~~A summary of activity in the allowance for sales credit memos is as follows (in thousands):~~

November 30, 2019 November 30, 2018 November 30, 2017

As Adjusted⁽¹⁾

Beginning balance $ 266
$ 178
$ 402
ASC 606 adjustment —
41
—
Charge (credit) to revenue (60 ) 46
(158 )
Write-offs and other (46 ) —
(69 )
Translation adjustments (2 ) 1
3
Ending balance $ 158
$ 266
$ 178
⁽¹⁾The Company adopted the accounting standard related to revenue recognition ("ASC 606") effective December 1, 2018 using the full retrospective method. See Note 1. Nature of Business and Summary of Significant Accounting Policies for further information.

~~Concentrations of Credit Risk~~

~~Our financial instruments~~Mr. Gupta became President and Chief Executive Officer in October 2016. Prior to that potentially subject us to concentrations of credit risk consist primarily of cash and cash equivalents, investments, derivative instruments and trade receivables. We have cash investment policies which, among other things, limit investments to investment-grade securities. We hold our cash and cash equivalents, investments and derivative instrument contracts with high quality financial institutions and we monitor the credit ratings of those institutions. We perform ongoing credit evaluations of our customers, and the risk with respect to trade receivables is further mitigated by the diversity, both by geography and by industry, of the customer base. No single customer represented more than ~~10%~~ ~~of consolidated accounts receivable or revenue in fiscal years~~ ~~2019~~, ~~2018~~ or ~~2017~~.

~~Fair Value of Financial Instruments~~

The carrying amount of our cash and cash equivalents, accounts receivable, accounts payable and long-term debt approximates fair value due to the short-term nature or market interest rates of these items. We base the fair value of short-term investments on quoted market prices or other relevant information generated by market transactions involving identical or comparable assets. We measure and record derivative financial instruments at fair value. See Note 4 for further discussion of financial instruments that are carried at fair value on a recurring and nonrecurring basis.

~~Derivative Instruments~~

We record all derivatives on the consolidated balance sheets at fair value. We use derivative instruments to manage exposures to fluctuations in the value of foreign currencies, which exist as part of our ongoing business operations.

~~Cash Flow Hedge~~

~~We entered into an interest rate swap contract in July 2019 to manage the variability of cash flows associated with approximately one-half of our variable rate debt.~~ ~~We have designated the interes~~t rate swap as a cash flow hedge and assess the hedge effectiveness both at the onset of the hedge and at regular intervals throughout the life of the derivative. To the extent that the interest rate swap is highly effective in offsetting the variability of the hedged cash flows, changes in the fair value of the derivative are included as a component of other comprehensive loss on our consolidated balance sheets. Although we have determined at the onset of the hedge that the interest rate swap will be a highly effective hedge throughout the term of the contract, any portion of the fair value swap subsequently determined to be ineffective will be recognized in earnings.

~~Forward Contracts~~

Certain assets and forecasted transactions are exposed to foreign currency risk. Our objective for holding derivatives is to eliminate or reduce the impact of these exposures. We periodically monitor our foreign currency exposures to enhance the overall economic effectiveness of our foreign currency hedge positions. Principal currencies hedged include the euro, British pound, Brazilian real, Indian rupee, and Australian dollar. We do not enter into derivative instruments for speculative purposes, nor do we hold or issue any derivative instruments for trading purposes.

We enter into certain derivative instruments that do not qualify for hedge accounting and are not designated as hedges. Although these derivatives do not qualify for hedge accounting, we believe that such instruments are closely correlated with the underlying exposure, thus managing the associated risk. The gains or losses from changes in the fair value of such derivative instruments that are not accounted for as hedges are recognized in earnings in foreign currency loss, net in the consolidated statements of operations.

~~Property and Equipment~~

We record property and equipment at cost. We record property and equipment purchased in business combinations at fair value, which is then treated as the cost. Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the related assets. Leasehold improvements are amortized on a straight-line basis over the shorter of the lease term or the useful lives of the assets. Useful lives by major asset class are as follows: computer equipment and software, 3 to 7 ~~years; buildings and improvements,~~ 5 to 39 ~~years; and furniture and fixtures,~~ 5 to 7 ~~years. Repairs and maintenance costs are expensed as incurred.~~

~~Product Development and Internal Use Software~~

Expenditures for product development, other than internal use software costs, are expensed as incurred. Product development expenses primarily consist of personnel and related expenses for our product development staff, the cost of various third-party contractor fees, and allocated overhead expenses.

Software development costs associated with internal use software are incurred in three stages of development: the preliminary project stage, the application development stage, and the post-implementation stage. Costs incurred during the preliminary project and post-implementation stages are expensed as incurred. Certain internal and external qualifying costs incurred during the application development stage are capitalized as property and equipment. Internal use software is amortized on a straight-line basis over its estimated useful life of three years, beginning when the software is ready for its intended use.

During the fiscal years ended November 30, 2019, 2018, and 2017, there were 0 internal use software development costs capitalized. We did 0t incur any amortization expense related to internal use software development costs during the fiscal year ended November 30, 2019 as these costs were fully amortized as of November 30, 2018. Amortization expense related to internal use software totaled $0.2 million and $0.6 million during the fiscal years ended November 30, 2018 and 2017, respectively.

~~Goodwill, Intangible Assets and Long-Lived Assets~~

Goodwill is the amount by which the cost of acquired net assets in a business combination exceeded the fair value of net identifiable assets on the date of purchase. We evaluate goodwill and other intangible assets with indefinite useful lives, if any, for impairment annually or on an interim basis when events and circumstances arise that indicate impairment may have occurred.

In performing our annual assessment, we first perform a qualitative test and if necessary, perform a quantitative test. To conduct the quantitative impairment test of goodwill, we compare the fair value of a reporting unit to its carrying value. If the reporting unit’s carrying value exceeds its fair value, we record an impairment loss to the extent that the carrying value of goodwill exceeds its implied fair value. We estimate the fair values of our reporting units using discounted cash flow models or other valuation models, such as comparative transactions and market multiples. We did 0t recognize any goodwill impairment charges during fiscal years 2019, 2018, or 2017.

Intangible assets are comprised of purchased technology, customer-related assets, and trademarks and trade names acquired through business combinations (Note 7). All of our intangible assets are amortized using the straight-line method over their estimated useful life.

We periodically review long-lived assets (primarily property and equipment) and intangible assets with finite lives for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable or that the useful lives of those assets are no longer appropriate. We base each impairment test on a comparison of the undiscounted cash flows to the carrying value of the asset or asset group. If impairment is indicated, we write down the asset to its estimated fair value based on a discounted cash flow analysis. During fiscal year 2019, we recorded a $22.7 million asset impairment charge, which was primarily applicable to the intangible assets obtained in connection with our acquisitions of DataRPM and Kinvey during the second and third quarters of fiscal year 2017, respectively (Note 4).

We classify long-lived assets to be sold as held for sale in the period in which: (i) we have approved and committed to a plan to sell the asset, (ii) the asset is available for immediate sale in its present condition, (iii) an active program to locate a buyer and other actions required to sell the asset have been initiated, (iv) the sale of the asset is probable, (v) the asset is being actively marketed for sale at a price that is reasonable in relation to its current fair value, and (vi) it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. Assets held for sale are initially measured at the lower of the carrying value or the fair value less cost to sell. Losses resulting from this measurement are recognized in the period in which the held for sale criteria are met while gains are not recognized until the date of sale. Once designated as held for sale, we stop recording depreciation expense on the asset. We assess the fair value less cost to sell of long-lived assets held for sale at each reporting period until it no longer meets this classification. In the fourth quarter of fiscal year 2018, we reclassified certain corporate land and building assets previously reported as property and equipment to assets held for sale on our consolidated balance sheet. As the fair value less cost to sell was less than the carrying value of these assets, we recognized an impairment charge of $5.1 million. We sold these long-lived assets during fiscal year 2019 and recognized a net gain on the sale of approximately $0.1 million. During the fourth quarter of fiscal year 2019, we incurred an additional asset impairment charge of $1.4 million related to the abandonment of certain long-lived assets associated with this sale of corporate land and buildings. The fair value of the assets held for sale was measured using third-party valuation models, which included a discounted cash flow analysis (Note 4).

~~Comprehensive (Loss) Income~~

~~The components of comprehensive loss include, in addition to net income, unrealized gains and losses on investments and foreign currency translation adjustments.~~

~~Accumulated other comprehensive loss by components, net of tax (in thousands):~~

Foreign Currency Translation Adjustment Unrealized (Losses) Gains on Investments Unrealized Loss on Hedging Activity Total
Balance, December 1, 2017 $ (18,177 ) $ (229 ) $ —
$ (18,406 )
Other comprehensive (loss) income (9,796 ) 26
—
(9,770 )
Balance, December 1, 2018 $ (27,973 ) $ (203 ) $ —
$ (28,176 )
Other comprehensive (loss) income (420 ) 173
(1,551 ) (1,798 )
Balance, November 30, 2019 $ (28,393 ) $ (30 ) $ (1,551 ) $ (29,974 )

~~The tax effect on accumulated unrealized losses on investments was minimal as of November 30, 2019, November 30, 2018, and November 30, 2017.~~

~~Revenue Recognition~~

~~Revenue Policy~~

We derive our revenue primarily from software licenses and maintenance and services. Our license arrangements generally contain multiple performance obligations, including software maintenance services. Revenue is recognized when a customer obtains control of promised goods or services in an amount that reflects the consideration that we expect to receive in exchange for those goods or services. When an arrangement contains multiple performance obligations, we account for individual performance obligations separately if they are distinct. We recognize revenue through the application of the following steps: (i) identification of the contract(s) with a customer; (ii) identification of the performance obligations in the contract; (iii) determination of the transaction price; (iv) allocation of the transaction price to performance obligations in the contract; and (v) recognition of revenue when or as we satisfy the performance obligations. Sales taxes collected from customers and remitted to government authorities are excluded from revenue and we do not license our software with a right of return.

~~Software Licenses~~

Software licenses are on-premise and fully functional when made available to the customer. As the customer can use and benefit from the license on its own, on-premise software licenses represent distinct performance obligations. Revenue is recognized upfront at the point in time, when control is transferred, which is defined as the point in time when the client can use and benefit from the license. Our licenses are sold as perpetual or term licenses, and the arrangements typically contain various combinations of maintenance and services, which are generally accounted for as separate performance obligations. We use the

residual approach to allocate the transaction price to our software license performance obligations because, due to the pricing of our licenses being highly variable, they do not have an observable stand-alone selling price ("SSP"). As required, we evaluate the residual approach estimate compared to all available observable data in order to conclude the estimate is representative of its SSP.

Perpetual licenses are generally invoiced upon execution of the contract and payable within 30 days. Term licenses are generally invoiced in advance on an annual basis over the term of the arrangement, which is typically one to three years. Any difference between the revenue recognized and the amount invoiced to the customer is recognized on our consolidated balance sheets as unbilled receivables until the customer is invoiced, at which point the amount is reclassified to accounts receivable.

~~Maintenance~~

Maintenance revenue is made up of technical support, bug fixes, and when-and-if available unspecified software upgrades. As these maintenance services are considered to be a series of distinct services that are substantially the same and have the same duration and measure of progress, we have concluded that they represent one combined performance obligation. Revenue is recognized ratably over the contract period. The SSP of maintenance services is a percentage of the net selling price of the related software license, which has remained within a tight range and is consistent with the stand-alone pricing of subsequent maintenance renewals.

~~Maintenance services are generally invoiced in advance on an annual basis over the term of the arrangement, which is typically one to three years.~~

~~Services~~

Services revenue primarily includes consulting and customer education services. In general, services are distinct performance obligations. Services revenue is generally recognized as the services are delivered to the customer. We apply the practical expedient of recognizing revenue upon invoicing for time and materials-based arrangements as the invoiced amount corresponds to the value of the services provided. The SSP of services is based upon observable prices in similar transactions using the hourly rates sold in stand-alone services transactions. Services are either sold on a time and materials basis or prepaid upfront.

We also offer products via a software-as-a-service ("SaaS") model, which is a subscription-based model. Our customers can use hosted software over the contract period without taking possession of it and the cloud services are available to them throughout the entire term, even if they do not use the service. Revenue related to SaaS offerings is recognized ratably over the contract period. The SSP of SaaS performance obligations is determined based upon observable prices in stand-alone SaaS transactions. SaaS arrangements are generally invoiced in advance on a monthly, quarterly, or annual basis over the term of the arrangement, which is typically one to three years.

~~Arrangements with Multiple Performance Obligations~~

When an arrangement contains multiple performance obligations, we account for individual performance obligations separately if they are distinct. We allocate the transaction price to each performance obligation in a contract based on its relative SSP. Although we do not have a history of offering these elements, prior to allocating the transaction price to each performance obligation, we consider whether the arrangement has any discounts, material rights, or specified future upgrades that may represent additional performance obligations. Determining whether products and services are distinct performance obligations and the determination of the SSP may require significant judgment.

~~Contract Balances~~

~~Unbilled Receivables and Contract Assets~~

The timing of revenue recognition may differ from the timing of customer invoicing. When revenue is recognized prior to invoicing and the right to the amount due from customers is conditioned only on the passage of time, we record an unbilled receivable on our consolidated balance sheets. Our multi-year term license arrangements, which are typically billed annually, result in revenue recognition in advance of invoicing and the recognition of unbilled receivables.

~~As of November 30, 2019, invoicing of our long-term unbilled receivables is expected to occur as follows (in thousands):~~

2021 $ 11,731
2022 761
Total $ 12,492

Contract assets, which arise when revenue is recognized prior to invoicing and the right to the amount due from customers is conditioned on something other than the passage of time, such as the completion of a related performance obligation, were $4.0 million as of November 30, 2019 and insignificant as of November 30, 2018. These amounts are included in unbilled receivables or long-term unbilled receivables on our consolidated balance sheets.

~~Deferred Revenue~~

Deferred revenue is recorded when revenue is recognized subsequent to customer invoicing. Our deferred revenue balance is primarily made up of deferred maintenance from our OpenEdge and Application Development and Deployment segments.

~~As of November 30, 2019, the changes in deferred revenue were as follows (in thousands):~~

Balance, December 1, 2018 As Adjusted⁽¹⁾
$ 135,940
Billings and other 454,604
Revenue recognized (413,298 )
Balance, November 30, 2019 $ 177,246
⁽¹⁾The Company adopted ASC 606 effective December 1, 2018 using the full retrospective method.

Transaction price allocated to remaining performance obligations represents contracted revenue that has not yet been recognized, which includes deferred revenue and amounts that will be invoiced and recognized as revenue in future periods. As of November 30, 2019, transaction price allocated to remaining performance obligations was $186 million. We expect to recognize approximately 90% of the revenue within the next year and the remainder thereafter.

~~Deferred Contract Costs~~

Deferred contract costs, which include certain sales incentive programs, are incremental and recoverable costs of obtaining a contract with a customer. Incremental costs of obtaining a contract with a customer are recognizedMr. Gupta served as an ~~asset if the expected benefit of those costs is longer than one year. We have applied the practical expedient~~advisor to expense costs as incurred for costs to obtain a contract with a customer when the amortization period would have been one year or less. These costs include a large majority of our sales incentive programs as we have determined that annual compensation is commensurate with annual sales activities.

~~Certain of our sales incentive programs do meet the requirements to be capitalized. Depending upon the sales incentive program~~various venture capital and the related revenue arrangement, such capitalized costs are amortized over the longer of (i) the product life, which is generally three to five years; or (ii) the term of the related revenue contract. We determined that a three to five year product life represents the period of benefit that we receiveprivate equity firms from these incremental costs based on both qualitative and quantitative factors, which include customer contracts, industry norms, and product upgrades. Total deferred contract costs were $1.7 million as of November 30, 2019 and minimal as of November 30, 2018 and are included in other current assets and other assets on our consolidated balance sheets. Amortization of deferred contract costs is included in sales and marketing expense on our consolidated statement of operations and was minimal in all periods presented.

~~Advertising Costs~~

~~Advertising costs are expensed as incurred and were $0.8 million, $1.4 million, and $1.5 million in fiscal years 2019, 2018, and 2017, respectively.~~

~~Warranty Costs~~

~~We make periodic provisions for expected warranty costs. Historically, warranty costs have been insignificant.~~

~~Stock-Based Compensation~~

Stock-based compensation expense reflects the fair value of stock-based awards, less the present value of expected dividends, measured at the grant date and recognized over the relevant service period. We estimate the fair value of each stock-based award on the measurement date using either the current market price of the stock, the Black-Scholes option valuation model, or the Monte Carlo Simulation valuation model. The Black-Scholes and Monte Carlo Simulation valuation models incorporate assumptions as to stock price volatility, the expected life of options or awards, a risk-free interest rate and dividend yield. We recognize stock-based compensation expense related to options and restricted stock units on a straight-line basis over the service period of the award, which is generally 4 or 5 years for options and 3 years for restricted stock units. We recognize stock-based compensation expense related to performance stock units and our employee stock purchase plan using an accelerated attribution method.

~~Fees Related to Shareholder Activist~~

InOctober 2015 until September 2017, Praesidium Investment Management, then one of our largest stockholders, publicly announced its disagreement with our strategy in a Schedule 13D filed with the Securities and Exchange Commission (the “SEC”) and stated that it was seeking changes in the composition of our Board of Directors. In fiscal years 2017 and 2018, we incurred professional and other fees relating to Praesidium’s actions. We did not incur any fees related to Praesidium's actions during fiscal year 2019.

~~Acquisition-Related Costs~~

Acquisition-related costs are expensed as incurred and include those costs incurred as a result of a business combination. These costs consist of professional services fees, including third-party legal and valuation-related fees, as well as retention fees and earn-out payments treated as compensation expense. We incurred $1.7 million, $0.3 million, and $1.5 million of acquisition-related costs, which are included in acquisition-related expenses in our consolidated statement of operations, for the fiscal years ended November 30, 2019, November 30, 2018, and November 30, 2017, respectively.

~~Restructuring Charges~~

Our restructuring charges are comprised primarily of costs related to property abandonment, including future lease commitments, net of any sublease income, and associated leasehold improvements; and employee termination costs related to headcount reductions. We recognize and measure restructuring liabilities initially at fair value when the liability is incurred. We incurred $6.3 million, $2.3 million, and $22.2 million of restructuring related costs, which are included in restructuring expenses in our consolidated statement of operations, for the fiscal years ended November 30, 2019, November 30, 2018, and November 30, 2017, respectively.

~~Income Taxes~~

We provide for deferred income taxes resulting from temporary differences between financial and taxable income. We record valuation allowances to reduce deferred tax assets to the amount that is more likely than not to be realized.

We recognize and measure uncertain tax positions taken or expected to be taken in a tax return utilizing a two-step approach. We first determine if the weight of available evidence indicates that it is more likely than not that the tax position will be sustained on audit, including resolution of any related appeals or litigation processes. The second step is that we measure the tax benefit as the largest amount that is more likely than not to be realized upon ultimate settlement. We recognize interest and penalties related to uncertain tax positions in our provision for income taxes on our consolidated statements of operations.

~~Recent Accounting Pronouncements~~

~~Recently Adopted Accounting Pronouncements~~

~~In October 2016, the FASB issued Accounting Standards Update No. 2016-16,~~ ~~Income Taxes (Topic 740), Intra-Entity Transfers of Assets Other Than Inventory~~ ("ASU 2016-16"), which requires entities to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. Under prior accounting standards, the recognition of current and deferred income taxes for an intra-entity transfer was prohibited until the asset has been sold to an outside party. We adopted this standard at the beginning of the first quarter of fiscal year 2019. Upon adoption, we reclassified approximately $3.4 million from non-current prepaid taxes, which is included in other assets on our consolidated balance sheet, to retained earnings as of December 1, 2018. During the preparation of our consolidated financial statements for the three months ended August 31, 2019, we identified that a deferred tax asset of $8.2 million should also have been recorded upon adoption of this standard at the beginning of the first quarter of fiscal year 2019, with the offset recorded to retained earnings. We determined that the error is not material to the first and second quarters of fiscal year 2019. We also concluded that recording an out-of-period correction in the third quarter of fiscal year 2019 would not be material and therefore corrected this error by recording the $8.2 million deferred tax asset during the third quarter of fiscal year 2019. Therefore, the impact of the adoption of ASU 2016-16 on our consolidated balance sheet was a reclassification of approximately $4.8 million to retained earnings.

~~In May 2014, the FASB issued Accounting Standards Update No. 2014-09,~~ ~~Revenue from Contracts with Customers (Topic 606)~~ ("ASC 606"). Under this standard, revenue is recognized when a customer obtains control of promised goods or services in an amount that reflects the consideration that the entity expects to receive in exchange for those goods or services. The standard also requires new disclosures regarding the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers and provides guidance on the recognition of costs related to obtaining customer contracts. We adopted this ASU effective December 1, 2018 in accordance with the full retrospective approach, which required us to retrospectively adjust certain previously reported results in the comparative prior periods presented. Upon adoption, we recorded a cumulative $31 million increase to our 2017 beginning retained earnings balance, a $15 million decrease to deferred revenue, a $28 million increase to unbilled receivables, and a $12 million increase to deferred tax liabilities.

~~The revenue recognition related to accounting for the following transactions is most impacted by our adoption of this standard:~~

•

~~Revenue from term licenses with extended payment terms over the term of the agreement within our Data Connectivity and Integration segment~~ - Under the applicable revenue recognition guidance for fiscal years 2018 and prior, these transactions were recognized when the amounts were billed to the customer. In accordance with ASC 606, revenue from term license performance obligations is recognized upon delivery and revenue from maintenance performance obligations is expected to be recognized over the contract term. To the extent that we enter into these transactions, revenue from term licenses with extended payment terms will be recognized prior to the customer being billed and we will recognize an unbilled receivable on the balance sheet. Accordingly, the recognition of license revenue is accelerated under ASC 606 as we historically did not recognize revenue until the amounts had been billed to the customer.

•

~~Revenue from transactions with multiple elements within our Application Development and Deployment segment (i.e., sales of perpetual licenses with maintenance and/or support)~~ - Under the applicable revenue recognition guidance for fiscal years 2018 and prior, these transactions were recognized ratably over the associated maintenance period as the Company did not have vendor specific objective evidence ("VSOE") for maintenance or support. Under ASC 606, the requirement to have VSOE for undelivered elements that existed under prior guidance is eliminated. Accordingly, the Company will recognize a portion of the sales price as revenue upon delivery of the license instead of recognizing the entire sales price ratably over the maintenance period.

~~The impact of the adoption of this standard on our previously reported consolidated balance sheet and consolidated statements of operations is as follows:~~

~~Consolidated Balance Sheet~~

November 30, 2018
(in thousands) As Reported Adjustments As Adjusted
Assets
Accounts receivable, net $ 58,450
$ 1,265
$ 59,715
Short-term unbilled receivables —
1,421
1,421
Long-term unbilled receivables —
1,811
1,811
Deferred tax assets 1,922
(956 ) 966
Other assets⁽¹⁾
580,237
—
580,237
Total assets $ 640,609
$ 3,541
$ 644,150
Liabilities and shareholders’ equity
Short-term deferred revenue 133,194
(9,984 ) 123,210
Long-term deferred revenue 15,127
(2,397 ) 12,730
Deferred tax liabilities 3,797
2,002
5,799
Other liabilities⁽²⁾
178,409
—
178,409
Retained earnings 71,242
13,883
85,125
Accumulated other comprehensive loss (28,213 ) 37
(28,176 )
Other equity⁽³⁾
267,053
—
267,053
Total liabilities and shareholders’ equity $ 640,609
$ 3,541
$ 644,150
⁽¹⁾Includes cash and cash equivalents, short-term investments, other current assets, assets held for sale, property and equipment, net, intangible assets, net, goodwill, and other assets.
⁽²⁾Includes current portion of long-term debt, net, accounts payable, accrued compensation and related taxes, dividends payable, income taxes payable, other accrued liabilities, long-term debt, net, and other noncurrent liabilities.
⁽³⁾Includes common stock and additional paid-in capital.

~~Consolidated Statements of Income~~

Fiscal Year Ended
November 30, 2018 November 30, 2017
(In thousands, except per share data) As Reported Adjustments As Adjusted As Reported Adjustments As Adjusted
Revenue:
Software licenses $ 122,137
$ (22,337 ) $ 99,800
$ 124,406
$ (10,763 ) $ 113,643
Maintenance and services 275,028
4,153
279,181
273,166
2,345
275,511
Total revenue 397,165
(18,184 ) 378,981
397,572
(8,418 ) 389,154
Costs of revenue 66,973
—
66,973
69,159
—
69,159
Gross Profit 330,192
(18,184 ) 312,008
328,413
(8,418 ) 319,995
Operating expenses 244,194
—
244,194
257,799
4,706
262,505
Income from operations 85,998
(18,184 ) 67,814
70,614
(13,124 ) 57,490
Other expense, net (7,018 ) —
(7,018 ) (5,027 ) —
(5,027 )
Income before income taxes 78,980
(18,184 ) 60,796
65,587
(13,124 ) 52,463
Provision for income taxes 15,489
(4,363 ) 11,126
28,170
(4,728 ) 23,442
Net income $ 63,491
$ (13,821 ) $ 49,670
$ 37,417
$ (8,396 ) $ 29,021
Earnings (loss) per share:
Basic $ 1.39
$ (0.30 ) $ 1.09
$ 0.78
$ (0.18 ) $ 0.60
Diluted $ 1.38
$ (0.30 ) $ 1.08
$ 0.77
$ (0.17 ) $ 0.60
Weighted average shares outstanding:
Basic 45,561
—
45,561
48,129
—
48,129
Diluted 46,135
—
46,135
48,516
—
48,516

~~The adoption of ASC 606 had no impact on total cash from or used in operating, financing, or investing activities on our consolidated cash flow statements.~~

~~Recently Issued Accounting Pronouncements Not Yet Adopted~~

~~In August 2018, the FASB issued Accounting Standards Update No. 2018-15,~~ ~~Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40), Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract~~ ("ASU 2018-15"). ASU 2018-15 amends current guidance to align the accounting for costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing costs associated with developing or obtaining internal-use software. Capitalized implementation costs must be expensed over the term of the hosting arrangement and presented in the same line item in the statement of income as the fees associated with the hosting element (service) of the arrangement. The guidance in ASU 2018-15 is effective for annual reporting periods beginning after December 15, 2019, with early adoption permitted. We are currently accounting for costs incurred in a cloud computing arrangement in accordance with the guidance provided in ASU 2018-15.

~~In August 2017, the FASB issued Accounting Standards Update No. 2017-12,~~ ~~Derivatives and Hedging (Topic 815), Targeted Improvements to Accounting for Hedging Activities~~ ("ASU 2017-12"). ASU 2017-12 intends to better align an entity's risk management activities and financial reporting for hedging relationships through changes to both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results. The amendments expand and refine hedge accounting for both nonfinancial and financial risk components and align the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements. The guidance in ASU 2017-12 is required for annual reporting periods beginning after December 15, 2018. We are currently accounting for our cash flow hedges in accordance with the guidance provided in ASU 2017-12.

~~In January 2017, the FASB issued Accounting Standards Update No. 2017-04,~~ ~~Intangibles - Goodwill and Other (Topic 350), Simplifying the Test for Goodwill Impairment~~ ("ASU 2017-04"). ASU 2017-04 amends Topic 350 to simplify the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. This update requires the performance of an annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit's fair value. However, the loss recognized should not exceed the total amount of goodwill allocated2016. Prior to that reporting unit. The guidance in ASU 2017-04 is required for annual reporting periods beginning after December 15, 2019, with early adoption permitted. We do not expect the implementation of this update to have a material effect upon adoption on our consolidated financial positiontime, Mr. Gupta was President and ~~results of operations.~~

~~In February 2016, the FASB issued Accounting Standards Update No. 2016-02,~~ ~~Leases (Topic 842)~~ ~~("ASU 2016-02")~~Chief Executive Officer at Kaseya, Inc., which requires lessees to record most leases on their balance sheets, recognizing a lease liability for the obligation to make lease payments and a right-of-use asset for the right to use the underlying asset for the lease term. The guidance in ASU 2016-02 is required for annual reporting periods beginning after December 15, 2018.

We are required to adopt this standard effective December 1, 2019 and plan to apply the modified retrospective transition method. The comparative historical information will not be restated and will continue to be reported under the accounting standards in effect for those periods. The new standard provides for optional practical expedients in transition. We expect to elect the package of transition practical expedients available in the standard, which permits us not to reassess our prior conclusions about lease identification, classification, and initial direct costs under the new standard. Furthermore, we expect to elect the practical expedients to combine lease and non-lease components and to not recognize right-of-use assets and lease liabilities for short-term leases. On a preliminary basis, we expect to recognize right-of-use assets of approximately $26 million to $30 million and lease liabilities of approximately $28 million to $32 million as of December 1, 2019. The most significant impact is from ~~right-of-use assets and lease liabilities related to our office space operating leases. The adoption is not expected to impact our consolidated net earnings or cash flows.~~

~~Note 2: Cash, Cash Equivalents and Investments~~

~~A summary of our cash, cash equivalents and available-for-sale investments at~~ ~~November 30, 2019~~ ~~is as follows (in thousands):~~

Amortized Cost Basis
Unrealized
Gains

Unrealized
Losses
Fair Value
Cash $ 144,346
$ —
$ —
$ 144,346
Money market funds 9,913
—
—
9,913
State and municipal bond obligations 7,036
1
—
7,037
U.S. treasury bonds 7,221
10
—
7,231
Corporate bonds 5,146
12
—
5,158
Total $ 173,662
$ 23
$ —
$ 173,685

~~A summary of our cash, cash equivalents and available-for-sale investments at~~ ~~November 30, 2018~~ ~~is as follows (in thousands):~~

Amortized Cost Basis
Unrealized
Gains

Unrealized
Losses
Fair Value
Cash $ 101,316
$ —
$ —
$ 101,316
Money market funds 3,810
—
—
3,810
State and municipal bond obligations 19,542
—
(119 ) 19,423
U.S. treasury bonds 6,726
—
(21 ) 6,705
Corporate bonds 8,329
—
(70 ) 8,259
Total $ 139,723
$ —
$ (210 ) $ 139,513

~~Such amounts are classified on our consolidated balance sheets as follows (in thousands):~~

November 30, 2019 November 30, 2018
Cash and Equivalents
Short-Term
Investments
Cash and Equivalents
Short-Term
Investments
Cash $ 144,346
$ —
$ 101,316
$ —
Money market funds 9,913
—
3,810
—
State and municipal bond obligations —
7,037
—
19,423
U.S. treasury bonds —
7,231
—
6,705
Corporate bonds —
5,158
—
8,259
Total $ 154,259
$ 19,426
$ 105,126
$ 34,387

~~The fair value of debt securities by contractual maturity is as follows (in thousands):~~

November 30,
2019 November 30,
2018
Due in one year or less $ 14,004
$ 25,051
Due after one year ⁽¹⁾
5,422
9,336
Total $ 19,426
$ 34,387


~~(1)~~	Includes state and municipal bond obligations, U.S. treasury bonds and corporate bonds, which are securities representing investments available for current operations and are classified as current on the consolidated balance sheets.

~~We did not hold any investments with continuous unrealized losses as of November 30, 2019 or November 30, 2018.~~

~~Note 3: Derivative Instruments~~

~~Cash Flow Hedge~~

OnJune 2013 until July 9, 2019, we entered into an interest rate swap contract with an initial notional amount of $150.0 million to manage the variability of cash flows associated with approximately one-half of our variable rate debt. The contract matures on April 30, 2024 and requires periodic interest rate settlements. Under this interest rate swap contract, we receive a floating rate based on the greater of 1-month LIBOR or 0.00% and pay a fixed rate of 1.855% ~~on the outstanding notional amount.~~

~~We have designated the interes~~t rate swap as a cash flow hedge and assess the hedge effectiveness both at the onset of the hedge and at regular intervals throughout the life of the derivative. To the extent that the interest rate swap is highly effective in offsetting the variability of the hedged cash flows, changes in the fair value of the derivative are included as a component of other comprehensive loss on our consolidated balance sheets. Although we have determined at the onset of the hedge that the interest rate swap will be a highly effective hedge throughout the term of the contract, any portion of the fair value swap subsequently determined to be ineffective will be recognized in earnings. ~~As ofNovember 30, 2019, the fair value of the hedge was a loss of $2.1 million and included in other noncurrent liabilities on our consolidated balance sheets.~~

The following table presents our interest rate swap contract where the notional amount reflects the quarterly amortization of the interest rate swap, which is equal to approximately one-half of the corresponding reduction in the balance of our term loan as we make our scheduled principal payments. The fair value of the derivative represents the discounted value of the expected future discounted cash flows for the interest rate swap, based on the amortization schedule and the current forward curve for the remaining term of the contract, as of the date of each reporting period (in thousands):

November 30, 2019 November 30, 2018
Notional Value Fair Value Notional Value Fair Value
Interest rate swap contracts designated as cash flow hedges $ 148,125
$ (2,054 ) $ —
$ —

~~Forward Contracts~~

We generally use forward contracts that are not designated as hedging instruments to hedge economically the impact of the variability in exchange rates on intercompany accounts receivable and loans receivable denominated in certain foreign currencies. We generally do not hedge the net assets of our international subsidiaries.

All forward contracts are recorded at fair value on the consolidated balance sheets at the end of each reporting period and expire between 30 days and two years from the date the contract was entered. At November 30, 2019, $0.1 million was recorded in other noncurrent liabilities on the consolidated balance sheets. At November 30, 2018, $0.3 million and $0.1 million was recorded in other noncurrent liabilities and other current assets, respectively, on the consolidated balance sheets. In fiscal year 2019, realized and unrealized losses of $1.1 million from our forward contracts were recognized in foreign currency loss, net on the consolidated statement of operations. In fiscal years 2018 and 2017, realized and unrealized losses of $6.9 million and realized and unrealized gains of $9.4 million, respectively, from our forward contracts were recognized in foreign currency loss, net on the consolidated statements of operations. These losses and gains were substantially offset by realized and unrealized gains and losses on the offsetting positions.

~~The table below details outstanding foreign currency forward contracts where the notional amount is determined using contract exchange rates (in thousands):~~

November 30, 2019 November 30, 2018
Notional Value Fair Value Notional Value Fair Value
Forward contracts to sell U.S. dollars $ 66,951
$ (85 ) $ 105,830
$ (170 )
Forward contracts to purchase U.S. dollars 1,457
5
240
—
Total $ 68,408
$ (80 ) $ 106,070
$ (170 )

~~Note 4: Fair Value Measurements~~

~~Recurring Fair Value Measurements~~

~~The following table details the fair value measurements within the fair value hierarchy of our financial assets and liabilities at~~ ~~November 30, 2019~~ ~~(in thousands):~~

Fair Value Measurements Using

Total Fair
Value
Level 1 Level 2 Level 3
Assets
Money market funds $ 9,913
$ 9,913
$ —
$ —
State and municipal bond obligations 7,037
—
7,037

—
U.S. treasury bonds 7,231
—
7,231
—
Corporate bonds 5,158
—
5,158
—
Liabilities
Foreign exchange derivatives (80 ) —
(80 ) —
Interest rate swap $ (2,054 ) $ —
$ (2,054 ) $ —

~~The following table details the fair value measurements within the fair value hierarchy of our financial assets and liabilities at~~ ~~November 30, 2018~~ ~~(in thousands):~~

Fair Value Measurements Using

Total Fair
Value
Level 1 Level 2 Level 3
Assets
Money market funds $ 3,810
$ 3,810
$ —
$ —
State and municipal bond obligations 19,423
—
19,423
—
U.S. treasury bonds 6,705
—
6,705
—
Corporate bonds 8,259
—
8,259
—
Liabilities
Foreign exchange derivatives $ (170 ) $ —
$ (170 ) $ —

When developing fair value estimates, we maximize the use of observable inputs and minimize the use of unobservable inputs. When available, we use quoted market prices to measure fair value. The valuation technique used to measure fair value for our Level 1 and Level 2 assets is a market approach, using prices and other relevant information generated by market transactions involving identical or comparable assets. If market prices are not available, the fair value measurement is based on models that use primarily market based parameters including yield curves, volatilities, credit ratings and currency rates. In certain cases where market rate assumptions are not available, we are required to make judgments about assumptions market participants would use to estimate the fair value of a financial instrument.

~~Nonrecurring Fair Value Measurements~~

~~During fiscal years 2019 and 2018, certain assets were measured at fair value on a nonrecurring basis using significant unobservable inputs (Level 3).~~

During the fourth quarter of fiscal year 2019, based on the fair value measurement, we recorded a $22.7 million asset impairment charge, which was attributable to the intangible assets primarily associated with the technologies and trade names obtained in the acquisitions of DataRPM and Kinvey during the second and third quarters of fiscal year 2017, respectively (Note 6).

During the fourth quarter of fiscal year 2018, based on the fair value measurement, we recorded a $5.1 million asset impairment charge as of November 30, 2018 related to certain corporate land and building assets previously reported as property and equipment, net that we reclassified to assets held for sale on our consolidated balance sheets. On April 3, 2019, we

sold these assets for approximately $5.8 million in net cash proceeds and recognized a net gain on the sale of approximately $0.1 million, which is included in interest income and other, net on our consolidated statements of operations.

~~The following table presents nonrecurring fair value measurements as of November 30, 2019 (in thousands):~~

Total Fair Value Total Losses
Intangible assets $ —
$ 22,688

The fair value measurements of intangible assets and long-lived assets were determined using an income-based valuation methodology, which incorporates unobservable inputs, including discounted expected cash flows over the remaining estimated useful life of the technology, thereby classifying the fair value as a Level 3 measurement within the fair value hierarchy. The expected cash flows include maintenance fees to be collected from existing customers using the products, offset by compensation related costs and hosting fees to be incurred over the remaining estimated useful lives.

~~The following table presents nonrecurring fair value measurements as of November 30, 2018 (in thousands):~~

Total Fair Value Total Losses
Assets held for sale $ 5,776
$ 5,147

The fair value measurement of the assets held for sale was measured using third-party valuation models and was determined using an income-based valuation methodology, which includes discounted expected cash flows. As the discounted cash flows represent unobservable inputs, the fair value was classified as a Level 3 measurement within the fair value hierarchy. The expected cash flows include proceeds from the sale, offset by the costs incurred to sell the assets.

~~Note 5: Property and Equipment~~

~~Property and equipment consists of the following (in thousands):~~

November 30, 2019 November 30, 2018
Computer equipment and software $ 47,699
$ 47,266
Land, buildings and leasehold improvements 34,083
34,676
Furniture and fixtures 7,090
6,104
Capitalized software development costs 276
276
Property and equipment, gross 89,148
88,322
Less accumulated depreciation and amortization (59,383 ) (57,608 )
Property and equipment, net $ 29,765
$ 30,714

~~Depreciation and amortization expense related to property and equipment was $7.6 million, $6.9 million, and $7.5 million for the years ended November 30, 2019, 2018, and 2017, respectively.~~

In the fourth quarter of fiscal year 2018, we reclassified certain corporate land and building assets previously reported as property and equipment to assets held for sale on our consolidated balance sheet. Based on the fair value measurement, we recorded a $5.1 million asset impairment charge as of November 30, 2018. On April 3, 2019, we sold these assets for approximately $5.8 million in net cash proceeds and recognized a net gain on the sale of approximately $0.1 million. During the fourth quarter of fiscal year 2019, we incurred an additional asset impairment charge of $1.4 million related to the abandonment of certain long-lived assets associated with this sale of corporate land and buildings. This asset impairment charge is included in impairment of intangible and long-lived assets on our consolidated statements of operations.

~~Note 6: Intangible Assets and Goodwill~~

~~Intangible Assets~~

~~Intangible assets are comprised of the following significant classes (in thousands):~~

November 30, 2019 November 30, 2018

Gross
Carrying
Amount

Accumulated
Amortization

Net Book
Value

Gross
Carrying
Amount

Accumulated
Amortization

Net Book
Value
Purchased technology $ 135,186
$ (105,967 ) $ 29,219
$ 154,301
$ (110,959 ) $ 43,342
Customer-related 134,042
(74,175 ) 59,867
67,802
(56,589 ) 11,213
Trademarks and trade names 24,740
(16,043 ) 8,697
17,740
(13,376 ) 4,364
Non-compete agreement 2,000
(391 ) 1,609
—
—
—
Total $ 295,968
$ (196,576 ) $ 99,392
$ 239,843
$ (180,924 ) $ 58,919

~~We amortize intangible assets assuming no expected residual value. Amortization expense related to these intangible assets was~~ ~~$48.1 million~~, ~~$36.0 million~~ ~~and~~ ~~$33.1 million~~ ~~in fiscal years~~ ~~2019~~, ~~2018~~ ~~and~~ ~~2017, respectively.~~

During the fourth quarter of fiscal year 2019, we evaluated the ongoing value of the intangible assets associated with the technology obtained in connection with the acquisitions of DataRPM and Kinvey. As a result of our decision to reduce our current and ongoing spending levels within our cognitive application product lines, which consist primarily of our DataRPM and Kinvey products, we determined that the intangible assets were fully impaired and incurred an impairment charge of $22.7 million (Note 4).

~~Future amortization expense for intangible assets as of November 30, 2019 is as follows (in thousands):~~

2020 $ 23,235
2021 23,117
2022 22,136
2023 21,860
2024 9,044
Total $ 99,392

~~Goodwill~~

~~Changes in the carrying amount of goodwill for fiscal years 2019 and 2018 are as follows (in thousands):~~

November 30, 2019 November 30, 2018
Balance, beginning of year $ 314,992
$ 315,041
Additions 117,871
—
Translation adjustments (39 ) (49 )
Balance, end of year $ 432,824
$ 314,992

~~The addition to goodwill during fiscal year 2019 is related to the acquisition of Ipswitch in April 2019 (Note 7).~~

~~Changes in the carrying amount of goodwill by reportable segment for fiscal year 2019 are as follows (in thousands):~~

November 30, 2018 Additions Translation adjustments November 30, 2019
OpenEdge $ 248,987
$ 117,871
$ (39 ) $ 366,819
Data Connectivity and Integration 19,040
—
19,040
Application Development and Deployment 46,965
—
46,965
Total goodwill $ 314,992
$ 117,871
$ (39 ) $ 432,824

~~We assess the impairment of goodwill on an annual basis and whenever events or changes in circumstances indicate that the carrying value of the asset may not be recoverable.~~

During fiscal year 2019, we tested goodwill for impairment for each of our reporting units as of October 31, 2019. Our reporting units each had fair values which significantly exceeded their carrying values as of the annual impairment date. We did not recognize any goodwill impairment charges during fiscal years 2019, 2018 or 2017.

~~Note 7: Business Combinations~~

~~Ipswitch Acquisition~~

On April 30, 2019, we completed the acquisition of all of the outstanding equity interests of Ipswitch, Inc. (“Ipswitch”) from Roger Greene (the “Seller”) pursuant to the Stock Purchase Agreement, dated as of March 28, 2019, by and among Progress, Ipswitch and the Seller. The acquisition was completed for an aggregate purchase price of $225.0 million, subject to certain customary adjustments as further described in the Stock Purchase Agreement (the “Consideration”), which was paid in cash. Pursuant to the Stock Purchase Agreement, $22.5 million of the Consideration was deposited into an escrow account to secure certain indemnification and other potential obligations of the Seller to Progress. The Seller also received an award of approximately $2.0 million in Progress restricted stock as consideration for the Seller entering into a non-competition agreement for three years as set forth in the Stock Purchase Agreement.

Ipswitch enables approximately 24,000 small and medium-sized businesses and enterprises to provide secure data sharing and ensure high-performance infrastructure availability. Through this acquisition, we bolstered our core offerings to small and medium-sized businesses and enterprises, enabling those businesses to respond faster to business demands and to improve productivity. We funded the acquisition through a combination of existing cash resources and a $185.0 million term loan, which is part of a new $401.0 million term loan and revolving credit facility (Note 8).

The consideration has been allocated to Ipswitch’s tangible assets, identifiable intangible assets, and assumed liabilities based on their estimated fair values. The preliminary fair value estimates of the net assets acquired are based upon preliminary calculations and valuations, and those estimates and assumptions are subject to change as we obtain additional information for those estimates during the measurement period (up to one year from the acquisition date). The excess of the total consideration over the tangible assets, identifiable intangible assets, and assumed liabilities was recorded as goodwill.

~~We recorded measurement period adjustments based on our ongoing valuation and purchase price allocation procedures.~~

~~The allocation of the purchase price is as follows (in thousands):~~

Initial Purchase Price Allocation Measurement Period Adjustments Adjusted Purchase Price Allocation Life
Net working capital $ 6,068
$ (216 ) $ 5,852

Property, plant and equipment 4,661
4,661

Purchased technology 33,100
33,100
5 Years
Trade name 9,600
9,600
5 Years
Customer relationships 66,600
66,600
5 Years
Other assets 314
(4 ) 310

Deferred revenue (12,696 ) (12,696 )
Goodwill 117,651
220
117,871

Net assets acquired $ 225,298
$ —
$ 225,298

The fair value of the intangible assets has been estimated using the income approach in which the after-tax cash flows are discounted to present value. The cash flows are based on estimates used to value the acquisition, and the discount rates applied were benchmarked with reference to the implied rate of return from the transaction model as well as the weighted average cost of capital. The valuation assumptions take into consideration the Company's estimates of customer attrition, technology obsolescence, and revenue growth projections. Based on the preliminary valuation, the acquired intangible assets are comprised of customer relationships of approximately $66.6 million, existing technology of approximately $33.1 million, and trade names of approximately $9.6 million.

Tangible assets acquired and assumed liabilities were recorded at fair value. The valuation of the assumed deferred revenue was based on our contractual commitment to provide post-contract customer support to Ipswitch customers and future contractual performance obligations under existing hosting arrangements. The fair value of this assumed liability was based on the estimated cost plus a reasonable margin to fulfill these service obligations. A significant portion of the deferred revenue is expected to be recognized in the 12 months following the acquisition.

We recorded the excess of the purchase price over the identified tangible and intangible assets as goodwill. We believe that the investment value of the future enhancement of our product and solution offerings created as a result of this acquisition has principally contributed to a purchase price that resulted in the recognition of $117.9 million of goodwill, which is deductible for tax purposes.

An election was made under Section 338(h)(10) of the Internal Revenue Code for Ipswitch to treat it as selling all of its assets on the acquisition date and then liquidating. As a result, the identifiable intangible assets and goodwill are deductible for tax purposes.

As previously noted, the Seller received a restricted stock award of approximately $2.0 million, subject to continued compliance with the three-year non-compete agreement. We concluded that the restricted stock award is not a compensation arrangement and we recorded the fair value of the award as an intangible asset separate from goodwill. We will recognize intangible asset amortization expense over the term of the agreement, which is 3 years. We recorded $0.4 million of amortization expense related to this restricted stock award for the fiscal year ended November 30, 2019 in operating expenses on our consolidated statement of operations.

Acquisition-related transaction costs (e.g., legal, due diligence, valuation, and other professional fees) and certain acquisition restructuring and related charges are not included as a component of consideration transferred but are required to be expensed as incurred. During the fiscal year ended November 30, 2019, we incurred approximately $1.7 million of acquisition-related costs, which are included in acquisition-related expenses on our consolidated statement of operations.

The operations of Ipswitch are included in our operating results as part of the OpenEdge segment from the date of acquisition. The amount of revenue of Ipswitch included in our consolidated statement of operations during the fiscal years ended November 30, 2019 was approximately $28.2 million. We determined that disclosing the amount of Ipswitch related earnings

~~included in the consolidated statements of operations is impracticable, as certain operations of Ipswitch were integrated into the operations of the Company from the date of acquisition.~~

~~Pro Forma Information~~

The following pro forma financial information presents the combined results of operations of Progress and Ipswitch as if the acquisition had occurred on December 1, 2017 after giving effect to certain pro forma adjustments. The pro forma adjustments reflected herein include only those adjustments that are directly attributable to the Ipswitch acquisition and factually supportable. These pro forma adjustments include (i) a decrease in revenue from Ipswitch due to the beginning balance of deferred revenue being adjusted to reflect the fair value of the acquired balance, (ii) a net increase in amortization expense to record amortization expense for the $111.3 million of acquired identifiable intangible assets and to eliminate historical amortization of Ipswitch intangible assets, (iii) an increase in interest expense to record interest for the period presented as a result of the new credit facility entered into by Progress in connection with the acquisition, and (iv) the income tax effect of the adjustments made at the statutory tax rate of the U.S. (approximately 24.5%). In addition, prior to the acquisition Ipswitch did not pay entity level corporate tax, with the exception of some states, because it was registered as an S-Corporation. Therefore, we applied the statutory tax rate of the U.S. (approximately 24.5%) to the income before tax of Ipswitch as if the acquisition had occurred on December 1, 2017.

The pro forma financial information does not reflect any adjustments for anticipated expense savings resulting from the acquisition and is not necessarily indicative of the operating results that would have actually occurred had the transaction been consummated on December 1, 2017. These results are prepared in accordance with ASC 606.

(In thousands, except per share data)
Pro Forma
Fiscal Year Ended November 30, 2019

Pro Forma
Fiscal Year Ended November 30, 2018
Revenue $ 442,286
$ 431,014
Net income $ 19,641
$ 20,599
Net income per basic share $ 0.44
$ 0.45
Net income per diluted share $ 0.43
$ 0.45

~~Kinvey Acquisition~~

On June 1, 2017, we acquired by merger 100% of the outstanding securities of Kinvey for an aggregate sum of $49.2 million, which included approximately $0.3 million held-back from the founder of Kinvey as an incentive to remain with the Company for at least two years following the acquisition. The $0.3 million held-back was recorded to expense over the service period, which ended prior to the expiration of the two years. Kinvey allows developers to set up, use, and operate a serverless cloud backend for any native, hybrid, web, or IoT app built using any development tools. The acquisition was accounted for as a business combination, and accordingly, the results of operations of Kinvey are included in our operating results as part of the OpenEdge business segment from the date of acquisition. We paid the purchase price in cash from available funds.

The total consideration, less the $0.3 million held-back discussed above, which is considered to be a compensation arrangement, was allocated to Kinvey's tangible assets, identifiable intangible assets and assumed liabilities based on their estimated fair values. The excess of the total consideration, less the amount held-back from the founder, over the tangible assets, identifiable intangible assets and assumed liabilities was recorded as goodwill. The allocation of the purchase price was completed in the fourth quarter of fiscal year 2017 upon the finalization of our valuation of identifiable intangible assets and deferred taxes.

~~The allocation of the purchase price is as follows (in thousands):~~

Total Life
Net working capital $ (963 )
Property, plant and equipment 26

Purchased technology 22,100
5 Years
Trade name 1,800
5 Years
Customer relationships 100
5 Years
Net deferred tax assets 1,465

Goodwill 24,351

Net assets acquired $ 48,879

The fair value of the intangible assets was estimated using the income approach in which the after-tax cash flows are discounted to present value. The cash flows are based on estimates used to price the acquisition, and the discount rates applied were benchmarked with reference to the implied rate of return from the transaction model as well as the weighted average cost of capital.

Deferred taxes include deferred tax liabilities resulting from the tax effects of fair value adjustments related to identifiable intangible assets, which are more than offset by the value of deferred tax assets acquired from Kinvey. Tangible assets acquired and assumed liabilities were recorded at fair value.

We recorded the excess of the purchase price over the identified tangible and intangible assets as goodwill. We believe that the investment value of the future enhancement of our product and solution offerings created as a result of this acquisition has principally contributed to a purchase price that resulted in the recognition of $24.4 million of goodwill, which is not deductible for tax purposes.

Acquisition-related transaction costs (e.g., legal, due diligence, valuation, and other professional fees) are not included as a component of consideration paid, but are required to be expensed as incurred. During the fiscal year ended November 30, 2019, we did 0t incur any acquisition-related transaction costs. During the fiscal years ended November 30, 2018 and 2017, we incurred approximately $0.3 million and $1.1 million, respectively, of acquisition-related costs, which are included in acquisition-related expenses in our consolidated statement of operations.

We have not disclosed the amount of revenues and earnings of Kinvey since acquisition, nor pro forma financial information, as those amounts are not significant to our consolidated financial statements.

~~DataRPM Acquisition~~

On March 1, 2017, we acquired by merger 100% of the outstanding securities of DataRPM for an aggregate sum of $30.0 million. Approximately $1.7 million of the purchase price was paid to DataRPM’s founders in the form of restricted stock units, subject to a two-year vesting schedule and continued employment. DataRPM is a developer of solutions within the cognitive predictive maintenance for the industrial IoT ("IIoT") market. The acquisition was accounted for as a business combination, and accordingly, the results of operations of DataRPM are included in our operating results as part of the OpenEdge business segment from the date of acquisition. We paid the purchase price in cash from available funds.

The total consideration, less the fair value of the granted restricted stock units discussed above, which are considered compensation arrangements, was allocated to DataRPM’s tangible assets, identifiable intangible assets and assumed liabilities based on their estimated fair values. The excess of the total consideration, less the fair value of the restricted stock units, over the tangible assets, identifiable intangible assets and assumed liabilities was recorded as goodwill. The allocation of the purchase price was completed in the fourth quarter of fiscal year 2017 upon the finalization of our valuation of identifiable intangible assets and deferred taxes.

~~The allocation of the purchase price is as follows (in thousands):~~

Total Life
Net working capital $ (174 )
Property, plant and equipment 68

Purchased technology 19,900
5 Years
Trade name 800
5 Years
Customer relationships 100
5 Years
Deferred taxes (5,006 )
Goodwill 12,583

Net assets acquired $ 28,271

Deferred taxes include deferred tax liabilities resulting from the tax effects of fair value adjustments related to identifiable intangible assets, partially offset by the fair value of deferred tax assets acquired from DataRPM. Tangible assets acquired and assumed liabilities were recorded at fair value.

We recorded the excess of the purchase price over the identified tangible and intangible assets as goodwill. We believe that the investment value of the future enhancement of our product and solution offerings created as a result of this acquisition has principally contributed to a purchase price that resulted in the recognition of $12.6 million of goodwill, which is not deductible for tax purposes.

As discussed above, approximately $1.7 million of the total consideration was paid to DataRPM’s founders in restricted stock units, subject to a vesting schedule and continued employment. We concluded that the restricted stock units are compensation arrangements and we are recognizing stock-based compensation expense in accordance with the vesting schedule over the service period of the awards, which is 2 years. During the fiscal years ended November 30, 2019, 2018 and 2017, we incurred stock-based compensation expense related to these restricted stock units of $0.1 million, $0.1 million and $0.4 million, respectively. The expense was lower in fiscal years 2019 and 2018 due to the forfeiture of the restricted stock units held by one of the founders as a result of his termination of employment. These amounts are included in operating expenses in our consolidated statement of operations.

Acquisition-related transaction costs (e.g., legal, due diligence, valuation, and other professional fees) are not included as a component of consideration transferred, but are required to be expensed as incurred. During the fiscal years ended November 30, 2019 and 2018, we did 0t incur any acquisition-related costs. During the fiscal year ended November 30, 2017, we incurred approximately $0.4 million of acquisition-related costs, which are included in acquisition-related expenses in our consolidated statement of operations.

We have not disclosed the amount of revenues and earnings of DataRPM since acquisition, nor pro forma financial information, as those amounts are not significant to our consolidated financial statements.

~~Note 8: Term Loan and Line of Credit~~

On April 30, 2019, we entered into an amended and restated credit agreement (the "Credit Agreement") with certain lenders (the "Lenders"), which provides for a $301.0 million secured term loan and a $100.0 million secured revolving credit facility. The revolving credit facility may be made available in U.S. Dollars and certain other currencies and may be increased by up to an additional $125.0 million if the existing or additional lenders are willing to make such increased commitments. The

~~revolving credit facility has sublimits for swing line loans up to $25.0 million and for the issuance of standby letters of credit in a face amount up to $25.0 million.~~

The Credit Agreement modified our prior credit facility by extending the maturity date to April 30, 2024 and extending the principal repayments of the term loan. We borrowed an additional $185.0 million under the term loan as part of this modification. The new term loan was used to partially fund our acquisition of Ipswitch (Note 7) and we expect to use the revolving credit facility for general corporate purposes, which may include acquisitions of other businesses, and may also use it for working capital.

The Credit Agreement replaces our previous credit agreement dated November 20, 2017, which was set to mature on November 20, 2022. Loans under the previous credit agreement could be prepaid before maturity in whole or in part at our option without penalty or premium. At the time we entered into the Credit Agreement, there were 0 revolving loans and $1.3 million letters of credit outstanding, which were incorporated into the new credit facility.

Interest rates for the term loan and revolving credit facility are based upon our leverage ratio and determined based on an index selected at our option. The rates range from 1.50% to 2.00% above the Eurocurrency rate for Eurocurrency-based borrowings or from 0.50% to 1.00% above the defined base rate for base rate borrowings. Additionally, we may borrow certain foreign currencies at rates set in the same respective range above the London interbank offered interest rates for those currencies. A quarterly commitment fee on the undrawn portion of the revolving credit facility is required and ranges from 0.25% to 0.35% per annum based on our leverage ratio. The average interest rate of the credit facility during the fiscal year ended November 30, 2019 was 3.90% and the interest rate as of November 30, 2019 was 3.38%.

The credit facility matures on April 30, 2024, when all amounts outstanding will be due and payable in full. The revolving credit facility does not require amortization of principal. The outstanding balance of the term loan as of November 30, 2019 was $297.2 million, with $11.3 million due in the next 12 months. The term loan requires repayment of principal at the end of each fiscal quarter, beginning with the fiscal quarter ended August 31, 2019. The principal repayment amounts are in accordance with the following schedule: (i) four payments of $1.9 million each, (ii) four payments of $3.8 million each, (iii) four payments of $5.6 million each, (iv) four payments of $7.5 million each, (v) three payments of $9.4 million each, and (vi) the last payment is of the remaining principal amount. Any amounts outstanding under the term loan thereafter would be due on the maturity date. The term loan may be prepaid before maturity in whole or in part at our option without penalty or premium. As of November 30, 2019, the carrying value of the term loan approximates the fair value, based on Level 2 inputs (observable market prices in less than active markets), as the interest rate is variable over the selected interest period and is similar to current rates at which we can borrow funds.

Costs incurred to obtain our long-term debt of $1.6 million, along with $1.2 million of unamortized debt issuance costs related to the previous credit agreement, are recorded as debt issuance costs as a direct deduction from the carrying value of the debt liability on our consolidated balance sheets as of November 30, 2019. These costs are being amortized over the term of the debt agreement using the effective interest rate method. Amortization expense related to the debt issuance costs of $0.5 million for the fiscal year ended November 30, 2019 and $0.4 million for the fiscal years ended November 30, 2018 and 2017 is recorded in interest expense on our consolidated statements of operations.

~~Revolving loans may be borrowed, repaid, and reborrowed until April 30, 2024,~~2015, at which time, all amounts outstanding must be repaid. Accrued interest on the loans is payable quarterly in arrears with respect to base rate loans and at the end of each interest rate period (or at each three-month interval in the case of loans with interest periods greater than three months) with respect to Eurocurrency rate loans. We may prepay the loans or terminate or reduce the commitments in whole or in part at any time, without premium or penalty, subject to certain conditions and reimbursement of certain costs in the case of Eurocurrency rate loans. As of November 30, 2019, there were 0 amounts outstanding under the revolving line and $1.8 million of letters of credit.

We are the sole borrower under the credit facility. Our obligations under the Credit Agreement are secured by substantially all of our assets and each of our material domestic subsidiaries, as well as 100% of the capital stock of our domestic subsidiaries and 65% of the capital stock of our first-tier foreign subsidiaries, in each case, subject to certain exceptions as described in the Credit Agreement. Future material domestic subsidiaries will be required to guaranty our obligations under the Credit Agreement, and to grant security interests in substantially all of their assets to secure such obligations. The Credit Agreement generally prohibits, with certain exceptions, any other liens on our assets, subject to certain exceptions as described in the Credit Agreement.

The Credit Agreement contains customary affirmative and negative covenants, including covenants that limit or restrict our ability to, among other things, grant liens, make investments, make acquisitions, incur indebtedness, merge or consolidate,

dispose of assets, pay dividends or make distributions, repurchase stock, change the nature of the business, enter into certain transactions with affiliates and enter into burdensome agreements, in each case subject to customary exceptions for a credit facility of this size and type. We are also required to maintain compliance with a consolidated fixed charge coverage ratio, a consolidated total leverage ratio and a consolidated senior secured leverage ratio. We are in compliance with these financial covenants as of November 30, 2019.

~~As of November 30, 2019, aggregate principal payments of long-term debt for the next five years are (in thousands):~~

2020 $ 11,287
2021 18,812
2022 26,338
2023 33,863
2024 206,938
Total $ 297,238

~~Note 9: Commitments and Contingencies~~

~~Leasing Arrangements~~

~~We lease certain facilities and equipment under non-cancelable operating lease arrangements. Future minimum rental payments under these leases are as follows at~~ ~~November 30, 2019~~ ~~(in thousands):~~

2020 $ 7,453
2021 5,711
2022 4,977
2023 5,017
2024 5,102
Thereafter 2,904
Total $ 31,164

Our operating lease arrangements are subject to customary renewal and base rental fee escalation clauses. Total rent expense, net of sublease income which is insignificant, under operating lease arrangements was approximately ~~$8.9 million~~, ~~$6.8 million~~ ~~and~~ ~~$6.9 million~~ ~~in fiscal years~~ ~~2019~~, ~~2018~~ ~~and~~ ~~2017, respectively.~~

~~Guarantees and Indemnification Obligations~~

We include standard intellectual property indemnification provisions in our licensing agreements in the ordinary course of business. Pursuant to our product license agreements, we will indemnify, hold harmless, and agree to reimburse the indemnified party for losses suffered or incurred by the indemnified party, generally business partners or customers, in connection with certain patent, copyright or other intellectual property infringement claims by third parties with respect to our products. Other agreements with our customers provide indemnification for claims relating to property damage or personal injury resulting from the performance of services by us or our subcontractors. Historically, our costs to defend lawsuits or settle claims relating to such indemnity agreements have been insignificant. Accordingly, the estimated fair value of these indemnification provisions is immaterial.

~~Legal Proceedings~~

We are subject to various legal proceedings and claims, either asserted or unasserted, which arise in the ordinary course of business. While the outcome of these claims cannot be predicted with certainty, management does not believe that the outcome of any of these other legal matters will have a material effect on our financial position, results of operations or cash flows.

~~Note 10: Shareholders’ Equity~~

~~Preferred Stock~~

Our Board of Directors is authorized to establish one or more series of preferred stock and to fix and determine the number and conditions of preferred shares, including dividend rates, redemption and/or conversion provisions, if any, preferences and voting rights. As of ~~November 30, 2019, there was~~ 0 ~~preferred stock issued or outstanding.~~

~~Common Stock~~

~~We have~~ ~~200,000,000~~ ~~shares of authorized common stock,~~ ~~$0.01~~ ~~par value per share, of which 45,036,441 were issued and outstanding at~~ ~~November 30, 2019~~.

~~There were 170,359 deferred stock units ("DSUs") outstanding at November 30, 2019. Each DSU represents~~ 1 share of our common stock and all DSU grants have been made to non-employee members of our Board of Directors. DSUs do not have voting rights and can only be converted into common stock when the recipient ceases to be a memberMr. Gupta became Chairman of the Board of Directors, or a ~~change~~position he held until October 2015. From July 2012 until June 2013, Mr. Gupta served as an advisor to various venture capital and private equity firms in ~~control~~several mergers and acquisitions opportunities. Mr. Gupta was previously President and Chief Executive Officer of FatWire Software from July 2007 until February 2012, prior to the acquisition of FatWire Software by Oracle Corporation. Prior roles included Chief Technology Officer at CA Technologies, with which Mr. Gupta held various senior positions.

Through his prior roles in the software industry as chief executive officer and in other leadership positions, Mr. Gupta has gained significant management and operating experience, extensive knowledge of the ~~Company occurs.~~software industry and critical technical, financial, strategic and marketing expertise. Also, in his role as our President and Chief Executive Officer, Mr. Gupta can provide unique insight into our markets, products, technology, challenges and opportunities.

Mr. Kane has been a director since November 2006. Mr. Kane is an adjunct professor of International Finance at the MIT Sloan Graduate Business School of Management. Mr. Kane is currently a Director and Strategic Advisor of One Laptop Per Child, a non-profit organization that provides computing and internet access for students in the developing world, for which he served as President and Chief Operating Officer from 2008 until 2009. Mr. Kane served as Executive Vice President and Chief Administrative Officer of Global BPO Services Corp., a special purpose acquisition corporation, from July 2007 until March 2008, and as Chief Financial Officer of Global BPO from August 2007 until March 2008. Prior to joining Global BPO, he served as Chief Financial Officer of RSA Security Inc., a provider of e-security solutions, from May 2006 until RSA was acquired by EMC Corporation in October 2006. From July 2003 until May 2006, he served as Chief Financial Officer of Aspen Technology, Inc. (NYSE: AZPN), a publicly traded provider of supply chain management software and professional services.

Mr. Kane is currently a director of Realpage Inc. (NASDAQ: RP), a publicly traded company providing on-demand software solutions for the rental housing industry. Mr. Kane was previously a director of Demandware, Inc. and Carbonite, Inc.

~~Common Stock Repurchases~~

~~In fiscal years 2019~~As our Audit Committee financial expert and ~~2018, we repurchased~~Chairman of the Audit Committee, Mr. Kane provides a high level of expertise and ~~retired 0.7 million shares~~leadership experience in the areas of ~~our common stock for $25.0 million~~finance, accounting, audit oversight and ~~2.9 million shares~~risk analysis derived from his experience as the chief financial officer of our common stock for $120.0 million, respectively, under this current authorization. In fiscal year 2017, we repurchased and retired 2.2 million shares of our common stock for $73.9 million. As of November 30, 2019, there was $75.0 million remaining under the current authorization. In January 2020,publicly-traded technology companies. Mr. Kane also offers substantial public company board experience to our Board of ~~Directors increased~~Directors. Mr. Kane also brings to the ~~total share repurchase authorization~~Board business acumen, substantial operational experience, and expertise in corporate strategy and development and mergers and acquisitions.

Ms. King has been a director since February 2018. Ms. King is currently Chief Executive Officer of Veracode, Inc., a leading provider of application security testing, a role she assumed in January 2019 following Veracode's acquisition by Thoma Bravo. Previously, from ~~$75.0 million~~July 2017 to ~~$250.0 million.~~January 2019, Ms. King served as Senior Vice President and General Manager of Veracode. From August 2015 until July 2017, Ms. King was the Chief Strategy Officer of Veracode. Prior to that time, from April 2012 until July 2015, Ms. King was Executive Vice President, Product Strategy and Corporate Development GM, Mobile at Veracode. Ms. King joined Veracode in November 2006 and also served as Veracode's Senior Vice President, Product Marketing and Vice President, Service Delivery.

-6-

~~Dividends~~From a variety of key roles at Veracode, Ms. King has gained significant management and operating experience, extensive knowledge of the software industry and critical strategic expertise. Ms. King also brings to the Board extensive experience in the areas of product marketing and product management as well as expertise in corporate strategy and development and mergers and acquisitions.

~~On September 27, 2016, our Board~~Mr. Krall has been a director since February 2008. Mr. Krall has served as a strategic advisor to Roku, Inc., a leading manufacturer of ~~Directors approved~~media players for streaming entertainment since January 2011. From February 2010 to December 2010, he served as President and Chief Operating Officer of Roku, where he was responsible for managing all functional areas of the ~~initiation~~company. Prior to that, Mr. Krall spent two years as President and Chief Executive Officer of QSecure, Inc., a ~~quarterly cash dividend~~privately held developer of ~~$0.125 per share~~secure credit cards based on micro-electro-mechanical-system technology. From 1995 to July 2007, he held a variety of ~~common stock to Progress stockholders. We began paying quarterly cash dividends~~positions of ~~$0.125 per share~~increasing responsibility and scope at Avid Technology, Inc. (NYSE: AVID), a publicly traded leading provider of common stock to Progress stockholders in December 2016 and increased the quarterly cash dividend to $0.14 per share in September 2017. In September 2018, the quarterly cash dividend was increased by 11% to $0.155 per share of common stock. On September 24, 2019, our Board of Directors approved an additional 6% increase to our quarterly cash dividend from $0.155 to $0.165 per share of common stock and declared a quarterly dividend of $0.165 per share of common stock. We have declared aggregate per share quarterly cash dividends totaling $0.630, $0.575 and $0.515digital media creation tools for the media and entertainment industry. His tenure at Avid included serving seven years ~~ended November 30, 2019, November 30, 2018~~as the company’s President and November 30, 2017, respectively. We have paid aggregate cash dividends totaling $27.8 million, $25.8 million, and $24.1 million and for the years ended November 30, 2019, November 30, 2018 and November 30, 2017, respectively.

~~Note 11: Stock-Based Compensation~~

Chief Executive Officer.

WeMr. Krall also currently have 1 stockholder-approved stock plan from which we can issue stock-based awards, which was approved by our stockholders in fiscal year 2008 ("2008 Plan"). The 2008 Plan replaced the 1992 Incentive and Nonqualified Stock Option Plan, the 1994 Stock Incentive Plan and the 1997 Stock Incentive Plan (collectively, the “Previous Plans”). The Previous Plans solely exist to satisfy outstanding options previously granted under those plans. The 2008 Plan permits the granting of stock awards to officers, members ofserves on the Board of Directors ~~employees~~forHarmonic Inc. (NASDAQ: HLIT), a leader in video delivery and consultants. Awards under the 2008 Plan may include nonqualified stock options, incentive stock options, grants of conditioned or restricted stock, unrestricted grants of stock, grants of stock contingent upon the attainment of performance goals, deferred stock units and stock appreciation rights. A total of ~~54,510,000~~ ~~shares are issuable under these plans, of which~~ ~~4,145,680~~ ~~shares were available for grant as of~~ ~~November 30, 2019~~.

We have adopted 2 stock plans for which the approval of stockholders was not required: the 2002 Nonqualified Stock Plan ("2002 Plan") and the 2004 Inducement Stock Plan ("2004 Plan"). The 2002 Plan permits the granting of stock awards to non-executive officer employees and consultants. Executive officers and members of the Board of Directors are not eligible for awards under the 2002 Plan. Awards under the 2002 Plan may include nonqualified stock options, grants of conditioned or restricted stock, unrestricted grants of stock, grants of stock contingent upon the attainment of performance goals and stock appreciation rights. A total of ~~9,750,000~~ ~~shares are issuable under the 2002 Plan, of which~~ ~~400,046~~ ~~shares were available for grant as of~~ ~~November 30, 2019~~.

The 2004 Plan is reserved for persons to whom we may issue securities as an inducement to become employed by us pursuant to the rules and regulations of the NASDAQ Stock Market. Awards under the 2004 Plan may include nonqualified stock

~~options, grants of conditioned or restricted stock, unrestricted grants of stock, grants of stock contingent upon the attainment of performance goals and stock appreciation rights. A total of~~ ~~1,500,000~~ ~~shares are issuable under the 2004 Plan, of which~~ ~~453,796~~ ~~shares were available for grant as of~~ ~~November 30, 2019~~.

~~Under all of our plans, the options granted generally begin to vest within one year of the grant.~~

~~A summary of stock option activity under all the plans is as follows:~~

Shares Weighted Average Weighted Average Remaining Contractual Term
Aggregate Intrinsic Value⁽¹⁾
(in thousands) Exercise Price (in years) (in thousands)
Options outstanding, December 1, 2018 1,107
$ 37.82

Granted 655
35.10

Exercised (119 ) 30.47

Canceled (220 ) 37.31

Options outstanding, November 30, 2019 1,423
$ 37.26
5.14 $ 9,782
Exercisable, November 30, 2019 497
$ 36.70
4.49 $ 3,849
Vested or expected to vest, November 30, 2019 1,423
$ 37.26
5.14 $ 9,782


⁽¹⁾	~~The aggregate intrinsic value was calculated based~~cable access virtualization. Mr. Krall previously served on ~~the difference between the closing price of our stock on November 30, 2019 of $41.92 and the exercise prices for all options outstanding.~~

~~A summary of restricted stock units activity is as follows (in thousands, except per share data):~~

Number of Shares Weighted Average Fair Value
Restricted stock units outstanding, December 1, 2018 912
$ 35.46
Granted 540
36.09
Issued (365 ) 32.93
Canceled (258 ) 31.79
Restricted stock units outstanding, November 30, 2019 829
$ 38.16

~~Each restricted stock unit represents~~ 1 ~~share of common stock. The restricted stock units generally vest semi-annually over a~~ ~~three~~-year period. Performance-based restricted stock units are subject to multi-year performance criteria aligned with our business plan and are earned only to the extent the performance criteria are achieved.

The fair value of outright stock awards, restricted stock units and DSUs is equal to the closing price of our common stock on the date of grant, less the present value of expected dividends, as the recipient is not entitled to dividends during the requisite service period.

During fiscal year 2017, we granted performance-based restricted stock units that include a three-year market condition under a Long-Term Incentive Plan (“LTIP”) where the performance measurement period is three years. Vesting of the LTIP awards is based on our level of attainment of specified total stockholder return ("TSR") targets relative to the percentage appreciation of a specified index of companies for the respective three-year periods and is also subject to the continued employment of the grantees. In order to estimate the fair value of such awards, we used a Monte Carlo Simulation valuation model.

During the first quarter of fiscal years 2018 and 2019, we granted performance-based restricted stock units that include 2 performance metrics under the LTIP where the performance measurement period is three years. Vesting of the 2018 and 2019 LTIP awards is as follows: (i) 50% is based on the three-year market condition as described above (TSR), and (ii) 50% is based on achievement of a three-year cumulative performance condition (operating income). In order to estimate the fair value of such awards, we used a Monte Carlo Simulation valuation model for the market condition portion of the award and used the

~~closing price of our common stock on the date of grant, less the present value of expected dividends, for the portion related to the performance condition.~~

The 1991 Employee Stock Purchase Plan ("ESPP") permits eligible employees to purchase up to an aggregate of 9,450,000 shares of our common stock through accumulated payroll deductions. The ESPP has a 27-month offering period comprised of 9 three-month purchase periods. The purchase price of the stock is equal to 85% of the lesser of the market value of such shares at the beginning of a 27-month offering period or the end of each three-month segment within such offering period. If the market price at any of the nine purchase periods is less than the market price on the first date of the 27-month offering period, subsequent to the purchase, the offering period is canceled and the employee is entered into a new 27-month offering period with the then current market price as the new base price. We issued 189,000 shares, 225,000 shares and 220,000 shares with weighted average purchase prices of $29.23, $24.27 and $22.27 per share, respectively, in fiscal years 2019, 2018 and 2017, respectively. At November 30, 2019, approximately 401,000 shares were available and reserved for issuance under the ESPP.

~~We estimated the fair value of stock options and ESPP awards granted in fiscal years~~ ~~2019~~, ~~2018~~ ~~and~~ ~~2017~~ ~~on the measurement dates using the Black-Scholes option valuation model, and LTIP awards using the Monte Carlo Simulation valuation model, with the following weighted average assumptions:~~

Fiscal Year Ended
November 30, 2019 November 30, 2018 November 30, 2017
Stock options:
Expected volatility 25.0 % 22.8 % 25.0 %
Risk-free interest rate 2.5 % 2.3 % 1.9 %
Expected life (in years) 4.8
4.8
4.8
Expected dividend yield 1.8 % 1.1 % 1.7 %
Employee stock purchase plan:
Expected volatility 30.6 % 23.8 % 22.9 %
Risk-free interest rate 2.3 % 2.3 % 1.2 %
Expected life (in years) 1.6
1.7
1.5
Expected dividend yield 1.7 % 1.5 % 1.6 %
Long-term incentive plan:
Expected volatility 32.2 % 27.4 % 27.5 %
Risk-free interest rate 2.5 % 2.1 % 1.4 %
Expected life (in years) 2.8
2.9
2.7
Expected dividend yield 1.7 % 1.7 % 1.8 %

For each stock option award, the expected life in years is based on historical exercise patterns and post-vesting termination behavior. Expected volatility is based on historical volatility of our stock, and the risk-free interest rate is based on the U.S. Treasury yield curve for the period that is commensurate with the expected life at the time of grant. The expected annual dividend yield is based on the weighted-average of the dividend yield assumptions used for options granted during the applicable period.

For each ESPP award, the expected life in years is based on the period of time between the beginning of the offering period and the date of purchase, plus an additional holding period of three months. Expected volatility is based on historical volatility of our stock, and the risk-free interest rate is based on the U.S. Treasury yield curve in effect at each purchase period. The expected annual dividend yield is based on the weighted-average of the dividend yield assumptions used for options granted during the applicable period.

~~Based on the above assumptions, the weighted average estimated fair value of stock options granted in fiscal years 2019, 2018, and~~ ~~2017~~ was $7.38, $10.30 and $5.95 per share, respectively. We amortize the estimated fair value of stock options to expense over the vesting period using the straight-line method. The weighted average estimated fair value for shares issued under our ESPP in fiscal years ~~2019~~, ~~2018~~ ~~and~~ ~~2017~~ ~~was $11.07,~~ ~~$10.24~~ ~~and~~ ~~$8.32~~ ~~per share, respectively. We amortize the estimated fair value of shares issued under the ESPP to expense over the vesting period using a graded vesting model.~~

~~Total unrecognized stock-based compensation expense, net of expected forfeitures, related to unvested stock options and unvested restricted stock awards amounted to $28.7 million at~~ ~~November 30, 2019. These costs are expected to be recognized over a weighted average period of 2 years.~~

~~The following additional activity occurred under our plans (in thousands):~~

Fiscal Year Ended
November 30, 2019 November 30, 2018 November 30, 2017
Total intrinsic value of stock options on date exercised $ 1,388
$ 3,692
$ 1,622
Total fair value of deferred stock units on date vested 1,853
1,690
57
Total fair value of restricted stock units on date vested 14,720
14,741
20,032

~~The following table provides the classification of stock-based compensation as reflected in our consolidated statements of operations (in thousands):~~

Fiscal Year Ended
November 30, 2019 November 30, 2018 November 30, 2017
Cost of maintenance and services $ 1,134
$ 616
$ 1,016
Sales and marketing 4,155
2,959
2,214
Product development 7,205
8,242
4,576
General and administrative 10,817
8,752
6,347
Total stock-based compensation $ 23,311
$ 20,569
$ 14,153
Income tax benefit included in the provision for income taxes $ 4,661
$ 4,345
$ 4,057

~~Separation Arrangements~~

During fiscal year 2017, we entered into separation agreements with 3 executives, which entitled them to accelerated vesting of certain stock-based awards. Due to the separation and accelerated vesting, we recognized additional stock-based compensation expense of $1.5 million, of which $0.8 million was recorded as sales and marketing expense and $0.7 million was recorded as general and administrative expense, in the consolidated statement of operations.

~~Note 12: Retirement Plan~~

We maintain a retirement plan covering all U.S. employees under Section 401(k) of the Internal Revenue Code. Company contributions to the plan are at the discretion of the Board of Directors and totaled approximately ~~$2.3 million~~, ~~$3.1 million~~ ~~and~~ ~~$2.1 million~~ ~~for fiscal years~~ ~~2019~~, ~~2018~~ ~~and~~ ~~2017, respectively.~~

~~Note 13: Restructuring~~

~~The following table provides a summary of activity for all of the restructuring actions, which are detailed further below (in thousands):~~

Excess Facilities and Other Costs Employee Severance and Related Benefits Total
Balance, November 30, 2016 $ 107
$ 1,443
$ 1,550
Costs incurred 2,655
19,555
22,210
Cash disbursements (1,456 ) (17,778 ) (19,234 )
Asset impairment (762 ) —
(762 )
Translation adjustments and other 26
336
362
Balance, November 30, 2017 $ 570
$ 3,556
$ 4,126
Costs incurred 1,011
1,240
2,251
Cash disbursements (1,309 ) (4,802 ) (6,111 )
Translation adjustments and other 35
10
45
Balance, November 30, 2018 $ 307
$ 4
$ 311
Costs incurred 740
5,591
6,331
Cash disbursements (760 ) (3,647 ) (4,407 )
Translation adjustments and other (91 ) 59
(32 )
Balance, November 30, 2019 $ 196
$ 2,007
$ 2,203

~~2019 Restructurings~~

During the fourth quarter of fiscal year 2019, we announced the reduction of our current and ongoing spending level within our cognitive application product lines, which consist primarily of our DataRPM and Kinvey products. This restructuring resulted in a reduction in positions primarily within the product development function. In connection with this restructuring action, during the fourth quarter of fiscal year 2019, we evaluated the ongoing value of the intangible assets primarily associated with the technologies and trade names obtained in the acquisitions of DataRPM and Kinvey. As a result, we wrote down these assets to fair value, which resulted in a $22.7 million asset impairment charge (Note 4).

~~Restructuring expenses are related to employee costs, including severance, health benefits and outplacement services (but excluding stock-based compensation).~~

For the fiscal year ended November 30, 2019, we incurred expenses of $2.5 million relating to this restructuring. The expenses are recorded as restructuring expenses in the consolidated statements of operations.

~~A summary of activity for this restructuring action is as follows (in thousands):~~

Excess
Facilities and
Other Costs Employee Severance and Related Benefits Total
Balance, December 1, 2018 $ —
$ —
$ —
Costs incurred —
2,494
2,494
Cash disbursements —
(1,035 ) (1,035 )
Translation adjustments and other —
1
1
Balance, November 30, 2019 $ —
$ 1,460
$ 1,460

Cash disbursements for expenses incurred to date under this restructuring are expected to be made through fiscal year 2020. Accordingly, the balance of the restructuring reserve of $1.5 million is included in other accrued liabilities on the consolidated balance sheet at November 30, 2019. We do not expect to incur additional material costs with respect to this restructuring.

During the second quarter of fiscal year 2019, we restructured our operations in connection with the acquisition of Ipswitch (Note 7). This restructuring resulted in a reduction in redundant positions, primarily within administrative functions of Ipswitch. We expect to incur additional expenses as part of this action related to employee costs and facility closures as we consolidate offices in various locations during fiscal year 2020, but we do not expect these costs to be material.

For the fiscal year ended November 30, 2019, we incurred expenses of $3.1 million relating to this restructuring. The expenses are recorded as restructuring expenses in the consolidated statements of operations.

~~A summary of activity for this restructuring action is as follows (in thousands):~~

Excess
Facilities and
Other Costs Employee Severance and Related Benefits Total
Balance, December 1, 2018 $ —
$ —
$ —
Costs incurred 5
3,093
3,098
Cash disbursements —
(2,604 ) (2,604 )
Translation adjustments and other —
58
58
Balance, November 30, 2019 $ 5
$ 547
$ 552

Cash disbursements for expenses incurred to date under this restructuring are expected to be made through fiscal year 2020. Accordingly, the balance of the restructuring reserve of $0.6 million is included in other accrued liabilities on the consolidated balance sheet at November 30, 2019.

~~2017 Restructuring~~

During the first quarter of fiscal year 2017, we undertook certain operational restructuring initiatives intended to significantly reduce annual costs. As part of this action, management committed to a new strategic plan highlighted by a new product strategy and a streamlined operating approach. To execute these operational restructuring initiatives, we reduced our global workforce by over 20%. These workforce reductions occurred in substantially all functional units and across all geographies in which we operate. During the fourth quarter of fiscal year 2017, we incurred additional costs with respect to this restructuring, including reduction in redundant positions primarily within the product development and sales functions. We also consolidated offices in various locations during fiscal years 2017 and 2018. We expect to incur additional expenses related to facility closures as part of this restructuring action through fiscal year 2020, but we do not expect these additional costs to be material.

Restructuring expenses are related to employee costs, including severance, health benefits and outplacement services (but excluding stock-based compensation), facilities costs, which include fees to terminate lease agreements and costs for unused space, net of sublease assumptions, and other costs, which include asset impairment charges.

As part of this fiscal year 2017 restructuring, for the fiscal years ended November 30, 2019 and 2018, we incurred expenses of $0.7 million and $2.3 million, respectively, which are recorded as restructuring expenses in the consolidated statements of operations.

~~A summary of activity for this restructuring action is as follows (in thousands):~~

Excess Facilities and Other Costs Employee Severance and Related Benefits Total
Balance, December 1, 2016 $ —
$ —
$ —
Costs incurred 2,570
19,555
22,125
Cash disbursements (1,294 ) (16,335 ) (17,629 )
Asset impairment (762 ) —
(762 )
Translation adjustments and other 26
336
362
Balance, November 30, 2017 $ 540
$ 3,556
$ 4,096
Costs incurred 1,011
1,240
2,251
Cash disbursements (1,279 ) (4,802 ) (6,081 )
Translation adjustments and other 35
10
45
Balance, November 30, 2018 $ 307
$ 4
$ 311
Costs incurred 735
4
739
Cash disbursements (760 ) (8 ) (768 )
Asset impairment (89 ) —
(89 )
Translation adjustments and other (2 ) —
(2 )
Balance, November 30, 2019 $ 191
$ —
$ 191

Cash disbursements for expenses incurred to date under this restructuring are expected to be made through fiscal year 2020. Accordingly, the balance of the restructuring reserve of $0.2 million is included in other accrued liabilities on the consolidated balance sheet at November 30, 2019.

~~Note 14: Income Taxes~~

~~The components of income before income taxes are as follows (in thousands):~~

Fiscal Year Ended
November 30, 2019 November 30, 2018 November 30, 2017

As Adjusted⁽¹⁾

As Adjusted⁽¹⁾
U.S. $ (11,778 ) $ 59,440
$ 65,191
Foreign 40,273
1,356
(12,728 )
Total $ 28,495
$ 60,796
$ 52,463
⁽¹⁾The Company adopted the accounting standard related to revenue recognition ("ASC 606") effective December 1, 2018 using the full retrospective method. See Note 1. Nature of Business and Summary of Significant Accounting Policies for further information.

~~The provision for income taxes is comprised of the following (in thousands):~~

Fiscal Year Ended
November 30, 2019 November 30, 2018 November 30, 2017
Current:
Federal $ 9,294
$ 8,979
$ 23,739
State 1,862
1,387
2,461
Foreign 5,808
3,088
1,496
Total current 16,964
13,454
27,696
Deferred, as adjusted⁽¹⁾:

Federal (12,191 ) (863 ) (2,740 )
State (2,399 ) (51 ) (292 )
Foreign (279 ) (1,414 ) (1,222 )
Total deferred (14,869 ) (2,328 ) (4,254 )
Total $ 2,095
$ 11,126
$ 23,442
⁽¹⁾The Company adopted the accounting standard related to revenue recognition ("ASC 606") effective December 1, 2018 using the full retrospective method. See Note 1. Nature of Business and Summary of Significant Accounting Policies for further information.

~~A reconciliation of the income taxes incurred at the U.S. Federal statutory rate compared to the effective tax rate is as follows (in thousands):~~

Fiscal Year Ended
November 30, 2019 November 30, 2018 November 30, 2017

As Adjusted⁽¹⁾

As Adjusted⁽¹⁾
Tax at U.S. Federal statutory rate $ 5,984
$ 13,513
$ 18,362
Foreign rate differences (2,619 ) 1,281
4,793
Effects of foreign operations included in U.S. Federal provision 451
550
(186 )
State income taxes, net (918 ) 1,180
1,349
Research credits (1,086 ) (302 ) (251 )
Domestic production activities deduction (248 ) (1,283 ) (2,670 )
Tax-exempt interest (27 ) (66 ) (101 )
Nondeductible stock-based compensation 1,043
502
808
Meals and entertainment 198
192
276
Compensation subject to 162(m) 422
227
208
Uncertain tax positions and tax settlements (720 ) (1,626 ) 429
Remeasurement of net deferred tax liabilities due to the Act —
(1,660 ) —
Net excess tax benefit or detriment from stock-based compensation plans (103 ) (861 ) —
Global intangible low tax inclusion 2,100
—
—
Foreign derived intangible deduction (2,300 ) —
—
Other (82 ) (521 ) 425
Total $ 2,095
$ 11,126
$ 23,442
⁽¹⁾The Company adopted the accounting standard related to revenue recognition ("ASC 606") effective December 1, 2018 using the full retrospective method. See Note 1. Nature of Business and Summary of Significant Accounting Policies for further information.

The effective income tax rate is based on the income for the year, the composition of the income in different countries, changes related to valuation allowances and adjustments, if any, for the potential tax consequences or benefits of audits or other tax contingencies. Our aggregate income tax rate in foreign jurisdictions is lower than our effective income tax rate in the United States. The majority of our income before provision for income taxes from foreign operations has been earned by our subsidiary in Bulgaria that is taxed at a 10% tax rate.

Our United States income before provision for income taxes was at a deficit for fiscal year 2019 largely due to increased expense for amortization of acquired intangibles and due to an impairment expense of intangibles and long-lived assets.

During the first quarter of fiscal year 2018, the Tax Cuts and Jobs Act (the "Act") was enacted in the United States. The Act reduced the U.S. federal corporate tax rate from 35% to 21% effective January 1, 2018, moved to a territorial tax system and eliminated the domestic production activities deduction. The Act also provided for a one-time deemed repatriation transition tax on the post-1986 undistributed foreign subsidiary earnings and profits through December 31, 2017. However, the Company concluded that it is not subject to the one-time transition tax due to the Company's foreign subsidiaries being in a net accumulated deficit position.

Other international provisions of the Act became effective in fiscal year 2019 for the Company. The global intangible low-taxed income ("GILTI") provisions require the Company to include in its U.S. income tax base foreign subsidiary earnings in excess of an allowable return of the foreign subsidiary's tangible assets.

~~During fiscal year 2018, the Company recognized a $1.7 million income tax benefit due to the re-measurement of its net U.S. deferred tax liabilities due to the Act.~~

~~The components of deferred tax assets and liabilities are as follows (in thousands):~~

November 30, 2019 November 30, 2018

As Adjusted⁽¹⁾
Deferred tax assets:
Accounts receivable $ 174
$ 134
Accrued compensation 3,283
1,863
Accrued liabilities and other 2,690
2,106
Deferred revenue 3,995
—
Stock-based compensation 4,342
3,166
Depreciation and amortization 15,341
—
Tax credit and loss carryforwards 21,867
24,338
Gross deferred tax assets 51,692
31,607
Valuation allowance (8,864 ) (8,790 )
Total deferred tax assets 42,828
22,817
Deferred tax liabilities:
Goodwill (18,879 ) (17,966 )
Deferred revenue (4,541 ) (1,610 )
Depreciation and amortization —
(7,151 )
Prepaid expenses (810 ) (923 )
Total deferred tax liabilities (24,230 ) (27,650 )
Total $ 18,598
$ (4,833 )
⁽¹⁾The Company adopted the accounting standard related to revenue recognition ("ASC 606") effective December 1, 2018 using the full retrospective method. See Note 1. Nature of Business and Summary of Significant Accounting Policies for further information.

The valuation allowance primarily applies to net operating loss carryforwards and unutilized tax credits in jurisdictions or under conditions where realization is not more likely than not. The $0.1 million increase in the valuation allowance during fiscal year 2019 primarily relates to acquired foreign net operating losses which have a valuation allowance recorded against them. The $7.3 million increase in the valuation allowance during fiscal year 2018 primarily relates to losses in a foreign subsidiary that are more likely than not going to expire prior to utilization. The $1.7 million decrease in the valuation allowance during fiscal year 2017 primarily relates to a foreign subsidiary that utilized net operating loss carryforwards in fiscal year 2017 that had a valuation allowance recorded against them.

At November 30, 2019, we have federal and foreign net operating loss carryforwards of $133.7 million expiring on various dates through 2034. In addition, we have state net operating loss carryforwards of $0.9 million expiring on various dates through 2020. At November 30, 2019, we have state tax credit carryforwards of approximately $3.2 million expiring on various

dates through 2034 and $2.3 million that may be carried forward indefinitely. In addition, we have federal tax credit carryforwards of approximately $0.9 million expiring on various dates through 2036.

It is our intention to indefinitely reinvest the earnings of our non-U.S. subsidiaries. We have not provided for U.S. income taxes on the undistributed earnings of non-U.S. subsidiaries, which totaled $72.3 million as of November 30, 2019, as these earnings have been indefinitely reinvested. It is not practicable to determine the amount of the unrecognized deferred tax liability if the undistributed earnings were to be repatriated due to the complexity of the income tax laws and regulations and the effects of the Tax Reform Act. These earnings could be subject to non-U.S. withholding taxes and other federal, state and/or foreign taxes if they were remitted to the U.S.

As of November 30, 2019, the total amount of unrecognized tax benefits was $5.0 million, of which $2.9 million was recorded in other noncurrent liabilities on the consolidated balance sheet and $2.1 million of deferred tax assets, principally related to U.S and foreign net operating loss carry-forwards and state research and development tax credits, have not been recorded.

~~A reconciliation of the balance of our unrecognized tax benefits is as follows (in thousands):~~

Fiscal Year Ended
November 30, 2019 November 30, 2018 November 30, 2017
Balance, beginning of year $ 5,787
$ 7,520
$ 7,046
Tax positions related to current year —
—
785
Tax positions related to a prior period 110
(15 ) (120 )
Settlements with tax authorities (181 ) (39 ) (155 )
Lapses due to expiration of the statute of limitations (723 ) (1,679 ) (36 )
Balance, end of year $ 4,993
$ 5,787
$ 7,520

~~If recognized, all amounts of unrecognized tax benefits would affect the effective tax rate.~~

We recognize interest and penalties related to uncertain tax positions as a component of our provision for income taxes. In fiscal year 2019 a net benefit of $0.1 million was recorded to the provision for income taxes related to estimated interest and penalties of $0.1 million offset by a reduction of $0.2 million related to statute expirations. In fiscal year 2018 a net benefit of $0.1 million was recorded to the provision for income taxes related to estimated interest and penalties of $0.2 million offset by a reduction of $0.3 million related to statute expirations. In fiscal year 2017 estimated interest and penalties of $0.2 million were recorded to the provision for income taxes. We have accrued $0.4 million and $0.4 million of estimated interest and penalties at November 30, 2019 and 2018, respectively. We do not expect any significant changes to the amount of unrecognized tax benefits in the next twelve months.

Our Federal income tax returns have been examined or are closed by statute for all years prior to fiscal year 2016. State income tax authorities in certain jurisdictions are examining state income tax returns and the Company does not expect the results of these examinations to be material to our consolidated balance sheets, cash flows or statements of income. Our state income tax returns have been examined or are closed by statute for all years prior to fiscal year 2013, and we are no longer subject to audit for those periods.

Tax authorities for certain non-U.S. jurisdictions are also examining tax returns and the Company does not expect the results of these examinations to be material to our consolidated balance sheets, cash flows or statements of income. With some exceptions, we are generally no longer subject to tax examinations in non-U.S. jurisdictions for years prior to fiscal year 2014.

~~Note 15: Earnings Per Share~~

We compute basic earnings per share using the weighted average number of common shares outstanding. We compute diluted earnings per share using the weighted average number of common shares outstanding plus the effect of outstanding dilutive stock options, restricted stock units and deferred stock units, using the treasury stock method. The following table sets forth the calculation of basic and diluted earnings per share from continuing operations (in thousands, expect per share data):

Fiscal Year Ended
November 30,
2019 November 30,
2018 November 30,
2017

As Adjusted⁽¹⁾

As Adjusted⁽¹⁾
Net income $ 26,400
$ 49,670
$ 29,021
Weighted average shares outstanding 44,791
45,561
48,129
Dilutive impact from common stock equivalents 549
574
387
Diluted weighted average shares outstanding 45,340
46,135
48,516
Basic earnings per share $ 0.59
$ 1.09
$ 0.60
Diluted earnings per share $ 0.58
$ 1.08
$ 0.60
⁽¹⁾The Company adopted the accounting standard related to revenue recognition ("ASC 606") effective December 1, 2018 using the full retrospective method. See Note 1. Nature of Business and Summary of Significant Accounting Policies for further information.

~~We excluded stock awards representing approximately 932,000 shares,~~ ~~602,000~~ ~~shares, and~~ ~~494,000~~ ~~shares of common stock from the calculation of diluted earnings per share in the fiscal years ended~~ ~~November 30, 2019~~, ~~2018~~ ~~and~~ ~~2017, respectively, because these awards were anti-dilutive.~~

~~Note 16: Business Segments and International Operations~~

Operating segments are components of an enterprise that engage in business activities for which discrete financial information is available and regularly reviewed by the chief operating decision maker in deciding how to allocate resources and assess performance. Our chief operating decision maker is our Chief Executive Officer.

The changes made to our organization during fiscal years 2019 and 2018, as discussed in Note 13, did not change our determination of the three reportable segments as our organizational structure maintains the focus of the 3 business segments.

~~We do not manage our assets or capital expenditures by segment or assign other income (expense) and income taxes to segments. We manage and report such items on a consolidated company basis.~~

~~The following table provides revenue and contribution margin from our reportable segments and reconciles to the consolidated income from continuing operations before income taxes:~~

Fiscal Year Ended
(In thousands) November 30, 2019 November 30, 2018 November 30, 2017

As Adjusted⁽¹⁾

As Adjusted⁽¹⁾
Segment revenue:
OpenEdge $ 296,929
$ 277,806
$ 279,823
Data Connectivity and Integration 39,903
23,129
29,434
Application Development and Deployment 76,466
78,046
79,897
Total revenue 413,298
378,981
389,154
Segment costs of revenue and operating expenses:
OpenEdge 85,209
67,820
75,791
Data Connectivity and Integration 7,973
7,634
10,270
Application Development and Deployment 23,993
27,087
27,116
Total costs of revenue and operating expenses 117,175
102,541
113,177
Segment contribution margin:
OpenEdge 211,720
209,986
204,032
Data Connectivity and Integration 31,930
15,495
19,164
Application Development and Deployment 52,473
50,959
52,781
Total contribution margin 296,123
276,440
275,977
Other unallocated expenses⁽²⁾
256,039
208,626
218,487
Income from operations 40,084
67,814
57,490
Other expense, net (11,589 ) (7,018 ) (5,027 )
Income before income taxes $ 28,495
$ 60,796
$ 52,463
⁽¹⁾The Company adopted the accounting standard related to revenue recognition ("ASC 606") effective December 1, 2018 using the full retrospective method. See Note 1. Nature of Business and Summary of Significant Accounting Policies for further information.
⁽²⁾The following expenses are not allocated to our segments as we manage and report our business in these functional areas on a consolidated basis only: certain product development and corporate sales and marketing expenses, customer support, administration, amortization and impairment of acquired intangibles, impairment of long-lived assets, loss on assets held for sale, stock-based compensation, fees related to shareholder activist, restructuring, and acquisition-related expenses.

Our revenues are derived from licensing our products, and from related services, which consist of maintenance, hosting services, and consulting and education. Information relating to revenue from external customers by revenue type is as follows (in thousands):

Fiscal Year Ended
November 30,
2019 November 30,
2018 November 30,
2017

As Adjusted⁽¹⁾

As Adjusted⁽¹⁾
Performance obligations transferred at a point in time:
Software licenses $ 122,552
$ 99,800
$ 113,643
Performance obligations transferred over time:
Maintenance 259,006
249,171
243,508
Services 31,740
30,010
32,003
Total revenue $ 413,298
$ 378,981
$ 389,154
⁽¹⁾The Company adopted the accounting standard related to revenue recognition ("ASC 606") effective December 1, 2018 using the full retrospective method. See Note 1. Nature of Business and Summary of Significant Accounting Policies for further information.

In the following table, revenue attributed to the United States includes sales to customers in the U.S. and sales to certain multinational organizations. Revenue from Canada, EMEA, Latin America and the Asia Pacific region includes sales to customers in each region plus sales from the U.S. to distributors in these regions. Information relating to revenue from external customers from different geographical areas is as follows (in thousands):

Fiscal Year Ended
November 30,
2019 November 30,
2018 November 30,
2017

As Adjusted⁽¹⁾

As Adjusted⁽¹⁾
United States $ 213,252
$ 187,627
$ 214,232
Canada 20,659
16,630
21,583
EMEA 137,301
135,055
117,509
Latin America 19,665
18,046
16,002
Asia Pacific 22,421
21,623
19,828
Total revenue $ 413,298
$ 378,981
$ 389,154
⁽¹⁾The Company adopted the accounting standard related to revenue recognition ("ASC 606") effective December 1, 2018 using the full retrospective method. See Note 1. Nature of Business and Summary of Significant Accounting Policies for further information.

~~No single customer, partner, or country outside of the U.S. has accounted for more than 10% of our consolidated revenue in any year presented. Long-lived assets totaled~~ ~~$25.7 million~~, ~~$25.8 million~~ ~~and~~ ~~$39.5 million~~ ~~in the U.S. and~~ ~~$4.1 million~~, ~~$4.9 million~~ ~~and~~ ~~$2.8 million~~ ~~outside of the U.S. at the end of fiscal years~~ ~~2019~~, ~~2018~~ ~~and~~ ~~2017, respectively. No individual country outside of the U.S. accounted for more than 10% of our consolidated long-lived assets.~~

~~Note 17: Selected Quarterly Financial Data (unaudited)~~

(in thousands, except per share data)
First
Quarter

Second
Quarter

Third
Quarter

Fourth
Quarter
Fiscal year 2019:
Revenue $ 89,549
$ 99,995
$ 106,716
$ 117,038
Gross profit 73,510
82,384
85,891
96,272
Income (loss) from operations 15,409
14,741
15,960
(6,026 )
Net income (loss) 9,402
8,181
13,557
(4,740 )
Basic earnings (loss) per share 0.21
0.18
0.30
(0.11 )
Diluted earnings (loss) per share 0.21
0.18
0.30
(0.11 )
Fiscal year 2018⁽¹⁾:

Revenue $ 95,410
$ 92,864
$ 92,603
$ 98,104
Gross profit 78,507
76,221
75,907
81,373
Income from operations 19,131
18,550
19,103
11,030
Net income 13,732
12,904
14,390
8,644
Basic earnings per share 0.30
0.28
0.32
0.19
Diluted earnings per share 0.29
0.28
0.32
0.19
⁽¹⁾The Company adopted the accounting standard related to revenue recognition ("ASC 606") effective December 1, 2018 using the full retrospective method. See Note 1. Nature of Business and Summary of Significant Accounting Policies for further information.

~~Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure~~

~~None.~~

~~Item~~ ~~9A. Controls and Procedures~~

~~(a) Evaluation of disclosure controls and procedures~~

Our management maintains disclosure controls and procedures as defined in Rule 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934, as amended (the “Exchange Act”) that are designed to provide reasonable assurance that information required to be disclosed in our reports filed or submitted under the Exchange Act is processed, recorded, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer (our principal executive officer and principal financial officer, respectively), as appropriate, to allow for timely decisions regarding required disclosure.

Our management, including the Chief Executive Officer and Chief Financial Officer, carried out an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective to ensure that the information required to be disclosed in the reports filed or submitted by us under the Securities Exchange Act of 1934 was recorded, processed, summarized and reported within the requisite time periods and that such information was accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow for timely decisions regarding required disclosure.

~~(b) Management’s Annual Report on Internal Control Over Financial Reporting~~

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). Because of its inherent limitations, internal control over financial reporting may not prevent or detect all misstatements. Our internal control system was designed to provide reasonable assurance to our management and board of directors regarding the preparation and fair presentation of published financial statements.

~~Our management assessed the effectiveness of our internal control over financial reporting as of November 30, 2019. Our assessment was based on the framework in the updated~~ ~~Internal Control - Integrated Framework (2013)~~ issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our assessment we believe that as of November 30, 2019, our internal control over financial reporting is effective based on those criteria.

Deloitte & Touche LLP, our independent registered public accounting firm, which audited our consolidated financial statements, has issued an attestation report on our internal control over financial reporting, which is included in this Item 9A below.

~~(c) Changes in internal control over financial reporting~~

Our management, including our Chief Executive Officer and Chief Financial Officer, evaluated our “internal control over financial reporting” as defined in Exchange Act Rule 13a-15(f) to determine whether any changes in our internal control over financial reporting occurred during the fiscal quarter ended November 30, 2019 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Based on that evaluation, there were no changes in our internal control over financial reporting during the fiscal quarter ended November 30, 2019 that have materially affected, or are reasonably likely to materially affect our internal control over financial reporting.

~~(d) Report of independent registered public accounting firm~~

~~REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM~~

~~To the shareholders and~~ the Board of Directors of ~~Progress~~Quantum Corp. (NYSE: QTM), a publicly traded global expert in data protection and big data management.

Mr. Krall has significant leadership, management and operational experience through his service in a broad range of executive positions within the software and technology industries. From working in companies ranging from small startups to public companies with thousands of employees serving worldwide marketplaces, Mr. Krall brings experience in the areas of new product development, integration of complex software and hardware solutions, strategy formation, and general management.

Ms. Tucci has been a director since February 2018. Ms. Tucci is currently Chief Operating Officer of Uplight, Inc., a provider of end-to-end technology solutions dedicated to serving the energy ecosystem, a position she has held since January 2020. Since December 2019, she has also served as an advisor to TPG Celegene Aggregation GP, Inc. in connection with its investment in CollabNet/Version One. Previously, Ms. Tucci was Chief Executive Officer of Apto, Inc., from August 2017 to September 2019. Prior to that time, Ms. Tucci was General Manager, Agile Management Business Unit of CA, Inc. from September 2015 until July 2017. Prior to that, Ms. Tucci was Chief Revenue Officer, Office of the CEO of Rally Software ~~Corporation~~Development Corp. from December 2014 until August 2015, when Rally was acquired by CA. Ms. Tucci joined Rally in December 2013 as Chief Marketing Officer. From January 2011 until August 2013, Ms. Tucci was Chief Strategy Officer of Symantec Corporation.

~~Opinion~~Through her experiences as chief executive officer, chief revenue officer and chief strategy officer of enterprise software companies, Ms. Tucci has developed extensive leadership, operational and strategic capabilities at both public and private software companies. Ms. Tucci’s experiences at technology companies specializing in software-as-a-service bring important insights to our Board as we continue to execute on ~~Internal Control over Financial Reporting~~

our business and product strategies.

~~We have audited~~Ms. Vitale has been a director since October 2019. Ms. Vitale owns and operates Vivian Vitale Consulting, LLC, a consulting practice assisting organizations in the ~~internal control over financial reporting~~development of ~~Progress Software~~human resources and people management practices, a role she has held since April 2018. From April 2012 until March 2018, she held multiple positions of increasing responsibility at Veracode, Inc., a provider of application security testing. Her tenure at Veracode included serving as Executive Vice President of Human Resources, continuing in her role through Veracode, Inc.’s acquisition by CA Technologies in March 2017. Prior to 2012, Ms. Vitale served as Senior Vice President at Care.com, Inc., an online provider of support services to families. Previously, Ms. Vitale has also held senior leadership roles at RSA Security, Unica Corporation and ~~subsidiaries (the "Company") as of November 30, 2019, based on criteria established in~~ ~~Internal Control - Integrated Framework (2013)~~ issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of November 30, 2019, based on criteria established in ~~Internal Control - Integrated Framework (2013)~~ ~~issued by COSO.~~IBM.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended November 30, 2019, of the Company and our report dated January 27, 2020, expressed an unqualified opinion on those financial statements and included an explanatory paragraph regarding the Company’s adoption of Accounting Standards Codification Update No. 2014-09, ~~Revenue from Contracts with Customers(ASC 606)~~.

~~Basis for Opinion~~

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. ~~Our responsibility is to express an opinion~~Ms. Vitale currently serves on the ~~Company’s internal control over financial reporting based on~~Board of Directors of NetScout Systems, Inc. (NASDAQ: NTCT), a publicly held network performance management company.

-7-

Due to her integral role in multiple acquisitions and integrations, Ms. Vitale brings skillsets crucial to our ~~audit. We are~~M&A strategy, including expertise creating high-impact programs and systems aimed at scaling for growth, acquisition integration and talent management. Mr. Vitale also bring extensive experience as a ~~public accounting firm registered with the PCAOB~~human resource consultant and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.executive for technology companies.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

~~Definition and Limitations of Internal Control over Financial Reporting~~

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

~~/s/ Deloitte & Touche LLP~~

~~Boston, Massachusetts~~

~~January 27, 2020~~

~~Item 9B. Other Information~~

~~Not applicable.~~

~~PART III~~

~~Item 10. Directors, Executive Officers and Corporate Governance~~

~~Executive and Other Key Officers of the Registrant~~


Executive and Other Key Officers of the Registrant

The following table sets forth certain information regarding our executive and other key officers.

Name

Age

Position

John Ainsworth

5556

Senior Vice President, Products - Core

Stephen Faberman

5051

Chief Legal Officer

Anthony Folger

Chief Financial Officer

Yogesh Gupta

5960

President and Chief Executive Officer

~~Paul Jalbert~~

~~Chief Financial Officer~~

Loren Jarrett

4546

Senior Vice President, General Manager - Developer Tools Business

Katie Kulikoski

4344

Chief People Officer

Tony Murphy

4950

Chief Information Officer and Chief Information Security Officer

Jennifer Ortiz

4344

Vice President Corporate Marketing

Gary Quinn

5960

Senior Vice President, Core Field Organization

Jeremy Segal

Senior Vice President, Corporate Development

Sundar Subramanian

4243

Senior Vice President, General Manager - ~~Incubation~~Chef Products

Mr. Ainsworth became Senior Vice President, Products-Core in January 2017. Mr. Ainsworth is responsible for the product management, product marketing, technical support and engineering functions for Progress OpenEdge, Progress Corticon, Progress DataDirect Connect, Progress DataDirect Hybrid Data Pipeline, Sitefinity, MOVEit, WhatsUp Gold and ~~WhatsUp Gold.~~Kinvey. Prior to joining our company, Mr. Ainsworth was Senior Vice President, Engineering Services at CA Technologies, Inc., a position he assumed in April 2016. Prior to that time, Mr. Ainsworth held various senior positions within CA Technologies, Inc., which he joined through acquisition in 1994.

Mr. Faberman became Chief Legal Officer in December 2015. As Chief Legal Officer, Mr. Faberman is responsible for our legal and compliance, risk management, license compliance, ~~facilities~~product security compliance and ~~corporate development~~facilities functions. Prior to becoming Chief Legal Officer, Mr. Faberman was Senior Vice President, General Counsel. Mr. Faberman became General Counsel in December 2012 and a Senior Vice President in January 2014. Prior to that time, from October 2012 to December 2012, Mr. Faberman was Vice President, Acting General Counsel, and from January 2012 to October 2012, Mr. Faberman was Vice President, Deputy General Counsel. Prior roles included Senior Vice President, Corporate Counsel at Heritage Property Investment Trust, Inc. from October 2003 until October 2006, and Partner, Bingham McCutcheon LLP until October 2003.

Mr. Folger became Chief Financial Officer in January 2020. As CFO, Mr. Folger is responsible for our finance and accounting, financial planning, treasury, tax and investor relations functions. Prior to joining our company, Mr. Folger was Chief Financial Officer and Treasurer of Carbonite, Inc., from January 2013 until Carbonite was acquired by OpenText Corporation in late December 2019. Prior to that time, from June 2006 to December 2012, Mr. Folger held senior leadership positions at Acronis AG, including Chief Financial Officer from October 2008 to December 2012.

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Mr. Gupta became President and Chief Executive Officer in October 2016. Prior to that time, Mr. Gupta served as an advisor to various venture capital and private equity firms from October 2015 until September 2016. Prior to that time, Mr. Gupta was President and Chief Executive Officer at Kaseya, Inc., from June 2013 until July 2015, at which time, Mr. Gupta became Chairman of the Board of Directors, a position he held until October 2015. From July 2012 until June 2013, Mr. Gupta served as an advisor to various venture capital and private equity firms in several mergers and acquisitions opportunities. Mr. Gupta was previously President and Chief Executive Officer of FatWire Software from July 2007 until February 2012, prior to the acquisition of FatWire Software by Oracle Corporation. Prior roles included Chief Technology Officer at CA Technologies, with ~~whom~~which Mr. Gupta held various senior positions.

Mr. Jalbert became Chief Financial Officer in March 2017. As CFO, Mr. Jalbert is responsible for our finance and accounting, financial planning, treasury, tax and investor relations functions. Prior to becoming CFO, Mr. Jalbert was Vice President, Chief Accounting Officer, a position he assumed upon joining the Company in August 2012. Prior roles included Corporate Controller at publicly traded companies Keane and Genuity, as well as other senior financial positions at Verizon (formerly GTE). On January 16, 2020, we announced that Mr. Jalbert will retire as CFO on January 31, 2020, and will be replaced as CFO by Anthony Folger.

Ms. Jarrett became Senior Vice President and General Manager, Developer Tools Business in June 2019. As General Manager, Ms. Jarrett is responsible for the sales, product management, product marketing, field marketing, technical support and engineering for our DevTools product line. Prior to this role, Ms. Jarrett was our Chief Marketing Officer, a position she held from January 2017 to June 2019. Prior to that time, Ms. Jarrett was Chief Marketing Officer at Acquia, from 2015 until December 2016. Previously, Ms. Jarrett was Chief Marketing Officer at Kaseya, Inc. from 2013 until 2015, and Vice President, Corporate Charge Card and Loyalty Products at American Express, in 2013. Prior to that time, Ms. Jarrett was Vice President, Product Management and Strategy at Oracle Corporation from 2011 until 2012, and Senior Vice President of Marketing and Product Management at FatWire from 2007 until its acquisition by Oracle in 2011.

Ms. Kulikoski became Chief People Officer in November 2019. As Chief People Officer, Ms. Kulikoski is responsible for all aspects of the company's global human resources ~~function,~~functions, including culture development, talent acquisition, retention, change management and process effectiveness. Prior to joining our Company, from May 2014 to September 2019, Ms. Kulikoski held a variety of positions of increasing responsibility and scope at Brightcove, Inc. Her tenure at Brightcove included serving as Chief People Officer from November 2018 to September 2019. Prior to May 2014, Ms. Kulikoski held leadership positions at Optaros, CIDC and ConnectEdu.

Mr. Murphy became Chief Information Officer in June 2017 and Chief Information Security Officer in September 2018. As our Chief Information Officer and Chief Information Security Officer, Mr. Murphy is responsible for the development and implementation of our overall technology strategy for all internal systems and business processes and for monitoring and preventing security related incidents. Prior to joining our company, Mr. Murphy was Vice President of Global IT at Stratus Technologies, from January 2013 until May 2017. Previously, Mr. Murphy was Director of IT and Business Systems at Acme Packet, Inc. from May 2011 until its acquisition by Oracle Corporation in 2013.

Ms. Ortiz became Vice President of Corporate Marketing in October 2019. In this role, Ms. Ortiz is responsible for the development and execution of our corporate marketing programs. Prior to becoming Vice President of Corporate Marketing, Ms. Ortiz held a variety of positions of increasing responsibility and scope at Progress during her fifteen-year tenure with the company.

Mr. Quinn became Senior Vice President, Core Field Organization in August 2017. Mr. Quinn is responsible for global field operations for Progress OpenEdge, Progress Corticon, Progress DataDirect Connect, Progress DataDirect Hybrid Data Pipeline, Sitefinity, MOVEit and WhatsUp Gold. Prior to joining our company, Mr. Quinn was President and Chief Executive Officer of FalconStor Software, Inc. Mr. Quinn joined FalconStor Software in April 2012 as vice president of sales and marketing for North America, and he was named executive vice president and chief operating officer (COO) in April 2013, interim CEO in June 2013 and CEO in July 2013. Prior roles included Executive Vice President of Global Partners and International Sales at CA Technologies until 2006 and Commissioner of Information Technology (CIO) at Suffolk County Department of Information Technology (DoIT) from 2008 until 2012.

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Mr. Segal became Senior Vice President, Corporate Development in May 2020. In this role, Mr. Segal is responsible for leading our inorganic growth strategy to deliver sustained shareholder value through accretive acquisitions. Prior to joining our company, Mr. Segal was Global Head of Corporate Development at LogMeIn, a position he assumed in September 2019. Prior to that time, Mr. Segal was Vice President, Corporate Development at LogMeIn beginning in March 2016. Prior to that time, Mr. Segal was Vice President, Corporate Development at Akamai Technologies, which he joined in April 2000.

Key Employees

Mr. Subramanian became Senior Vice President and General Manager, ~~Incubation~~Chef Products in ~~August 2019.~~October 2020 upon completion of our acquisition of Chef. As General Manager, Mr. Subramanian is responsible for the sales, product management, product marketing, field marketing, technical support and engineering for the Chef product lines. Prior to that time, upon joining our company in August 2019, Mr. Subramanian was responsible for driving all facets of the company’s ~~early stage~~early-stage products including ~~sales, demand generation, engineering, product management, product marketing, customer success, support and developer relations for~~ the Kinvey, Kinvey Health Cloud, DataRPM, NativeChat and NativeScript product lines. Prior to joining Progress, Mr. Subramanian was an Executive Director at athenahealth, Inc., from August 2016 to July 2019, and Vice President, Products at Citrus Payment Solutions Pvt. Ltd., from September 2015 to August 2016. Previously, he served as Vice President, SaaS at Kaseya, Inc., from January 2014 to August 2015.

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~~Code~~


Audit Committee

The Audit Committee of ~~Conduct~~our Board of Directors during fiscal 2020 consisted of Dr. Gawlick, Mr. Kane and Ms. King, with Mr. Kane serving as Chair. The Audit Committee met eight times during fiscal 2020.

Our Board of Directors has determined that each member of the Audit Committee meets the independence requirements promulgated by Nasdaq and the SEC, including Rule 10A-3(b)(1) under the Exchange Act. In addition, our Board of Directors has determined that each member of the Audit Committee is financially literate, and that Mr. Kane qualifies as an “audit committee financial expert” under the rules of the SEC.

The Audit Committee operates under a written charter adopted by our Board of Directors, a copy of which can be found on our website at www.progress.com under the heading “Corporate Governance” located on the “Investor Relations” page.

The Audit Committee assists our Board of Directors in fulfilling its oversight responsibilities for accounting and financial reporting compliance. The Audit Committee meets with the independent registered public accounting firm with and without our management present.

For fiscal 2020, among other functions, the Audit Committee:

•appointed, retained and oversaw the work performed by our independent registered public accounting firm

•reviewed the independent registered public accounting firm’s fees for services performed

•reviewed with the independent registered public accounting firm, the Company’s internal audit and financial management, and the integrity of the Company’s internal and external financial reporting processes and the adequacy and effectiveness of the Company’s internal controls over financial reporting

•reviewed with management various matters related to our internal controls and legal, compliance and regulatory matters

•reviewed with management and the independent registered public accounting firm the annual audited financial statements and the quarterly financial statements, prior to the filing of reports containing those financial statements with the SEC

•reviewed with management policies with respect to our risk assessment and risk management, including appropriate guidelines and policies to govern the process, as well as the steps management has taken to monitor and control those risks.


Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires our directors, executive officers, and holders of more than 10% of our common stock to file with the SEC initial reports of ownership and reports of changes in ownership of our common stock. These reporting persons are required by regulations of the SEC to furnish us with copies of all such filings. Based solely on a review of the copies of such forms that we have received, and on written representations from certain reporting persons, we believe that, with respect to the fiscal year ended November 30, 2020, our directors, officers, and 10% stockholders complied with all applicable Section 16(a) filing requirements.

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Code of Conduct and Business Ethics

We have adopted a Code of Conduct and Business Ethics that applies to all employees and directors. A copy of the Code of Conduct and Business Ethics is publicly available on our website at www.progress.com. If we make any substantive amendments to the Code of Conduct and Business Ethics or grant any waiver, including any implicit waiver, from the Code of Conduct and Business Ethics to our executive officers or directors, we will disclose the nature of such amendment or waiver in a Current Report on Form 8-K.

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ITEM 11. EXECUTIVE COMPENSATION

COMPENSATION DISCUSSION AND ANALYSIS


Introduction

This “Compensation Discussion and Analysis” section describes the elements of our compensation programs for our executive officers. This section also provides an overview of our executive compensation philosophy and analyzes how and why the Compensation Committee of our Board of Directors arrives at specific compensation decisions and policies.

We describe below our compensation philosophy, policies, and practices relating to the fiscal year ended November 30, 2020 with respect to the following “named executive officers” (“NEOs”), whose compensation is set forth in the “Summary Compensation Table” and other compensation tables contained in this Amendment No. 1 to Annual Report on Form 10-K/A:

•Yogesh Gupta, our President and Chief Executive Officer;

•Anthony Folger, our Chief Financial Officer, who joined our Company on January 31, 2020;

•Paul Jalbert, our former Chief Financial Officer, who remained at the Company until April 2, 2020 to assist his successor, Mr. Folger (as discussed below);

•John Ainsworth, our Senior Vice President, Products – Core;

•Loren Jarrett, our Senior Vice President and General Manager, Developer Tools Business; and

•Gary Quinn, our Senior Vice President, Core Field Organization.

On January 31, 2020, Mr. Jalbert retired as Chief Financial Officer and Mr. Folger was appointed to succeed Mr. Jalbert as CFO. Because Mr. Jalbert meets the criteria of a named executive officer for fiscal 2020, the terms of Mr. Jalbert's compensation are discussed in this “Compensation Discussion and Analysis” section.

We present our Compensation Discussion and Analysis in the following sections:


1. Executive Summary. In this section, we discuss our strategy, our fiscal 2020 corporate performance and certain governance aspects of our executive compensation program.			p. 14

2.Executive Compensation Program. In this section, we describe our executive compensation philosophy and process and the material elements of our executive compensation program.			p. 23

3.2020 Executive Compensation Decisions. In this section, we provide an overview of our Compensation Committee’s executive compensation decisions for fiscal 2020 and certain actions taken before or after fiscal 2020, when doing so enhances the understanding of our executive compensation program.			p. 29

4. Other Executive Compensation Matters. In this section, we describe our other compensation policies and review the accounting and tax treatment of compensation.			p. 47

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Executive Summary

Business Overview

We provide the best products to develop, deploy and manage high-impact business applications. Our comprehensive product solutions are designed to make technology teams more productive and we have a deep commitment to the developer community, both open source and commercial alike. With Progress, organizations can accelerate the creation and delivery of strategic business applications, automate the process by which apps are configured, deployed, and scaled, and make critical data and content more accessible and secure, leading to competitive differentiation and business success.

Our Strategy

Our strategy is centered around the following key tenets:

Trusted Provider of the Best Products to Develop, Deploy and Manage High-Impact Business Applications. A key element of our strategy is centered on providing the platform and tools enterprises need to build modern, strategic business applications. We offer these products and tools to both new customers and partners as well as our existing partner and customer ecosystems. This strategy builds on our inherent DNA and our vast experience in application development that we've acquired over the past 40 years.

Focus on Customer and Partner Retention to Drive Recurring Revenue and Profitability. Our organizational philosophy and operating principles focus primarily on customer and partner retention and success, and a streamlined operating approach in order to efficiently drive more predictable and stable recurring revenue.

Total Growth Strategy Driven by Accretive M&A.We are pursuing a total growth strategy driven by accretive acquisitions ofbusinesses within the software infrastructure space, with products that appeal to both IT organizations and individual developers. These acquisitions must meet strict financial and other criteria, which should enable us to drive significant stockholder returns by providing scale and increased cash flows.

Holistic Capital Allocation Approach. We have adopted and are executing a stockholder friendly capital allocation policy that utilizes dividends and share repurchases to return capital to stockholders. Pursuant to our capital allocation strategy, we target to return approximately 25% of our annual cash flows from operations to stockholders in the form of dividends. We also intend to repurchase our shares in sufficient quantities to offset dilution from our equity plans.

COVID-19 Impact

Our fiscal 2020, which began on December 1, 2019 and ended on November 30, 2020, was significantly impacted by the COVID-19 pandemic. Our financial results in the first quarter of fiscal 2020 positioned us well against the goals contained in our fiscal 2020 budget and operating plan. However, the outbreak of COVID-19 in March 2020 resulted in a global slowdown of economic activity including worldwide travel restrictions, prohibitions of non-essential work activities, disruption and shutdown of businesses and greater uncertainty in global financial markets.

In response to the COVID-19 pandemic, we implemented significant changes that we determined were in the best interest of our employees and the communities in which we operate. First and foremost, we prioritized the health and well-being of our employees. We immediately transitioned our employees to work-from-home, while implementing strict travel restrictions. We also took a series of steps to provide employees with additional assistance and benefits to support them and their families during the pandemic while working from home.

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Early in our second quarter of fiscal 2020, as large parts of the global economy came to a near standstill due to lockdowns and shutdowns of non-essential businesses in the United States and globally, we assessed our business and how it could be impacted by the pandemic. We considered that—

•Global economic conditions could impact our ability to acquire new customers and expand existing customer installations;

•Economic conditions could impact the timing of certain maintenance contract renewals and customer collections;

•Our products power mission-critical applications across a variety of industries;

•The cost, effort and time required to replace our solutions would be prohibitive in most cases;

•More than 80% of our revenue is recurring in nature;

•Our retention rates have consistently been well over 90%; and

•Our technical support and professional services could be delivered remotely without disruption.

As a result of these considerations, in late March, we revised our fiscal 2020 operating plan to reduce our revenue and free cash flow expectations for the balance of fiscal 2020 to reflect these potential headwinds. We similarly reduced our operating expenses to ensure that we maintained our profitability and operating margin despite the reduced revenue and free cash flow expectations. The changes to our revised operating plan were reviewed with our Board and reflected in our financial guidance to stockholders for the remainder of fiscal 2020. The impact of these adjustments on our annual cash bonus plan are described in the “Cash Incentive Compensation” section below.

Fiscal 2020 Performance

As outlined below, we had strong financial and operating performance in fiscal 2020 despite the adverse impacts of COVID-19. We also remained solidly on course with the execution of our strategic plan. Our acquisition of Chef Software, a global leader in the growing DevOps and DevSecOps markets, in October 2020, advanced our total growth strategy of doubling our size in five years.

Highlights of our fiscal 2020 operational and financial results include:

•At or above top end of revenue guidance on both a GAAP and non-GAAP basis for fiscal 2020;

•Exceeded top end of earnings per share guidance on both a GAAP and non-GAAP basis for fiscal 2020;

•Completed integration of Ipswitch, Inc., our fiscal 2019 acquisition, with revenue and synergies above our financial expectations;

•200 bps operating margin expansion in fiscal 2020;

•Key product releases in our core product lines, including DCI, Sitefinity, MOVEit and WhatsUp Gold;

•Achieved 80% recurring revenue;

•90%+ renewal rates in fiscal 2020 for OpenEdge, our flagship product;

•Achieved record cash flows of nearly $145 million in cash from operations generated in fiscal 2020; and

•Over $50 million of capital returned to stockholders in fiscal 2020, including more than $27 million in dividends, with dividend increase for third consecutive year.

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The table below summarizes our 2020 financial results as compared to fiscal 2019:


(In millions, except percentages and per share amounts)		Fiscal 2020 Actual	Fiscal 2019 Actual	Change
GAAP
	Revenue	$442.1	$413.3	7%
	Income from operations	$107.7	$40.1	169%
	Operating Margin	24%	10%	1400 bps
	Diluted earnings per share	$1.76	$0.58	203%
	Cash from operations	$144.8	$128.5	13%
Non-GAAP
	Revenue	$456.2	$432.0	6%
	Income from operations	$182.8	$162.3	13%
	Operating Margin	40%	38%	200 bps
	Diluted earnings per share	$3.09	$2.69	15%
	Adjusted free cash flow	$142.5	$128.9	11%

A reconciliation between the GAAP results and non-GAAP measures is located in Annex A at the end of this Amendment No. 1 to Annual Report on Form 10-K/A.

While we underachieved our original goals as set forth at the beginning of the fiscal year due to the COVID-19 pandemic, our fiscal 2020 results reflected the durability of our business, our strong execution and our relentless commitment to ensuring customer success by delivering high quality product offerings and support. Our fiscal 2020 financial and strategic highlights and their impact on executive compensation are summarized below.

GAAP Results vs. Non-GAAP Measures

As disclosed in our press releases regarding annual and quarterly earnings and other communications, we provide financial information using methods in addition to those prescribed by generally accepted accounting principles in the United States (“GAAP”), such as non-GAAP revenue, non-GAAP operating income, non-GAAP earnings per share and adjusted free cash flow.

We believe these non-GAAP financial measures enhance the reader’s overall understanding of our current financial performance and our prospects for the future by providing more transparency for certain financial measures and providing a level of disclosure that helps investors understand how we plan and measure our business. We believe that providing these non-GAAP measures affords investors a view of our operating results that may be more easily compared to our peer companies and enables investors to consider our operating results on both a GAAP and non-GAAP basis during and following the integration period of our acquisitions. Presenting the GAAP measures on their own may not be indicative of our core operating results. Furthermore, management believes that the presentation of non-GAAP measures when shown in conjunction with the corresponding GAAP measures provides useful information to management and investors regarding present and future business trends relating to our financial condition and results of operations.

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Non-GAAP revenue, non-GAAP income from operations and operating margin, non-GAAP net income, and non-GAAP diluted earnings per share exclude the effect of purchase accounting on the fair value of acquired deferred revenue, amortization of acquired intangible assets, impairment of acquired intangible assets, stock-based compensation expense, restructuring charges, acquisition-related expenses, certain identified non-operating gains and losses, and the related tax effects of the preceding items. Adjusted free cash flow is equal to cash flows from operating activities less purchases of property and equipment and capitalized software development costs, plus restructuring payments.

This non-GAAP information is not in accordance with, or an alternative to, GAAP information and should be considered in conjunction with our GAAP results as the items excluded from the non-GAAP information often have a material impact on our financial results. We provide a reconciliation of non-GAAP adjustments to our GAAP financial results in our earnings releases and we make this information available on our website at www.progress.com within the “Investor Relations” section.

2020 Compensation Highlights

The Compensation Committee’s philosophy is to tie executive pay to company performance, thereby creating alignment with our stockholders and driving the creation of sustainable long-term stockholder value. Despite challenges described above in response to the COVID-19 pandemic, our fiscal year 2020 compensation programs continued to reflect this philosophy, and compensation earned reflected our business achievements.

Our fiscal 2020 budget and operating plan reflected our expectations for limited revenue growth from our core products beyond the inclusion of Ipswitch for the entire fiscal year, and prioritized enhancing customer retention. The overarching priority of our fiscal 2020 plan was that we operate our business as efficiently as possible in order to strengthen Progress for the benefit of our stockholders. In addition, our fiscal 2020 plan reflected our focus on growing our business through acquisitions.

As was the case in fiscal 2019, the Compensation Committee utilized a combination of short and long-term compensation programs to advance our strategy.

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FISCAL 2020 COMPENSATION STRUCTURE

Our executives’ target compensation for fiscal 2020 consisted of the components described below:

*Reflects average

Our fiscal 2020 compensation structure at the start of fiscal 2020 as shown in the table above was identical to our fiscal 2019 compensation structure. The Compensation Committee reviewed our fiscal 2020 compensation structure in November 2019 and January 2020 in consultation with Pay Governance, our external compensation consultant. Consistent with prior years, our annual incentive bonus plan was designed to achieve financial goals related to our business plan for fiscal 2020 and in line with our financial guidance to stockholders.

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For fiscal 2020, payouts under our Corporate Bonus Plan were made at 94% of target, based on the Company's performance. The construct, underlying metrics and resulting performance and payout outcome under the Corporate Bonus Plan are described further in the section below entitled “Cash Incentive Compensation”. The three-year performance period for performance-based stock units ("PSUs") awarded under our 2018 Long-Term Incentive Plan ("LTIP") ended on November 30, 2020. Based on our relative total shareholder return ("TSR") during that period, we failed to meet the threshold level of performance required for the TSR metric, but we did meet the threshold level of performance for the cumulative total operating income metric. As a result, a portion of the awarded PSUs were earned, as described further in the section entitled "2020 Executive Compensation Decisions – Equity Compensation – LTIP PSUs" below.

Alignment of CEO Realizable Pay Value and Performance

The Compensation Committee reviews realizable pay value analyses for the executive officers to inform design and award levels for long-term incentive awards. We believe our overall executive compensation program has been effective at driving the achievement of our target financial and strategic results, appropriately aligning executive pay and corporate performance and enabling us to attract and retain top executives within our industry. When results do not meet our expectations, our named executive officers receive compensation that is below our target levels and may be below market in comparison to our peer group. The table below shows the target and realizable pay for our CEO, Mr. Gupta, for fiscal years 2018 through 2020. The realizable pay values shown below are as of our 2020 fiscal year-end, November 30, 2020. Realizable pay calculations show the potential value of pay as of a specific date; however, the actual pay realized will vary due to performance, vesting provisions and changes in stock price.


	Total Target Compensation ($)(1)	Total Realizable Compensation ($)(2)	Realizable Pay as a Percentage of Target Pay
2018	4,800,000	2,887,779	60%
2019	4,800,000	4,045,663	84%
2020	5,000,000	2,097,629	42%
Average 2018-2020	4,866,667	3,010,357	62%

_____________

(1)Total Target Compensation is defined as the sum of (a) annual base salary, (b) target bonus, (c) the value of stock options awarded, equal to the number of options granted multiplied by the Black-Scholes value of such options on the grant date (d) the value of restricted stock units ("RSUs") awarded, equal to the number of RSUs granted multiplied by the closing price of our stock on the grant date and (e) the value of PSUs awarded under our LTIP, equal to the number of PSUs granted assuming 100% performance multiplied by the closing price of our stock on the grant date.

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(2)Total Realizable Compensation is defined as the sum of (a) annual base salary, (b) actual corporate bonus plan award paid, (c) the “in-the-money” value of stock options as of November 30, 2020 (the last trading day of our fiscal year 2020), (d) the value of RSUs awarded, equal to the number of RSUs granted multiplied by the closing price of our stock on November 30, 2020, which was $40.10 and (e) the value of PSUs awarded, determined by measuring the performance thus far in the performance period and determining the resulting level of assumed payout as of the most recent fiscal year end. With respect to the 2018 LTIP PSUs, the amounts in this column reflect that the threshold level of performance was not met and therefore no awarded PSUs were earned, based on Progress's total shareholder return over the three-year performance period ending November 30, 2020, but that in total 75% of the PSUs were earned, based on Progress’s cumulative operating income over the three-year performance period ending November 30, 2020 which finished at 151%. With respect to each of the 2019 and 2020 LTIP PSUs, we have assumed achievement of both the total shareholder return and the operating income metrics based on company performance thus far in the performance period and determined the resulting level of payout as of November 30, 2020. As a result of our financial performance in fiscal years 2018, 2019 and 2020, Mr. Gupta earned 62%, 105% and 94% of his annual bonus, respectively.

In January 2020, the Committee evaluated Mr. Gupta's fiscal 2020 target annual equity compensation against our compensation peer group. Based on this review, the Committee recommended to the independent directors of the Board of Directors an increase of $200,000 to Mr. Gupta’s annual equity award for fiscal 2020. The independent directors of the Board approved this recommendation and, accordingly, for fiscal 2020, the value of Mr. Gupta’s annual equity award was increased by $200,000 to $3,850,000, with 50% of the award in the form of LTIP PSUs, 30% in the form of time-based RSUs and 20% in the form of stock options. For 2018, 2019 and 2020, the amount and mix of Mr. Gupta’s cash compensation remained unchanged as his cash compensation was in line with market data.

Response to 2020 Say-on-Pay Vote and the Evolution of our Executive Compensation Programs

We value the input of our stockholders on our compensation programs. We hold an advisory vote on executive compensation on an annual basis. We also regularly seek feedback from our stockholders to better understand their opinions on governance issues, including compensation. The Compensation Committee carefully considers stockholder feedback and the outcome of each vote when reviewing our executive compensation programs each year.

At our 2020 annual stockholders meeting, approximately 96% of the votes cast approved, on an advisory basis, our executive compensation for fiscal year 2019. As shown in the table below, for each of the past five years, we received at least 96% support with respect to the advisory vote on executive compensation.

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Say-on-Pay Votes (2016-2020)

Recent Executive Compensation Developments

Over the past several years we have made significant changes to our executives’ compensation in response to prior say-on-pay votes and feedback from stockholders, as well as to align with executive compensation best practices. Those changes included:

(1)Adopting a long-term incentive compensation plan tied to three-year relative TSR and three-year cumulative non-GAAP operating income (which is subject to a 35% annual operating margin threshold). These metrics are different from those used under our Corporate Bonus Plan;

(2)Eliminating performance-based equity tied to one-year performance periods;

(3)Revising the allocation of long-term equity grants to 50% performance share units, 30% restricted stock units and 20% stock options;

(4)Reducing the cap on the maximum payout that can occur under our Corporate Bonus Plan to 150% of target (from 200%);

(5)Adding the requirement under our Corporate Bonus Plan that executive officers will not be eligible for any portion of their target bonus at achievement levels below our public guidance; and

(6)Adopting a "clawback" policy and an anti-hedging policy.

The Compensation Committee will continue to consider the outcome of our say-on-pay votes and our stockholders' views when making future compensation decisions for our executives.

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Compensation Governance


What We Do:			What We Don’t Do:
ü 70% of annual equity award is performance-based			X No perquisites
ü Grant performance-based equity awards with performance measures that span three years			X No guaranteed salary increases or non-performance-based bonuses
ü Utilize different measures for performance equity awards and cash incentives			X No excise tax gross-ups
ü Maintain stock ownership guidelines to ensure our directors’ and executives’ interests are aligned with those of our stockholders			X No pledging or hedging of company stock by directors or executive officers
ü Maintain compensation recovery (or “clawback”) policy
ü Cap the amounts our executives can earn under our annual incentive plans
ü Compensation Committee retains independent compensation consultant

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Executive Compensation Program

Philosophy and Objectives

Our philosophy is to reward executive officers based upon corporate performance, as well as to provide long-term incentives for the achievement of financial and strategic goals. We use a combination of cash compensation, composed of base salary and an annual cash bonus program, long-term equity incentive compensation programs, and a broad-based benefits program to create a competitive compensation package for our executive management team. We tie the payment of cash and long-term equity incentive compensation to executive officers exclusively to the achievement of financial objectives.

The Compensation Committee uses the following principles to guide its decisions regarding the compensation of our executive officers:



Pay for Performance:			Total compensation should reflect a “pay-for-performance” philosophy in which more than 50% of each executive officer’s compensation is tied to the achievement of company financial objectives. Cash compensation for our executive officers is weighted toward short-term incentive bonus awards tied to company financial objectives that are difficult to attain and require achievement closely linked to our annual operating plan and budget and publicly announced expectations. Long-term incentive awards, namely PSUs and stock options, also ensure pay and performance alignment over the long term.

Alignment with Stockholders’ Interests:			Total compensation levels should include long-term performance-based equity awards to align executive officer and stockholder interests.

Internal Parity:			To the extent practicable, base salaries and short- and long-term incentive targets for similarly situated executive officers should be comparable to avoid divisiveness and encourage teamwork, collaboration, and a cooperative working environment.

External Competitiveness:			Total compensation should be competitive with peer companies so that we can attract and retain high performing key executive talent. To achieve this goal within market ranges, our Compensation Committee annually reviews the compensation practices of other companies in our peer group, as discussed in the “Peer Group” section below.

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Compensation Review Process

Compensation Committee Calendar

Role of Compensation Committee

Toward the end of each fiscal year, the Compensation Committee begins the process of reviewing executive officer compensation for the next fiscal year. The Compensation Committee is provided with reports from its independent compensation consultant comparing our executive compensation and equity granting practices relative to the market and to our peer group. The Compensation Committee reviews recommendations from management on the current fiscal year annual and long-term incentive compensation programs. The Compensation Committee then reviews and approves any changes to executive officers’ total target cash compensation and long-term equity incentive compensation. The Compensation Committee reviews all recommendations considering our compensation philosophy and seeks input from its independent compensation consultant prior to making any final decisions.

Role of Chief Executive Officer

Our Chief Executive Officer makes recommendations to the Compensation Committee with respect to compensation for his direct reports (including our other named executive officers). In making these recommendations, the factors considered include market data, tenure, individual performance, responsibilities, and experience levels of the executives, as well as the compensation of the executives relative to one another.

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These initial CEO recommendations are discussed with the Chairman of the Compensation Committee and presented at Compensation Committee meetings. The Total Rewards group within our Human Capital Department and individuals within our Finance and Legal Departments support the Compensation Committee in the performance of its responsibilities. During fiscal 2020, our Chief Financial Officer, Chief Legal Officer and Chief People Officer attended the Compensation Committee meetings to provide perspectives on the competitive landscape, the needs of the business, information about our financial performance and relevant legal and regulatory developments.

The Compensation Committee meets in executive session (without management) with its independent compensation consultant to deliberate on executive compensation matters. None of our executive officers participate in the Compensation Committee’s deliberations or decisions regarding their own compensation.

Role of Compensation Consultant

Our Compensation Committee again retained Pay Governance to advise it on matters related to executive compensation for fiscal 2020.

Other than providing limited guidance regarding our broad-based equity plan design for all employees, which was approved by the Compensation Committee, Pay Governance did not provide any services for management in fiscal 2020. Pay Governance consulted with our management when requested by the Compensation Committee and only as necessary to obtain relevant compensation and performance data for the executives as well as essential business information so that it could effectively support the Compensation Committee with appropriate competitive market information and relevant analyses.

During fiscal 2020, Pay Governance provided a range of services to the Compensation Committee to support the Compensation Committee’s agenda and obligations under its charter, including providing advice relating to the impact of regulatory updates, industry trends and peer group compensation data, advice on the structure and competitiveness of our compensation programs, advice on the consistency of our programs with our executive compensation philosophy and advice on director compensation. Representatives of Pay Governance also attended Compensation Committee meetings.

The Compensation Committee assessed the independence of Pay Governance and determined that Pay Governance is independent of our company and has no relationships that could create a conflict of interest with us. As part of its assessment, the Compensation Committee considered the fact that Pay Governance did not provide any other services to us and consults with our management only as necessary to provide the services described above.

Peer Group

To assist the Compensation Committee in making decisions on total compensation for executives and company-wide equity grants, the Compensation Committee utilizes peer and industry group data and analyses. Each year, as necessary, the Compensation Committee reviews with its independent compensation consultant the list of peer companies as points of comparison to ensure that comparisons are meaningful.

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For fiscal 2020, Pay Governance provided recommendations on the composition of our peer group. Based on the facts described in the table below and management’s input, for fiscal 2020, Pay Governance recommended, and the Compensation Committee approved, the following peer group:


General Description	Criteria Considered	Peer Group List

Software and high technology companies which operate in similar or related businesses and with which Progress competes for talent	Publicly traded and based in U.S. Revenues-0.5x to 2.5x of Progress Market Cap-0.2x to 3.0x of Progress Other (e.g., recent financial performance, business model, proxy advisor peers)	Aspen Technology, Inc. Avid Technology, Inc. Appian Corporation Bottomline Technologies (de), Inc. Carbonite, Inc. CommVault Systems, Inc. Everbridge, Inc. HubSpot Inc. LogMeIn, Inc. Manhattan Associates, Inc. MicroStrategy, Incorporated MongoDB, Inc. OneSpan Inc. Pegasystems, Inc. QAD Inc.* Rapid7, Inc. Synchronoss Technologies, Inc. SPS Commerce, Inc.* Talend S.A.* TiVo Corporation *Added for 2020

For fiscal 2020, the Compensation Committee removed two peer companies utilized in 2019 and added three new peer companies as shown in the table above. The two companies removed (Tableau Software and Carbon Black) were acquired during 2019.

Pay Governance then prepared a compensation analysis based on survey data and data gathered from publicly available information for our peer group companies. Pay Governance separately analyzed and advised the Compensation Committee regarding the pay practices of companies engaged in a total growth strategy similar to ours.

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Survey Data

The executive compensation analysis prepared by Pay Governance included data from Radford’s 2019 Global Technology Survey for companies with revenues similar to us. The Compensation Committee used this data to compare the current compensation of our named executive officers to the peer group and to determine the relative market value for each position, based on direct, quantitative comparisons of pay levels. The survey data was used when there was a lack of public peer data for an executive’s position and to obtain a general market understanding of current compensation practices.

Competitive Positioning

Fiscal 2020 target total direct compensation for our named executive officers was set by the Compensation Committee based predominantly on competitive pay practices, as reflected in the peer group and survey data. The Compensation Committee reviews market data at the 25th, 50th, and 75th percentile and, for 2020, sought to target total direct compensation for the named executive officers as a group at the 50th percentile of our peer group in setting our executive compensation programs. Additional adjustments were considered based on individual importance to our company, anticipated future contributions, internal pay equity, and historical pay levels, as well as the level of an executive officer’s unvested equity awards and incentives.

Components of Executive Officer Compensation

Compensation for our named executive officers currently consists of three primary components that are designed to reward performance in a simple and straightforward manner: base salaries, annual cash bonuses, and long-term equity awards. The purpose and key characteristics of each of these components, in addition to other compensation elements described below, and how each element accomplishes the goals and objectives of our overall program are summarized below.

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Compensation Element	Objective	Key Features

Cash Compensation	To attract, motivate and reward executives whose knowledge, skills, and performance are critical to our success

•Base Salary	To secure and retain services of key executive talent by providing a fixed level of cash compensation for performing essential elements of position	Adjustments may be made to reflect market conditions for a position, changes in the status or duties associated with a position, individual performance, or internal pay equity

•Annual Cash Bonus	To encourage and reward annual corporate performance that enhances short and long-term stockholder value	Cash bonuses are based on percentage of base salary, with actual awards based exclusively on attainment of objective corporate financial goals

Equity Compensation	To align executives’ interests with those of stockholders

•PSUs under the Long-Term Incentive Plan	To align interests of management with those of our stockholders with the goal of creating long-term growth and value	Three-year performance period Performance metrics utilized are: •50% operating income (subject to 35% annual operating margin threshold) •50% relative TSR in comparison to the S&P Software and Services Select Industry Index

•Restricted Stock Units	To retain executive talent	Service-based vesting over three-year period

•Stock Options	To align interests of management with those of our stockholders with the goal of creating long-term growth and value	Service-based vesting over four-year period Exercise price equal to fair market value on date of grant

Other Compensation	To provide benefits that promote employee health and welfare, which assists in attracting and retaining our executive officers	Indirect compensation element consisting of programs such as medical, dental, and vision insurance, a 401(k) plan with up to a 3% matching contribution, an employee stock purchase plan program, and other plans and programs generally made available to employees

Severance and Change in Control Benefits	To serve our retention and motivational objectives helping our named executive officers maintain continued focus, dedication to their responsibilities and objectivity to maximize stockholder value, including in the event of a transaction that could result in a change in control of our company; particularly important in a time of increased consolidation in our industry and increased competition for executive talent	Provides protection in the event of an involuntary termination of employment under specified circumstances, including following a change in control of our company as described below under “Executive Compensation-Severance and Change in Control Agreements” and "Estimate of Severance and Change in Control Benefits."

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2020 Executive Compensation Decisions

2020 Program Design

Consistent with its pay-for-performance philosophy, the Compensation Committee emphasized alignment with our long-term business goals in designing our executive compensation programs for fiscal 2020. Our executive compensation programs for fiscal 2020 were designed to reflect our continued commitment to the strategic and operating plan we launched in 2017. As noted above, our strategy consists of the following primary objectives—

•Be the trusted provider of the best products to develop, deploy and manage high-impact business applications;

•Focus on customer and partner retention to drive recurring revenue and profitability;

•Execute our total growth strategy driven by accretive M&A; and

•Execute our holistic capital allocation approach.

Our fiscal 2020 budget and operating plan reflected our expectations for limited growth for our core products and prioritized customer retention. The overarching priority of our fiscal 2020 plan was that we operate our business as efficiently as possible to strengthen Progress for the benefit of our stockholders. In addition, our fiscal 2020 plan reflected our focus on growing our business through acquisitions.

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The chart below summarizes the key attributes of each pay element for fiscal 2020.


Element			Key Attributes

Base salary			Aligns with scope and complexity of role and prevailing market conditions; salary levels are generally at market median For fiscal 2020, the Compensation Committee made only modest increases to the base salaries of certain of the named executive officers. Such changes were in line with market data.

Annual Cash Bonus			100% financial/formulaic FY20 metrics • Total non-GAAP revenue (40%) • Total non-GAAP operating income (40%) • Total adjusted free cash flow (20%) Thresholds set at 98% of total revenue target, 92% of operating income target and 97% of adjusted free cash flow target under our annual budget Payouts under the annual cash bonuses capped at 150% of target amounts For fiscal 2020, the Compensation Committee did not make any changes to the annual cash bonus targets of any of the named executive officers, other than Ms. Jarrett’s target, which was increased from 50% to 60% of her base salary in order to bring her cash bonus target in line with market data.

Restricted Stock Units			Vests over three years to support retention 30% of annual equity award

Stock options			Vests over four years to support retention and align with our stockholders’ interests 20% of annual equity award

LTIP PSUs			Three-year performance period Performance metrics utilized are 50% operating income (subject to 35% annual operating margin threshold) and 50% relative TSR in comparison to the S&P Software and Services Select Industry Index 50% of annual equity award Equity awards for our named executive officers were identical to fiscal 2019 annual equity awards, other than Mr. Gupta’s equity award, the value of which was increased by $200,000, and Mr. Quinn’s equity award, the value of which was increased by $100,000, in each case to bring the respective equity award target in line with market data.

Pay Mix

In setting the mix among the different elements of executive compensation, we do not target specific allocations, but generally weight target compensation more heavily toward performance-based compensation, both cash and equity. The percentage of performance-based compensation for our executive officers and other employees increases with job responsibility, reflecting our view of internal pay equity and the ability of a given employee to contribute to our results. We also generally align our compensation mix with the practices of our peer group when possible and to the extent consistent with our compensation strategy and business plan.

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As shown in the charts below, the total direct compensation mix for Mr. Gupta and our other named executive officers in fiscal 2020 was consistent with our peer group.

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* “Other NEOs” reflects average of NEO salaries, excluding CFO

These allocations reflect our belief that a significant portion of our named executive officers’ compensation should be performance-based and therefore “at risk” based on company performance, as well as subject to service requirements. Since our cash incentive opportunities and equity incentive awards have both upside opportunities and downside risks and our actual performance can deviate from the target goals, the amount of compensation earned will differ from the target allocations.

Individual Considerations

Below is a summary of the fiscal 2020 compensation decisions and, where applicable, changes for each named executive officer from fiscal 2019.

Yogesh Gupta, President and Chief Executive Officer (1)


	2019 Target Pay ($)		2020 Target Pay ($)
Target Annual Cash Compensation	1,150,000		1,150,000	(6)
Base Salary	575,000		575,000
Target Bonus	575,000	(2)	575,000	(7)
Target Annual Equity Compensation	3,650,000		3,850,000	(8)
Target Annual RSUs	1,095,000	(3)	1,155,000	(9)
Target Annual Stock Options	730,000	(4)	770,000	(10)
Target LTIP PSUs	1,825,000	(5)	1,925,000	(11)
Total Target Annual Compensation	4,800,000		5,000,000

_____________

(1)Mr. Gupta became our President Chief Executive Officer in October 2016. We entered into an employment agreement with Mr. Gupta setting forth the terms of his compensation described above.

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(2)Represents cash payable upon achievement of target performance under our Corporate Bonus Plan. Based on company performance, Mr. Gupta earned 105% of his fiscal 2019 target bonus.

(3)RSUs vest in equal installments every six months over three years beginning on October 1, 2019.

(4)Stock options vest in equal installments every six months over four years beginning on October 1, 2019.

(5)PSUs issued to our executive officers under our Long-Term Incentive Plan are subject to three-year relative total shareholder return and operating income performance measures as further described in this Amendment No. 1 to Annual Report on Form 10-K/A.

(6)We evaluated Mr. Gupta's fiscal 2019 target annual cash compensation against our compensation peer group to determine whether any changes should be made. We determined that Mr. Gupta's target annual cash compensation was in line with the market data positioning sought by the Compensation Committee and made no changes for fiscal 2020.

(7)Represents cash payable upon achievement of target performance under our Corporate Bonus Plan. Based on company performance, Mr. Gupta earned 94% of his fiscal 2020 target bonus. For a discussion of the impact of COVID-19 on the company’s performance and the fiscal 2020 Corporate Bonus Plan, see “Cash Incentive Compensation”.

(8)We evaluated Mr. Gupta's fiscal 2019 target annual equity compensation against our compensation peer group to determine whether any changes should be made. Based on this evaluation, we determined that the value of Mr. Gupta’s target annual equity compensation should be increased by $200,000 for fiscal 2020 to better reflect the market data positioning sought by the Compensation Committee.

(9)RSUs vest in equal installments every six months over three years beginning October 1, 2020.

(10)Stock options vest in equal installments every six months over four years beginning on October 1, 2020.

(11)PSUs issued to our executive officers under our Long-Term Incentive Plan are subject to three-year relative total shareholder return and operating income performance measures as further described in this Amendment No. 1 to Annual Report on Form 10-K/A.

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Anthony Folger, Chief Financial Officer (1)


	2020 Target Pay ($)
Target Annual Cash Compensation	660,000
Base Salary	400,000
Target Bonus	260,000	(2)
Target Annual Equity Compensation	1,600,000
Target Annual RSUs	480,000	(3)
Target Annual Stock Options	320,000	(4)
Target LTIP PSUs	800,000	(5)
Total Target Annual Compensation	2,260,000

_____________

(1)Mr. Folger became our Chief Financial Officer in January 2020. We entered into an employment agreement with Mr. Folger setting forth the terms of his compensation described above.

(2)Represents cash payable upon achievement of target performance under our Corporate Bonus Plan. Based on company performance, Mr. Folger earned 94% of his fiscal 2020 target bonus prorated to reflect his employment commencement date. For a discussion of the impact of COVID-19 on the company’s performance and the fiscal 2020 Corporate Bonus Plan, see “Cash Incentive Compensation”.

(3)RSUs vest in equal installments every six months over three years beginning October 1, 2020.

(4)Stock options vest in equal installments every six months over four years beginning on October 1, 2020.

Paul Jalbert, Former Chief Financial Officer (1)


	2019 Target Pay ($)		2020 Target Pay ($)
Target Annual Cash Compensation	624,000		624,000	(6)
Base Salary	390,000		390,000
Target Bonus	234,000	(2)	234,000
Target Annual Equity Compensation	1,330,000		--	(7)
Target Annual RSUs	399,000	(3)	--
Target Annual Stock Options	266,000	(4)	--
Target LTIP PSUs	665,000	(5)	--
Total Target Annual Compensation	1,954,000		624,000

_____________

(1)On January 31, 2020, Mr. Jalbert retired from his position as Chief Financial Officer, and was succeeded by Mr. Folger. Mr. Jalbert remained with the Company until April 2, 2020 in order to assist Mr. Folger in the transition.

(2)Represents cash payable upon achievement of target performance under our Corporate Bonus Plan. Based on company performance, Mr. Jalbert earned 105% of his fiscal 2019 target bonus.

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(3)RSUs vest in equal installments every six months over three years beginning October 1, 2019. During the period beginning February 1, 2020 and ending April 2, 2020, Mr. Jalbert’s unvested RSUs continued to vest in accordance with the terms and conditions of such awards. Additionally, all unvested RSUs held by Mr. Jalbert that would otherwise have vested on October 1, 2020 accelerated and became fully exercisable on April 2, 2020. Due to Mr. Jalbert's retirement, no other RSUs vested or were accelerated.

(4)Stock options vest in equal installments over six months every four years beginning on October 1, 2019. During the period beginning February 1, 2020 and ending April 2, 2020, Mr. Jalbert’s unvested stock options continued to vest in accordance with the terms and conditions of such awards. Additionally, all unvested stock options held by Mr. Jalbert that would otherwise have vested on October 1, 2020 accelerated and became fully exercisable on April 2, 2020. Due to Mr. Jalbert's retirement, no other stock options (except those described above) vested or were accelerated.

(6)Due to Mr. Jalbert’s retirement, no changes were made to his Target Annual Cash Compensation for fiscal 2020. From and after January 31, 2020 until April 2, 2020, Mr. Jalbert received a monthly base salary of $10,000. Mr. Jalbert did not receive any portion of his fiscal 2020 target bonus.

(7)Due to Mr. Jalbert’s retirement, he did not receive any Target Annual Equity Compensation for fiscal 2020.

John Ainsworth, Senior Vice President, Products – Core (1)


	2019 Target Pay ($)		2020 Target Pay ($)
Target Annual Cash Compensation	517,500	(2)	555,500	(7)
Base Salary	345,000		370,000
Target Bonus	172,500	(3)	185,500	(8)
Target Annual Equity Compensation	700,000		700,000	(9)
Target Annual RSUs	210,000	(4)	210,000	(10)
Target Annual Stock Options	140,000	(5)	140,000	(11)
Target LTIP PSUs	350,000	(6)	350,000	(12)
Total Target Annual Compensation	1,217,500		1,255,000

_____________

(1)Mr. Ainsworth became our Senior Vice President, Products – Core in January 2017.

(2)We evaluated Mr. Ainsworth’s fiscal 2018 target annual cash compensation against our compensation peer group to determine whether any changes should be made. Based on this evaluation, we determined that Mr. Ainsworth's base salary should be increased from $335,000 to $345,000, which was in line with the market data positioning sought by the Compensation Committee.

(3)Represents cash payable upon achievement of target performance under our Corporate Bonus Plan. Based on company performance, Mr. Ainsworth earned 105% of his fiscal 2019 target bonus.

(4)RSUs vest in equal installments every six months over three years beginning on October 1, 2019.

(5)Stock options vest in equal installments every six months over four years beginning on October 1, 2019.

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(6)PSUs issued to our executive officers under our Long-Term Incentive Plan are subject to three-year relative total shareholder return and operating income performance measures as further described in this Amendment No. 1 to Annual Report on Form 10-K/A.

(7)We evaluated Mr. Ainsworth’s fiscal 2019 target annual cash compensation against our compensation peer group to determine whether any changes should be made. Based on this evaluation, we determined that Mr. Ainsworth's base salary should be increased from $345,000 to $370,000, to better reflect the market data positioning sought by the Compensation Committee.

(8)Represents cash payable upon achievement of target performance under our Corporate Bonus Plan. Based on company performance, Mr. Ainsworth earned 94% of his fiscal 2020 target bonus. For a discussion of the impact of COVID-19 on the company’s performance and the fiscal 2020 Corporate Bonus Plan, see “Cash Incentive Compensation”.

(9)We evaluated Mr. Ainsworth’s fiscal 2019 target annual equity compensation against our compensation peer group to determine whether any changes should be made. We determined that Mr. Ainsworth’s target annual equity compensation was in line with the market data positioning sought by the Compensation Committee and made no changes for fiscal 2020.

(10)RSUs vest in equal installments every six months over three years beginning on October 1, 2020.

(11)Stock options vest in equal installments every six months over four years beginning on October 1, 2020.

(12)PSUs issued to our executive officers under our Long-Term Incentive Plan are subject to three-year relative total shareholder return and operating income performance measures as further described in this Amendment No. 1 to Annual Report on Form 10-K/A.

Loren Jarrett, Senior Vice President and General Manager – Developer Tools Business and former Chief Marketing Officer (1)


	2019 Target Pay ($)		2020 Target Pay ($)
Target Annual Cash Compensation	517,500		568,000	(6)
Base Salary	345,000		355,000
Target Bonus	172,500	(2)	213,000	(7)
Target Annual Equity Compensation	700,000		700,000	(8)
Target Annual RSUs	210,000	(3)	210,000	(9)
Target Annual Stock Options	140,000	(4)	140,000	(10)
Target LTIP PSUs	350,000	(5)	350,000	(11)
Total Target Annual Compensation	1,217,500		1,268,000

_____________

(1)Ms. Jarrett joined Progress as our Chief Marketing Officer in January 2017. She became SVP, General Manager of our Developer Tools business in June 2019. Ms. Jarrett's compensation did not change in connection with her role change.

(2)Represents cash payable upon achievement of target performance under our Corporate Bonus Plan. Based on company performance, Ms. Jarrett earned 105% of her fiscal 2019 target bonus.

(3)RSUs vest in equal installments every six months over three years beginning on October 1, 2019.

(4)Stock options vest in equal installments every six months over four years beginning on October 1, 2019.

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(6)We evaluated Ms. Jarrett’s fiscal 2019 target annual cash compensation against our compensation peer group to determine whether any changes should be made. Based on this evaluation, we determined that Ms. Jarrett's base salary should be increased from $345,000 to $355,000, to better reflect the market data positioning sought by the Compensation Committee. In addition, we increased Ms. Jarrett's 2020 cash bonus target from 50% of her base salary in 2019 to 60% of her base salary in 2020, to better reflect the market data positioning sought by the Compensation Committee. For fiscal 2020, Ms. Jarrett’s target bonus of $213,000 was composed of two parts. Two-thirds of this target was tied to performance under the Corporate Bonus Plan and one-third of this target was tied to financial objectives with respect to the products for which she is the General Manager.

(7)Represents cash payable upon achievement of target performance under our Corporate Bonus Plan. Based on company performance, in fiscal 2020, Ms. Jarrett earned 94% of the portion of her fiscal 2020 target bonus that was tied to the Corporate Bonus Plan, and 97% of the portion of her fiscal 2020 target bonus that was tied to the financial objectives of the products for which she is the General Manager. For a discussion of the impact of COVID-19 on the company’s performance and the fiscal 2020 Corporate Bonus Plan, see “Cash Incentive Compensation”.

(8)We evaluated Ms. Jarrett’s fiscal 2019 target annual equity compensation against our compensation peer group to determine whether any changes should be made. We determined that Ms. Jarrett’s target annual equity compensation was in line with the market data positioning sought by the Compensation Committee and made no changes for fiscal 2020.

(9)RSUs vest in equal installments every six months over three years beginning on October 1, 2020.

(10)Stock options vest in equal installments every six months over four years beginning on October 1, 2020.

Gary Quinn, Senior Vice President, Core Field Organization (1)


	2019 Target Pay ($)		2020 Target Pay ($)
Target Annual Cash Compensation	619,000		665,000	(6)
Base Salary	325,000		350,000
Target Bonus	294,000	(2)	315,000	(7)
Target Annual Equity Compensation	700,000		800,000	(8)
Target Annual RSUs	210,000	(3)	240,000	(9)
Target Annual Stock Options	140,000	(4)	160,000	(10)
Target LTIP PSUs	350,000	(5)	400,000	(11)
Total Target Annual Compensation	1,319,000		1,465,000

_____________

(1)Mr. Quinn became our Senior Vice President, Core Field Organization in August 2017.

(2)Mr. Quinn’s target bonus of $294,000 is composed of two parts. Two-thirds of this target is tied to performance under the Corporate Bonus Plan and one-third of this target is tied to financial objectives with respect to the products for which he is the sales leader. Based on company performance, in fiscal 2019, Mr. Quinn earned 105% of the portion of his fiscal 2019 target bonus that was tied to the Corporate Bonus Plan, and 105% of the portion of his fiscal 2019 target bonus that was tied to the financial objectives of the products for which he is the sales leader.

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(3)RSUs vest in equal installments every six months over three years beginning on October 1, 2019.

(4)Stock options vest in equal installments every six months over four years beginning on October 1, 2019.

(6)We evaluated Mr. Quinn’s fiscal 2019 base salary against our compensation peer group to determine whether any changes should be made. Based on this evaluation, we determined that Mr. Quinn's base salary should be increased from $325,000 to $350,000, to better reflect the market data positioning sought by the Compensation Committee.

(7)We evaluated Mr. Quinn’s fiscal 2019 target annual cash compensation against our compensation peer group to determine whether any changes should be made. Based on this evaluation, we determined that Mr. Quinn's target bonus should be increased from $294,000 to $315,000 to better reflect the market data positioning sought by the Compensation Committee. Mr. Quinn’s target bonus of $315,000 is composed of two parts. Two-thirds of this target is tied to performance under the Corporate Bonus Plan and one-third of this target is tied to financial objectives with respect to the products for which he is the sales leader. Based on company performance, in fiscal 2020, Mr. Quinn earned 94% of the portion of his fiscal 2020 target bonus that was tied to the Corporate Bonus Plan, and 98% of the portion of his fiscal 2020 target bonus that was tied to the financial objectives of the products for which he is the sales leader. For a discussion of the impact of COVID-19 on the company’s performance and the fiscal 2020 Corporate Bonus Plan, see “Cash Incentive Compensation”.

(8)We evaluated Mr. Quinn’s fiscal 2019 target annual equity compensation against our compensation peer group to determine whether any changes should be made. Based on this evaluation, we increased the value of Mr. Quinn’s target annual equity compensation by $100,000 for fiscal 2020 to better reflect the market data positioning sought by the Compensation Committee.

(9)RSUs vest in equal installments every six months over three years beginning on October 1, 2020.

(10)Stock options vest in equal installments every six months over four years beginning on October 1, 2020.

Cash Incentive Compensation

Annual Cash Bonus

It is our philosophy to base a significant portion of each executive officer’s total compensation opportunity on performance incentives. Our annual bonus plan is intended to motivate eligible participants toward overall business results, to tie their goals and interests to those of the Company and its stockholders, and to enable the Company to attract and retain highly qualified executives. Our bonus plan is administered by our Compensation Committee.

The Compensation Committee set the target annual cash incentive opportunity for 2020 (expressed as a percentage of base salary earned during the year) for each named executive officer in January 2020. In setting the target levels, the Compensation Committee considered each named executive officer’s 2020 target total cash opportunity against the peer group data provided by our independent compensation consultant, internal pay equity and the roles and responsibilities of the named executive officers. The Compensation Committee believes that the target annual cash bonus opportunity should make up a larger portion of an executive officer’s total target cash compensation as the executive’s level of responsibility increases.

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The Compensation Committee set each named executive officer’s cash bonus target, other than Ms. Jarrett’s, at the same percentage as his or her respective target opportunity in 2019. Ms. Jarrett’s cash bonus target was increased from 50% of her base salary to 60%. In addition, for fiscal 2020, it was determined that Ms. Jarrett’s target bonus should be comprised of two parts. Two-thirds of her bonus would be tied to performance under the fiscal 2020 Corporate Bonus Plan and one-third of her target would be tied to financial objectives with respect to the products for which she is the General Manager. This structure is identical to the bonus structure applicable to Mr. Quinn.

2020 Plan Design

In January 2020, the Compensation Committee approved the fiscal 2020 Corporate Bonus Plan. For fiscal 2020, the Compensation Committee adopted three plan metrics for the Corporate Bonus Plan applicable to our named executive officers, all of which would be utilized to determine funding and payout under the cash bonus plan. These three-plan metrics were non-GAAP corporate revenue, non-GAAP operating income, and adjusted free cash flow. These plan metrics were the same metrics utilized by the Compensation Committee in fiscal 2019, apart from removing the metric for Kinvey new bookings. The Kinvey new booking metric was removed because we announced in September 2019 that we were reducing our investment in our Kinvey platform.

The non-GAAP corporate revenue metric was weighted at 40%, the non-GAAP operating income metric was weighted at 40%, and the adjusted free cash flow metric was weighted at 20%. Each metric was measured separately and was not impacted by performance with respect to the other metrics. The performance measures selected for our cash bonus plan were designed to support our goals of expanding our non-GAAP operating income, while at the same time preserving our strong cash flow, which would result in increased stockholder returns.

For 2020, the Compensation Committee set the thresholds for purposes of earning any award under the Corporate Bonus Plan at 98% of the total revenue target, 92% of the operating income target and 97% of the adjusted free cash flow target under our fiscal 2020 annual budget.

The targets established with respect to the total revenue goal reflect the challenges we face in maintaining our core revenues. The targets established with respect to the non-GAAP operating income metric are consistent with our operational model for our core business. The targets established with respect to the adjusted free cash flow goal reflect the importance of maintaining strong cash flows to enable us to execute a capital allocation strategy in the best interests of stockholders. Each target also reflected the plan requirement that our executive officers not be eligible for any portion of their target bonus at achievement levels below our public guidance.

COVID-19 Impact

•Global economic conditions could impact our ability to acquire new customers and expand existing customer installations;

•Economic conditions could impact the timing of certain maintenance contract renewals and customer collections;

•Our products power mission-critical applications across a variety of industries;

•The cost, effort and time required to replace our solutions would be prohibitive in most cases;

•More than 80% of our revenue is recurring in nature;

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•Our retention rates have consistently been well over 90%; and

•Our technical support and professional services could be delivered remotely without disruption.

During our third quarter of fiscal 2020, the Compensation Committee determined, in recognition of the factors described above relating to the impact of the COVID-19 pandemic and the fact that the consequences could not have been anticipated by the Committee at the time the fiscal 2020 operating plan and fiscal 2020 Corporate Bonus Plan performance targets were determined, and that the global business consequences of the pandemic were generally outside of our control, that performance against the predetermined goals (as calculated at the end of the year) should exclude the impact of the adjustments we made to our operating plan in response to COVID-19.

In approving these adjustments, the Compensation Committee considered the disruptive nature and effect of the pandemic on our business, our success in managing and navigating the pandemic environment, the leadership shown by our executives in supporting our customers, partners employees and other stakeholders, the continued dedication and commitment of our employees to our customers and partners, and the execution of the company’s strategic goals. No other changes or adjustments (upwards or downwards) were made by the Compensation Committee to our fiscal 2020 Corporate Bonus Plan as a result of the COVID-19 pandemic. These adjustments applied to our executive officers as well as to all other participants in the fiscal 2020 Corporate Bonus Plan.

As shown in the table below, if the Compensation Committee had not adjusted our fiscal 2020 Corporate Bonus Plan as a result of the COVID-19 pandemic, the final payout percentage applicable to all participants in the fiscal 2020 Corporate Bonus Plan would have been 51%. With the COVID-19 adjustments made by the Compensation Committee, the final payout percentage applicable to all participants in the fiscal 2020 Corporate Bonus Plan was 94%.

In addition, in October 2020, the Compensation Committee modified the fiscal 2020 Corporate Bonus Plan to reflect the Chef acquisition. The Compensation Committee increased the targets of all levels of the non-GAAP revenue, non-GAAP operating income and adjusted free cash flow metrics consistent with the internal acquisition model and publicly announced expectations. For further detail about our use of non-GAAP measures, refer to the paragraph entitled, “GAAP Results vs. non-GAAP Measures” above.

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The table below summarizes the impact of these adjustments as a result of the COVID-19 pandemic and Chef acquisition on our fiscal 2020 Corporate Bonus Plan:



Metric ($ in rounded millions) (1)	Non-GAAP Corp. Revenue (40% Weighting)			Non-GAAP Operating Income (40% Weighting)			Adjusted Free Cash Flow (20% Weighting)			Final Approved Payout
	Threshold (25%)	Target (100%)	Maximum (150%)	Threshold (25%)	Target (100%)	Maximum (100%)	Threshold (25%)	Target (100%)	Maximum (150%)
Initial Target	448	455	470	177	192	223	145	150	169
Chef Acquisition	11	12	12	-2	-2	-2	-3	-3	-3
Final Target	460	466	482	175	189	220	142	147	166
Actual Result/ Funding % Adjusting for COVID-19 Impact	463 (72%)			193 (107%)			153 (111%)			94%
Actual Result/ Funding % Not Adjusting for COVID-19 Impact	457 (0%)			196 (112%)			143 (30%)			51%

_____________

(1)Target and actual achievement figures shown in the table above are based on budgeted exchange rates. For purposes of computing Non-GAAP Operating Income, bonus expense is added back to the Threshold, Target, Maximum, and Actual achievement amounts.

Amounts Earned under the 2020 Corporate Bonus Plan

As a result of our performance during fiscal 2020, we achieved an overall payout percentage of 94% under the fiscal 2020 Corporate Bonus Plan. For Mr. Gupta and the other executive officers, the actual bonuses earned were based 100% on the financial metrics described above and no portion of the annual bonuses were based on subjective measures.

The following table shows the bonuses earned by our named executive officers under the fiscal 2020 Corporate Bonus Plan.


NEO	Target Annual Bonus ($)	Amount Earned ($)
Yogesh Gupta	575,000	540,500
Anthony Folger (1)	260,000	203,667
Paul Jalbert (2)	--	--
John Ainsworth	185,500	173,900
Loren Jarrett (3)	177,500	166,850
Gary Quinn (4)	210,000	197,400

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_____________

(1)Mr. Folger became our CFO in January 2020 and received a pro-rated payout of his 2020 actual bonus.

(2)Mr. Jalbert’s employment with the Company terminated on April 2, 2020 and he did not receive any portion of his 2020 bonus.

(3)Reflects the portion of Ms. Jarrett’s target bonus (two-thirds) that is tied to the Corporate Bonus Plan. The remaining portion (one-third) of Ms. Jarrett’s target bonus is tied to financial objectives within the products for which she is the General Manager. For fiscal 2020, Ms. Jarrett earned 94% of the portion of her fiscal 2020 target bonus that was tied to the Corporate Bonus Plan and 97% of the portion of her bonus that was tied to the financial objectives within the products for which she is the General Manager.

(4)Reflects the portion of Mr. Quinn’s target bonus (two-thirds) that is tied to the Corporate Bonus Plan. The remaining portion (one-third) of Mr. Quinn's target bonus is tied to financial objectives within the products for which he is the sales leader. For fiscal 2020, Mr. Quinn earned 94% of the portion of his fiscal 2020 target bonus that was tied to the Corporate Bonus Plan and 98% of the portion of his bonus that was tied to the financial objectives within the products for which he is the sales leader.

Equity Compensation

We use equity compensation to attract, retain, motivate, and reward our named executive officers. Equity-based incentive awards are intended to be the longer-term components of our overall executive compensation program and are designed to encourage performance by our executive officers over several years. The Compensation Committee’s decisions regarding the amount and type of equity incentive compensation, the allocation of equity and relative weighting of these awards within total executive compensation have been based on advice provided by our independent compensation consultant and the Compensation Committee’s understanding and individual experiences with market practices of similarly situated companies. We issue annual and new hire equity awards based on guidelines for awards commensurate with position levels and that reflect grant practices within our peer group and the broader software industry generally.

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The following is a summary of our fiscal 2020 equity program, which was identical to our fiscal 2019 equity program.

Program

Fiscal 2020 Equity Program

Form of Equity

Time-Based Restricted Stock Units

Stock Options

Performance-Based Stock Units

Performance Periods

PSUs have three-year performance period

Metrics

LTIP PSUs tied 50% to cumulative operating income (subject to 35% annual operating margin threshold) and 50% to relative TSR

Vesting

Time-Based RSUs vest in six equal installments over 3 years

Stock options vest in eight equal installments over 4 years

LTIP:

•With respect to TSR metric, participants can earn between 0% to 200% of target amount of LTIP PSUs, with threshold vesting at 35% achievement

•With respect to operating income metric, participants can earn between 0% and 200% of the target amount of LTIP PSUs, once operating income criteria is met, subject to a 35% annual operating margin threshold

Frequency of Grant

Annual

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Target Value and Award Determination

The Compensation Committee reviews the mix of equity awards to our named executive officers on an annual basis. Consistent with the Compensation Committee’s philosophy that a significant portion of the equity mix to named executive officers should be tied to our long-term performance, the Compensation Committee determined that there should be no changes to the equity mix utilized for fiscal 2019. Accordingly, the equity mix for fiscal 2020 was 50% LTIP PSUs, 30% RSUs and 20% stock options.

To determine the size of the equity awards, the Compensation Committee first determined the total number of shares that would be allocated for the annual equity awards to all proposed recipients. The total number of shares was determined by consideration of the potential dilution to our stockholders and average burn rate of other companies in our industry. For fiscal 2020, the Compensation Committee considered that the proposed equity budget for fiscal 2020 was consistent with the prior year and would result in a burn rate significantly below other companies in our industry and peer group. The Compensation Committee utilized the grant data from the peer group and other information provided by Pay Governance to assist it in determining the size of the overall equity pool for our company as well as the individual grants to the named executive officers.

To determine the size of the individual annual equity awards, the Compensation Committee, utilizing data provided by Pay Governance, compared the long-term equity incentive compensation levels of our executives with similar positions within our peer group and survey data to determine the long-term equity incentive compensation amount for each executive. The Compensation Committee reviews market data at the 25th, 50th, and 75th percentile. In finalizing the amounts of the annual equity awards, the Compensation Committee considers this market data, the CEO’s recommendations, the burn rate of the executive grants, and the degree to which those amounts would be aligned with our goals of motivating and retaining key employees.

RSUs

RSUs typically vest in six equal installments over a three-year period. In a volatile stock market, RSUs continue to provide value when other forms of equity such as stock options may not, which the Compensation Committee believes is useful in retaining talented executives in unpredictable economic times.

The RSUs awarded as part of the fiscal 2020 equity program were issued in January 2020. The Compensation Committee awarded these RSUs as a dollar amount, which were then converted to RSUs based on our closing stock price on the date of grant.

Stock Options

Stock option awards provide individuals with the right to purchase shares of our common stock at a fixed exercise price, typically for a period of seven years, subject to continued employment with our company. Stock option grants are intended to correlate executive compensation to our long-term success as measured by our stock price. Stock options are tied to our future success because options granted have an exercise price equal to the closing market value at the date of grant and will only provide value to the extent that the price of our stock increases above the exercise price. As a result, the Compensation Committee views stock options as a form of performance equity, but with a longer-term focus than PSUs tied to three-year performance metrics.

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Stock options vest in eight equal installments over a four-year period. We believe that meaningful vesting periods encourage recipients to remain with our company over the long term and, because the value of the awards is based on our stock price, stock options encourage recipients to focus on achievement of longer-term goals, such as strategic growth, business innovation and stockholder return.

The stock options awarded as part of the fiscal 2020 equity program were issued in January 2020. The Compensation Committee awarded these stock options as a dollar amount, which were then converted to stock options based on the Black-Scholes value of our stock options on the date of grant.

LTIP PSUs

We currently have in place a long-term equity incentive compensation plan consisting of PSUs that are earned based on company performance over a three-year measurement period. PSUs under our long-term equity incentive compensation plan are subject to three-year performance criteria aligned with our business plan and are earned only to the extent the performance criteria are achieved.

For fiscal 2020, the number of shares eligible to be earned is dependent on the following: 50% on our relative TSR performance as compared to companies in the S&P Software and Services Select Industry Index and 50% on our cumulative operating income (subject to meeting a 35% annual operating margin threshold). The performance metrics used by the Compensation Committee in fiscal 2020 were the same as those used in fiscal 2019.

With respect to the relative TSR metric, the Compensation Committee left unchanged the payout scale utilized in fiscal 2019 to reflect current trends and stockholder-friendly practices (e.g., above-median performance required to achieve target payout). Participants can earn between 0% and 200% (the payout cap under the LTIP) of the target amount of PSUs attributable to the relative TSR metric. The cumulative three-year TSR measure compares the TSR of our common stock against the TSR of companies included in the S&P Software and Services Select Industry Index during the three-year period. Our relative TSR performance must be at the 55th percentile of the index group in order for 100% of the target award to be earned. Additionally, regardless of our relative position with respect to the S&P Software and Services Select Industry Index, the award with respect to the TSR metric will be capped at 100% if our absolute TSR over the measurement period is negative.

With respect to the operating income metric, participants can earn between 0% and 200% of the target amount of PSUs attributable to the operating income metric. In designing the operating income metric to include both operating margin dollar and percentage goals, the Compensation Committee sought to ensure discipline and reinforce, consistent with our stated strategy, that profitable growth and margin expansion/maintenance are key to long-term value creation. The cumulative three-year operating income measure is based on the sum of the operating income amounts for 2020, 2021 and 2022 contained in our 2020 strategic plan, which was modified in October 2020 to reflect the acquisition of Chef. No adjustment to the 2020 LTIP was made to reflect the impact of the COVID-19 pandemic impact.

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We must achieve 100% of the operating income target for a given performance period in order for payout with respect to this metric to occur. Furthermore, with respect to the operating income metric, the 35% annual operating margin threshold “performance gatekeeper” applies at all levels of performance and requires that annual operating margin be at or above 35% for each of 2020, 2021 and 2022 or no payout can occur with respect to this metric, regardless of cumulative operating income performance. The below table sets forth the payout criteria for the 2020 LTIP:


		% of Target Earned*
Performance Metric	Weight Factor	0%	50%	100%	150%	200%
Relative TSR Performance (% Rank)	50%	<35%	35%	55%	75%	90%
Operating Income (3-year Cumulative)**	50%	<$570	N/A	$570	$601	$630

* Award interpolated for performance within stated percentiles

** $ amounts in millions and using budgeted exchange rates. In addition, if operating margin in any of the three annual periods of the performance period is less than 35%, the operating income metric earned will be zero.

The three-year performance period with respect to the LTIP awarded in 2018 (the “2018 LTIP PSUs”) expired on November 30, 2020. Based on the price of our common stock for the thirty-day trading period ending November 30, 2020, our TSR compared to the S&P Software & Services Index for the same period placed us in the 33rd percentile, meaning that the TSR metric was not met. Based on our actual total three-year operating income for fiscal 2018, 2019 and 2020, the percentage of PSUs earned with respect to the operating income metric was 151%, resulting in a blended 75% payout percentage.

The following table shows the portion of the 2018 LTIP PSUs earned by ~~Item 10~~our named executive officers based on Company performance.


Named Executive Officer	Target LTIP Value ($)	Target PSUs (#)(1)	PSUs Earned
Yogesh Gupta	1,825,000	36,004	27,183
Anthony Folger (2)	--	--	--
Paul Jalbert (3)	665,000	13,119	--
John Ainsworth	350,000	6,905	5,212
Loren Jarrett	350,000	6,905	5,212
Gary Quinn	350,000	6,905	5,212

_____________

(1)Target LTIPs were determined by dividing the Target LTIP Value by the closing price of our stock on the date of grant, which was $50.69 on January 12, 2018, which was the date of grant of the 2018 LTIP PSUs.

(2)Mr. Folger became our Chief Financial Officer in January 2020 and was not eligible for any 2018 LTIP PSUs.

(3)Mr. Jalbert retired as our Chief Financial Officer in January 2020 and his employment terminated in April 2020. As a result, his 2018 LTIP PSUs were canceled upon his termination of employment.

For the fiscal 2020 award under the LTIP, the three-year comparison period commenced on December 1, 2019 and will end on November 30, 2022.

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Other Executive Compensation Matters

Timing of Equity Grants

We do not time grants either to take advantage of a depressed stock price or in anticipation of an increase in stock price and have limited the amount of discretion that can be exercised in connection with the timing of awards. We generally make awards only on pre-determined dates to ensure that awards cannot be timed to take advantage of material non-public information.

Equity awards may be made only by the Compensation Committee. The Compensation Committee makes awards only at Compensation Committee meetings and awards are not effective in trading blackout periods (the period encompassing ten days prior to the end of each fiscal quarter through 48 hours after the earnings for that quarter are announced).

Stock Ownership Guidelines

In January 2018, our Board of Directors adopted revised stock ownership guidelines for our senior executive officers, including our named executive officers. These guidelines provide for the Chief Executive Officer to hold an amount of our common stock, restricted shares, stock options and/or earned performance shares having a value equal to at least three times his or her base salary. For other senior executive officers, the stock ownership requirement is at least one times his or her base salary. Executive officers have five years to attain the applicable ownership threshold. As of the date of this Amendment No. 1 to Annual Report on Form 10-K/A, all of the named executive officers met the applicable ownership threshold except Mr. Folger, who joined our company in January 2020.

Compensation Recovery Policy

We have adopted a clawback policy providing that in the event of a material restatement of financial statements triggered by executive-level misconduct, we may require that the bonuses and other incentive compensation paid to that executive be forfeited. The amount of incentive compensation subject to recovery would be the amount in excess of what the executive officer would have earned in accordance with the restatement, as determined by the Compensation Committee.

Hedging and Pledging Policy

Our directors and executive officers are prohibited from engaging in short sales, transactions in derivative securities such as put or call options, hedging transactions or other inherently speculative transactions with respect to our stock. In addition, no director or executive officer may pledge or margin, or make any offer to pledge or margin, any of our stock, including without limitation, borrowing against such stock, at any time. Stock options granted under our stock option plans are not deemed to be derivative securities covered by this policy. Employees, other than our executive officers, are generally permitted to engage in transactions designed to hedge or offset market risk.

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Tax and Accounting Considerations and Compensation Recovery Policies

Deductibility of Executive Compensation.

Section 162(m) of the Internal Revenue Code places a limit of $1 million on the amount of compensation that public companies may deduct in any one year with respect to certain of their named executive officers. Through fiscal 2017, certain performance-based compensation approved by stockholders was not subject to this deduction limit. With the enactment of the 2017 Tax Cuts and Jobs Act, however, the performance-based compensation exemption was eliminated, except with respect to certain grandfathered arrangements. While the Compensation Committee considers the deductibility of compensation as one factor in determining executive compensation, the Compensation Committee believes that it is in our best interests and the best interests of our stockholders to maintain flexibility in our approach to executive compensation in order to structure a program that we consider to be the most effective in attracting, motivating and retaining key executives.

Section 409A of the Internal Revenue Code.

Section 409A of the Internal Revenue Code imposes additional significant taxes in the event that an executive officer, director or service provider receives “deferred compensation” that does not satisfy the requirements of Section 409A. Our severance and change in control agreements described below, including the Employee Retention and Motivation Agreements we entered into with our named executive officers, contain provisions that are intended to either avoid the application of Section 409A or, to the extent doing so is not possible, comply with the applicable Section 409A requirements. The Compensation Committee has the sole discretion to change the severance guidelines applicable to executive officers to the extent necessary to avoid the application of Section 409A or comply with applicable Section 409A requirements.

Accounting for Stock-Based Compensation.

Stock-based compensation expense reflects the fair value of stock-based awards, measured at the grant date and recognized over the relevant service period. We estimate the fair value of each stock-based award on the measurement date using either the current market price of the stock, the Black-Scholes option valuation model, or the Monte Carlo Simulation valuation model.

COMPENSATION COMMITTEE REPORT

This report is submitted by the Compensation Committee of our Board of Directors. The Compensation Committee has reviewed the “Compensation Discussion and Analysis” included in this Amendment No. 1 to Annual Report on Form 10-K/A and discussed it with management. Based on such review and discussions, the Compensation Committee has recommended to our Board of Directors that the “Compensation Discussion and Analysis” be included in this Amendment No. 1 to Annual Report on Form 10-K/A and in our proxy statement for the 2021 Annual Meeting of Stockholders.

No portion of this Compensation Committee Report shall be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended (the "Securities Act"), or the Securities Exchange Act of 1934, as amended (the "Exchange Act"), through any general statement incorporating by reference in its entirety the annual report or proxy statement in which this report appears, except to the extent that the Company specifically incorporates this report or a portion of it by reference. In addition, this report shall not be deemed filed under either the Securities Act or the Exchange Act.

Respectfully submitted by the Compensation Committee,

David A. Krall, Chairman
Angela T. Tucci
Vivian Vitale

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Compensation Committee Interlocks and Insider Participation

The members of our Compensation Committee at the beginning of fiscal 2020 were Dr. Gawlick, Mr. Krall and Ms. Tucci, with Mr. Krall serving as Chair. In March 2020, Ms. Vitale replaced Dr. Gawlick as a member of the Compensation Committee. Dr. Gawlick, Mr. Krall, Ms. Tucci and Ms. Vitale are not, nor have they ever been, an officer or employee of our company or of any of its subsidiaries, or had any relationship with us requiring disclosure in this Amendment No. 1 to Annual Report on Form 10-K/A. There are no compensation committee interlocks amongst any of our directors.


Analysis of Risk Associated with Our Compensation Plans

In setting compensation, the Compensation Committee considers the risks to our ~~definitive Proxy Statement.~~stockholders and to the achievement of our goals that may be inherent in the compensation plans and programs for all employees, including our executives. When evaluating our overall executive compensation program, the Compensation Committee considers whether the program is based on the appropriate philosophy, benchmarked against the appropriate peer group and balanced between long and short-term performance targets, company and individual performance. Although a significant portion of our executives’ compensation is performance-based and “at-risk,” we believe our compensation plans and programs are appropriately structured so as not to encourage our employees to take excessive or unreasonable risks.

We considered the following elements of our compensation plans and policies when evaluating whether such plans and policies are structured to encourage our employees to take unreasonable risks:

•A detailed planning process with executive or Compensation Committee oversight exists for all compensation programs.

~~Item 11. Executive Compensation~~•The proportion of an employee’s performance-based pay increases as the responsibility and potential impact of the employee’s position increases, which structure is in line with market practices.

•Compensation consists of both fixed and variable components. The fixed portion (i.e., base salary) and variable portion (i.e., performance-based bonus and equity awards) provide a mix of compensation intended to produce corporate performance without encouraging excessive risks.

•We set performance goals that we believe are aggressive and consistent with building long-term stockholder value.

•We generally use consistent corporate performance metrics from year-to-year rather than changing the metric to take advantage of changing market conditions.

•Our short-term incentive plans are capped as to the maximum potential payout, which we believe mitigates excessive risk taking by limiting bonus payments even if we dramatically exceed the performance targets.

•We modify the short-term incentive plans to reflect acquisitions consistent with our internal acquisition model and publicly announced expectations.

•The time-based vesting for RSUs and stock options ensures that our executives’ interests align with those of our stockholders for the long-term performance of our company.

•Assuming achievement of at least a minimum level of performance, payouts under our performance-based plans result in some compensation at levels below full target achievement, rather than an “all-or-nothing” approach.

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•Our long-term performance-based equity awards are based on multi-year criteria that align with our stockholders interests that we grow our company in a disciplined manner.

•In accordance with our written stock option grant policy, all equity grants must occur at a meeting of the Compensation Committee and management has no authority to issue equity.

•The Compensation Committee retains and does not delegate any of its power to determine matters of executive compensation.

•We maintain a system of controls and procedures designed to ensure that amounts are earned and paid in accordance with our plans and programs.

•We do not allow our executives and directors to hedge their exposure to ownership of, or interest in, our stock. We also do not allow them to engage in speculative transactions with respect to our stock.

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SUMMARY OF EXECUTIVE COMPENSATION

The following table sets forth certain information ~~required~~with respect to compensation for the fiscal years ended November 30, 2020, 2019, and 2018 earned by:

(a)Mr. Gupta;

(b)Mr. Folger;

(c)Mr. Jalbert; and

(d)Mr. Ainsworth, Ms. Jarrett and Mr. Quinn, our three other named executive officers.

SUMMARY COMPENSATION TABLE – FISCAL YEARS 2020, 2019 and 2018


Name and Principal Position	Year	Salary ($)	Stock Awards ($)(1)	Option Awards ($)(2)	Non-Equity Incentive Plan Compensation ($)(3)	All Other Compensation ($)(4)	Total ($)
Yogesh Gupta, Chief Executive Officer	2020 2019 2018	575,000 575,000 575,000	3,305,184 2,996,755 3,140,069	770,010 730,203 729,772	540,500 603,750 356,500	15,183 9,120 8,970	5,205,877 4,914,828 4,810,311
Anthony Folger, Chief Financial Officer (5)	2020 2019 2018	316,923 — —	1,314,556 —	320,002 — —	203,667 — —	9,722 — —	2,164,870 — —
Paul Jalbert, Former Chief Financial Officer (6)	2020 2019 2018	102,808 387,692 375,000	— 1,091,979 1,144,203	— 266,077 265,922	— 245,700 139,500	12,629 8,962 8,790	115,437 2,000,410 1,933,415
John Ainsworth, SVP, Products - Core	2020 2019 2018	365,192 343,462 335,000	600,957 574,735 795,435	140,010 140,040 139,964	173,900 181,125 103,850	20,830 8,897 9,488	1,300,889 1,248,259 1,383,737
Loren Jarrett, General Manager, Developer Tools Business	2020 2019 2018	353,077 343,462 335,000	600,957 574,735 795,435	140,010 140,040 139,964	166,850 181,125 103,850	40,940 8,897 9,488	1,301,834 1,248,259 1,383,737
Gary Quinn, SVP, Core Field Organization	2020 2019 2018	345,192 325,000 325,000	686,834 574,735 795,435	160,009 140,040 139,964	197,400 205,800 100,750	130,008 112,543 90,699	1,519,443 1,358,118 1,451,848

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(1)These amounts do not reflect the actual economic value realized by ~~Item~~the named executive officer. In accordance with FASB ASC Topic 718, we estimate the fair value of each stock-based award on the measurement date, using either the current market price of the stock or the Monte Carlo Simulation valuation model, assuming the probable outcome of related performance conditions at target levels. See the description of our 2020 Annual Equity Programdescribed in “Compensation Discussion and Analysis” in this Amendment No. 1 to Annual Report on Form 10-K/A and Note 11 of the consolidated financial statements contained in our Annual Report on Form 10-K for the fiscal year ended November 30, 2020. The value at grant date of the LTIP PSUs included in the amounts shown in this column, assuming the highest level of performance conditions achieved (payout at 200% of target) are $4,300,282, $3,879,176, and $4,137,220 for Mr. Gupta for fiscal 2020, 2019 and 2018 respectively; $2,676,417 for Mr. Folger for fiscal 2020; $0, $1,413,506, and $1,507,504 for Mr. Jalbert for fiscal 2020, 2019 and 2018, respectively; $893,579, $743,958 and $793,454 for Mr. Quinn for fiscal 2020, 2019 and 2018, respectively; and $781,908, $743,958, and $793,454, for each of Mr. Ainsworth and Ms. Jarrett for fiscal 2020, 2019 and 2018, respectively.

(2)Represents the grant date fair value of options on the date of grant. The grant date fair value of our options is ~~incorporated~~equal to the number of shares subject to the option multiplied by ~~reference~~the fair value of our options on the date of grant determined using the Black-Scholes option valuation model. The methodology and assumptions used to calculate the Black-Scholes value of our options are described in Note 11 of the consolidated financial statements contained in our Annual Report on Form 10-K for the fiscal year ended November 30, 2020.

(3)The amounts listed reflect the amounts earned under our Corporate Bonus Plan as described in “Compensation Discussion and Analysis” in this Amendment No. 1 to Annual Report on Form 10-K/A. For all individuals, bonus payments were accrued and earned in the year indicated and paid in the succeeding fiscal year.

(4)Amounts listed in this column for 2020 include:


Name	Company Contributions (401(k)) ($)	Insurance Premiums ($)	Sales Leader Plan ($)	Health Expenses ($)	Dividend Equivalents ($)
Mr. Gupta	12,442	720	—		2,021
Mr. Folger	8,308	576	—	—	838
Mr. Jalbert	12,442	187	—	—	0
Mr. Ainsworth	12,442	533	—	7,488	367
Ms. Jarrett	12,442	511	27,620	—	367
Mr. Quinn	12,512	504	116,572		420

(5)Mr. Folger became our Chief Financial Officer in January 2020.

(6)Mr. Jalbert retired from his position as Chief Financial Officer on January 31, 2020 and his employment with the Company terminated on April 2, 2020. In connection with his retirement, Mr. Jalbert received the retirement benefits described in “Compensation Discussion and Analysis” in this Amendment No. 1 to Annual Report on Form 10-K/A.

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Grants of Plan-Based Awards

GRANTS OF PLAN-BASED AWARDS TABLE - 2020


		Estimated Future Payouts Under Non-Equity Incentive Plan Awards			Estimated Future Payouts Under Equity Incentive Plan Awards			All Other Stock Awards: Number of Shares of Stock or Units (#)(4)	All Other Stock Awards: Number of Securities Underlying Options (#)(5)	Exercise or Base Price of Option Awards ($/Sh)	Grant Date Fair Value of Stock and Option Awards ($)(6)
Name	Grant Date (1)	Threshold ($)(2)	Target ($)(2)	Maximum ($)(2)	Threshold (#)(3)	Target (#)(3)	Maximum (#)(3)
Yogesh Gupta	—	143,750	575,000	862,500	—	—	—	—	—	—	—
	1/21/2020	—	—	—	10,205	40,819	81,638	—	—	—	2,150,141
	1/21/2020	—	—	—	—	—	—	24,492	—	—	1,155,043
	1/21/2020	—	—	—	—	—	—	—	72,574	47.16	770,010
Anthony Folger	—	65,000	260,000	390,000	—	—	—	—	—	—	—
	3/30/2020	—	—	—	6,351	25,405	50,810	—	—	—	834,554
	3/30/2020	—	—	—	—	—	—	15,243	—	—	480,002
	3/30/2020	—	—	—	—	—	—	—	50,394	31.49	320,002
Paul Jalbert	—	58,500	234,000	351,000	—	—	—	—	—	—	—
	1/21/2020	—	—	—	—	—	—	—	—	—	—
	1/21/2020	—	—	—	—	—	—	—	—	—
	1/21/2020	—	—	—	—	—	—	—	—	47.16	—
John Ainsworth	—	46,250	185,000	277,500	—	—	—	—	—	—
	1/21/2020	—	—	—	1,855	7,422	14,844	—	—	—	390,954
	1/21/2020	—	—	—	—	—	—	4,453	—	—	210,003
	1/21/2020	—	—	—	—	—	—	—	13,196	47.16	140,010
Loren Jarrett	—	53,250	213,000	319,500	—
	1/21/2020	—	—	—	1,855	7,422	14,844	—	—	—	390,954
	1/21/2020	—	—	—	—	—	—	4,453	—	—	210,003
	1/21/2020	—	—	—	—	—	—	—	13,196	47.16	140,010
Gary Quinn	—	78,750	315,000	472,500	—	—	—	—	—	—	—
	1/21/2020	—	—	—	2,120	8,482	16,964	—	—	—	446,789
	1/21/2020	—	—	—		—	—	5,090	—	—	240,044
	1/21/2020	—	—	—		—	—	—	15,081	47.16	160,009

_____________

(1)Awards granted on January 21, 2020 were approved by the Compensation Committee on January 7, 2020, at which time the Company was in a trading blackout period. Awards granted on March 30, 2020 were approved by the Compensation Committee on March 17, 2020, at which time the Company was in a trading blackout period.

(2)These columns indicate the range of payouts (25%, 100% and 150%) targeted for fiscal 2020 performance under our Corporate Bonus Plan as described in “Compensation Discussion and Analysis” in this Amendment No. 1 to Annual Report on Form 10-K/A. The actual payout with respect to fiscal 2020 for each named executive officer is shown in the Summary Compensation Table in the column titled “Non-Equity Incentive Plan Compensation.”

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(3)The second row of these columns with respect to each named executive officer represents performance share units awarded under our Long-Term Incentive Plan. These columns show the performance share units that could be earned at threshold, target and maximum levels of performance. If we do not achieve a threshold performance metric, no performance share units will be earned with respect to that performance metric. Because the LTIP is based on a three-year performance period, none of the performance share units will be earnable until the performance period closes following our 2022 fiscal year. See “Compensation Discussion and Analysis” section of this Amendment No. 1 to Annual Report on Form 10-K/A for additional discussion of the LTIP.

(4)Represents RSUs that vest, so long as the executive continues to be employed with us, in six equal installments over three years beginning approximately nine months after the date of issuance.

(5)Represents stock options that vest, so long as the executive continues to be employed with us, in eight equal installments over four years beginning approximately nine months after date of issuance.

(6)In the case of RSUs and LTIP PSUs, represents the fair value of the awards, measured at the grant date. In the case of stock options, the grant date fair value is equal to the number of shares subject to the option multiplied by the fair value of our options on the date of grant determined using the Black-Scholes option valuation model. The methodology and assumptions used to calculate the Black-Scholes value of our options are described in Note 11 of the consolidated financial statements contained in our Annual Report. The closing price of our stock on January 21, 2020 was $47.16. The closing price of our stock on March 30, 2020 was $31.49.


Narrative Description of Summary Compensation Table and Grants of Plan-Based Awards Table

The material terms of our named executive officers’ annual compensation, including base salaries, cash incentive plan, time-based RSUs, stock options and Long-Term Incentive Plan PSUs and the explanations of the amounts of salary, cash incentives, and equity values in proportion to total compensation are described under “Compensation Discussion and Analysis” in this Amendment No. 1 to Annual Report on Form 10-K/A.

As discussed in greater detail in “Compensation Discussion and Analysis” in this Amendment No. 1 to Annual Report on Form 10-K/A, the 2020 non-equity incentive awards were granted pursuant to the fiscal 2020 Corporate Bonus Plan, with amounts to be earned based on the achievement of certain financial targets. In fiscal 2020, following adjustments made in light of the COVID-19 pandemic as discussed above, we exceeded the target level of performance under our bonus plan with respect to the non-GAAP operating income and the adjusted free cash flow metrics, but fell short of the target level of performance with respect to the non-GAAP revenue metric, which resulted in an overall payout percentage of 94% with respect to the annual cash bonus.

As discussed in greater detail in “Compensation Discussion and Analysis” in this Amendment No. 1 to Annual Report on Form 10-K/A, the PSUs awarded under the Long-Term Incentive Plan will be earned based on the results achieved during the three year performance period as determined following our 2022 fiscal year, contingent upon each named executive officer’s continued service.

The RSUs granted to our ~~definitive Proxy Statement.~~named executive officers in 2020 vest in equal installments every six months over three years, subject to continued employment. There is no purchase price associated with PSU or RSU awards. The stock options granted to our named executive officers in 2020 vest in equal installments every six months over four years, subject to continued employment. The stock options have an exercise price equal to the closing price of our common stock on the date of grant.

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~~Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters~~


Outstanding Equity Awards

The following table sets forth certain information with respect to the outstanding equity awards at November 30, 2020 for each of the named executive officers. We have omitted Mr. Jalbert from the table below because he retired as Chief Financial Officer on January 31, 2020 and his employment with the Company terminated on April 2, 2020. Pursuant to a Transition Letter entered into between Mr. Jalbert and the Company in connection with his retirement, all unvested stock options and unvested restricted stock units held by Mr. Jalbert that would otherwise have vested on October 1, 2020 accelerated and became fully exercisable on April 2, 2020, as detailed in the section entitled "Severance and Change in Control Agreements" below. All other unvested equity awards terminated as of such date.

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OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END 2020


		Option Awards					Stock Awards
		Number of Securities Underlying Unexercised Options					Number of Shares or Units of Stock That Have Not Vested (#)(1)		Market Value of Shares or Units of Stock That Have Not Vested ($)(2)	Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(3)		Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(4)
Name	Grant Date	Exercisable (#)		Unexercisable (#)	Option Exercise Price ($)	Option Expiration Date
Yogesh Gupta
	2/23/2017	130,877	(6)	18,696	28.98	2/22/2024	—		—	—		—
	1/12/2018	43,248	(7)	25,947	50.69	1/11/2025	3,601	(8)	144,400	27,183	(9)	1,090,038
	1/22/2019	37,605	(10)	62,670	34.73	1/21/2026	15,765	(11)	632,177	52,549	(12)	2,107,215
	1/21/2020	9,072	(13)	63,502	47.16	1/20/2027	20,410	(14)	818,441	40,819	(15)	1,636,842
Anthony Folger	3/30/2020	6,300	(13)	44,094	31.49	3/30/2027	12,703	(14)	509,390	25,405	(15)	1,018,741
John Ainsworth
	2/17/2017	20,554	(6)	2,936	29.25	2/16/2024				—		—
	1/12/2018	8,295	(7)	4,976	50.69	1/11/2025	691	(8)	27,709	5,212	(9)	209,001
	10/15/2018	—		—	—	—	2,059	(16)	82,566	—		—
	1/22/2019	7,212	(10)	12,019	34.73	1/21/2026	3,024	(11)	121,262	10,078	(12)	404,128
	1/21/2020	1,650	(13)	11,546	47.16	1/20/2027	3,711	(14)	148,811	7,422	(15)	297,622
Loren Jarrett
	2/17/2017	20,554	(6)	2,936	29.25	2/16/2024
	1/12/2018	8,295	(7)	4,976	50.69	1/11/2025	691	(8)	27,709	5,212	(9)	209,001
	10/15/2018	—		—	—	—	2,059	(16)	82,566	—		—
	1/22/2019	7,212	(10)	12,019	34.73	1/21/2026	3,024	(11)	121,262	10,078	(12)	404,128
	1/21/2020	1,650	(13)	11,546	47.16	1/20/2027	3,711	(14)	148,811	7,422	(15)	297,622
Gary Quinn
	9/29/2017	21,098	(5)	7,032	38.17	9/28/2024
	1/12/2018	8,295	(7)	4,976	50.69	1/11/2025	691	(8)	27,709	5,212	(9)	209,001
	10/15/2018	—		—	—	—	2,059	(16)	82,566	—		—
	1/22/2019	7,212	(10)	12,019	34.73	1/21/2026	3,024	(11)	121,262	10,078	(12)	404,128
	1/21/2020	1,886	(13)	13,195	47.16	1/20/2027	4,242	(14)	170,104	8,482	(15)	340,128

_____________

(1)The unvested awards shown in this column are RSUs subject to service-based vesting, unless otherwise noted.

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(2)The market value of unvested RSUs was calculated as of November 30, 2020 (the last trading day of our fiscal 2020) based on the closing price of our common stock on Nasdaq of $40.10 on that date.

(3)The unvested awards shown in this column are PSUs subject to performance-based vesting. PSUs are reported assuming payout at target award levels, unless otherwise noted.

(4)The market value of unvested PSUs was calculated as of November 30, 2020 based on the closing price of our common stock on Nasdaq of $40.10 on that date.

(5)Vest in eight equal semi-annual installments beginning April 1, 2018.

(6)Vest in eight equal semi-annual installments beginning October 1, 2017.

(7)Vest in eight equal semi-annual installments beginning October 1, 2018.

(8)Vest in six equal semi-annual installments beginning October 1, 2018.

(9)Vest on February 1, 2021, subject to the Company meeting total shareholder return and operating income criteria over the three-year period ending November 30, 2020.

(10)Vest in eight equal semi-annual installments beginning October 1, 2019.

(11)Vest in six equal semi-annual installments beginning October 1, 2019.

(12)Vest on February 1, 2022, subject to the Company meeting total shareholder return and operating income criteria over the three-year period ending November 30, 2021.

(13)Vest in eight equal semi-annual installments beginning October 1, 2020.

(14)Vest in six equal semi-annual installments beginning October 1, 2020.

(15)Vest on February 1, 2023, subject to the Company meeting total shareholder return and operating income criteria over the three-year period ending November 30, 2022.

(16)Vest 33% on October 1, 2019 and 16.67% semi-annually thereafter.

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Option Exercises and Stock Vested

The following table sets forth certain information regarding the number of stock options exercised and RSUs that vested in the fiscal year ended November 30, 2020 under our equity incentive plans and the corresponding amounts realized by the named executive officers. The value realized on exercise of stock option awards is calculated as the difference between the closing price of our common stock on the Nasdaq Global Select Market on the exercise date and the exercise price of the applicable stock option award. The value realized on vesting for RSUs is calculated as the product of the number of shares subject to the RSUs that vested and the closing price of our common stock on the Nasdaq Global Select Market on the vesting date.

Option Exercises and Stock Vested - Fiscal 2020


	Option Awards		Stock Awards
Name	Number of Shares Acquired on Exercise (#)	Value Realized on Exercise ($)	Number of Shares Acquired on Vesting (#)	Value Realized on Vesting ($)
Yogesh Gupta	—	—	55,964	2,291,377
Anthony Folger	—	—	2,540	95,314
Paul Jalbert	44,569	582,678	55,853	1,973,450
John Ainsworth	—	—	18,318	727,173
Loren Jarrett	—	—	18,318	727,173
Gary Quinn	—	—	19,011	770,626


Severance and Change in Control Agreements

We have agreements with, or guidelines applicable to, our executive officers that provide the benefits described below in connection with certain terminations of employment or a change in control of our company. We do not provide excise tax gross-ups to our executive officers under these or any other agreements.

Mr. Gupta’s Executive Employment Agreement

In connection with his appointment as our President and Chief Executive Officer, we and Mr. Gupta entered into an employment agreement, effective as of October 10, 2016, setting forth Mr. Gupta’s compensation and certain other terms. Mr. Gupta’s employment agreement provides that if his employment is terminated because of an “involuntary termination,” he will be entitled to:

(1)the payment of cash severance equal to 18 months of total target cash compensation as of the date of termination, which will be paid over 18 months;

(2)the payment of his annual target cash bonus on a pro-rata basis with respect to the elapsed part of the relevant fiscal year;

(3)the continuation, for a period of 18 months, of benefits that are substantially equivalent to the benefits (medical, dental, and vision) that were in effect immediately prior to termination; and

(4)18 months of acceleration of unvested stock options and RSUs (but not unvested performance equity).

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Receipt of the severance and benefits is subject to Mr. Gupta’s execution of a standard separation and release agreement. Separation payments upon any involuntary termination within twenty-four months following a change in control would be governed by the Employee Retention and Motivation Agreement described below and not by Mr. Gupta’s employment agreement.

An “involuntary termination” is defined in the employment agreement as a termination of employment by us other than for cause, disability or death or a termination by Mr. Gupta as a result of certain events occurring without his consent such as an assignment to him of duties or a significant reduction of his duties, either of which is materially inconsistent with his position prior to the assignment or reduction, or the removal of Mr. Gupta from that position, a material reduction in Mr. Gupta's base salary or target bonus, a relocation of Mr. Gupta to a facility or location more than fifty miles from his then present location, or a material breach of the employment agreement by us.

Mr. Gupta’s employment agreement also includes non-competition and related covenants. The non-competition covenant will be in effect for the duration of the period in which severance and other benefits are paid. The non-competition covenant relates to certain businesses with similar product areas and activities as our company.

Mr. Gupta’s Employee Retention and Motivation Agreement

We and Mr. Gupta have also entered into an Employee Retention and Motivation Agreement (the “Gupta ERMA”), which provides certain compensation and benefits if his employment is involuntarily terminated within 24 months of a change in control of our company. If an involuntary termination of Mr. Gupta’s employment occurs under other circumstances, the severance terms of his employment agreement, as described above, would control and not the Gupta ERMA.

Change in Control Benefits.Under the Gupta ERMA, upon a change in control of our company, Mr. Gupta would be entitled to:

(1)the payment of his annual target cash bonus on a pro-rata basis with respect to the elapsed part of the relevant fiscal year; and

(2)18 months of acceleration of unvested stock options and RSUs (but not unvested performance equity, which will vest in accordance with its terms), unless the acquirer assumes all such options and restricted equity. If such outstanding stock options and shares of restricted equity held by Mr. Gupta are continued by us or assumed by our successor entity, then vesting will continue in its usual course.

Involuntary Termination Following Change in Control. In the event of an involuntary termination within twenty-four (24) months following a change in control, Mr. Gupta would be entitled to:

(1)a lump-sum payment of cash severance equal to 24 months of total target cash compensation as of the date of termination;

(2)the continuation, for a period of 24 months, of benefits that are substantially equivalent to the benefits (medical, dental, and vision) that were in effect immediately prior to termination; and

(3)accelerated vesting of all unvested stock options and RSUs (but not unvested performance equity, which will vest in accordance with its terms).

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In the event that any amounts provided for under the Gupta ERMA or otherwise payable to Mr. Gupta would constitute “parachute payments” within the meaning of Section 280G of the Internal Revenue Code and be subject to the related excise tax, Mr. Gupta would be entitled to receive either full payment of the benefits under the agreement or such lesser amount that would result in no portion of the benefits being subject to the excise tax, whichever results in the greatest amount of after-tax benefits to Mr. Gupta.

Mr. Folger’s Executive Employment Agreement

In connection with his appointment as Chief Financial Officer, we and Mr. Folger entered into an employment agreement, effective January 31, 2020, setting forth Mr. Folger’s compensation and certain other terms. Mr. Folger’s employment agreement provides that in the event that his employment is terminated as a result of an “involuntary termination,” he will be entitled to:

•the payment of cash severance equal to 12 months of total target cash compensation as of the date of termination, which will be paid over 12 months;

•the continuation, for a period of 12 months, of benefits that are substantially equivalent to the benefits (medical, dental, and vision) that were in effect immediately prior to termination; and

•12 months accelerated vesting of all unvested stock options and RSUs (but not unvested performance equity).

Receipt of the severance and benefits is subject to Mr. Folger’s execution of a standard separation and release agreement, which will also include non-competition and related covenants. The non-competition covenant will be in effect for the duration of the period in which severance and other benefits are paid. The non-competition covenant relates to certain businesses with similar product area and activities as the Company. Separation payments upon any involuntary termination within twelve months following a change in control would be governed by the Employee Retention and Motivation Agreement described below and not by Mr. Folger’s employment agreement.

An “involuntary termination” is defined in the employment agreement as a termination of employment by the Company other than for “Cause” (as defined in the agreement), disability or death or a termination by Mr. Folger as a result of certain events occurring without his consent such as an assignment to him of duties, a significant reduction of his duties, either of which is materially inconsistent with his position prior to the assignment or reduction, or the removal of Mr. Folger from such position, a material reduction in Mr. Folger’s base salary or target bonus, a relocation of Mr. Folger to a facility or location more than fifty miles from his then-present location or a material breach of the employment agreement by the Company.

Mr. Jalbert’s Transition Letter

On January 31, 2020, Mr. Jalbert retired as Chief Financial Officer. He remained with the Company until April 2, 2020 in order to assist his successor, Anthony Folger, in the transition. Pursuant to a Transition Letter, dated January 16, 2020, between Mr. Jalbert and the Company (the "Transition Letter"), during the period beginning February 1, 2020 and ending April 2, 2020, the Company paid Mr. Jalbert a base salary of $10,000 per month for his services, Mr. Jalbert continued to participate in the benefit arrangements of the Company and Mr. Jalbert’s unvested equity awards continued to vest in accordance with the terms and conditions of such awards. Additionally, all unvested stock options and unvested restricted stock units held by Mr. Jalbert that would otherwise have vested on October 1, 2020 accelerated and became fully exercisable on April 2, 2020, as detailed in the section entitled "Estimate of Severance and Change in Control Benefits" below. No other PSUs (including PSUs under the LTIP), RSUs or stock options (except those described above) vested or were accelerated in connection with Mr. Jalbert's retirement.

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Executive Severance Guidelines

We have adopted severance guidelines applicable to our executive officers, including the named executive officers other than Mr. Gupta and Mr. Folger. Any severance payable to Messrs. Gupta and Folger is governed by the employment agreements described above. Our executive severance guidelines provide that upon an involuntary termination and the execution of a standard release of claims, an executive officer is entitled to:

•the payment of cash severance equal to 12 months of total target cash compensation as of the date of termination, which will be paid over 12 months;

•the payment of his or her annual target cash bonus on a pro-rata basis with respect to the elapsed part of the relevant fiscal year;

•the continuation, for a period of 12 months, of benefits that are substantially equivalent to the benefits (medical, dental, and vision) that were in effect immediately prior to termination; and

•12 months of acceleration of unvested stock options and RSUs (but not unvested performance equity).

Severance payments and benefits upon any involuntary termination within 12 months following a change in control are governed by the Employee Retention and Motivation Agreement (“ERMA”) described below.

The payment of severance and other benefits is conditioned upon the executive agreeing to non-competition, non-disparagement and related covenants. The non-competition covenant would be in effect for one year following the termination of employment. In connection with the termination of employment of an executive officer, all PSUs awarded to that executive officer are cancelled.

Other Employee Retention and Motivation Agreements

We have entered into an ERMA with each of our other named executive officers. Each agreement is substantially identical to the Gupta ERMA except that (i) upon the involuntary termination of the executive officer within 12 months following a change of control, the executive officer will be entitled to receive a lump sum payment equal to 15 months of his or her total target compensation and his or her benefits will continue for 15 months, and (ii) for all named executive officers, accelerated vesting in connection with an involuntary termination following a change in control is limited to twelve months. Under no circumstances would any of our executive officers be entitled to a gross-up payment under the ERMAs for any excise taxes to which he or she may be subject if any of the above payments and benefits are considered to be "parachute payments."

Estimate of Severance and Change in Control Benefits

The following table indicates the estimated payments and benefits that each of Messrs. Gupta, Folger, Ainsworth, Quinn and Ms. Jarrett would have received under (a) their respective employment agreements, in the case of Messrs. Gupta and Folger, (b) our severance guidelines applicable to executive officers, in the case of Messrs. Ainsworth, Quinn and Ms. Jarrett, and (c) their respective ERMAs, assuming in each case that the change of control of our company, termination of his or her employment and/or retirement occurred at November 30, 2020. We have omitted Mr. Jalbert from the table below because his retirement was effective on April 2, 2020.

These amounts are estimates only and do not necessarily reflect the actual amounts that would be paid to the named executive officer, which amounts would only be known at the time that he or she becomes entitled to such payment.

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	Involuntary Termination (1)($)	Change in Control Only (2)($)	Involuntary Termination Within 12 Months Following Change of Control ($)
Yogesh Gupta
Cash Severance	1,725,000	—	2,300,000
Pro Rata Bonus	575,000	575,000	575,000
Stock Options	409,822	—	544,437
Restricted Stock Units	1,267,641	—	1,595,018
Benefits (3)	31,637	—	42,183
Total	4,009,100	575,000	5,056,638

Anthony Folger
Cash Severance	660,000	—	825,000
Pro Rata Bonus	260,000	260,000	260,000
Stock Options	108,477	—	108,477
Restricted Stock Units	203,708	—	203,708
Benefits (3)	36,027	—	45,034
Total	1,268,212	260,000	1,442,219

John Ainsworth
Cash Severance	517,500	—	646,875
Pro Rata Bonus	172,500	172,500	172,500
Stock Options	57,675	—	57,675
Restricted Stock Units	250,625	—	250,625
Benefits (3)	21,257	—	26,571
Total	1,019,557	172,500	1,154,246

Loren Jarrett
Cash Severance	568,000	—	710,000
Pro Rata Bonus	213,000	213,000	213,000
Stock Options	57,675	—	57,675
Restricted Stock Units	250,625	—	250,625
Benefits (3)	35,731	—	44,664
Total	1,125,031	213,000	1,275,964

Gary Quinn
Cash Severance	665,000	—	831,250
Pro Rata Bonus	315,000	315,000	315,000
Stock Options	39,391	—	39,391
Restricted Stock Units	259,126	—	259,126
Benefits (3)	21,257	—	26,571
Total	1,299,774	315,000	1,471,338

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_____________

(1)The amounts shown in the first column, with respect to stock options and RSUs, represent the value of certain unvested options and RSUs becoming fully vested and are calculated using the exercise price for each unvested stock option and the closing price of our common stock on November 30, 2020 (the last trading day of our fiscal 2020), which was $40.10. In the event of an involuntary termination, all unvested PSUs awarded to an individual under our Long-Term Incentive Plans are cancelled.

(2)In the event of a change in control, there is no accelerated vesting of options or RSUs provided that the acquirer assumes all outstanding stock options and RSUs of the individual. These tables have been prepared under that assumption. However, if the acquirer does not assume all outstanding stock options and RSUs of the individual, (i) in the case of Mr. Gupta, there is limited (12 month) accelerated vesting of stock options and RSUs in the event of a change of control, which values, based on the closing price of our common stock on November 30, 2020, are $342,515 and $893,228, respectively, and (ii) in the case of Messrs. Folger, Ainsworth and Quinn and Ms. Jarrett, there is limited (12 month) accelerated vesting of stock options and RSUs, and the values of stock options and RSUs indicated in the first column would apply upon a change of control. The amounts referenced in the foregoing sentence have been calculated using the exercise price for each unvested stock option and the closing price of our common stock on November 30, 2020, which was $40.10. Under the terms of the LTIP, in the event of a change in control, grantees are entitled to accelerated determination of PSUs earned under outstanding LTIP awards, unless the acquirer assumes such LTIP awards. Upon the change in control, our Compensation Committee will determine the number of PSUs that are eligible to be earned based on the actual attainment of the relevant metrics as of the change in control. Those PSUs determined to be earned will not become fully vested until the conclusion of the original three-year performance period, subject to the continued employment of the grantee through such date. Additionally, under the terms of the LTIP, in the event of an involuntary termination following a change in control, grantees are entitled to accelerated payout of PSUs determined to be earned under outstanding LTIP awards as of the change in control. For purposes of computing amounts attributable to accelerated vesting, the second and third columns exclude all unvested PSUs awarded under our LTIP as those amounts are undeterminable.

(3)Represents the estimated value of continuing benefits (medical, dental, and vision) for:

(1)18 months in the case of an involuntary termination of Mr. Gupta’s employment, 24 months in the case of an involuntary termination in connection with a change in control;

(2)12 months in the case of an involuntary termination of employment of Messrs. Folger, Ainsworth and Quinn and Ms. Jarrett, other than in connection with a change in control; and

(3)15 months, in the case of an involuntary termination in connection with a change in control with respect to Messrs. Folger, Ainsworth and Quinn and Ms. Jarrett.


CEO Pay Ratio

In accordance with SEC rules, we are providing the ratio of the annual total compensation of our CEO to the annual total compensation of our median employee. The 2020 annual total compensation of our CEO Mr. Gupta is $5,205,876, the 2020 annual total compensation of our median compensated employee is $80,264, and the ratio of these amounts is 65 to 1.

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This pay ratio is a reasonable estimate calculated in a manner consistent with SEC rules based on our human resources system of record and the methodology described below. Because the SEC rules for identifying the median compensated employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their compensation practices, the pay ratio reported by other companies may not be comparable to the pay ratio reported above, as other companies may have different employment and compensation practices and may utilize different methodologies, exclusions, estimates, and assumptions in calculating their own pay ratios.

For purposes of identifying our median compensated employee, we used our global employee population as of November 1, 2020, identified based on our human resources system of record. We utilized total direct compensation as our consistently applied compensation measure. In this context, total direct compensation means the applicable annual fixed pay determined as of November 1, 2020, the annual incentive cash target amount or commission target amount payable for service in 2020, and the approved value of the annual equity awards granted during 2020. To identify our median compensated employee, we then calculated the total direct compensation for our global employee population, converted other currencies to US dollars and ordered the employees based on their total direct compensation.

To compute the pay ratio, we then calculated both the CEO and median employee’s annual total compensation pursuant to the proxy disclosure rules and compared the annual total compensation of the CEO to that of the median employee.

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Director Compensation Plan—Fiscal 2020

We pay our non-employee directors a mix of cash and equity compensation. Employee directors receive no compensation for their service as directors.

In accordance with the 2020 Director Compensation Plan adopted by the Board, for 2020, our non-employee directors were paid an annual retainer of $250,000. This annual retainer was paid $50,000 in cash and $200,000 in equity, in the form of deferred stock units (“DSUs”). The independent Chairman of the Board was paid an additional cash retainer of $50,000. The cash portions of the annual retainers were paid in June 2020.

Prior to adopting the 2020 Director Compensation Plan, the Compensation Committee received market data from its independent compensation consultant and considered whether any changes in director compensation were required. Based on the market data, the Compensation Committee recommended to the Board no changes to director compensation and the Board adopted this recommendation.

The number of DSUs granted was determined by dividing the equity retainer by the grant-date closing price of our common stock as reported by Nasdaq. The DSUs vest in a single installment on the date of the Annual Meeting, subject to continued service on our Board of Directors through such date. DSUs do not convert to shares of common stock until a director terminates service on the Board of Directors or upon a change in control, whichever occurs first.

With respect to service on the committees of our Board of Directors, the following fees were paid:

•Audit Committee - $25,000 for the Chair and $20,000 for the other members;

•Compensation Committee - $25,000 for the Chair and $15,000 for the other members;

•Nominating and Corporate Governance Committee - $12,500 for the Chair and $10,000 for the other members; and

•Mergers and Acquisitions/Strategy Committee - $12,500 for the Chair and $10,000 for the other members.

The fees paid for service on the committees were paid in cash in June 2020.

Prior to March 2019, newly elected directors were also entitled to receive an initial director appointment grant of $300,000 of DSUs in connection with his or her appointment to our Board of Directors. In March 2019, the Board of Directors eliminated this initial director appointment grant for future appointees to the Board to remain in line with market practice.

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Director Compensation Table—Fiscal 2020

The following table sets forth a summary of the compensation paid or granted to our non-employee directors for service on our Board in 2020.


Name	Fees Earned or Paid in Cash ($)	Stock Awards (1)(2) ($)	Total ($)
Paul T. Dacier	62,500	200,035		262,535
John R. Egan	110,000	200,035		310,035
Rainer Gawlick	85,000	200,035		285,035
Charles F. Kane	90,000	200,035		290,035
Samskriti Y. King	95,000	200,035		295,035
David A. Krall	75,000	200,035		275,035
Angela T. Tucci	80,000	200,035		280,035
Vivian Vitale(3)	90,000	300,047		390,047

_____________

•The number of outstanding unvested DSUs held by each director as of November 30, 2020 is shown in the table below. No director held stock options.


Name			Unvested DSUs Outstanding at November 30, 2020
Mr. Dacier			8,215
Mr. Egan			5,137
Dr. Gawlick			8,215
Mr. Kane			5,137
Ms. King			9,046
Mr. Krall			5,137
Ms. Tucci			9,046
Ms. Vitale			5,137

•Represents the fair value of the awards measured at the grant date. The number of units granted to each Director was determined by dividing the grant date value of the award, $200,000, by $38.94, the closing price of our common stock on June 29, 2020.

•Ms. Vitale received an additional grant of DSUs in fiscal year 2020. Represents the fair value of the awards measured at the grant date. The number of units granted to Ms. Vitale was determined by dividing the grant date value of the award, $100,000, by $31.94, the closing price of our common stock on March 30, 2020.

Stock Ownership Guidelines

Non-employee members of our Board are required to own shares of Progress common stock. The Board of Directors sets and periodically reviews and makes changes to these ownership requirements. In March 2017, our Board of Directors adopted revised stock retention guidelines for non-employee directors. These guidelines provide for all non-employee directors to hold an amount of our common stock, restricted shares, stock options and/or DSUs having a value equal to at least five times the annual cash retainer. Directors have five years to attain this ownership threshold. As of the March 19, 2021, all non-employee directors had met this ownership threshold, other than Ms. Vitale, who recently joined the Board in October 2019.

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The following table sets forth certain information regarding beneficial ownership as of March 19, 2021:

•by each person who is known by us to beneficially own more than 5% of the outstanding shares of our common stock;

•by each of our directors and nominees for the Board of Directors;

•by each of our named executive officers; and

•by all of our directors and executive officers as a group.

We have determined beneficial ownership in accordance with the rules of the SEC. Under such rules, beneficial ownership includes any shares over which the individual has sole or shared voting power or investment power as well as any shares that the individual has the right to acquire within 60 days of March 19, 2021 through the exercise of any stock option, warrants or other rights.

The percentage of shares beneficially owned is based on 44,003,055 shares of our common stock outstanding as of March 19, 2021. In computing the number of shares of stock beneficially owned by a person and the percentage ownership of that person, we deemed to be outstanding all shares of our common stock subject to options that are currently vested or exercisable or that will become vested or exercisable within 60 days of March 19, 2021, restricted stock units that vest within 60 days of March 19, 2021 and fully vested deferred stock units or deferred stock units that vest within 60 days of March 19, 2021. We did not deem these shares outstanding, however, for the purpose of computing the percentage ownership of any other person.

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	Amount and Nature of Beneficial Ownership
Name and Address of Beneficial Owner	Shares Beneficially Owned	Percent of Common Stock Beneficially Owned

BlackRock, Inc. (2) 55 East 52nd Street New York, NY 10055	7,298,629	16.2%
The Vanguard Group, Inc. (3) 100 Vanguard Blvd. Malvern, PA 19355	4,837,743	10.7%
Renaissance Technologies LLC (4) 800 Third Ave. New York, NY 10022	2,370,990	5.6%
John Ainsworth (5)	74,437	*
Paul T. Dacier (6)	28,674	*
John R. Egan (7)	48,196	*
Anthony Folger (8)	19,901	*
Rainer Gawlick (9)	29,674	*
Yogesh Gupta (10)	394,809	*
Paul Jalbert (11)	43,012	*
Loren Jarrett (12)	63,678	*
Charles F. Kane (13)	83,380	*
Samskriti King (14)	20,100	*
David A. Krall (15)	92,911	*
Gary Quinn (16)	57,440	*
Angela Tucci (17)	20,100	*
Vivian Vitale (18)	8,313	*
All executive officers and directors as a group (18 persons) (19)	1,152,715	2.6%

_____________

* Less than 1%

(1)All persons named in the table have sole voting and investment power with respect to all shares of our common stock shown as beneficially owned by them, subject to community property laws where applicable and subject to the other information contained in the footnotes to this table. Unless otherwise noted, the address of such person is c/o Progress Software Corporation, 14 Oak Park Drive, Bedford, Massachusetts 01730.

(2)Derived from Schedule 13G filed on January 25, 2021. The Schedule 13G reported that BlackRock, Inc., a parent holding company through certain of its subsidiaries, beneficially owned 7,298,629 shares of our common stock, with sole voting power over 7,196,555 shares, and sole dispositive power over 7,298,629 shares. The Schedule 13G indicates that more than 5% of our outstanding common stock is being held by the reporting person on behalf of iShares Core S&P Small-Cap ETF.

(3)Derived from Schedule 13G/A filed on February 10, 2021. The Schedule 13G/A reported that The Vanguard Group, an investment adviser, beneficially owned 4,837,743 shares of our common stock, with shared voting power over 102,644 shares, sole dispositive power over 4,698,295 shares and shared dispositive power over 139,448 shares.

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(4)Derived from Schedule 13G filed on February 10, 2021. The Schedule 13G reported that Renaissance Technologies LLC beneficially owned 2,370,990 shares of our common stock, with sole voting power over 2,370,990 shares and sole dispositive power over 2,370,990 shares.

(5)Includes 37,711 shares issuable upon the exercise of outstanding options that are exercisable as of March 19, 2021; 8,649 shares issuable upon the exercise of outstanding options that will be exercisable within 60 days of March 19, 2021 and 3,470 restricted stock units that will vest within 60 days of March 19, 2021.

(6)Includes 23,213 fully vested deferred stock units and 5,461 deferred stock units that will vest within 60 days of March 19, 2021.

(7)Includes 24,126 fully vested deferred stock units and 5,137 deferred stock units that will vest within 60 days of March 19, 2021.

(8)Includes 6,300 shares issuable upon the exercise of outstanding options that are exercisable as of March 19, 2021; 6,300 shares issuable upon the exercise of outstanding options that will be exercisable within 60 days of March 19, 2021 and 2,540 restricted stock units that will vest within 60 days of March 19, 2021.

(9)Includes 23,213 fully vested deferred stock units and 5,461 deferred stock units that will vest within 60 days of March 19, 2021.

(10)Includes 220,802 shares issuable upon the exercise of outstanding options that are exercisable as of March 19, 2021; 48,951 shares issuable upon the exercise of outstanding options that will be exercisable within 60 days of March 19, 2021 and 12,938 restricted stock units that will vest within 60 days of March 19, 2021.

(11)Mr. Jalbert retired as Chief Financial Officer on January 31, 2020 and his employment with the Company terminated on April 2, 2020, at which time, all unvested equity awards terminated as of such date. Pursuant to a Transition Letter entered into between Mr. Jalbert and the Company in connection with his retirement, all unvested stock options and unvested restricted stock units held by Mr. Jalbert that would otherwise vest on October 1, 2020 accelerated and became fully exercisable on April 2, 2020, as detailed in the section entitled "Severance and Change in Control Agreements" below.

(12)Includes 37,711 shares issuable upon the exercise of outstanding options that are exercisable as of March 19, 2021; 8,649 shares issuable upon the exercise of outstanding options that will be exercisable within 60 days of March 19, 2021 and 3,470 restricted stock units that will vest within 60 days of March 19, 2021.

(13)Includes 36,374 fully vested deferred stock units and 5,137 deferred stock units that will vest with 60 days of March 19, 2021.

(14)Includes 14,695 fully vested deferred stock units and 5,405 deferred stock units that will vest within 60 days of March 19, 2021.

(15)Includes 22,437 fully vested deferred stock units and 5,137 deferred stock units that will vest within 60 days of March 19, 2021.

(16)Includes 38,491 shares issuable upon the exercise of outstanding options that are exercisable as of March 19, 2021; 9,464 shares issuable upon the exercise of outstanding options that will be exercisable within 60 days of March 19, 2021 and 3,576 restricted stock units that will vest within 60 days of March 19, 2021.

(17)Includes 14,695 fully vested deferred stock units and 5,405 deferred stock units that will vest within 60 days of March 19, 2021.

(18)Includes 3,176 fully vested deferred stock units and 5,137 deferred stock units that will vest within 60 days of March 19, 2021.

(19)Includes 391,206 shares issuable upon the exercise of outstanding options that are exercisable as of March 19, 2021; 97,776 shares issuable upon the exercise of outstanding stock options that will be exercisable within 60 days of March 19, 2021; 31,712 restricted stock units that will vest within 60 days of March 19, 2021; 161,929 fully vested deferred stock units and 42,280 deferred stock units that will vest within 60 days of March 19, 2021.

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Information related to securities authorized for issuance under equity compensation plans as of November 30, ~~2019~~2020 is as follows (in thousands, except ~~per share~~per-share data):


Plan Category	Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights		Weighted-average Exercise Price of Outstanding Options, Warrants and Rights	Number of Securities Remaining Available for Future Issuance
Equity compensation plans approved by stockholders (1)	2,025	(2)	$38.68	3,208	(3)
Equity compensation plans not approved by stockholders (4)	443		$41.02	902
Total	2,468		$39.28	4,110

_____________

(1)Consists of the 1992 Incentive and Nonqualified Stock Option Plan, 1994 Stock Incentive Plan, 1997 Stock Incentive Plan, 2008 Stock Option and Incentive Plan, and 1991 Employee Stock Purchase Plan (ESPP).

Plan Category
Number of
Securities to be
Issued Upon
Exercise of
Outstanding
Options, Warrants
and Rights

Weighted-average
Exercise
Price of
Outstanding
Options,
Warrants
and Rights

Number of
Securities
Remaining
Available
For
Future
Issuance

Equity compensation plans approved by stockholders⁽¹⁾
1,696
⁽²⁾
$ 35.27
4,547
⁽³⁾
Equity compensation plans not approved by stockholders⁽⁴⁾
555
   40.85
854

Total 2,251
   $ 37.26
5,401


⁽¹⁾(2)Includes 796,000 restricted stock units under our 2008 Plan. Does not include purchase rights accruing under the ESPP because the purchase price (and therefore the number of shares to be purchased) will not be determined until the end of the purchase period.	Consists of the 1992 Incentive and Nonqualified Stock Option Plan, 1994 Stock Incentive Plan, 1997 Stock Incentive Plan, 2008 Stock Option and Incentive Plan and 1991 Employee Stock Purchase Plan ("ESPP").


⁽²⁾	Includes 829,000 restricted stock units under our 2008 Plan. Does not include purchase rights accruing under the ESPP because the purchase price (and therefore the number of shares to be purchased) will not be determined until the end of the purchase period.


⁽³⁾	~~Includes 401,000 shares available for future issuance under the ESPP.~~


⁽⁴⁾	~~Consists of the 2002 Nonqualified Stock Plan and the 2004 Inducement Plan described below.~~

(3)Includes 164,000 shares available for future issuance under the ESPP.

(4)Consists of the 2002 Nonqualified Stock Plan and the 2004 Inducement Plan described below.

We have adopted two equity compensation plans, the 2002 Nonqualified Stock Plan ~~(2002 Plan)~~ and the 2004 Inducement Stock Plan, ~~(2004 Plan),~~ for which the approval of stockholders was not required. We intend that the issuance of awards under the 2004 Inducement Stock Plan be reserved for persons to whom we may issue securities as an inducement to become employed by us pursuant to the rules and regulations of ~~NASDAQ.~~Nasdaq. An executive officer would be eligible to receive an award under the 2004 Inducement Stock Plan only as an inducement to join us. Executive officers and members of the Board of Directors are not eligible for awards under the 2002 Nonqualified Stock Plan. ~~An executive officer would be eligible to receive an award under the 2004 Plan only as an inducement to join us.~~ Awards under the 2002 Nonqualified Stock Plan and the 2004 Inducement Stock Plan may include nonqualified stock options, grants of conditioned stock, unrestricted grants of stock, grants of stock contingent upon the attainment of performance goals and stock appreciation rights. A total of 11,250,000 shares are issuable under the two plans, of which ~~853,842~~901,672 shares are available for future issuance.

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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE


Review, Approval or Ratification of Transactions with Related Persons

Pursuant to the Audit Committee’s charter, which can be found at www.progress.com under the heading "Corporate Governance" located on the “Investor Relations” page, the Audit Committee is responsible for the review and approval of related person transactions. A related person is a director, executive officer, nominee for director or certain stockholders of our company since the beginning of the last fiscal year and their respective immediate family members. A related person transaction is a transaction involving: (1) our company and any related person when the amount involved exceeds $120,000, and (2) the related person has a material direct or indirect interest.

We identify transactions for review and approval in accordance with the policies and procedures set forth in our Code of Conduct and Business Ethics, which can be found at www.progress.com under the heading "Corporate Governance" located on the “Investor Relations” page. The Code of Conduct and Business Ethics requires our employees, including our executive officers, to disclose any potential or actual conflicts of interest to his or her manager, our human capital department or our Chief Compliance Officer. This disclosure also applies to potential conflicts involving immediate family members of employees. We require our directors to complete a questionnaire intended to identify any transactions or potential transactions that must be reported per SEC rules and regulations. This questionnaire also requires our directors to promptly notify us of any changes during the year.


Transactions with Related Persons

During fiscal 2020, neither the Company nor its subsidiaries engaged in any transactions or series of similar transactions in which the amount involved exceeded $120,000 and in which any of our directors or executive officers, any holder of more than 5% of any class of our voting securities or any member of the immediate family of any of the foregoing persons had a direct or indirect material interest, nor are any such transactions currently proposed.


Independence of Members of our Board of Directors

We have determined that all current directors except Yogesh Gupta (our current President and Chief Executive Officer) are independent within the meaning of the director independence standards of NASDAQ and the applicable rules of the SEC. In making this determination, we solicited information from each of the directors regarding whether that director, or any member of his immediate family, had a direct or indirect material interest in any transactions involving our company, was involved in a debt relationship with our company or received personal benefits outside the scope of the director’s normal compensation. We considered the responses of the directors, and independently considered the commercial agreements, acquisitions and other material transactions entered by us during 2020, and determined that none of our non-employee directors had a material interest in those transactions.

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ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES


Selection of Independent Registered Public Accounting Firm

The ~~information required~~Audit Committee has selected the firm of Deloitte & Touche LLP, independent registered public accounting firm, to serve as our independent registered public accounting firm for the fiscal year ending November 30, 2021.

Independent Registered Public Accounting Firm Fees

Aggregate fees billed to us for services performed for the fiscal years ended November 30, 2020 and November 30, 2019 by ~~Item 12~~our independent registered public accounting firm, Deloitte & Touche LLP, were as follows:


	2020			2019
Audit Fees (1)	$	2,414,266	$	2,117,145
Audit-Related Fees (2)		270,000		673,700
Tax Fees (3)	2,615			19,805
All Other Fees	—		—

__________

(1)Represents fees billed for each of the last two fiscal years for professional services rendered for the audit of our annual financial statements included in Form 10-K and reviews of financial statements included in our interim filings on Form 10-Q, as well as statutory audit fees related to our wholly-owned foreign subsidiaries. In accordance with the policy on Audit Committee pre-approval, 100% of audit services provided by the independent registered public accounting firm are pre-approved.

(2)Represents, for 2020, fees billed for audit services in connection with the acquisition of Chef Software, Inc. and fees billed for audit services in connection with the implementation of Accounting Standards Update No. 2016-02, Leases (Topic 842), and for 2019, fees billed for audit services in connection with the acquisition of Ipswitch, Inc. ("Ipswitch") and implementation review of our new financial systems platform. In accordance with the policy on Audit Committee pre-approval, 100% of audit-related services provided by the independent registered public accounting firm are pre-approved.

(3)Includes fees primarily for tax services. In accordance with the policy on Audit Committee pre-approval, 100% of tax services provided by the independent registered public accounting firm are pre-approved.

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Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Registered Public Accounting Firm

The Audit Committee is responsible for appointing, setting compensation, and overseeing the work of our independent registered public accounting firm. The Audit Committee has established a policy regarding pre-approval of all audit and permissible non-audit services provided by the independent registered public accounting firm.

Requests for specific services by the independent registered public accounting firm which comply with the auditor services policy are reviewed by our Finance, Tax, and Internal Audit departments. Requests approved internally are aggregated and submitted to the Audit Committee in one of the following ways:

•Request for approval of services at a meeting of the Audit Committee; or

•Request for approval of services by the Chairman of the Audit Committee and then the approval by the full committee at the next meeting of the Audit Committee.

The request may be made with respect to security ownership and our equity compensation plans may be found under the headings captioned “Information About Progress Software Common Stock Ownership” and “Equity Compensation Plan Information” in our definitive Proxy Statement and is incorporated by reference.either specific services or a type of service for predictable or recurring services.

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~~Item 13. Certain Relationships and Related Transactions, and Director Independence~~

~~The information required by Item 13 is incorporated by reference to our definitive Proxy Statement.~~

~~Item 14. Principal Accounting Fees and Services~~

~~The information required by Item 14 is incorporated by reference to our definitive Proxy Statement.~~

PART IV

Item 15. Exhibits, Financial Statement Schedules

(a) ~~Documents Filed as Part of this Annual Report on Form 10-K~~

~~1. Financial Statements (included in Item 8 of this Annual Report on Form 10-K):~~


•	~~Report of Independent Registered Public Accounting Firm~~


•	~~Consolidated Balance Sheets as of November 30, 2019 and 2018~~


•	~~Consolidated Statements of Operations for the years ended November 30, 2019, 2018 and 2017~~


•	~~Consolidated Statements of Comprehensive Income (Loss) for the years ended November 30, 2019, 2018 and 2017~~


•	~~Consolidated Statements of Shareholders’ Equity for the years ended November 30, 2019, 2018 and 2017~~


•	~~Consolidated Statements of Cash Flows for the years ended November 30, 2019, 2018 and 2017~~


•	~~Notes to Consolidated Financial Statements~~

~~2. Financial Statement Schedules~~

~~Financial statement schedules are omitted as they are either not required or the information is otherwise included in the consolidated financial statements.~~

~~(b)~~ Exhibits

Documents listed below, except for documents followed by parenthetical numbers, are being filed as exhibits. Documents followed by parenthetical numbers are not being filed herewith and, pursuant to Rule 12b-32 of the General Rules and Regulations promulgated by the SEC under the Securities Exchange Act of 1934 (the Act), reference is made to such documents as previously filed as exhibits with the SEC. Our file number under the ~~Exchange~~ Act is 0-19417.



2.1*			Stock Purchase Agreement, dated March 28, 2019, by and among Progress Software Corporation, Ipswitch, Inc. and Roger Greene (1)
~~2.2~~2.2*			Agreement and Plan of Merger, dated September 4, 2020, by and among Progress Software Corporation, Go Big Transitory Subsidiary, Inc., Chef Software Inc. and Shareholder Representative Services LLC (2)
2.3			Plan of Domestication ~~(2)~~(3)
3.1			Certificate of Conversion from Non-Delaware Corporation to Delaware Corporation ~~(3)~~(4)
3.2			Certificate of Incorporation ~~(4)~~(5)
3.2.1			Certificate of Correction to Certification of Incorporation ~~(5)~~(6)
3.3			Amended and Restated By-Laws, as amended March 19, 2019 ~~(6)~~(7)
4.1			Specimen certificate for the Common Stock ~~(7)~~(8)
4.2			Description of Registered Securities (9)
10.1**			1992 Incentive and Nonqualified Stock Option Plan ~~(8)~~(10)
10.2**			1994 Stock Incentive Plan ~~(9)~~(11)
10.3**			1997 Stock Incentive Plan, as amended and restated ~~(10)~~(12)
10.4**			Form of Employee Retention and Motivation Agreement (effective prior to September 2014) ~~(11)~~(13)
10.5**			2002 Nonqualified Stock Plan, as amended and restated ~~(12)~~(14)
10.6**			2004 Inducement Stock Plan, as amended and restated ~~(13)~~(15)
10.7**			Progress Software Corporation 1991 Employee Stock Purchase Plan, as amended and restated ~~(14)~~(16)
10.8**			Progress Software Corporation 2008 Stock Option and Incentive Plan, as amended and restated ~~(15)~~(17)
10.9**			Form of Notice of Grant of Stock Options and Grant Agreement under the Progress Software Corporation 2008 Stock Option and Incentive Plan ~~(16)~~(18)
10.10**			Progress Software Corporation Corporate Executive Bonus Plan ~~(17)~~(19)
10.11**			Progress Software Corporation ~~2019~~2020 Fiscal Year Compensation Program for Non-Employee Directors ~~(18)~~(20)
10.12**			Form of Deferred Stock Unit Agreement under the Progress Software Corporation 2008 Stock Option and Incentive Plan ~~(19)~~(21)
10.13**			Form of Non-Qualified Stock Option Agreement for Non-Employee Directors under the Progress Software Corporation 2008 Stock Option and Incentive Plan (Initial Grant) ~~(20)~~(22)



10.14**	Form of Non-Qualified Stock Option Agreement for Non-Employee Directors under the Progress Software Corporation 2008 Stock Option and Incentive Plan (Annual Grant) ~~(21)~~(23)
10.15**		Form of Restricted Stock Unit Agreement under the Progress Software Corporation 2008 Stock Option and Incentive Plan ~~(22)~~(24)
10.16*		Second Amended and Restated Credit Agreement, dated as of April 30, 2019, by and among Progress Software Corporation, each of the lenders party thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, Wells Fargo Bank, N.A. and Citizens Bank, N.A., as Syndication Agents, and Bank of America, N.A., Citibank, N.A., Silicon Valley Bank, Santander Bank, N.A. and TD Bank, N.A., as Documentation Agents, and JPMorgan Chase Bank, N.A., as Sole Bookrunner and Sole Lead Arranger ~~(23)~~(25)
10.17**		Employment Agreement, dated October 10, 2016, by and between Progress Software Corporation and Yogesh Gupta ~~(24)~~(26)
10.18**		Employee Retention and Motivation Agreement, dated as of October 10, 2016, by and between Progress Software Corporation and Yogesh Gupta ~~(25)~~(27)

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10.19**			Employment Agreement, dated ~~March 24, 2017,~~January 16, 2020, by and between Progress Software Corporation and ~~Paul Jalbert (26)~~Anthony Folger (28)
10.20			Form of Employee Retention and Motivation Agreement (effective after September 2014) (29)
10.21			Form of Termination Letter (Executive Officers) (30)
10.22			Form of Separation Agreement and Release (Executive Officers) (31)
21.1			List of Subsidiaries of the Registrant (32)
23.1			Consent of Deloitte & Touche LLP, Independent Registered Public Accounting Firm (33)
31.1			Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 - Yogesh Gupta (34)
31.2			Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 - ~~Paul Jalbert~~Anthony Folger (35)
~~32.1~~31.3			Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 - Yogesh Gupta
31.4			Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 – Anthony Folger
32.1			Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (36)
101***			The following materials from Progress Software Corporation’s Annual Report on Form 10-K for the year ended November 30, ~~2019,~~2020, formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Consolidated Balance Sheets as of November 30, ~~2019~~2020 and ~~2018,~~2019, (ii) Consolidated Statements of Income for the years ended November 30, 2020, 2019 ~~2018~~ and ~~2017,~~2018, (iii) Consolidated Statements of Comprehensive Income for the years ended November 30, 2020, 2019 ~~2018~~ and ~~2017,~~2018, (iv) Consolidated Statements of Shareholders’ Equity for the years ended November 30, 2020, 2019 ~~2018~~ and ~~2017,~~2018, and (v) Consolidated Statements of Cash Flows for the years ended November 30, 2020, 2019 and 2018 ~~and 2017.~~(37).
104			Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

(1)Incorporated by reference to Exhibit 2.1 to our Current Report on Form 8-K filed on April 1, 2019.

(2)Incorporated by reference to Exhibit 2.1 to our Current Report on Form 8-K filed on September 9, 2020.

(3)Incorporated by reference to Exhibit 2.1 to our Current Report on Form 8-K filed on May 14, 2015.

(4)Incorporated by reference to Exhibit 3.1 to our Current Report on Form 8-K filed on May 14, 2015.

(5)Incorporated by reference to Exhibit 3.2 to our Current Report on Form 8-K filed on May 14, 2015.

(6)Incorporated by reference to Exhibit 3.2.1 to our Annual Report on Form 10-K for the year ended November 30, 2015.

(7)Incorporated by reference to Exhibit 3.1 to our Quarterly Report on Form 10-Q for the quarter ended May 31, 2019.

(8)Incorporated by reference to Exhibit 4.1 to our Annual Report on Form 10-K for the year ended November 30, 2011.

(9)Incorporated by reference to Exhibit 4.2 to our Annual Report on Form 10-K for the year ended November 30, 2019.

(10)Incorporated by reference to Exhibit 10.1 to our Annual Report on Form 10-K for the year ended November 30, 2009.

(11)Incorporated by reference to Exhibit 10.2 to our Annual Report on Form 10-K for the year ended November 30, 2009.

(12)Incorporated by reference to Exhibit 10.3 to our Annual Report on Form 10-K for the year ended November 30, 2012.

(13)Incorporated by reference to Exhibit 10.4 to our Annual Report on Form 10-K for the year ended November 30, 2013.

(14)Incorporated by reference to Exhibit 10.5 to our Annual Report on Form 10-K for the year ended November 30, 2015.

(15)Incorporated by reference to Exhibit 10.6 to our Annual Report on Form 10-K for the year ended November 30, 2015.

(16)Incorporated by reference to Appendix A to our definitive Proxy Statement filed April 15, 2016.

(17)Incorporated by reference to Annex A to our definitive Proxy Statement filed May 7, 2013.

(18)Incorporated by reference to Exhibit 10.9 to our Annual Report on Form 10-K for the year ended November 30, 2013.

(19)Incorporated by reference to Exhibit 10.10 to our Annual Report on Form 10-K for the year ended November 30, 2012.

(20)Incorporated by reference to Exhibit 10.1 to our Quarterly Report on Form 10-Q for the quarter ended February 29, 2020 filed on April 7, 2020.

(21)Incorporated by reference to Exhibit 10.12 to our Annual Report on Form 10-K for the year ended November 30, 2013.

(22)Incorporated by reference to Exhibit 10.13 to our Annual Report on Form 10-K for the year ended November 30, 2013.

(23)Incorporated by reference to Exhibit 10.14 to our Annual Report on Form 10-K for the year ended November 30, 2013.

(24)Incorporated by reference to Exhibit 10.15 to our Annual Report on Form 10-K for the year ended November 30, 2014.

(25)Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed on May 1, 2019.

(26)Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed on October 14, 2016.

(27)Incorporated by reference to Exhibit 10.2 to our Current Report on Form 8-K filed on October 14, 2016.

(28)Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed on January 17, 2020.

(29)Incorporated by reference to Exhibit 10.20 to our Annual Report on Form 10-K for the year ended November 30, 2019.

(30)Incorporated by reference to Exhibit 10.21 to our Annual Report on Form 10-K for the year ended November 30, 2019.

(31)Incorporated by reference to Exhibit 10.22 to our Annual Report on Form 10-K for the year ended November 30, 2019.

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(32)Incorporated by reference to Exhibit 21.1 to our Annual Report on Form 10-K for the year ended November 30, 2020.

(33)Incorporated by reference to Exhibit 23.1 to our Annual Report on Form 10-K for the year ended November 30, 2020.

(34)Incorporated by reference to Exhibit 31.1 to our Annual Report on Form 10-K for the year ended November 30, 2020.

(35)Incorporated by reference to Exhibit 31.2 to our Annual Report on Form 10-K for the year ended November 30, 2020.

(36)Incorporated by reference to Exhibit 32.1 to our Annual Report on Form 10-K for the year ended November 30, 2020.

(37)Incorporated by reference to Exhibit 101 to our Annual Report on Form 10-K for the year ended November 30, 2020.


~~(1)~~*			~~Incorporated by reference to Exhibit 2.1 to our Current Report on Form 8-K filed on April 1, 2019.~~


~~(2)~~	~~Incorporated by reference to Exhibit 2.1 to our Current Report on Form 8-K filed on May 14, 2015.~~


~~(3)~~	~~Incorporated by reference to Exhibit 3.1 to our Current Report on Form 8-K filed on May 14, 2015.~~


~~(4)~~	~~Incorporated by reference to Exhibit 3.2 to our Current Report on Form 8-K filed on May 14, 2015.~~


~~(5)~~	~~Incorporated by reference to Exhibit 3.2.1 to our Annual Report on Form 10-K for the year ended November 30, 2015.~~


~~(6)~~	~~Incorporated by reference to Exhibit 3.1 to our Quarterly Report on Form 10-Q for the quarter ended May 31, 2019.~~


~~(7)~~	~~Incorporated by reference to Exhibit 4.1 to our Annual Report on Form 10-K for the year ended November 30, 2011.~~


~~(8)~~	~~Incorporated by reference to Exhibit 10.1 to our Annual Report on Form 10-K for the year ended November 30, 2009.~~


~~(9)~~	~~Incorporated by reference to Exhibit 10.2 to our Annual Report on Form 10-K for the year ended November 30, 2009.~~


~~(10)~~	~~Incorporated by reference to Exhibit 10.3 to our Annual Report on Form 10-K for the year ended November 30, 2012.~~


~~(11)~~	~~Incorporated by reference to Exhibit 10.4 to our Annual Report on Form 10-K for the year ended November 30, 2013.~~


~~(12)~~	~~Incorporated by reference to Exhibit 10.5 to our Annual Report on Form 10-K for the year ended November 30, 2015.~~


~~(13)~~	~~Incorporated by reference to Exhibit 10.6 to our Annual Report on Form 10-K for the year ended November 30, 2015.~~


~~(14)~~	~~Incorporated by reference to Appendix A to our definitive Proxy Statement filed April 15, 2016.~~


~~(15)~~	~~Incorporated by reference to Annex A to our definitive Proxy Statement filed May 7, 2013.~~


~~(16)~~	~~Incorporated by reference to Exhibit 10.9 to our Annual Report on Form 10-K for the year ended November 30, 2013.~~


~~(17)~~	~~Incorporated by reference to Exhibit 10.10 to our Annual Report on Form 10-K for the year ended November 30, 2012.~~


~~(18)~~	~~Incorporated by reference to Exhibit 10.1 to our Quarterly Report on Form 10-Q for the quarter ended February 28, 2019 filed on April 5, 2019.~~


~~(19)~~	~~Incorporated by reference to Exhibit 10.12 to our Annual Report on Form 10-K for the year ended November 30, 2013.~~


~~(20)~~	~~Incorporated by reference to Exhibit 10.13 to our Annual Report on Form 10-K for the year ended November 30, 2013.~~


~~(21)~~	~~Incorporated by reference to Exhibit 10.14 to our Annual Report on Form 10-K for the year ended November 30, 2013.~~


~~(22)~~	~~Incorporated by reference to Exhibit 10.15 to our Annual Report on Form 10-K for the year ended November 30, 2014.~~


~~(23)~~	~~Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed on May 1, 2019.~~


~~(24)~~	~~Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed on October 14, 2016.~~


~~(25)~~	~~Incorporated by reference to Exhibit 10.2 to our Current Report on Form 8-K filed on October 14, 2016.~~


~~(26)~~	~~Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed on March 31, 2017.~~



*	Certain schedules and exhibits have been omitted from this Exhibit pursuant to Item 601(a)(5) of Regulation S-K. Progress Software Corporation will furnish a copy of any omitted schedule or exhibit to the U.S. Securities and Exchange Commission or its staff upon request.
**		Management contract or compensatory plan or arrangement in which an executive officer or director of Progress Software Corporation participates.



***	Pursuant to Rule 406T of Regulations S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

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~~(c) Financial Statement Schedules~~

~~All schedules are omitted because they are not applicable or the required information is shown on the financial statements or notes hereto.~~

~~Item 16. Form 10-K Summary~~

~~Not applicable.~~

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on the ~~27th~~30th day of ~~January2020~~.

March 2021.



~~PROGRESS SOFTWARE CORPORATION~~

~~By:~~	~~/s/ YOGESH K. GUPTA~~
	~~Yogesh K. Gupta~~
	~~President and Chief Executive Officer~~

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.



~~Signature~~				~~Title~~	~~Date~~PROGRESS SOFTWARE CORPORATION

By:		/s/ YOGESH K. GUPTA
		Yogesh K. Gupta
		President and Chief Executive Officer		~~January 27, 2020~~
~~Yogesh K. Gupta~~	~~(Principal Executive Officer)~~

~~/s/ PAUL A. JALBERT~~	~~Chief Financial Officer~~		~~January 27, 2020~~
~~Paul A. Jalbert~~	~~(Principal Financial Officer and Principal Accounting Officer)~~

~~/s/ JOHN R. EGAN~~	~~Non-Executive Chairman~~		~~January 27, 2020~~
~~John R. Egan~~

~~/s/ PAUL T. DACIER~~	~~Director~~		~~January 27, 2020~~
~~Paul T. Dacier~~

~~/s/ RAINER GAWLICK~~	~~Director~~		~~January 27, 2020~~
~~Rainer Gawlick~~

~~/s/ CHARLES F. KANE~~	~~Director~~		~~January 27, 2020~~
~~Charles F. Kane~~

~~/s/ SAMSKRITI KING~~	~~Director~~		~~January 27, 2020~~
~~Samskriti King~~

~~/s/ DAVID A. KRALL~~	~~Director~~		~~January 27, 2020~~
~~David A. Krall~~

~~/s/ ANGELA TUCCI~~	~~Director~~		~~January 27, 2020~~
~~Angela Tucci~~

~~/s/ VIVIAN VITALE~~	~~Director~~		~~January 27, 2020~~
~~Vivian Vitale~~

-77-

Appendix A

RECONCILIATIONS OF GAAP TO NON-GAAP SELECTED FINANCIAL MEASURES

(Unaudited)


	Fiscal Year Ended								% Change
(In thousands, except per share data)	November 30, 2020				November 30, 2019				Non-GAAP
Adjusted revenue:
GAAP revenue	$	442,150			$	413,298
Acquisition-related revenue(1)	14,062				18,663
Non-GAAP revenue	$	456,212	100	%	$	431,961	100	%	6	%

Adjusted income from operations:
GAAP income from operations	$	107,728	24	%	$	40,084	10	%
Amortization of acquired intangibles	27,946		6	%	48,139		11	%
Stock-based compensation	23,482		5	%	23,311		5	%
Impairment of intangible and long-lived assets(2)	—		—	%	24,096		6	%
Restructuring expenses and other	5,906		1	%	6,307		1	%
Acquisition-related revenue(1) and expenses	17,699		4	%	20,321		5	%
Non-GAAP income from operations	$	182,761	40	%	$	162,258	38	%	13	%

Adjusted net income:
GAAP net income	$	79,722	18	%	$	26,400	6	%
Amortization of acquired intangibles	27,946		6	%	48,139		11	%
Stock-based compensation	23,482		5	%	23,311		5	%
Impairment of intangible and long-lived assets(2)	—		—	%	24,096		6	%
Restructuring expenses and other	5,906		1	%	6,307		1	%
Acquisition-related revenue(1) and expenses	17,699		4	%	20,321		5	%
Provision for income taxes	(14,673)		(3)	%	(26,829)		(6)	%
Non-GAAP net income	$	140,082	31	%	$	121,745	28	%	15	%

Adjusted diluted earnings per share:
GAAP diluted earnings per share	$	1.76			$	0.58
Amortization of acquired intangibles	0.62				1.07
Stock-based compensation	0.51				0.51
Impairment of intangible and long-lived assets(2)	—				0.53
Restructuring expenses and other	0.13				0.14
Acquisition-related revenue(1) and expenses	0.39				0.45
Provision for income taxes	(0.32)				(0.59)
Non-GAAP diluted earnings per share	$	3.09			$	2.69			15	%

Non-GAAP weighted avg shares outstanding - diluted	45,321				45,340				—	%

(1)Acquisition-related revenue constitutes revenue reflected as pre-acquisition deferred revenue that would otherwise have been recognized but for the purchase accounting treatment of acquisitions. Since GAAP accounting requires the elimination of this revenue, GAAP results alone do not fully capture all of our economic activities. Acquisition-related revenue adjustments relate to Progress' Application Development and Deployment business segment for Chef in fiscal year 2020 and Progress' OpenEdge business segment for Ipswitch in fiscal year 2019.
(2)Primarily represents a reduction in the carrying values of the intangible assets associated with Kinvey and DataRPM.

-78-


Adjusted Free Cash Flow

(In thousands)	FY 2020		FY 2019		% Change
Cash flows from operations	$	144,847	$	128,484	13	%
Purchases of property and equipment	(6,517)		(3,998)		63	%
Free cash flow	138,330		124,486		11	%
Add back: restructuring payments	4,123		4,407		(6)	%
Adjusted free cash flow	$	142,453	$	128,893	11	%

-79-

	~~04-2746201~~
Delaware		04-2746201
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value per share	PRGS	The Nasdaq Stock Market LLC




~~PART I~~

~~Item 1.~~	~~Business~~	4
~~Item 1A.~~	~~Risk Factors~~	11
~~Item 1B.~~	~~Unresolved Staff Comments~~	17
~~Item 2.~~	~~Properties~~	17
~~Item 3.~~	~~Legal Proceedings~~	17
~~Item 4.~~	~~Mine Safety Disclosures~~	17

~~PART II~~

~~Item 5.~~	~~Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities~~	17
~~Item 6.~~	~~Selected Financial Data~~	20
~~Item 7.~~	~~Management’s Discussion and Analysis of Financial Condition and Results of Operations~~	20
~~Item 7A.~~	~~Quantitative and Qualitative Disclosures About Market Risk~~	43
~~Item 8.~~	~~Financial Statements and Supplementary Data~~	44
~~Item 9.~~	~~Changes in and Disagreements with Accountants on Accounting and Financial Disclosure~~	90
~~Item 9A.~~	~~Controls and Procedures~~	90
~~Item 9B.~~	~~Other Information~~	92

~~PART III~~

~~Item 10.~~	~~Directors, Executive Officers and Corporate Governance~~	92
~~Item 11.~~	~~Executive Compensation~~	93
~~Item 12.~~	~~Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters~~	94
~~Item 13.~~	~~Certain Relationships and Related Transactions, and Director Independence~~	94
~~Item 14.~~	~~Principal Accounting Fees and Services~~	94

~~PART IV~~

~~Item 15.~~	~~Exhibits, Financial Statement Schedules~~	95
~~Item 16.~~	~~Form 10-K Summary~~	97

	~~Signatures~~	98



November 30,	2014		2015		2016		2017		2018		2019
Progress Software Corporation	$	100.00	$	92.06	$	113.47	$	158.63	$	134.92	$	157.83
NASDAQ Composite	100.00		108.07		112.61		145.41		155.07		181.24
NASDAQ Computer	100.00		108.14		115.99		164.04		171.76		223.01



	Fiscal Year Ended
(In thousands)	November 30, 2019			November 30, 2018			Percentage Change
Cost of software licenses	$	4,894		$	4,769		3	%
As a percentage of software license revenue	4		%	5		%
As a percentage of total revenue	1		%	1		%



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



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


PART III
Item 10.	Directors, Executive Officers and Corporate Governance	4
Item 11.	Executive Compensation	13
Item 12.	Security Own ership of Certain Beneficial Owners and Management and Related Stockholder Matters	67
Item 13.	Certain Relationships and Related Transactions, and Director Independence	71
Item 14.	Principal Accountant Fees and Services	72

PART IV
Item 15.	Exhibits and Finan cial Statement Schedules	74

Signatures		77



Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs⁽¹⁾
September 2019	—	$	—	—	$	75,000
October 2019	—	—		—	75,000
November 2019	—	—		—	75,000
Total	—	$	—	—	$	75,000


⁽¹⁾	As of November 30, 2019, there was $75.0 million remaining under the current authorization of $250.0 million. In January 2020, our Board of Directors increased the total share repurchase authorization from $75.0 million to $250.0 million.



Year Ended November 30,	2019		2018		2017		2016			2015
			As Adjusted⁽¹⁾		As Adjusted⁽¹⁾		As Reported⁽¹⁾			As Reported⁽¹⁾
Revenue	$	413,298	$	378,981	$	389,154	$	405,341		$	377,554
Income (loss) from operations	40,084		67,814		57,490		(29,709		)	14,754
Net income (loss)	26,400		49,670		29,021		(55,726		)	(8,801		)
Basic earnings (loss) per share	0.59		1.09		0.60		(1.13		)	(0.17		)
Diluted earnings (loss) per share	0.58		1.08		0.60		(1.13		)	(0.17		)
Cash dividends declared per common share	0.630		0.575		0.515		0.125			—
Cash, cash equivalents and short-term investments	173,685		139,513		183,609		249,754			241,279
Total assets	881,271		644,150		718,718		754,827			877,123
Long-term debt, net, including current portion	294,719		116,089		121,909		135,000			144,375
Shareholders’ equity	330,282		324,002		404,381		406,629			522,464
⁽¹⁾The Company adopted the accounting standard related to revenue recognition ("ASC 606") effective December 1, 2018 using the full retrospective method. As a result, we have adjusted balances for 2018 and 2017. We have not adjusted 2016 and 2015 for ASC 606. See Note 1. Nature of Business and Summary of Significant Accounting Policies for further information.



	Fiscal Year Ended				Percentage Change
(In thousands)	November 30, 2019		November 30, 2018		As Reported		Constant Currency
Revenue	$	413,298	$	378,981	9	%	11	%



(In thousands)	November 30, 2019		November 30, 2018
Cash and cash equivalents	$	154,259	$	105,126
Short-term investments	19,426		34,387
Total cash, cash equivalents and short-term investments	$	173,685	$	139,513



	Payments Due by Period
	Total		Less than 1 Year		1-3 Years		3-5 Years		More than 5 Years
Long-term debt:
Principal payments	$	297,238	$	11,288	$	45,150	$	240,800	$	—
Interest payments⁽¹⁾	39,223		9,921		18,159		11,143		—
Operating leases	31,164		7,453		10,688		10,119		2,904
Purchase obligations⁽²⁾	2,888		963		1,773		152		—
Unrecognized tax benefits⁽³⁾	—		—		—		—		—
Total	$	370,513	$	29,625	$	75,770	$	262,214	$	2,904


~~(1)~~	Interest on the long-term debt is due and payable monthly and is estimated using the effective interest rate as of November 30, 2019 as the interest rate is variable. See Note 8 to our Consolidated Financial Statements in Item 8 of this Form 10-K for additional information.



~~Delaware~~


~~(2)~~	~~Represents the fixed or minimum amounts due under purchase obligations for support service agreements.~~



	November 30, 2019					November 30, 2018
	Notional Value		Fair Value			Notional Value		Fair Value
Forward contracts to sell U.S. dollars	$	66,951	$	(85	)	$	105,830	$	(170	)
Forward contracts to purchase U.S. dollars	1,457		5			240		—
Total	$	68,408	$	(80	)	$	106,070	$	(170	)



(In thousands, except share data)	November 30, 2019			November 30, 2018
				As Adjusted⁽¹⁾
Assets
Current assets:
Cash and cash equivalents	$	154,259		$	105,126
Short-term investments	19,426			34,387
Total cash, cash equivalents and short-term investments	173,685			139,513
Accounts receivable (less allowances of $825 in 2019 and $840 in 2018)	72,820			59,715
Unbilled receivables and contract assets	10,880			1,421
Other current assets	27,280			25,080
Assets held for sale	—			5,776
Total current assets	284,665			231,505
Long-term unbilled receivables and contract assets	12,492			1,811
Property and equipment, net	29,765			30,714
Intangible assets, net	99,392			58,919
Goodwill	432,824			314,992
Deferred tax assets	18,601			966
Other assets	3,532			5,243
Total assets	$	881,271		$	644,150
Liabilities and shareholders’ equity
Current liabilities:
Current portion of long-term debt, net	$	10,717		$	5,819
Accounts payable	10,603			10,593
Accrued compensation and related taxes	34,444			25,500
Dividends payable to shareholders	7,498			6,998
Income taxes payable	1,444			1,228
Other accrued liabilities	18,685			12,686
Short-term deferred revenue	157,494			123,210
Total current liabilities	240,885			186,034
Long-term debt, net	284,002			110,270
Long-term deferred revenue	19,752			12,730
Deferred tax liabilities	3			5,799
Other noncurrent liabilities	6,347			5,315
Commitments and contingencies (Note 9)
Shareholders’ equity:
Preferred stock, $0.01 par value; authorized, 10,000,000 shares; issued, none	—			—
Common stock, $0.01 par value, and additional paid-in capital; authorized, 200,000,000 shares; issued and outstanding, 45,036,441 shares in 2019 and 45,114,935 shares in 2018	450			451
Additional paid-in capital	295,503			266,602
Retained earnings	64,303			85,125
Accumulated other comprehensive loss	(29,974		)	(28,176		)
Total shareholders’ equity	330,282			324,002
Total liabilities and shareholders’ equity	$	881,271		$	644,150
⁽¹⁾The Company adopted the accounting standard related to revenue recognition ("ASC 606") effective December 1, 2018 using the full retrospective method. See Note 1. Nature of Business and Summary of Significant Accounting Policies for further information.



	Common Stock					Additional Paid-In Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Total Shareholders' Equity
(in thousands)	Number of Shares		Amount			Additional Paid-In Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Total Shareholders' Equity
Balance, December 1, 2016, as adjusted⁽¹⁾	48,537		$	485		$	239,011		$	231,794		$	(28,561	)	$	442,729
Issuance of stock under employee stock purchase plan	220		2			4,898			—			—			4,900
Exercise of stock options	203		2			5,106			—			—			5,108
Vesting of restricted stock units and release of deferred stock units	660		7			—			—			—			7
Withholding tax payments related to net issuance of restricted stock units	(118	)	(1		)	(3,755		)	—			—			(3,756		)
Tax benefit arising from employee stock purchase plan, stock options and restricted share activity	—		—			679			—			��			679
Stock-based compensation	—		—			14,153			—			—			14,153
Dividends declared	—		—			—			(24,679		)	—			(24,679		)
Treasury stock repurchases and retirements	(2,221	)	(22		)	(10,729		)	(63,185		)	—			(73,936		)
Net income	—		—			—			29,021			—			29,021
Other comprehensive income	—		—			—			—			10,155			10,155
Balance, November 30, 2017, as adjusted⁽¹⁾	47,281		$	473		$	249,363		$	172,951		$	(18,406	)	$	404,381
Issuance of stock under employee stock purchase plan	225		2			5,456			—			—			5,458
Exercise of stock options	189		2			3,856			—			—			3,858
Vesting of restricted stock units and release of deferred stock units	407		4			—			—			—			4
Withholding tax payments related to net issuance of restricted stock units	(108	)	(1		)	(3,998		)	—			—			(3,999		)
Stock-based compensation	—		—			20,569			—			—			20,569
Adjustment due to adoption of ASU 2016-09 (Note 1)	—		—			641			(641		)	—			—
Dividends declared	—		—			—			(26,169		)	—			(26,169		)
Treasury stock repurchases and retirements	(2,879	)	(29		)	(9,285		)	(110,686		)	—			(120,000		)
Net income	—		—			—			49,670			—			49,670
Other comprehensive loss	—		—			—			—			(9,770		)	(9,770		)
Balance, November 30, 2018⁽¹⁾	45,115		$	451		$	266,602		$	85,125		$	(28,176	)	$	324,002



Issuance of stock under employee stock purchase plan	189		2			5,505			—			—			5,507
Exercise of stock options	119		1			3,620			—			—			3,621
Vesting of restricted stock units and release of deferred stock units	364		4			(1		)	—			—			3
Withholding tax payments related to net issuance of restricted stock units	(106	)	(1		)	(4,277		)	—			—			(4,278		)
Stock-based compensation	—		—			23,311			—			—			23,311
Issuance of shares related to non-compete agreement (Note 7)	44					2,000									2,000
Adjustment due to adoption of ASU 2016-16 (Note 1)	—		—						4,781			—			4,781
Dividends declared	—		—			—			(28,267		)	—			(28,267		)
Treasury stock repurchases and retirements	(688	)	(7		)	(1,257		)	(23,736		)	—			(25,000		)
Net income	—		—			—			26,400			—			26,400
Other comprehensive loss	—		—			—			—			(1,798		)	(1,798		)
Balance, November 30, 2019	45,037		$	450		$	295,503		$	64,303		$	(29,974	)	$	330,282
⁽¹⁾The Company adopted the accounting standard related to revenue recognition ("ASC 606") effective December 1, 2018 using the full retrospective method. See Note 1. Nature of Business and Summary of Significant Accounting Policies for further information.



Supplemental disclosure:
Cash paid for income taxes, net of refunds of $1,385 in 2019, $909 in 2018, and $3,997 in 2017	$	16,340	$	25,451	$	25,992
Cash paid for interest	$	8,666	$	4,220	$	3,597
Non-cash investing and financing activities:
Total fair value of restricted stock awards, restricted stock units and deferred stock units on date vested	$	16,573	$	16,431	$	20,089
Dividends declared	$	7,498	$	6,998	$	6,619




	November 30, 2019			November 30, 2018			November 30, 2017
				As Adjusted⁽¹⁾
Beginning balance	$	574		$	498		$	741
ASC 606 adjustment	—			88			—
Charge to costs and expenses	606			216			204
Write-offs and other	(457		)	(232		)	(437		)
Translation adjustments	(56		)	4			(10		)
Ending balance	$	667		$	574		$	498
⁽¹⁾The Company adopted the accounting standard related to revenue recognition ("ASC 606") effective December 1, 2018 using the full retrospective method. See Note 1. Nature of Business and Summary of Significant Accounting Policies for further information.



	Foreign Currency Translation Adjustment			Unrealized (Losses) Gains on Investments			Unrealized Loss on Hedging Activity			Total
Balance, December 1, 2017	$	(18,177	)	$	(229	)	$	—		$	(18,406	)
Other comprehensive (loss) income	(9,796		)	26			—			(9,770		)
Balance, December 1, 2018	$	(27,973	)	$	(203	)	$	—		$	(28,176	)
Other comprehensive (loss) income	(420		)	173			(1,551		)	(1,798		)
Balance, November 30, 2019	$	(28,393	)	$	(30	)	$	(1,551	)	$	(29,974	)



Balance, December 1, 2018 As Adjusted⁽¹⁾	$	135,940
Billings and other	454,604
Revenue recognized	(413,298		)
Balance, November 30, 2019	$	177,246
⁽¹⁾The Company adopted ASC 606 effective December 1, 2018 using the full retrospective method.



	Amortized Cost Basis		Unrealized Gains		Unrealized Losses		Fair Value
Cash	$	144,346	$	—	$	—	$	144,346
Money market funds	9,913		—		—		9,913
State and municipal bond obligations	7,036		1		—		7,037
U.S. treasury bonds	7,221		10		—		7,231
Corporate bonds	5,146		12		—		5,158
Total	$	173,662	$	23	$	—	$	173,685



	November 30, 2019				November 30, 2018
	Cash and Equivalents		Short-Term Investments		Cash and Equivalents		Short-Term Investments
Cash	$	144,346	$	—	$	101,316	$	—
Money market funds	9,913		—		3,810		—
State and municipal bond obligations	—		7,037		—		19,423
U.S. treasury bonds	—		7,231		—		6,705
Corporate bonds	—		5,158		—		8,259
Total	$	154,259	$	19,426	$	105,126	$	34,387



	November 30, 2019		November 30, 2018
Due in one year or less	$	14,004	$	25,051
Due after one year ⁽¹⁾	5,422		9,336
Total	$	19,426	$	34,387



				Fair Value Measurements Using
	Total Fair Value			Level 1		Level 2			Level 3
Assets
Money market funds	$	9,913		$	9,913	$	—		$	—
State and municipal bond obligations	7,037			—		7,037			—
U.S. treasury bonds	7,231			—		7,231			—
Corporate bonds	5,158			—		5,158			—
Liabilities
Foreign exchange derivatives	(80		)	—		(80		)	—
Interest rate swap	$	(2,054	)	$	—	$	(2,054	)	$	—



	Total Fair Value		Total Losses
Assets held for sale	$	5,776	$	5,147



	November 30, 2019			November 30, 2018
Computer equipment and software	$	47,699		$	47,266
Land, buildings and leasehold improvements	34,083			34,676
Furniture and fixtures	7,090			6,104
Capitalized software development costs	276			276
Property and equipment, gross	89,148			88,322
Less accumulated depreciation and amortization	(59,383		)	(57,608		)
Property and equipment, net	$	29,765		$	30,714



	November 30, 2019							November 30, 2018
	Gross Carrying Amount		Accumulated Amortization			Net Book Value		Gross Carrying Amount		Accumulated Amortization			Net Book Value
Purchased technology	$	135,186	$	(105,967	)	$	29,219	$	154,301	$	(110,959	)	$	43,342
Customer-related	134,042		(74,175		)	59,867		67,802		(56,589		)	11,213
Trademarks and trade names	24,740		(16,043		)	8,697		17,740		(13,376		)	4,364
Non-compete agreement	2,000		(391		)	1,609		—		—			—
Total	$	295,968	$	(196,576	)	$	99,392	$	239,843	$	(180,924	)	$	58,919



2020	$	23,235
2021	23,117
2022	22,136
2023	21,860
2024	9,044
Total	$	99,392



	November 30, 2019			November 30, 2018
Balance, beginning of year	$	314,992		$	315,041
Additions	117,871			—
Translation adjustments	(39		)	(49		)
Balance, end of year	$	432,824		$	314,992



	Initial Purchase Price Allocation			Measurement Period Adjustments			Adjusted Purchase Price Allocation			Life
Net working capital	$	6,068		$	(216	)	$	5,852
Property, plant and equipment	4,661						4,661
Purchased technology	33,100						33,100			5 Years
Trade name	9,600						9,600			5 Years
Customer relationships	66,600						66,600			5 Years
Other assets	314			(4		)	310
Deferred revenue	(12,696		)				(12,696		)
Goodwill	117,651			220			117,871
Net assets acquired	$	225,298		$	—		$	225,298



(In thousands, except per share data)	Pro Forma Fiscal Year Ended November 30, 2019		Pro Forma Fiscal Year Ended November 30, 2018
Revenue	$	442,286	$	431,014
Net income	$	19,641	$	20,599
Net income per basic share	$	0.44	$	0.45
Net income per diluted share	$	0.43	$	0.45