##### 









SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549





Form 10-K


ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)


OF THE SECURITIES EXCHANGE ACT of 1934


For the fiscal year ended December 31, 2004


Commission file number 000-24677


BindView Development Corporation


(Exact name of registrant as specified in its charter)


|                                                                                 |  |                                         
|-------------------------------------------------------------------------------- |  | ----------------------------------------
|Texas                                                                            |  | 76-0306721                              
|(State or other jurisdiction of
    incorporation or organization)               |  | (I.R.S. Employer
    Identification No.)
|                                                                                
|5151 San Felipe, 25th Floor, Houston, TX(Address of principal executive offices) |  | 77056(Zip Code)                         

(713) 561-4000


(Registrants telephone number, including area code)


Securities registered pursuant to Section 12(b) of the
Act:


None


Securities registered pursuant to Section 12(g) of the
Act:


|                                     |  |                                          
|------------------------------------ |  | -----------------------------------------
|Title of each class                  |  | Name of each exchange on which registered
|                                     |  |                                          
|Common Stock, no par value per share |  | NASDAQ National Market                   

þ o


þ


þ o






DOCUMENTS INCORPORATED BY REFERENCE












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BINDVIEW DEVELOPMENT CORPORATION


TABLE OF CONTENTS


|         |  |                                                                                                                      |  |  |    | 
|-------- |  | -------------------------------------------------------------------------------------------------------------------- |  |  | -- | 
|PART I  
|1.       |  | Business                                                                                                             |  |  | 2  | 
|2.       |  | Properties                                                                                                           |  |  | 7  | 
|3.       |  | Legal Proceedings                                                                                                    |  |  | 7  | 
|4.       |  | Submission of Matters to a Vote of Security
    Holders                                                              |  |  | 8  | 
|        
|PART II 
|5.       |  | Market for Registrants Common Equity,
    Related Stockholder Matters and Issuer Purchases of Equity
    Securities |  |  | 8  | 
|6.       |  | Selected Financial Data                                                                                              |  |  | 9  | 
|7.       |  | Managements Discussion and Analysis
    of Financial Condition and Results of Operations                            |  |  | 10 | 
|7A.      |  | Quantitative and Qualitative Disclosures
    About Market Risk                                                       |  |  | 25 | 
|8.       |  | Financial Statements and Supplementary
    Data                                                                      |  |  | 25 | 
|9.       |  | Changes in and Disagreements with
    Accountants on Accounting and Financial Disclosure                             |  |  | 26 | 
|9A.      |  | Controls and Procedures                                                                                              |  |  | 26 | 
|        
|PART III
|10.      |  | Directors and Executive Officers of the
    Registrant                                                               |  |  | 29 | 
|11.      |  | Executive Compensation                                                                                               |  |  | 29 | 
|12.      |  | Security Ownership of Certain Beneficial
    Owners and Management and Related Stockholder Matters                   |  |  | 29 | 
|13.      |  | Certain Relationships and Related
    Transactions                                                                   |  |  | 29 | 
|14.      |  | Principal Accounting Fees and Services                                                                               |  |  | 29 | 
|        
|PART IV 
|15.      |  | Exhibits and Financial Statement
    Schedule                                                                        |  |  | 29 | 
|         |  | Signatures                                                                                                           |  |  | 54 | 
|         |  | Exhibit Index                                                                                                        |  |  | 55 | 

1



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##### 






PART I







|        |         
|------- | --------
|Item 1. | Business

Special Note Regarding Forward-Looking Statements




General






Financial Information About Industry Segments




Narrative Description of Business




| |       
| | ------
| | Market





2



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##### 







| |                        
| | -----------------------
| | Products and Technology





| |                      
| | ---------------------
| | Compliance Monitoring





| |                         
| | ------------------------
| | Vulnerability Management





| |                        
| | -----------------------
| | Identity Administration



3



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##### 





| |                         
| | ------------------------
| | Configuration Management





| |                          
| | -------------------------
| | Software-Technology Suite





| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | BindView Compliance Center 
     BindView Configuration Advisor 
     BindView Decision Support Center 
     BindView Management Pack for Microsoft Operations Manager 
     BindView NETinventory 
     BindView Patch Deployment 
     BindView Policy Operations Center 
     BindView Smart Plug-In for HP OpenView 
     bv-Admin for .Net® Web Services 
     bv-Admin for Group Policy Objects 
     bv-Admin for Microsoft® Exchange 
     bv-Admin for Microsoft® Exchange Migration 
     bv-Admin for Novell NDS® 
     bv-Admin for Novell® Migration 
     bv-Admin for Windows® 
     bv-Admin for Windows® Migration 
     bv-Control for Check Point FireWall-1 
     bv-Control for Desktops 
     bv-Control for Internet Security 
     bv-Control for Microsoft® Exchange 
     bv-Control for Microsoft® SQL Server 
     bv-Control for NDS® eDirectory 
     bv-Control for NetWare® 
     bv-Control for Oracle® 
     bv-Control for OS/400 
     bv-Control for SAP® Systems 
     bv-Control for UNIX® 
     bv-Control for Web Services 
     bv-Control for Windows® 200x and Active Directory®

Backlog




| |                                                                                                                                                                                                                                               
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | We normally do not operate with a backlog of product orders
    because we ship our products shortly after orders are received.
    We occasionally experience a backlog of services orders; we do
    not believe such backlogs are material.

4



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##### 



Competition






| |   |                                                                                                                   
| | - | ------------------------------------------------------------------------------------------------------------------
| |  | security analysis and audit products;                                                                             
|
| |  | Windows NT management and migration tools;                                                                        
|
| |  | network security scanning technology;                                                                             
|
| |  | security-policy products and services;                                                                            
|
| |  | shareware/freeware software products that perform some of the
    same functions as our software;                 
|
| |  | enterprise resource planning application add-ons for SAP
    security administration and vulnerability assessment;
|
| |  | LAN desktop management suites; and                                                                                
|
| |  | stand-alone inventory and asset management products.                                                              





Sales and Marketing






| |            
| | -----------
| | Sales Force

Direct Sales Force.


Telesales Force.


5



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##### 





| |                   
| | ------------------
| | VARs and Resellers





| |                 
| | ----------------
| | Channel Programs







Customer Support and Professional Services






Company-Sponsored Research & Development
Activities




Employees




6



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##### 



Patents, Trademarks, and Copyrights




Seasonality




Future Intentions




Available Information











|        |           
|------- | ----------
|Item 2. | Properties








|        |                  
|------- | -----------------
|Item 3. | Legal Proceedings



7



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|        |                                                    
|------- | ---------------------------------------------------
|Item 4. | Submission of Matters to a Vote of Security Holders






PART II







|        |                                                                                                                     
|------- | --------------------------------------------------------------------------------------------------------------------
|Item 5. | Market For Registrants Common Equity, Related
    Stockholder Matters and Issuer Purchases of Equity
    Securities

Market for Common Stock








|     |                |      |   |      |     |  |   |      | 
|---- | -------------- | ---- | - | ---- | --- |  | - | ---- | 
|     |                | High |   |      | Low | 
|     |                |      |   |      |     | 
|2003 |                |      |   |      |     |  |   |     
|     | First Quarter  |      | $ | 1.51 |     |  | $ | 1.14 | 
|     | Second Quarter |      |   | 2.09 |     |  |   | 1.10 | 
|     | Third Quarter  |      |   | 2.99 |     |  |   | 2.00 | 
|     | Fourth Quarter |      |   | 3.90 |     |  |   | 2.13 | 
|2004 |                |      |   |      |     |  |   |     
|     | First Quarter  |      | $ | 4.71 |     |  | $ | 3.40 | 
|     | Second Quarter |      |   | 3.72 |     |  |   | 2.36 | 
|     | Third Quarter  |      |   | 3.47 |     |  |   | 2.40 | 
|     | Fourth Quarter |      |   | 4.32 |     |  |   | 2.94 | 

Holders




Dividend Policy




Recent Sales of Unregistered Securities




8



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|        |                        
|------- | -----------------------
|Item 6. | Selected Financial Data



|                                                                       |                               |                                          |        |        |      |   |        |        |  |   |         |        |  |      |         |        |  |   |        |        | 
|---------------------------------------------------------------------- | ----------------------------- | ---------------------------------------- | ------ | ------ | ---- | - | ------ | ------ |  | - | ------- | ------ |  | ---- | ------- | ------ |  | - | ------ | ------ | 
|                                                                       |                               | Year Ended December 31,                  |       
|                                                                       |                               |                                          |       
|                                                                       |                               | 2004                                     |        |        | 2003 |   |        | 2002   |  |   | 2001    |        |  | 2000 |        
|                                                                       |                               |                                          |        |        |      |   |        |        |  |   |         |        |  |      |        
|                                                                       |                               | (In thousands, except per share amounts) |       
|Statement of Operations Data:                                          |                               |                                          |        |        |      |   |        |        |  |   |         |        |  |      |         |        |  |   |        |       
|Revenues:                                                              |                               |                                          |        |        |      |   |        |        |  |   |         |        |  |      |         |        |  |   |        |       
|                                                                       | Licenses                      |                                          | $      | 35,767 |      |   | $      | 35,357 |  |   | $       | 37,238 |  |      | $       | 42,532 |  |   | $      | 58,931 | 
|                                                                       | Services                      |                                          |        | 37,133 |      |   |        | 32,315 |  |   |         | 29,740 |  |      |         | 28,356 |  |   |        | 27,125 | 
|                                                                       |                               |                                          |        |        |      |   |        |        |  |   |         |        |  |      |        
|                                                                       |                               |                                          | 72,900 |        |      |   | 67,672 |        |  |   | 66,978  |        |  |      | 70,888  |        |  |   | 86,056 |       
|Cost of revenues:                                                      |                               |                                          |        |        |      |   |        |        |  |   |         |        |  |      |         |        |  |   |        |       
|                                                                       | Licenses                      |                                          |        | 1,015  |      |   |        | 527    |  |   |         | 500    |  |      |         | 1,059  |  |   |        | 2,410  | 
|                                                                       | Services                      |                                          |        | 8,022  |      |   |        | 6,954  |  |   |         | 5,782  |  |      |         | 6,407  |  |   |        | 4,049  | 
|                                                                       |                               |                                          |        |        |      |   |        |        |  |   |         |        |  |      |        
|                                                                       |                               |                                          | 9,037  |        |      |   | 7,481  |        |  |   | 6,282   |        |  |      | 7,466   |        |  |   | 6,459  |       
|Gross profit                                                           |                               |                                          | 63,863 |        |      |   | 60,191 |        |  |   | 60,696  |        |  |      | 63,422  |        |  |   | 79,597 |       
|Operating costs and expenses:                                          |                               |                                          |        |        |      |   |        |        |  |   |         |        |  |      |         |        |  |   |        |       
|                                                                       | Sales and marketing           |                                          |        | 38,208 |      |   |        | 36,040 |  |   |         | 37,242 |  |      |         | 49,079 |  |   |        | 44,746 | 
|                                                                       | Research and development      |                                          |        | 21,164 |      |   |        | 18,423 |  |   |         | 19,219 |  |      |         | 22,668 |  |   |        | 26,500 | 
|                                                                       | General and administrative    |                                          |        | 9,114  |      |   |        | 7,750  |  |   |         | 7,932  |  |      |         | 14,600 |  |   |        | 9,780  | 
|                                                                       | Restructuring and transaction |                                          |        | 748    |      |   |        | 2,184  |  |   |         | 3,002  |  |      |         | 6,594  |  |   |        | 6,357  | 
|                                                                       | Asset impairment              |                                          |        |       |      |   |        |       |  |   |         | 276    |  |      |         | 1,979  |  |   |        | 1,284  | 
|                                                                       |                               |                                          |        |        |      |   |        |        |  |   |         |        |  |      |        
|                                                                       |                               |                                          | 69,234 |        |      |   | 64,397 |        |  |   | 67,671  |        |  |      | 94,920  |        |  |   | 88,667 |       
|                                                                       |                               |                                          |        |        |      |   |        |        |  |   |         |        |  |      |        
|Operating loss                                                         |                               |                                          | (5,371 | )      |      |   | (4,206 | )      |  |   | (6,975  | )      |  |      | (31,498 | )      |  |   | (9,070 | )     
|Other income (expense), net                                            |                               |                                          | 535    |        |      |   | 447    |        |  |   | 2,104   |        |  |      | (2,859  | )      |  |   | 4,443  |       
|                                                                       |                               |                                          |        |        |      |   |        |        |  |   |         |        |  |      |        
|Loss before income taxes                                               |                               |                                          | (4,836 | )      |      |   | (3,759 | )      |  |   | (4,871  | )      |  |      | (34,357 | )      |  |   | (4,627 | )     
|Provision (benefit) for income taxes                                   |                               |                                          | 273    |        |      |   | 50     |        |  |   | 19,562  |        |  |      | (10,211 | )      |  |   | (783   | )     
|                                                                       |                               |                                          |        |        |      |   |        |        |  |   |         |        |  |      |        
|Net loss                                                               |                               | $                                        | (5,109 | )      |      | $ | (3,809 | )      |  | $ | (24,433 | )      |  | $    | (24,146 | )      |  | $ | (3,844 | )     
|                                                                       |                               |                                          |        |        |      |   |        |        |  |   |         |        |  |      |        
|Loss per common share  basic and diluted                              |                               | $                                        | (0.11  | )      |      | $ | (0.08  | )      |  | $ | (0.49   | )      |  | $    | (0.47   | )      |  | $ | (0.07  | )     
|Shares used in computing loss per common share  basic
    and diluted |                               |                                          | 47,356 |        |      |   | 46,714 |        |  |   | 50,319  |        |  |      | 51,438  |        |  |   | 51,810 |       

|                     |  |                |        |  |      |   |        |      |  |   |        |  |  |      |        |  |  |   |         | 
|-------------------- |  | -------------- | ------ |  | ---- | - | ------ | ---- |  | - | ------ |  |  | ---- | ------ |  |  | - | ------- | 
|                     |  | December 31,   |       
|                     |  |                |       
|                     |  | 2004           |        |  | 2003 |   |        | 2002 |  |   | 2001   |  |  | 2000 |       
|                     |  |                |        |  |      |   |        |      |  |   |        |  |  |      |       
|                     |  | (In thousands) |       
|Balance Sheet Data:  |  |                |        |  |      |   |        |      |  |   |        |  |  |      |        |  |  |   |         | 
|Working capital      |  | $              | 27,285 |  |      | $ | 28,472 |      |  | $ | 26,309 |  |  | $    | 33,450 |  |  | $ | 64,483  | 
|Total assets         |  |                | 58,554 |  |      |   | 63,007 |      |  |   | 63,556 |  |  |      | 88,121 |  |  |   | 113,034 | 
|Shareholders equity |  |                | 30,127 |  |      |   | 33,970 |      |  |   | 35,426 |  |  |      | 63,809 |  |  |   | 92,261  | 

9



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|        |                                                                                          
|------- | -----------------------------------------------------------------------------------------
|Item 7. | Managements Discussion and Analysis of Financial
    Condition and Results of Operations

The following discussion and analysis should be read in
conjunction with the Companys Consolidated Financial
Statements and Notes thereto included elsewhere herein. Special
Note: Certain statements set forth below constitute
forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and
the Securities Exchange Act of 1934, as amended. See
Business  Special Note Regarding
Forward-Looking Statements contained elsewhere herein.


Overview




Critical Accounting Policies and Estimates








| |   |                                         
| | - | ----------------------------------------
| |  | Revenue recognition;                    
|
| |  | Accounting for stock-based compensation;
|
| |  | Accounting for income taxes;            
|
| |  | Allowance for doubtful accounts; and    
|
| |  | Accounting for restructuring charges    



| |                    
| | -------------------
| | Revenue Recognition





10



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| |              
| | -------------
| | Stock Options





11



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##### 



Share-Based Payment Statement of Cash Flows




| |             
| | ------------
| | Income Taxes





| |                                                            
| | -----------------------------------------------------------
| | Accounts Receivable and Provision for Doubtful
    Accounts





| |                      
| | ---------------------
| | Restructuring Charges



12



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##### 



Results of Operations




| |                                                                                
| | -------------------------------------------------------------------------------
| | Year Ended December 31, 2004 Compared with the Year
    Ended December 31, 2003

Revenues.










Gross Profit.






13



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##### 



Operating Costs and Expenses.












14



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##### 









|                   |  |               |     |  |              |   |     |            |  |         |            |   |  |   |     | 
|------------------ |  | ------------- | --- |  | ------------ | - | --- | ---------- |  | ------- | ---------- | - |  | - | --- | 
|                   |  |               |     |  |              |   |     | Remaining  | 
|                   |  | Restructuring |     |  | Cash         |   |     |            |  | Accrual |           
|                   |  | Charges       |     |  | Expenditures |   |     | Write-Offs |  |         | 12/31/2004 |  
|                   |  |               |     |  |              |   |     |            |  |         |            |  
|Employee severance |  | $             | 383 |  |              | $ | (77 | )          |  | $       |           |   |  | $ | 306 | 
|Other              |  |               | 107 |  |              |   |    |            |  |         | (87        | ) |  |   | 20  | 
|                   |  |               |     |  |              |   |     |            |  |         |            |  
|                   |  | $             | 490 |  |              | $ | (77 | )          |  | $       | (87        | ) |  | $ | 326 | 
|                   |  |               |     |  |              |   |     |            |  |         |            |  







|                  |  |            |       |  |               |   |     |              |  |           |            |   |  |   |       | 
|----------------- |  | ---------- | ----- |  | ------------- | - | --- | ------------ |  | --------- | ---------- | - |  | - | ----- | 
|                  |  | Remaining  |       |  | Restructuring |   |     |              |  | Remaining |           
|                  |  | Accrual    |       |  | Charge        |   |     | Cash         |  |           | Accrual    |  
|                  |  | 12/31/2003 |       |  | Adjustments   |   |     | Expenditures |  |           | 12/31/2004 |  
|                  |  |            |       |  |               |   |     |              |  |           |            |  
|Lease commitments |  | $          | 1,991 |  |               | $ | 258 |              |  | $         | (1,132     | ) |  | $ | 1,117 | 

Provision for Income Taxes.


Net Loss.




| |                                                                                
| | -------------------------------------------------------------------------------
| | Year Ended December 31, 2003 Compared with the Year
    Ended December 31, 2002

Revenues.


15



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##### 













Gross Profit.






Operating Costs and Expenses.




16



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##### 









Other Income.


Provision for Income Taxes.


Net Loss.


Recent Accounting Pronouncements




Liquidity and Capital Resources






17



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Contractual Obligations




|                          |  |       |        |   |      |   |       |             |  |   |             |   |  |             |       |   |  |   |       |  
|------------------------- |  | ----- | ------ | - | ---- | - | ----- | ----------- |  | - | ----------- | - |  | ----------- | ----- | - |  | - | ----- | -
|Contractual Obligation    |  | Total |        |   | 2005 |   |       | 2006 - 2007 |  |   | 2008 - 2009 |   |  | 2010 - 2011 |      
|                          |  |       |        |   |      |   |       |             |  |   |             |   |  |             |      
|Operating leases          |  | $     | 21,038 |   |      | $ | 4,170 |             |  | $ | 7,369       |   |  | $           | 7,100 |   |  | $ | 2,399 |  
|Sub-leasing arrangements* |  |       | (771   | ) |      |   | (92   | )           |  |   | (244        | ) |  |             | (251  | ) |  |   | (184  | )
|                          |  |       |        |   |      |   |       |             |  |   |             |   |  |             |      
|                          |  | $     | 20,267 |   |      | $ | 4,078 |             |  | $ | 7,125       |   |  | $           | 6,849 |   |  | $ | 2,215 |  
|                          |  |       |        |   |      |   |       |             |  |   |             |   |  |             |      






|  |                                                                                                                                                                                                                                                                                     
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|* | We have sub-leased portions of these facilities under operating
    leases. Anticipated cash receipts from these executed sub-lease
    arrangements have been taken into account when deriving expected
    cash outflow on operating lease commitments in the preceding
    table.

Off-Balance Sheet Arrangements






| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | any obligation under a guarantee contract that has any of the
    characteristics identified in paragraph 3 of FASB
    Interpretation No. 45, Guarantors Accounting and
    Disclosure Requirements for Guarantees, Including Indirect
    Guarantees of Indebtedness of Others (November 2002)
    (FIN 45), as may be modified or supplemented,
    and that is not excluded from the initial recognition and
    measurement provisions of FIN 45 pursuant to
    paragraphs 6 or 7 of that Interpretation;
|
| |  | a retained or contingent interest in assets transferred to an
    unconsolidated entity or similar arrangement that serves as
    credit, liquidity or market risk support to such entity for such
    assets;                                                                                                                                                                                                                                                                                                    

18



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| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | any obligation, including a contingent obligation, under a
    contract that would be accounted for as a derivative instrument,
    except that it is both indexed to our own stock and classified
    in stockholders equity in our statement of financial
    position, and therefore excluded from the scope of FASB
    Statement of Financial Accounting Standards No. 133,
    Accounting for Derivative Instruments and Hedging Activities
    (June 1998), pursuant to paragraph 11(a) of that Statement,
    as may be modified or supplemented; or
|
| |  | any obligation, including a contingent obligation, arising out
    of a variable interest (as referenced in FASB Interpretation
    No. 46, Consolidation of Variable Interest Entities
    (January 2003), as may be modified or supplemented) in an
    unconsolidated entity that is held by us or is material to us,
    where such entity provides financing, liquidity, market risk or
    credit risk support to us or engages in leasing, hedging or
    research and development services with us.                                                  

Proprietary Rights




Cautionary Statements






| |   |                                                                                                                                                   
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------
| |  | We may face future competition from established companies
    entering our market, from new entrants, and/or from consolidated
    companies.     
|
| |  | Our products could be rendered obsolete by operating-system and
    application-program software vendors.                                         
|
| |  | Our products may not be able to prevail in comparative
    evaluations against our competitors products.                                         
|
| |  | Our R&D efforts may not be sufficient to keep up with
    changing markets.                                                                       
|
| |  | Our product sales are significantly concentrated in one product
    line.                                                                         
|
| |  | Our quarterly sales are significantly back-end loaded, which can
    lead to uncertainty about meeting expectations and to lower
    sales prices.
|
| |  | Regulatory-compliance issues, complexities, and costs are likely
    to increase.                                                                 
|
| |  | Our product sales usually require long lead times.                                                                                                
|
| |  | We may be subject to foreign currency risks.                                                                                                      
|
| |  | Our sales are somewhat seasonal.                                                                                                                  
|
| |  | Ongoing refinements to our sales organization may result in
    transitional inefficiencies.                                                      
|
| |  | We do not maintain a significant backlog of product orders.                                                                                       
|
| |  | Our international sales are subject to certain additional risks.                                                                                  
|
| |  | We are dependent upon continued growth of the market for Windows
    system software.                                                             
|
| |  | We are likely to continue to be confronted by rapidly-changing
    markets.                                                                       
|
| |  | Our software could contain errors that are hard to detect and
    costly to fix.                                                                  

19



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##### 





| |   |                                                                                                                                  
| | - | ---------------------------------------------------------------------------------------------------------------------------------
| |  | We could be subject to liability claims if our software has
    errors.                                                          
|
| |  | We rely on certain third-party relationships, and our business
    could be hurt if those relationships were to be impaired.     
|
| |  | We license certain third-party software for inclusion in our
    products; such software may not always be available for our use.
|
| |  | Our increasing use of development resources in other countries
    may present risks.                                            
|
| |  | Our revenue bases may change with the market.                                                                                    
|
| |  | We are affected by the migration rate to and among various
    Microsoft platforms.                                              
|
| |  | Other companies might try to misappropriate our technology.                                                                      
|
| |  | We might be accused of misappropriating a third partys
    technology.                                                          
|
| |  | Our cost structure is fixed to a certain extent, which may limit
    our ability to reduce costs if sales decrease.              
|
| |  | We may be required to defer increasing amounts of revenue in the
    future.                                                     
|
| |  | Our stock price has a history of volatility.                                                                                     
|
| |  | Our corporate governance structure includes certain
    anti-takeover provisions.                                                
|
| |  | Our network and Web site may be targeted for intentional
    disruption.                                                         
|
| |  | Natural disasters and other infrastructure problems may hurt our
    ability to operate.                                         

We may face future competition from established companies
entering our market, from new entrants, and/or from consolidated
companies.


Our products could be rendered obsolete by operating-system
and application-program software vendors.


Our products may not be able to prevail in comparative
evaluations against our competitors products.


20



---



##### 





Our R&D efforts may not be sufficient to keep up with
changing markets.


Our product sales are significantly concentrated in one
product line.


Our quarterly sales are significantly back-end loaded, which
can lead to uncertainty about meeting expectations and to lower
sales prices.


Regulatory-compliance issues, complexities, and costs are
likely to increase.


Our product sales usually require long lead times.


We may be subject to foreign currency risks.


21



---



##### 



Our sales are somewhat seasonal.


Ongoing refinements to our sales organization may result in
transitional inefficiencies.


We do not maintain a significant backlog of product
orders.


Our international sales are subject to certain additional
risks.


We are dependent upon continued growth of the market for
Windows system software.


We are likely to continue to be confronted by
rapidly-changing markets.


Our software could contain errors that are hard to detect and
costly to fix.


22



---



##### 





We could be subject to liability claims if our software has
errors.


We rely on certain third-party relationships, and our
business could be hurt if those relationships were to be
impaired.


We license certain third-party software for inclusion in our
products, and such software may not always be available for our
use.


Our increasing use of development resources in other
countries may present risks.


Our revenue bases may change with the market.


We are affected by the migration rate to and among various
Microsoft platforms.


Other companies might try to misappropriate our
technology.


23



---



##### 





We might be accused of misappropriating a third partys
technology.


Our cost structure is fixed to a certain extent, which may
limit our ability to reduce costs if sales decrease.


We may be required to defer increasing amounts of revenue in
the future.


Our stock price has a history of volatility.


Our corporate governance structure includes certain
anti-takeover provisions.


24



---



##### 



Our network and Web site may be targeted for intentional
disruption.


Natural disasters and other infrastructure problems may hurt
our ability to operate.







|         |                                                               
|-------- | --------------------------------------------------------------
|Item 7A. | Quantitative and Qualitative Disclosures About Market
    Risk

Special Note: Certain
statements set forth below constitute forward-looking
statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and the Securities Exchange
Act of 1934, as amended. See Business  Special
Note Regarding Forward-Looking Statements contained
elsewhere herein.


Foreign Currency Exchange Rates




Interest Rate Risk









|        |                                            
|------- | -------------------------------------------
|Item 8. | Financial Statements and Supplementary Data



25



---



##### 








|        |                                                                                         
|------- | ----------------------------------------------------------------------------------------
|Item 9. | Changes in and Disagreements With Accountants on
    Accounting and Financial Disclosure






Item 9A. Controls and Procedures


Evaluation of Disclosure Controls and Procedures




Managements Report on Internal Control Over Financial
Reporting






Internal Control  Integrated Framework Internal
Control  Integrated Framework.




Changes in Internal Control Over Financial Reporting






| |                                                                      
| | ---------------------------------------------------------------------
| | Revenue Recognition Issues in BindViews Latin
    America Operations



26



---



##### 



















| |   |                                                                                                                                                        
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Insufficient due diligence in evaluating the operational risk of
    conducting business in Latin America.                                             
|
| |  | Collusion between Latin America personnel and resellers to
    obtain sales commissions in advance of when they were actually
    earned.              
|
| |  | Minimal direct non-sales management oversight of the Latin
    America operations.                                                                     
|
| |  | Revenue recognition review procedures for Latin America that did
    not fully address the additional risks of transacting business
    in that region.



27



---



##### 







| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Management has formalized and strengthened their risk assessment
    procedures by adding additional management oversight.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| |  | We now obtain signed written representations from each sales and
    professional services representative, manager, director and vice
    president prior to finalizing results for a quarterly or annual
    period and prior to payment of sales commissions or any
    incentive-based compensation. The representation includes
    statements that (i) he or she has complied with the
    Companys Code of Conduct, (ii) the documentation
    supporting sales transactions for which they are responsible is
    valid, appropriately authorized and complete and (iii) no
    conditions exist that have been agreed to with the customer that
    have not been explicitly stated in the documentation supporting
    the sales transaction.
|
| |  | In geographies where the Company has a limited operating history
    (e.g. Latin America or any other new geography the Company may
    enter), payment of commissions will be deferred until collection
    of accounts receivable has occurred.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| |  | We assigned domestic non-sales personnel to communicate directly
    with foreign resellers and end-user customers regarding past due
    accounts receivable.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| |  | We changed our reporting structure to provide for more direct
    communication. These changes include sales operations now
    reporting to our chief operating officer and the head of
    professional services now reporting directly to non-sales
    management.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| |  | We have strengthened our internal controls over hiring practices
    and now require complete and extensive background and reference
    checks prior to hiring.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| |  | The Companys disclosure committee includes representations
    from a broader cross section of departments.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|
| |  | Our pre-close analytical review procedures were enhanced to more
    readily identify emerging changes in our business. Additionally,
    we established additional review procedures including the
    establishment of a review hierarchy based upon the value of the
    contract and contracts in which professional services is over
    certain thresholds.                                                                                                                                                                                                                                                                                                                                                                                      
|
| |  | We have changed the reporting structure within our organization
    to ensure that improper actions within the organization are
    detected and where possible prevented. Specifically, we have
    created a new position of chief operating officer to which our
    vice presidents of sales now report; the Director of
    Professional Services now reports to non-sales management and
    the Director of Internal Audit now reports directly to the
    Chairman of the Audit Committee.                                                                                                                                                                                                                                                     





28



---



##### 






PART III







|         |                                                   
|-------- | --------------------------------------------------
|Item 10. | Directors and Executive Officers of the Registrant








|         |                       
|-------- | ----------------------
|Item 11. | Executive Compensation








|         |                                                                   
|-------- | ------------------------------------------------------------------
|Item 12. | Security Ownership of Certain Beneficial Owners and
    Management








|         |                                               
|-------- | ----------------------------------------------
|Item 13. | Certain Relationships and Related Transactions








|         |                                       
|-------- | --------------------------------------
|Item 14. | Principal Accounting Fees and Services






PART IV







|         |                                           
|-------- | ------------------------------------------
|Item 15. | Exhibits and Financial Statement Schedules

|                                                                 |  |  |      | 
|---------------------------------------------------------------- |  |  | ---- | 
|(a) 1. Financial Statements                                      |  |  | Page | 
|                                                                 |  |  |     
|Report of Independent Registered Public Accounting Firm          |  |  | 30   | 
|Consolidated Balance Sheets                                      |  |  | 33   | 
|Consolidated Statements of Operations and Comprehensive
    Loss |  |  | 34   | 
|Consolidated Statements of Shareholders Equity                  |  |  | 35   | 
|Consolidated Statements of Cash Flows                            |  |  | 36   | 
|Notes to Consolidated Financial Statements                       |  |  | 37   | 
|                                                                
|2. Financial Statement Schedules                                 |  |  |      | 
|                                                                
|Schedule II  Valuation and Qualifying Accounts                  |  |  | 53   | 





3. Exhibits:




29



---



##### 



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM






Consolidated financial statements




Internal control over financial reporting


Internal Control  Integrated Framework Internal Control 
Integrated Framework




30



---



##### 














31



---



##### 



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON


FINANCIAL STATEMENT SCHEDULE













32



---



##### 



BINDVIEW DEVELOPMENT CORPORATION


CONSOLIDATED BALANCE SHEETS


(In thousands)


|                                        |                                                                                                            |                                            |       |         |        |  |       |         |        | 
|--------------------------------------- | ---------------------------------------------------------------------------------------------------------- | ------------------------------------------ | ----- | ------- | ------ |  | ----- | ------- | ------ | 
|                                        |                                                                                                            | December 31,                               |      
|                                        |                                                                                                            |                                            |      
|                                        |                                                                                                            | 2004                                       |       |         | 2003   | 
|                                        |                                                                                                            |                                            |       |         |        | 
|ASSETS                                 
|Current assets:                         |                                                                                                            |                                            |       |         |        |  |       |        
|                                        | Cash and cash equivalents                                                                                  |                                            | $     | 25,666  |        |  | $     | 35,449  |       
|                                        | Cash  restricted                                                                                          |                                            |       | 2,250   |        |  |       | 2,250   |       
|                                        | Short-term investments                                                                                     |                                            |       | 6,974   |        |  |       |        |       
|                                        | Accounts receivable, net of allowance of $671 and $1,040                                                   |                                            |       | 14,657  |        |  |       | 14,066  |       
|                                        | Other                                                                                                      |                                            |       | 1,634   |        |  |       | 2,180   |       
|                                        |                                                                                                            |                                            |       |         |        | 
|                                        |                                                                                                            | Total current assets                       |       |         | 51,181 |  |       |         | 53,945 | 
|Property and equipment, net             |                                                                                                            |                                            | 6,664 |         |        |  | 6,564 |        
|Investments and other assets            |                                                                                                            |                                            | 709   |         |        |  | 2,498 |        
|                                        |                                                                                                            |                                            |       |         |        | 
|                                        |                                                                                                            | Total assets                               |       | $       | 58,554 |  |       | $       | 63,007 | 
|                                        |                                                                                                            |                                            |       |         |        | 
|LIABILITIES AND SHAREHOLDERS EQUITY   
|Current liabilities:                    |                                                                                                            |                                            |       |         |        |  |       |        
|                                        | Accounts payable                                                                                           |                                            | $     | 3,023   |        |  | $     | 2,066   |       
|                                        | Accrued liabilities                                                                                        |                                            |       | 5,307   |        |  |       | 4,879   |       
|                                        | Accrued compensation                                                                                       |                                            |       | 3,603   |        |  |       | 5,275   |       
|                                        | Deferred revenue                                                                                           |                                            |       | 11,963  |        |  |       | 13,253  |       
|                                        |                                                                                                            |                                            |       |         |        | 
|                                        |                                                                                                            | Total current liabilities                  |       |         | 23,896 |  |       |         | 25,473 | 
|Deferred revenue                        |                                                                                                            |                                            | 2,707 |         |        |  | 1,477 |        
|Other                                   |                                                                                                            |                                            | 1,824 |         |        |  | 2,087 |        
|Commitments and Contingencies (Note 10) |                                                                                                            |                                            |       |         |        |  |       |        
|Shareholders equity:                   |                                                                                                            |                                            |       |         |        |  |       |        
|                                        | Preferred stock, $0.01 par value, 20,000 shares
    authorized, none issued                                |                                            |       |        |        |  |       |        |       
|                                        | Common stock, no par value, 100,000 shares authorized,
    47,849 and 47,034 shares issued and outstanding |                                            |       | 1       |        |  |       | 1       |       
|                                        | Additional paid-in capital                                                                                 |                                            |       | 106,244 |        |  |       | 105,176 |       
|                                        | Note receivable from shareholder                                                                           |                                            |       | (131    | )      |  |       | (392    | )     
|                                        | Deferred stock compensation                                                                                |                                            |       | (789    | )      |  |       |        |       
|                                        | Accumulated deficit                                                                                        |                                            |       | (77,316 | )      |  |       | (72,207 | )     
|                                        | Accumulated other comprehensive income                                                                     |                                            |       | 2,118   |        |  |       | 1,392   |       
|                                        |                                                                                                            |                                            |       |         |        | 
|                                        |                                                                                                            | Total shareholders equity                 |       |         | 30,127 |  |       |         | 33,970 | 
|                                        |                                                                                                            |                                            |       |         |        | 
|                                        |                                                                                                            | Total liabilities and shareholders equity |       | $       | 58,554 |  |       | $       | 63,007 | 
|                                        |                                                                                                            |                                            |       |         |        | 



33



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##### 



BINDVIEW DEVELOPMENT CORPORATION


CONSOLIDATED STATEMENTS OF OPERATIONS AND


COMPREHENSIVE LOSS


(In thousands, except per share amounts)


|                                                                            |                                                   |                         |        |        |      |   |        |        |   |   |         |         |  
|--------------------------------------------------------------------------- | ------------------------------------------------- | ----------------------- | ------ | ------ | ---- | - | ------ | ------ | - | - | ------- | ------- | -
|                                                                            |                                                   | Year Ended December 31, |       
|                                                                            |                                                   |                         |       
|                                                                            |                                                   | 2004                    |        |        | 2003 |   |        | 2002   |  
|                                                                            |                                                   |                         |        |        |      |   |        |        |  
|Revenues:                                                                   |                                                   |                         |        |        |      |   |        |        |   |   |         |        
|                                                                            | Licenses                                          |                         | $      | 35,767 |      |   | $      | 35,357 |   |   | $       | 37,238  |  
|                                                                            | Services                                          |                         |        | 37,133 |      |   |        | 32,315 |   |   |         | 29,740  |  
|                                                                            |                                                   |                         |        |        |      |   |        |        |  
|                                                                            |                                                   |                         | 72,900 |        |      |   | 67,672 |        |   |   | 66,978  |        
|Cost of revenues:                                                           |                                                   |                         |        |        |      |   |        |        |   |   |         |        
|                                                                            | Licenses                                          |                         |        | 1,015  |      |   |        | 527    |   |   |         | 500     |  
|                                                                            | Services                                          |                         |        | 8,022  |      |   |        | 6,954  |   |   |         | 5,782   |  
|                                                                            |                                                   |                         |        |        |      |   |        |        |  
|                                                                            |                                                   |                         | 9,037  |        |      |   | 7,481  |        |   |   | 6,282   |        
|Gross profit                                                                |                                                   |                         | 63,863 |        |      |   | 60,191 |        |   |   | 60,696  |        
|Operating costs and expenses:                                               |                                                   |                         |        |        |      |   |        |        |   |   |         |        
|                                                                            | Sales and marketing                               |                         |        | 38,208 |      |   |        | 36,040 |   |   |         | 37,242  |  
|                                                                            | Research and development                          |                         |        | 21,164 |      |   |        | 18,423 |   |   |         | 19,219  |  
|                                                                            | General and administrative                        |                         |        | 9,114  |      |   |        | 7,750  |   |   |         | 7,932   |  
|                                                                            | Restructuring                                     |                         |        | 748    |      |   |        | 2,184  |   |   |         | 3,002   |  
|                                                                            | Asset impairment                                  |                         |        |       |      |   |        |       |   |   |         | 276     |  
|                                                                            |                                                   |                         |        |        |      |   |        |        |  
|                                                                            |                                                   |                         | 69,234 |        |      |   | 64,397 |        |   |   | 67,671  |        
|                                                                            |                                                   |                         |        |        |      |   |        |        |  
|Operating loss                                                              |                                                   |                         | (5,371 | )      |      |   | (4,206 | )      |   |   | (6,975  | )      
|Other income, net                                                           |                                                   |                         | 535    |        |      |   | 447    |        |   |   | 2,104   |        
|                                                                            |                                                   |                         |        |        |      |   |        |        |  
|Loss before income taxes                                                    |                                                   |                         | (4,836 | )      |      |   | (3,759 | )      |   |   | (4,871  | )      
|Provision for income taxes                                                  |                                                   |                         | 273    |        |      |   | 50     |        |   |   | 19,562  |        
|                                                                            |                                                   |                         |        |        |      |   |        |        |  
|Net loss                                                                    |                                                   | $                       | (5,109 | )      |      | $ | (3,809 | )      |   | $ | (24,433 | )      
|                                                                            |                                                   |                         |        |        |      |   |        |        |  
|Loss per common share  basic and diluted                                   |                                                   | $                       | (0.11  | )      |      | $ | (0.08  | )      |   | $ | (0.49   | )      
|                                                                            |                                                   |                         |        |        |      |   |        |        |  
|Number of shares used to calculate per share amounts, basic and
    diluted |                                                   |                         | 47,356 |        |      |   | 46,714 |        |   |   | 50,319  |        
|                                                                            |                                                   |                         |        |        |      |   |        |        |  
|Reconciliation of net loss to comprehensive loss:                           |                                                   |                         |        |        |      |   |        |        |   |   |         |        
|                                                                            | Net loss                                          |                         | $      | (5,109 | )    |   | $      | (3,809 | ) |   | $       | (24,433 | )
|                                                                            | Unrealized gain from foreign currency translation |                         |        | 726    |      |   |        | 1,009  |   |   |         | 568     |  
|                                                                            |                                                   |                         |        |        |      |   |        |        |  
|                                                                            | Comprehensive loss                                |                         | $      | (4,383 | )    |   | $      | (2,800 | ) |   | $       | (23,865 | )
|                                                                            |                                                   |                         |        |        |      |   |        |        |  



34



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##### 



BINDVIEW DEVELOPMENT CORPORATION


CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY


(In thousands)


|                             |                                                           |              |        |            |         |   |   |             |  |   |            |         |       |              |        |               |         |   |      |          |       |   |               |         |   |        |       |       |  |   |         |        |   |   |        |         |  
|---------------------------- | --------------------------------------------------------- | ------------ | ------ | ---------- | ------- | - | - | ----------- |  | - | ---------- | ------- | ----- | ------------ | ------ | ------------- | ------- | - | ---- | -------- | ----- | - | ------------- | ------- | - | ------ | ----- | ----- |  | - | ------- | ------ | - | - | ------ | ------- | -
|                             |                                                           |              |        |            |         |   |   |             |  |   |            |         |       | Accumulated  |        |               |         |   |     
|                             |                                                           |              |        | Additional |         |   |   |             |  |   |            |         | Other |              |        |               |         |  
|                             |                                                           | Common Stock |        |            | Paid-In |   |   | Shareholder |  |   | Deferred   |         |       |              |        | Comprehensive |         |   |      |          | Total |  
|                             |                                                           |              |        |            | Capital |   |   | Note        |  |   | Stock      |         |       | Accumulated  |        |               | Income  |   |      | Treasury |       |   | Shareholders |        
|                             |                                                           | Shares       |        |            | Amount  |   |   | Amount      |  |   | Receivable |         |       | Compensation |        |               | Deficit |   |      | (Loss)   |       |   | Stock         |         |   | Equity |      
|                             |                                                           |              |        |            |         |   |   |             |  |   |            |         |       |              |        |               |         |   |      |          |       |   |               |         |   |        |      
|Balance at December 31, 2001 |                                                           |              | 54,375 |            |         | $ | 1 |             |  | $ | 121,884    |         |       | $            | (1,188 | )             |         | $ |     |          |       | $ | (43,965       | )       |   | $      | (185  | )     |  | $ | (12,738 | )      |   | $ | 63,809 |        
|                             | Exercise of stock options                                 |              |        | 108        |         |   |   |            |  |   |            | 66      |       |              |        |              |         |   |      |         |       |   |               |        |   |        |       |      |  |   |         |       |   |   |        | 66      |  
|                             | Employee stock purchase plan                              |              |        | 490        |         |   |   |            |  |   |            | 498     |       |              |        |              |         |   |      |         |       |   |               |        |   |        |       |      |  |   |         |       |   |   |        | 498     |  
|                             | Treasury stock purchases (5,697 shares)                   |              |        |           |         |   |   |            |  |   |            |        |       |              |        |              |         |   |      |         |       |   |               |        |   |        |       |      |  |   |         | (5,378 | ) |   |        | (5,378  | )
|                             | Retirement of treasury stock                              |              |        | (8,695     | )       |   |   |             |  |   |            | (18,116 | )     |              |        |              |         |   |      |         |       |   |               |        |   |        |       |      |  |   |         | 18,116 |   |   |        |        |  
|                             | Reduction of shareholder note in lieu of guaranteed bonus |              |        |           |         |   |   |            |  |   |            |        |       |              |        | 296           |         |   |      |         |       |   |               |        |   |        |       |      |  |   |         |       |   |   |        | 296     |  
|                             | Foreign currency translation adjustment                   |              |        |           |         |   |   |            |  |   |            |        |       |              |        |              |         |   |      |         |       |   |               |        |   |        |       | 568   |  |   |         |       |   |   |        | 568     |  
|                             | Net loss                                                  |              |        |           |         |   |   |            |  |   |            |        |       |              |        |              |         |   |      |         |       |   |               | (24,433 | ) |        |       |      |  |   |         |       |   |   |        | (24,433 | )
|                             |                                                           |              |        |            |         |   |   |             |  |   |            |         |       |              |        |               |         |   |      |          |       |   |               |         |   |        |      
|Balance at December 31, 2002 |                                                           |              | 46,278 |            |         | $ | 1 |             |  | $ | 104,332    |         |       | $            | (892   | )             |         | $ |     |          |       | $ | (68,398       | )       |   | $      | 383   |       |  | $ |        |        |   | $ | 35,426 |        
|                             | Exercise of stock options                                 |              |        | 281        |         |   |   |            |  |   |            | 390     |       |              |        |              |         |   |      |         |       |   |               |        |   |        |       |      |  |   |         |       |   |   |        | 390     |  
|                             | Provision for reserve on note receivable                  |              |        |           |         |   |   |            |  |   |            |        |       |              |        | 144           |         |   |      |         |       |   |               |        |   |        |       |      |  |   |         |       |   |   |        | 144     |  
|                             | Reduction of shareholder note in lieu of guaranteed bonus |              |        |           |         |   |   |            |  |   |            |        |       |              |        | 356           |         |   |      |         |       |   |               |        |   |        |       |      |  |   |         |       |   |   |        | 356     |  
|                             | Employee stock purchase plan                              |              |        | 475        |         |   |   |            |  |   |            | 454     |       |              |        |              |         |   |      |         |       |   |               |        |   |        |       |      |  |   |         |       |   |   |        | 454     |  
|                             | Foreign currency translation adjustment                   |              |        |           |         |   |   |            |  |   |            |        |       |              |        |              |         |   |      |         |       |   |               |        |   |        |       | 1,009 |  |   |         |       |   |   |        | 1,009   |  
|                             | Net loss                                                  |              |        |           |         |   |   |            |  |   |            |        |       |              |        |              |         |   |      |         |       |   |               | (3,809  | ) |        |       |      |  |   |         |       |   |   |        | (3,809  | )
|                             |                                                           |              |        |            |         |   |   |             |  |   |            |         |       |              |        |               |         |   |      |          |       |   |               |         |   |        |      
|Balance at December 31, 2003 |                                                           |              | 47,034 |            |         | $ | 1 |             |  | $ | 105,176    |         |       | $            | (392   | )             |         | $ |     |          |       | $ | (72,207       | )       |   | $      | 1,392 |       |  | $ |        |        |   | $ | 33,970 |        
|                             | Exercise of stock options                                 |              |        | 1,062      |         |   |   |            |  |   |            | 1,905   |       |              |        |              |         |   |      |         |       |   |               |        |   |        |       |      |  |   |         |       |   |   |        | 1,905   |  
|                             | Issuance of restricted stock                              |              |        | 270        |         |   |   |            |  |   |            | 826     |       |              |        |              |         |   |      | (826     | )     |   |               |        |   |        |       |      |  |   |         |       |   |   |        |        |  
|                             | Deferred stock compensation amortization                  |              |        |           |         |   |   |            |  |   |            |        |       |              |        |              |         |   |      | 37       |       |   |               |        |   |        |       |      |  |   |         |       |   |   |        | 37      |  
|                             | Reduction of shareholder note in lieu of guaranteed bonus |              |        |           |         |   |   |            |  |   |            |        |       |              |        | 261           |         |   |      |         |       |   |               |        |   |        |       |      |  |   |         |       |   |   |        | 261     |  
|                             | Employee stock purchase plan                              |              |        | 290        |         |   |   |            |  |   |            | 650     |       |              |        |              |         |   |      |         |       |   |               |        |   |        |       |      |  |   |         |       |   |   |        | 650     |  
|                             | Purchases and retirement of treasury stock                |              |        | (807       | )       |   |   |            |  |   |            | (2,313  | )     |              |        |              |         |   |      |         |       |   |               |        |   |        |       |      |  |   |         |       |   |   |        | (2,313  | )
|                             | Foreign currency translation adjustment                   |              |        |           |         |   |   |            |  |   |            |        |       |              |        |              |         |   |      |         |       |   |               |        |   |        |       | 726   |  |   |         |       |   |   |        | 726     |  
|                             | Net loss                                                  |              |        |           |         |   |   |            |  |   |            |        |       |              |        |              |         |   |      |         |       |   |               | (5,109  | ) |        |       |      |  |   |         |       |   |   |        | (5,109  | )
|                             |                                                           |              |        |            |         |   |   |             |  |   |            |         |       |              |        |               |         |   |      |          |       |   |               |         |   |        |      
|Balance at December 31, 2004 |                                                           |              | 47,849 |            |         | $ | 1 |             |  | $ | 106,244    |         |       | $            | (131   | )             |         | $ | (789 | )        |       | $ | (77,316       | )       |   | $      | 2,118 |       |  | $ |        |        |   | $ | 30,127 |        
|                             |                                                           |              |        |            |         |   |   |             |  |   |            |         |       |              |        |               |         |   |      |          |       |   |               |         |   |        |      



35



---



##### 



BINDVIEW DEVELOPMENT CORPORATION


CONSOLIDATED STATEMENTS OF CASH FLOWS


(In thousands)


|                                               |                                                                                               |                                              |                     |                                                     |       |        |        |        |       |        |        |         |        |       |        |  
|---------------------------------------------- | --------------------------------------------------------------------------------------------- | -------------------------------------------- | ------------------- | --------------------------------------------------- | ----- | ------ | ------ | ------ | ----- | ------ | ------ | ------- | ------ | ----- | ------ | -
|                                               |                                                                                               | Year Ended December 31,                      |                    
|                                               |                                                                                               |                                              |                    
|                                               |                                                                                               | 2004                                         |                     |                                                     | 2003  |        |        | 2002   |      
|                                               |                                                                                               |                                              |                     |                                                     |       |        |        |        |      
|Cash flows from operating activities:          |                                                                                               |                                              |                     |                                                     |       |        |        |        |       |        |        |        
|                                               | Net loss                                                                                      |                                              | $                   | (5,109                                              | )     |        | $      | (3,809 | )     |        | $      | (24,433 | )     
|                                               | Adjustments to reconcile net loss to net cash provided by (used
    in) operating activities: |                                              |                     |                                                     |       |        |        |        |       |        |        |         |       
|                                               |                                                                                               | Depreciation and amortization                |                     |                                                     | 2,887 |        |        |        | 3,574 |        |        |         | 4,442  |      
|                                               |                                                                                               | Asset impairments                            |                     |                                                     | 87    |        |        |        |      |        |        |         | 276    |      
|                                               |                                                                                               | Deferred income tax provision (benefit)      |                     |                                                     | (80   | )      |        |        | 50    |        |        |         | 19,562 |      
|                                               |                                                                                               | Stock compensation expense                   |                     |                                                     | 562   |        |        |        | 357   |        |        |         |       |      
|                                               |                                                                                               | Other                                        |                     |                                                     |      |        |        |        | 144   |        |        |         | 48     |      
|                                               |                                                                                               | Changes in operating assets and liabilities: |                     |                                                     |       |        |        |        |       |        |        |         |        |      
|                                               |                                                                                               |                                              | Accounts receivable |                                                     |       | (467   | )      |        |       | (2,666 | )      |         |        | (933  | )     
|                                               |                                                                                               |                                              | Other assets        |                                                     |       | 427    |        |        |       | (62    | )      |         |        | (773  | )     
|                                               |                                                                                               |                                              | Accounts payable    |                                                     |       | 928    |        |        |       | 18     |        |         |        | 36    |       
|                                               |                                                                                               |                                              | Accrued liabilities |                                                     |       | (1,776 | )      |        |       | 682    |        |         |        | 1,811 |       
|                                               |                                                                                               |                                              | Deferred revenues   |                                                     |       | (61    | )      |        |       | (17    | )      |         |        | 1,602 |       
|                                               |                                                                                               |                                              |                     |                                                     |       |        |        |        |      
|                                               |                                                                                               |                                              |                     | Net cash provided by (used in) operating activities |       |        | (2,602 | )      |       |        | (1,729 | )       |        |       | 1,638  |  
|                                               |                                                                                               |                                              |                     |                                                     |       |        |        |        |      
|Cash flows from investing activities:          |                                                                                               |                                              |                     |                                                     |       |        |        |        |       |        |        |        
|                                               | Capital expenditures                                                                          |                                              |                     | (3,355                                              | )     |        |        | (2,307 | )     |        |        | (3,064  | )     
|                                               | Reimbursement of tenant improvements                                                          |                                              |                     | 284                                                 |       |        |        |       |       |        |        |        |       
|                                               | Purchase of short-term investments                                                            |                                              |                     | (10,812                                             | )     |        |        |       |       |        |        |        |       
|                                               | Proceeds from maturity of short term investments                                              |                                              |                     | 3,838                                               |       |        |        |       |       |        |        | 3,253   |       
|                                               | Lapse of restrictions on cash                                                                 |                                              |                     | 2,056                                               |       |        |        |       |       |        |        |        |       
|                                               | Other                                                                                         |                                              |                     |                                                    |       |        |        |       |       |        |        | 40      |       
|                                               |                                                                                               |                                              |                     |                                                     |       |        |        |        |      
|                                               |                                                                                               |                                              |                     | Net cash provided by (used in) investing activities |       |        | (7,989 | )      |       |        | (2,307 | )       |        |       | 229    |  
|                                               |                                                                                               |                                              |                     |                                                     |       |        |        |        |      
|Cash flows from financing activities:          |                                                                                               |                                              |                     |                                                     |       |        |        |        |       |        |        |        
|                                               | Repurchase of common stock                                                                    |                                              |                     | (2,313                                              | )     |        |        |       |       |        |        | (5,378  | )     
|                                               | Net proceeds from sale of common stock                                                        |                                              |                     | 2,480                                               |       |        |        | 844    |       |        |        | 564     |       
|                                               |                                                                                               |                                              |                     |                                                     |       |        |        |        |      
|                                               |                                                                                               |                                              |                     | Net cash provided by (used in) financing activities |       |        | 167    |        |       |        | 844    |         |        |       | (4,814 | )
|Effect of exchange rate changes on cash        |                                                                                               |                                              | 641                 |                                                     |       |        | 881    |        |       |        | 916    |        
|                                               |                                                                                               |                                              |                     |                                                     |       |        |        |        |      
|Net decrease in cash and cash equivalents      |                                                                                               |                                              | (9,783              | )                                                   |       |        | (2,311 | )      |       |        | (2,031 | )      
|Cash and cash equivalents at beginning of year |                                                                                               |                                              | 35,449              |                                                     |       |        | 37,760 |        |       |        | 39,791 |        
|                                               |                                                                                               |                                              |                     |                                                     |       |        |        |        |      
|Cash and cash equivalents at end of year       |                                                                                               | $                                            | 25,666              |                                                     |       | $      | 35,449 |        |       | $      | 37,760 |        
|                                               |                                                                                               |                                              |                     |                                                     |       |        |        |        |      
|Non-cash financing and investing activities:   |                                                                                               |                                              |                     |                                                     |       |        |        |        |       |        |        |        
|                                               | Reduction of shareholder note in lieu of guaranteed bonus                                     |                                              | $                   | 261                                                 |       |        | $      | 356    |       |        | $      | 296     |       



36



---



##### 



BINDVIEW DEVELOPMENT CORPORATION


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS




|   |                                                                           
|-- | --------------------------------------------------------------------------
|1. | Description of Business and Summary of Significant Accounting
    Policies



| |           
| | ----------
| | Operations





| |                                                          
| | ---------------------------------------------------------
| | Principles of Consolidation and Basis of
    Presentation





| |                    
| | -------------------
| | Revenue Recognition









37



---



##### 



BINDVIEW DEVELOPMENT CORPORATION


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)












| |                         
| | ------------------------
| | Research and Development





| |                                    
| | -----------------------------------
| | Software Developed for Internal Use





| |              
| | -------------
| | Stock Options



38



---



##### 



BINDVIEW DEVELOPMENT CORPORATION


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)




|                                                                                                              |  |                         |         |   |      |   |        |      |  |   |         |  
|------------------------------------------------------------------------------------------------------------- |  | ----------------------- | ------- | - | ---- | - | ------ | ---- |  | - | ------- | -
|                                                                                                              |  | Year Ended December 31, |        
|                                                                                                              |  |                         |        
|                                                                                                              |  | 2004                    |         |   | 2003 |   |        | 2002 | 
|                                                                                                              |  |                         |         |   |      |   |        |      | 
|Net loss as reported                                                                                          |  | $                       | (5,109  | ) |      | $ | (3,809 | )    |  | $ | (24,433 | )
|Add: Stock-based employee compensation expense included in
    reported net loss                              |  |                         | 562     |   |      |   | 357    |      |  |   |        |  
|Deduct: Total stock-based employee compensation expense
    determined under fair value method for all awards |  |                         | (5,845  | ) |      |   | (6,343 | )    |  |   | (7,979  | )
|                                                                                                              |  |                         |         |   |      |   |        |      | 
|Pro forma net loss                                                                                            |  | $                       | (10,392 | ) |      | $ | (9,795 | )    |  | $ | (32,412 | )
|                                                                                                              |  |                         |         |   |      |   |        |      | 
|Loss per common share (basic and diluted):                                                                    |  |                         |         |   |      |   |        |      |  |   |         |  
| As reported                                                                                                 |  | $                       | (0.11   | ) |      | $ | (0.08  | )    |  | $ | (0.49   | )
| Pro forma                                                                                                   |  | $                       | (0.22   | ) |      | $ | (0.21  | )    |  | $ | (0.64   | )



|                         |  |              |     |   |      |  |     |      |  |  |     |  
|------------------------ |  | ------------ | --- | - | ---- |  | --- | ---- |  |  | --- | -
|                         |  | Year Ended   |    
|                         |  | December 31, |    
|                         |  |              |    
|                         |  | 2004         |     |   | 2003 |  |     | 2002 | 
|                         |  |              |     |   |      |  |     |      | 
|Expected life (in years) |  |              | 5   |   |      |  | 5   |      |  |  | 5   |  
|Interest rate            |  |              | 4   | % |      |  | 4   | %    |  |  | 5   | %
|Volatility               |  |              | 102 | % |      |  | 100 | %    |  |  | 106 | %
|Dividend yield           |  |              | 0   | % |      |  | 0   | %    |  |  | 0   | %



| |             
| | ------------
| | Income Taxes



39



---



##### 



BINDVIEW DEVELOPMENT CORPORATION


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)




| |                          
| | -------------------------
| | Cash and Cash Equivalents





| |                                                            
| | -----------------------------------------------------------
| | Accounts Receivable and Allowance for Doubtful
    Accounts





| |            
| | -----------
| | Investments





| |                       
| | ----------------------
| | Property and Equipment





| |                  
| | -----------------
| | Long-Lived Assets





| |                  
| | -----------------
| | Advertising Costs





| |                             
| | ----------------------------
| | Foreign Currency Translation





| |                 
| | ----------------
| | Use of Estimates



40



---



##### 



BINDVIEW DEVELOPMENT CORPORATION


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)






| |                  
| | -----------------
| | Reclassifications





| |                                 
| | --------------------------------
| | Recent Accounting Pronouncements





|   |                                             
|-- | --------------------------------------------
|2. | Restructuring Expenses and Asset Impairments





41



---



##### 



BINDVIEW DEVELOPMENT CORPORATION


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)








|                   |  |               |     |  |              |   |     |            |  |                   |            |   |  |   |     | 
|------------------ |  | ------------- | --- |  | ------------ | - | --- | ---------- |  | ----------------- | ---------- | - |  | - | --- | 
|                   |  | Restructuring |     |  | Cash         |   |     |            |  | Remaining Accrual |           
|                   |  | Charges       |     |  | Expenditures |   |     | Write-Offs |  |                   | 12/31/2004 |  
|                   |  |               |     |  |              |   |     |            |  |                   |            |  
|Employee severance |  | $             | 383 |  |              | $ | (77 | )          |  | $                 |           |   |  | $ | 306 | 
|Other              |  |               | 107 |  |              |   |    |            |  |                   | (87        | ) |  |   | 20  | 
|                   |  |               |     |  |              |   |     |            |  |                   |            |  
|                   |  | $             | 490 |  |              | $ | (77 | )          |  | $                 | (87        | ) |  | $ | 326 | 
|                   |  |               |     |  |              |   |     |            |  |                   |            |  







|                  |  |            |       |  |                      |   |     |              |  |   |                   |   |  |   |       | 
|----------------- |  | ---------- | ----- |  | -------------------- | - | --- | ------------ |  | - | ----------------- | - |  | - | ----- | 
|                  |  | Remaining  |       |  |                      |   |     |              | 
|                  |  | Accrual    |       |  | Restructuring Charge |   |     | Cash         |  |   | Remaining Accrual |  
|                  |  | 12/31/2003 |       |  | Adjustments          |   |     | Expenditures |  |   | 12/31/2004        |  
|                  |  |            |       |  |                      |   |     |              |  |   |                   |  
|Lease commitments |  | $          | 1,991 |  |                      | $ | 258 |              |  | $ | (1,132            | ) |  | $ | 1,117 | 





|   |            
|-- | -----------
|3. | Investments



42



---



##### 



BINDVIEW DEVELOPMENT CORPORATION


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)




|                        |       |           |       |       |        |       |       |                |       |   |               |    |   |   |   |   | 
|----------------------- | ----- | --------- | ----- | ----- | ------ | ----- | ----- | -------------- | ----- | - | ------------- | -- | - | - | - | - | 
|                        |       |           |       |       |        | Gross |       |                | Gross
|                        |       | Amortized |       |       | Market |       |       | Unrealized     |       |   | Unrealized   
|                        |       | Cost      |       |       | Value  |       |       | Holding Losses |       |   | Holding Gains
|                        |       |           |       |       |        |       |       |                |       |   |              
|Treasury securities     |       | $         | 3,182 |       |        | $     | 3,180 |                |       | $ | (2            | )  |   | $ |  |  
|Corporate bonds         |       |           | 2,545 |       |        |       | 2,542 |                |       |   | (3            | )  |   |   |  |  
|Certificates of deposit |       |           | 400   |       |        |       | 400   |                |       |   |              |    |   |   |  |  
|Asset backed securities |       |           | 847   |       |        |       | 847   |                |       |   |              |    |   |   |  |  
|                        |       |           |       |       |        |       |       |                |       |   |               |   
|                        | Total |           | $     | 6,974 |        |       | $     | 6,969          |       |   | $             | (5 | ) |   | $ |  | 
|                        |       |           |       |       |        |       |       |                |       |   |               |   





|   |                
|-- | ---------------
|4. | Restricted Cash





|   |                       
|-- | ----------------------
|5. | Property and Equipment



|                                                 |  |              |             |              |      |   |         |      |  |   |         |  
|------------------------------------------------ |  | ------------ | ----------- | ------------ | ---- | - | ------- | ---- |  | - | ------- | -
|                                                 |  |              |             | December 31, |     
|                                                 |  | Estimated    |             |              |      |  
|                                                 |  | Useful Lives |             |              | 2004 |   |         | 2003 | 
|                                                 |  |              |             |              |      |   |         |      | 
|Computer equipment and software                  |  |              | 3 years     |              |      | $ | 20,758  |      |  | $ | 19,549  |  
|Office furniture and other equipment             |  |              | 3-10 years  |              |      |   | 5,100   |      |  |   | 4,161   |  
|Autos                                            |  |              | 5 years     |              |      |   | 43      |      |  |   | 49      |  
|Leasehold improvements                           |  |              | Lease terms |              |      |   | 5,473   |      |  |   | 5,061   |  
|                                                 |  |              |             |              |      |   |         |      | 
|                                                 |  |              |             |              |      |   | 31,374  |      |  |   | 28,820  |  
|Less  accumulated depreciation and amortization |  |              |             |              |      |   | (24,710 | )    |  |   | (22,256 | )
|                                                 |  |              |             |              |      |   |         |      | 
|                                                 |  |              |             |              |      | $ | 6,664   |      |  | $ | 6,564   |  
|                                                 |  |              |             |              |      |   |         |      | 



43



---



##### 



BINDVIEW DEVELOPMENT CORPORATION


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)




|   |             
|-- | ------------
|6. | Income Taxes



|                |                                |                         |        |        |      |   |        |        |   |   |        |        |  
|--------------- | ------------------------------ | ----------------------- | ------ | ------ | ---- | - | ------ | ------ | - | - | ------ | ------ | -
|                |                                | Year Ended December 31, |       
|                |                                |                         |       
|                |                                | 2004                    |        |        | 2003 |   |        | 2002   |  
|                |                                |                         |        |        |      |   |        |        |  
|U.S. operations |                                | $                       | (5,868 | )      |      | $ | (4,524 | )      |   | $ | (5,653 | )     
|Foreign         |                                |                         | 1,032  |        |      |   | 765    |        |   |   | 782    |       
|                |                                |                         |        |        |      |   |        |        |  
|                | Total loss before income taxes |                         | $      | (4,836 | )    |   | $      | (3,759 | ) |   | $      | (4,871 | )
|                |                                |                         |        |        |      |   |        |        |  



|                |         |                                  |     |   |      |   |    |      |    |  |   |        |        | 
|--------------- | ------- | -------------------------------- | --- | - | ---- | - | -- | ---- | -- |  | - | ------ | ------ | 
|                |         | Year Ended December 31,          |    
|                |         |                                  |    
|                |         | 2004                             |     |   | 2003 |   |    | 2002 |   
|                |         |                                  |     |   |      |   |    |      |   
|Current         |         |                                  |     |   |      |   |    |      |    |  |   |       
|U.S. operations |         |                                  |     |   |      |   |    |      |    |  |   |       
|                | Federal |                                  | $   |  |      |   | $  |     |    |  | $ |       |       
|                | State   |                                  |     |  |      |   |    |     |    |  |   |       |       
|Foreign         |         |                                  | 353 |   |      |   | 50 |      |    |  |  |       
|                |         |                                  |     |   |      |   |    |      |   
|                |         | Total current                    |     | $ | 353  |   |    | $    | 50 |  |   | $      |       | 
|Deferred        |         |                                  |     |   |      |   |    |      |    |  |   |       
|U.S. operations |         |                                  |     |   |      |   |    |      |    |  |   |       
|                | Federal |                                  | $   |  |      |   | $  |     |    |  | $ | 19,466 |       
|                | State   |                                  |     |  |      |   |    |     |    |  |   | 96     |       
|Foreign         |         |                                  | (80 | ) |      |   |   |      |    |  |  |       
|                |         |                                  |     |   |      |   |    |      |   
|                |         | Total deferred                   |     | $ | (80  | ) |    | $    |   |  |   | $      | 19,562 | 
|                |         |                                  |     |   |      |   |    |      |   
|                |         | Total provision for income taxes |     | $ | 273  |   |    | $    | 50 |  |   | $      | 19,562 | 
|                |         |                                  |     |   |      |   |    |      |   



|                                                           |                                  |                         |        |     |      |   |        |      |  |   |        |        | 
|---------------------------------------------------------- | -------------------------------- | ----------------------- | ------ | --- | ---- | - | ------ | ---- |  | - | ------ | ------ | 
|                                                           |                                  | Year Ended December 31, |       
|                                                           |                                  |                         |       
|                                                           |                                  | 2004                    |        |     | 2003 |   |        | 2002 | 
|                                                           |                                  |                         |        |     |      |   |        |      | 
|Income taxes computed at federal statutory income tax rate |                                  | $                       | (1,644 | )   |      | $ | (1,278 | )    |  | $ | (1,656 | )     
|State income taxes, net of federal benefit                 |                                  |                         | (29    | )   |      |   | (513   | )    |  |   | (112   | )     
|Foreign income taxes                                       |                                  |                         | (78    | )   |      |   | (212   | )    |  |   | (203   | )     
|Research and development credit                            |                                  |                         | (1,167 | )   |      |   | (791   | )    |  |   | (275   | )     
|Foreign interest and dividends                             |                                  |                         | 153    |     |      |   | 467    |      |  |   |       |       
|Valuation allowance                                        |                                  |                         | 2,270  |     |      |   | 2,156  |      |  |   | 21,705 |       
|Permanent differences                                      |                                  |                         | 395    |     |      |   | 140    |      |  |   | 103    |       
|Other                                                      |                                  |                         | 373    |     |      |   | 81     |      |  |   |       |       
|                                                           |                                  |                         |        |     |      |   |        |      | 
|                                                           | Total provision for income taxes |                         | $      | 273 |      |   | $      | 50   |  |   | $      | 19,562 | 
|                                                           |                                  |                         |        |     |      |   |        |      | 

44



---



##### 



BINDVIEW DEVELOPMENT CORPORATION


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)




|                              |                                |                                            |         |     |        |   |         |   |        | 
|----------------------------- | ------------------------------ | ------------------------------------------ | ------- | --- | ------ | - | ------- | - | ------ | 
|                              |                                | December 31,                               |        
|                              |                                |                                            |        
|                              |                                | 2004                                       |         |     | 2003   |  
|                              |                                |                                            |         |     |        |  
|Deferred tax assets:          |                                |                                            |         |     |        |   |         |  
|                              | Current                        |                                            |         |     |        |   |         |   |       
|                              |                                | Allowance for doubtful accounts            |         | $   | 246    |   |         | $ | 372    | 
|                              |                                | Accrued liabilities                        |         |     |       |   |         |   | 544    | 
|                              |                                |                                            |         |     |        |  
|                              |                                |                                            | 246     |     |        |   | 916     |  
|                              | Long term                      |                                            |         |     |        |   |         |   |       
|                              |                                | Net operating loss carryforwards           |         |     | 18,404 |   |         |   | 18,384 | 
|                              |                                | Capitalized research and development costs |         |     | 7,616  |   |         |   | 5,539  | 
|                              |                                | Difference in basis for equity investment  |         |     | 1,872  |   |         |   | 1,872  | 
|                              |                                | Tax credit carryforwards                   |         |     | 5,289  |   |         |   | 4,122  | 
|                              |                                | Differences in basis for long-lived assets |         |     | 1,379  |   |         |   | 1,705  | 
|                              |                                | Other                                      |         |     | 1,055  |   |         |   | 956    | 
|                              |                                |                                            |         |     |        |  
|                              |                                |                                            | 35,615  |     |        |   | 32,578  |  
|Total deferred tax assets     |                                |                                            | 35,861  |     |        |   | 33,494  |  
|Deferred tax liabilities:     |                                |                                            |         |     |        |   |         |  
|                              | Current                        |                                            |         |     |        |   |         |   |       
|                              |                                | Accrued liabilities                        |         |     | (17    | ) |         |   |       | 
|                              |                                |                                            |         |     |        |  
|                              | Total deferred tax liabilities |                                            |         | (17 | )      |   |         |  |       
|Total net deferred tax assets |                                |                                            | 35,844  |     |        |   | 33,494  |  
|Less: valuation allowance     |                                |                                            | (35,764 | )   |        |   | (33,494 | )
|                              |                                |                                            |         |     |        |  
|Total deferred tax assets     |                                | $                                          | 80      |     |        | $ |        |  
|                              |                                |                                            |         |     |        |  







45



---



##### 



BINDVIEW DEVELOPMENT CORPORATION


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)




|   |                   
|-- | ------------------
|7. | Net Loss Per Share



|                                          |                                                                    |                      |       |        |        |   |       |        |        |   |       |         |        | 
|----------------------------------------- | ------------------------------------------------------------------ | -------------------- | ----- | ------ | ------ | - | ----- | ------ | ------ | - | ----- | ------- | ------ | 
|                                          |                                                                    | 2004                 |       |        | 2003   |   |       | 2002   |       
|                                          |                                                                    |                      |       |        |        |   |       |        |       
|Numerator:                                |                                                                    |                      |       |        |        |   |       |        |        |   |       |        
|                                          | Net loss  numerator for loss per share 
    basic and diluted    |                      | $     | (5,109 | )      |   | $     | (3,809 | )      |   | $     | (24,433 | )     
|Denominator:                              |                                                                    |                      |       |        |        |   |       |        |        |   |       |        
|                                          | Denominator for basic loss per share 
    weighted-average shares |                      |       | 47,356 |        |   |       | 46,714 |        |   |       | 50,319  |       
|Effect of dilutive securities:            |                                                                    |                      |       |        |        |   |       |        |        |   |       |        
|                                          | Effect of stock options                                            |                      |       |       |        |   |       |       |        |   |       |        |       
|                                          |                                                                    |                      |       |        |        |   |       |        |       
|                                          |                                                                    | Total diluted shares |       |        | 47,356 |   |       |        | 46,714 |   |       |         | 50,319 | 
|                                          |                                                                    |                      |       |        |        |   |       |        |       
|Loss per common share  basic and diluted |                                                                    | $                    | (0.11 | )      |        | $ | (0.08 | )      |        | $ | (0.49 | )      
|                                          |                                                                    |                      |       |        |        |   |       |        |       





|   |                     
|-- | --------------------
|8. | Shareholders Equity



| |             
| | ------------
| | Common Stock





| |                        
| | -----------------------
| | Shareholder Rights Plan



46



---



##### 



BINDVIEW DEVELOPMENT CORPORATION


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)






| |                         
| | ------------------------
| | Share Repurchase Program







|   |                               
|-- | ------------------------------
|9. | Stock-Based Compensation Plans



| |                                     
| | ------------------------------------
| | Employee Stock-Based Incentive Plans



|                                                                 |  |      |      |  |      |   |      |      |  |   |      | 
|---------------------------------------------------------------- |  | ---- | ---- |  | ---- | - | ---- | ---- |  | - | ---- | 
|                                                                 |  | 2004 |      |  | 2003 |   |      | 2002 | 
|                                                                 |  |      |      |  |      |   |      |      | 
|Shares available for issuance (in millions)                      |  |      | 4.2  |  |      |   | 5.7  |      |  |   | 8.1  | 
|Options outstanding (in millions)                                |  |      | 9.4  |  |      |   | 9.2  |      |  |   | 7.2  | 
|Options exercisable (in millions)                                |  |      | 4.8  |  |      |   | 3.9  |      |  |   | 3.1  | 
|Weighted average exercise price per share on options exercisable |  | $    | 3.25 |  |      | $ | 3.77 |      |  | $ | 4.54 | 



| |                                  
| | ---------------------------------
| | Non-Employee Director Option Plan



|                                                                 |  |      |      |  |      |   |      |      |  |   |      | 
|---------------------------------------------------------------- |  | ---- | ---- |  | ---- | - | ---- | ---- |  | - | ---- | 
|                                                                 |  | 2004 |      |  | 2003 |   |      | 2002 | 
|                                                                 |  |      |      |  |      |   |      |      | 
|Shares available for issuance (in millions)                      |  |      | 0.4  |  |      |   |     |      |  |   | 0.1  | 
|Options outstanding (in millions)                                |  |      | 0.5  |  |      |   | 0.4  |      |  |   | 0.3  | 
|Options exercisable (in millions)                                |  |      | 0.3  |  |      |   | 0.2  |      |  |   | 0.1  | 
|Weighted average exercise price per share on options exercisable |  | $    | 1.46 |  |      | $ | 1.47 |      |  | $ | 1.73 | 

47



---



##### 



BINDVIEW DEVELOPMENT CORPORATION


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)




|                                       |                                  |         |       |        |                 |           |             |             |  |   |      |       | 
|-------------------------------------- | -------------------------------- | ------- | ----- | ------ | --------------- | --------- | ----------- | ----------- |  | - | ---- | ----- | 
|                                       |                                  |         |       |        |                 | Weighted  |            
|                                       |                                  |         |       |        |                 | Average   |            
|                                       |                                  |         |       |        |                 | Price Per |            
|                                       |                                  | Options |       |        | Price Per Share |           |             | Share       | 
|                                       |                                  |         |       |        |                 |           |             |             | 
|Options outstanding, December 31, 2001 |                                  |         | 8,199 |        |                 | $         | 0.38-$13.81 |             |  | $ | 5.28 |      
|                                       | Options granted                  |         |       | 3,149  |                 |           | $           | 0.79-$2.37  |  |   | $    | 1.41  | 
|                                       | Options lapsed or canceled       |         |       | (3,698 | )               |           | $           | 0.41-$13.81 |  |   | $    | 6.34  | 
|                                       | Options exercised                |         |       | (107   | )               |           | $           | 0.38-$2.07  |  |   | $    | 0.61  | 
|                                       |                                  |         |       |        |                 |           |             |             | 
|Options outstanding, December 31, 2002 |                                  |         | 7,543 |        |                 | $         | 0.38-$13.75 |             |  | $ | 3.20 |      
|                                       | Options granted                  |         |       | 3,478  |                 |           | $           | 1.10-$3.06  |  |   | $    | 1.34  | 
|                                       | Options lapsed or canceled       |         |       | (1,300 | )               |           | $           | 0.41-$12.38 |  |   | $    | 4.73  | 
|                                       | Options exercised                |         |       | (280   | )               |           | $           | 0.46-$2.90  |  |   | $    | 1.39  | 
|                                       | Reinstated exchange plan options |         |       | 198    |                 |           | $           | 3.19-$13.13 |  |   | $    | 10.07 | 
|                                       |                                  |         |       |        |                 |           |             |             | 
|Options outstanding, December 31, 2003 |                                  |         | 9,639 |        |                 | $         | 0.38-$13.75 |             |  | $ | 2.54 |      
|                                       | Options granted                  |         |       | 2,855  |                 |           | $           | 2.46-$4.24  |  |   | $    | 2.87  | 
|                                       | Options lapsed or canceled       |         |       | (1,537 | )               |           | $           | 0.79-$12.38 |  |   | $    | 2.78  | 
|                                       | Options exercised                |         |       | (1,062 | )               |           | $           | 0.38-$3.19  |  |   | $    | 1.72  | 
|                                       |                                  |         |       |        |                 |           |             |             | 
|Options outstanding, December 31, 2004 |                                  |         | 9,895 |        |                 | $         | 0.38-$13.75 |             |  | $ | 2.68 |      
|                                       |                                  |         |       |        |                 |           |             |             | 



|                |  |                     |       |           |                     |  |          |       |  |   |         |          |  |       |       |  |  |   |       | 
|--------------- |  | ------------------- | ----- | --------- | ------------------- |  | -------- | ----- |  | - | ------- | -------- |  | ----- | ----- |  |  | - | ----- | 
|                |  | Options Outstanding |       |           | Options Exercisable | 
|                |  |                     |       |           |                     | 
|                |  |                     |       | Weighted  |                     |  | Weighted |       |  |   |         | Weighted | 
|                |  |                     |       | Average   |                     |  | Average  |       |  |   |         | Average  | 
|                |  |                     |       | Remaining |                     |  | Exercise |       |  |   |         | Exercise | 
|                |  | Options             |       |           | Life in Years       |  |          | Price |  |   | Options |          |  | Price |      
|                |  |                     |       |           |                     |  |          |       |  |   |         |          |  |       |      
|$1.00 and below |  |                     | 571   |           |                     |  | 4.8      |       |  | $ | 0.81    |          |  |       | 475   |  |  | $ | 0.78  | 
|$1.01-$1.50     |  |                     | 2,883 |           |                     |  | 7.0      |       |  | $ | 1.17    |          |  |       | 1,485 |  |  | $ | 1.21  | 
|$1.51-$2.00     |  |                     | 1,206 |           |                     |  | 6.2      |       |  | $ | 1.58    |          |  |       | 798   |  |  | $ | 1.61  | 
|$2.01-$3.75     |  |                     | 3,973 |           |                     |  | 8.1      |       |  | $ | 2.73    |          |  |       | 1,209 |  |  | $ | 2.67  | 
|$3.76-$5.00     |  |                     | 415   |           |                     |  | 4.4      |       |  | $ | 4.66    |          |  |       | 283   |  |  | $ | 5.00  | 
|$5.01-$10.00    |  |                     | 707   |           |                     |  | 4.4      |       |  | $ | 8.90    |          |  |       | 695   |  |  | $ | 8.92  | 
|Over $10.00     |  |                     | 140   |           |                     |  | 4.4      |       |  | $ | 11.90   |          |  |       | 138   |  |  | $ | 11.88 | 
|                |  |                     |       |           |                     |  |          |       |  |   |         |          |  |       |      
|                |  |                     | 9,895 |           |                     |  | 6.9      |       |  | $ | 2.68    |          |  |       | 5,083 |  |  | $ | 3.13  | 
|                |  |                     |       |           |                     |  |          |       |  |   |         |          |  |       |      



48



---



##### 



BINDVIEW DEVELOPMENT CORPORATION


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)




| |                        
| | -----------------------
| | Option Exchange Program







| |                             
| | ----------------------------
| | Employee Stock Purchase Plan





| |                 
| | ----------------
| | Restricted Stock



49



---



##### 



BINDVIEW DEVELOPMENT CORPORATION


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)




|    |                              
|--- | -----------------------------
|10. | Commitments and Contingencies



| |                  
| | -----------------
| | Lease Commitments









| |                      
| | ---------------------
| | Employment Agreements





| |              
| | -------------
| | Legal Matters





|    |                       
|--- | ----------------------
|11. | Employee Benefit Plans





|    |                                    
|--- | -----------------------------------
|12. | Fair Value of Financial Instruments





|    |                              
|--- | -----------------------------
|13. | Concentrations of Credit Risk



50



---



##### 



BINDVIEW DEVELOPMENT CORPORATION


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)










|    |             
|--- | ------------
|14. | Segment Data



Total Revenues


|         |  |                         |      |  |      |   |      |      |  |   |      | 
|-------- |  | ----------------------- | ---- |  | ---- | - | ---- | ---- |  | - | ---- | 
|         |  | Year Ended December 31, |     
|         |  |                         |     
|         |  | 2004                    |      |  | 2003 |   |      | 2002 | 
|         |  |                         |      |  |      |   |      |      | 
|Domestic |  | $                       | 63.3 |  |      | $ | 59.4 |      |  | $ | 59.8 | 
|Foreign  |  |                         | 9.6  |  |      |   | 8.3  |      |  |   | 7.2  | 
|         |  |                         |      |  |      |   |      |      | 
|Total    |  | $                       | 72.9 |  |      | $ | 67.7 |      |  | $ | 67.0 | 
|         |  |                         |      |  |      |   |      |      | 

Product Revenues


|                              |            |                         |      |      |      |   |      |      |  |   |      |      | 
|----------------------------- | ---------- | ----------------------- | ---- | ---- | ---- | - | ---- | ---- |  | - | ---- | ---- | 
|                              |            | Year Ended December 31, |     
|                              |            |                         |     
|                              |            | 2004                    |      |      | 2003 |   |      | 2002 | 
|                              |            |                         |      |      |      |   |      |      | 
|License revenues              |            |                         |      |      |      |   |      |      |  |   |      |     
|                              | bv-Control |                         | $    | 29.4 |      |   | $    | 29.4 |  |   | $    | 31.1 | 
|                              | bv-Admin   |                         |      | 4.8  |      |   |      | 5.9  |  |   |      | 6.1  | 
|                              | Other      |                         |      | 1.6  |      |   |      | 0.1  |  |   |      |     | 
|                              |            |                         |      |      |      |   |      |      | 
|                              | Total      |                         | $    | 35.8 |      |   | $    | 35.4 |  |   | $    | 37.2 | 
|                              |            |                         |      |      |      |   |      |      | 
|                             
|Maintenance revenues          |            |                         |      |      |      |   |      |      |  |   |      |     
|                              | bv-Control |                         | $    | 26.8 |      |   | $    | 24.7 |  |   | $    | 24.2 | 
|                              | bv-Admin   |                         |      | 3.3  |      |   |      | 2.9  |  |   |      | 2.3  | 
|                              | bv-Policy  |                         |      | 0.6  |      |   |      | 0.3  |  |   |      | 0.1  | 
|                              | Other      |                         |      | 0.2  |      |   |      |     |  |   |      |     | 
|                              |            |                         |      |      |      |   |      |      | 
|                              | Total      |                         | $    | 30.9 |      |   | $    | 27.9 |  |   | $    | 26.6 | 
|                              |            |                         |      |      |      |   |      |      | 
|Professional service revenues |            | $                       | 6.2  |      |      | $ | 4.4  |      |  | $ | 3.2  |     
|Total revenues                |            | $                       | 72.9 |      |      | $ | 67.7 |      |  | $ | 67.0 |     
|                              |            |                         |      |      |      |   |      |      | 

51



---



##### 



BINDVIEW DEVELOPMENT CORPORATION


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)


Long-lived assets


|         |  |              |     |  |      |   |     | 
|-------- |  | ------------ | --- |  | ---- | - | --- | 
|         |  | December 31, |    
|         |  |              |    
|         |  | 2004         |     |  | 2003 |  
|         |  |              |     |  |      |  
|Domestic |  | $            | 4.7 |  |      | $ | 5.9 | 
|Foreign  |  |              | 2.0 |  |      |   | 0.7 | 
|         |  |              |     |  |      |  
|Total    |  | $            | 6.7 |  |      | $ | 6.6 | 
|         |  |              |     |  |      |  



|    |                       
|--- | ----------------------
|15. | Other Income (Expense)





|    |                                     
|--- | ------------------------------------
|16. | Quarterly Financial Data (Unaudited)



|                                    |  |               |        |   |          |   |        |               |  |   |              |   |  |   |        | 
|----------------------------------- |  | ------------- | ------ | - | -------- | - | ------ | ------------- |  | - | ------------ | - |  | - | ------ | 
|                                    |  | Quarter Ended |       
|                                    |  |               |       
|                                    |  | March 31,     |        |   | June 30, |   |        | September 30, |  |   | December 31, |  
|                                    |  |               |        |   |          |   |        |               |  |   |              |  
|2004:                               |  |               |        |   |          |   |        |               |  |   |              |   |  |   |        | 
|Revenues                            |  | $             | 14,833 |   |          | $ | 17,879 |               |  | $ | 17,226       |   |  | $ | 22,962 | 
|Gross profit                        |  |               | 12,862 |   |          |   | 15,779 |               |  |   | 14,582       |   |  |   | 20,640 | 
|Net income (loss)                   |  |               | (2,768 | ) |          |   | (1,491 | )             |  |   | (2,586       | ) |  |   | 1,736  | 
|Basic net income (loss) per share   |  |               | (0.06  | ) |          |   | (0.03  | )             |  |   | (0.05        | ) |  |   | 0.04   | 
|Diluted net income (loss) per share |  |               | (0.06  | ) |          |   | (0.03  | )             |  |   | (0.05        | ) |  |   | 0.03   | 
|                                   
|2003:                               |  |               |        |   |          |   |        |               |  |   |              |   |  |   |        | 
|Revenues                            |  | $             | 13,047 |   |          | $ | 15,315 |               |  | $ | 15,551       |   |  | $ | 23,759 | 
|Gross profit                        |  |               | 11,499 |   |          |   | 13,515 |               |  |   | 13,458       |   |  |   | 21,719 | 
|Net income (loss)                   |  |               | (2,701 | ) |          |   | (2,143 | )             |  |   | (1,146       | ) |  |   | 2,181  | 
|Basic net income (loss) per share   |  |               | (0.06  | ) |          |   | (0.05  | )             |  |   | (0.02        | ) |  |   | 0.05   | 
|Diluted net income (loss) per share |  |               | (0.06  | ) |          |   | (0.05  | )             |  |   | (0.02        | ) |  |   | 0.04   | 

52



---



##### 



SCHEDULE II  VALUATION AND QUALIFYING
ACCOUNTS


(In thousands)


|                                                      |      |            |   |            |         |  |   |                 |  |  |             |      |   |  |   |        | 
|----------------------------------------------------- | ---- | ---------- | - | ---------- | ------- |  | - | --------------- |  |  | ----------- | ---- | - |  | - | ------ | 
|                                                      |      |            |   | Additions- |         |  |   |                 | 
|                                                      |      |            |   | Charges    |         |  |   |                 | 
|                                                      |      | Balance at |   |            | to      |  |   | Charges         |  |  | Balance at  |     
|                                                      |      | January 1  |   |            | Expense |  |   | Against Reserve |  |  | December 31 |     
|                                                      |      |            |   |            |         |  |   |                 |  |  |             |     
|Accounts receivable  allowance for doubtful accounts |      |            |   |            |         |  |   |                 |  |  |             |      |   |  |   |       
|                                                      | 2002 |            | $ | 1,097      |         |  | $ |                |  |  | $           | (140 | ) |  | $ | 1,237  | 
|                                                      | 2003 |            |   | 1,237      |         |  |   |                |  |  |             | 197  |   |  |   | 1,040  | 
|                                                      | 2004 |            |   | 1,040      |         |  |   |                |  |  |             | 369  |   |  |   | 671    | 
|Deferred tax asset valuation allowance                |      |            |   |            |         |  |   |                 |  |  |             |      |   |  |   |       
|                                                      | 2002 |            | $ | 12,478     |         |  | $ | 21,705          |  |  | $           |     |   |  | $ | 34,183 | 
|                                                      | 2003 |            |   | 34,183     |         |  |   |                |  |  |             | 689  |   |  |   | 33,494 | 
|                                                      | 2004 |            |   | 33,494     |         |  |   | 2,270           |  |  |             |     |   |  |   | 35,764 | 

53



---



##### 






SIGNATURES






| |                                     
| | ------------------------------------
| | Bindview Development
    Corporation



| |  |                    
| |  | -------------------
| |  | /s/ Eric J. Pulaski

| |                                                  
| | -------------------------------------------------
| |                                                  
| | Eric J. Pulaski                                  
| | Chairman of the Board and Chief Executive Officer
| | (Principal Executive Officer)                    





|                                                     |  |                                                                                                          |  |                |  | 
|---------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------- |  | -------------- |  | 
|Signature                                            |  | Title                                                                                                    |  | Date          
|                                                     |  |                                                                                                          |  |               
|                                                    
|/s/ Eric J. PulaskiEric
    J. Pulaski               |  | Chairman of the Board and Chief Executive Officer
    (Principal Executive Officer)                      |  | March 11, 2005
|                                                    
|/s/ Edward L. PierceEdward
    L. Pierce             |  | Director, Executive Vice President and Chief Financial
    Officer
    (Principal Financial Officer)     |  | March 11, 2005
|                                                    
|/s/ Kevin P. CohnKevin
    P. Cohn                   |  | Vice President, Chief Accounting Officer and Corporate
    Controller
    (Principal Accounting Officer) |  | March 11, 2005
|                                                    
|/s/ Peter T. DamerisPeter
    T. Dameris             |  | Director                                                                                                 |  | March 11, 2005
|                                                    
|/s/ Richard A.
    Hosley IIRichard
    A. Hosley II |  | Director                                                                                                 |  | March 11, 2005
|                                                    
|/s/ Robert D. RepassRobert
    D. Repass             |  | Director                                                                                                 |  | March 11, 2005
|                                                    
|/s/ Armand ShapiroArmand
    Shapiro                 |  | Director                                                                                                 |  | March 11, 2005

54



---



##### 









|        |    |      |  |   |             |                                                                                                                                                                                                                                                                                                                                     
|------- | -- | ---- |  | - | ----------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |      |  |   |            
|Number  |    |      |  |   | Description
|        |    |      |  |   |            
|        | 2  | .1   |  |  |             | Agreement of Merger dated as of January 26, 2000, by and
    among BindView, Bravo Acquisition Corporation, Entevo
    Corporation and the Representing Stockholders identified therein
    (incorporated by reference to Exhibit 2.1 to
    BindViews Current Report on form 8-K (File No.
    000-24677), dated February 9, 2000)
|        | 3  | .1   |  |  |             | Amended and Restated Articles of Incorporation of BindView
    (incorporated by reference to Exhibit 3.1 to the
    Registration Statement on Form S-1 of BindView (Reg.
    No. 333-52883), filed with the Commission on May 15,
    1998 (the Form S-1))                                                                        
|        | 3  | .2   |  |  |             | Bylaws of BindView Development Corporation, as amended
    May 23, 2002 (Incorporated by reference to Exhibit 3.3
    to BindViews Quarterly Report on Form 10-Q for the
    quarter ended June 30, 2002)                                                                                                                          
|        | 4  | .1   |  |  |             | Article IV of the Amended and Restated Articles of
    Incorporation of BindView Development Corporation (incorporated
    by reference to Exhibit 3.1 to the Form S-1)                                                                                                                                                             
|        | 4  | .2   |  |  |             | Section 7 of the Bylaws of BindView Development Corporation
    (incorporated by reference to BindViews Quarterly Report
    on Form 10-Q for the quarter ended June 30, 2003)                                                                                                                                                     
|        | 4  | .3   |  |  |             | Rights Agreement dated September 17, 2001 between BindView
    and Mellon Investor Services LLC (incorporated by reference to
    Exhibit 4.1 to BindViews Form 8-K filed on
    September 20, 2001 (the 9/20/2001 8-K)                                                                                                          
|        | 4  | .4   |  |  |             | Resolution Establishing a Series of Preferred Stock dated
    September 17, 2001 (incorporated by reference to
    Exhibit 4.2 to the 9/20/2001 8-K)                                                                                                                                                                                
|        | 4  | .5   |  |  |             | Form of Right Certificate (incorporated by reference to
    Exhibit 4.3 to the 9/20/2001 8-K)                                                                                                                                                                                                                                       
|        | 4  | .6   |  |  |             | Summary of Rights to Purchase Preferred Shares (incorporated by
    reference to Exhibit 4.4 to the 9/20/2001 8-K)                                                                                                                                                                                                                  
|        | 10 | .1  |  |  |             | Incentive Stock Option Plan (incorporated by reference to
    Exhibit 10.1 to the Form S-1)                                                                                                                                                                                                                                         
|        | 10 | .2  |  |  |             | Stock Option Plan (incorporated by reference to
    Exhibit 10.2 to the Form S-1)                                                                                                                                                                                                                                                   
|        | 10 | .3  |  |  |             | 1997 Incentive Plan (incorporated by reference to
    Exhibit 10.3 to the Form S-1)                                                                                                                                                                                                                                                 
|        | 10 | .4  |  |  |             | Omnibus Incentive Plan, as amended (incorporated by reference to
    Exhibit 10.2 to BindViews Annual Report on
    Form 10-K for the year ended December 31, 1999 (the
    1999 10-K)                                                                                                                                           
|        | 10 | .5   |  |  |             | Agreement to Sublease dated June 25, 1998 between BindView
    and Halliburton Energy Services, Inc. (incorporated by reference
    to Exhibit 10.8 to BindViews Form S-1/A filed
    July 14, 1998)                                                                                                                               
|        | 10 | .6   |  |  |             | Lease Agreement dated June 20, 1995 between BindView and
    School Employees Holding Corp., including all amendments thereto
    (incorporated by reference to Exhibit 10.7 to the
    Form S-1)                                                                                                                                   
|        | 10 | .7  |  |  |             | Amended and Restated Employment Agreement, dated June 24,
    1999, between BindView and Marc R. Caminetsky (incorporated by
    reference to BindViews Quarterly Report On Form 10-Q
    (File No. 000-24677) for the quarter ended June 30, 1999
    (the 6/30/99 10-Q)                                                        
|        | 10 | .8  |  |  |             | Amended and Restated Employment Agreement, dated June 24,
    1999, between BindView and Paul J. Cormier (incorporated by
    reference to Exhibit 10.2 to the 6/30/99 10-Q)                                                                                                                                                        
|        | 10 | .9  |  |  |             | Executive Employment Agreement dated October 2, 2000
    between BindView and Kevin M. Weiss (Incorporated by reference
    to Exhibit 10.10 to BindViews Annual Report on
    Form 10-K for the year ended December 31, 2000 (the
    2000 10-K)                                                                                
|        | 10 | .10 |  |  |             | Employee Agreement dated September 26, 1996 between
    BindView Development Corporation and David E. Pulaski
    (incorporated by reference to Exhibit 10.14 to the
    Form S-1)                                                                                                                                                  
|        | 10 | .11 |  |  |             | Form of Indemnification Agreement (incorporated by reference to
    Exhibit 10.16 to the Form S-1)                                                                                                                                                                                                                                  

55



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##### 



|        |    |      |  |   |             |                                                                                                                                                                                                                                                            
|------- | -- | ---- |  | - | ----------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |      |  |   |            
|Number  |    |      |  |   | Description
|        |    |      |  |   |            
|        | 10 | .12 |  |  |             | Executive Employment Agreement dated May 1, 2001 between
    BindView and Edward L. Pierce (incorporated by reference to
    Exhibit 10.1 to BindViews Quarterly Report on
    Form 10-Q for the quarter ended June 30, 2001 (the
    6/30/2001 10-Q)   
|        | 10 | .13 |  |  |             | Restricted Stock Agreement dated May 1, 2001 between
    BindView and Edward L. Pierce (incorporated by reference to
    Exhibit 10.2 to the 6/30/2001 10-Q)                                                                                               
|        | 10 | .14 |  |  |             | Promissory Note dated May 1, 2001 executed in favor of
    Bindview by Edward L. Pierce (incorporated by reference to
    Exhibit 10.3 to the 6/30/2001 10-Q)                                                                                              
|        | 10 | .15 |  |  |             | Change of Control Agreement dated May 1, 2001 between
    BindView and Edward L. Pierce (incorporated by reference to
    Exhibit 10.4 to the 6/30/2001 10-Q)                                                                                              
|        | 10 | .16 |  |  |             | Indemnification Agreement dated May 1, 2001 between
    BindView and Edward L. Pierce (incorporated by reference to
    Exhibit 10.5 to the 6/30/2001 10-Q)                                                                                                
|        | 10 | .17 |  |  |             | Nonqualified Stock Option Agreement dated May 1, 2001
    between BindView and Richard P. Gardner (incorporated by
    reference to Exhibit 10.6 to the 6/30/2001 10-Q)                                                                                    
|        | 10 | .18 |  |  |             | Nonqualified Stock Option Agreement dated May 1, 2001
    between BindView and William D. Miller (incorporated by
    reference to Exhibit 10.7 to the 6/30/2001 10-Q)                                                                                     
|        | 10 | .19 |  |  |             | Nonqualified Stock Option Agreement dated May 1, 2001
    between BindView and Kevin M. Weiss (incorporated by reference
    to Exhibit 10.8 to the 6/30/2001 10-Q)                                                                                        
|        | 10 | .20 |  |  |             | Executive Employment Agreement dated May 31, 2001 between
    BindView and Kevin P. Cohn (incorporated by reference to
    Exhibit 10.9 to the 6/30/2001 10-Q)                                                                                             
|        | 10 | .21 |  |  |             | Nonqualified Stock Option Agreement dated May 31, 2001
    between BindView and Kevin P. Cohn (incorporated by reference to
    Exhibit 10.10 to the 6/30/2001 10-Q)                                                                                       
|        | 10 | .22 |  |  |             | Change of Control Agreement dated May 31, 2001 between
    BindView and Kevin P. Cohn (incorporated by reference to
    Exhibit 10.11 to the 6/30/2001 10-Q)                                                                                               
|        | 10 | .23 |  |  |             | Indemnification Agreement dated May 31, 2001 between
    BindView and Kevin P. Cohn (incorporated by reference to
    Exhibit 10.12 to the 6/30/2001 10-Q)                                                                                                 
|        | 10 | .24 |  |  |             | Indemnification Agreement dated July 18, 2001 between
    BindView and Gary S. Margolis (incorporated by reference to
    Exhibit 10.1 to BindViews Quarterly Report on
    Form 10-Q for the quarter ended September 30, 2001
    (the 9/30/2001 10-Q) 
|        | 10 | .25 |  |  |             | Separation Agreement dated August 1, 2001 to be effective
    July 2, 2001 between BindView and Richard P. Gardner
    (incorporated by reference to Exhibit 10.2 to the 9/30/2001
    10-Q)                                                               
|        | 10 | .26 |  |  |             | Separation Agreement dated August 3, 2001 to be effective
    July 16, 2001 between BindView and Kevin M. Weiss
    (incorporated by reference to Exhibit 10.3 to the 9/30/2001
    10-Q)                                                                  
|        | 10 | .27 |  |  |             | 1998 Non-Employee Director Stock Option Plan, as amended
    October 26, 2001 and February 21, 2002 (incorporated
    by reference to Exhibit 10.28 to BindViews Annual
    Report on Form 10K for the year ended December 31,
    2001 (the 2001 10-K))
|        | 10 | .28 |  |  |             | Amended and Restated Executive Employment Agreement dated
    December 31, 2001 between BindView and Edward L. Pierce
    (incorporated by reference to Exhibit 10.29 to the 2001
    10-K)                                                                
|        | 10 | .29  |  |  |             | Lease agreement dated March 30, 2001 between BindView and
    Sage Plaza One Ltd (incorporated by reference to
    Exhibit 10.30 to the 2001 10-K)                                                                                                         
|        | 10 | .30 |  |  |             | Indemnification Agreement between the Company and Armand S.
    Shapiro, effective October 26, 2001 (incorporated by
    reference to Exhibit 10.31 to the 2001 10-K)                                                                                      
|        | 10 | .31 |  |  |             | Promissory Note dated December 31, 2001 executed in favor
    of Bindview by Edward L. Pierce (incorporated by reference to
    Exhibit 10.32 to the 2001 10-K)                                                                                            
|        | 10 | .32 |  |  |             | Rescission Agreement dated December 31, 2001 between
    BindView and Edward L. Pierce (incorporated by reference to
    Exhibit 10.33 to the 2001 10-K)                                                                                                   
|        | 10 | .33 |  |  |             | Restricted Stock Agreement dated December 31, 2001 between
    BindView and Edward L. Pierce (incorporated by reference to
    Exhibit 10.34 to the 2001 10-K)                                                                                             
|        | 10 | .34 |  |  |             | Security Agreement dated December 31, 2001 between BindView
    and Edward L. Pierce (incorporated by reference to
    Exhibit 10.35 to the 2001 10-K)                                                                                                     

56



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##### 



|        |    |      |  |   |             |                                                                                                                                                                                                                                                                                         
|------- | -- | ---- |  | - | ----------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |      |  |   |            
|Number  |    |      |  |   | Description
|        |    |      |  |   |            
|        | 10 | .35 |  |  |             | Indemnification agreement between the Company and Eric J.
    Pulaski, executed March 27, 2002 (incorporated by reference
    to Exhibit 10.1 to BindViews Quarterly Report on
    Form 10-Q for the quarter ended March 31, 2002 (the
    3/31/2002 10-Q))                          
|        | 10 | .36 |  |  |             | Indemnification agreement between the Company and Peter L.
    Bloom, executed March 27, 2002 (incorporated by reference
    to Exhibit 10.2 to the 3/31/2002 10-Q)                                                                                                                     
|        | 10 | .37 |  |  |             | Indemnification agreement between the Company and Richard A.
    Hosley II, executed March 27, 2002 (incorporated by
    reference to Exhibit 10.2 to the 3/31/2002 10-Q)                                                                                                               
|        | 10 | .38 |  |  |             | Indemnification agreement between the Company and Peter T.
    Dameris, executed August 15, 2002 (incorporated by
    reference to Exhibit 10.1 to BindViews Quarterly
    Report on Form 10-Q for the quarter ended
    September 30, 2002 (the 9/30/2002 10-Q))                    
|        | 10 | .39 |  |  |             | Nonqualified Stock Option Agreement, August 15, 2002,
    between the Company and Peter T. Dameris (incorporated by
    reference to Exhibit 10.2 to the 9/30/2002 10-Q)                                                                                                                
|        | 10 | .40 |  |  |             | 1999 Employee Stock Purchase Plan (incorporated by reference to
    Annex A to the Registrants Proxy Statement relating
    to its 1999 Annual Shareholders Meeting, filed with the
    commission on April 30, 1999)                                                                 
|        | 10 | .41  |  |  |             | 1999 Employee Stock Purchase Plan, as amended effective
    January 1, 2001 (incorporated by reference to
    Exhibit 10.41 to BindViews Annual Report on
    Form 10-K for the year ended December 31, 2002 (the
    2002 10-K)                                                     
|        | 10 | .42  |  |  |             | Second Amendment to Employee Stock Purchase Plan, adopted by the
    Board of Directors on January 27, 2003, subject to
    subsequent shareholder approval (incorporated by reference to
    Exhibit 10.42 to the 2002 10-K)                                                           
|        | 10 | .43  |  |  |             | BindView Development Corporation 2000 Indian Stock Option Plan,
    as amended through March 30, 2001 (incorporated by
    reference to Exhibit 10.43 to the 2002 10-K)                                                                                                                 
|        | 10 | .44  |  |  |             | BindView Development Corporation 2000 Employee Incentive Plan,
    as amended through March 30, 2001 (incorporated by
    reference to Exhibit 10.44 to the 2002 10-K)                                                                                                                  
|        | 10 | .45 |  |  |             | Executive Employment Agreement entered into effective
    December 30, 2002, between the Company and Eric J. Pulaski
    (incorporated by reference to Exhibit 10.45 to the 2002
    10-K)                                                                                              
|        | 10 | .46 |  |  |             | Executive Employment Agreement entered into effective
    December 30, 2002, between the Company and David S. Flame
    (incorporated by reference to Exhibit 10.46 to the 2002
    10-K)                                                                                               
|        | 10 | .47 |  |  |             | Executive Employment Agreement entered into effective
    December 30, 2002, between the Company and David E. Lloyd
    (incorporated by reference to Exhibit 10.47 to the 2002
    10-K)                                                                                               
|        | 10 | .48 |  |  |             | Executive Employment Agreement entered into effective
    December 30, 2002, between the Company and Gary S. Margolis
    (incorporated by reference to Exhibit 10.48 to the 2002
    10-K)                                                                                             
|        | 10 | .49 |  |  |             | Executive Employment Agreement entered into effective
    December 30, 2002, between the Company and Ronald E.
    Rosenthal (incorporated by reference to Exhibit 10.49 to
    the 2002 10-K)                                                                                          
|        | 10 | .50 |  |  |             | Form of Change of Control Agreement entered into effective
    December 30, 2002, between the Company and, respectively,
    Eric J. Pulaski, Kevin P. Cohn, Jeffery E. Margolis, Gary E.
    Margolis, and D.C. Toedt (incorporated by reference to
    Exhibit 10.50 to the 2002 10-K)
|        | 10 | .51 |  |  |             | Change of Control Agreement entered into effective
    December 30, 2002, between the Company and David S. Flame
    (incorporated by reference to Exhibit 10.51 to the 2002
    10-K)                                                                                                  
|        | 10 | .52 |  |  |             | Change of Control Agreement entered into effective
    December 30, 2002, between the Company and David E. Lloyd
    (incorporated by reference to Exhibit 10.52 to the 2002
    10-K)                                                                                                  
|        | 10 | .53 |  |  |             | Change of Control Agreement entered into effective
    December 30, 2002, between the Company and Ronald E.
    Rosenthal (incorporated by reference to Exhibit 10.53 to
    the 2002 10-K)                                                                                             
|        | 10 | .54 |  |  |             | Form of First Amended and Restated Executive Employment
    Agreement entered into effective December 30, 2002, between
    the Company and, respectively, Jeffery E. Margolis and D.C.
    Toedt (incorporated by reference to Exhibit 10.54 to the
    2002 10-K)                     
|        | 10 | .55 |  |  |             | Form of Executive Employment Agreement entered into effective
    December 30, 2002, between the Company and, respectively,
    Scott S. Blake, Shantanu Ghosh, Diana Massaro, and Bruce K.
    Swope (incorporated by reference to Exhibit 10.55 to the
    2002 10-K)                 

57



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##### 



|        |    |       |  |   |             |                                                                                                                                                                                                                                                                                                                                                                                                              
|------- | -- | ----- |  | - | ----------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |       |  |   |            
|Number  |    |       |  |   | Description
|        |    |       |  |   |            
|        | 10 | .56  |  |  |             | Form of Change of Control Agreement entered into effective
    December 30, 2002, between the Company and, respectively,
    Scott S. Blake, Shantanu Ghosh, Diana Massaro, and Bruce K.
    Swope (incorporated by reference to Exhibit 10.56 to the
    2002 10-K)                                                                                                                                         
|        | 10 | .57  |  |  |             | Change of Control Agreement between BindView and Shekar Ayyar,
    entered into October 13, 2004, effective as of July 19, 2004
    (incorporated by reference to Exhibit 10.2 to BindViews
    Current Report on Form 8-K filed October 20, 2004 which in turn
    incorporates by reference Exhibit 10.50 to our Annual Report on
    Form 10-K for the year ended December 31, 2002)                     
|        | 10 | .58  |  |  |             | Indemnification Agreement between BindView and Shekar Ayyar,
    entered into October 13, 2004, effective as of July 19, 2004
    (incorporated by referenced to Exhibit 10.3 to BindViews
    Current Report on Form 8-K filed October 20, 2004 which in turn
    incorporates by reference Exhibit 10.1 to BindViews
    Quarterly Report on Form 10-Q for the quarter ended March 31,
    2002)         
|        | 10 | .59  |  |  |             | Nonqualified Stock Option Agreement between BindView and Shekar
    Ayyar, entered into October 13, 2004, effective as of July 19,
    2004 (incorporated by reference to Exhibit 10.4 to
    BindViews Current Report on Form 8-K filed October 20,
    2004 which in turn incorporates by reference Exhibit 10.10 to
    BindViews Quarterly report on Form 10-Q for the quarter
    ended June 30, 2001)
|        | 10 | .60  |  |  |             | Restricted Stock Agreement between BindView and Shekar Ayyar,
    entered into October 13, 2004, effective as of July 19, 2004
    (incorporated by reference to Exhibit 10.5 to BindViews
    Current Report on Form 8-K filed October 20, 2004)                                                                                                                                                           
|        | 10 | .61  |  |  |             | Executive Employment Agreement between BindView and Arshad
    Matin, executed and effective as of April 13, 2004 (incorporated
    by reference to Exhibit 10.1 to BindViews Current Report
    on Form 8-K filed October 27, 2004 which in turn incorporates by
    reference Exhibit 10.1 to our Quarterly Report on Form 10-Q
    filed August 13, 2004)                                                
|        | 10 | .62  |  |  |             | Change of Control Agreement between BindView and Arshad Matin,
    executed and effective as of April 13, 2004 (incorporated by
    reference to Exhibit 10.2 to BindViews Current Report on
    Form 8-K filed October 27, 2004 which in turn incorporates by
    reference Exhibit 10.50 to our Annual Report on Form 10-K for
    the year ended December 31,2002)                                       
|        | 10 | .63  |  |  |             | Indemnification Agreement between BindView and Arshad Matin,
    executed and effective as of April 13, 2004 (incorporated by
    reference to Exhibit 10.3 to BindViews Current Report on
    Form 8-K filed October 27, 2004 which in turn incorporates by
    reference Exhibit 10.1 to BindViews Quarterly Report on
    Form 10-Q for the quarter ended March 31, 2002)                               
|        | 10 | .64  |  |  |             | Nonqualified Stock Option Agreement between BindView and Arshad
    Matin, effective April 13, 2004 (incorporated by reference to
    Exhibit 10.4 to BindViews Current Report on Form 8-K filed
    October 27, 2004 which in turn incorporates by reference Exhibit
    10.10 to our Quarterly Report on Form 10-Q for the quarter ended
    June 30, 2001)                                               
|        | 10 | .65  |  |  |             | Separation Agreement between BindView and David S. Flame,
    effective November 2, 2004 (incorporated by reference to Exhibit
    10.1 to BindViews Current Report on Form 8-K filed
    November 8, 2004)                                                                                                                                                                                                 
|        | 10 | .66   |  |  |             | Sublease agreement dated September 30, 2004 between BindView and
    Nationwide Life Insurance Company of America (incorporated by
    reference to Exhibit 10.1 BindViews Quarterly Report on
    Form 10-Q for the quarter ended September 30, 2004)                                                                                                                                                      
|        | 10 | .67* |  |  |             | First Amended and Restated Executive Employment Agreement
    between BindView and Shekar Ayyar, executed December 24, 2004
    and January 7, 2005, to be effective as of July 19, 2004                                                                                                                                                                                                                     
|        | 21 | .1*   |  |  |             | Subsidiaries of the Company                                                                                                                                                                                                                                                                                                                                                                                  
|        | 23 | .1*   |  |  |             | Consent of PricewaterhouseCoopers LLP                                                                                                                                                                                                                                                                                                                                                                        
|        | 31 | .1*   |  |  |             | Certification of Eric J. Pulaski, Chairman of the Board and
    Chief Executive Officer, pursuant to Rule 13a-14(a) under
    the Securities and Exchange Act of 1934                                                                                                                                                                                                                                        

58



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##### 



|        |    |     |  |   |             |                                                                                                                                                                                                                         
|------- | -- | --- |  | - | ----------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |     |  |   |            
|Number  |    |     |  |   | Description
|        |    |     |  |   |            
|        | 31 | .2* |  |  |             | Certification of Edward L. Pierce, Director, Executive Vice
    President, and Chief Financial Officer, pursuant to
    Rule 13a-14(a) under the Securities and Exchange Act of 1934                                    
|        | 32 | .1* |  |  |             | Certifications of Eric J. Pulaski, Chairman of the Board and
    Chief Executive Officer and Edward L. Pierce, Director,
    Executive Vice President and Chief Financial Officer pursuant to
    18 U.S.C. Section 1350

59