Key questions and answers from the third quarter fiscal 2008 earnings call conducted by Blackboard, Inc. (BBBB: chart) on October 29, 2008.

Michael Nemeroff (Wedbush): Could you reconcile the guidance to the tax benefit? By my calculations, I get to about $0.19 on the EPS for the quarter. Then also if you could tell us whether the core contract value for Blackboard was at or above that 20% figure that it’s been for the last couple quarters and whether you have any concerns about cash flow and collections going forward as the credit crunch and schools may be possibly hoarding cash?

Mike Beach: We have got significant variability in the effective tax rate. You could see that in the third quarter benefit. If you apply the estimated effective rate from our prior guidance which was 37% to the non-GAAP earnings in the quarter, the earnings per share would have been $0.19.

The only other kind of one-time item or unusual item in the quarter was the foreign currency. So if you look at foreign currency, we had a $200,000 negative impact to earnings which is worth about $0.01.

Michael Nemeroff (Wedbush): So excluding the tax benefit but adding back the FX, you get to about $0.20 which was in line with consensus, is that correct?

Mike Beach: Yes. On the contract value for Blackboard would have been approximately 19% growth for the quarter year-over-year.

Michael Nemeroff (Wedbush): Okay, and about the last one on the cash flow?

Mike Beach: We've factored in what we’re saying in the marketplace related to the cash flow guidance we’ve provided, and we haven’t seen a material slowdown in collections and are comfortable with the range we’re providing. There were some events that happened during the third quarter that could have had a negative impact on cash flow.

Michael Stanton: It’s fair to say that our cash flow guidance for the full year of $80 million to $85 million which is raised assumes that there could be some amount of impact but we feel good about that number.

Michael Nemeroff (Wedbush): So you’re still tracking or still expect that 200 basis point improvement in the margin next year?

Mike Beach: So as we look at next year, we clearly expect margin expansion and our goal is 24% EBITDA excluding stock-based comp. We give formal guidance as it relates to 2009 on our fourth quarter call as we historically have and at that time, we’ll nail down the exact margin. But that’s our goal and we do expect margin expansion over 2008, in 2009.

Michael Nemeroff (Wedbush): You’re at EDUCAUSE and you’re with several thousand schools down there. Can you tell us what the tone is there and how schools are thinking about their budgets going-forward into 2009? Does the market meltdown here, does that impact the sale cycle, the length of the sale cycles potentially for statewide deals going-forward, and how much of that is baked into your guidance for next year?

Michael Chason: I’ve had a really great opportunity over the last two days and of course, will continue throughout today and tomorrow to meet with a good number of both clients and prospective clients, as well as speak with a number of other leaders in the industry. And I see that the attitude here is basic cautiously optimistic.

Certainly we’re staying down and talking with schools about expanding their licenses and how they can better utilize our technology to take into consideration if the schools may be under a slight amount of budget pressure next year, so looking to our technology to help reduce expenses, allow them to put more students in a class and especially in the community college and the commercial college system that actually expects to see increasing enrollments as more people go back to school to continue with their education if there’s an economic slowdown. All of those are factors that are tied into people looking to continue to purchase our software.

We do believe in this past quarter, it did influence the sale cycle, just a general concern about the economy, but not specific cutbacks yet in the budget. And I think that we can expect that to continue, a slightly longer sales cycle on higher ed but not the same kind of reduction in budgets that we’ve seen tied to the K-12 space.

Regarding the sale cycle statewide deals, I don’t think we have enough experience yet with statewide deals to specifically say whether this is going to have any influence on them. Of course, the statewide deals we’ve done have been on longer sale cycle. But as states look for ways to save money, improve education, and again, potentially prepare for increasing enrollment in their state institutions, there could be more discussions with senior level executives about doing statewide deals. So I think that economic pressure could be an impetus for more conversations around that.

Tom Roderick (Thomas Weisel Partners): When you look at the post-secondary part of your business, can you give us a sense as to how that’s broken out between state-funded universities and in private universities?

Michael Chason: I think the breakout of this will be generally in line with the general breakout between public and private institutions.

Mike Beach: Yes, I’d say it’s roughly 60/40, and in favor of public.

Tom Roderick (Thomas Weisel Partners): You've announced a fair number of wins over the last several quarters, sounds like you got Tulane in this quarter, can you talk about what if any live implementations are out there and what are the sort of the top reference accounts on outcomes?