##### Table of Contents









UNITED STATES SECURITIES AND EXCHANGE COMMISSION


Washington, DC 20549





FORM 10-K


(Mark One)




|  |                                                                                         
|- | ----------------------------------------------------------------------------------------
|þ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended March 31, 2005


or




|  |                                                             
|- | ------------------------------------------------------------
|o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
    THE

SECURITIES EXCHANGE ACT OF 1934


Commission file number 0-19817





STELLENT, INC.


(Exact name of registrant as specified in its charter)


|                                                                   |  |                                         
|------------------------------------------------------------------ |  | ----------------------------------------
|Minnesota                                                          |  | 41-1652566                              
|(State or other jurisdiction of
    incorporation or organization) |  | (I.R.S. Employer
    Identification No.)

7777 Golden Triangle Drive


Eden Prairie, Minnesota 55344-3736


(Address of principal executive offices and zip code)


(952) 903-2000


(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: Preferred Share


Purchase Rights; Common Stock, par value $.01 per share


þ o


o


þ o














---










STELLENT, INC.


FORM 10-K


For the fiscal year ended March 31, 2005


TABLE OF CONTENTS


|                                                         |          |             |                                                                                           |      |  |    | 
|-------------------------------------------------------- | -------- | ----------- | ----------------------------------------------------------------------------------------- | ---- |  | -- | 
|                                                         |          | Description |                                                                                           | Page | 
|                                                         |          |             |                                                                                           |      | 
|PART I                                                   |          |             |                                                                                           |      |  |   
|                                                         | Item 1.  |             | Business                                                                                  |      |  | 1  | 
|                                                         | Item 2.  |             | Properties                                                                                |      |  | 7  | 
|                                                         | Item 3.  |             | Legal Proceedings                                                                         |      |  | 8  | 
|                                                         | Item 4.  |             | Submission of Matters to a Vote of Security
    Holders                                   |      |  | 8  | 
|                                                         | Item 4A. |             | Executive Officers of the Registrant                                                      |      |  | 8  | 
|                                                        
|PART II                                                  |          |             |                                                                                           |      |  |   
|                                                         | Item 5.  |             | Market for Registrants Common Equity
    and Related Stockholder Matters                 |      |  | 10 | 
|                                                         | Item 6.  |             | Selected Financial Data                                                                   |      |  | 11 | 
|                                                         | Item 7.  |             | Managements Discussion and Analysis
    of Financial Condition and Results of Operations |      |  | 12 | 
|                                                         | Item 7A. |             | Quantitative and Qualitative Disclosures
    About Market Risk                            |      |  | 38 | 
|                                                         | Item 8.  |             | Financial Statements and Supplementary
    Data                                           |      |  | 39 | 
|                                                         | Item 9.  |             | Changes in and Disagreements with
    Accountants on Accounting and Financial Disclosure  |      |  | 40 | 
|                                                         | Item 9A. |             | Controls and Procedures                                                                   |      |  | 40 | 
|                                                         | Item 9B. |             | Other Information                                                                         |      |  | 41 | 
|                                                        
|PART III                                                 |          |             |                                                                                           |      |  |   
|                                                         | Item 10. |             | Directors and Executive Officers of the
    Registrant                                    |      |  | 41 | 
|                                                         | Item 11. |             | Executive Compensation                                                                    |      |  | 41 | 
|                                                         | Item 12. |             | Security Ownership of Certain Beneficial
    Owners and Management                        |      |  | 41 | 
|                                                         | Item 13. |             | Certain Relationships and Related
    Transactions                                        |      |  | 41 | 
|                                                         | Item 14. |             | Principal Accountant Fees and Services                                                    |      |  | 41 | 
|                                                        
|PART IV                                                  |          |             |                                                                                           |      |  |   
|                                                         | Item 15. |             | Exhibits and Financial Statement
    Schedules                                            |      |  | 42 | 
|Signatures                                               |          |             | 46                                                                                        |     
|Certifications                                           |          |             |                                                                                           |     
|Subsidiaries of Registrant                              
|Consent of Grant Thornton LLP                           
|Certification by Robert F. Olson Pursuant to Section 302
|Certification by Gregg A. Waldon Pursuant to Section 302
|Certification by Robert F. Olson Pursuant to Section 906
|Certification by Gregg A. Waldon Pursuant to Section 906







---



##### Table of Contents



DOCUMENTS INCORPORATED BY REFERENCE









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

Forward-Looking Statements




OVERVIEW




tm


MARKETS AND CUSTOMERS








| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Universal Content Management:Organizations deploy
    Stellent® Universal Content Management software to build
    enterprise-wide content management deployments and
    line-of-business solutions, such as public Web sites; intranets
    for internal-only company information; extranets, which are Web
    sites available only to select audiences, such as partners and
    customers; multi-site management, which is the development and
    management of all of the above types of Web sites; and financial
    compliance initiatives, such as Sarbanes-Oxley.
|
| |  | Content Components:Other technology companies embed this
    technology into their own products to enable their users to view
    business information on, and to convert business information to
    formats                                                                                                                                                                                                                                                                                                                                                               

1



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| |  |                                                                                                                                                 
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------
| |  | viewable on handheld devices or in a Web browser. These
    technologies are also integrated into our Universal Content
    Management software.

PRODUCTS




Universal Content Management Software










Stellent Content Server




Application Modules






| |   |                                                                                                                                                                                                                                                          
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Web Content Management:Enables organizations to create
    web content, and manage and publish Web sites.                                                                                                                                                
|
| |  | Document Management and Imaging:Provides Web-based
    management, collaboration and access to business information
    created in common office software applications or created as
    paper documents which are then converted into electronic images.
|
| |  | Digital Asset Management:Enables digital assets
     such as photos, graphics, audio clips and video
    clips  to be searched, accessed, viewed, managed,
    distributed and re-purposed via the Web.                                                

2



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| |   |                                                                                                                                                                                                      
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Records Management:Provides a Web-based method for
    managing business records and creating rules  such as
    expiration, archiving and deletion  regarding the
    disposition of that content.
|
| |  | Collaboration Management:Enables the creation of a
    project or team space for sharing documents, schedules and
    discussions among a team via the Web.                                          

Primary Usage Scenarios




| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Enterprise Content Management:Enterprise content
    management (ECM) is an infrastructure for all content-based
    applications within an enterprise, allowing organizations to
    strategically select, deploy and maintain an effective,
    efficient knowledge platform within their organizations. Often
    times, the ability to provide an ECM infrastructure is a
    requirement in line-of-business transactions as companies look
    ahead to other upcoming content management needs.                                                                                                                                                                                                                  
|
| |  | Compliance Management:The need to comply with government
    mandates for financial records retention and compliance
    monitoring  such as Sarbanes-Oxley  has
    emerged as a driving factor in both business and technology
    decisions. Compliance solutions powered by content management
    technologies  whether as a compliance platform for
    all regulations mandated for an organization, or as
    line-of-business compliance applications for individual
    regulatory efforts  assist organizations in their
    compliance processes by automating the capture, retention,
    management and disposition of electronic files and physical
    documents maintained for compliance purposes.
|
| |  | Multi-Site Management:Multi-site management refers to a
    content management infrastructure for creating and managing
    multiple, distributed Web properties such as public Web sites,
    intranets, extranets and portals. Stellents
    second-generation, multi-site management solution offers a
    rapidly deployable product, allowing companies to easily launch
    and maintain multiple internal or external sites while
    preserving appropriate corporate branding.                                                                                                                                                                                                                                
|
| |  | Customer Applications:In addition to the three usage
    scenarios outlined above, Stellent customers use our content
    management technology to power a variety of other high-value
    applications, including public-facing Web sites, corporate
    intranets, dealer and partner extranets, human resource portals,
    customer service Web sites, marketing brand management, and
    accounts payable imaging.                                                                                                                                                                                                                                                                                                

Content Components Software






SUPPLIERS




CONTRACTS




3



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##### Table of Contents





CONSULTING SERVICES






| |   |                                                                                                           
| | - | ----------------------------------------------------------------------------------------------------------
| |  | Technical architecture analysis and needs assessment, such as
    software, security and metadata analysis
|
| |  | Solutions development and deployment strategies                                                           
|
| |  | Software installation and configuration                                                                   
|
| |  | Custom application development                                                                            
|
| |  | Third party product integration                                                                           
|
| |  | Project management                                                                                        
|
| |  | Knowledge transfer                                                                                        



PRODUCT SUPPORT






PRODUCT TRAINING




4



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SALES AND MARKETING










RESEARCH AND DEVELOPMENT








5



---



##### Table of Contents



ACQUISITIONS




COMPETITION








PROPRIETARY RIGHTS AND LICENSING






6



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##### Table of Contents







EMPLOYEES




GEOGRAPHIC INFORMATION




AVAILABLE INFORMATION









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





7



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



In re Stellent Securities
Litigation.







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








|         |                                     
|-------- | ------------------------------------
|Item 4A. | Executive Officers of the Registrant

(a) Executive Officers of the Registrant




|                  |  |     |    |  |          |                                                                                
|----------------- |  | --- | -- |  | -------- | -------------------------------------------------------------------------------
|Name              |  | Age |    |  | Position
|                  |  |     |    |  |         
|Robert F. Olson   |  |     | 49 |  |          | President and Chief Executive Officer and Chairman of the Board                
|Gregg A. Waldon   |  |     | 44 |  |          | Executive Vice President, Chief Financial Officer, Secretary,
    and Treasurer
|Frank A. Radichel |  |     | 55 |  |          | Executive Vice President of Research & Development                             
|Mark K. Ruport    |  |     | 52 |  |          | Executive Vice President of Field Operations                                   
|Daniel P. Ryan    |  |     | 46 |  |          | Executive Vice President of Marketing/Business Development                     









8



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9



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PART II







|        |                                                                          
|------- | -------------------------------------------------------------------------
|Item 5. | Market for Registrants Common Equity and Related
    Stockholder Matters





|                                  |  |      |       |  |     |   |      | 
|--------------------------------- |  | ---- | ----- |  | --- | - | ---- | 
|                                  |  | High |       |  | Low |  
|                                  |  |      |       |  |     |  
|Fiscal year ended March 31, 2004: |  |      |       |  |     |   |      | 
|First Quarter                     |  | $    | 6.54  |  |     | $ | 3.60 | 
|Second Quarter                    |  |      | 9.24  |  |     |   | 5.17 | 
|Third Quarter                     |  |      | 10.96 |  |     |   | 7.71 | 
|Fourth Quarter                    |  |      | 10.50 |  |     |   | 6.74 | 
|Fiscal year ended March 31, 2005: |  |      |       |  |     |   |      | 
|First Quarter                     |  | $    | 8.95  |  |     | $ | 6.60 | 
|Second Quarter                    |  |      | 8.66  |  |     |   | 6.05 | 
|Third Quarter                     |  |      | 9.25  |  |     |   | 6.40 | 
|Fourth Quarter                    |  |      | 9.21  |  |     |   | 8.01 | 

Dividend Policy




Issuer Purchases of Equity Securities




10



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



|                                                   |                                                        |                                       |         |        |      |   |         |        |   |   |         |        |   |      |         |        |  |   |         |        |  
|-------------------------------------------------- | ------------------------------------------------------ | ------------------------------------- | ------- | ------ | ---- | - | ------- | ------ | - | - | ------- | ------ | - | ---- | ------- | ------ |  | - | ------- | ------ | -
|                                                   |                                                        | Year Ended March 31,                  |        
|                                                   |                                                        |                                       |        
|                                                   |                                                        | 2001                                  |         |        | 2002 |   |         | 2003   |   |   | 2004    |        |   | 2005 |        
|                                                   |                                                        |                                       |         |        |      |   |         |        |   |   |         |        |   |      |        
|                                                   |                                                        | (In thousands, except per share data) |        
|Consolidated Statement of Operations Data:         |                                                        |                                       |         |        |      |   |         |        |   |   |         |        |   |      |         |        |  |   |         |       
|Revenues:                                          |                                                        |                                       |         |        |      |   |         |        |   |   |         |        |   |      |         |        |  |   |         |       
|                                                   | Product licenses                                       |                                       | $       | 53,853 |      |   | $       | 66,908 |   |   | $       | 40,364 |   |      | $       | 41,571 |  |   | $       | 54,376 |  
|                                                   | Services                                               |                                       |         | 6,507  |      |   |         | 9,648  |   |   |         | 9,726  |   |      |         | 14,349 |  |   |         | 19,772 |  
|                                                   | Post-contract support                                  |                                       |         | 6,361  |      |   |         | 11,784 |   |   |         | 15,344 |   |      |         | 19,854 |  |   |         | 32,663 |  
|                                                   |                                                        |                                       |         |        |      |   |         |        |   |   |         |        |   |      |        
|Total revenues                                     |                                                        |                                       | 66,721  |        |      |   | 88,340  |        |   |   | 65,434  |        |   |      | 75,774  |        |  |   | 106,811 |       
|                                                   |                                                        |                                       |         |        |      |   |         |        |   |   |         |        |   |      |        
|Cost of revenues:                                  |                                                        |                                       |         |        |      |   |         |        |   |   |         |        |   |      |         |        |  |   |         |       
|                                                   | Product licenses                                       |                                       |         | 3,899  |      |   |         | 5,005  |   |   |         | 6,480  |   |      |         | 4,936  |  |   |         | 5,017  |  
|                                                   | Services                                               |                                       |         | 6,177  |      |   |         | 10,021 |   |   |         | 8,416  |   |      |         | 13,272 |  |   |         | 19,550 |  
|                                                   | Post-contract support                                  |                                       |         | 1,013  |      |   |         | 3,371  |   |   |         | 3,730  |   |      |         | 3,885  |  |   |         | 5,350  |  
|                                                   | Amortization of capitalized software from acquisitions |                                       |         | 700    |      |   |         | 966    |   |   |         | 1,892  |   |      |         | 1,574  |  |   |         | 2,390  |  
|                                                   |                                                        |                                       |         |        |      |   |         |        |   |   |         |        |   |      |        
|Total cost of revenues                             |                                                        |                                       | 11,789  |        |      |   | 19,363  |        |   |   | 20,518  |        |   |      | 23,667  |        |  |   | 32,307  |       
|                                                   |                                                        |                                       |         |        |      |   |         |        |   |   |         |        |   |      |        
|Gross profit                                       |                                                        |                                       | 54,932  |        |      |   | 68,977  |        |   |   | 44,916  |        |   |      | 52,107  |        |  |   | 74,504  |       
|                                                   |                                                        |                                       |         |        |      |   |         |        |   |   |         |        |   |      |        
|Operating expenses:                                |                                                        |                                       |         |        |      |   |         |        |   |   |         |        |   |      |         |        |  |   |         |       
|                                                   | Sales and marketing                                    |                                       |         | 29,448 |      |   |         | 46,672 |   |   |         | 38,343 |   |      |         | 39,122 |  |   |         | 42,365 |  
|                                                   | General and administrative                             |                                       |         | 9,016  |      |   |         | 11,884 |   |   |         | 11,301 |   |      |         | 8,856  |  |   |         | 14,097 |  
|                                                   | Research and development                               |                                       |         | 9,756  |      |   |         | 17,601 |   |   |         | 15,766 |   |      |         | 13,263 |  |   |         | 17,958 |  
|                                                   | Acquisition-related sales, marketing and other costs   |                                       |         |       |      |   |         |       |   |   |         |       |   |      |         |       |  |   |         | 886    |  
|                                                   | Acquisition and related costs                          |                                       |         | 775    |      |   |         | 237    |   |   |         | 1,127  |   |      |         |       |  |   |         |       |  
|                                                   | Amortization of acquired intangible assets and other   |                                       |         | 9,808  |      |   |         | 12,914 |   |   |         | 6,635  |   |      |         | 2,006  |  |   |         | 677    |  
|                                                   | Impairment charge on fixed assets                      |                                       |         |       |      |   |         |       |   |   |         |       |   |      |         |       |  |   |         | 375    |  
|                                                   | Restructuring charges                                  |                                       |         |       |      |   |         |       |   |   |         | 4,368  |   |      |         | 743    |  |   |         | 3,673  |  
|                                                   | Acquired in-process research and development           |                                       |         | 10,400 |      |   |         |       |   |   |         |       |   |      |         |       |  |   |         |       |  
|                                                   |                                                        |                                       |         |        |      |   |         |        |   |   |         |        |   |      |        
|Total operating expenses                           |                                                        |                                       | 69,203  |        |      |   | 89,308  |        |   |   | 77,540  |        |   |      | 63,990  |        |  |   | 80,031  |       
|                                                   |                                                        |                                       |         |        |      |   |         |        |   |   |         |        |   |      |        
|Loss from operations                               |                                                        |                                       | (14,271 | )      |      |   | (20,331 | )      |   |   | (32,624 | )      |   |      | (11,883 | )      |  |   | (5,527  | )     
|Other income (expense):                            |                                                        |                                       |         |        |      |   |         |        |   |   |         |        |   |      |         |        |  |   |         |       
|                                                   | Interest income (expense) net                          |                                       |         | 7,000  |      |   |         | 3,755  |   |   |         | 1,957  |   |      |         | 982    |  |   |         | 822    |  
|                                                   | Investment (impairment) gain on sale                   |                                       |         | (400   | )    |   |         | (5,722 | ) |   |         | (1,733 | ) |      |         | 388    |  |   |         | (1,136 | )
|                                                   |                                                        |                                       |         |        |      |   |         |        |   |   |         |        |   |      |        
|Net loss                                           |                                                        | $                                     | (7,671  | )      |      | $ | (22,298 | )      |   | $ | (32,400 | )      |   | $    | (10,513 | )      |  | $ | (5,841  | )     
|                                                   |                                                        |                                       |         |        |      |   |         |        |   |   |         |        |   |      |        
|Loss per share  basic and diluted                 |                                                        | $                                     | (0.36   | )      |      | $ | (1.00   | )      |   | $ | (1.45   | )      |   | $    | (0.48   | )      |  | $ | (0.22   | )     
|                                                   |                                                        |                                       |         |        |      |   |         |        |   |   |         |        |   |      |        
|Weighted average common shares  basic and diluted |                                                        |                                       | 21,472  |        |      |   | 22,286  |        |   |   | 22,345  |        |   |      | 22,028  |        |  |   | 26,224  |       

11



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|                                                 |  |                 |         |  |      |   |         |      |  |   |         |  |  |      |         |  |  |   |         | 
|------------------------------------------------ |  | --------------- | ------- |  | ---- | - | ------- | ---- |  | - | ------- |  |  | ---- | ------- |  |  | - | ------- | 
|                                                 |  | As of March 31, |        
|                                                 |  |                 |        
|                                                 |  | 2001            |         |  | 2002 |   |         | 2003 |  |   | 2004    |  |  | 2005 |        
|                                                 |  |                 |         |  |      |   |         |      |  |   |         |  |  |      |        
|                                                 |  | (in thousands)  |        
|Consolidated Balance Sheet Data:                 |  |                 |         |  |      |   |         |      |  |   |         |  |  |      |         |  |  |   |         | 
|Cash, cash equivalents and marketable securities |  | $               | 106,510 |  |      | $ | 96,158  |      |  | $ | 81,169  |  |  | $    | 73,512  |  |  | $ | 72,750  | 
|Working capital                                  |  |                 | 109,279 |  |      |   | 102,850 |      |  |   | 69,823  |  |  |      | 72,520  |  |  |   | 67,371  | 
|Total assets                                     |  |                 | 181,586 |  |      |   | 165,926 |      |  |   | 129,709 |  |  |      | 124,688 |  |  |   | 187,652 | 






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

Overview




| |        
| | -------
| | General













12



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| |              
| | -------------
| | Market Trends









| |   |                                                                                                                                                                                                                  
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the trend toward companies seeking solutions for managing
    multiple internal and external Web sites will continue,                                                                                            
|
| |  | content within the enterprise will continue to grow at a high
    rate,                                                                                                                                          
|
| |  | vendor consolidation, and the demand for integrated solutions,
    will continue to be a driving force in technology buying
    decisions; and                                                                   
|
| |  | compliance mandates and records management initiatives are
    increasingly driving technology purchasing decisions, and
    influencing which vendors are selected to power
    information-related initiatives.





| |               
| | --------------
| | Restructurings



13



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RESULTS OF OPERATIONS




Revenues


|                                  |  |                           |         |   |                   |   |        |      |  |   |              |   |  |              |    |   |  |  |    |  
|--------------------------------- |  | ------------------------- | ------- | - | ----------------- | - | ------ | ---- |  | - | ------------ | - |  | ------------ | -- | - |  |  | -- | -
|                                  |  | Years Ended March 31,     |         |   | Percentage Change |  
|                                  |  |                           |         |   |                   |  
|                                  |  | 2005                      |         |   | 2004              |   |        | 2003 |  |   | 2004 to 2005 |   |  | 2003 to 2004 |   
|                                  |  |                           |         |   |                   |   |        |      |  |   |              |   |  |              |   
|                                  |  | (In thousands, except for |         |   |                   |   |       
|                                  |  | percentages)              |         |   |                   |   |       
|Product licenses                  |  | $                         | 54,376  |   |                   | $ | 41,571 |      |  | $ | 40,364       |   |  |              | 31 | % |  |  | 3  | %
|Services                          |  |                           | 19,772  |   |                   |   | 14,349 |      |  |   | 9,726        |   |  |              | 38 | % |  |  | 48 | %
|Post-contract support             |  |                           | 32,663  |   |                   |   | 19,854 |      |  |   | 15,344       |   |  |              | 65 | % |  |  | 29 | %
|                                  |  |                           |         |   |                   |   |        |      |  |   |              |   |  |              |   
|Total                             |  | $                         | 106,811 |   |                   | $ | 75,774 |      |  | $ | 65,434       |   |  |              | 41 | % |  |  | 16 | %
|                                  |  |                           |         |   |                   |   |        |      |  |   |              |   |  |              |   
|As a percentage of total revenue: |  |                           |         |   |                   |   |        |      |  |   |              |   |  |              |    |   |  |  |    |  
|Product licenses                  |  |                           | 51      | % |                   |   | 55     | %    |  |   | 62           | % |  |              |    |   |  |  |    |  
|Services                          |  |                           | 19      | % |                   |   | 19     | %    |  |   | 15           | % |  |              |    |   |  |  |    |  
|Post-contract support             |  |                           | 30      | % |                   |   | 26     | %    |  |   | 23           | % |  |              |    |   |  |  |    |  









| |                 
| | ----------------
| | Product Licenses



14



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| |         
| | --------
| | Services









| |                      
| | ---------------------
| | Post-Contract Support







15



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Cost of Revenues and Gross Profit


|                                                               |                                                                |                         |        |    |                   |   |        |      |   |   |              |    |   |              |    |   |  |  |     |    | 
|-------------------------------------------------------------- | -------------------------------------------------------------- | ----------------------- | ------ | -- | ----------------- | - | ------ | ---- | - | - | ------------ | -- | - | ------------ | -- | - |  |  | --- | -- | 
|                                                               |                                                                | Years Ended March 31,   |        |    | Percentage Change |  
|                                                               |                                                                |                         |        |    |                   |  
|                                                               |                                                                | 2005                    |        |    | 2004              |   |        | 2003 |   |   | 2004 to 2005 |    |   | 2003 to 2004 |   
|                                                               |                                                                |                         |        |    |                   |   |        |      |   |   |              |    |   |              |   
|                                                               |                                                                | (In thousands,          |        |    |                   |   |       
|                                                               |                                                                | except for percentages) |        |    |                   |   |       
|Cost of product licenses                                       |                                                                | $                       | 5,017  |    |                   | $ | 4,936  |      |   | $ | 6,480        |    |   |              | 2  | % |  |  | (24 | )%
|Cost of services                                               |                                                                |                         | 19,550 |    |                   |   | 13,272 |      |   |   | 8,416        |    |   |              | 47 | % |  |  | 58  | % 
|Cost of post-contract support                                  |                                                                |                         | 5,350  |    |                   |   | 3,885  |      |   |   | 3,730        |    |   |              | 38 | % |  |  | 4   | % 
|Cost of amortization of capitalized software from acquisitions |                                                                |                         | 2,390  |    |                   |   | 1,574  |      |   |   | 1,892        |    |   |              | 52 | % |  |  | (17 | )%
|                                                               |                                                                |                         |        |    |                   |   |        |      |   |   |              |    |   |              |   
|Total cost of revenues                                         |                                                                | $                       | 32,307 |    |                   | $ | 23,667 |      |   | $ | 20,518       |    |   |              | 37 | % |  |  | 15  | % 
|                                                               |                                                                |                         |        |    |                   |   |        |      |   |   |              |    |   |              |   
|Gross profit                                                   |                                                                | $                       | 74,504 |    |                   | $ | 52,107 |      |   | $ | 44,916       |    |   |              |    |   |  |  |     |   
|                                                               | As a percentage of total revenue:                              |                         |        |    |                   |   |        |      |   |   |              |    |   |              |    |   |  |  |     |    | 
|                                                               | Cost of product licenses                                       |                         |        | 5  | %                 |   |        | 6    | % |   |              | 10 | % |              |    |   |  |  |     |    | 
|                                                               | Cost of services                                               |                         |        | 18 | %                 |   |        | 18   | % |   |              | 13 | % |              |    |   |  |  |     |    | 
|                                                               | Cost of post-contract support                                  |                         |        | 5  | %                 |   |        | 5    | % |   |              | 5  | % |              |    |   |  |  |     |    | 
|                                                               | Cost of amortization of capitalized software from acquisitions |                         |        | 2  | %                 |   |        | 2    | % |   |              | 3  | % |              |    |   |  |  |     |    | 
|                                                               | Total cost of revenues                                         |                         |        | 30 | %                 |   |        | 31   | % |   |              | 31 | % |              |    |   |  |  |     |    | 
|                                                               | Gross profit                                                   |                         |        | 70 | %                 |   |        | 69   | % |   |              | 69 | % |              |    |   |  |  |     |    | 



| |                           
| | --------------------------
| | Cost of Revenues  General





16



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| |                                    
| | -----------------------------------
| | Cost of Revenues  Product Licenses

|                                                               |  |                         |        |   |                   |   |        |      |  |   |              |   |  |              |    |   |  |  |     |   
|-------------------------------------------------------------- |  | ----------------------- | ------ | - | ----------------- | - | ------ | ---- |  | - | ------------ | - |  | ------------ | -- | - |  |  | --- | --
|                                                               |  | Years Ended March 31,   |        |   | Percentage Change |  
|                                                               |  |                         |        |   |                   |  
|                                                               |  | 2005                    |        |   | 2004              |   |        | 2003 |  |   | 2004 to 2005 |   |  | 2003 to 2004 |   
|                                                               |  |                         |        |   |                   |   |        |      |  |   |              |   |  |              |   
|                                                               |  | (In thousands,          |        |   |                   |   |       
|                                                               |  | except for percentages) |        |   |                   |   |       
|Cost of product licenses                                       |  | $                       | 5,017  |   |                   | $ | 4,936  |      |  | $ | 6,480        |   |  |              | 2  | % |  |  | (24 | )%
|Cost of amortization of capitalized software from acquisitions |  |                         | 2,390  |   |                   |   | 1,574  |      |  |   | 1,892        |   |  |              | 52 | % |  |  | (17 | )%
|                                                               |  |                         |        |   |                   |   |        |      |  |   |              |   |  |              |   
|Total                                                          |  | $                       | 7,407  |   |                   | $ | 6,510  |      |  | $ | 8,372        |   |  |              | 14 | % |  |  | (22 | )%
|                                                               |  |                         |        |   |                   |   |        |      |  |   |              |   |  |              |   
|Gross profit  licenses                                        |  | $                       | 46,969 |   |                   | $ | 35,061 |      |  | $ | 31,992       |   |  |              |    |   |  |  |     |   
|As a percentage of license revenue:                            |  |                         |        |   |                   |   |        |      |  |   |              |   |  |              |    |   |  |  |     |   
|Cost of product licenses                                       |  |                         | 9      | % |                   |   | 12     | %    |  |   | 16           | % |  |              |    |   |  |  |     |   
|Cost of amortization of capitalized software from acquisitions |  |                         | 5      | % |                   |   | 4      | %    |  |   | 5            | % |  |              |    |   |  |  |     |   
|Total cost of license revenues                                 |  |                         | 14     | % |                   |   | 16     | %    |  |   | 21           | % |  |              |    |   |  |  |     |   
|Gross profit                                                   |  |                         | 86     | % |                   |   | 84     | %    |  |   | 79           | % |  |              |    |   |  |  |     |   

Cost of product licenses.








Amortization of Capitalized Software from Acquisitions.


17



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| |                            
| | ---------------------------
| | Cost of Revenues  Services

|                                     |  |                         |        |   |                   |   |        |      |  |   |              |   |  |              |    |   |  |  |    |  
|------------------------------------ |  | ----------------------- | ------ | - | ----------------- | - | ------ | ---- |  | - | ------------ | - |  | ------------ | -- | - |  |  | -- | -
|                                     |  | Years Ended March 31,   |        |   | Percentage Change |  
|                                     |  |                         |        |   |                   |  
|                                     |  | 2005                    |        |   | 2004              |   |        | 2003 |  |   | 2004 to 2005 |   |  | 2003 to 2004 |   
|                                     |  |                         |        |   |                   |   |        |      |  |   |              |   |  |              |   
|                                     |  | (In thousands,          |        |   |                   |   |       
|                                     |  | except for percentages) |        |   |                   |   |       
|Cost of services                     |  | $                       | 19,550 |   |                   | $ | 13,272 |      |  | $ | 8,416        |   |  |              | 47 | % |  |  | 58 | %
|Gross profit                         |  | $                       | 222    |   |                   | $ | 1,077  |      |  | $ | 1,310        |   |  |              |    |   |  |  |    |  
|As a percentage of services revenue: |  |                         |        |   |                   |   |        |      |  |   |              |   |  |              |    |   |  |  |    |  
|Cost of services revenues            |  |                         | 99     | % |                   |   | 93     | %    |  |   | 87           | % |  |              |    |   |  |  |    |  
|Gross profit                         |  |                         | 1      | % |                   |   | 7      | %    |  |   | 13           | % |  |              |    |   |  |  |    |  







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| |                                         
| | ----------------------------------------
| | Cost of Revenues  Post-Contract Support

|                                                  |  |                         |        |   |                   |   |        |      |  |   |              |   |  |              |    |   |  |  |   |  
|------------------------------------------------- |  | ----------------------- | ------ | - | ----------------- | - | ------ | ---- |  | - | ------------ | - |  | ------------ | -- | - |  |  | - | -
|                                                  |  | Years Ended March 31,   |        |   | Percentage Change |  
|                                                  |  |                         |        |   |                   |  
|                                                  |  | 2005                    |        |   | 2004              |   |        | 2003 |  |   | 2004 to 2005 |   |  | 2003 to 2004 |   
|                                                  |  |                         |        |   |                   |   |        |      |  |   |              |   |  |              |   
|                                                  |  | (In thousands,          |        |   |                   |   |       
|                                                  |  | except for percentages) |        |   |                   |   |       
|Post-contract support                             |  | $                       | 5,350  |   |                   | $ | 3,885  |      |  | $ | 3,730        |   |  |              | 38 | % |  |  | 4 | %
|Gross profit                                      |  | $                       | 27,313 |   |                   | $ | 15,969 |      |  | $ | 11,614       |   |  |              |    |   |  |  |   |  
|As a percentage of post-contract support revenue: |  |                         |        |   |                   |   |        |      |  |   |              |   |  |              |    |   |  |  |   |  
|Post-contract support cost of revenues            |  |                         | 16     | % |                   |   | 20     | %    |  |   | 24           | % |  |              |    |   |  |  |   |  
|Gross profit                                      |  |                         | 84     | % |                   |   | 80     | %    |  |   | 76           | % |  |              |    |   |  |  |   |  







Operating Expenses




| |                    
| | -------------------
| | Sales and Marketing

|                             |  |                         |        |   |                   |   |        |      |  |   |              |   |  |              |   |   |  |  |   |  
|---------------------------- |  | ----------------------- | ------ | - | ----------------- | - | ------ | ---- |  | - | ------------ | - |  | ------------ | - | - |  |  | - | -
|                             |  | Years Ended March 31,   |        |   | Percentage Change |  
|                             |  |                         |        |   |                   |  
|                             |  | 2005                    |        |   | 2004              |   |        | 2003 |  |   | 2004 to 2005 |   |  | 2003 to 2004 |  
|                             |  |                         |        |   |                   |   |        |      |  |   |              |   |  |              |  
|                             |  | (In thousands,          |        |   |                   |   |       
|                             |  | except for percentages) |        |   |                   |   |       
|Sales and marketing          |  | $                       | 42,365 |   |                   | $ | 39,122 |      |  | $ | 38,343       |   |  |              | 8 | % |  |  | 2 | %
|Percentage of total revenues |  |                         | 40     | % |                   |   | 52     | %    |  |   | 59           | % |  |              |   |   |  |  |   |  



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| |                           
| | --------------------------
| | General and Administrative

|                             |  |                         |        |   |                   |   |       |      |  |   |              |   |  |              |    |   |  |  |     |   
|---------------------------- |  | ----------------------- | ------ | - | ----------------- | - | ----- | ---- |  | - | ------------ | - |  | ------------ | -- | - |  |  | --- | --
|                             |  | Years Ended March 31,   |        |   | Percentage Change |  
|                             |  |                         |        |   |                   |  
|                             |  | 2005                    |        |   | 2004              |   |       | 2003 |  |   | 2004 to 2005 |   |  | 2003 to 2004 |   
|                             |  |                         |        |   |                   |   |       |      |  |   |              |   |  |              |   
|                             |  | (In thousands,          |        |   |                   |   |      
|                             |  | except for percentages) |        |   |                   |   |      
|General and administrative   |  | $                       | 14,097 |   |                   | $ | 8,856 |      |  | $ | 11,301       |   |  |              | 59 | % |  |  | (22 | )%
|Percentage of total revenues |  |                         | 13     | % |                   |   | 12    | %    |  |   | 17           | % |  |              |    |   |  |  |     |   







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

|                             |  |                         |        |   |                   |   |        |      |  |   |              |   |  |              |    |   |  |  |     |   
|---------------------------- |  | ----------------------- | ------ | - | ----------------- | - | ------ | ---- |  | - | ------------ | - |  | ------------ | -- | - |  |  | --- | --
|                             |  | Years Ended March 31,   |        |   | Percentage Change |  
|                             |  |                         |        |   |                   |  
|                             |  | 2005                    |        |   | 2004              |   |        | 2003 |  |   | 2004 to 2005 |   |  | 2003 to 2004 |   
|                             |  |                         |        |   |                   |   |        |      |  |   |              |   |  |              |   
|                             |  | (In thousands,          |        |   |                   |   |       
|                             |  | except for percentages) |        |   |                   |   |       
|Research and development     |  | $                       | 17,958 |   |                   | $ | 13,263 |      |  | $ | 15,766       |   |  |              | 35 | % |  |  | (16 | )%
|Percentage of total revenues |  |                         | 17     | % |                   |   | 18     | %    |  |   | 24           | % |  |              |    |   |  |  |     |   

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| |                  
| | -----------------
| | Acquisition Costs

|                                                     |  |                         |     |   |                   |   |   |      |  |   |              |   |  |              |     |   |  |  |      |   
|---------------------------------------------------- |  | ----------------------- | --- | - | ----------------- | - | - | ---- |  | - | ------------ | - |  | ------------ | --- | - |  |  | ---- | --
|                                                     |  | Years Ended March 31,   |     |   | Percentage Change |  
|                                                     |  |                         |     |   |                   |  
|                                                     |  | 2005                    |     |   | 2004              |   |   | 2003 |  |   | 2004 to 2005 |   |  | 2003 to 2004 |    
|                                                     |  |                         |     |   |                   |   |   |      |  |   |              |   |  |              |    
|                                                     |  | (In thousands,          |     |   |                   |   |  
|                                                     |  | except for percentages) |     |   |                   |   |  
|Acquisition-related sales, marketing and other costs |  | $                       | 886 |   |                   | $ |  |      |  | $ |             |   |  |              | 100 | % |  |  |     | % 
|Acquisition and related costs                        |  | $                       |    |   |                   | $ |  |      |  | $ | 1,127        |   |  |              |    | % |  |  | (100 | )%
|Percentage of total revenues                         |  |                         | 1   | % |                   |   |  | %    |  |   | 2            | % |  |              |     |   |  |  |      |   







| |                                                     
| | ----------------------------------------------------
| | Amortization of Acquired Intangible Assets and Other

|                                                     |  |                         |     |   |                   |   |       |      |  |   |              |   |  |              |     |    |  |  |     |   
|---------------------------------------------------- |  | ----------------------- | --- | - | ----------------- | - | ----- | ---- |  | - | ------------ | - |  | ------------ | --- | -- |  |  | --- | --
|                                                     |  | Years Ended March 31,   |     |   | Percentage Change |  
|                                                     |  |                         |     |   |                   |  
|                                                     |  | 2005                    |     |   | 2004              |   |       | 2003 |  |   | 2004 to 2005 |   |  | 2003 to 2004 |    
|                                                     |  |                         |     |   |                   |   |       |      |  |   |              |   |  |              |    
|                                                     |  | (In thousands,          |     |   |                   |   |      
|                                                     |  | except for percentages) |     |   |                   |   |      
|Amortization of acquired intangible assets and other |  | $                       | 677 |   |                   | $ | 2,006 |      |  | $ | 6,635        |   |  |              | (66 | )% |  |  | (70 | )%
|Percentage of total revenues                         |  |                         | 1   | % |                   |   | 3     | %    |  |   | 10           | % |  |              |     |    |  |  |     |   

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| |                                  
| | ---------------------------------
| | Impairment Charge on Fixed Assets

Accounting for Impairment
or Disposal of Long-Lived Assets




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

|                             |  |                         |       |   |                   |   |     |      |  |   |              |   |  |              |     |   |  |  |     |   
|---------------------------- |  | ----------------------- | ----- | - | ----------------- | - | --- | ---- |  | - | ------------ | - |  | ------------ | --- | - |  |  | --- | --
|                             |  | Years Ended March 31,   |       |   | Percentage Change |  
|                             |  |                         |       |   |                   |  
|                             |  | 2005                    |       |   | 2004              |   |     | 2003 |  |   | 2004 to 2005 |   |  | 2003 to 2004 |    
|                             |  |                         |       |   |                   |   |     |      |  |   |              |   |  |              |    
|                             |  | (In thousands,          |       |   |                   |   |    
|                             |  | except for percentages) |       |   |                   |   |    
|Restructuring charges        |  | $                       | 3,673 |   |                   | $ | 743 |      |  | $ | 4,368        |   |  |              | 394 | % |  |  | (83 | )%
|Percentage of total revenues |  |                         | 3     | % |                   |   | 1   | %    |  |   | 7            | % |  |              |     |   |  |  |     |   



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Other Income (Expense)


|                                     |  |                         |        |    |                   |   |     |      |  |   |              |    |  |              |      |    |  |  |     |   
|------------------------------------ |  | ----------------------- | ------ | -- | ----------------- | - | --- | ---- |  | - | ------------ | -- |  | ------------ | ---- | -- |  |  | --- | --
|                                     |  | Years Ended March 31,   |        |    | Percentage Change |  
|                                     |  |                         |        |    |                   |  
|                                     |  | 2005                    |        |    | 2004              |   |     | 2003 |  |   | 2004 to 2005 |    |  | 2003 to 2004 |     
|                                     |  |                         |        |    |                   |   |     |      |  |   |              |    |  |              |     
|                                     |  | (In thousands,          |        |    |                   |   |    
|                                     |  | except for percentages) |        |    |                   |   |    
|Interest income, net                 |  | $                       | 822    |    |                   | $ | 982 |      |  | $ | 1,957        |    |  |              | (16  | )% |  |  | (50 | )%
|Investment gain on sale (impairment) |  | $                       | (1,136 | )  |                   | $ | 388 |      |  | $ | (1,733       | )  |  |              | (393 | )% |  |  | 122 | % 
|As a percentage of total revenues:   |  |                         |        |    |                   |   |     |      |  |   |              |    |  |              |      |    |  |  |     |   
|Interest income, net                 |  |                         | 1      | %  |                   |   | 1   | %    |  |   | 3            | %  |  |              |      |    |  |  |     |   
|Investment impairment                |  |                         | (1     | )% |                   |   | 1   | %    |  |   | (3           | )% |  |              |      |    |  |  |     |   

Interest income, net










| |                             
| | ----------------------------
| | Investment gain (impairment)







Net Operating Loss Carryforwards




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Liquidity and Capital Resources














|                                                |  |                       |        |   |      |   |        |      |  |   |        |  
|----------------------------------------------- |  | --------------------- | ------ | - | ---- | - | ------ | ---- |  | - | ------ | -
|                                                |  | Years Ended March 31, |       
|                                                |  |                       |       
|                                                |  | 2005                  |        |   | 2004 |   |        | 2003 | 
|                                                |  |                       |        |   |      |   |        |      | 
|Cash provided by (used in) operating activities |  | $                     | 2,917  |   |      | $ | (5,809 | )    |  | $ | (8,020 | )
|Cash provided by (used in) investing activities |  | $                     | (2,171 | ) |      | $ | 10,307 |      |  | $ | 21,133 |  
|Cash provided by (used in) financing activities |  | $                     | 3,912  |   |      | $ | 1,867  |      |  | $ | (2,704 | )

Operating Activities:




24



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Investing Activities:










Financing Activities:


25



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| |                          
| | -------------------------
| | Financial Risk Management





| |                        
| | -----------------------
| | Contractual Obligations



|                     |  |       |        |       |        |   |       |       |  |     |       |  |       |         |       |  |  |   |       | 
|-------------------- |  | ----- | ------ | ----- | ------ | - | ----- | ----- |  | --- | ----- |  | ----- | ------- | ----- |  |  | - | ----- | 
|                     |  |       |        | Under |        |   | 1-3   |       |  | 3-5 |       |  | After |        
|                     |  | Total |        |       | 1 Year |   |       | Years |  |     | Years |  |       | 5 Years |      
|                     |  |       |        |       |        |   |       |       |  |     |       |  |       |         |      
|Earn out payments(1) |  | $     | 400    |       |        | $ | 400   |       |  | $   |      |  |       | $       |      |  |  | $ |      | 
|Purchase orders      |  |       | 1,126  |       |        |   | 1,126 |       |  |     |      |  |       |         |      |  |  |   |      | 
|Capital leases       |  |       | 172    |       |        |   | 172   |       |  |     |      |  |       |         |      |  |  |   |      | 
|Operating leases     |  |       | 13,431 |       |        |   | 4,139 |       |  |     | 3,535 |  |       |         | 2,060 |  |  |   | 3,697 | 
|                     |  |       |        |       |        |   |       |       |  |     |       |  |       |         |      
|Total                |  | $     | 15,129 |       |        | $ | 5,837 |       |  | $   | 3,535 |  |       | $       | 2,060 |  |  | $ | 3,697 | 
|                     |  |       |        |       |        |   |       |       |  |     |       |  |       |         |      






|    |                                                                                                                                                                                                                                                                       
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The Company has agreed to make earn out payments dependent upon
    the future revenue performance of certain companies acquired.
    The expected payments noted above are based on historic and
    anticipated future levels of revenues of the acquired companies.

Critical Accounting Policies and Estimates






| |   |                                 
| | - | --------------------------------
| |  | revenue recognition;            
|
| |  | allowance for doubtful accounts;

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| |   |                                                                                              
| | - | ---------------------------------------------------------------------------------------------
| |  | accrual for restructuring and excess facilities costs;                                       
|
| |  | accounting for income taxes; and                                                             
|
| |  | valuation and evaluating impairment of long-lived assets,
    intangible assets and goodwill.



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

Software Revenue Recognition Modification of SOP 97-2, Software Revenue Recognition with
Respect to Certain Transactions Revenue
Recognition




Persuasive Evidence of an Arrangement Exists


Delivery has Occurred


The Fee is Fixed or Determinable


Collectibility is Probable and Supported






27



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





| |                                            
| | -------------------------------------------
| | Restructuring and Excess Facilities Accrual



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| |                     
| | --------------------
| | Workforce Reductions





| |                  
| | -----------------
| | Excess Facilities





| |                            
| | ---------------------------
| | Accounting for Income Taxes





Accounting for Income Taxes




29



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| |                                                           
| | ----------------------------------------------------------
| | Valuation and Evaluation of Impairment of Long-Lived Asset

Accounting for the
Impairment or Disposal of Long-Lived Assets (SFAS
No. 144).




| |                                                                           
| | --------------------------------------------------------------------------
| | Valuation and Evaluation Goodwill and Other Acquired
    Intangible Assets

Goodwill and Other Intangible Assets (SFAS No. 142).




| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Step 1  We compare the fair value of our reporting
    unit to its carrying value, including goodwill. If the reporting
    units carrying value, including goodwill, exceeds the
    units fair value, we move on to Step 2. If the units
    fair value exceeds the carrying value, no further work is
    performed and no impairment charge is necessary.                                                                                                                                                                                                           
|
| |  | Step 2  We perform an allocation of the fair value of
    the reporting unit to its identifiable tangible and non-goodwill
    intangible assets and liabilities. This derives an implied fair
    value for the reporting units goodwill. We then compare
    the implied fair value of the reporting units goodwill
    with the carrying amount of the reporting units goodwill.
    If the carrying amount of the reporting units goodwill is
    greater than the implied fair value of its goodwill, an
    impairment charge would be recognized for the excess.





Recent Accounting Pronouncements


Accounting Changes and Error Corrections Accounting
Changes Reporting
Accounting Changes in Interim Financial Statements


30



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Share-Based Payment.


Exchanges of Nonmonetary Assets Accounting for Nonmonetary
Transactions


Application of FASB
Statement No. 109,


Accounting and
Disclosure Guidance for the Foreign Earnings Repatriation
Provision within the American Jobs Creations Act of 2004


The Meaning of Other-Than-Temporary
Impairment and Its Application to Certain Investments


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Consolidation
of Variable Interest Entities


Related Party Transactions










RISK FACTORS


DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS






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BECAUSE OUR INFRASTRUCTURE COSTS ARE GENERALLY FIXED AND THE
TIMING OF OUR REVENUES FROM QUARTER TO QUARTER IS HIGHLY
VARIABLE, OUR FUTURE PERFORMANCE IS DIFFICULT TO PREDICT, MAKING
AN INVESTMENT IN OUR COMMON STOCK SUBJECT TO HIGH VOLATILITY.








| |   |                                                                                                                      
| | - | ---------------------------------------------------------------------------------------------------------------------
| |  | demand for our products and services;                                                                                
|
| |  | the timing of new product introductions and sales of our
    products and services;                                  
|
| |  | unexpected delays in introducing new products and services;                                                          
|
| |  | increased expenses, whether related to sales and marketing,
    research and development, administration or services;
|
| |  | changes in the rapidly evolving market for Web content
    management solutions;                                     
|
| |  | the mix of revenues from product licenses and services, as well
    as the mix of products licensed;                 
|
| |  | the mix of services provided and whether services are provided
    by our staff or third-party contractors;          
|
| |  | the mix of domestic and international sales;                                                                         
|
| |  | costs related to possible acquisitions of technology or
    businesses;                                              
|
| |  | general economic conditions; and                                                                                     
|
| |  | public announcements by our competitors.                                                                             

WE HAVE A HISTORY OF MAKING ACQUISITIONS, INCLUDING LARGE
STRATEGIC ACQUISITIONS, AND FUTURE POTENTIAL ACQUISITIONS MAY BE
DIFFICULT TO COMPLETE OR TO INTEGRATE AND MAY DIVERT
MANAGEMENTS ATTENTION AND CAUSE OUR OPERATING RESULTS TO
SUFFER.




WE MAY NOT BE PROFITABLE IN THE FUTURE, WHICH WOULD CAUSE OUR
FINANCIAL POSITION TO SUFFER AND MAY CAUSE THE MARKET PRICE OF
OUR STOCK TO FALL.




33



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| |   |                                               
| | - | ----------------------------------------------
| |  | the demand for our products;                  
|
| |  | our ability to quickly introduce new products;
|
| |  | the level of product and price competition;   
|
| |  | our ability to control costs; and             
|
| |  | general economic conditions.                  

THE INTENSE COMPETITION IN OUR INDUSTRY FROM RECENT AND
EXPECTED INDUSTRY CONSOLIDATION MAY REDUCE OUR FUTURE SALES AND
PROFITS.




WE DEPEND ON THE CONTINUED SERVICE OF OUR KEY PERSONNEL; IF
WE LOSE THE SERVICES OF OUR KEY PERSONNEL OUR ABILITY TO EXECUTE
OUR OPERATING PLAN, AND OUR OPERATING RESULTS, MAY SUFFER.




WE HAVE RELIED AND EXPECT TO CONTINUE TO RELY ON SALES OF OUR
UNIVERSAL CONTENT MANAGEMENT SOFTWARE, WHICH INCLUDES OUR
IMAGING AND BUSINESS PROCESS MANAGEMENT SOFTWARE, AND CONTENT
COMPONENT SOFTWARE PRODUCTS FOR OUR REVENUES; IF OUR UNIVERSAL
CONTENT MANAGEMENT SOFTWARE AND IMAGING AND BUSINESS PROCESS
MANAGEMENT SOFTWARE DOES NOT GAIN AND MAINTAIN CUSTOMER
ACCEPTANCE, OUR REVENUES AND OPERATING RESULTS MAY SUFFER.




34



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IF WE CANNOT PROTECT OUR INTELLECTUAL PROPERTY, WHICH
CONSISTS PRIMARILY OF OUR PROPRIETARY SOFTWARE PRODUCTS, AND DO
SO COST-EFFECTIVELY, OUR BUSINESS, OPERATING RESULTS AND
FINANCIAL CONDITION MAY SUFFER.








OUR PRODUCTS MAY NOT BE COMPATIBLE WITH COMMERCIAL WEB
BROWSERS AND OPERATING SYSTEMS, WHICH MAY LIMIT OUR ABILITY TO
GENERATE REVENUES FROM OUR PRODUCTS.




WE COULD BE SUBJECT TO PRODUCT LIABILITY CLAIMS IF OUR
SOFTWARE PRODUCTS DAMAGE CUSTOMERS DATA, FAIL TO MAINTAIN ACCESS
SECURITY OR OTHERWISE FAIL TO PERFORM TO SPECIFICATIONS, WHICH
COULD HARM OUR OPERATING RESULTS AND FINANCIAL POSITION AND
REDUCE THE VALUE OF AN INVESTMENT IN OUR COMMON STOCK.




35



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FUTURE REGULATION OF THE INTERNET OR AFFECTING WEB-BASED
COMMUNICATIONS COULD BE ADOPTED THAT RESTRICT OUR BUSINESS,
WHICH MAY LIMIT OUR ABILITY TO GENERATE REVENUES FROM OUR
PRODUCTS.




WE HAVE BEEN NAMED A DEFENDANT IN SECURITIES CLASS-ACTION
LAWSUITS AND WE MAY IN THE FUTURE BE NAMED IN ADDITIONAL
LITIGATION, WHICH MAY RESULT IN SUBSTANTIAL COSTS AND DIVERT
MANAGEMENTS ATTENTION AND RESOURCES.






THE MARKET PRICE OF OUR COMMON STOCK COULD FLUCTUATE
SIGNIFICANTLY DUE TO VARIATIONS IN OUR OPERATING RESULTS,
CHANGES IN THE SOFTWARE INDUSTRY AND OTHER FACTORS, RESULTING IN
SUDDEN CHANGES IN THE MARKET VALUE OF AN INVESTMENT IN OUR
COMMON STOCK.






| |   |                                                             
| | - | ------------------------------------------------------------
| |  | variations in quarterly operating results;                  
|
| |  | changes in estimates by securities analysts;                
|
| |  | changes in market valuations of companies in our industry;  
|
| |  | announcements of significant events, such as major sales;   
|
| |  | acquisitions of businesses or losses of major customers; and
|
| |  | sales of our equity securities.                             

WE CAN ISSUE SHARES OF PREFERRED STOCK WITHOUT SHAREHOLDER
APPROVAL, WHICH COULD ADVERSELY AFFECT THE RIGHTS OF COMMON
SHAREHOLDERS.




36



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OUR SHAREHOLDER RIGHTS PLAN AND CERTAIN PROVISIONS OF
MINNESOTA LAW MAY MAKE A TAKEOVER OF STELLENT DIFFICULT,
DEPRIVING SHAREHOLDERS OF OPPORTUNITIES TO SELL SHARES AT
ABOVE-MARKET PRICES.




NEW LEGISLATION AND POTENTIAL NEW ACCOUNTING PRONOUNCEMENTS
ARE LIKELY TO IMPACT OUR FUTURE CONSOLIDATED FINANCIAL POSITION
AND RESULTS OF OPERATIONS.


Share-Based Payment,


REALIZING THE BENEFITS FROM OUR ACQUISITION OF OPTIKA
REQUIRES US TO OVERCOME INTEGRATION AND OTHER CHALLENGES WHICH
MAY BE DIFFICULT BECAUSE OPTIKA IS ACCUSTOMED TO OPERATING AS AN
AUTONOMOUS BUSINESS.






| |   |                                                                                                                                                                                                                                                                                                                                                     
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | combining Optikas Colorado-based operations with our
    Minnesota headquartered preexisting operations;                                                                                                                                                                                                                                           
|
| |  | integrating and managing the combined company with a small
    management team;                                                                                                                                                                                                                                                                     
|
| |  | retaining and assimilating the key personnel of Optika
    accustomed to working without the oversight of a parent company;                                                                                                                                                                                                                         
|
| |  | integrating the sales organization of Optika, which historically
    relied extensively on indirect sales channels and generated a
    high proportion of maintenance and other revenues, with our
    preexisting sales organization, which relies extensively on
    direct sales and generates a high proportion of product license
    revenues;
|
| |  | retaining preexisting customers of each company in light of
    changes that may occur as a result of the acquisition and
    attracting new customers while overcoming integration challenges;                                                                                                                                                     
|
| |  | retaining strategic partners in light of changes that have
    occurred and may occur in each companys operations as a
    result of the acquisition and attracting new strategic partners
    while overcoming integration challenges; and                                                                                                        
|
| |  | creating and maintaining uniform standards, controls,
    procedures, policies and information for two companies
    accustomed to operating under autonomous management.                                                                                                                                                                           

37



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| |   |                                                                                                                                                                                                    
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the potential disruption of our on-going business and
    distraction of our management;                                                                                                           
|
| |  | lost sales or decreased revenues as a result of difficulties
    inherent in combining product offerings, coordinating sales and
    marketing efforts to communicate effectively our capabilities;
|
| |  | the potential need to demonstrate to customers that the
    acquisition will not result in adverse changes in customer
    service standards or business; and                                      
|
| |  | impairment of relationships with employees, suppliers and
    customers as a result of any integration of new management
    personnel.                                                            

CHARGES TO EARNINGS RESULTING FROM THE APPLICATION OF THE
PURCHASE METHOD OF ACCOUNTING MAY ADVERSELY AFFECT OUR MARKET
VALUE.









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

Interest Rate Risk






|                                                 |  |      |        |  
|------------------------------------------------ |  | ---- | ------ | -
|                                                 |  | 2005 |       
|                                                 |  |      |       
|Cash, cash equivalents and marketable securities |  | $    | 72,750 |  
|Approximate average interest rate                |  |      | 1.9    | %



|                                                 |  |      |        |  
|------------------------------------------------ |  | ---- | ------ | -
|                                                 |  | 2004 |       
|                                                 |  |      |       
|Cash, cash equivalents and marketable securities |  | $    | 73,512 |  
|Approximate average interest rate                |  |      | 1.4    | %



38



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Foreign Currency Risk




Commodity Price Risk









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

Quarterly Financial Information (Unaudited)


|                                                             |         |                                          |        |        |               |   |        |              |  |   |           |        |  |   |        |        |  
|------------------------------------------------------------ | ------- | ---------------------------------------- | ------ | ------ | ------------- | - | ------ | ------------ |  | - | --------- | ------ |  | - | ------ | ------ | -
|                                                             |         | Three Months Ended                       |       
|                                                             |         |                                          |       
|                                                             |         | June 30,                                 |        |        | September 30, |   |        | December 31, |  |   | March 31, |       
|                                                             |         | 2004(2)                                  |        |        | 2004          |   |        | 2004         |  |   | 2005(1)   |       
|                                                             |         |                                          |        |        |               |   |        |              |  |   |           |       
|                                                             |         | (In thousands, except per share amounts) |       
|Total revenues                                               |         | $                                        | 22,660 |        |               | $ | 27,956 |              |  | $ | 27,667    |        |  | $ | 28,528 |       
|Gross profit                                                 |         | $                                        | 15,608 |        |               | $ | 19,635 |              |  | $ | 19,185    |        |  | $ | 20,076 |       
|Total operating expenses                                     |         | $                                        | 19,637 |        |               | $ | 19,030 |              |  | $ | 19,117    |        |  | $ | 22,247 |       
|Income (loss) from operations                                |         | $                                        | (4,029 | )      |               | $ | 605    |              |  | $ | 68        |        |  | $ | (2,171 | )     
|Net income (loss)                                            |         | $                                        | (3,835 | )      |               | $ | 754    |              |  | $ | 193       |        |  | $ | (2,953 | )     
|Net income (loss) per common share:                          |         |                                          |        |        |               |   |        |              |  |   |           |        |  |   |        |       
|                                                             | Basic   |                                          | $      | (0.16  | )             |   | $      | 0.03         |  |   | $         | 0.01   |  |   | $      | (0.11  | )
|                                                             | Diluted |                                          | $      | (0.16  | )             |   | $      | 0.03         |  |   | $         | 0.01   |  |   | $      | (0.11  | )
|Shares used in computing net income (loss) per common share: |         |                                          |        |        |               |   |        |              |  |   |           |        |  |   |        |       
|                                                             | Basic   |                                          |        | 23,879 |               |   |        | 26,720       |  |   |           | 26,963 |  |   |        | 27,237 |  
|                                                             | Diluted |                                          |        | 23,879 |               |   |        | 27,776       |  |   |           | 28,284 |  |   |        | 27,237 |  

|                                                                         |  |                                          |        |   |               |   |        |              |  |   |           |   |  |   |        |  
|------------------------------------------------------------------------ |  | ---------------------------------------- | ------ | - | ------------- | - | ------ | ------------ |  | - | --------- | - |  | - | ------ | -
|                                                                         |  | Three Months Ended                       |       
|                                                                         |  |                                          |       
|                                                                         |  | June 30,                                 |        |   | September 30, |   |        | December 31, |  |   | March 31, |  
|                                                                         |  | 2003(4)                                  |        |   | 2003          |   |        | 2003(3)      |  |   | 2004      |  
|                                                                         |  |                                          |        |   |               |   |        |              |  |   |           |  
|                                                                         |  | (In thousands, except per share amounts) |       
|Total revenues                                                           |  | $                                        | 17,387 |   |               | $ | 18,521 |              |  | $ | 19,222    |   |  | $ | 20,644 |  
|Gross profit                                                             |  | $                                        | 11,968 |   |               | $ | 12,907 |              |  | $ | 13,253    |   |  | $ | 13,979 |  
|Total operating expenses                                                 |  | $                                        | 17,925 |   |               | $ | 15,643 |              |  | $ | 15,809    |   |  | $ | 14,613 |  
|Loss from operations                                                     |  | $                                        | (5,957 | ) |               | $ | (2,736 | )            |  | $ | (2,556    | ) |  | $ | (634   | )
|Net loss                                                                 |  | $                                        | (5,665 | ) |               | $ | (2,487 | )            |  | $ | (1,931    | ) |  | $ | (430   | )
|Basic and diluted net loss per common Share                              |  | $                                        | (0.26  | ) |               | $ | (0.11  | )            |  | $ | (0.09     | ) |  | $ | (0.02  | )
|Shares used in computing basic and diluted net loss per common
    share |  |                                          | 21,830 |   |               |   | 21,916 |              |  |   | 22,101    |   |  |   | 22,265 |  






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Included in net loss for the fourth quarter of fiscal year 2005
    was a restructuring charge of $1.1 million as part of our
    reorganization and integration of Optika, $0.1 million
    change in estimate and impairment charge on fixed assets
    associated with our restructuring plan, expense of
    $0.8 million related to litigation expenses were included
    in general and administrative for the accrual of remaining
    expenses regarding the

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|    |                                                                                                                                                                                                                                                                                                                                                  
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    | settlement of the shareholders class action lawsuit, which
    is subject to final documentation and preliminary and final
    court approval, and the settlement of certain other litigation.
    It also includes an impairment charge on our fixed assets which
    totaled $0.4 million and a $1.1 million investment
    impairment charge.
|   
|(2) | Included in net loss for the first quarter of fiscal year 2005
    was $0.9 million of acquisition-related sales and marketing
    charges and a restructuring charge of $2.5 million related
    to the initial integration of Optika.                                                                                                          
|   
|(3) | Included in net loss for the third quarter of fiscal year 2004
    was a $0.4 million gain on sale of investments.                                                                                                                                                                                                                               
|   
|(4) | Included in net loss for the first quarter of fiscal year 2004
    was a $0.8 million restructuring charge as part of a
    reorganization.                                                                                                                                                                                                      










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








|         |                        
|-------- | -----------------------
|Item 9A. | Controls and Procedures

Controls and Procedures






Managements Report on Internal Control over Financial
Reporting




40



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|         |                  
|-------- | -----------------
|Item 9B. | Other Information






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 and Related Stockholder Matters








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








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



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|         |                                                                     
|-------- | --------------------------------------------------------------------
|Item 15. | Exhibits, Financial Statement Schedules, and Reports on
    Form 8-K

(a) Documents filed as part of this report:




| |                                      
| | -------------------------------------
| | 1. Consolidated Financial Statements:

|                                                                                                                   |  |                     |    | 
|------------------------------------------------------------------------------------------------------------------ |  | ------------------- | -- | 
|                                                                                                                   |  | Page Number in this |   
|Description                                                                                                        |  | Annual Report       |   
|                                                                                                                   |  |                     |   
|Audited Financial Statements:                                                                                      |  |                     |    | 
|Report of Independent Registered Public Accounting Firm
    (regarding Financial Statements)                       |  |                     | 49 | 
|Report of Independent Registered Public Accounting Firm
    (regarding Internal Controls Over Financial Reporting) |  |                     | 50 | 
|Consolidated Balance Sheets                                                                                        |  |                     | 51 | 
|Consolidated Statements of Operations                                                                              |  |                     | 52 | 
|Consolidated Statements of Stockholders Equity                                                                    |  |                     | 53 | 
|Statements of Cash Flows                                                                                           |  |                     | 54 | 
|Notes to Financial Statements                                                                                      |  |                     | 55 | 



| |    |                              
| | -- | -----------------------------
| | 2. | Financial Statement Schedule:

Schedule II Valuation of Qualifying Accounts


|                      |                                  |                           |  |   |           |  |  |            |            |  |          |   |       |  |  |   |       | 
|--------------------- | -------------------------------- | ------------------------- |  | - | --------- |  |  | ---------- | ---------- |  | -------- | - | ----- |  |  | - | ----- | 
|Column A              |                                  | Column B                  |  |   | Column C  |  |  | Column D   |            |  | Column E |  
|                      |                                  |                           |  |   |           |  |  |            |            |  |          |  
|                      |                                  | Balance at                |  |   |           |  |  |            | Balance at | 
|                      |                                  | Beginning                 |  |   |           |  |  |            | End of     | 
|Description           |                                  | of Period                 |  |   | Additions |  |  | Deductions |            |  | Period   |  
|                      |                                  |                           |  |   |           |  |  |            |            |  |          |  
|                      |                                  | (In thousands)            | 
|Deducted From Assets: |                                  |                           |  |   |           |  |  |            |            |  |          |   |       |  |  |  
|                      | Allowance for doubtful accounts: |                           |  |   |           |  |  |            |            |  |          |   |       |  |  |   |      
|                      |                                  | Year ended March 31, 2003 |  | $ | 1,337     |  |  | $          | 3,679      |  |          | $ | 3,616 |  |  | $ | 1,400 | 
|                      |                                  |                           |  |   |           |  |  |            |            |  |          |  
|                      |                                  | Year ended March 31, 2004 |  | $ | 1,400     |  |  | $          | 1,175      |  |          | $ | 1,436 |  |  | $ | 1,139 | 
|                      |                                  |                           |  |   |           |  |  |            |            |  |          |  
|                      |                                  | Year ended March 31, 2005 |  | $ | 1,139     |  |  | $          | 1,057      |  |          | $ | 1,393 |  |  | $ | 803   | 
|                      |                                  |                           |  |   |           |  |  |            |            |  |          |  

42



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REPORT OF INDEPENDENT REGISTERED CERTIFIED


PUBLIC ACCOUNTING FIRM ON SCHEDULE










| |                       
| | ----------------------
| | /s/ Grant Thornton LLP





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EXHIBITS


|     |    |     |             |                                                                                                                                       |           |                                                                                                                                                                                      
|---- | -- | --- | ----------- | ------------------------------------------------------------------------------------------------------------------------------------- | --------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|File |    |     | Description |                                                                                                                                       | Reference
|     |    |     |             |                                                                                                                                       |          
|     | 3  | .1  |             | Amended and Restated Articles of Incorporation                                                                                        |           | Incorporated by reference to Exhibit 3.1 of the
    Registrants Form 8-K dated August 29, 2001.                                                                                     
|     | 3  | .2  |             | Bylaws                                                                                                                                |           | Incorporated by reference to Exhibit 4.2 of the
    Registrants Registration Statement on Form S-8, File
    No. 333-75828.                                                         
|     | 4  | .1  |             | Share Rights Agreement between the Registrant and Wells Fargo
    Bank Minnesota, N.A., as Rights Agent, dated as of May 29,
    2002 |           | Incorporated by reference to Exhibit 99.1 of the
    Registrants Registration Statement on Form 8-A12G,
    File No. 000-19817, filed June 3, 2002.                                 
|     | 10 | .1  |             | Stellent, Inc. 1994-1997 Stock Option and Compensation Plan*                                                                          |           | Incorporated by reference to Exhibit A of the
    Registrants Definitive Proxy Statement Schedule 14A,
    filed with the Securities and Exchange Commission July 28,
    1998      
|     | 10 | .2  |             | InfoAccess, Inc. 1990 Stock Option Plan as amended
    September 29, 1999                                                             |           | Incorporated by reference to Exhibit 99.1 of the
    Registrants Registration Statement on Form S-8, File
    No. 333-90843                                                         
|     | 10 | .3  |             | InfoAccess, Inc. 1995 Stock Option Plan as amended
    September 29, 1999                                                             |           | Incorporated by reference to Exhibit 99.2 of the
    Registrants Registration Statement on Form S-8, File
    No. 333-90843                                                         
|     | 10 | .5  |             | Stellent, Inc. 1999 Employee Stock Option and Compensation Plan                                                                       |           | Incorporated by reference to Exhibit 10.31 of the
    Registrants Form 10-Q for the three months ended
    September 30, 1999                                                       
|     | 10 | .6  |             | Stellent, Inc. 2000 Stock Incentive Plan*                                                                                             |           | Incorporated by reference to Exhibit B to the
    Registrants Definitive Proxy statement on
    Schedule 14A, filed with the Securities and Exchange
    Commission on July 25, 2000
|     | 10 | .7  |             | Stellent, Inc. amended and restated 2000 Employee Stock
    Incentive Plan*                                                           |           | Incorporated by reference to Exhibit 10.34 of the
    Registrants Form 10-Q for the three months ended
    September 30, 2001                                                       
|     | 10 | .8  |             | Stellent, Inc. Amended and Restated 1997 Directors Stock Option
    Plan*                                                             |           | Incorporated by reference to Exhibit B of the
    Registrants Definitive Proxy Statement Schedule 14A,
    filed with the Securities and Exchange Commission July 26,
    2002      
|     | 10 | .9  |             | Stellent, Inc. Employee Stock Purchase Plan                                                                                           |           | Incorporated by reference to Exhibit A of the
    Registrants Definitive Proxy Statement filed with the
    Securities and Exchange Commission July 29, 1999                        
|     | 10 | .10 |             | Optika Imaging Systems, Inc. 1994 Stock Option/Stock Issuance
    Plan                                                                |           | Incorporated by reference to Exhibit 99.1 of the
    Registrants Registration Statement on Form S-8, File
    No. 333-116000                                                        
|     | 10 | .11 |             | Amendment to Optika Imaging Systems, Inc. 1994 Stock
    Option/Stock Issuance Plan                                                   |           | Incorporated by reference to Exhibit 10.1 of the
    Registrants Form 10-Q for the period Ended
    June 30, 2004                                                                   
|     | 10 | .12 |             | Optika Inc. 2000 Non-Officer Stock Incentive Plan                                                                                     |           | Incorporated by reference to Exhibit 99.2 of the
    Registrants Registration Statement on Form S-8, File
    No. 333-116000                                                        
|     | 10 | .13 |             | Optika Inc. 2003 Equity Incentive Plan                                                                                                |           | Incorporated by reference to Exhibit 99 of the
    Registrants Registration Statement on Form S-8, File
    No. 333-116148                                                          

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|     |    |     |             |                                                                                                                                                                                                                   |           |                                                                                                                           
|---- | -- | --- | ----------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------- | --------------------------------------------------------------------------------------------------------------------------
|File |    |     | Description |                                                                                                                                                                                                                   | Reference
|     |    |     |             |                                                                                                                                                                                                                   |          
|     | 10 | .14 |             | Amendment to Optika Inc. 2003 Equity Incentive Plan                                                                                                                                                               |           | Incorporated by reference to Exhibit 10.2 of the
    Registrants Form 10-Q for the period Ended
    June 30, 2004        
|     | 10 | .46 |             | French Annex to the Stellent, Inc. 2000 Stock Incentive Plan                                                                                                                                                      |           | Incorporated by reference to Exhibit 10.46 of the
    Registrants Form 10-K for the fiscal year ended
    March 31, 2002.
|     | 10 | .48 |             | Employment Agreement dated January 11, 2004 by and among
    the Registrant Mark K Ruport and Optika Inc.*                                                                                                        |           | Incorporated by reference to Annex J of the Registrant
    Registration Statement on Form S-4, File
    No. 333-112543.   
|     | 10 | .49 |             | Employment Agreement Dated April 1, 2003, by and between
    the Registrant and Robert F. Olson*                                                                                                                  |           | Incorporated by reference to Exhibit 10.49 of the
    Registrants Form 10-Q for the quarter ended
    June 30, 2003.     
|     | 10 | .50 |             | Employment Agreement Dated April 1, 2003 by and between the
    Registrant and Daniel Ryan*                                                                                                                       |           | Incorporated by reference to Exhibit 10.50 of the
    Registrants Form 10-Q for the quarter ended
    June 30, 2003      
|     | 10 | .51 |             | Employment Agreement Dated April 1, 2003, by and between
    the Registrant and Gregg A. Waldon*                                                                                                                  |           | Incorporated by reference to Exhibit 10.51 of the
    Registrants Form 10-Q for the quarter ended
    June 30, 2003      
|     | 10 | .52 |             | Employment Agreement Dated April 1, 2003 by and between the
    Registrant and Frank Radichel*                                                                                                                    |           | Incorporated by reference to Exhibit 10.51 of the
    Registrants Form 10-Q for the quarter ended
    September 30, 2003 
|     | 21 |     |             | Subsidiaries of Registrant                                                                                                                                                                                        |           | Electronic transmission                                                                                                   
|     | 23 |     |             | Consent of Grant Thornton LLP                                                                                                                                                                                     |           | Electronic transmission                                                                                                   
|     | 24 |     |             | Power of Attorney                                                                                                                                                                                                 |           | Included on the signature page hereof                                                                                     
|     | 31 | .1  |             | Certification by Robert F. Olson, Chairman of the Board,
    President and Chief Executive Officer, pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002                                                 |           | Electronic Transmission                                                                                                   
|     | 31 | .2  |             | Certification by Gregg A. Waldon, Executive Vice President, CFO,
    Treasurer and Secretary, pursuant to Section 302 of the
    Sarbanes-Oxley Act of 2002                                                       |           | Electronic Transmission                                                                                                   
|     | 32 | .1  |             | Certification by Robert F. Olson, Chairman of the Board,
    President and Chief Executive Officer, pursuant to 18 USC
    Section 1350, as adopted pursuant to Section 906 of
    the Sarbanes-Oxley Act of 2002 |           | Electronic Transmission                                                                                                   
|     | 32 | .2  |             | Certification by Gregg A. Waldon, Executive Vice President, CFO,
    Treasurer and Secretary, pursuant to 18 U.S.C Section 1350,
    as adopted pursuant to Section 906 of the Sarbanes-Oxley
    Act of 2002     |           | Electronic Transmission                                                                                                   




|  |                                                       
|- | ------------------------------------------------------
|* | Management contract, compensation plan or arrangement.

(b) Exhibits




(c) Financial Statements




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SIGNATURES






| |               
| | --------------
| | STELLENT, INC.
| | (Registrant)  



| |     |                    
| | --- | -------------------
| | By: | /s/ Robert F. Olson

| |                                     
| | ------------------------------------
| |                                     
| | Robert F. Olson                     
| | Chairman of the Board, President and
| | Chief Executive Officer             



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POWER OF ATTORNEY




| |  |                                                                                                                                                                                                    |  | 
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | 
|
| |  | /s/ Robert F. OlsonRobert
    F. Olson,
    Chairman of the Board,
    Chief Executive Officer
    and President (Principal Executive Officer)                                                     |  | 
|
|
| |  | /s/ Gregg A. WaldonGregg
    A. Waldon,
    Executive Vice President,
    Chief Financial Officer,
    Secretary, Treasurer
    (Principal Financial Officer
    and Principal Accounting Officer) |  | 
|
|
| |  | /s/ Kenneth H. HolecKenneth
    H. Holec,
    Director                                                                                                                                             |  | 
|
|
| |  | /s/ Alan B. MenkesAlan
    B. Menkes,
    Director                                                                                                                                                 |  | 
|
|
| |  | /s/ Philip E. SoranPhilip
    E. Soran,
    Director                                                                                                                                               |  | 
|
|
| |  | /s/ Raymond A. TuckerRaymond
    A. Tucker,
    Director                                                                                                                                           |  | 
|
|
| |  | /s/ Steven C. WaldronSteven
    C. Waldron,
    Director                                                                                                                                           |  | 

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STELLENT, INC.


INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


|                                                                                                                      |  |      |    | 
|--------------------------------------------------------------------------------------------------------------------- |  | ---- | -- | 
|                                                                                                                      |  | Page |   
|                                                                                                                      |  |      |   
|Report of Independent Registered Public
    Accounting Firm (regarding Financial Statements)                          |  |      | 49 | 
|Report of Independent Registered Public
    Accounting Firm (regarding Internal Control Over Financial
    Reporting) |  |      | 50 | 
|Consolidated Balance Sheets as of
    March 31, 2004 and 2005                                                         |  |      | 51 | 
|Consolidated Statements of Operations for
    the years ended March 31, 2003, 2004 and 2005                           |  |      | 52 | 
|Consolidated Statements of
    Shareholders Equity for the years ended March 31,
    2003, 2004 and 2005             |  |      | 53 | 
|Consolidated Statements of Cash Flows for
    the years ended March 31, 2003, 2004 and 2005                           |  |      | 54 | 
|Notes to Consolidated Financial
    Statements                                                                        |  |      | 55 | 

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM






Internal Control 
Integrated Framework








Internal
Control  Integrated Framework Internal Control  Integrated
Framework






| |                       
| | ----------------------
| | /s/ Grant Thornton LLP





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REPORT OF INDEPENDENT REGISTERED CERTIFIED PUBLIC ACCOUNTING
FIRM












Internal Control  Integrated Framework




| |                       
| | ----------------------
| | /s/ Grant Thornton LLP





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STELLENT, INC.





CONSOLIDATED BALANCE SHEETS


(In thousands, except per share data)


|                                              |                                                               |                                                                                                                                                     |                            |         |      |         |         |         |     |         | 
|--------------------------------------------- | ------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------- | ------- | ---- | ------- | ------- | ------- | --- | ------- | 
|                                              |                                                               | March 31,                                                                                                                                           |                           
|                                              |                                                               |                                                                                                                                                     |                           
|                                              |                                                               | 2004                                                                                                                                                |                            |         | 2005 |        
|                                              |                                                               |                                                                                                                                                     |                            |         |      |        
|ASSETS                                       
|Current assets                                |                                                               |                                                                                                                                                     |                            |         |      |         |         |        
|                                              | Cash and equivalents                                          |                                                                                                                                                     | $                          | 44,165  |      |         | $       | 49,113  |    
|                                              | Short-term marketable securities                              |                                                                                                                                                     |                            | 22,366  |      |         |         | 17,523  |    
|                                              | Trade accounts receivable, net                                |                                                                                                                                                     |                            | 19,165  |      |         |         | 30,063  |    
|                                              | Prepaid royalties, current portion                            |                                                                                                                                                     |                            | 1,851   |      |         |         | 965     |    
|                                              | Prepaid expenses and other current assets                     |                                                                                                                                                     |                            | 4,905   |      |         |         | 3,884   |    
|                                              |                                                               |                                                                                                                                                     |                            |         |      |        
|                                              |                                                               |                                                                                                                                                     | Total current assets       |         |      | 92,452  |         |         |     | 101,548 | 
|Long-term marketable securities               |                                                               |                                                                                                                                                     | 6,981                      |         |      |         | 6,114   |        
|Property and equipment, net                   |                                                               |                                                                                                                                                     | 4,471                      |         |      |         | 4,333   |        
|Prepaid royalties, net of current portion     |                                                               |                                                                                                                                                     | 1,482                      |         |      |         | 1,044   |        
|Goodwill                                      |                                                               |                                                                                                                                                     | 14,780                     |         |      |         | 67,640  |        
|Other acquired intangible assets, net         |                                                               |                                                                                                                                                     | 2,230                      |         |      |         | 5,615   |        
|Investments in and notes with other companies |                                                               |                                                                                                                                                     | 1,136                      |         |      |         |        |        
|Other                                         |                                                               |                                                                                                                                                     | 1,156                      |         |      |         | 1,358   |        
|                                              |                                                               |                                                                                                                                                     |                            |         |      |        
|                                              |                                                               | $                                                                                                                                                   | 124,688                    |         |      | $       | 187,652 |        
|                                              |                                                               |                                                                                                                                                     |                            |         |      |        
|                                             
|LIABILITIES AND SHAREHOLDERS EQUITY         
|Current liabilities                           |                                                               |                                                                                                                                                     |                            |         |      |         |         |        
|                                              | Accounts payable                                              |                                                                                                                                                     | $                          | 2,748   |      |         | $       | 3,867   |    
|                                              | Deferred revenues, current portion                            |                                                                                                                                                     |                            | 10,097  |      |         |         | 19,854  |    
|                                              | Commissions payable                                           |                                                                                                                                                     |                            | 1,301   |      |         |         | 2,419   |    
|                                              | Accrued expenses and other                                    |                                                                                                                                                     |                            | 5,786   |      |         |         | 7,867   |    
|                                              | Current installments of obligation under capital leases       |                                                                                                                                                     |                            |        |      |         |         | 170     |    
|                                              |                                                               |                                                                                                                                                     |                            |         |      |        
|                                              |                                                               |                                                                                                                                                     | Total current liabilities  |         |      | 19,932  |         |         |     | 34,177  | 
|Deferred revenue, net of current portion      |                                                               |                                                                                                                                                     | 51                         |         |      |         | 946     |        
|                                              |                                                               |                                                                                                                                                     |                            |         |      |        
|                                              |                                                               |                                                                                                                                                     | Total liabilities          |         |      | 19,983  |         |         |     | 35,123  | 
|Shareholders equity                          |                                                               |                                                                                                                                                     |                            |         |      |         |         |        
|                                              | Capital stock, $0.01 par value, 100,000 shares
    authorized |                                                                                                                                                     |                            |         |      |         |         |         |    
|                                              |                                                               | Preferred stock, 10,000 shares authorized, no shares issued
    and outstanding at March 31, 2004 and 2005                                          |                            |         |     |         |         |         |    |        
|                                              |                                                               | Common stock, 90,000 shares authorized, 22,339 and
    27,476 shares issued and 22,339 and 27,476 shares
    outstanding at March 31, 2004 and 2005 |                            |         | 223  |         |         |         | 275 |        
|                                              | Additional paid-in capital                                    |                                                                                                                                                     |                            | 189,221 |      |         |         | 243,013 |    
|                                              | Unearned compensation                                         |                                                                                                                                                     |                            |        |      |         |         | (469    | )  
|                                              | Accumulated deficit                                           |                                                                                                                                                     |                            | (85,415 | )    |         |         | (91,256 | )  
|                                              | Accumulated other comprehensive income                        |                                                                                                                                                     |                            | 676     |      |         |         | 966     |    
|                                              |                                                               |                                                                                                                                                     |                            |         |      |        
|                                              |                                                               |                                                                                                                                                     | Total shareholders equity |         |      | 104,705 |         |         |     | 152,529 | 
|                                              |                                                               |                                                                                                                                                     |                            |         |      |        
|                                              |                                                               | $                                                                                                                                                   | 124,688                    |         |      | $       | 187,652 |        
|                                              |                                                               |                                                                                                                                                     |                            |         |      |        



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STELLENT, INC.





CONSOLIDATED STATEMENTS OF OPERATIONS


(In thousands, except per share data)


|                                                      |                                                        |                          |         |        |         |   |         |        |         |   |        |        |         |  
|----------------------------------------------------- | ------------------------------------------------------ | ------------------------ | ------- | ------ | ------- | - | ------- | ------ | ------- | - | ------ | ------ | ------- | -
|                                                      |                                                        | Year Ended March 31,     |        
|                                                      |                                                        |                          |        
|                                                      |                                                        | 2003                     |         |        | 2004    |   |         | 2005   |        
|                                                      |                                                        |                          |         |        |         |   |         |        |        
|Revenues                                              |                                                        |                          |         |        |         |   |         |        |         |   |        |       
|                                                      | Product licenses                                       |                          | $       | 40,364 |         |   | $       | 41,571 |         |   | $      | 54,376 |        
|                                                      | Services                                               |                          |         | 9,726  |         |   |         | 14,349 |         |   |        | 19,772 |        
|                                                      | Post-contract support                                  |                          |         | 15,344 |         |   |         | 19,854 |         |   |        | 32,663 |        
|                                                      |                                                        |                          |         |        |         |   |         |        |        
|                                                      |                                                        | Total revenues           |         |        | 65,434  |   |         |        | 75,774  |   |        |        | 106,811 |  
|Cost of revenues                                      |                                                        |                          |         |        |         |   |         |        |         |   |        |       
|                                                      | Product licenses                                       |                          |         | 6,480  |         |   |         | 4,936  |         |   |        | 5,017  |        
|                                                      | Services                                               |                          |         | 8,416  |         |   |         | 13,272 |         |   |        | 19,550 |        
|                                                      | Post-contract support                                  |                          |         | 3,730  |         |   |         | 3,885  |         |   |        | 5,350  |        
|                                                      | Amortization of capitalized software from acquisitions |                          |         | 1,892  |         |   |         | 1,574  |         |   |        | 2,390  |        
|                                                      |                                                        |                          |         |        |         |   |         |        |        
|                                                      |                                                        | Total cost of revenues   |         |        | 20,518  |   |         |        | 23,667  |   |        |        | 32,307  |  
|                                                      |                                                        |                          |         |        |         |   |         |        |        
|                                                      |                                                        | Gross profit             |         |        | 44,916  |   |         |        | 52,107  |   |        |        | 74,504  |  
|Operating expenses                                    |                                                        |                          |         |        |         |   |         |        |         |   |        |       
|                                                      | Sales and marketing                                    |                          |         | 38,343 |         |   |         | 39,122 |         |   |        | 42,365 |        
|                                                      | General and administrative                             |                          |         | 11,301 |         |   |         | 8,856  |         |   |        | 14,097 |        
|                                                      | Research and development                               |                          |         | 15,766 |         |   |         | 13,263 |         |   |        | 17,958 |        
|                                                      | Acquisition  related sales, marketing and other costs |                          |         |       |         |   |         |       |         |   |        | 886    |        
|                                                      | Acquisition and related costs                          |                          |         | 1,127  |         |   |         |       |         |   |        |       |        
|                                                      | Amortization of acquired intangible assets and other   |                          |         | 6,635  |         |   |         | 2,006  |         |   |        | 677    |        
|                                                      | Impairment charge on fixed assets                      |                          |         |       |         |   |         |       |         |   |        | 375    |        
|                                                      | Restructuring charges                                  |                          |         | 4,368  |         |   |         | 743    |         |   |        | 3,673  |        
|                                                      |                                                        |                          |         |        |         |   |         |        |        
|                                                      |                                                        | Total operating expenses |         |        | 77,540  |   |         |        | 63,990  |   |        |        | 80,031  |  
|                                                      |                                                        |                          |         |        |         |   |         |        |        
|Loss from operations                                  |                                                        |                          | (32,624 | )      |         |   | (11,883 | )      |         |   | (5,527 | )     
|Other income (expense)                                |                                                        |                          |         |        |         |   |         |        |         |   |        |       
|                                                      | Interest income, net                                   |                          |         | 1,957  |         |   |         | 982    |         |   |        | 822    |        
|                                                      | Investment (impairment) gain on sale                   |                          |         | (1,733 | )       |   |         | 388    |         |   |        | (1,136 | )      
|                                                      |                                                        |                          |         |        |         |   |         |        |        
|                                                      |                                                        | Net loss                 |         | $      | (32,400 | ) |         | $      | (10,513 | ) |        | $      | (5,841  | )
|                                                      |                                                        |                          |         |        |         |   |         |        |        
|Net loss per common share  basic and diluted         |                                                        | $                        | (1.45   | )      |         | $ | (0.48   | )      |         | $ | (0.22  | )     
|                                                      |                                                        |                          |         |        |         |   |         |        |        
|Weighted average shares outstanding basic and diluted |                                                        |                          | 22,345  |        |         |   | 22,028  |        |         |   | 26,224 |       
|                                                      |                                                        |                          |         |        |         |   |         |        |        



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STELLENT, INC.





CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY


(In thousands)


|                                                              |  |              |        |   |            |   |     |             |  |       |          |               |  |              |         |   |               |               |      |        |  |   |        |   |  |   |         |   |  |   |         |  
|------------------------------------------------------------- |  | ------------ | ------ | - | ---------- | - | --- | ----------- |  | ----- | -------- | ------------- |  | ------------ | ------- | - | ------------- | ------------- | ---- | ------ |  | - | ------ | - |  | - | ------- | - |  | - | ------- | -
|                                                              |  |              |        |   |            |   |     |             |  |       |          | Accumulated   |  |              |         |   |              
|                                                              |  |              |        |   |            |   |     |             |  | Other |          |               |  |              |        
|                                                              |  |              |        |   | Additional |   |     |             |  |       |          | Comprehensive |  |              | Total   |   |               | Comprehensive |     
|                                                              |  | Common Stock |        |   | Paid-In    |   |     | Accumulated |  |       | Unearned |               |  | Income       |         |   | Shareholders |               |      | Income | 
|                                                              |  | Shares       |        |   | Amount     |   |     | Capital     |  |       | Deficit  |               |  | Compensation |         |   | (Loss)        |               |      | Equity |  |   | (Loss) |  
|                                                              |  |              |        |   |            |   |     |             |  |       |          |               |  |              |         |   |               |               |      |        |  |   |        |  
|Balance at April 1, 2002                                      |  |              | 22,399 |   |            | $ | 224 |             |  | $     | 194,197  |               |  | $            | (42,502 | ) |               | $             |     |        |  | $ | 68     |   |  | $ | 151,987 |   |  |   |         |  
|Exercise of stock options and warrants                        |  |              | 27     |   |            |   | 1   |             |  |       | 101      |               |  |              |        |   |               |               |     |        |  |   |       |   |  |   | 102     |   |  |   |         |  
|Issuance of common stock in employee stock purchase plan      |  |              | 187    |   |            |   | 2   |             |  |       | 657      |               |  |              |        |   |               |               |     |        |  |   |       |   |  |   | 659     |   |  |   |         |  
|Repurchase of common stock                                    |  |              | (757   | ) |            |   | (8  | )           |  |       | (3,457   | )             |  |              |        |   |               |               |     |        |  |   |       |   |  |   | (3,465  | ) |  |   |         |  
|Reduction of tax benefit from employee stock option exercises |  |              |       |   |            |   |    |             |  |       | (4,894   | )             |  |              |        |   |               |               |     |        |  |   |       |   |  |   | (4,894  | ) |  |   |         |  
|Foreign currency translation adjustment gain                  |  |              |       |   |            |   |    |             |  |       |         |               |  |              |        |   |               |               |     |        |  |   | 374    |   |  |   | 374     |   |  | $ | 374     |  
|Net unrealized loss on investments                            |  |              |       |   |            |   |    |             |  |       |         |               |  |              |        |   |               |               |     |        |  |   | (127   | ) |  |   | (127    | ) |  |   | (127    | )
|Net loss                                                      |  |              |       |   |            |   |    |             |  |       |         |               |  |              | (32,400 | ) |               |               |     |        |  |   |       |   |  |   | (32,400 | ) |  |   | (32,400 | )
|                                                              |  |              |        |   |            |   |     |             |  |       |          |               |  |              |         |   |               |               |      |        |  |   |        |  
|Balance at March 31, 2003                                     |  |              | 21,856 |   |            |   | 219 |             |  |       | 186,604  |               |  |              | (74,902 | ) |               |               |     |        |  |   | 315    |   |  |   | 112,236 |   |  | $ | (32,153 | )
|                                                              |  |              |        |   |            |   |     |             |  |       |          |               |  |              |         |   |               |               |      |        |  |   |        |  
|Exercise of stock options                                     |  |              | 274    |   |            |   | 3   |             |  |       | 1,341    |               |  |              |        |   |               |               |     |        |  |   |       |   |  |   | 1,344   |   |  |   |         |  
|Issuance of common stock                                      |  |              | 100    |   |            |   | 1   |             |  |       | 753      |               |  |              |        |   |               |               |     |        |  |   |       |   |  |   | 754     |   |  |   |         |  
|Issuance of common stock in employee stock purchase plan      |  |              | 172    |   |            |   | 1   |             |  |       | 831      |               |  |              |        |   |               |               |     |        |  |   |       |   |  |   | 832     |   |  |   |         |  
|Repurchase of common stock                                    |  |              | (63    | ) |            |   | (1  | )           |  |       | (308     | )             |  |              |        |   |               |               |     |        |  |   |       |   |  |   | (309    | ) |  |   |         |  
|Foreign currency translation adjustment gain                  |  |              |       |   |            |   |    |             |  |       |         |               |  |              |        |   |               |               |     |        |  |   | 361    |   |  |   | 361     |   |  | $ | 361     |  
|Net loss                                                      |  |              |       |   |            |   |    |             |  |       |         |               |  |              | (10,513 | ) |               |               |     |        |  |   |       |   |  |   | (10,513 | ) |  |   | (10,513 | )
|                                                              |  |              |        |   |            |   |     |             |  |       |          |               |  |              |         |   |               |               |      |        |  |   |        |  
|Balance at March 31, 2004                                     |  |              | 22,339 |   |            |   | 223 |             |  |       | 189,221  |               |  |              | (85,415 | ) |               |               |     |        |  |   | 676    |   |  |   | 104,705 |   |  | $ | (10,152 | )
|                                                              |  |              |        |   |            |   |     |             |  |       |          |               |  |              |         |   |               |               |      |        |  |   |        |  
|Exercise of stock options                                     |  |              | 777    |   |            |   | 8   |             |  |       | 3,621    |               |  |              |        |   |               |               |     |        |  |   |       |   |  |   | 3,629   |   |  |   |         |  
|Stock issued and options assumed in acquisition               |  |              | 4,204  |   |            |   | 42  |             |  |       | 49,338   |               |  |              |        |   |               |               |     |        |  |   |       |   |  |   | 49,380  |   |  |   |         |  
|Issuance of common stock in employee stock purchase plan      |  |              | 156    |   |            |   | 2   |             |  |       | 930      |               |  |              |        |   |               |               |     |        |  |   |       |   |  |   | 932     |   |  |   |         |  
|Unearned stock- based compensation                            |  |              |       |   |            |   |    |             |  |       |         |               |  |              |        |   |               |               | (895 | )      |  |   |       |   |  |   | (895    | ) |  |   |         |  
|Reversal of compensation expense for terminated employees     |  |              |       |   |            |   |    |             |  |       | (97      | )             |  |              |        |   |               |               | 97   |        |  |   |       |   |  |   |        |   |  |   |         |  
|Recognition of unearned compensation expense                  |  |              |       |   |            |   |    |             |  |       |         |               |  |              |        |   |               |               | 329  |        |  |   |       |   |  |   | 329     |   |  |   |         |  
|Foreign currency translation adjustment gain                  |  |              |       |   |            |   |    |             |  |       |         |               |  |              |        |   |               |               |     |        |  |   | 290    |   |  |   | 290     |   |  | $ | 290     |  
|Net loss                                                      |  |              |       |   |            |   |    |             |  |       |         |               |  |              | (5,841  | ) |               |               |     |        |  |   |       |   |  |   | (5,841  | ) |  |   | (5,841  | )
|                                                              |  |              |        |   |            |   |     |             |  |       |          |               |  |              |         |   |               |               |      |        |  |   |        |  
|Balance at March 31, 2005                                     |  |              | 27,476 |   |            | $ | 275 |             |  | $     | 243,013  |               |  | $            | (91,256 | ) |               | $             | (469 | )      |  | $ | 966    |   |  | $ | 152,529 |   |  | $ | (5,551  | )
|                                                              |  |              |        |   |            |   |     |             |  |       |          |               |  |              |         |   |               |               |      |        |  |   |        |  



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STELLENT, INC.





CONSOLIDATED STATEMENTS OF CASH FLOWS


(In thousands)


|                                                                                    |                                                                                   |                                                           |        |         |        |   |        |         |        |   |        |         |        |  
|----------------------------------------------------------------------------------- | --------------------------------------------------------------------------------- | --------------------------------------------------------- | ------ | ------- | ------ | - | ------ | ------- | ------ | - | ------ | ------- | ------ | -
|                                                                                    |                                                                                   | Year Ended March 31,                                      |       
|                                                                                    |                                                                                   |                                                           |       
|                                                                                    |                                                                                   | 2003                                                      |        |         | 2004   |   |        | 2005    |       
|                                                                                    |                                                                                   |                                                           |        |         |        |   |        |         |       
|Operating activities:                                                               |                                                                                   |                                                           |        |         |        |   |        |         |        |   |        |        
|                                                                                    | Net loss                                                                          |                                                           | $      | (32,400 | )      |   | $      | (10,513 | )      |   | $      | (5,841  | )     
|                                                                                    | Adjustments to reconcile net loss to cash flows used in
    operating activities: |                                                           |        |         |        |   |        |         |        |   |        |         |       
|                                                                                    | Depreciation and amortization                                                     |                                                           |        | 3,179   |        |   |        | 3,369   |        |   |        | 3,481   |       
|                                                                                    | Amortization of acquired intangible assets and other                              |                                                           |        | 8,527   |        |   |        | 3,580   |        |   |        | 3,067   |       
|                                                                                    | Impairment charge on fixed assets                                                 |                                                           |        |        |        |   |        |        |        |   |        | 451     |       
|                                                                                    | Tax benefit reduction from employee stock option exercises                        |                                                           |        | (4,894  | )      |   |        |        |        |   |        |        |       
|                                                                                    | Changes in operating assets and liabilities, net of amounts
    acquired          |                                                           |        | 15,626  |        |   |        | (1,857  | )      |   |        | 623     |       
|                                                                                    | Investment impairment (gain on sale)                                              |                                                           |        | 1,733   |        |   |        | (388    | )      |   |        | 1,136   |       
|                                                                                    | Other                                                                             |                                                           |        | 209     |        |   |        |        |        |   |        |        |       
|                                                                                    |                                                                                   |                                                           |        |         |        |   |        |         |       
|                                                                                    |                                                                                   | Net cash flows provided by (used in) operating activities |        |         | (8,020 | ) |        |         | (5,809 | ) |        |         | 2,917  |  
|Investing activities:                                                               |                                                                                   |                                                           |        |         |        |   |        |         |        |   |        |        
|                                                                                    | Maturities (purchases) of marketable securities, net                              |                                                           |        | 25,772  |        |   |        | 14,383  |        |   |        | 10,857  |       
|                                                                                    | Business acquisitions, net of cash acquired                                       |                                                           |        | (3,486  | )      |   |        | (2,184  | )      |   |        | (11,094 | )     
|                                                                                    | Purchases of property and equipment                                               |                                                           |        | (1,002  | )      |   |        | (2,263  | )      |   |        | (1,934  | )     
|                                                                                    | Purchase of intangibles                                                           |                                                           |        | (201    | )      |   |        |        |        |   |        |        |       
|                                                                                    | Proceeds from sale of investment in other companies                               |                                                           |        |        |        |   |        | 388     |        |   |        |        |       
|                                                                                    | Other                                                                             |                                                           |        | 50      |        |   |        | (17     | )      |   |        |        |       
|                                                                                    |                                                                                   |                                                           |        |         |        |   |        |         |       
|                                                                                    |                                                                                   | Net cash flows provided by (used in) investing activities |        |         | 21,133 |   |        |         | 10,307 |   |        |         | (2,171 | )
|Financing activities:                                                               |                                                                                   |                                                           |        |         |        |   |        |         |        |   |        |        
|                                                                                    | Repurchase of common stock                                                        |                                                           |        | (3,465  | )      |   |        | (309    | )      |   |        |        |       
|                                                                                    | Issuance of common stock                                                          |                                                           |        | 659     |        |   |        | 832     |        |   |        | 3,629   |       
|                                                                                    | Proceeds from stock options and warrants                                          |                                                           |        | 102     |        |   |        | 1,344   |        |   |        | 932     |       
|                                                                                    | Payments under capital leases                                                     |                                                           |        |        |        |   |        |        |        |   |        | (649    | )     
|                                                                                    |                                                                                   |                                                           |        |         |        |   |        |         |       
|                                                                                    |                                                                                   | Net cash flows provided by (used in) financing activities |        |         | (2,704 | ) |        |         | 1,867  |   |        |         | 3,912  |  
|Effect of exchange rate changes on cash and equivalents                             |                                                                                   |                                                           | 374    |         |        |   | 361    |         |        |   | 290    |        
|                                                                                    |                                                                                   |                                                           |        |         |        |   |        |         |       
|                                                                                    |                                                                                   | Net increase in cash                                      |        |         | 10,783 |   |        |         | 6,726  |   |        |         | 4,948  |  
|Cash and equivalents at beginning of year                                           |                                                                                   |                                                           | 26,656 |         |        |   | 37,439 |         |        |   | 44,165 |        
|                                                                                    |                                                                                   |                                                           |        |         |        |   |        |         |       
|Cash and equivalents at end of year                                                 |                                                                                   | $                                                         | 37,439 |         |        | $ | 44,165 |         |        | $ | 49,113 |        
|                                                                                    |                                                                                   |                                                           |        |         |        |   |        |         |       
|Supplemental disclosure of cash flows information:                                  |                                                                                   |                                                           |        |         |        |   |        |         |        |   |        |        
|                                                                                    | Cash paid for interest                                                            |                                                           | $      |        |        |   | $      |        |        |   | $      | 24      |       
|Non-cash investing and financing activities:                                        |                                                                                   |                                                           |        |         |        |   |        |         |        |   |        |        
|                                                                                    | Common stock issued in business acquisitions                                      |                                                           | $      |        |        |   | $      | 754     |        |   | $      | 41,416  |       
|                                                                                    | Assumption of stock option plan related to business combination                   |                                                           |        |        |        |   |        |        |        |   |        | 7,964   |       
|                                                                                    | Purchase of equipment through capital leases                                      |                                                           |        |        |        |   |        |        |        |   |        | 819     |       
|Detail of changes in operating assets and liabilities, net of
    amounts acquired: |                                                                                   |                                                           |        |         |        |   |        |         |        |   |        |        
|                                                                                    | Trade accounts receivable, net                                                    |                                                           | $      | 2,974   |        |   | $      | (3,563  | )      |   | $      | (8,102  | )     
|                                                                                    | Prepaid expenses and other current assets                                         |                                                           |        | 4,408   |        |   |        | (692    | )      |   |        | 2,354   |       
|                                                                                    | Accounts payable                                                                  |                                                           |        | 23      |        |   |        | 461     |        |   |        | 756     |       
|                                                                                    | Accrued expenses and other liabilities                                            |                                                           |        | 8,221   |        |   |        | 1,937   |        |   |        | 5,615   |       
|                                                                                    |                                                                                   |                                                           |        |         |        |   |        |         |       
|                                                                                    |                                                                                   | Net changes in operating assets and liabilities           |        | $       | 15,626 |   |        | $       | (1,857 | ) |        | $       | 623    |  
|                                                                                    |                                                                                   |                                                           |        |         |        |   |        |         |       



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STELLENT, INC.





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(In thousands, except per share data)




|   |                                           
|-- | ------------------------------------------
|1. | Summary of Significant Accounting Policies



Principles of Consolidation:


Revenue Recognition: Software Revenue
Recognition, Modification of
SOP 97-2, Software Revenue Recognition with Respect to
Certain Transactions, Revenue Recognition.






| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Persuasive Evidence of an Arrangement Exists 
    The Company determines that persuasive evidence of an
    arrangement exists with respect to a customer under i) a
    signature license agreement, which is signed by both the
    customer and the Company, or ii) a purchase order, quote or
    binding letter-of-intent received from and signed by the
    customer, in which case the customer has either previously
    executed a signature license agreement with the Company or will
    receive a shrink-wrap license agreement with the software. The
    Company does not offer product return rights to end users or
    resellers.                                                                                                                                            
|
| | Delivery has Occurred  The Companys
    software may be either physically or electronically delivered to
    the customer. The Company determines that delivery has occurred
    upon shipment of the software pursuant to the billing terms of
    the arrangement or when the software is made available to the
    customer through electronic delivery. Customer acceptance
    generally occurs at delivery.                                                                                                                                                                                                                                                                                                                                                                              
|
| | The Fee is Fixed or Determinable  If at the
    outset of the customer arrangement, the Company determines that
    the arrangement fee is not fixed or determinable, revenue is
    typically recognized when the arrangement fee becomes due and
    payable. Fees due under an arrangement are generally deemed
    fixed and determinable if they are payable within twelve months.                                                                                                                                                                                                                                                                                                                                                                                                         
|
| | Collectibility is Probable and Supported  The
    Company determines whether collectibility is probable and
    supported on a case-by-case basis. The Company may generate a
    high percentage of its license revenue from its current customer
    base, for whom there is a history of successful collection. The
    Company assesses the probability of collection from new
    customers based upon the number of years the customer has been
    in business and a credit review process, which evaluates the
    customers financial position and ultimately their ability
    to pay. If the Company is unable to determine from the outset of
    an arrangement that collectibility is probable based upon its
    review process, revenue is recognized as payments are received.



55



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STELLENT, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


(In thousands, except per share data)










Cost of Revenues:


Cash and Equivalents:


Marketable Securities:


56



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STELLENT, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


(In thousands, except per share data)






|                                 |  |                     |        |  |                 |   |       |       |  |   |        | 
|-------------------------------- |  | ------------------- | ------ |  | --------------- | - | ----- | ----- |  | - | ------ | 
|                                 |  | U.S. Government and |        |  | Corporate       |   |       |      
|                                 |  | Agency Securities   |        |  | Debt Securities |   |       | Total | 
|                                 |  |                     |        |  |                 |   |       |       | 
|Short-term marketable securities |  | $                   | 14,103 |  |                 | $ | 3,420 |       |  | $ | 17,523 | 
|Long-term marketable securities  |  | $                   | 4,697  |  |                 | $ | 1,417 |       |  | $ | 6,114  | 

Investments in and Notes with Other Companies:






Accounts Receivable:


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STELLENT, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


(In thousands, except per share data)




Property and Equipment:


Goodwill and Other Acquired Intangible Assets:


|                      |  |           |        |  |      |   |        | 
|--------------------- |  | --------- | ------ |  | ---- | - | ------ | 
|                      |  | March 31, |       
|                      |  |           |       
|                      |  | 2004      |        |  | 2005 |  
|                      |  |           |        |  |      |  
|Beginning of the year |  | $         | 12,703 |  |      | $ | 14,780 | 
|Acquisition of Optika |  |           |       |  |      |   | 51,155 | 
|Acquisition of Mexico |  |           |       |  |      |   | 1,158  | 
|Acquisition of Ancept |  |           | 2,077  |  |      |   | 367    | 
|Acquisition of Korea  |  |           |       |  |      |   | 180    | 
|                      |  |           |        |  |      |  
|End of the year       |  | $         | 14,780 |  |      | $ | 67,640 | 
|                      |  |           |        |  |      |  



|                |  |          |       |  |                 |  |               | 
|--------------- |  | -------- | ----- |  | --------------- |  | ------------- | 
|                |  | Acquired |       |  | Amortization    | 
|                |  | Value    |       |  | Period in Years | 
|                |  |          |       |  |                 | 
|Core technology |  | $        | 4,991 |  |                 |  | 3             | 
|Customer base   |  |          | 2,725 |  |                 |  | 3 to 10       | 
|                |  |          |       |  |                 | 
|                |  | $        | 7,716 |  |                 |  | 5.45 weighted | 
|                |  |          |       |  |                 | 
|                |  |          |       |  |                 |  | average years | 





|                        |  |                      |        |  |              |   |         |              |  |   |       | 
|----------------------- |  | -------------------- | ------ |  | ------------ | - | ------- | ------------ |  | - | ----- | 
|                        |  | As of March 31, 2004 |       
|                        |  |                      |       
|                        |  | Gross Carrying       |        |  | Accumulated  |   |         |             
|                        |  | Amount               |        |  | Amortization |   |         | Net Balances | 
|                        |  |                      |        |  |              |   |         |              | 
|Core technology         |  | $                    | 13,200 |  |              | $ | (13,200 | )            |  | $ |      | 
|Customer base           |  |                      | 3,840  |  |              |   | (3,812  | )            |  |   | 28    | 
|Capitalized software    |  |                      | 7,282  |  |              |   | (5,081  | )            |  |   | 2,201 | 
|Trademarks              |  |                      | 1,715  |  |              |   | (1,714  | )            |  |   | 1     | 
|Other intangible assets |  |                      | 1,400  |  |              |   | (1,400  | )            |  |   |      | 
|                        |  |                      |        |  |              |   |         |              | 
|                        |  | $                    | 27,437 |  |              | $ | (25,207 | )            |  | $ | 2,230 | 
|                        |  |                      |        |  |              |   |         |              | 

58



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STELLENT, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


(In thousands, except per share data)


|                |  |                      |       |  |              |   |        |              |  |   |       | 
|--------------- |  | -------------------- | ----- |  | ------------ | - | ------ | ------------ |  | - | ----- | 
|                |  | As of March 31, 2005 |      
|                |  |                      |      
|                |  | Gross Carrying       |       |  | Accumulated  |   |        |             
|                |  | Amount               |       |  | Amortization |   |        | Net Balances | 
|                |  |                      |       |  |              |   |        |              | 
|Core technology |  | $                    | 4,991 |  |              | $ | (1,870 | )            |  | $ | 3,121 | 
|Customer base   |  |                      | 2,725 |  |              |   | (231   | )            |  |   | 2,494 | 
|                |  |                      |       |  |              |   |        |              | 
|                |  | $                    | 7,716 |  |              | $ | (2,101 | )            |  | $ | 5,615 | 
|                |  |                      |       |  |              |   |        |              | 





|           |  |   |       | 
|---------- |  | - | ----- | 
|2006       |  | $ | 1,942 | 
|2007       |  |   | 1,547 | 
|2008       |  |   | 461   | 
|2009       |  |   | 270   | 
|2010       |  |   | 270   | 
|Thereafter |  |   | 1,125 | 
|           |  |   |      
|           |  | $ | 5,615 | 
|           |  |   |      

Impairment of Long-Lived Assets:


Impairment of Goodwill and Other Intangible Assets:




| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Step 1  The Company compares the fair value of our
    reporting unit to its carrying value, including goodwill. If the
    reporting units carrying value, including goodwill,
    exceeds the units fair value, the Company moves on to Step
    2. If the units fair value exceeds the carrying value, no
    further work is performed and no impairment charge is necessary.                                                       
|
| |  | Step 2  The Company performs an allocation of the
    fair value of the reporting unit to its identifiable tangible
    and non-goodwill intangible assets and liabilities. This derives
    an implied fair value for the reporting units goodwill.
    The Company then compare the implied fair value of the reporting
    units goodwill with the carrying amount of the reporting
    units goodwill. If the carrying amount of the

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STELLENT, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


(In thousands, except per share data)




| |  |                                                                                                                                                   
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------
| |  | reporting units goodwill is greater than the implied fair
    value of its goodwill, an impairment charge would be recognized
    for the excess.





Software Development Costs:




Warranties:


Indemnification Obligations:


Translation of Foreign Currencies:


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##### Table of Contents



STELLENT, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


(In thousands, except per share data)


Reclassifications:


Comprehensive Income (Loss):


Advertising:




Net Loss per Common Share:


Stock-based Compensation:


|                                                                                                                  |  |                       |         |   |      |   |         |      |  |   |         |  
|----------------------------------------------------------------------------------------------------------------- |  | --------------------- | ------- | - | ---- | - | ------- | ---- |  | - | ------- | -
|                                                                                                                  |  | Years Ended March 31, |        
|                                                                                                                  |  |                       |        
|                                                                                                                  |  | 2003                  |         |   | 2004 |   |         | 2005 | 
|                                                                                                                  |  |                       |         |   |      |   |         |      | 
|Net loss  as reported                                                                                            |  | $                     | (32,400 | ) |      | $ | (10,513 | )    |  | $ | (5,841  | )
|Add: Stock-based compensation included in net loss as reported                                                    |  |                       |        |   |      |   |        |      |  |   | 329     |  
|Less: Total stock-based employee compensation expense determined
    under fair value based method for all awards |  |                       | (10,797 | ) |      |   | (8,711  | )    |  |   | (11,828 | )
|                                                                                                                  |  |                       |         |   |      |   |         |      | 
|Net loss  pro forma                                                                                              |  | $                     | (43,197 | ) |      | $ | (19,224 | )    |  | $ | (17,340 | )
|                                                                                                                  |  |                       |         |   |      |   |         |      | 

|                                                              |  |                       |       |   |      |   |       |      |  |   |       |  
|------------------------------------------------------------- |  | --------------------- | ----- | - | ---- | - | ----- | ---- |  | - | ----- | -
|                                                              |  | Years Ended March 31, |      
|                                                              |  |                       |      
|                                                              |  | 2003                  |       |   | 2004 |   |       | 2005 | 
|                                                              |  |                       |       |   |      |   |       |      | 
|Basic and diluted net loss per common share  as
    reported |  | $                     | (1.45 | ) |      | $ | (0.48 | )    |  | $ | (0.22 | )
|                                                              |  |                       |       |   |      |   |       |      | 
|Basic and diluted net loss per common share  pro forma       |  | $                     | (1.93 | ) |      | $ | (0.87 | )    |  | $ | (0.66 | )
|                                                              |  |                       |       |   |      |   |       |      | 



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STELLENT, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


(In thousands, except per share data)






|                                                                  |  |                       |      |  |      |  |         |      |  |  |           | 
|----------------------------------------------------------------- |  | --------------------- | ---- |  | ---- |  | ------- | ---- |  |  | --------- | 
|                                                                  |  | Years Ended March 31, |     
|                                                                  |  |                       |     
|                                                                  |  | 2003                  |      |  | 2004 |  |         | 2005 | 
|                                                                  |  |                       |      |  |      |  |         |      | 
|Risk free interest yields                                         |  |                       | 4.8% |  |      |  | 2%-5.5% |      |  |  | 3.0%-3.6% | 
|Dividend yield                                                    |  |                       |     |  |      |  |        |      |  |  |          | 
|Volatility factor of expected market price of Companys
    stock |  |                       | 95%  |  |      |  | 95%     |      |  |  | 70%-95%   | 
|Weighted average expected life of options (years)                 |  |                       | 3.25 |  |      |  | 3.25    |      |  |  | 3.00-3.25 | 



|                                                                  |  |                       |           |  |      |  |           |      |  |  |           | 
|----------------------------------------------------------------- |  | --------------------- | --------- |  | ---- |  | --------- | ---- |  |  | --------- | 
|                                                                  |  | Years Ended March 31, |          
|                                                                  |  |                       |          
|                                                                  |  | 2003                  |           |  | 2004 |  |           | 2005 | 
|                                                                  |  |                       |           |  |      |  |           |      | 
|Risk free interest yields                                         |  |                       | 1.4%-1.9% |  |      |  | 1.0%-1.1% |      |  |  | 1.3%-2.2% | 
|Dividend yield                                                    |  |                       |          |  |      |  |          |      |  |  |          | 
|Volatility factor of expected market price of Companys
    stock |  |                       | 96%       |  |      |  | 83%       |      |  |  | 45%       | 
|Weighted average expected life of options (years)                 |  |                       | 0.5       |  |      |  | 0.5       |      |  |  | 0.5       | 

Share-Based
Payments.


Fair Value of Financial Instruments:


Use of Estimates:


New Accounting Pronouncements: Accounting Changes and Error
Corrections. Accounting Changes Reporting Accounting Changes in Interim Financial
Statements


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##### Table of Contents



STELLENT, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


(In thousands, except per share data)




Exchanges of Nonmonetary Assets Accounting for Nonmonetary Transactions


Application of FASB
Statement No. 109


Accounting and
Disclosure Guidance for the Foreign Earnings Repatriation
Provision within the American Jobs Creations Act of 2004.


The Meaning of Other-Than-Temporary Impairment
and Its Application to Certain Investments


Consolidation
of Variable Interest Entities, an Interpretation of Accounting
Research Bulletin (ARB) No. 51.


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STELLENT, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


(In thousands, except per share data)




|   |                      
|-- | ---------------------
|2. | Business Combinations











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STELLENT, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


(In thousands, except per share data)




|                                                       |  |   |        |  
|------------------------------------------------------ |  | - | ------ | -
|Purchase price:                                        |  |   |        |  
|Cash                                                   |  | $ | 10,000 |  
|Transaction costs                                      |  |   | 1,594  |  
|Value of common stock issued                           |  |   | 41,416 |  
|Value of stock option grants                           |  |   | 7,964  |  
|                                                       |  |   |       
|Total purchase consideration paid                      |  | $ | 60,974 |  
|                                                       |  |   |       
|Fair value of assets acquired and liabilities assumed: |  |   |        |  
|Cash                                                   |  | $ | 7,460  |  
|Accounts receivable                                    |  |   | 2,912  |  
|Fixed assets                                           |  |   | 591    |  
|Other assets                                           |  |   | 660    |  
|Accounts payable                                       |  |   | (313   | )
|Accrued expenses                                       |  |   | (1,433 | )
|Deferred revenue                                       |  |   | (6,194 | )
|Acquisition restructuring charge                       |  |   | (859   | )
|Goodwill                                               |  |   | 51,155 |  
|Identifiable intangible assets                         |  |   | 6,100  |  
|Unearned compensation                                  |  |   | 895    |  
|                                                       |  |   |       
|Total purchase price                                   |  | $ | 60,974 |  
|                                                       |  |   |       



Accounting in a Business
Combination for Deferred Revenue of an Acquiree.




|                |  |            |       |  |             |        |          |              |  |   |       | 
|--------------- |  | ---------- | ----- |  | ----------- | ------ | -------- | ------------ |  | - | ----- | 
|                |  |            |       |  |             | Annual |         
|                |  | Fair Value |       |  | Useful Life |        |          | Amortization | 
|                |  |            |       |  |             |        |          |              | 
|Core technology |  | $          | 3,400 |  |             |        | 3 years  |              |  | $ | 1,133 | 
|Customer base   |  |            | 2,700 |  |             |        | 10 years |              |  |   | 270   | 
|                |  |            |       |  |             |        |          |              | 
|                |  | $          | 6,100 |  |             |        |          |              |  | $ | 1,403 | 
|                |  |            |       |  |             |        |          |              | 



65



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##### Table of Contents



STELLENT, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


(In thousands, except per share data)










|                                     |  |                       |         |   |      |   |         |  
|------------------------------------ |  | --------------------- | ------- | - | ---- | - | ------- | -
|                                     |  | Years Ended March 31, |        
|                                     |  |                       |        
|                                     |  | 2004                  |         |   | 2005 |  
|                                     |  |                       |         |   |      |  
|Net revenues                         |  | $                     | 96,967  |   |      | $ | 109,361 |  
|Net loss                             |  | $                     | (12,240 | ) |      | $ | (9,404  | )
|Net loss per share:                  |  |                       |         |   |      |   |         |  
|Basic and diluted                    |  | $                     | (0.47   | ) |      | $ | (0.35   | )
|Weighted average shares outstanding: |  |                       |         |   |      |   |         |  
|Basic and diluted                    |  |                       | 26,151  |   |      |   | 26,882  |  







|   |                           
|-- | --------------------------
|3. | Related Party Transactions





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STELLENT, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


(In thousands, except per share data)










|   |                       
|-- | ----------------------
|4. | Property and Equipment



|                              |  |           |        |   |      |   |         |  
|----------------------------- |  | --------- | ------ | - | ---- | - | ------- | -
|                              |  | March 31, |       
|                              |  |           |       
|                              |  | 2004      |        |   | 2005 |  
|                              |  |           |        |   |      |  
|Equipment and furniture       |  | $         | 12,143 |   |      | $ | 14,142  |  
|Leasehold improvements        |  |           | 1,690  |   |      |   | 1,926   |  
|                              |  |           |        |   |      |  
|                              |  |           | 13,833 |   |      |   | 16,068  |  
|Less accumulated depreciation |  |           | (9,362 | ) |      |   | (11,735 | )
|                              |  |           |        |   |      |  
|                              |  | $         | 4,471  |   |      | $ | 4,333   |  
|                              |  |           |        |   |      |  



|   |                     
|-- | --------------------
|5. | Shareholders Equity

Warrants:


Stock Repurchase:


Shareholder Rights Plan:


67



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STELLENT, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


(In thousands, except per share data)


Stock Options:




|                                 |                          |        |       |           |                |   |       |       | 
|-------------------------------- | ------------------------ | ------ | ----- | --------- | -------------- | - | ----- | ----- | 
|                                 |                          |        |       | Weighted- |               
|                                 |                          |        |       | Average   |               
|                                 |                          | Shares |       |           | Exercise Price |  
|                                 |                          |        |       |           |                |  
|Outstanding as of March 31, 2002 |                          |        | 6,411 |           |                | $ | 25.12 |      
|                                 | Granted                  |        |       | 2,469     |                |   |       | 5.52  | 
|                                 | Exercised                |        |       | (27       | )              |   |       | 3.71  | 
|                                 | Forfeited                |        |       | (4,168    | )*             |   |       | 28.25 | 
|                                 |                          |        |       |           |                |  
|Outstanding as of March 31, 2003 |                          |        | 4,685 |           |                |   | 12.13 |      
|                                 | Granted                  |        |       | 1,838     |                |   |       | 6.47  | 
|                                 | Exercised                |        |       | (274      | )              |   |       | 4.90  | 
|                                 | Forfeited                |        |       | (605      | )              |   |       | 17.49 | 
|                                 |                          |        |       |           |                |  
|Outstanding as of March 31, 2004 |                          |        | 5,644 |           |                |   | 10.06 |      
|                                 | Converted Optika options |        |       | 1,114     |                |   |       | 6.70  | 
|                                 | Granted                  |        |       | 1,513     |                |   |       | 7.20  | 
|                                 | Exercised                |        |       | (778      | )              |   |       | 4.67  | 
|                                 | Forfeited                |        |       | (807      | )              |   |       | 12.56 | 
|                                 |                          |        |       |           |                |  
|Outstanding as of March 31, 2005 |                          |        | 6,686 |           |                | $ | 9.19  |      
|                                 |                          |        |       |           |                |  

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STELLENT, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


(In thousands, except per share data)







|  |                                                                                                           
|- | ----------------------------------------------------------------------------------------------------------
|* | Includes 2,196 stock options forfeited in connection with a
    stock option exchange program (see below).



|               |                 |  |             |                     |       |                  |                     |  |                  |  |  |             |       |  |                  |  |       |  |  |   |       | 
|-------------- | --------------- |  | ----------- | ------------------- | ----- | ---------------- | ------------------- |  | ---------------- |  |  | ----------- | ----- |  | ---------------- |  | ----- |  |  | - | ----- | 
|               |                 |  |             | Options Outstanding |       |                  |                    
|               |                 |  |             |                     |       |                  | Options Exercisable | 
|               |                 |  |             | Weighted-Average    |       |                  |                     |  |                  | 
|Range of       |                 |  | Number      |                     |       | Remaining        |                     |  | Weighted-Average |  |  | Number      |       |  | Weighted-Average | 
|Exercise Price |                 |  | Outstanding |                     |       | Contractual Life |                     |  | Exercise Price   |  |  | Exercisable |       |  | Exercise Price   | 
|               |                 |  |             |                     |       |                  |                     |  |                  |  |  |             |       |  |                  | 
|               | $1.59 -  $2.99  |  |             |                     | 320   |                  |                     |  | 9.2              |  |  | $           | 2.61  |  |                  |  | 251   |  |  | $ | 2.70  | 
|               | $3.00 -  $3.99  |  |             |                     | 296   |                  |                     |  | 4.2              |  |  |             | 3.41  |  |                  |  | 252   |  |  |   | 3.39  | 
|               | $4.00 -  $4.99  |  |             |                     | 761   |                  |                     |  | 7.6              |  |  |             | 4.40  |  |                  |  | 482   |  |  |   | 4.43  | 
|               | $5.00 -  $5.99  |  |             |                     | 512   |                  |                     |  | 7.7              |  |  |             | 5.55  |  |                  |  | 406   |  |  |   | 5.55  | 
|               | $6.00 -  $6.99  |  |             |                     | 1,966 |                  |                     |  | 8.0              |  |  |             | 6.48  |  |                  |  | 761   |  |  |   | 6.35  | 
|               | $7.00 -  $7.99  |  |             |                     | 1,013 |                  |                     |  | 8.3              |  |  |             | 7.65  |  |                  |  | 335   |  |  |   | 7.77  | 
|               | $8.00 - $10.99  |  |             |                     | 575   |                  |                     |  | 8.0              |  |  |             | 8.75  |  |                  |  | 360   |  |  |   | 8.80  | 
|               | $11.00 - $16.99 |  |             |                     | 463   |                  |                     |  | 7.1              |  |  |             | 13.70 |  |                  |  | 458   |  |  |   | 13.70 | 
|               | $17.00 - $29.99 |  |             |                     | 424   |                  |                     |  | 5.8              |  |  |             | 18.93 |  |                  |  | 367   |  |  |   | 19.05 | 
|               | $30.00 - $39.99 |  |             |                     | 295   |                  |                     |  | 5.8              |  |  |             | 35.94 |  |                  |  | 295   |  |  |   | 35.95 | 
|               | $40.00 - $81.82 |  |             |                     | 61    |                  |                     |  | 6.6              |  |  |             | 47.26 |  |                  |  | 61    |  |  |   | 47.28 | 
|               |                 |  |             |                     |       |                  |                     |  |                  |  |  |             |       |  |                  | 
|               |                 |  |             |                     | 6,686 |                  |                     |  | 7.6              |  |  |             | 9.19  |  |                  |  | 4,028 |  |  |   | 10.74 | 
|               |                 |  |             |                     |       |                  |                     |  |                  |  |  |             |       |  |                  | 

Stock Option Exchange Program:


Employee Stock Purchase Plan:




|   |                       
|-- | ----------------------
|6. | Employee Benefit Plans



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STELLENT, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


(In thousands, except per share data)




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

The components of net loss per basic and diluted shares are
as follows:


|                       |                                                       |          |   |                |             |  |           |        |  |  |   |       |  
|---------------------- | ----------------------------------------------------- | -------- | - | -------------- | ----------- |  | --------- | ------ |  |  | - | ----- | -
|                       |                                                       |          |   | Weighted       |             |  |          
|                       |                                                       |          |   | Average Shares |             |  | Per Share |       
|                       |                                                       | Net Loss |   |                | Outstanding |  |           | Amount | 
|                       |                                                       |          |   |                |             |  |           |        | 
|Years Ending March 31, |                                                       |          |   |                |             |  |           |        |  |  |   |      
|2003:                  |                                                       |          |   |                |             |  |           |        |  |  |   |      
|                       | Basic                                                 |          | $ | (32,400        | )           |  |           | 22,345 |  |  | $ | (1.45 | )
|                       | Dilutive effect of employee stock option and warrants |          |   |               |             |  |           |       |  |  |   |      |  
|                       |                                                       |          |   |                |             |  |           |        | 
|                       | Diluted                                               |          | $ | (32,400        | )           |  |           | 22,345 |  |  | $ | (1.45 | )
|                       |                                                       |          |   |                |             |  |           |        | 
|2004:                  |                                                       |          |   |                |             |  |           |        |  |  |   |      
|                       | Basic                                                 |          | $ | (10,513        | )           |  |           | 22,028 |  |  | $ | (0.48 | )
|                       | Dilutive effect of employee stock option and warrants |          |   |               |             |  |           |       |  |  |   |      |  
|                       |                                                       |          |   |                |             |  |           |        | 
|                       | Diluted                                               |          | $ | (10,513        | )           |  |           | 22,028 |  |  | $ | (0.48 | )
|                       |                                                       |          |   |                |             |  |           |        | 
|2005:                  |                                                       |          |   |                |             |  |           |        |  |  |   |      
|                       | Basic                                                 |          | $ | (5,841         | )           |  |           | 26,224 |  |  | $ | (0.22 | )
|                       | Dilutive effect of employee stock option and warrants |          |   |               |             |  |           |       |  |  |   |      |  
|                       |                                                       |          |   |                |             |  |           |        | 
|                       | Diluted                                               |          | $ | (5,841         | )           |  |           | 26,224 |  |  | $ | (0.22 | )
|                       |                                                       |          |   |                |             |  |           |        | 



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STELLENT, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


(In thousands, except per share data)




|   |             
|-- | ------------
|8. | Income Taxes



|                          |                                              |                        |         |        |      |  |         |        |   | 
|------------------------- | -------------------------------------------- | ---------------------- | ------- | ------ | ---- |  | ------- | ------ | - | 
|                          |                                              | March 31,              |        
|                          |                                              |                        |        
|                          |                                              | 2004                   |         |        | 2005 | 
|                          |                                              |                        |         |        |      | 
|Deferred tax liabilities: |                                              |                        |         |        |      |  |         |       
|                          | Depreciation                                 |                        | $       | (192   | )    |  | $       | (225   | )
|                          | Other                                        |                        |         | (135   | )    |  |         | 41     |  
|Deferred tax assets:      |                                              |                        |         |        |      |  |         |       
|                          | Deferred revenue                             |                        |         | 3,534  |      |  |         | 871    |  
|                          | Accounts receivable and other reserves       |                        |         | 569    |      |  |         | 640    |  
|                          | Net operating loss carryforwards             |                        |         | 36,209 |      |  |         | 54,773 |  
|                          | Amortization of intangibles                  |                        |         | 10,886 |      |  |         | 8,071  |  
|                          | Foreign tax credits                          |                        |         | 379    |      |  |         | 309    |  
|                          | Permanent investment write-down              |                        |         | 1,667  |      |  |         | 2,006  |  
|                          | Research and development credit carryforward |                        |         | 3,167  |      |  |         | 4,612  |  
|                          |                                              |                        |         |        |      | 
|                          |                                              |                        | 56,084  |        |      |  | 71,098  |       
|Valuation allowance       |                                              |                        | (56,084 | )      |      |  | (71,098 | )     
|                          |                                              |                        |         |        |      | 
|                          |                                              | Net deferred tax asset |         | $      |     |  |         | $      |  | 
|                          |                                              |                        |         |        |      | 



|                                   |            |   |         |         | 
|---------------------------------- | ---------- | - | ------- | ------- | 
|For the year ending March 31, 2005 |            |   |         |        
|                                   | 2006       |   | $       |        | 
|                                   | 2007       |   |         |        | 
|                                   | 2008       |   |         |        | 
|                                   | 2009       |   |         |        | 
|                                   | 2010       |   |         | 344     | 
|                                   | Thereafter |   |         | 152,056 | 
|                                   |            |   |        
|                                   |            | $ | 152,400 |        
|                                   |            |   |        



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STELLENT, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


(In thousands, except per share data)






|                      |          |                                    |  |      |   |      |  |   |   |  |  |   |   | 
|--------------------- | -------- | ---------------------------------- |  | ---- | - | ---- |  | - | - |  |  | - | - | 
|                      |          | Year Ended                        
|                      |          | March 31,                         
|                      |          |                                   
|                      |          | 2003                               |  | 2004 |   | 2005
|                      |          |                                    |  |      |   |     
|Income tax provision: |          |                                    |  |      |   |      |  |   |   |  |  |  
|                      | Current: |                                    |  |      |   |      |  |   |   |  |  |   |  
|                      |          | U.S. and state                     |  | $    |  |      |  | $ |  |  |  | $ |  | 
|                      |          | Foreign                            |  |      |  |      |  |   |  |  |  |   |  | 
|                      |          |                                    |  |      |   |      |  |   |  
|                      |          | Total income tax expense (benefit) |  | $    |  |      |  | $ |  |  |  | $ |  | 
|                      |          |                                    |  |      |   |      |  |   |  





|                                 |  |                      |       |    |      |  |       |      |  |  |       |   
|-------------------------------- |  | -------------------- | ----- | -- | ---- |  | ----- | ---- |  |  | ----- | --
|                                 |  | Year Ended March 31, |      
|                                 |  |                      |      
|                                 |  | 2003                 |       |    | 2004 |  |       | 2005 | 
|                                 |  |                      |       |    |      |  |       |      | 
|Federal statutory rate           |  |                      | (34.0 | )% |      |  | (34.0 | )%   |  |  | (34.0 | )%
|Research and development credits |  |                      | (3.8  | )  |      |  | (0.1  | )    |  |  | 1.9   |   
|State taxes                      |  |                      | (7.1  | )  |      |  | (0.3  | )    |  |  | 0.4   |   
|Permanent differences            |  |                      | (0.2  | )  |      |  | (1.8  | )    |  |  | 4.0   |   
|Change in valuation allowance    |  |                      | 38.8  |    |      |  | 37.6  |      |  |  | 27.8  |   
|Other                            |  |                      | 6.3   |    |      |  | (1.4  | )    |  |  | (0.1  | ) 
|                                 |  |                      |       |    |      |  |       |      | 
|                                 |  |                      |      | %  |      |  |      | %    |  |  |      | % 
|                                 |  |                      |       |    |      |  |       |      | 



|   |                              
|-- | -----------------------------
|9. | Commitments and Contingencies

Operating and Capital Leases:


|                              |  |           |   |      |  |   |      |  
|----------------------------- |  | --------- | - | ---- |  | - | ---- | -
|                              |  | March 31, |  
|                              |  |           |  
|                              |  | 2004      |   | 2005 | 
|                              |  |           |   |      | 
|Property and equipment:       |  |           |   |      |  |   |      |  
|Equipment and furniture       |  | $         |  |      |  | $ | 819  |  
|Less accumulated depreciation |  |           |  |      |  |   | (653 | )
|                              |  |           |   |      |  |  
|                              |  | $         |  |      |  | $ | 166  |  
|                              |  |           |   |      |  |  

72



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STELLENT, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


(In thousands, except per share data)




|                                   |            |           |        |       |         |   |     |   | 
|---------------------------------- | ---------- | --------- | ------ | ----- | ------- | - | --- | - | 
|                                   |            | Operating |        |       | Capital |  
|                                   |            |           |        |       |         |  
|For the year ending March 31, 2006 |            | $         | 4,139  |       |         | $ | 170 |  
|                                   | 2007       |           |        | 2,524 |         |   |     |  | 
|                                   | 2008       |           |        | 1,011 |         |   |     |  | 
|                                   | 2009       |           |        | 1,020 |         |   |     |  | 
|                                   | 2010       |           |        | 1,040 |         |   |     |  | 
|                                   | Thereafter |           |        | 3,697 |         |   |     |  | 
|                                   |            |           |        |       |         |  
|                                   |            | $         | 13,431 |       |         | $ | 170 |  
|                                   |            |           |        |       |         |  

Software Royalties:


Legal Proceedings: In re
Stellent Securities Litigation.






|    |                      
|--- | ---------------------
|10. | Restructuring Charges

Accounting for Costs Associated with
Exit or Disposal Activities,




73



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##### Table of Contents



STELLENT, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


(In thousands, except per share data)










74



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##### Table of Contents



STELLENT, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


(In thousands, except per share data)




|                              |                    |                       |    |     |             |   |     |             |   |   |             |     |   |             |     |     |             |   |    |       |   |   |             |      |   |       |    |     |             |   |       |       |   |   |       |     |   |   |     |      |   |   |     |     |   |   |       |       |  
|----------------------------- | ------------------ | --------------------- | -- | --- | ----------- | - | --- | ----------- | - | - | ----------- | --- | - | ----------- | --- | --- | ----------- | - | -- | ----- | - | - | ----------- | ---- | - | ----- | -- | --- | ----------- | - | ----- | ----- | - | - | ----- | --- | - | - | --- | ---- | - | - | --- | --- | - | - | ----- | ----- | -
|                              |                    | Restructuring Charges |    |     |            
|                              |                    |                       |    |     |            
|                              |                    | Second                |    |     | Third       |   |     | Fourth      |   |   | First       |     |   | First       |     |     | Fourth      |   |    |      
|                              |                    | Quarter 03           |    |     | Quarter 03 |   |     | Quarter 03 |   |   | Quarter 04 |     |   | Quarter 05 |     |     | Quarter 05 |   |    |      
|                              |                    |                       |    |     |             |   |     |             |   |   |             |     |   |             |     |     |             |   |    |      
|                              |                    | Employee              |    |     | Other       |   |     | Employee    |   |   | Employee    |     |   | Other       |     |     | Employee    |   |    | Other |   |   | Employee    |      |   | Other |    |     | Employee    |   |       | Other |   |   |      
|                              |                    | Termination           |    |     | Exit        |   |     | Termination |   |   | Termination |     |   | Exit        |     |     | Termination |   |    | Exit  |   |   | Termination |      |   | Exit  |    |     | Termination |   |       | Exit  |   |   |      
|                              |                    | Benefits              |    |     | Costs       |   |     | Benefits    |   |   | Benefits    |     |   | Costs       |     |     | Benefits    |   |    | Costs |   |   | Benefits    |      |   | Costs |    |     | Benefits    |   |       | Costs |   |   | Total |    
|                              |                    |                       |    |     |             |   |     |             |   |   |             |     |   |             |     |     |             |   |    |       |   |   |             |      |   |       |    |     |             |   |       |       |   |   |       |    
|Balance at April 1, 2003      |                    | $                     | 54 |     |             | $ | 304 |             |   | $ | 33          |     |   | $           | 240 |     |             | $ | 43 |       |   | $ |            |      |   | $     |   |     |             | $ |      |       |   | $ |      |     |   | $ |    |      |   | $ |    |     |   |   | 674   |      
|                              | Expense            |                       |    |    |             |   |     |            |   |   |             |    |   |             |     |    |             |   |    |      |   |   |             | 396  |   |       |    | 56  |             |   |       |      |   |   |       |    |   |   |     |     |   |   |     |    |   |   |       | 452   |  
|                              | Payments           |                       |    | (36 | )           |   |     | (65         | ) |   |             | (33 | ) |             |     | (60 | )           |   |    | (11   | ) |   |             | (245 | ) |       |    |    |             |   |       |      |   |   |       |    |   |   |     |     |   |   |     |    |   |   |       | (450  | )
|                              | Change in estimate |                       |    |    |             |   |     | 360         |   |   |             |    |   |             |     |    |             |   |    |      |   |   |             |     |   |       |    |    |             |   |       |      |   |   |       |    |   |   |     |     |   |   |     |    |   |   |       | 360   |  
|                              |                    |                       |    |     |             |   |     |             |   |   |             |     |   |             |     |     |             |   |    |       |   |   |             |      |   |       |    |     |             |   |       |       |   |   |       |    
|Balance at June 30, 2003      |                    |                       | 18 |     |             |   | 599 |             |   |   |            |     |   |             | 180 |     |             |   | 32 |       |   |   | 151         |      |   |       | 56 |     |             |   |      |       |   |   |      |     |   |   |    |      |   |   |    |     |   |   | 1,036 |      
|                              | Payments           |                       |    | (18 | )           |   |     | (43         | ) |   |             |    |   |             |     | (60 | )           |   |    |      |   |   |             | (38  | ) |       |    | (56 | )           |   |       |      |   |   |       |    |   |   |     |     |   |   |     |    |   |   |       | (215  | )
|                              |                    |                       |    |     |             |   |     |             |   |   |             |     |   |             |     |     |             |   |    |       |   |   |             |      |   |       |    |     |             |   |       |       |   |   |       |    
|Balance at September 30, 2003 |                    |                       |   |     |             |   | 556 |             |   |   |            |     |   |             | 120 |     |             |   | 32 |       |   |   | 113         |      |   |       |   |     |             |   |      |       |   |   |      |     |   |   |    |      |   |   |    |     |   |   | 821   |      
|                              | Payments           |                       |    |    |             |   |     | (43         | ) |   |             |    |   |             |     | (60 | )           |   |    |      |   |   |             | (38  | ) |       |    |    |             |   |       |      |   |   |       |    |   |   |     |     |   |   |     |    |   |   |       | (141  | )
|                              |                    |                       |    |     |             |   |     |             |   |   |             |     |   |             |     |     |             |   |    |       |   |   |             |      |   |       |    |     |             |   |       |       |   |   |       |    
|Balance at December 31, 2003  |                    |                       |   |     |             |   | 513 |             |   |   |            |     |   |             | 60  |     |             |   | 32 |       |   |   | 75          |      |   |       |   |     |             |   |      |       |   |   |      |     |   |   |    |      |   |   |    |     |   |   | 680   |      
|                              | Payments           |                       |    |    |             |   |     | (49         | ) |   |             |    |   |             |     | (60 | )           |   |    | (32   | ) |   |             |     |   |       |    |    |             |   |       |      |   |   |       |    |   |   |     |     |   |   |     |    |   |   |       | (141  | )
|                              | Change in estimate |                       |    |    |             |   |     |            |   |   |             |    |   |             |     |    |             |   |    |      |   |   |             | (69  | ) |       |    |    |             |   |       |      |   |   |       |    |   |   |     |     |   |   |     |    |   |   |       | (69   | )
|                              |                    |                       |    |     |             |   |     |             |   |   |             |     |   |             |     |     |             |   |    |       |   |   |             |      |   |       |    |     |             |   |       |       |   |   |       |    
|Balance at March 31, 2004     |                    |                       |   |     |             |   | 464 |             |   |   |            |     |   |             |    |     |             |   |   |       |   |   | 6           |      |   |       |   |     |             |   |      |       |   |   |      |     |   |   |    |      |   |   |    |     |   |   | 470   |      
|                              | Expense            |                       |    |    |             |   |     |            |   |   |             |    |   |             |     |    |             |   |    |      |   |   |             |     |   |       |    |    |             |   |       | 1,866 |   |   |       | 595 |   |   |     |     |   |   |     |    |   |   |       | 2,461 |  
|                              | Payments           |                       |    |    |             |   |     | (48         | ) |   |             |    |   |             |     |    |             |   |    |      |   |   |             |     |   |       |    |    |             |   |       | (306  | ) |   |       |    |   |   |     |     |   |   |     |    |   |   |       | (354  | )
|                              |                    |                       |    |     |             |   |     |             |   |   |             |     |   |             |     |     |             |   |    |       |   |   |             |      |   |       |    |     |             |   |       |       |   |   |       |    
|Balance at June 30, 2004      |                    |                       |   |     |             |   | 416 |             |   |   |            |     |   |             |    |     |             |   |   |       |   |   | 6           |      |   |       |   |     |             |   | 1,560 |       |   |   | 595   |     |   |   |    |      |   |   |    |     |   |   | 2,577 |      
|                              | Payments           |                       |    |    |             |   |     | (33         | ) |   |             |    |   |             |     |    |             |   |    |      |   |   |             |     |   |       |    |    |             |   |       | (794  | ) |   |       | (81 | ) |   |     |     |   |   |     |    |   |   |       | (908  | )
|                              |                    |                       |    |     |             |   |     |             |   |   |             |     |   |             |     |     |             |   |    |       |   |   |             |      |   |       |    |     |             |   |       |       |   |   |       |    
|Balance at September 30, 2004 |                    |                       |   |     |             |   | 383 |             |   |   |            |     |   |             |    |     |             |   |   |       |   |   | 6           |      |   |       |   |     |             |   | 766   |       |   |   | 514   |     |   |   |    |      |   |   |    |     |   |   | 1,669 |      
|                              | Payments           |                       |    |    |             |   |     | (51         | ) |   |             |    |   |             |     |    |             |   |    |      |   |   |             |     |   |       |    |    |             |   |       | (391  | ) |   |       | (81 | ) |   |     |     |   |   |     |    |   |   |       | (523  | )
|                              |                    |                       |    |     |             |   |     |             |   |   |             |     |   |             |     |     |             |   |    |       |   |   |             |      |   |       |    |     |             |   |       |       |   |   |       |    
|Balance at December 31, 2004  |                    |                       |   |     |             |   | 332 |             |   |   |            |     |   |             |    |     |             |   |   |       |   |   | 6           |      |   |       |   |     |             |   | 375   |       |   |   | 433   |     |   |   |    |      |   |   |    |     |   |   | 1,146 |      
|                              | Expense            |                       |    |    |             |   |     |            |   |   |             |    |   |             |     |    |             |   |    |      |   |   |             |     |   |       |    |    |             |   |       |      |   |   |       |    |   |   |     | 990  |   |   |     | 114 |   |   |       | 1,104 |  
|                              | Payments           |                       |    |    |             |   |     | (51         | ) |   |             |    |   |             |     |    |             |   |    |      |   |   |             | (6   | ) |       |    |    |             |   |       | (36   | ) |   |       | (87 | ) |   |     | (348 | ) |   |     | (7  | ) |   |       | (535  | )
|                              | Change in estimate |                       |    |    |             |   |     |            |   |   |             |    |   |             |     |    |             |   |    |      |   |   |             |     |   |       |    |    |             |   |       | 32    |   |   |       |    |   |   |     |     |   |   |     |    |   |   |       | 32    |  
|                              |                    |                       |    |     |             |   |     |             |   |   |             |     |   |             |     |     |             |   |    |       |   |   |             |      |   |       |    |     |             |   |       |       |   |   |       |    
|Balance at March 31, 2005     |                    | $                     |   |     |             | $ | 281 |             |   | $ |            |     |   | $           |    |     |             | $ |   |       |   | $ |            |      |   | $     |   |     |             | $ | 371   |       |   | $ | 346   |     |   | $ | 642 |      |   | $ | 107 |     |   | $ | 1,747 |      
|                              |                    |                       |    |     |             |   |     |             |   |   |             |     |   |             |     |     |             |   |    |       |   |   |             |      |   |       |    |     |             |   |       |       |   |   |       |    

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##### Table of Contents



STELLENT, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


(In thousands, except per share data)




|    |                                                     
|--- | ----------------------------------------------------
|11. | Segments of Business and Geographic Area Information



|                     |               |                      |   |        |        |  |  |      |       |  |   |        |        |      |  |      |       |  |   |        |         |  |  |      |       | 
|-------------------- | ------------- | -------------------- | - | ------ | ------ |  |  | ---- | ----- |  | - | ------ | ------ | ---- |  | ---- | ----- |  | - | ------ | ------- |  |  | ---- | ----- | 
|                     |               | Year Ended March 31, |  
|                     |               |                      |  
|                     |               | 2003                 |   |        | %      |  |  | 2004 |       |  | % |        |        | 2005 |  |      | %     | 
|                     |               |                      |   |        |        |  |  |      |       |  |   |        |        |      |  |      |       | 
|Revenues:            |               |                      |   |        |        |  |  |      |       |  |   |        |        |      |  |      |       |  |   |        |         |  |  |     
|                     | United States |                      | $ | 50,676 |        |  |  | 77.4 |       |  | $ | 54,538 |        |      |  | 72.0 |       |  | $ | 77,874 |         |  |  | 72.9 |      
|                     | Europe        |                      |   | 10,964 |        |  |  | 16.8 |       |  |   | 14,649 |        |      |  | 19.3 |       |  |   | 16,261 |         |  |  | 15.2 |      
|                     | Asia Pacific  |                      |   |       |        |  |  |     |       |  |   | 489    |        |      |  | 0.7  |       |  |   | 6,157  |         |  |  | 5.8  |      
|                     | Canada        |                      |   | 1,965  |        |  |  | 3.0  |       |  |   | 4,329  |        |      |  | 5.7  |       |  |   | 3,702  |         |  |  | 3.5  |      
|                     | Other         |                      |   | 1,829  |        |  |  | 2.8  |       |  |   | 1,769  |        |      |  | 2.3  |       |  |   | 2,817  |         |  |  | 2.6  |      
|                     |               |                      |   |        |        |  |  |      |       |  |   |        |        |      |  |      |       | 
|                     |               | Total revenues       |   | $      | 65,434 |  |  |      | 100.0 |  |   | $      | 75,774 |      |  |      | 100.0 |  |   | $      | 106,811 |  |  |      | 100.0 | 
|                     |               |                      |   |        |        |  |  |      |       |  |   |        |        |      |  |      |       | 
|Identifiable assets: |               |                      |   |        |        |  |  |      |       |  |   |        |        |      |  |      |       |  |   |        |         |  |  |     
|                     | United States |                      | $ | 3,864  |        |  |  |      |       |  | $ | 3,541  |        |      |  |      |       |  | $ | 3,313  |         |  |  |      |      
|                     | Europe        |                      |   | 952    |        |  |  |      |       |  |   | 894    |        |      |  |      |       |  |   | 696    |         |  |  |      |      
|                     | Asia Pacific  |                      |   | 14     |        |  |  |      |       |  |   | 36     |        |      |  |      |       |  |   | 318    |         |  |  |      |      
|                     | Other         |                      |   |       |        |  |  |      |       |  |   |       |        |      |  |      |       |  |   | 6      |         |  |  |      |      
|                     |               |                      |   |        |        |  |  |      |       |  |   |        |        |      |  |      |       | 
|                     |               | Total                |   | $      | 4,830  |  |  |      |       |  |   | $      | 4,471  |      |  |      |       |  |   | $      | 4,333   |  |  |      |       | 
|                     |               |                      |   |        |        |  |  |      |       |  |   |        |        |      |  |      |       | 



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