##### Table of Contents



As
filed with the Securities and Exchange Commission on October 10, 2006
   SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 20-F
 o
    
    REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES
EXCHANGE ACT OF 1934
 OR
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
 For the fiscal year ended June 30, 2006
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
 For the transition period from  to
 o
    
    SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
 Commission file number: 000-30838
 InfoVista S.A.
 (Exact name of
registrant as specified in its charter)
 Not Applicable
    
    6 rue de la Terre de Feu91940 Les Ulis, France
    
    France(Translation of
registrants
    
    (Address of principal
    
    (Jurisdiction of
incorporationname into English)
    
    executive offices)
    
    or organization)
 Securities registered or to be registered pursuant to Section 12(b) of the Act:
 Title of each class:
    
    
    
    Name of each exchange on which registered:American Depositary Shares, each representing
one 
Ordinary shares, nominal value 0.54 per share
    
    
    
    NasdaqOrdinary shares,
nominal value 0.54 per share*
    
    
    
    Nasdaq
 Securities registered or to be registered pursuant to Section 12(g) of the Act:
None
 Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:
None
  
 18,343,443 common shares at June 30, 2006
 
 o þ
 o þ
 þ o
  o þ o
 o þ
 o þ
 
 *
    
    Listed, not for trading or quotation purposes, but only in connection with the registration
of the American Depositary Shares pursuant to the requirements of the Securities and Exchange
Commission.




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##### Table of Contents



TABLE OF CONTENTS
 Page No.PART I
    
    
    
    
    8Item 1.
    
    Identity of Directors, Senior Management and Advisers
    
    
    8Item 2.
    
    Offer Statistics and Expected Timetable
    
    
    8Item 3.
    
    Key Information
    
    
    83.1
    
    Selected Financial Data
    
    
    83.2
    
    Exchange Rate Information
    
    
    103.3
    
    Risk Factors
    
    
    103.3.1
    
    Risks Related to our Business
    
    
    113.3.2
    
    Risks Related to our Industry
    
    
    193.3.3
    
    Other Risks
    
    
    20Item 4.
    
    Information on the Company
    
    
    224.1
    
    General Information
    
    
    224.1.1
    
    Name and registered office
    
    
    224.1.2
    
    Legal form and applicable law
    
    
    234.1.3
    
    Date of incorporation and expiry
    
    
    234.1.4
    
    Corporate Purpose
    
    
    234.1.5
    
    Registry of Commerce and Companies
    
    
    234.1.6
    
    Consultation of legal documents
    
    
    234.1.7
    
    Fiscal year
    
    
    234.1.8
    
    Mergers & consolidations
    
    
    244.2
    
    General information concerning the Share Capital of the Company
    
    
    244.2.1
    
    Subsidiaries and unconsolidated investments as of September 11, 2006
    
    
    244.2.2
    
    Share capital information
    
    
    244.3
    
    Business Overview4.4
    
    Industry Background
    
    
    254.5
    
    Strategy
    
    
    284.6
    
    Solutions and Products
    
    
    294.7
    
    Products in Development
    
    
    304.8
    
    Services
    
    
    314.9
    
    Geographical Breakdown of Revenues and operating results
    
    
    324.10
    
    End-Users
    
    
    334.11
    
    Sales and Marketing
    
    
    34
 2




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##### Table of Contents



Page No.4.12
    
    Strategic Relationships4.13
    
    Competition4.15
    
    Intellectual Property
    
    
    364.16
    
    Insurance
    
    
    374.17
    
    Communications
    
    
    384.18
    
    Personnel  See Item 6. Directors, Senior Management and Employees
    
    
    384.19
    
    Research and Development
    
    
    384.20
    
    Facilities
    
    
    384.21
    
    Legal Proceedings
    
    
    384.22
    
    Seasonality
    
    
    394.23
    
    Raw Materials
    
    
    394.24
    
    Material Effect of Government Regulations
    
    
    394.25
    
    industrial and environmental risks
    
    
    39Item 5.
    
    Operating and Financial Review and Prospects
    
    
    405.1
    
    Overview
    
    
    405.2
    
    Recent Developments
    
    
    405.3
    
    Revenues
    
    
    405.4
    
    Cost of Revenues
    
    
    415.5
    
    Operating Expenses
    
    
    425.6
    
    Period-to-Period variability
    
    
    425.7
    
    Results of Operations
    
    
    435.8
    
    Liquidity and Capital Resources
    
    
    515.9
    
    critical accounting policies
    
    
    535.10
    
    Transition to International Financial Reporting Standards (IFRS)
    
    
    565.11
    
    Forward Looking Statements
    
    
    565.12
    
    Contractual obligationsItem 6.
    
    Directors, Senior Management and Employees
    
    
    576.1
    
    Board of Directors
    
    
    576.2
    
    Executive Officers
    
    
    636.3
    
    Corporate Governance
    
    
    646.3.1
    
    Audit Committee
    
    
    656.3.2
    
    Compensation Committee
    
    
    656.3.3
    
    Investment Committee
    
    
    666.4
    
    (reserved)
    
    
    66
 3




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##### Table of Contents



Page No.6.5
    
    Compensation of Directors and Executive Officers (Mandataires Sociaux)
    
    
    666.6
    
    Options and Warrants to subscribe / Purchase our Securities
    
    
    716.6.1
    
    Options giving the right to subscribe for new shares
    
    
    716.6.2
    
    Options giving the right to purchase existing shares
    
    
    746.6.3
    
    Warrants
    
    
    766.7
    
    Employees
    
    
    76Compensation policy
    
    
    77Profit sharing and Share purchase schemes
    
    
    78Social relations
    
    
    78Collective agreements
    
    
    786.8
    
    Share ownership
    
    
    79Item 7.
    
    Major Shareholders and Related Party Transactions
    
    
    807.1
    
    Major Shareholders as of SEPTEMBER 11, 2006
    
    
    807.2
    
    Significant Changes to shareholdings over the last three fiscal years
    
    
    817.3
    
    Related Party Transactions
    
    
    82Item 8.
    
    Financial Information
    
    
    828.1
    
    Consolidated Statements and Other Financial Information
    
    
    828.2
    
    Legal Proceedings
    
    
    828.3
    
    Dividend Policy
    
    
    828.4
    
    significant changes
    
    
    82Item 9.
    
    The Offer and Listing
    
    
    829.1
    
    Markets
    
    
    839.2
    
    Price History of the Stock
    
    
    849.3
    
    General
    
    
    869.4
    
    Euronext Paris Sa and Eurolist
    
    
    87Item 10.
    
    Additional Information
    
    
    8810.1
    
    Memorandum and Articles of Association
    
    
    8810.2
    

Shareholders Meetings and Voting Rights
    
    
    8810.2.1
    
    General
    
    
    8810.2.2
    
    General Shareholders Meetings
    
    
    8910.2.3
    
    Notice of Shareholders Meetings
    
    
    8910.2.4
    
    Attendance and Voting at Shareholders Meetings
    
    
    9010.2.5
    
    Proxies and Votes by mail
    
    
    9110.2.6
    
    Quorum
    
    
    9110.2.7
    
    Majority
    
    
    9110.3
    
    Financial Statements and Other Communications with Shareholders
    
    
    92
 4




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Page No.10.4
    
    Dividends
    
    
    9210.4.1
    
    Legal Reserve
    
    
    9210.4.2
    
    Approval of Dividends
    
    
    9210.4.3
    
    Distribution of Dividends
    
    
    9310.4.4
    
    Timing of Payment
    
    
    9310.5
    
    Changes in Share Capital
    
    
    9310.5.1
    
    Increases in Share Capital
    
    
    9310.5.2
    
    Decreases in Share Capital
    
    
    9410.5.3
    
    Share Capital Issued History
    
    
    9510.6
    
    Preemptive Subscription Rights
    
    
    9810.7
    
    Form, Holding and Transfer of Shares
    
    
    9810.7.1
    
    Form of Shares
    
    
    9810.7.2
    
    Holding of Shares
    
    
    9810.7.3
    
    Transfer of Shares
    
    
    9910.8
    
    Liquidation Rights
    
    
    9910.9
    
    Requirements for Holdings Exceeding Certain Percentages
    
    
    9910.10
    
    Purchase of Our Own Shares
    
    
    10010.11
    
    Trading in Our Own Shares
    
    
    10210.12
    
    Ownership of Shares by Non-French Persons
    
    
    10310.13
    
    Material Contracts
    
    
    10310.14
    
    Exchange Controls
    
    
    10310.15
    
    Other
    
    
    10310.16
    
    French Taxation
    
    
    10310.16.1
    
    Taxation on Sale or Disposal of Shares
    
    
    10410.16.2
    
    Taxation of Dividends
    
    
    10410.16.3
    
    Estate and Gift Tax
    
    
    10510.16.4
    
    Wealth Tax
    
    
    10510.16.5
    
    Taxation of U.S. Investors
    
    
    10510.16.6
    
    Where You Can Find More Information
    
    
    110Item 11.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    11011.1
    
    General
    
    
    11111.2
    
    Currencies
    
    
    11111.3
    
    Interest Rates
    
    
    11111.4
    
    Shares
    
    
    11111.5
    
    Liquidity Situation11.6
    
    Financial Instruments
    
    
    111Item 12.
    
    Description of Securities Other than Equity Securities
    
    
    112
 5




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Page No.PART II
    
    
    
    
    112Item 13.
    
    Defaults, Dividend Arrearages and Delinquencies
    
    
    112Item 14.
    
    Material Modifications to the Rights of Security Holders
    
    
    11214.1
    
    Material Modifications to the Rights of Security Holders
    
    
    112Part III
    
    
    
    
    112Item 15.
    
    controls and procedures
    
    
    112Item 16.
    
    [RESERVED]
    
    
    113Item 16A.
    
    Audit Committee Financial Expert
    
    
    113Item 16B.
    
    Code of ethics
    
    
    113Item 16C.
    
    Principal independent auditor fees and services
    
    
    113Item 16D.
    
    Exemptions from the Listing Standards for Audit Committees
    
    
    114Item 16E.
    
    Purchases of equity securities
    
    
    115Item 17.
    
    Financial Statements
    
    
    116Item 18.
    
    EXHIBITS
    
    
    117EX-1EX-10.1EX-10.2EX-12.1EX-12.2EX-13.1
  6




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##### Table of Contents



PART I
 
 ITEM 1.       IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
  
 ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE
  
 ITEM 3. KEY INFORMATION
 
 3.1       SELECTED FINANCIAL DATA
   
  
 7




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##### Table of Contents



Year ended June 30(In thousands, except for share and per share data)
    
    2006
    
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002$
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Consolidated Statement of Operations and
Comprehensive Income Data:RevenuesLicense revenues
    
    
    28,811
    
    
    
    22,686
    
    
    
    19,049
    
    
    
    16,076
    
    
    
    13,246
    
    
    
    18,295Service revenues
    
    
    22,765
    
    
    
    17,925
    
    
    
    15,292
    
    
    
    12,611
    
    
    
    12,276
    
    
    
    11,108Total revenues
    
    
    51,576
    
    
    
    40,611
    
    
    
    34,341
    
    
    
    28,687
    
    
    
    25,522
    
    
    
    29,403Cost of revenuesCost of licenses
    
    
    1,011
    
    
    
    796
    
    
    
    857
    
    
    
    681
    
    
    
    914
    
    
    
    954Cost of services
    
    
    9,014
    
    
    
    7,098
    
    
    
    5,917
    
    
    
    5,722
    
    
    
    6,220
    
    
    
    6,242Total cost of revenues
    
    
    10,025
    
    
    
    7,894
    
    
    
    6,774
    
    
    
    6,403
    
    
    
    7,134
    
    
    
    7,196Gross profit
    
    
    41,551
    
    
    
    32,717
    
    
    
    27,567
    
    
    
    22,284
    
    
    
    18,388
    
    
    
    22,207Operating expenses:Sales and marketing expenses
    
    
    23,025
    
    
    
    18,130
    
    
    
    15,400
    
    
    
    14,846
    
    
    
    16,537
    
    
    
    16,729Research and development expenses
    
    
    9,675
    
    
    
    7,618
    
    
    
    6,651
    
    
    
    6,081
    
    
    
    7,042
    
    
    
    7,234General and administrative expenses
    
    
    8,715
    
    
    
    6,862
    
    
    
    5,574
    
    
    
    4,346
    
    
    
    5,170
    
    
    
    7,034Restructuring costs and consulting fee
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,495
    
    
    
    1,590
    
    
    
    2,377Impairment of fixed assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    608
    
    
    
    150
    
    
    
    182Impairment charge for goodwill
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,841Amortization of acquired intangibles assets
    
    
    
    
    
    
    
    
    
    
    158
    
    
    
    380
    
    
    
    380
    
    
    
    380Total operating expenses
    
    
    41,415
    
    
    
    32,610
    
    
    
    27,783
    
    
    
    28,756
    
    
    
    30,869
    
    
    
    35,777Operating income (loss)
    
    
    136
    
    
    
    107
    
    
    
    (216
    )
    
    
    (6,472
    )
    
    
    (12,481
    )
    
    
    (13,570
    )Other
income, net
    
    
    775
    
    
    
    610
    
    
    
    376
    
    
    
    522
    
    
    
    992
    
    
    
    1,644Income (loss) before income taxes and
minority interest
    
    
    911
    
    
    
    717
    
    
    
    160
    
    
    
    (5,950
    )
    
    
    (11,489
    )
    
    
    (11,926
    )Income tax expense
    
    
    (250
    )
    
    
    (197
    )
    
    
    (36
    )
    
    
    (254
    )
    
    
    (36
    )
    
    
    (12
    )Minority interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    34Net income (loss)
    
    
    661
    
    
    
    520
    
    
    
    124
    
    
    
    (6,204
    )
    
    
    (11,525
    )
    
    
    (11,904
    )Other comprehensive (loss) income, net
of tax: Foreign currency translation
adjustments
    
    
    (338
    )
    
    
    (266
    )
    
    
    35
    
    
    
    (98
    )
    
    
    (370
    )
    
    
    (164
    )Unrealized gains (losses)
on available for sale securities
    
    
    42
    
    
    
    33
    
    
    
    63
    
    
    
    54
    
    
    
    337
    
    
    
    (487
    )Comprehensive income (loss)
    
    
    365
    
    
    
    287
    
    
    
    222
    
    
    
    (6,248
    )
    
    
    (11,558
    )
    
    
    (12,555
    )Basic net income (loss) per share
    
    
    0.03
    
    
    
    0.03
    
    
    
    0.01
    
    
    
    (0.35
    )
    
    
    (0.61
    )
    
    
    (0.60
    )Diluted net income (loss) per share
    
    
    0.03
    
    
    
    0.03
    
    
    
    0.01
    
    
    
    (0.35
    )
    
    
    (0.61
    )
    
    
    (0.60
    )Basic weighted average shares outstanding
    
    
    17,810,281
    
    
    
    17,810,281
    
    
    
    17,271,717
    
    
    
    17,778,929
    
    
    
    18,843,308
    
    
    
    19,733,253Diluted weighted average shares outstanding
    
    
    19,315,017
    
    
    
    19,315,017
    
    
    
    20,936,182
    
    
    
    17,778,929
    
    
    
    18,843,308
    
    
    
    19,733,253
 As of June 30,(In thousands, except for share and per share data)
    
    2006
    
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    
    
    
    
    
    
    
    
    
    $Consolidated Balance Sheet Data:Cash and cash equivalents
    
    
    15,283
    
    
    
    12,034
    
    
    
    8,781
    
    
    
    5,070
    
    
    
    4,779
    
    
    
    3,316Marketable securities
    
    
    33,236
    
    
    
    26,170
    
    
    
    24,965
    
    
    
    27,606
    
    
    
    38,971
    
    
    
    52,423Working capital (current assets
less current liabilities)
    
    
    44,665
    
    
    
    35,169
    
    
    
    32,007
    
    
    
    30,956
    
    
    
    39,681
    
    
    
    53,150Fixed assets, net
    
    
    2,678
    
    
    
    2,109
    
    
    
    2,200
    
    
    
    2,449
    
    
    
    3,549
    
    
    
    4,441Total assets
    
    
    72,329
    
    
    
    56,952
    
    
    
    52,229
    
    
    
    48,853
    
    
    
    58,433
    
    
    
    73,530Total current liabilities
    
    
    20,262
    
    
    
    15,954
    
    
    
    15,120
    
    
    
    12,486
    
    
    
    11,944
    
    
    
    12,851Total
long-term liabilities
    
    
    286
    
    
    
    225
    
    
    
    113
    
    
    
    113
    
    
    
    71
    
    
    
    61Stockholders equity
    
    
    51,782
    
    
    
    40,773
    
    
    
    36,996
    
    
    
    36,254
    
    
    
    46,418
    
    
    
    60,618Capital stock (1)
    
    
    126,148
    
    
    
    99,329
    
    
    
    94,896
    
    
    
    95,215
    
    
    
    94,869
    
    
    
    96,495
 
 (1)
    
    inclusive of common stock and capital in excess of par value of stock 8




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3.2 EXCHANGE RATE INFORMATION
   
  Period end rate
    
    

Average
rate
    
    
    High
    
    
    Loweuro/U.S. dollarSeptember 2006
(through September
11, 2006)
    
    
    1.29
    
    
    
    1.28
    
    
    
    1.29
    
    
    
    1.27August 2006
    
    
    1.28
    
    
    
    1.27
    
    
    
    1.28
    
    
    
    1.25July 2006
    
    
    1.27
    
    
    
    1.27
    
    
    
    1.30
    
    
    
    1.25June 2006
    
    
    1.29
    
    
    
    1.28
    
    
    
    1.29
    
    
    
    1.26May 2006
    
    
    1.25
    
    
    
    1.23
    
    
    
    1.25
    
    
    
    1.21April 2006
    
    
    1.21
    
    
    
    1.20
    
    
    
    1.22
    
    
    
    1.19March 2006
    
    
    1.19
    
    
    
    1.19
    
    
    
    1.21
    
    
    
    1.19
 Period end rate
    
    

Average
rate
    
    
    High
    
    
    LowYear ended June 30,euro/U.S. dollar2006
    
    
    1.27
    
    
    
    1.22
    
    
    
    1.29
    
    
    
    1.172005
    
    
    1.21
    
    
    
    1.27
    
    
    
    1.36
    
    
    
    1.202004
    
    
    1.22
    
    
    
    1.19
    
    
    
    1.29
    
    
    
    1.082003
    
    
    1.14
    
    
    
    1.05
    
    
    
    1.19
    
    
    
    0.962002
    
    
    1.00
    
    
    
    1.12
    
    
    
    1.19
    
    
    
    1.00
 
 
 3.3      RISK FACTORS
  9




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3.3.1 Risks Related to our Business
 Our limited operating history makes it difficult for investors to predict how our business and
our future operating results will develop
   We have incurred significant losses in the past, we cannot guarantee that we will maintain
profitability
  Our inability to acquire and
integrate other businesses, products or technologies could seriously harm our competitive
position
  We expect that our quarterly revenues and operating results will fluctuate and this could cause our
stock price to fluctuate or decline
   10




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Because we rely on the InfoVista product line and related services for the majority of our revenues
today, our failure to market them successfully or to offer other products could weaken our
competitive position and adversely affect our results of operations
   Our failure to attract new clients and gain new opportunities within different divisions of
existing clients could cause our revenues to decline
   11




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Our failure to obtain additional large clients or significant opportunities within existing large
clients could cause our revenues to decline
   Because our revenues depend on service providers, including telecommunications companies, adverse
trends in these clients markets could have a material adverse effect on our results of operations
   Our software requires the use of third-party software and our business could be seriously harmed if
we fail to obtain or embed it effectively in our software
   12




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The inability of our products to operate with the products used by our present and potential
clients could harm our revenues
   Defects in our products could harm our reputation and expose us to potential liability
   Our failure to adapt to rapid changes in technology or to develop and introduce new products or
enhancements to existing products could seriously reduce the demand for our products
    Our products have a long and variable sales cycle making it difficult to determine if and when a
sale will occur
 13




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Our failure to adequately protect our intellectual property could harm our competitive market
position
    Claims that our products infringe the proprietary rights of others could harm our sales and
increase our costs
  14




---



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
    
    cease making, licensing or using products or services that incorporate the
challenged intellectual property;
    
    obtain and pay for licenses from the holder of the infringed intellectual
property right, which licenses might not be available on acceptable terms, if at
all;
    
    redesign our products, which could be costly and force us to interrupt product
licensing and releases, or might not be feasible at a reasonable cost or at all; or
    
    refund license fees paid to us as a result of indemnification guarantees.
 Our inability to maintain and establish new relationships with strategic partners and other
indirect sales relationships could cause our revenues to decline
   Our inability to hire and retain key personnel would slow our growth
  We will be increasingly susceptible to risks associated with our international operations, which
could harm our operating results
  15




---



##### Table of Contents




    
    currency exchange rate fluctuations;
    
    longer accounts receivable payment cycles and difficulties in collecting accounts receivables;
    
    even lengthier sales cycles and increased selling expenses, including travel;
    
    difficulties and costs of staffing and managing foreign operations;
    
    reduced protection for, or our inability to secure and enforce, intellectual
property rights in some countries;
    
    potentially adverse tax consequences;
    
    the burdens of complying with a wide variety of ever changing foreign laws and
regulations; and
    
    political and economic instability.
  Our inability to acquire and integrate other businesses, products or technologies could seriously
harm our competitive position
   In the future, we may not be able to secure financing necessary to operate our business as planned
   16




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We may incur tax expenses as a result of stock options issued to French based employees
  Changes to current accounting policies could have a significant effect on our reported financial
results or the way in which we conduct our business
   We are exposed to risks from recent legislation requiring companies to evaluate internal control
over financial reporting.
   17




---



##### Table of Contents



We may decide to deregister from the SEC and delist from the NASDAQ
  We cannot be certain that our internal control over financial reporting will be effective or
sufficient in the future
   
 3.3.2 Risks Related to our Industry
 If the Service Level Management (SLM) market or the Performance Management segment in
particular, declines or fails to grow, demand for our products will be reduced
  Our competitive landscape is continuously evolving and highly intense and we may not be able to
compete effectively in such an environment
   18




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##### Table of Contents



3.3.3 Other Risks
 The price of our shares and ADSs is highly volatile and could decline significantly
 Nouveau Marché Compartment C of Eurolist by Euronext Nouveau Marché Compartment C of Eurolist by Euronext
 
    
    the operating results announced by us or the difference between results announced
by us and forecasts (published or unpublished) by analysts;
    
    the announcement of the results of competitors and other technology companies;
    
    important contracts, mergers, acquisitions, strategic partnerships or
participations involving our competitors or us; and
    
    a modification in analyst forecasts or their investment recommendations regarding
us;
  The price of our ADSs and the U.S. dollar value of any dividends will be affected by fluctuations
in the U.S. dollar/euro exchange rate
  The effects of fluctuations in international currency exchange rates could have a material adverse
impact on the results of our operations and the financial condition of our customers, our
subsidiaries and us
  19




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The effects of fluctuations in interest rates could have a material adverse impact on the results
of our operations and the financial condition of our customers, our subsidiaries and us
  Certain shareholders may not be able to exercise preemptive rights for shares underlying their ADSs
 droits préférentiels de souscription Compartment C of Eurolist by Euronext
 Holders of ADSs may be subject to additional risks related to holding ADSs rather than shares
  
    
    In the event of a dividend or other distribution, if exchange rates fluctuate during
any period of time when the depositary cannot convert a foreign currency into U.S.
dollars, the ADS holder may lose some or all of the value of the distribution. There
can be no assurances that the depositary will be able to convert any currency at a
specified exchange rate or sell any property, rights, shares or other securities at a
specified price, or that any of such transactions can be completed within a specified
time period;
    
    In order to vote at general shareholders meetings, ADS holders who are not
registered on the books of the depositary are required to transfer their ADSs for a
certain number of days before a general shareholders meeting into a blocked account
established for that purpose by the depositary. Any ADS transferred to this blocked
account will not be available for transfer during that time. ADS holders who are
registered on the books of the depositary must give instructions to the depositary not
to transfer their ADSs during this period before the general shareholders meeting. ADS
holders must therefore receive voting materials from the depositary sufficiently in
 20




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advance in
order to make these transfers or give these instructions. There can be no guarantee that
ADS holders will receive voting materials in time to instruct the depositary to vote. It
is possible that ADS holders, or persons who hold their ADSs through brokers, dealers or
other third parties, will not have the opportunity to exercise a right to vote at all;
    
    ADS holders may not receive copies of all reports from the depositary or us. They
may be required to go to the depositarys offices to inspect any reports issued; and
    
    The depositary and we may amend or terminate the deposit agreement without ADS
holders consent in a manner that could prejudice ADS holders.
 The value of the shares that we hold may fluctuate
  Passive Foreign Investment Company Status under the U.S. Internal Revenue Code
  
    
    gains realized on the disposition of shares or ADSs being treated as ordinary income
rather than capital gain;
    
    the applicability of interest charges on certain dividends and on the disposition of the shares or ADSs; and
    
    the failure of any dividends paid to qualify for the reduced rate of taxation generally
available for individual U.S. holders.
  
 ITEM
4. INFORMATION ON THE COMPANY
 
 4.1 GENERAL INFORMATION
 
 4.1.1 Name and registered office
 
 21




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4.1.2 Legal form and applicable law
 société anonyme Conseil
dadministration Code de commerce
 
 4.1.3 Date of incorporation and expiry
 société à
responsabilité limitée Méthodes Futures pour lInformatique M.F.I., société
anonyme
 
 4.1.4 Corporate Purpose
  
    
    the research, study, design, development and production of software;
    
    sale, distribution, maintenance, training, and consulting, regarding all equipment,
software or services as concerns computing, automatic or automation processes,
industrial and office automation, or telecommunication structures for companies or
institutions, public or private, whatever their area of business; and
    
    generally, all industrial, commercial, stock, property, and financial operations
that may have a direct or indirect effect on the defined purposes or contribute to
their development.
 statuts
 
 4.1.5 Registry of Commerce and Companies
  
 4.1.6 Consultation of legal documents
 statuts
 
 4.1.7 Fiscal year
  22




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4.1.8 Mergers & consolidations
  
 4.2      GENERAL INFORMATION CONCERNING THE SHARE CAPITAL OF THE COMPANY
 
 4.2.1 Subsidiaries as of September 11, 2006
 
     
 4.2.2 Share capital information
  23




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4.3 BUSINESS OVERVIEW
     
 4.4 INDUSTRY BACKGROUND
  Service Provider Market
  24




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##### Table of Contents





Consolidation among Tier One Service Providers Mergers between SBC, BellSouth and AT&T,
Sprint and Nextel, and Verizon and MCI are expected to slow the market for service
assurance and monitoring technologies as the number of buying entities is reduced.
Pressure to reduce costs and increase efficiency also compels service providers to
consolidate the multiple tools that exist within different business groups in the
organization and standardize on a platform that supports performance monitoring and
management requirements in the OSS (Operation Support System).

New Players While the Tier One Service Provider market keeps consolidating in the
U.S., cable operators worldwide (including in North America) continue their business
transformation to become full-fledged providers of IP services to both the consumer and
enterprise market. The shift to IP-based technology triggers the need for management
tools that can efficiently assure the quality of experience. Both the evolution of the
cable companies, and expansion of U.S.-based tier two and tier three service providers
should offset the consolidation among tier one service providers.

Differentiated and Highly Granular SLAs Business-to-Business service providers use Service
Level Agreements (SLA) as an effective strategy to increase customer loyalty,
differentiate their services and create new revenue opportunities. As converged IP
services become more immediate in their impact (e.g. triple play  voice, data, video)
service level measurement systems deployed by providers are shifting to the network
edge focusing on the end user impact of these services. In fact, providers must now
meet or exceed the high expectations that customers have come to expect from legacy
services that were based on dedicated packet switched technology. Stringent SLA
measurement and reporting requirements are fueling investments in IT Performance
Management. In order to meet high customer expectations, a paradigm shift in the way
traffic is being monitored and managed is underway. This major change requires a new
type of instrumentation technology known as Deep Packet Inspection providing highly
granular traffic usage and quality of experience reporting down to the end-user and the
business application.

Optimizing Network Efficiency Metro Ethernet, DSL, fiber to the home and secured IP VPN
continue to require major investments in infrastructure and associated new service
assurance tools. Increased competition and demands for new investments also mean that
greater scrutiny is being placed on maintaining capital efficiency and utilization
rates. At the same time, converged MPLS traffic with different Class of Service (CoS)
prioritizations and the deployment of new equipment introduce new degrees of complexity
in network management. Quality of Service (QoS) oriented network performance
monitoring and reporting is critical to provide operational staff proactive visibility
of service degradations to initiate problem resolution. Similarly, underutilized
network capacity needs to be identified via trend analysis and monitoring and
rebalanced to achieve targeted returns on investment.

Managed Services The search for new revenue streams among service providers and growing
comfort with remotely delivered services (e.g. remote network management) among
enterprises is fueling the growth of outsourcing and managed network-centric services
(IP Telephony, LAN, WAN, Security etc.). Managed service entities have evolved in all
types of providers including carriers, system integrators and traditional outsourcers.
That brings with it increased challenges of delivering the right quality of service and
the need for ensuring improved visibility of the health and availability of those IT
services. Portal-based customer reporting that provides enterprise customers the
visibility into how their business systems are being supported and managed is a key component of a
managed services offering. 25




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##### Table of Contents



Enterprise Market
  
    
    Service-Centric Management IT is transforming from a bottom-up resource-centric
management of infrastructure approach, where IT was a cost center to business operations
with no strategic visibility or responsibility, to a top-down service-centric management
approach, where IT is a critical component of business delivery. CIOs and their business
line organizations demand that IT be aligned with business objectives. Concurrently,
performance measures like individual resource availability are being replaced by end-user
centric service quality measurements (SQM) that reflect the actual health of business
services.
    
    IP Convergence New IP-enabled networked applications are delivering more tools and
capabilities to businesses to connect, collaborate and leverage their intellectual and
human capital worldwide. IP telephony, instant messaging and collaboration, presence
services, conferencing etc. all provide ways to cut down organizational response time and
improve effectiveness of enterprise teams while also holding down costs. However, moving
from legacy packet switched networks to new generation IP/MPLS networks also has
concomitant costs. Job roles and responsibilities, for example, when traditional trunk
telephony moves to IP Telephony, are morphing, requiring organizations to staff different
skill sets, undertake retraining, re-organize and adopt new ways of management. Again,
effective IT Performance Management of these converged and typically real-time services
(e.g. voice and video conferencing over IP networks) is proving critical to transition,
measure and manage new IT organizations.
    
    Selective Sourcing Enterprise businesses continually look for higher productivity
gains and returns at lower costs. With the evolution of new generation communication and
collaboration technologies, the costs of managing technology in-house have also multiplied.
Hence businesses are actively considering outsourcing non-core IT operations to MSPs while
core areas that make strategic sense or represent areas of key intellectual property or
efficiency continue to be sourced from in-house corporate IT organizations. This duality of
selectively farming out different IT services to MSPs based on their competencies and
in-sourcing other core tasks as a shared service is termed selective sourcing. In this
scenario, the management of multiple vendor relationships delivering multiple services that
come together to support an ultimate business service is a key driver for continued
performance and service level management growth in the Enterprise.
    
    Automation and Processes The ascendancy of service-centric management as an IT way of
life, also demands higher levels of automation and shared process adoption from IT
management products and technologies. Enterprise customers expect higher embedded
intelligence and analytics within their management tools that can aid them in proactively
identifying, troubleshooting and resolving problems to support service level delivery.
Automated processes and technologies such as auto-discovery driven services, centralized
Configuration Management Data Base (CMDB) technologies, and standardized process
frameworks like the Information Technology Infrastructure Library (ITIL) are all gaining
market acceptance as the means to make Service-centric IT management a reality.
 
 26




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##### Table of Contents



4.5 STRATEGY
  Innovate and deliver high-value solutions in our core markets:
 Strengthen our de facto standard position in the service provider market:
 Target Tier-1 and Tier-2 telecommunication service providers:
 Foster the adoption of our solutions by large enterprise customers:
 Know and serve our customers better:
 27




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##### Table of Contents



4.6
    
    SOLUTIONS AND PRODUCTS
   Solutions
 VistaInsight for Networks (for Enterprises)
 VistaInsight for Networks (for Service Providers)
 VistaInsight for IP Telephony
 VistaInsight for Servers
 28




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##### Table of Contents



VistaTroubleshooter
 VistaFoundation
  Supporting or Add-on Products
  
 4.7
    
    PRODUCTS IN DEVELOPMENT
   Internet Telephony Communications Solutions publications
  29




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4.8
    
    SERVICES
    Solution Architect & Consulting
 Solution Support: .
 Education & Certification
  30




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4.9
    
    GEOGRAPHICAL BREAKDOWN OF REVENUES AND OPERATING RESULTS
  Year ended June 30,2006
    
    
    2005
    
    
    2004(In thousands )Europe
    
    
    18,436
    
    
    
    16,550
    
    
    
    13,818Of whichLicense revenues
    
    
    9,788
    
    
    
    8,554
    
    
    
    6,886Services revenues
    
    
    8,648
    
    
    
    7,996
    
    
    
    6,932Americas
    
    
    17,389
    
    
    
    15,214
    
    
    
    12,063Of whichLicense revenues
    
    
    9,555
    
    
    
    8,874
    
    
    
    7,288Services revenues
    
    
    7,834
    
    
    
    6,340
    
    
    
    4,775Asia-Pacific
    
    
    4,786
    
    
    
    2,577
    
    
    
    2,806Of whichLicense revenues
    
    
    3,359
    
    
    
    1,621
    
    
    
    1,902Services revenues
    
    
    1,427
    
    
    
    956
    
    
    
    904Total
    
    
    40,611
    
    
    
    34,341
    
    
    
    28,687
  Year ended June 30,2006
    
    
    2005
    
    
    2004(In thousands )Europe
    
    
    18,436
    
    
    
    16,550
    
    
    
    13,818Of whichFrance
    
    
    5,758
    
    
    
    4,966
    
    
    
    3,666Germany
    
    
    3,320
    
    
    
    3,085
    
    
    
    3,035United Kingdom
    
    
    5,642
    
    
    
    5,518
    
    
    
    4,021Belgium
    
    
    49
    
    
    
    308
    
    
    
    740Spain
    
    
    3,033
    
    
    
    2,673
    
    
    
    2,356Italy
    
    
    634
    
    
    
    
    
    
    
    Americas
    
    
    17,389
    
    
    
    15,214
    
    
    
    12,063Asia-Pacific
    
    
    4,786
    
    
    
    2,577
    
    
    
    2,806Total
    
    
    40,611
    
    
    
    34,341
    
    
    
    28,687
 31




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##### Table of Contents



Year ended June 30,2006
    
    
    2005
    
    
    2004(In thousands )Europe
    
    
    (6,007
    )
    
    
    (3,097
    )
    
    
    (5,709
    )Of whichFrance
    
    
    (14,662
    )
    
    
    (10,268
    )
    
    
    (11,616
    )Germany
    
    
    1,756
    
    
    
    1,422
    
    
    
    483United Kingdom
    
    
    3,850
    
    
    
    3,743
    
    
    
    2,768Belgium
    
    
    86
    
    
    
    23
    
    
    
    772Spain
    
    
    2,416
    
    
    
    1,983
    
    
    
    1,884Italy
    
    
    547
    
    
    
    
    
    
    
    Americas
    
    
    4,393
    
    
    
    2,665
    
    
    
    (1,962
    )Asia-Pacific
    
    
    1,721
    
    
    
    216
    
    
    
    1,199Total
    
    
    107
    
    
    
    (216
    )
    
    
    (6,472
    )
 
 4.10
    
    END-USERS
   Year ended June 30,2006
    
    
    2005
    
    
    2004Client X1
    
    
    6.51%
    
    
    Client B1
    
    
    7.94%
    
    
    DISA
    
    
    8.04%Client Y1
    
    
    5.27%
    
    
    Client C1
    
    
    5.45%
    
    
    Telefonica
    
    
    6.50%Client Z1
    
    
    4.25%
    
    
    Cable & Wireless
    
    
    4.77%
    
    
    Client B1
    
    
    4.46%
 
 1
    
    For reasons of confidentiality, we cannot name
our end-users for the years ended June 30, 2006, 2005 and 2004 which are
therefore identified as Client B, C,
X, Y and Z. 32




---



##### Table of Contents



Telecommunications
    
    Financial
    
    Outsourcers and 
Consulting
    
    OtherCompanies and ISPs
    
    Institutions
    
    Firms
    
    EnterprisesAccenture Atis
    
    AXA
    
    Cap Gemini Telecom
    
    BASFBell Canada
    
    Banque de France
    
    Hitachi Information Systems
    
    British AirwaysBellSouth
    
    BNP Paribas
    
    Siemens Business Services
    
    Hoffmann-La RocheBouygues Telecom
    
    Lehman Brothers
    
    Spherion
    
    Norfolk SouthernBritish Telecom
    
    Royal Bank of Scotland
    
    T/Systems ITS
    
    RenaultCable & Wireless
    
    Wachovia
    
    
    
    ShellDeutsche TelekomFrance TélécomH3GInfonetNextel CommunicationsNippon Telegraph andTelephoneSingTelTelecom MalaysiaTelefonicaTelmexVerizonVideotron
 
 4.11
    
    SALES AND MARKETING
  Sales
  
    
    Direct sales: Our direct sales force is comprised of full-time sales professionals
and applications engineers who primarily target the telecommunications industry and
large enterprises, along with providing support to our indirect sales channels; and
    
    Indirect sales: We have contractual relationships with many types of market
participants that range from authorized reselling agreements to product OEM contracts.
We offer our resellers sales and technical training and support to help them market
their complete technology solutions. Many of these agreements permit the reseller or
integrator to purchase our software at discounts from our list prices. We also have
co-selling arrangements in which we pay third parties for their assistance in a direct
sale to an end user.
  Marketing
 33




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4.12
    
    STRATEGIC RELATIONSHIPS
    
 4.13
    
    COMPETITION
   
    
    suppliers of network and system management products including Computer
Associates, Compuware, Hewlett Packard, IBM Tivoli, Microsoft, EMC and BMC;
    
    SLM software providers active in adjacent segments, such as event
management and policy management;
 34




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##### Table of Contents




    
    application management software vendors who are expanding footprint into
IT infrastructure performance reporting;
    
    large software and hardware suppliers;
    
    systems integrators who generally provide consulting services to develop client specific applications;
    
    service suppliers who act as outsourcers of SLM services;
    
    home grown management software that is built specifically to meet unique
needs and processes of a customers infrastructure and services; and
    
    our clients internal technical organizations that produce proprietary
software addressing their specific needs.
 
 4.15
    
    INTELLECTUAL PROPERTY
  Patents
 Trademarks
  35




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##### Table of Contents



4.16
    
    INSURANCE
    
   
 36




---



##### Table of Contents



4.17
    
    COMMUNICATIONS
  
 4.18
    
    PERSONNEL
  
 4.19
    
    RESEARCH AND DEVELOPMENT
   
 
 4.20
    
    FACILITIES
  
 4.21
    
    LEGAL PROCEEDINGS
   37




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##### Table of Contents




 
 4.22
    
    SEASONALITY
  Year ended June 30,2006
    
    
    2005
    
    
    2004(In thousands)Quarter ended September 30
    
    
    9,059
    
    
    
    7,625
    
    
    
    5,858Quarter ended December 31
    
    
    9,951
    
    
    
    8,622
    
    
    
    6,898Quarter ended March 31
    
    
    10,318
    
    
    
    8,523
    
    
    
    7,886Quarter ended June 30
    
    
    11,283
    
    
    
    9,571
    
    
    
    8,045Total
    
    
    40,611
    
    
    
    34,341
    
    
    
    28,687
  
 4.23
    
    RAW MATERIALS
  
 4.24
    
    MATERIAL EFFECT OF GOVERNMENT REGULATIONS
  
 4.25
    
    INDUSTRIAL AND ENVIRONMENTAL RISKS
   38




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ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
  
 5.1
    
    OVERVIEW
  
 5.2
    
    RECENT DEVELOPMENTS
 5.2.1
    
    Purchase of 700,000 treasury shares
  
 
 5.3
    
    REVENUES
    39




---



##### Table of Contents



Year ended June 30,2006
    
    
    2005
    
    
    2004All amounts in percentagesDirect sales
    
    
    59.8
    
    
    
    59.6
    
    
    
    51.8Resellers
    
    
    31.2
    
    
    
    34.3
    
    
    
    39.3Referral partners
    
    
    5.8
    
    
    
    1.9
    
    
    
    3.8OEMs
    
    
    3.2
    
    
    
    4.2
    
    
    
    5.1Total
    
    
    100
    
    
    
    100
    
    
    
    100
  Year ended June 30,2006
    
    
    2005
    
    
    2004All amounts in percentagesEurope
    
    
    45.4
    
    
    
    48.2
    
    
    
    48.1Americas
    
    
    42.9
    
    
    
    44.3
    
    
    
    42.1Asia-Pacific
    
    
    11.7
    
    
    
    7.5
    
    
    
    9.8Total
    
    
    100
    
    
    
    100
    
    
    
    100
  
 5.4
    
    COST OF REVENUES
   40




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5.5
    
    OPERATING EXPENSES
     
 
 
 
  
    
 
 5.6
    
    PERIOD-TO-PERIOD VARIABILITY
  41




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5.7 RESULTS OF OPERATIONS
  Year ended June 30,2006
    
    
    2005
    
    
    2004
    
    
    %
    
    
    
    
    
    %
    
    
    
    
    
    %In thousandsRevenuesLicense revenues
    
    
    22,686
    
    
    
    55.9
    
    
    
    19,049
    
    
    
    55.5
    
    
    
    16,076
    
    
    
    56.0Service revenues
    
    
    17,925
    
    
    
    44.1
    
    
    
    15,292
    
    
    
    45.5
    
    
    
    12,611
    
    
    
    44.0Total revenues
    
    
    40,611
    
    
    
    100.0
    
    
    
    34,341
    
    
    
    100.0
    
    
    
    28,687
    
    
    
    100.0Cost of revenuesCost of licenses
    
    
    796
    
    
    
    2.0
    
    
    
    857
    
    
    
    2.5
    
    
    
    681
    
    
    
    2.4Cost of services
    
    
    7,098
    
    
    
    17.4
    
    
    
    5,917
    
    
    
    17.4
    
    
    
    5,722
    
    
    
    19.9Total cost of revenues
    
    
    7,894
    
    
    
    19.4
    
    
    
    6,774
    
    
    
    19.7
    
    
    
    6,403
    
    
    
    22.3Gross profit
    
    
    32,717
    
    
    
    80.6
    
    
    
    27,567
    
    
    
    80.3
    
    
    
    22,284
    
    
    
    77.7Operating expensesSales and marketing expenses
    
    
    18,130
    
    
    
    44.6
    
    
    
    15,400
    
    
    
    44.8
    
    
    
    14,846
    
    
    
    51.8Research and development expenses
    
    
    7,618
    
    
    
    18.8
    
    
    
    6,651
    
    
    
    19.4
    
    
    
    6,081
    
    
    
    21.2General and administrative expenses
    
    
    6,862
    
    
    
    16.9
    
    
    
    5,574
    
    
    
    16.2
    
    
    
    4,346
    
    
    
    15.1Restructuring costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,495
    
    
    
    8.7Impairment of fixed assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    608
    
    
    
    2.1Amortization of acquired intangibles
    
    
    
    
    
    
    
    
    
    
    158
    
    
    
    0.5
    
    
    
    380
    
    
    
    1.3Total operating expenses
    
    
    32,610
    
    
    
    80.3
    
    
    
    27,783
    
    
    
    80.9
    
    
    
    28,756
    
    
    
    100.2Operating income (loss)
    
    
    107
    
    
    
    0.3
    
    
    
    (216
    )
    
    
    (0.6
    )
    
    
    (6,472
    )
    
    
    (22.6
    )Other income (expense):Financial income
    
    
    701
    
    
    
    1.7
    
    
    
    422
    
    
    
    1.3
    
    
    
    631
    
    
    
    2.2Net foreign currency transaction losses
    
    
    (91
    )
    
    
    (0.2
    )
    
    
    (46
    )
    
    
    (0.1
    )
    
    
    (109
    )
    
    
    (0.4
    )Income (Loss) before income taxes
    
    
    717
    
    
    
    1.8
    
    
    
    160
    
    
    
    0.5
    
    
    
    (5,950
    )
    
    
    (20.7
    )Income tax expense
    
    
    (197
    )
    
    
    (0.5
    )
    
    
    (36
    )
    
    
    (0.1
    )
    
    
    (254
    )
    
    
    (0.9
    )Net income (loss)
    
    
    520
    
    
    
    1.3
    
    
    
    124
    
    
    
    0.4
    
    
    
    (6,204
    )
    
    
    (21.6
    )
 42




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##### Table of Contents



Total Revenues
  Year ended June 30,2006
    
    2005
    
    2004All amounts in percentagesLicense gross margin(License gross profit as % of license revenues)
    
    
    96.5
    
    
    
    95.5
    
    
    
    95.8Service gross margin(Service gross profit as % of service revenues)
    
    
    60.4
    
    
    
    61.1
    
    
    
    54.6
 Years Ended June 30, 2006, 2005 and 2004
     
 43




---



##### Table of Contents



Total Revenues
  Year ended June 30,2006
    
    
    2005
    
    
    2004In thousandsEurope
    
    
    18,436
    
    
    
    16,550
    
    
    
    13,818Americas
    
    
    17,389
    
    
    
    15,214
    
    
    
    12,063Asia-Pacific
    
    
    4,786
    
    
    
    2,577
    
    
    
    2,806Total Revenues
    
    
    40,611
    
    
    
    34,341
    
    
    
    28,687
  
   .
 
 44




---



##### Table of Contents



License Revenues
 Year ended June 30,2006
    
    
    2005
    
    
    2004% of
    
    
    
    
    
    
    % of
    
    
    
    
    
    
    % oftotal
    
    
    
    
    
    
    total
    
    
    
    
    
    
    total
    
    
    revenues
    
    
    
    
    
    revenues
    
    
    
    
    
    revenuesIn thousandsLicense revenues
    
    
    22,686
    
    
    
    55.9
    
    
    
    19,049
    
    
    
    55.5
    
    
    
    16,076
    
    
    
    56.0
 
  Service Revenues
 Year ended June 30,2006
    
    
    2005
    
    
    2004% of
    
    
    
    
    
    
    % of
    
    
    
    
    
    
    % oftotal
    
    
    
    
    
    
    total
    
    
    
    
    
    
    total
    
    
    revenues
    
    
    
    
    
    revenues
    
    
    
    
    
    revenuesIn thousandsService revenues
    
    
    17,925
    
    
    
    44.1
    
    
    
    15,292
    
    
    
    44.5
    
    
    
    12,611
    
    
    
    44.0
  45




---



##### Table of Contents



Cost of Revenues
 Year ended June 30,2006
    
    
    2005
    
    
    2004% of
    
    
    
    
    
    
    % of
    
    
    
    
    
    
    % oftotal
    
    
    
    
    
    
    total
    
    
    
    
    
    
    total
    
    
    revenues
    
    
    
    
    
    revenues
    
    
    
    
    
    revenuesIn thousandsCost of licenses
    
    
    796
    
    
    
    2.0
    
    
    
    857
    
    
    
    2.5
    
    
    
    681
    
    
    
    2.4Cost of services
    
    
    7,098
    
    
    
    17.4
    
    
    
    5,917
    
    
    
    17.4
    
    
    
    5,722
    
    
    
    19.9Total cost of revenues
    
    
    7,894
    
    
    
    19.4
    
    
    
    6,774
    
    
    
    19.7
    
    
    
    6,403
    
    
    
    22.3
    
 Sales and Marketing Expenses
 Year ended June 30,2006
    
    
    2005
    
    
    2004% of
    
    
    
    
    
    
    % of
    
    
    
    
    
    
    % oftotal
    
    
    
    
    
    
    total
    
    
    
    
    
    
    total
    
    
    revenues
    
    
    
    
    
    revenues
    
    
    
    
    
    revenuesIn thousandsSales and marketing expenses
    
    
    18,130
    
    
    
    44.6
    
    
    
    15,400
    
    
    
    44.8
    
    
    
    14,846
    
    
    
    51.8
 46




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##### Table of Contents



   
    
 Research and Development Expenses
 Year ended June 30,2006
    
    
    2005
    
    
    2004% of
    
    
    
    
    
    
    % of
    
    
    
    
    
    
    % oftotal
    
    
    
    
    
    
    total
    
    
    
    
    
    
    total
    
    
    revenues
    
    
    
    
    
    revenues
    
    
    
    
    
    revenuesIn thousandsResearch and development expenses
    
    
    7,618
    
    
    
    18.8
    
    
    
    6,651
    
    
    
    19.4
    
    
    
    6,081
    
    
    
    21.2
 
 General and Administrative Expenses
 Year ended June 30,2006
    
    
    2005
    
    
    2004% of
    
    
    
    
    
    
    % of
    
    
    
    
    
    
    % oftotal
    
    
    
    
    
    
    total
    
    
    
    
    
    
    total
    
    
    revenues
    
    
    
    
    
    revenues
    
    
    
    
    
    revenuesIn thousandGeneral and administrative expenses
    
    
    6,862
    
    
    
    16.9
    
    
    
    5,574
    
    
    
    16.2
    
    
    
    4,346
    
    
    
    15.1
    
 
 47




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##### Table of Contents



Restructuring Charges
 Year ended June 30,2006
    
    
    2005
    
    
    2004% of
    
    
    
    
    
    
    % of
    
    
    
    
    
    
    % oftotal
    
    
    
    
    
    
    total
    
    
    
    
    
    
    total
    
    
    revenues
    
    
    
    
    
    revenues
    
    
    
    
    
    revenuesIn thousandsRestructuring costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,495
    
    
    
    8.7
  Impairment of Fixed Assets
 Year ended June 30,2006
    
    
    2005
    
    
    2004% of
    
    
    
    
    
    
    % of
    
    
    
    
    
    
    % oftotal
    
    
    
    
    
    
    total
    
    
    
    
    
    
    total
    
    
    revenues
    
    
    
    
    revenues
    
    
    
    revenuesIn thousandsImpairment of fixed assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    608
    
    
    
    2.1
  Amortization of Acquired Intangible Assets
 Year ended June 30,2006
    
    
    2005
    
    
    2004% of
    
    
    
    
    
    
    % of
    
    
    
    
    
    
    % oftotal
    
    
    
    
    
    
    total
    
    
    
    
    
    
    total
    
    
    revenues
    
    
    
    
    
    revenues
    
    
    
    
    
    revenuesIn thousandsAmortization of acquired intangibles
    
    
    
    
    
    
    
    
    
    
    158
    
    
    
    0.5
    
    
    
    380
    
    
    
    1.3
 48




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##### Table of Contents



Other Income
 Year ended June 30,2006
    
    
    2005
    
    
    2004% of
    
    
    
    
    
    
    % of
    
    
    
    
    
    
    % oftotal
    
    
    
    
    
    
    total
    
    
    
    
    
    
    total
    
    
    revenues
    
    
    
    
    
    revenues
    
    
    
    
    
    revenuesIn thousandsFinancial income
    
    
    701
    
    
    
    1.7
    
    
    
    422
    
    
    
    1.3
    
    
    
    631
    
    
    
    2.2Net foreign currency transaction losses
    
    
    (91
    )
    
    
    (0.2
    )
    
    
    (46
    )
    
    
    (0.1
    )
    
    
    (109
    )
    
    
    (0.4
    )Other income
    
    
    610
    
    
    
    1.5
    
    
    
    376
    
    
    
    1.2
    
    
    
    522
    
    
    
    1.8
  Income Tax Expense
 Year ended June 30,2006
    
    
    2005
    
    
    2004% of
    
    
    
    
    
    
    % of
    
    
    
    
    
    
    % oftotal
    
    
    
    
    
    
    total
    
    
    
    
    
    
    total
    
    
    revenues
    
    
    
    
    
    revenues
    
    
    
    
    
    revenuesIn thousandsIncome tax expense
    
    
    (197
    )
    
    
    (0.5
    )
    
    
    (36
    )
    
    
    (0.1
    )
    
    
    (254
    )
    
    
    (0.9
    )
 
 49




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##### Table of Contents



Impact of Changes in Exchange Rates
  
   
 Impact of Inflation
  
 5.8 LIQUIDITY AND CAPITAL RESOURCES
 Liquidity
                    
 Days Sales Outstanding
  50




---



##### Table of Contents



Cash flow
           
           
      
 Income taxes
   
 
 51




---



##### Table of Contents



Future liquidity
  
 5.9 CRITICAL ACCOUNTING POLICIES
  Revenue recognition
      52




---



##### Table of Contents



Trade receivables
   Foreign currency translation
   53




---



##### Table of Contents



 
 Income taxes
      54




---



##### Table of Contents



5.10 TRANSITION TO INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS)
  
 5.11 FORWARD LOOKING STATEMENTS
  
    
    the risks and uncertainties encountered by emerging companies in rapidly evolving
markets, particularly companies in the competitive software industry;
    
    the assumption that market acceptance of our products will increase or remain at
current levels;
    
    the assumption that we shall implement and continue to develop fruitful strategic
partnerships;
    
    the risk that the telecommunications market will continue to be unstable;
    
    the assumption that we will continue to obtain third-party software licenses on
commercially reasonable terms;
    
    the risk that we may fail to develop new technologies, or to develop and deploy new
product releases or enhanced products on a timely basis;
    
    the risk that we may fail to adequately protect our intellectual property or
trademarks; and
    
    the assumption that no new accounting pronouncements or interpretation of current
pronouncements will modify our current accounting policies.
  Forward Looking Discussion of Available Trend Information
  55




---



##### Table of Contents




 Société Française des Analystes Financiers
 
 5.12 CONTRACTUAL OBLIGATIONS
  
 Payments due by periodTotal
    
    

Less
than1 year
    
    

1
to 3years
    
    

3 to 5 years
    
    

More
than5
years(In thousands)Long-term debt obligations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Capital finance lease
obligations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Operating lease obligations
    
    
    3,523
    
    
    
    1,405
    
    
    
    2,113
    
    
    
    5
    
    
    
    Purchase obligations
    
    
    604
    
    
    
    604
    
    
    
    
    
    
    
    
    
    
    
    Other long term liabilities
    
    
    225
    
    
    
    
    
    
    
    87
    
    
    
    
    
    
    
    138
    4,352
    
    
    
    2,009
    
    
    
    2,200
    
    
    
    5
    
    
    
    138
 
  
 ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
 société anonyme Président du Conseil dadministration statuts) Directeur Général statuts
 
 6.1 BOARD OF DIRECTORS
 Rapport
Bouton statuts
 56




---



##### Table of Contents



statuts
     jetons de
présence jetons de présence
 jetons de présence
  statuts Directeurs Généraux Délégués). Directeurs Généraux Délégués statuts Directeur Général
Délégué Directeur Général Délégué
 57




---



##### Table of Contents



Directeur Général Délégué Directeur Général Délégué
 statuts statuts, statuts
  statuts
 Code de commerce Directeur Général Directeurs Généraux
Délégués
 Code de commerce Directeur Général Directeurs Généraux Délégués
 58




---



##### Table of Contents



Directeur Généraux Délégués,
 sociétés anonymes statuts
 statuts th Directeur Général Directeur Général Délégué th
  59




---



##### Table of Contents



Term
    
    
    
    
    
    Other mandatesName
    
    Date of first
    
    expiry
    
    Current title with
    
    Main occupation
    
    expired during the
    
    Other positions or(Year of birth)
    

appointment
    
    date(1)
    
    InfoVista
    
    outside InfoVista
    
    last five years
    
    employmentAlain Tingaud (1954)
    
    
    1995
    
    
    Dec. 2006
    
    Chairman and
Director
    
    -     Managing Director
of Alain Tingaud
Innovations (ATI)
EURL
    
    -     Director of
Mediapps S.A.,
Château-On-Line
S.A., Clariteam
S.A.
    
    -     Director and
Chairman of
InfoVista
Corporation,
Director of
InfoVista UK Ltd and
InfoVista
(Asia-Pacific) Pte
Ltd-     Director of SUA-LG
SA, RCME SA, MANEOS
ltd, RealViz S.A.,
Ecensity Corp.Jean-Paul 
Bernardini (1962)
    
    
    1998
    
    
    Dec. 2006
    
    Director (and
member of Audit
Committee and
Compensation
Committee)
    
    -     Chairman of the
board, Natexis
Investissement
    
    
    
    -     Chairman of
Financière CBM
-     Chairman of the
Advisory committee
(comite de
surveillance),
AerocanPatrick Leleu (1955)
    
    
    2006
    (2)
    
    Dec. 2006
    
    Director (and
member of the
Compensation
Committee)
    
    -     Directeur Général
Déléguéof Netsize
SA
    
    -     Chairman and CEO
of Noos
    
    -     Director of Filao
SAHerbert May (1949)
    
    
    2000
    
    
    Dec. 2006
    
    Director (and
member of the Audit
Committee,
Compensation
Committee, and
Investment
Committee)
    
    -     Management
Consultant in
Strategy,
Marketing,
Multimedia
Telecommunications,
and Information
Technology
    
    -     Director of
Mediapps, Inventel,
O3SIS, Net-linx
    
    -     Director of
In-Fusio, Versant,
Gate5, Kewego
-     Managing Director
of Explora GmBHPhilippe Ozanian
(1963)
    
    
    2004
    
    
    Dec. 2006
    
    Director, Directeur
Général Déléguéand
CFO
    
    
    
    -     Director of
InfoVista BNL
    
    -     Director of
InfoVista
Corporation,
InfoVista UK Ltd,
InfoVista SRL,
InfoVista GmbH, and
InfoVista
(Asia-Pacific) Pte
Ltd.Hubert Tardieu
(1945)
    
    
    1998
    
    
    Dec. 2006
    
    Director (and
member of the
Investment
Committee)
    
    -     Executive
Vice-President
Consulting &
Systems Integration
at Atos OriginGad Tobaly (1963)
    
    
    2004
    
    
    Dec. 2006
    
    Director and CEO
    
    
    
    
    
    -     Director and CEO
of InfoVista
Corporation-     Director of
InfoVista SRLPhilippe Vassor
(1953)
    
    
    2005
    
    

    Dec. 2006
    
    Director (and
member of the Audit
Committee and
Investment
Committee)
    
    -     Chairman of
Baignas SAS
    
    -     Chairman of the
Deloitte Group in
France
    
    -     Director of
Groupama S.A and
Arkema.
 
 (1)
    
    Extension of the terms of office of the directors will be proposed
during the next general shareholders meeting called to approve our financial
statements for the year ended June 30, 2006.(2)
    
    Mr. Leleu has been appointed by the board of directors on March 15, 2006, to
replace Mr. Guy Dubois, who had resigned. The appointment of Mr. Leleu and the renewal of his
mandate will be submitted to the approval of the shareholders at the annual shareholders
meeting to be held on December 2006. 60




---



##### Table of Contents



Directors Business Activities
 Alain Tingaud
  Jean-Paul Bernardini
  Patrick Leleu Directeur Général Délégué
  Herbert May
  Philippe Ozanian is Directeur Général Délégué
 61




---



##### Table of Contents



Hubert Tardieu 
  Gad Tobaly is Directeur Général)
 Philippe Vassor
  (mandataires)
  
    
    convicted of fraud in the past five years,
    
    declared bankrupt, had their property impounded or liquidated in the past five years, or
    
    the subject of an official accusation and/or penalty delivered by legal or
regulatory authorities in the past five years.
   
 6.2 EXECUTIVE OFFICERS
  62




---



##### Table of Contents



InitiallyName (Year of birth)
    
    appointed
    
    
    Current position with InfoVistaGad Tobaly (1963)
    
    
    2004
    
    
    Directeur GénéralChief Executive OfficerPhilippe Ozanian (1963)
    
    
    2000
    
    
    Directeur Général
DéléguéChief Financial OfficerExecutive Vice-PresidentManuel Stopnicki (1963)
    
    
    1995
    
    
    Chief Technical OfficerExecutive Vice-President
  Executive Officers Biographies
 Gad Tobaly Directeur Général
 Philippe Ozanian Directeur Général Délégué
 Manuel Stopnicki Ecole Supérieure dInformatique
  
 6.3 CORPORATE GOVERNANCE
   63




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##### Table of Contents



6.3.1 Audit Committee
   
    
    Annual, semi-annual, and quarterly reporting of our statutory and consolidated accounts;
    
    Independent statutory auditors reports;
    
    Financial audit results of our independent auditors;
    
    Evaluation of managements implementation of accounting methods and policies;
    
    Internal control procedures and analysis of financial risks; and
    
    Any other associated accounting or finance subjects or topics;
 mandataires sociaux
   
 6.3.2 Compensation Committee
   
    
    Ensure fair compensation for our executive officers;
    
    Ensure proper establishment of the variable compensation in line with our objectives
and market conditions;
 64




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##### Table of Contents




    
    Ensure proper balance between the fixed and variable compensation of our executive
officers, making certain that their variable salaries are based on clearly defined
objectives that are aligned with the strategies as set forth by our board of directors;
    
    Review stock options to be granted to executive officers and employees along with
the establishment of their terms and conditions;
    
    Review warrants to be issued to our board directors and their applicable terms and
conditions;
    
    Review our fixed and variable salary policies and ensure that it is consistent with
our objectives; and
    
    Implement innovating ideas to compensate and retain our key officers and employees.
  
 6.3.3 Investment Committee
    
 6.4 (RESERVED)
 
 6.5 COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS (MANDATAIRES SOCIAUX)
 jetons de presence 
 
 65




---



##### Table of Contents



mandataires sociaux
 Fees Paid for
    
    
    Fees Paid forGross Compensation
    
    
    
    
    
    
    Services Rendered
    
    
    Services Rendered(Including variable
    
    
    
    
    
    
    During Fiscal
    
    
    During FiscalComponent)
    
    
    Other Benefits
    
    

Year 2006
    
    

Year 2005
    
    
    Total PaymentsMr. Tingaud
    
    
    467,603 (251 655
    )
    
    
    11,186
    
    
    
    
    
    
    
    
    
    
    
    478,789Mr. Stopnicki
    
    
    296,568 (53,980
    )
    
    
    231
    
    
    
    
    
    
    
    
    
    
    
    296,799Mr. Tobaly
    
    
    544,709 (255 453
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    544,709Mr. Ozanian
    
    
    424,926 (140 092
    )
    
    
    71,063
    
    
    
    
    
    
    
    
    
    
    
    495,989Mr. Bernardini
    
    
    
    
    
    
    
    
    
    
    20,565
    
    
    
    6,325
    
    
    
    26,890Mr. May
    
    
    
    
    
    
    
    
    
    
    20,303
    
    
    
    6,075
    
    
    
    26,378Mr. Dubois
    
    
    
    
    
    
    
    
    
    
    14,126
    
    
    
    5,825
    
    
    
    19,951Mr. Tardieu
    
    
    
    
    
    
    
    
    
    
    18,878
    
    
    
    5,825
    
    
    
    24,703Mr. Waal
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,075
    
    
    
    6,075Mr. Vassor
    
    
    
    
    
    
    
    
    
    
    18,878
    
    
    
    
    
    
    
    18,878Mr. Leleu
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0TOTAL
    
    
    1,733,806 (701,180)
    
    
    
    82,480
    
    
    
    92,750
    
    
    
    30,125
    
    
    
    1,939,161
 mandataires sociaux
 Fees Paid for
    
    
    Fees Paid forGross Compensation
    
    
    
    
    
    
    Services Rendered
    
    
    Services Rendered(Including variable
    
    
    
    
    
    
    During Fiscal
    
    
    During FiscalComponent)
    
    
    Other Benefits
    
    

Year 2006
    
    

Year 2005
    
    
    Total PaymentsMr. Tingaud
    
    
    333,570 (124,318
    )
    
    
    23,170
    
    
    
    
    
    
    
    
    
    
    
    356,740Mr. Tobaly
    
    
    437,274 (221,558
    )
    
    
    19,258
    
    
    
    
    
    
    
    
    
    
    
    456,532Mr. Ozanian
    
    
    300,809 (81,945
    )
    
    
    87,968
    
    
    
    
    
    
    
    
    
    
    
    388,777Mr. Bernardini
    
    
    
    
    
    
    
    
    
    
    13,409
    
    
    
    
    
    
    
    13,409Mr. May
    
    
    
    
    
    
    
    
    
    
    13,267
    
    
    
    4,267
    
    
    
    17,534Mr. Guy Dubois
    
    
    
    
    
    
    
    
    
    
    10,588
    
    
    
    3,516
    
    
    
    14,104Mr. Tardieu
    
    
    
    
    
    
    
    
    
    
    10,588
    
    
    
    3,767
    
    
    
    14,355Mr. Peter Waal
    
    
    
    
    
    
    
    
    
    
    13,086
    
    
    
    3,450
    
    
    
    16,536TOTAL
    
    
    1,071,653 (427,821)
    
    
    
    130,396
    
    
    
    60,938
    
    
    
    15,000
    
    
    
    1,277,987
 
  
  66




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##### Table of Contents



Shares (directlyOptions(1)
    
    
    Warrants(1)
    
    

or indirectly)Mr. Tingaud
    
    
    130,755
    
    
    
    0
    
    
    
    841,490Mr. Bernardini
    
    
    0
    
    
    
    0
    
    
    
    10,000Mr. Leleu
    
    
    0
    
    
    
    0
    
    
    
    1Mr. May
    
    
    0
    
    
    
    0
    
    
    
    1Mr. Ozanian
    
    
    158,727
    
    
    
    0
    
    
    
    533Mr. Tardieu
    
    
    0
    
    
    
    0
    
    
    
    1,250Mr. Tobaly
    
    
    600,000
    
    
    
    0
    
    
    
    1Mr. Vassor
    
    
    0
    
    
    
    0
    
    
    
    200Mr. Stopnicki
    
    
    88,546
    
    
    
    0
    
    
    
    0Total
    
    
    978,028
    (2)
    
    
    0
    
    
    
    853,476
 
 (1)
    
    Number of issuable shares.(2)
    
    The exercise price of these stock options varies between 1.52 and 5.11.
They will expire between April 9, 2007 and August 8, 2015. 67




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##### Table of Contents



mandataire social
 Total number of stock
options grantedName of the
    
    during fiscal year 2006
    
    Exercise price per
    
    Expiration date ofMandataire Social
    
    total
    
    per date of grant
    
    share
    
    the stock optionsGad Tobaly
    
    
    150,000
    
    
    150,000(Board Aug. 08, 2005)
    
    5.11
    
    Aug. 08, 2015
  Total number of stock
options grantedduring fiscal year 2006
    
    Exercise price
    
    
    Expiration date ofName of the 10 employees
    
    total
    
    

per
date of grant
    
    per share
    
    

the  stock optionsRoland Rodriguez
    
    
    40,000
    
    
    40,000 (Board 08/08/2005)
    
    

    5.11
    
    
    
    08/08/2015Joseph Quigg
    
    
    15,000
    
    
    15,000 (Board 08/08/2005)
    
    

    5.11
    
    
    
    08/08/2015Beth Ruck
    
    
    10,000
    
    
    10,000 (Board 03/15/2006)
    
    

    6.70
    
    
    
    03/15/2016Louise Maitland
    
    
    7,000
    
    
    7,000 (Board 08/08/2005)
    
    

    5.11
    
    
    
    08/08/2015Eric Braun
    
    
    2,500
    
    
    2,500 (Board 09/09/2005)
    
    

    5.00
    
    
    
    09/09/2015David Moton
    
    
    2,500
    
    
    2,500 (Board 09/09/2005)
    
    

    5.00
    
    
    
    09/09/2015Michael Johnson
    
    
    2,500
    
    
    2,500 (Board 09/09/2005)
    
    

    5.00
    
    
    
    09/09/2015Hemal Wadhia
    
    
    2,500
    
    
    2,500 (Board 09/09/2005)
    
    

    5.00
    
    
    
    09/09/2015Bill Busler
    
    
    2,500
    
    
    2,500(Board 09/09/2005)
    
    
    5.00
    
    
    
    09/09/2015Mike Unruh
    
    
    2,500
    
    
    2,500(Board 3/15/2006)
    
    

    6.70
    
    
    
    3/15/2016
 68




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##### Table of Contents



Total number of options exercisedduring
fiscal year 2006
    
    Exercise PriceName of the 10 employees
    
    total
    
    
    per date of grant
    
    (in euros)50,000 (Board 09/04/1999)
    
    
    1.7712,500 (Board 09/07/1999)
    
    
    1.7712,500 (Board 28/01/2000)
    
    
    4.88Manuel Stopnicki
    
    
    173,545
    
    
    20,000 (Board 13/05/2002)
    
    
    2.8015,000 (Board 08/08/2002)
    
    
    1.8437,500 (Board 10/02/2003)
    
    
    1.5226,045 (Board 19/08/2003)
    
    
    2.1537,500 (Board 10/02/2003)
    
    
    1.52Jack Allen
    
    
    65,000
    
    
    22,500 (Board 19/08/2003)
    
    
    2.155,000 (Board 17/08/2004)
    
    
    3.429,300 (Board 13/05/2002)
    
    
    2.80Patrick Villeneuve
    
    
    25,425
    
    
    15,000 (Board 08/08/2002)
    
    
    1.841,125 (Board 19/08/2003)
    
    
    2.15Serge Adda
    
    
    25,000
    
    
    25,000 (Board 09/04/1999)
    
    
    1.775,000 (Board 08/08/2002)
    
    
    1.84Santiago Salvador
    
    
    20,000
    
    
    5,000 (Board 10/02/2003)
    
    
    1.529,000 (Board 19/08/2003)
    
    
    2.151,000 (Board 17/08/2004)
    
    
    3.421,800 (Board 13/05/2002)
    
    
    2.80Guillaume Le Mener
    
    
    16,800
    
    
    5,000 (Board 08/08/2002)
    
    
    1.844,000 (Board 10/02/2003)
    
    
    1.526,000 (Board 19/08/2003)
    
    
    2.152,500 (Board 09/07/1999)
    
    
    1.77Bernard Henry
    
    
    14,800
    
    
    2,500 (Board 28/10/1999)
    
    
    3.059,800 (Board 13/05/2002)
    
    
    2.803,500 (Board 13/05/2002)
    
    
    2.80Mark Davis
    
    
    13,500
    
    
    5,000 (Board 10/02/2003)
    
    
    1.523,750 (Board 19/08/2003)
    
    
    2.151,250 (Board 17/08/2004)
    
    
    3.427,000 (Board 13/05/2002)
    
    
    2.80Dennis Kelly
    
    
    12,500
    
    
    4,000 (Board 08/08/2002)
    
    
    1.84500 (Board 19/08/2003)
    
    
    2.151,000 (Board 17/08/2004)
    
    
    3.42Eric Braun
    
    
    12,500
    
    
    12,500 (Board 28/10/1999)
    
    
    3.05TOTAL
    
    
    379,070
 69




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##### Table of Contents



6.6 OPTIONS AND WARRANTS TO SUBSCRIBE / PURCHASE OUR SECURITIES
 
 6.6.1 Options giving the right to subscribe for new shares
  Authorization information
   Number ofDate of shareholders
    
    Date of expiry of
    
    issuable sharesName of Plan
    
    authorization
    
    authorization
    
    authorized(1)1999 Plan(2)
    
    April 9, 1999
    
    April 9, 2004
    
    
    1,126,0002000 Plan(2)
    
    December 9, 1999
    
    December 9, 2004
    
    
    250,000May 11, 2000
    
    December 9, 2004
    
    
    500,0002001 Plan(3)
    
    December 18, 2000
    
    December 18, 2005
    
    
    2,000,000
 
 (1)
    
    When a stock option holder ceases to be an employee, his/her
un-exercised stock options revert to us and may be re-issued, subject to the
authorization period.(2)
    
    The authorizations to grant options for Plans 1999, 2000 and 2001
have expired but options granted before the expiration of the authorization are still
exercisable.(3)
    
    The 2001 Plan as modified was ratified by the general shareholders
meeting of December 13, 2001. Vesting information
 1 2
 70




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##### Table of Contents



Grant information
 as adjusted for the reverse stock split of May 25, 2000).
 Period during which stock
    
    Exercise Priceoption-holder may
    
    per stock
    
    
    No. ofGrant dates
    
    exercise stock options
    

option
in (1)
    
    

issuable shares1999 PlanApril 9, 1999
    
    April 2000 - April 2007
    
    
    1.77
    
    
    
    192,312July 9, 1999
    
    July 2000 - July 2007
    
    
    1.77
    
    
    
    32,450October 28, 1999
    
    October 2000 - October 2007
    
    
    3.05
    
    
    
    24,375January 28, 2000
    
    January 2001 - January 2008
    
    
    4.88
    
    
    
    38,750March 31, 2000
    
    March 2001 - March 2008
    
    
    12.20
    
    
    
    5,000August 19, 2003
    
    August, 2004 - August, 2011
    
    
    2.15
    
    
    
    52,875February 16, 2004
    
    February 2005 - February 2012
    
    
    3.94
    
    
    
    4,500Totals per plan
    
    
    
    
    
    
    
    
    350,2622000 PlanJanuary 28, 2000
    
    January 2001 - January 2008
    
    
    4.88
    
    
    
    12,375March 10, 2000
    
    March 2001 - March 2008
    
    
    12.20
    
    
    
    22,250March 31, 2000
    
    March 2001 - March 2008
    
    
    12.20
    
    
    
    3,000October 19, 2000 (2)
    
    October 2001 - October 2008
    
    
    38.50
    
    
    
    1,000February 10, 2003
    
    February 2004 - February 2011
    
    
    1.52
    
    
    
    62,500August 19, 2003
    
    August 2004(7)- August 2011
    
    
    2.15
    
    
    
    223,313August 17, 2004
    
    August 2005 - August 2012
    
    
    3.42
    
    
    
    138,000Totals per plan
    
    
    
    
    
    
    
    
    462,4382001 PlanJanuary 24, 2001 (3)
    
    January 2002 - January 2011
    
    
    31.00
    
    
    
    14,000April 23, 2001 (4)
    
    April 2002 - April 2011
    
    
    10.83
    
    
    
    22,600June 20, 2001 (5)
    
    June 2002 - June 2011
    
    
    8.14
    
    
    
    28,650September 26, 2001
    
    September 2002 - September 2011
    
    
    2.44
    
    
    
    0December 13, 2001
    
    December 2002 - December 2012
    
    
    4.26
    
    
    
    8,200May 13, 2002 (6)
    
    September 2001 - May 2012
    
    
    2.80
    
    
    
    311,460August 8, 2002
    
    August 2003 - August 2012
    
    
    1.84
    
    
    
    182,000February 10, 2003
    
    February 2004 - February 2013
    
    
    1.52
    
    
    
    40,800February 16, 2004
    
    February 2005 - February 2014
    
    
    3.94
    
    
    
    330,000June 2, 2004
    
    June 2005 - June 2014
    
    
    3.76
    
    
    
    60,000August 17, 2004
    
    August 2005 - August 2014
    
    
    3.42
    
    
    
    202,475May 30, 2005
    
    May 2006 - May 2015
    
    
    4.43
    
    
    
    7,500August 8, 2005
    
    August 2006 - August 2015
    
    
    5.11
    
    
    
    7,000September 9, 2005
    
    September 2006 - September 2015
    
    
    5.00
    
    
    
    9,500Totals per plan
    
    
    
    
    
    
    
    
    1,224,185
 
 (1)
    
    All amounts have been converted from French francs to euro at the official conversion
rate of 1.00 = FF 6.55957, unless the exercise price was fixed in both euros and
francs.(2)
    
    Options giving right to subscribe to 34,750 shares were cancelled on holders request,
as part of the Surrender and Re-grant Scheme.(3)
    
    Options giving right to subscribe to 569,515 shares were cancelled on holders request,
as part of the Surrender and Re-grant Scheme. 71




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##### Table of Contents



(4)
    
    Options giving right to subscribe to 143,500 shares were cancelled on holders request,
as part of the Surrender and Re-grant Scheme.(5)
    
    Options giving right to subscribe to 32,000 shares were cancelled on holders request,
as part of the Surrender and Re-grant Scheme.(6)
    
    Out of the 1,092,665 stock options granted on this date, 884,365 are re-granted stock
options and may already be exercised by their holders since the time limits for exercise
which apply to the reissued stock options is identical to that for those which were
surrendered.(7)
    
    249,358of these stock options were granted to seven employees with a
modification to the Plan vesting period. The stock options shall vest by the earlier of 25%
at the end of each quarter for which we will reach break even point (adjusted net
profit), or under the terms of the 2000 Plan. As of September 11, 2006, all those stock
options are fully vested. Directeurs Généraux Délégués
    
  72




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##### Table of Contents



6.6.2 Options giving the right to purchase existing shares
  Authorization information
   Date of shareholders
    
    Date of expiry of
    
    Number of sharesName of Plan
    
    authorization
    
    authorization
    
    authorized(1)2003 Plan
    
    December 5, 2002
    
    February 4, 2006
    
    
    300,0002004 Plan
    
    December 15, 2003
    
    February 14, 2007
    
    
    480,0002005 Plan
    
    December 9, 2004
    
    February 8, 2008
    
    
    360,000
 
 (1)
    
    When a stock option holder ceases to be an employee, his/her
un-exercised stock options revert to us and may be re-issued, subject to the
authorization period.  Vesting information
 1 2
 73




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##### Table of Contents



Grant information
  Period during which stock
    
    
    Exercise Priceoption-holder may
    
    
    per stock
    
    
    No. ofGrant dates
    
    exercise stock options
    
    
    option
    
    

issuable shares2003 PlanAugust 19, 2003
    
    August 19, 2004 - August 19, 2013
    
    
    2.15
    
    
    
    248,880Total per plan
    
    
    
    
    
    
    
    
    
    
    248,8802004 PlanAugust 17, 2004
    
    August 17, 2005 - August 17, 2014
    
    
    3.92
    
    
    
    126,200December 9, 2004
    
    December 9, 2005 - December 9, 2014
    
    
    4.35
    
    
    
    230,750August 8, 2005
    
    August 8, 2006 - August 8, 2015
    
    
    5.11
    
    
    
    40,000March 15, 2006
    
    March 15, 2007 - March 15, 2016
    
    
    6.70
    
    
    
    12,500Total per plan
    
    
    
    
    
    
    
    
    
    
    409,4502005 PlanAugust 8, 2005
    
    August 8, 2006 - August 8, 2015
    
    
    5.11
    
    
    
    165,000Total per plan
    
    
    
    
    
    
    
    
    
    
    165,000
 Directeurs Généraux Délégués
  74




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##### Table of Contents



6.6.3 Warrants
   Maximum no.
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    No. ofPeriod during
    
    
    of shares
    
    
    
    
    
    
    
    
    
    
    Exercise
    
    
    warrants
    
    
    No. ofDate of
    
    
    which holder
    
    
    authorized
    
    
    Maximum no.
    
    
    
    
    
    price per
    
    
    granted to
    
    
    executiveName of
    
    shareholders
    
    
    may exercise
    
    
    by the
    
    
    of issuable
    
    
    Subscription
    
    
    warrant in
    
    
    executive
    
    
    officersseries
    
    authorization
    
    
    warrants
    
    
    shareholders
    
    
    shares
    
    
    price in
    
    
    (1)
    
    
    officers
    
    concernedSeries E
    
    December, 13 2001
    
    February 7, 2002 to February 6, 2007
    
    
    195,624
    
    
    
    25,000
    
    
    
    0.04
    
    
    
    4.31
    
    
    
    0
    
    
    
    0Series F
    
    December 5, 2002
    
    February 10, 2003 to February 9, 2008
    
    
    190,624
    
    
    
    0
    
    
    
    0.02
    
    
    
    1.52
    (2)
    
    
    0
    
    
    
    0Total per series
    
    
    
    
    
    
    386,248
    
    
    
    25,000
    
    
    
    
    
    
    
    
    
    
    
    0
 
 (1)
    
    All amounts have been converted from French francs to euros at the official
conversion rate of 1.00 = FF 6.55957.(2)
    
    The subscription price for each warrant is equal to 1% of the average closing
share price on the then Nouveau Marché(currently Eurolist by Euronext) for the twenty
trading sessions prior to the grant date. The exercise price of each warrant is equal to the
highest of (1) 85% of the average closing share price on the Nouveau Marché (currently
Eurolist by Euronext), (2) the closing share price on the Nouveau Marché(currently Eurolist
by Euronext) at the end of the trading session immediately preceding the grant date, or (3)
the closing share price of our ADSs on Nasdaq the day preceding the grant date. 
 6.7 EMPLOYEES
 6.7.1 Employee distribution
  Distribution by department
 Year ended June 302006
    
    
    2005
    
    
    2004General and administrative
    
    
    29
    
    
    
    25
    
    
    
    21Sales and marketing
    
    
    73
    
    
    
    68
    
    
    
    69Research and development
    
    
    66
    
    
    
    58
    
    
    
    55Customer service
    
    
    47
    
    
    
    43
    
    
    
    43Total Employees
    
    
    215
    
    
    
    194
    
    
    
    188
 75




---



##### Table of Contents



Distribution by level
 Year ended June 30,2006
    
    
    2005
    
    
    2004Employees
    
    
    8
    
    
    
    5
    
    
    
    4Engineers/Managers
    
    
    204
    
    
    
    186
    
    
    
    180Executive officers
    
    
    3
    
    
    
    3
    
    
    
    4Total Employees
    
    
    215
    
    
    
    194
    
    
    
    188
 Geographic distribution
 Year ended June 30,2006
    
    
    2005
    
    
    2004Europe
    
    
    145
    
    
    
    130
    
    
    
    125Americas
    
    
    57
    
    
    
    52
    
    
    
    49Asia-Pacific
    
    
    13
    
    
    
    12
    
    
    
    14Total Employees
    
    
    215
    
    
    
    194
    
    
    
    188
   6.7.2 Reduction in workforce
   6.7.3 Compensation
 
 Compensation policy
  76




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##### Table of Contents



   
 
 Profit sharing and Share purchase schemes
 Plan
dintéressement Plan
dintéressement Plan dEpargne dEntreprise
 Plan dintéressement
 Plan
dintéressement  
 6.7.4 Social relations and collective agreements
 
 Social relations
 comité dentreprise  comité dentreprise
 
 Collective agreements
 comité
dentreprise
  convention collective nationale des bureaux détudes techniques,
cabinets dingénieurs-conseils et sociétés de conseils
 77




---



##### Table of Contents



6.7.5 Health and safety conditions
  6.7.6 Training for personnel
  
 
 6.8 SHARE OWNERSHIP
  78




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##### Table of Contents



ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
 
 7.1 MAJOR SHAREHOLDERS
  % of share
    
    
    % ofShareholders
    
    Number of shares
    
    
    capital
    
    
    voting rightsOdyssée Venture (1)
    
    
    1,906,498
    
    
    
    9.75
    
    
    
    10.36FMR Corp. / Fidelity International Ltd (1)(2) (3)
    
    
    1,532,145
    
    
    
    7.83
    
    
    
    8.33Generali Finances(4)
    
    
    1,293,419
    
    
    
    6.62
    
    
    
    7.04of which includes:FCP Generali Ambition
    
    
    792,491
    
    
    
    4.06
    
    
    
    4.31FCP Prudence Vie
    
    
    230,928
    
    
    
    1.18
    
    
    
    1.26FCP Epargne Retraite International
    
    
    270,000
    
    
    
    1.38
    
    
    
    1.47Powe Capital
    
    
    1,108,883
    
    
    
    5.67
    
    
    
    6.03Sicav Generali Euro Actions(5)
    
    
    910,000
    
    
    
    4.65
    
    
    
    4.95Sicav Generali Euro Investissement(5)
    
    
    910,000
    
    
    
    4.65
    
    
    
    4.95Reabourne Technology Investment Management
    
    
    698,120
    
    
    
    3.57
    
    
    
    3.80CV Sofinnova Ventures
    
    
    557,066
    
    
    
    2.85
    
    
    
    3.03Montpensier Finance
    
    
    549,000
    
    
    
    2.81
    
    
    
    2.99Directors & Executive OfficersAlain Tingaud (1)
    
    
    841,490
    
    
    
    4.30
    
    
    
    4.57Jean-Paul Bernardini
    
    
    10,000
    
    
    
    0.05
    
    
    
    0.05Herbert May
    
    
    1
    
    
    
    0.00
    
    
    
    0.00Hubert Tardieu (1)
    
    
    1,250
    
    
    
    0.01
    
    
    
    0.01Patrick Leleu
    
    
    1
    
    
    
    0.00
    
    
    
    0.00Philippe Ozanian
    
    
    533
    
    
    
    0.00
    
    
    
    0.00Manuel Stopnicki
    
    
    0
    
    
    
    0.00
    
    
    
    0.00Gad Tobaly
    
    
    1
    
    
    
    0.00
    
    
    
    0.00Philippe Vassor
    
    
    200
    
    
    
    0.00
    
    
    
    0.00InfoVista S.A.(3)
    
    
    1,169,134
    
    
    
    5.98
    
    
    
    0.00Others (6)
    
    
    8,070,573
    
    
    
    41.26
    
    
    
    43.89Total
    
    
    19,558,314
    
    
    
    100
    
    
    
    100
 
 (1)
    
    Directly or indirectly.(2)
    
    We obtained this information as of August 31, 2006.(3)
    
    On September 12, 2006, we acquired 700,000 InfoVista S.A. shares from Fidelity International Ltd. Through a letter dated September
14, 2006, Fidelity International Ltd and FMR Corp notified the Autorité des marchés financiersthat its holding had gone under
5%. The above mentioned figures (as of September 11, 2006) do not take this transaction into account.(4)
    
    Includes 317,041 shares (or 1.62% of our share capital) that are without voting rights for a period of two years until September 25, 2008.
This is due to the late notification to the Autorité des marches financiers completed on September 25, 2006, that Generali Finances had
gone over 5% of our share capital and voting rights.(5)
    
    Based on information provided by Generali Finances on behalf of their funds that hold more than 2% of our share capital and/or
voting rights.(6)
    
    Includes shares issued upon the exercise of stock options by our employees.
 79




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##### Table of Contents



June 30, 2006
    
    
    
    
    
    
    
    
    
    
    June 30, 2005
    
    
    
    
    
    
    
    
    
    
    June 30, 2004% of the
    
    
    
    
    
    
    
    
    
    
    % of the
    
    
    % of the
    
    
    
    
    
    
    % of theNumber of
    
    
    share
    
    
    % of the
    
    
    Number of
    
    
    share
    
    
    voting
    
    
    Number of
    
    
    share
    
    
    % of theShareholders
    
    shares
    
    
    capital
    
    
    voting rights
    
    
    shares
    
    
    capital
    
    
    rights
    
    
    shares
    
    
    capital
    
    
    voting rightsFMR Corp. / Fidelity International
Limited(1)
    
    
    2,017,321
    
    
    
    10.33
    
    
    
    11.00
    
    
    
    2,075,593
    
    
    
    11.20
    
    
    
    11.95
    
    
    
    1,852,471
    
    
    
    9.78
    
    
    
    10.82Odyssée Venture (1)(2)
    
    
    1,856,498
    
    
    
    9.51
    
    
    
    10.12
    
    
    
    1,843,894
    
    
    
    9.95
    
    
    
    10.61
    
    
    
    1,895,625
    
    
    
    10.00
    
    
    
    11.07Powe Capital(3)
    
    
    1,008,833
    
    
    
    5.17
    
    
    
    5.50
    
    
    
    845,476
    
    
    
    4.56
    
    
    
    4.87
    
    
    
    591,689
    
    
    
    3.12
    
    
    
    3.46Alain Tingaud(1)
    
    
    936,683
    
    
    
    4.80
    
    
    
    5.11
    
    
    
    1,015,243
    
    
    
    5.48
    
    
    
    5.84
    
    
    
    1,235,053
    
    
    
    6.52
    
    
    
    7.22Sicav Generali Euro Actions(4)
    
    
    910,000
    
    
    
    4.66
    
    
    
    4.96
    
    
    
    270,832
    
    
    
    1.46
    
    
    
    1.56
    
    
    
    0
    
    
    
    0
    
    
    
    0Sicav Generali Euro Investissement(4)
    
    
    900,000
    
    
    
    4.61
    
    
    
    4.91
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0Generali Finances(4)
    
    
    1,085,886
    
    
    
    5.56
    
    
    
    5.92
    
    
    
    1,015,244
    
    
    
    5.48
    
    
    
    5.84
    
    
    
    380,748
    
    
    
    2.00
    
    
    
    2.22of which includes:FCP Generali Ambition
    
    
    792,491
    
    
    
    4.06
    
    
    
    4.32
    
    
    
    792,491
    
    
    
    4.28
    
    
    
    4.56
    
    
    
    364,756
    
    
    
    1.92
    
    
    
    2.13FCP Epargne Retraite International
    
    
    135,992
    
    
    
    0.70
    
    
    
    0.74
    
    
    
    136,825
    
    
    
    0.74
    
    
    
    0.79
    
    
    
    15,992
    
    
    
    0.08
    
    
    
    0.09FCP Prudence Vie
    
    
    157,403
    
    
    
    0.80
    
    
    
    0.86
    
    
    
    85,928
    
    
    
    0.46
    
    
    
    0.49
    
    
    
    0
    
    
    
    0
    
    
    
    0Reabourne Technology Investment Management
    
    
    677,520
    
    
    
    3.47
    
    
    
    3.69
    
    
    
    698,570
    
    
    
    3.77
    
    
    
    4.02
    
    
    
    715,716
    
    
    
    3.78
    
    
    
    4.18CV Sofinnova Ventures Partners III
    
    
    557,066
    
    
    
    2.85
    
    
    
    3.04
    
    
    
    602,066
    
    
    
    3.25
    
    
    
    3.47
    
    
    
    602,066
    
    
    
    3.18
    
    
    
    3.52Montpensier Finance
    
    
    418,000
    
    
    
    2.14
    
    
    
    2.28
    
    
    
    70,000
    
    
    
    0.38
    
    
    
    0.40
    
    
    
    0
    
    
    
    0
    
    
    
    0InfoVista S.A
    
    
    1,184,121
    
    
    
    6.06
    
    
    
    0
    
    
    
    1,151,854
    
    
    
    6.22
    
    
    
    0
    
    
    
    1,835,454
    
    
    
    9.69
    
    
    
    0Others(5)
    
    
    7,975,636
    
    
    
    40.84
    
    
    
    43.47
    
    
    
    8,935,949
    
    
    
    48.25
    
    
    
    51.44
    
    
    
    9,842,098
    
    
    
    51.93
    
    
    
    57.51Total
    
    
    19,527,564
    
    
    
    100.00
    
    
    
    100.00
    
    
    
    18,524,721
    
    
    
    100.00
    
    
    
    100.00
    
    
    
    18,950,920
    
    
    
    100.00
    
    
    
    100.00
 
 (1)
    
    Directly and indirectly.(2)
    
    Through a letter dated May 12, 2006, Odyssée Venture SAS notified the Autorité des
marchés financiersthat its holding had gone under 10%.(3)
    
    Through a letter dated May 3, 2006, Powe Capital Management LLP notified the
Autorité des marchés financiersthat its holding had gone over 5%.(4)
    
    Based on information provided by Generali Finances on behalf of their funds that
hold more than 2% of our share capital and/or voting rights.(5)
    
    Includes shares issued upon the exercise of stock options by our employees.
 80




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##### Table of Contents



7.3 RELATED PARTY TRANSACTIONS
  
 ITEM 8. FINANCIAL INFORMATION
 
 8.1 CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION
  
 8.2 LEGAL PROCEEDINGS
  
 8.3 DIVIDEND POLICY
  
 8.4 SIGNIFICANT CHANGES
  
 ITEM 9. THE OFFER AND LISTING
 Autorités des Marchés Financiers Commission des Opérations de Bourse Conseil de
Discipline de la Gestion Financière
 81




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##### Table of Contents



9.1 MARKETS
 Nouveau Marché
 82




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##### Table of Contents



9.2 PRICE HISTORY OF THE STOCK
 Nouveau
Marché)
 Nouveau Marché)
 Price of Shares in euros(1)
    
    

Price of ADSs in US dollars(2)Closing
    
    
    Volume
    
    
    
    
    
    
    Closing
    
    
    VolumeHigh
    
    
    Low
    
    
    Average
    
    
    in 000s
    
    
    High
    
    
    Low
    
    
    Average
    
    
    in 000s6 months to September 11, 20062006 September
    
    
    5.19
    
    
    
    4.76
    
    
    
    4.92
    
    
    
    168
    
    
    
    6.30
    
    
    
    6.30
    
    
    
    6.30
    
    
    
    02006 August
    
    
    5.28
    
    
    
    4.52
    
    
    
    5.06
    
    
    
    387
    
    
    
    6.78
    
    
    
    6.24
    
    
    
    6.47
    
    
    
    52006
July
    
    
    5.95
    
    
    
    4.92
    
    
    
    5.51
    
    
    
    624
    
    
    
    7.26
    
    
    
    6.64
    
    
    
    7.02
    
    
    
    12006
June
    
    
    6.05
    
    
    
    5.40
    
    
    
    5.79
    
    
    
    375
    
    
    
    7.50
    
    
    
    6.61
    
    
    
    7.24
    
    
    
    22006
May
    
    
    6.68
    
    
    
    5.60
    
    
    
    6.17
    
    
    
    636
    
    
    
    8.64
    
    
    
    7.01
    
    
    
    7.85
    
    
    
    22006 April
    
    
    6.85
    
    
    
    6.30
    
    
    
    6.60
    
    
    
    729
    
    
    
    8.59
    
    
    
    7.00
    
    
    
    7.94
    
    
    
    3High
    
    
    Low
    
    
    
    
    
    
    
    
    
    
    High
    
    
    LowFiscal year 2006 by quarter endedJune 30, 2006
    
    
    6.85
    
    
    
    5.40
    
    
    
    
    
    
    
    
    
    
    
    8.64
    
    
    
    6.61March 31, 2006
    
    
    7.25
    
    
    
    5.74
    
    
    
    
    
    
    
    
    
    
    
    9.22
    
    
    
    6.67December 31, 2005
    
    
    5.99
    
    
    
    4.55
    
    
    
    
    
    
    
    
    
    
    
    7.64
    
    
    
    3.00September 30, 2005
    
    
    5.95
    
    
    
    4.52
    
    
    
    
    
    
    
    
    
    
    
    7.35
    
    
    
    5.00High
    
    
    Low
    
    
    
    
    
    
    
    
    
    
    
    High
    
    
    LowFiscal year 2005 by quarter endedJune 30, 2005
    
    
    5.40
    
    
    
    3.95
    
    
    
    
    
    
    
    
    
    
    
    6.95
    
    
    
    2.85March 31, 2005
    
    
    5.59
    
    
    
    4.40
    
    
    
    
    
    
    
    
    
    
    
    7.50
    
    
    
    3.88December 31, 2004
    
    
    4.75
    
    
    
    3.66
    
    
    
    
    
    
    
    
    
    
    
    7.00
    
    
    
    4.19September 30, 2004
    
    
    4.27
    
    
    
    3.15
    
    
    
    
    
    
    
    
    
    
    
    5.00
    
    
    
    3.44High
    
    
    LowFiscal year 2004 by quarter endedJune 30, 2004
    
    
    4.22
    
    
    
    3.31
    
    
    
    
    
    
    
    
    
    
    
    5.35
    
    
    
    4.00March 31, 2004
    
    
    4.69
    
    
    
    2.35
    
    
    
    
    
    
    
    
    
    
    
    6.24
    
    
    
    2.84December 31, 2003
    
    
    2.57
    
    
    
    1.86
    
    
    
    
    
    
    
    
    
    
    
    3.24
    
    
    
    1.82September 30, 2003
    
    
    2.63
    
    
    
    2.01
    
    
    
    
    
    
    
    
    
    
    
    2.90
    
    
    
    2.30High
    
    
    Low
    
    
    
    
    
    
    
    
    
    
    
    High
    
    
    LowFiscal years 2005 and 2004July 1, 2004 to June 30, 2005
    
    
    5.59
    
    
    
    3.15
    
    
    
    
    
    
    
    
    
    
    
    7.50
    
    
    
    2.85July 1, 2003 to June 30, 2004
    
    
    4.69
    
    
    
    1.86
    
    
    
    
    
    
    
    
    
    
    
    6.24
    
    
    
    1.82
 
 (1)
    
    Source: Euronext Paris(2)
    
    Source: Nasdaq 83




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##### Table of Contents



Nouveau Marché)
 Price history of the stock on the Eurolist by Euronext
(Source EURONEXT PARIS)
 
 84




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##### Table of Contents



Price history of the stock on the NASDAQ
(Source: NASDAQ)
 
 
 9.3 GENERAL
 SBF TM
 Premier Marché
 Bolsa de Valores de Lisboa e Porto
 85




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##### Table of Contents



9.4 EURONEXT PARIS SA AND EUROLIST
 Premier, Second Nouveau
Marchés TM
 
    
    Compartment A comprises the companies with market capitalizations above 1
billion;
    
    Compartment B comprises the companies with market capitalizations from 150
million and up to and including 1 billion;
    
    Compartment C comprises the companies with market capitalizations below 150
million.
  Continu, Fixing, .
 continu
  Continu
 Service à Règlement Différé Service à Règlement
Différé  
 86




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##### Table of Contents



ITEM 10. ADDITIONAL INFORMATION
 
 10.1 MEMORANDUM AND ARTICLES OF ASSOCIATION
  statuts,
 statuts statuts statuts statuts Greffe
 
 10.2 SHAREHOLDERS MEETINGS AND VOTING RIGHTS
 
 10.2.1 General
 Livre II Code de commerce
  
    
    electing, replacing and removing directors;
    
    allocating fees to the board of directors;
    
    appointing statutory auditors;
    
    approving the annual and consolidated accounts;
    
    declaring dividends or authorizing dividends to be paid in shares, and
    
    approving regulated agreements.
 statuts
 87




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##### Table of Contents




    
    changing our statuts,our companys name or corporate purpose;
    
    increasing or decreasing our share capital;
    
    creating a new class of equity securities;
    
    authorizing or approving the issuance of any securities giving rights to equity
securities or any other rights to equity securities (common or preferred shares);
    
    a statutory merger; and
    
    the voluntary liquidation of our company prior to the end of its statutory term.
  
 10.2.2 General Shareholders Meetings
 Tribunal de Commerce
 
    
    one or several shareholders holding at least 5% of our share capital;
    
    any interested party in cases of urgency,
    
    duly qualified associations of shareholders who have held their shares in registered
form for at least two years and who together hold at least a specified percentage of
the voting rights of our company,
    
    the workers committee in emergency situations, and
    
    majority shareholders in share capital or voting rights after a public tender offer
or the acquisition of a controlling block of shares.
 
 10.2.3 Notice of Shareholders Meetings
 avis de reunion Bulletin des Annonces Légales Obligatoires
 88




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##### Table of Contents



avis de convocation département
  
    
    one or several shareholders holding a specified percentage of shares calculated
on a basis of a formula relating to our share capital;
    
    a duly qualified association of shareholders who have held their shares in
registered form for at least two years and who together hold at least a specified
percentage of our voting rights; and
    
    the workers committee.
   
 10.2.4 Attendance and Voting at Shareholders Meetings
 statuts
 Intermédiaire
financier habilité
 statuts
 89




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##### Table of Contents



10.2.5 Proxies and Votes by mail
  Code civil
  
 10.2.6 Quorum
    
 10.2.7 Majority
   90




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##### Table of Contents



statuts
  
 10.3 FINANCIAL STATEMENTS AND OTHER COMMUNICATIONS WITH SHAREHOLDERS
  loi de sécurité financière
 
 10.4 DIVIDENDS
 statuts statuts
 
 10.4.1 Legal Reserve
 sociétés anonymes 
 
 10.4.2 Approval of Dividends
  91




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##### Table of Contents



10.4.3 Distribution of Dividends
  statuts
 
 10.4.4 Timing of Payment
 Président Tribunal de
Commerce
 
 10.5 CHANGES IN SHARE CAPITAL
 
 10.5.1 Increases in Share Capital
  
    
    issuing additional common or preferred shares or or a new class of equity securities; or
    
    increasing the nominal value of existing shares.
  
    
    for cash;
    
    for assets contributed in kind;
    
    by conversion, exchange or redemption of debt securities convertible, redeemable
or exchangeable into our shares;
    
    by incorporation of profits, reserves or share premiums;
    
    by exercise of any such rights attached to other securities giving right to
common or preferred shares, including warrants or stock options;
    
    subject to various conditions, in satisfaction of debt incurred by our company; or
    
    any combination of the above.
  92




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##### Table of Contents



Directeurs Généraux Délégués
   
    
    increase our share capital by issuing, with preferential subscription rights, shares
or other securities giving right, immediately or in the future, to our share capital,
up to a maximum nominal amount of 3,700,000;
    
    increase our share capital by incorporating reserves, profits or premiums up to a
maximum nominal amount of 3,700,000 to be deducted from the maximum amount referred
to in the first bulletpoint.
 
  
  
 10.5.2 Decreases in Share Capital
  93




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##### Table of Contents



10.5.3 Share Capital Issued History
 CumulativeAdditional Paid-in
    
    
    
    Number of
    
    NominalDate
    
    Movement
    
    Number of Shares
    
    Capital Amount
    
    Capital Amount
    

Cumulative Capital
    
    Shares
    
    Value10/13/95
    
    Issuance of common stock
    
    
    19,000
    
    
    FF 900,000
    
    FF 8,100
    
    FF 1,900,000
    
    
    19,000
    
    
    FF 10010/13/95
    
    Issuance of common stock
    
    
    81,000
    
    
    FF 8,100,000
    
    
    
    FF 10,000,000
    
    
    100,000
    
    
    FF 10006/21/96
    
    Reduction of the nominal value byissues of shares at no value
    
    2,000,000 new shares in exchange for 100,000 existing
shares
    
    
    
    
    
    FF 10,000,000
    
    
    2,000,000
    
    
    FF 505/16/97
    
    Reduction of the nominal value
    
    10,000,000 new shares in exchange for 2,000,000
existing shares
    
    
    
    
    
    FF 10,000,000
    
    
    10,000,000
    
    
    FF 105/16/97
    
    Issuance of common stock
    
    
    3,769,415
    
    
    FF 3,769,415
    
    FF 11,270,550.85
    
    FF 13,769,415
    
    
    13,769,415
    
    
    FF 105/16/97
    
    Issuance of common stock (incorporating additional paid in
capital of 0,80 F)
    
    
    
    
    
    FF 11,015,532
    
    
    
    FF 24,784,947
    
    
    13,769,415
    
    
    FF 1.8006/30/98
    
    Issuance of common stock
    
    
    5,809,720
    
    
    FF 10,457,496
    
    FF 22,657,908
    
    FF 35,242,443
    
    
    19,579,135
    
    
    FF 1.8006/30/99
    
    Exercise of stock warrants
(6/30/1998 Shareholders Meeting)
    
    
    2,091,495
    
    
    FF 3,764,691
    
    FF 8,365,980
    
    FF 39,007,134
    
    
    21,670,630
    
    
    FF 1.8012/23/99
(09/12/99 Shareholders meeting)
    
    Issuance of common stock
    
    
    2,800,000
    
    
    FF 5,040,000
    
    FF 39,760,000
    
    FF 4,047,134
    
    
    24,470,630
    
    
    FF 1.8003/10/2000
    
    Conversion of capital into euros and capital reduction
    
    
    
    
    
    FF 707,595.19
    
    
    
    6,607,070.10
    
    
    24,470,630
    
    
    0.2703/31/2000
    
    Exercise of 1999 D Stock warrants
(12/9/1999 Shareholders meeting)
    
    
    1,200,000
    
    
    324,000
    
    FF 17,040 000
( 2,603,021.10)
    
    6,931,070.10
    
    
    25,670,630
    
    
    0.2705/23/2000
    
    Exercise of stock options (Plans 1996 and 1999)
    
    
    188,326
    
    
    50,848.02
    
    FF 156,329.08
( 23,832.21)
    
    6,981,918.12
    
    
    25,858,956
    
    
    0.2705/25/2000
    
    Reverse stock split
(2 for 1)
    
    12,929,478 new shares in exchange for 25,858,956
existing shares
    
    
    
    
    
    6,981,918.12
    
    
    12,929,478
    
    
    0.54
 94




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##### Table of Contents



CumulativeAdditional Paid-in
    
    
    
    Number of
    
    NominalDate
    
    Movement
    
    Number of Shares
    
    Capital Amount
    
    Capital Amount
    

Cumulative Capital
    
    Shares
    
    ValueInitial Public Offering
    
    Issuance of common stock
    
    
    6,000,000
    
    
    3,240,000
    
    73,560,000
    
    10,221,918.12
    
    
    18,929,478
    
    
    0.54(07/07/2000)10/12/2000
    
    Exercise of 1999 B stock warrants
(12/9/1999 Shareholders meeting)
    
    
    70,000
    
    
    37,800
    
    303,685.79
    
    10,259,718.12
    
    
    18,999,478
    
    
    0.5412/18/2000
    
    Exercise of stock options
(Plan 1999)
    
    
    72,186
    
    
    38,980.44
    
    93,847.83
    
    10,298,698.56
    
    
    19,071,664
    
    
    0.5401/24/2001
    
    Exercise of 1999 C stock warrants
(12/9/1999 Shareholders meeting)
    
    
    18,750
    
    
    10,125
    
    81,344.40
    
    10,308,823.56
    
    
    19,090,414
    
    
    0.5401/24/2001
    
    Exercise of stock options
(Plans 1996 and 1999)
    
    
    18,437
    
    
    9,955.98
    
    18,582.45
    
    10,318,779.54
    
    
    19,108,851
    
    
    0.5404/04/2001
    
    Exercise of 1999 A stock warrants
(12/9/1999 Shareholders meeting)
    
    
    30,000
    
    
    16,200
    
    130,151.05
    
    10,334,979.54
    
    
    19,138,851
    
    
    0.5406/20/2001
    
    Exercise of 1998 O stock warrants
(6/30/1998 Shareholders meeting)
    
    
    287,289
    
    
    155,136.06
    
    195,239.35
    
    10,490,115.60
    
    
    19,426,140
    
    
    0.5406/20/2001
    
    Exercise of 1999 A stock warrants
(12/9/1999 Shareholders meeting)
    
    
    120,000
    
    
    64,800
    
    520,604.23
    
    10,554,915.60
    
    
    19,546,140
    
    
    0.5406/20/2001
    
    Exercise of stock options
(Plans 1996 and 1999)
    
    
    95,274
    
    
    51,447.96
    
    169,508.03
    
    10,606,363.56
    
    
    19,641,414
    
    
    0.5410/17/2001
    
    Exercise of stock options
(Plans 1996 and 1999)
    
    
    16,562
    
    
    8,943.48
    
    11,252.91
    
    10,615,307.04
    
    
    19,657,976
    
    
    0.5401/23/2002
    
    Exercise of 1998 O stock warrants
(6/30/1998 Shareholders meeting)
    
    
    197,710
    
    
    106,763.40
    
    134,362.16
    
    10,722,070.44
    
    
    19,855,686
    
    
    0.5406/04/2002
    
    Exercise of stock options
(Plans 1996 and 1999)
    
    
    10,874
    
    
    5, 871.96
    
    13,797.52
    
    10,727,942.40
    
    
    19,866,560
    
    
    0.5409/11/2002
    
    Exercise of stock options
(Plan 1996)
    
    
    16,250
    
    
    8,775
    
    19,825
    
    10,736,717.40
    
    
    19,882,810
    
    
    0.5404/23/2003
    
    Cancellation of common stock held in treasury
    
    
    1,080,173
    
    
    583,293.42
    
    1,154,914.76
    
    10,153,423.98
    
    
    18,802,637
    
    
    0.5407/25/2003
    
    Exercise of stock options
(Plan 1999)
    
    
    2,625
    
    
    1,417.50
    
    3,228.75
    
    10,154,841.48
    
    
    18,805,262
    
    
    0.54
 95




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##### Table of Contents



CumulativeAdditional Paid-in
    
    
    
    Number of
    
    NominalDate
    
    Movement
    
    Number of Shares
    
    Capital Amount
    
    Capital Amount
    

Cumulative Capital
    
    Shares
    
    Value01/26/2004
    
    Exercise of stock options (Plan 1999)
    
    
    23,125
    
    
    12,487.50
    
    28,443.75
    
    10,167,328.98
    
    
    18,828,387
    
    
    0.5407/21/2004
    
    Exercise of stock options (Plans 1999 and 2001) and O 1998 and
BSA F 2003 stock warrants
    
    
    163,533
    
    
    88,307.82
    
    245,844.59
    
    10,255,636.80
    
    
    18,991,920
    
    
    0.5410/21/2004
    
    Exercise of stock options (Plans 1999 and 2001)
    
    
    76,150
    
    
    41,121
    
    103,564
    
    10,296,757.80
    
    
    19,068,070
    
    
    0.5410/21/2004
    
    Cancellation of common stock held in treasury
    
    
    694,454
    
    
    375,005.16
    
    
    
    9,921,752.64
    
    
    18,373,616
    
    
    0.5407/21/2005
    
    Exercise of stock options (Plans 1999, 2000 and 2001)
    
    
    151,105
    
    
    81,596.70
    
    244,856.80
    
    10,003,349.34
    
    
    18,524,721
    
    
    0.5403/15/2006
    
    Exercise of stock options (Plans 1999, 2000 and 2001) and BSA E
2002 and BSA F 2003
Warrants1
    
    
    918,169
    
    
    495,811.26
    
    1,878,800.42
    
    10,499,160.60
    
    
    19,442,890
    
    
    0.5407/26/2006
    
    Exercise of stock options (Plans 1999, 2000 and 2001) and BSA F
2003 warrants
    
    
    84,674
    
    
    45,723.96
    
    195,177.25
    
    10,544,884.56
    
    
    19,527,564
    
    
    0.5409/11/2006
    
    Exercise of stock options (Plans
1999 and 2001) 1
    
    
    30,750
    
    
    16,605
    
    52,307.50
    
    10,561,489.56
    
    
    19,558,314
    
    
    0.54
 
 1
    
    This movement has not yet been officially approved by the board of directors 96




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10.6 PREEMPTIVE SUBSCRIPTION RIGHTS
 pro rata
 délai de priorité
 
 10.7 FORM, HOLDING AND TRANSFER OF SHARES
 
 10.7.1 Form of Shares
 statuts
 
 10.7.2 Holding of Shares
  statuts
  97




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##### Table of Contents



10.7.3 Transfer of Shares
 statuts
  Impôt sur les opérations de Bourse   
 Impôt sur les opérations
de Bourse
 
 10.8 LIQUIDATION RIGHTS
 pro rata
 
 10.9 REQUIREMENTS FOR HOLDINGS EXCEEDING CERTAIN PERCENTAGES
   98




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##### Table of Contents



statuts
 avis
 
  
 10.10 PURCHASE OF OUR OWN SHARES
 prestataire de services dinvestissement) note dinformation descriptif du programme
 99




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##### Table of Contents



pro rata
  
  
  
 
 100




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##### Table of Contents



 
 
 10.11 TRADING IN OUR OWN SHARES
  
    
    the issuer may not, when executing trades under a share repurchase program, purchase
shares at a price higher than the highest price of the last independent trade or the
highest current independent bid on the trading venues where the purchase is carried out;
    
    when the issuer carries out the purchase of its own shares through derivative financial
instruments, the exercise price of such derivative financial instruments shall not be above
the higher of the price of the last independent trade or the highest current independent
bid;
    
    the issuer may not purchase more than 25% of the average daily volume of the shares in
any one day on the regulated market on which the purchase is carried out. The average daily
volume figure is to be based on the average daily volume traded in the month preceding the
month of public disclosure of the program and fixed on that basis for the authorized period
of the program. Where the program makes no reference to that volume, the average daily
volume figure must be based on the average daily volume traded in the 20 trading days
preceding the date of purchase.
  
    
    selling of its own shares during the life of the program;
    
    trading where the company becomes aware of information that, if disclosed, would have a
significant impact on the market price of its securities;
    
    trading during a 15-day period before the date on which the company makes its
consolidated, annual and intermediary accounts public.
  
    
    the issuer has in place a time-schedule share repurchase program; or
    
    the share purchase program is lead-managed by an investment firm or a credit institution
which makes its trading decisions in relation to the issuers shares independently of, and
without influence by, the issuer with regard to the timing of the purchases.
  101




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##### Table of Contents



10.12 OWNERSHIP OF SHARES BY NON-FRENCH PERSONS
  autorisation préalable déclaration administrative déclaration administrative
 
 10.13 MATERIAL CONTRACTS
  
 10.14 EXCHANGE CONTROLS
  
 10.15 OTHER
  
 10.16 FRENCH TAXATION
    102




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10.16.1 Taxation on Sale or Disposal of Shares
 bénéfices sociaux
 
 
 10.16.2 Taxation of Dividends
   
     Territoires dOutre-Mer
 Australia
    
    India
    
    Mexico
    
    SwitzerlandAustria
    
    Israel
    
    Namibia
    
    TogoBelgium
    
    Italy
    
    Netherlands
    
    TurkeyBolivia
    
    Ivory Coast
    
    New Zealand
    
    UkraineBrazil
    
    Japan
    
    Niger
    
    United KingdomBurkina Faso
    
    Latvia
    
    Norway
    
    U.S.Canada
    
    Lithuania
    
    Pakistan
    
    VenezuelaEstonia
    
    Luxembourg
    
    Senegal
    
    French Territoires dOutre-Mer and others :Finland
    
    Malaysia
    
    SingaporeGabon
    
    Mali
    
    South Korea
    
    Mayotte
 103




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##### Table of Contents



Ghana
    
    Malta
    
    Spain
    
    New CaledoniaIceland
    
    Mauritius
    
    Sweden
    
    Saint-Pierre & Miquelon
     
  
 10.16.3 Estate and Gift Tax
  
 10.16.4 Wealth Tax
 impôt de solidarité sur
la fortune
 
 10.16.5 Taxation of U.S. Investors
  1.
    
    You own, directly or indirectly or through attribution, less than 10% of our
companys share capital or voting stock,2.
    
    You are any one of the following:
 104




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##### Table of Contents



(a)
    
    an individual who is a citizen or resident of the U.S. for U.S.
federal income tax purposes;(b)
    
    a corporation or other entity taxable as a corporation for U.S.
federal income tax purposes created or organized in or under the laws of the
U.S. or any state thereof (including the District of Columbia);(c)
    
    an estate whose income is subject to U.S. federal income taxation
regardless of its source; or(d)
    
    a trust if a court in the U.S. is able to exercise primary
supervision over the administration of the trust, and if one or more U.S.
persons have the authority to control all substantial decisions of the trust.
 3.
    
    You are entitled to the benefits of the U.S.-France income tax treaty under the
Limitation on Benefits article of that treaty,4.
    
    You are not also a resident of France,5.
    
    You hold your shares or ADSs of our company as capital assets, and6.
    
    Your functional currency is the U.S. dollar.
     Investors of our shares
or ADSs should consult their own tax advisors concerning the U.S.
federal, state and local tax consequences in light of their particular
 105




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situations as well as any
consequences arising under the laws of any other taxing jurisdiction.
 (i) Taxation of Dividends
   
        106




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(ii) Taxation of Capital Gains
  107




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(iv) French Estate and Gift Taxes
  
    
    you are domiciled in France at the time of making the gift, or at the time of
your death, or
    
    you used the shares or ADSs in conducting a business through a permanent
establishment or fixed base in France, or you held the shares or ADSs for that use.
 (v) French Wealth Tax
  (vi) U.S. Information Reporting and Backup Withholding
  108




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10.16.6 Where You Can Find More Information
  www.sec.gov
 
 ITEM 11.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 
 11.1 GENERAL
  109




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11.2 CURRENCIES
     
 
 11.3 INTEREST RATES
  
 11.4 SHARES
  
 
 11.5 LIQUIDITY SITUATION
  
 11.6 FINANCIAL INSTRUMENTS
  As of June 30, 2006Carrying Amount
    
    
    Fair Value(In thousands)Marketable securities
    
    
    26,170
    
    
    
    26,170Deposits and other assets
    
    
    811
    
    
    
    763
  110




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ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
  
 PART II
 
 ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
   
 ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS
 
 14.1 MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS
  
 PART III
 
 ITEM 15. CONTROLS AND PROCEDURES
   111




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ITEM 16. [RESERVED]
 
 ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT
  
 ITEM 16B. CODE OF ETHICS
  
 ITEM 16C. PRINCIPAL INDEPENDENT AUDITOR FEES AND SERVICES
  Ernst & Youngand other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    S&Wmember firms (1)
    
    
    Grant Thornton
    
    
    PWC
    
    
    Associés2006
    
    
    2006
    
    
    2005
    
    
    2006
    
    
    2006
    
    
    2005
    
    
    2005%
    
    
    
    
    
    
    
    
    
    
    %In thousandsAudit fees
    
    
    308
    
    
    
    100,0
    
    
    
    225
    
    
    
    40
    
    
    
    100,0
    
    
    
    62
    
    
    
    39Audit related-fees
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Sub-total
    
    
    308
    
    
    
    100,0
    
    
    
    225
    
    
    
    40
    
    
    
    100,0
    
    
    
    62
    
    
    
    39Legal, tax and social
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    53
    
    
    
    Services fees
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    All other fees
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Sub-total
    
    
    0
    
    
    
    
    
    
    
    0
    
    
    
    0
    
    
    
    
    
    
    
    53
    
    
    
    0Total
    
    
    308
    
    
    
    100,0
    
    
    
    225
    
    
    
    40
    
    
    
    100,0
    
    
    
    115
    
    
    
    39
 
 (1)
    
    Ernst & Young was appointed co-statutory auditor of InfoVista S.A. for
the year ended June 30, 2006 and 2005.(2)
    
    Grant Thornton was appointed co-statutory auditor of InfoVista S.A. for the
year ended June 30, 2006 and 2005.  de minimis
 112




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ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
  113




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ITEM 16E. PURCHASES OF EQUITY SECURITIES
 Issuer Purchases of Equity Securities
 Maximum Number ofTotal Number of
    
    
    
    
    
    
    
    
    Shares that May YetShares purchased
    
    
    Average Price Paid
    
    
    Total Number of Shares
    
    
    Be Purchased UnderPeriod
    
    during the period
    
    
    per Share (in euros)
    
    
    Purchased as of period end
    
    
    the Plans or ProgramsJuly, 2005
    
    
    79,569
    
    
    
    5.12
    
    
    
    1,153,687
    
    
    
    698,785August 2005
    
    
    52,934
    
    
    
    5.04
    
    
    
    1,187,520
    
    
    
    665,152September 2005
    
    
    29,308
    
    
    
    4.85
    
    
    
    1,200,385
    
    
    
    655,781October 2005
    
    
    25,900
    
    
    
    4.84
    
    
    
    1,202,788
    
    
    
    653,378November 2005
    
    
    39,728
    
    
    
    4.85
    
    
    
    1,185,545
    
    
    
    688,571December 2005
    
    
    23,500
    
    
    
    5.40
    
    
    
    1,164,970
    
    
    
    731,766January 2006
    
    
    25,298
    
    
    
    6.03
    
    
    
    1,152,528
    
    
    
    744,208February 2006
    
    
    52,962
    
    
    
    6.25
    
    
    
    1,131,113
    
    
    
    808,961March 2006
    
    
    6,653
    
    
    
    6.55
    
    
    
    1,128,584
    
    
    
    815,905April 2006
    
    
    33,707
    
    
    
    6.53
    
    
    
    1,128,936
    
    
    
    816,266May 2006
    
    
    70,363
    
    
    
    6.14
    
    
    
    1,182,256
    
    
    
    765,540June 2006
    
    
    27,448
    
    
    
    5.69
    
    
    
    1,184,121
    
    
    
    768,634July 2006
    
    
    35,980
    
    
    
    5.26
    
    
    
    1,175,860
    
    
    
    776,896August 2006
    
    
    6,423
    
    
    
    5.03
    
    
    
    1,179,743
    
    
    
    774,913September
2006(1)
    
    
    7,445
    
    
    
    4.96
    
    
    
    1,169,134
    
    
    
    786,697Total
    
    
    517,218
 
 (1)
    
    Through September 11, 2006 114




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##### Table of Contents



ITEM 17. FINANCIAL STATEMENTS
  
 Page(s)Consolidated Financial StatementsReports
of independent registered public accounting firm
    
    F-2Consolidated Statements of Operations for the years ended June 30, 2006, 2005 and 2004
    
    F-3Consolidated Balance Sheets as of June 30, 2006 and 2005
    
    F-4Consolidated Statements of Stockholders Equity for the years ended June 30, 2006, 2005 and 2004
    
    F-5Consolidated Statements of Cash Flows for the years ended June 30, 2006, 2005 and 2004
    
    F-6Notes to the Consolidated Financial Statements
    

F-7
 F-30
 
 115




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##### Table of Contents



ITEM 18. EXHIBITS
 1
    
    Statuts, or by-laws, of InfoVista (unofficial English translation up to date as of July 26, 2006)4.1
    
    License to Commercialize ObjectStore, ObjectStore Performance Expert and ObjectStore
Runtime, between eXcelon Corporation and InfoVista dated August 23, 2000**
(incorporated by reference to exhibit 4.1 to Form 20-F, Commission File Number 000-30838).4.2
    
    1996 Stock Option Plan (unofficial English translation) (incorporated by reference to exhibit
10.5 to Form F-1, Commission File Number 333-12160)4.3
    
    1999 Stock Option Plan (unofficial English translation) (incorporated by reference to exhibit
10.6 to Form F-1, Commission File Number 333-12160)4.4
    
    2000 Stock Option Plan, as amended (unofficial English translation) (incorporated by reference
to exhibit 10.7 to Form F-1, Commission File Number 333-12160)4.5
    
    2001 Stock Option Plan, as amended (unofficial English translation) (incorporated by reference
to exhibit 4.3 to Form S-8, Commission File Number 333-81300)4.6
    
    2003 Stock Option Plan (unofficial English translation) (incorporated by reference to exhibit
4.6 to Form 20-F, Commission File Number 000-30838)8
    
    Subsidiaries of the Registrant (see Information on the Company  General Information Concerning
the Share capital of the Company  Subsidiaries and Investments).10.1
    
    Consent of Ernst & Young Audit10.2
    
    Consent of PricewaterhouseCoopers Audit12.1
    
    Certification of the Chief Executive Officer pursuant to
Section 302 of the Sarbanes Oxley Act of 2002.12.2
    
    Certification of the Chief Financial Officer pursuant to
Section 302 of the Sarbanes Oxley Act of 2002.13.1
    
    Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 116




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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
        
 F-1




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##### Table of Contents



Report of Independent Registered Public Accounting Firm




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##### Table of Contents



INFOVISTA
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 (In thousands, except for share and per share data)
 For the year ended June 30,2006
    
    
    2005
    
    
    2004RevenuesLicense revenues
    
    
    22,686
    
    
    
    19,049
    
    
    
    16,076Service revenues
    
    
    17,925
    
    
    
    15,292
    
    
    
    12,611Total revenues (Note 14)
    
    
    40,611
    
    
    
    34,341
    
    
    
    28,687Cost of revenuesCost of licenses
    
    
    796
    
    
    
    857
    
    
    
    681Cost of services
    
    
    7,098
    
    
    
    5,917
    
    
    
    5,722Total cost of revenues
    
    
    7,894
    
    
    
    6,774
    
    
    
    6,403Gross profit
    
    
    32,717
    
    
    
    27,567
    
    
    
    22,284Operating expensesSales and marketing expenses
    
    
    18,130
    
    
    
    15,400
    
    
    
    14,846Research and development expenses
    
    
    7,618
    
    
    
    6,651
    
    
    
    6,081General and administrative expenses
    
    
    6,862
    
    
    
    5,574
    
    
    
    4,346Restructuring costs (Note 16)
    
    
    
    
    
    
    
    
    
    
    2,495Impairment of fixed assets
    
    
    
    
    
    
    
    
    
    
    608Amortization of intangibles assets
    
    
    
    
    
    
    158
    
    
    
    380Total operating expenses
    
    
    32,610
    
    
    
    27,783
    
    
    
    28,756Operating income (loss) (Note 14)
    
    
    107
    
    
    
    (216
    )
    
    
    (6,472
    )Other income (expense):Financial income
    
    
    701
    
    
    
    422
    
    
    
    631Net foreign currency transaction losses
    
    
    (91
    )
    
    
    (46
    )
    
    
    (109
    )Income (loss) before income taxes
    
    
    717
    
    
    
    160
    
    
    
    (5,950
    )Income tax expense (Note 8)
    
    
    (197
    )
    
    
    (36
    )
    
    
    (254
    )Net income (loss)
    
    
    520
    
    
    
    124
    
    
    
    (6,204
    )Basic net income (loss) per share (Note 20)
    
    
    0.03
    
    
    
    0.01
    
    
    
    (0.35
    )Diluted net income (loss) per share (Note 20)
    
    
    0.03
    
    
    
    0.01
    
    
    
    (0.35
    )Basic weighted average shares outstanding
    
    
    17,810,281
    
    
    
    17,271,717
    
    
    
    17,778,929Diluted weighted average shares outstanding
    
    
    19,315,017
    
    
    
    20,936,182
    
    
    
    17,778,929
 The accompanying notes are an integral part of the consolidated financial statements.
 F-3




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INFOVISTA
 
 CONSOLIDATED BALANCE SHEETS
 (In thousands, except for share and per share data)
 As ofJune 30, 2006
    
    
    June 30, 2005ASSETSCash and cash equivalents (Note 2)
    
    
    12,034
    
    
    
    8,781Marketable securities (Note 2)
    
    
    26,170
    
    
    
    24,965Trade receivables, net (Note 17)
    
    
    10,914
    
    
    
    11,310Prepaid expenses and other current assets (Note 3)
    
    
    2,005
    
    
    
    2,071Total current assets
    
    
    51,123
    
    
    
    47,127Fixed assets, net ( Note 4)
    
    
    2,109
    
    
    
    2,200Intangible assets, net (Note 5)
    
    
    1,569
    
    
    
    1,158Investment in equity securities (Note 6)
    
    
    1,340
    
    
    
    1,027Deposits and other assets (Note 7)
    
    
    811
    
    
    
    717Total long-term assets
    
    
    5,829
    
    
    
    5,102Total assets
    
    
    56,952
    
    
    
    52,229LIABILITIES & STOCKHOLDERS EQUITYTrade payables
    
    
    2,183
    
    
    
    2,465Accrued salaries and commissions
    
    
    2,495
    
    
    
    2,523Accrued social security and other payroll taxes
    
    
    1,469
    
    
    
    1,026Deferred revenue
    
    
    7,929
    
    
    
    7,202Accrued VAT
    
    
    1,658
    
    
    
    1,541Other current liabilities
    
    
    220
    
    
    
    363Total current liabilities
    
    
    15,954
    
    
    
    15,120Total long term liabilities
    
    
    225
    
    
    
    113Stockholders equityCommon stock, par value of 0.54 per share
(19,527,564 and 18,524,721 authorized and issued,
18,343,443 and 17,372,867 shares outstanding)
(Note 13)
    
    
    10,545
    
    
    
    10,003Capital in excess of par value of stock
    
    
    88,784
    
    
    
    84,893Accumulated deficit
    
    
    (51,669
    )
    
    
    (52,189
    )Unrealized loss on available for sale securities
    
    
    
    
    
    
    (33
    )Cumulative translation adjustment
    
    
    (1,466
    )
    
    
    (1,200
    )Less common stock in treasury, at cost
    
    
    (5,421
    )
    
    
    (4,478
    )Total stockholders equity
    
    
    40,773
    
    
    
    36,996Total liabilities and stockholders equity
    
    
    56,952
    
    
    
    52,229
 The accompanying notes are an integral part of the consolidated financial statements.
 F-4




---



##### Table of Contents



INFOVISTA
 
 CONSOLIDATED
STATEMENTS OF STOCKHOLDERS EQUITY
 (In thousands, except for share and per share data)
 Capital in
    
    
    AccumulatedNumber of
    
    
    Number of
    
    
    
    
    
    
    
    
    
    
    excess of
    
    
    otherordinary
    
    
    treasury
    
    
    Common
    
    
    Treasury
    
    
    par value of
    
    
    comprehensiveshares
    
    
    shares
    
    
    stock
    
    
    stock
    
    
    stock
    
    
    loss
    
    
    TotalBalance, June 30, 2003
    
    
    18,802,637
    
    
    
    764,634
    
    
    
    10,153
    
    
    
    (1,054
    )
    
    
    84,716
    
    
    
    (47,397
    )
    
    
    46,418Exercise of stock options
    
    
    124,950
    
    
    
    
    
    
    
    67
    
    
    
    
    
    
    
    182
    
    
    
    
    
    
    
    249Subscription and exercise of
stock warrants
    
    
    23,333
    
    
    
    
    
    
    
    13
    
    
    
    
    
    
    
    17
    
    
    
    
    
    
    
    30Stock based compensation expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    44
    
    
    
    
    
    
    
    44Purchase of treasury stock
    
    
    
    
    
    
    1,100,820
    
    
    
    
    
    
    
    (4,310
    )
    
    
    
    
    
    
    
    
    
    
    (4,310
    )Common stock issued from treasury
    
    
    
    
    
    
    (30,000
    )
    
    
    
    
    
    
    48
    
    
    
    23
    
    
    
    
    
    
    
    71Components of comprehensive loss:Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,204
    )
    
    
    (6,204
    )Currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (98
    )
    
    
    (98
    )Unrealized gain on available for
sale securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    54
    
    
    
    54Comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,248
    )Balance, June 30, 2004
    
    
    18,950,920
    
    
    
    1,835,454
    
    
    
    10,233
    
    
    
    (5,316
    )
    
    
    84,982
    
    
    
    (53,645
    )
    
    
    36,254Exercise of stock options
    
    
    268,255
    
    
    
    (1,160
    )
    
    
    145
    
    
    
    2
    
    
    
    426
    
    
    
    
    
    
    
    573Purchase of treasury stock
    
    
    
    
    
    
    31,286
    
    
    
    
    
    
    
    (141
    )
    
    
    
    
    
    
    
    
    
    
    (141
    )Retirement of treasury stock
    
    
    (694,454
    )
    
    
    (694,454
    )
    
    
    (375
    )
    
    
    951
    
    
    
    (576
    )
    
    
    
    
    
    
    0Common stock issued from treasury
    
    
    
    
    
    
    (19,272
    )
    
    
    
    
    
    
    26
    
    
    
    61
    
    
    
    
    
    
    
    87Components of comprehensive
income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    124
    
    
    
    124Currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    36
    
    
    
    36Unrealized gain on available
for sale securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    63
    
    
    
    63Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    223Balance, June 30, 2005
    
    
    18,524,721
    
    
    
    1,151,854
    
    
    
    10,003
    
    
    
    (4,478
    )
    
    
    84,893
    
    
    
    (53,422
    )
    
    
    36,996Exercise of stock options
    
    
    771,595
    
    
    
    (19,895
    )
    
    
    417
    
    
    
    78
    
    
    
    1,562
    
    
    
    
    
    
    
    2,057Exercise of stock warrants
    
    
    231,248
    
    
    
    
    
    
    
    125
    
    
    
    
    
    
    
    479
    
    
    
    
    
    
    
    604Purchase of treasury stock
    
    
    
    
    
    
    467,370
    
    
    
    
    
    
    
    (2,597
    )
    
    
    
    
    
    
    
    
    
    
    (2,597
    )Common stock issued from treasury
    
    
    
    
    
    
    (415,208
    )
    
    
    
    
    
    
    1,576
    
    
    
    781
    
    
    
    
    
    
    
    2,357Stock based compensation charge
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,069
    
    
    
    
    
    
    
    1,069Components of comprehensive
income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    520
    
    
    
    520Currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (266
    )
    
    
    (266
    )Unrealized gain on available for
sale securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    33
    
    
    
    33Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    287Balance, June 30, 2006
    
    
    19,527,564
    
    
    
    1,184,121
    
    
    
    10,545
    
    
    
    (5,421
    )
    
    
    88,784
    
    
    
    (53,135
    )
    
    
    40,773
 The accompanying notes are an integral part of the consolidated financial statements.
 F-5




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##### Table of Contents



INFOVISTA
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (In thousands, except for share and per share data)
 For the year ended June 30,2006
    
    
    2005
    
    
    2004Cash flows from operating activities
Net income (loss)
    
    
    520
    
    
    
    124
    
    
    
    (6,204
    )Adjustments to reconcile net income (loss) to net cash (used)
provided by operating activitiesDepreciation and amortization
    
    
    1,240
    
    
    
    1,381
    
    
    
    1,680Loss on disposal of fixed assets
    
    
    45
    
    
    
    36
    
    
    
    608Stock compensation expense
    
    
    1,069
    
    
    
    
    
    
    
    44Provision for bad debt
    
    
    39
    
    
    
    (20
    )
    
    
    113Gain on sale of investment in available for sale securities
    
    
    (17
    )
    
    
    
    
    
    
    Sale (Purchase) of trading securities, net
    
    
    (7,190
    )
    
    
    2,703
    
    
    
    11,419Changes in operating assets and liabilitiesTrade receivables
    
    
    136
    
    
    
    (2,757
    )
    
    
    (3,325
    )Prepaid expenses and other current assets
    
    
    60
    
    
    
    336
    
    
    
    201Deposits and other assets
    
    
    (98
    )
    
    
    (13
    )
    
    
    (192
    )Trade payable
    
    
    (216
    )
    
    
    (193
    )
    
    
    (783
    )Accrued expenses
    
    
    446
    
    
    
    1,017
    
    
    
    79Deferred revenues
    
    
    929
    
    
    
    1,640
    
    
    
    1,227Accrued VAT taxes and other current liabilities
    
    
    (18
    )
    
    
    (16
    )
    
    
    118Other long term liabilities
    
    
    113
    
    
    
    1
    
    
    
    79Net cash (used) provided by operating activities
    
    
    (2,942
    )
    
    
    4,239
    
    
    
    5,064Cash flows from investing activitiesPurchase of tangible and intangible assets
    
    
    (1,687
    )
    
    
    (1,069
    )
    
    
    (600
    )Sale of investments in available-for-sale securities
    
    
    6,017
    
    
    
    
    
    
    
    Purchase of investments in equity securities
    
    
    (313
    )
    
    
    
    
    
    
    (90
    )Net cash provided (used) by investing activities
    
    
    4,017
    
    
    
    (1,069
    )
    
    
    (690
    )Cash flows from financing activitiesProceeds from exercise of stock options
    
    
    2,057
    
    
    
    573
    
    
    
    249Proceeds from exercise of stock warrants
    
    
    604
    
    
    
    
    
    
    
    30Purchase of treasury stock
    
    
    (2,597
    )
    
    
    (141
    )
    
    
    (4,310
    )Proceeds from issuance of treasury stock
    
    
    2,357
    
    
    
    87
    
    
    
    71Net cash provided (used) by financing activities
    
    
    2,421
    
    
    
    519
    
    
    
    (3,960
    )Net change in cash
    
    
    3,496
    
    
    
    3,689
    
    
    
    414Effects of exchange rate changes
    
    
    (243
    )
    
    
    22
    
    
    
    (123
    )Increase in cash and cash equivalents
    
    
    3,253
    
    
    
    3,711
    
    
    
    291Cash and cash equivalents at beginning of period
    
    
    8,781
    
    
    
    5,070
    
    
    
    4,779Cash and cash equivalents at end of period
    
    
    12,034
    
    
    
    8,781
    
    
    
    5,070
 The accompanying notes are an integral part of the consolidated financial statements.
 F-6




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##### Table of Contents



INFOVISTA
 
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (In thousands, except for share and per share data)
 1  SIGNIFICANT ACCOUNTING POLICIES
 Description of business
  Principles of consolidation and basis of presentation
    Commencement ofCountry of
    
    
    
    
    
    
    inclusion in consolidatedCompany
    
    incorporation
    
    
    % of ownership
    
    
    financial statementsInfoVista S.A. (parent)
    
    France
    
    
    
    
    
    
    InfoVista Corporation
    
    USA
    
    
    100.00
    
    
    
    1997InfoVista UK Ltd
    
    Great Britain
    
    
    100.00
    
    
    
    1999InfoVista GmbH
    
    Germany
    
    
    100.00
    
    
    
    1999InfoVista (Asia-Pacific) Pte Ltd
    
    Singapore
    
    
    100.00
    
    
    
    2000InfoVista BNL NV
    
    Belgium
    
    
    100.00
    
    
    
    2001InfoVista IBE SA
    
    Spain
    
    
    100.00
    
    
    
    2001InfoVista SRL
    
    Italy
    
    
    100.00
    
    
    
    2006
  Estimates and assumptions
  F-7




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##### Table of Contents



INFOVISTA
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except for share and per share data)
 Foreign currency translation and transactions
     
 Revenue recognition
      F-8




---



##### Table of Contents



INFOVISTA
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except for share and per share data)
   Intangible assets
  Fixed assets
  Furniture and fixtures
    
    10 yearsComputers and hardware
    
    5 yearsLeasehold improvements
    
    10 earsPurchased software
    
    3 years
  Impairment of long lived assets
  F-9




---



##### Table of Contents



INFOVISTA
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except for share and per share data)
  Trade receivables
  Cash, cash equivalents, and marketable securities
   Income taxes
  Research and development of computer software
    F-10




---



##### Table of Contents



INFOVISTA
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except for share and per share data)
 Fair value of financial instruments
  Treasury stock
  Net income (loss) per share
  Advertising costs
  Stock based compensation
    F-11




---



##### Table of Contents



INFOVISTA
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except for share and per share data)
  
  
 Weighted average assumptions:Expected holding period (years)
    
    
    6.0Risk-free interest rate
    
    
    3.57
    %Expected volatility
    
    
    40.00
    %Expected dividend yield
    
    
    N/A
 
 F-12




---



##### Table of Contents



INFOVISTA
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except for share and per share data)
   Year ended June 30,2005
    
    
    2004Net income (loss), as reported
    
    
    124
    
    
    
    (6,204
    )Total stock-based employee
compensation expense included in
the determination of the net
income (loss) as reported, net
of related tax effects
    
    
    
    
    
    
    44Total stock-based employee
compensation expense determine
under fair value based method
for all awards, net of related
tax effects
    
    
    (1,514
    )
    
    
    (1,077
    )Pro forma net loss
    
    
    (1,390
    )
    
    
    (7,237
    )Net income (loss) per share:Basic and diluted  as reported
    
    
    0.01
    
    
    
    (0.35
    )Basic and diluted  pro forma
    
    
    (0.08
    )
    
    
    (0.41
    )
  Year ended June 30,2005
    
    
    2004Weighted average fair value per
share for stock options and
warrants granted whose exercise price exceeds the
market price of the stock on the
grant date
    
    
    1.26
    
    
    
    2.13 whose exercise price equals the
market price of the stock on the
grant date
    
    
    1.53
    
    
    
    1.52Weighted average exercise price whose exercise price exceeds the
market price of the stock on the
grant date
    
    
    3.92
    
    
    
    3.94 whose exercise price equals the
market price of the stock on the
grant date
    
    
    3.79
    
    
    
    2.32Total fair value of stock options
and warrants granted
    
    
    1,348
    
    
    
    2,211Weighted average assumptions:Expected holding period (years)
    
    
    5.2
    
    
    
    3.7Risk-free interest rate
    
    
    3.02
    %
    
    
    2.91
    %Volatility
    
    
    40.00
    %
    
    
    84.77
    %Expected dividend yield
    
    
    N/A
    
    
    
    N/A
 F-13




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##### Table of Contents



INFOVISTA
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except for share and per share data)
 Recent accounting pronouncements
   2  CASH AND CASH EQUIVALENTS AND MARKETABLE SECURITIES
 Cash and cash equivalents
  As of June 302006
    
    
    2005Cash held at bank
    
    
    5,078
    
    
    
    7,617Cash equivalents
    
    
    6,956
    
    
    
    1,164Total cash and cash equivalents
    
    
    12,034
    
    
    
    8,781
  
 F-14




---



##### Table of Contents



INFOVISTA
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except for share and per share data)
 Marketable securities
  As of June 30, 2006
    
    
    As of June 30, 2005Available
    
    
    
    
    
    
    
    
    
    
    AvailableTrading
    
    
    for Sale
    
    
    
    
    
    
    Trading
    
    
    for SaleSecurities
    
    
    Securities
    
    
    Total
    
    
    Securities
    
    
    Securities
    
    
    TotalSICAV and FCP
    
    
    26,170
    
    
    
    
    
    
    
    26,170
    
    
    
    18,998
    
    
    
    
    
    
    
    18,998KLEBER 2006
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,967
    
    
    
    5,967Total
    
    
    26,170
    
    
    
    
    
    
    
    26,170
    
    
    
    18,998
    
    
    
    5,967
    
    
    
    24,965
   
    
        
 3  PREPAID EXPENSES AND OTHER CURRENT ASSETS
  As of June 302006
    
    
    2005Prepaid expenses
    
    
    690
    
    
    
    641Value Added Taxes receivable
    
    
    1,173
    
    
    
    1,303Other
    
    
    142
    
    
    
    127Total prepaid expenses and other current assets
    
    
    2,005
    
    
    
    2,071
  F-15




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##### Table of Contents



INFOVISTA
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except for share and per share data)
 4  FIXED ASSETS, NET
  DisposalsJune 30,
    
    
    
    
    
    
    and
    
    
    Currency
    
    
    June 30,2005
    
    
    Additions
    
    
    write-offs
    
    
    variation
    
    
    2006Gross ValuePurchased software
    
    
    1,330
    
    
    
    261
    
    
    
    (415
    )
    
    
    (8
    )
    
    
    1,168Computers & hardware
    
    
    3,101
    
    
    
    328
    
    
    
    (310
    )
    
    
    (25
    )
    
    
    3,094Leasehold improvements
    
    
    1,135
    
    
    
    160
    
    
    
    
    
    
    
    (24
    )
    
    
    1,271Furniture & fixtures
    
    
    789
    
    
    
    61
    
    
    
    (45
    )
    
    
    (20
    )
    
    
    785Total
    
    
    6,355
    
    
    
    810
    
    
    
    (770
    )
    
    
    (77
    )
    
    
    6,318
 DisposalsJune 30,
    
    
    
    
    
    
    and
    
    
    Currency
    
    
    June 30,2005
    
    
    Additions
    
    
    write-offs
    
    
    variation
    
    
    2006Accumulated DepreciationPurchased software
    
    
    1,223
    
    
    
    113
    
    
    
    (398
    )
    
    
    (8
    )
    
    
    930Computers & hardware
    
    
    1,948
    
    
    
    484
    
    
    
    (303
    )
    
    
    (17
    )
    
    
    2,112Leasehold improvements
    
    
    616
    
    
    
    144
    
    
    
    0
    
    
    
    (13
    )
    
    
    747Furniture & fixtures
    
    
    368
    
    
    
    81
    
    
    
    (24
    )
    
    
    (5
    )
    
    
    420Total
    
    
    4,155
    
    
    
    822
    
    
    
    (725
    )
    
    
    (43
    )
    
    
    4,209Total fixed assets, net
    
    
    2,200
    
    
    
    (12
    )
    
    
    (45
    )
    
    
    (34
    )
    
    
    2,109
   
 5  INTANGIBLE ASSETS, NET
  DisposalsJune 30,
    
    
    
    
    
    
    and
    
    
    
    
    
    
    Currency
    
    
    June 30,2005
    
    
    Additions
    
    
    retirements
    
    
    Reclass
    
    
    variation
    
    
    2006Gross ValueLicenses
technologies &
royalty advances
    
    
    2,094
    
    
    
    829
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,923Acquired
intangibles &
others
    
    
    331
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    331Total
    
    
    2,425
    
    
    
    829
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    3,254
 F-16




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##### Table of Contents



INFOVISTA
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except for share and per share data)
 DisposalsJune 30,
    
    
    
    
    
    
    and
    
    
    
    
    
    
    Currency
    
    
    June 30,2005
    
    
    Additions
    
    
    retirements
    
    
    Reclass
    
    
    variation
    
    
    2006Accumulated DepreciationLicenses
technologies &
royalty advances
    
    
    1,186
    
    
    
    365
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,551Acquired
intangibles &
others
    
    
    81
    
    
    
    53
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    134Total
    
    
    1,267
    
    
    
    418
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    1,685Total intangibles
assets, net
    
    
    1,158
    
    
    
    411
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    1,569
   
    
  
 6  INVESTMENT IN EQUITY SECURITIES
  
 
 7  FAIR VALUE OF LONG TERM DEPOSITS
    
 F-17




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##### Table of Contents



INFOVISTA
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except for share and per share data)
  8  INCOME TAXES
  Year ended June 302006
    
    
    2005
    
    
    2004France
    
    
    (21,719
    )
    
    
    5,154
    
    
    
    3,120Others
    
    
    22,436
    
    
    
    (4,994
    )
    
    
    (9,070
    )Total
    
    
    717
    
    
    
    160
    
    
    
    (5,950
    )
  Year ended June 302006
    
    
    2005
    
    
    2004Current income tax expense
    
    
    (197
    )
    
    
    (36
    )
    
    
    (254
    )Deferred income tax expense
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    (197
    )
    
    
    (36
    )
    
    
    (254
    )
 Effective tax rate
  Year ended June 302006
    
    
    2005
    
    
    2004French Statutory tax rate
    
    
    33.33
    %
    
    
    33.83
    %
    
    
    34.32
    %Income tax provision computed at French
Statutory tax rate
    
    
    239
    
    
    
    54
    
    
    
    (2,042
    )Permanent differences
    
    
    617
    
    
    
    (237
    )
    
    
    (8
    )Change in valuation allowance
    
    
    (856
    )
    
    
    183
    
    
    
    2,050Withholding & annual minimum income taxes
    
    
    197
    
    
    
    36
    
    
    
    254Income tax provision
    
    
    197
    
    
    
    36
    
    
    
    254
 F-18




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##### Table of Contents



INFOVISTA
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except for share and per share data)
 Deferred taxes and valuation allowance
  As of June 30,2006
    
    
    2005Deferred tax liabilities:Depreciation
    
    
    (109
    )
    
    
    (61
    )Others
    
    
    (37
    )
    
    
    (81
    )Total deferred tax liabilities
    
    
    (146
    )
    
    
    (142
    )Deferred tax assets:Net operating loss carryforwards
    
    
    13,714
    
    
    
    15,718Depreciation and amortization
    
    
    2
    
    
    
    53Others
    
    
    568
    
    
    
    558Total deferred tax assets
    
    
    14,284
    
    
    
    16,329Valuation allowance
    
    
    (14,138
    )
    
    
    (16,187
    )Net deferred tax assets
    
    
    0
    
    
    
    0
  Net operating loss carryforwards
  Expiration date:2007
    
    
    2008
    
    
    2009
    
    
    2010
    
    
    Between 2023 and 2025
    
    
    6,823No expiration date
    
    
    34,681Total net operating loss carryforwards
    
    
    41,504
  9  DEBT
 Available lines of credit
  F-19




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##### Table of Contents



INFOVISTA
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except for share and per share data)
 10
 COMMITMENTS AND CONTINGENCIES
 Operating leases
   Year ending June 30,2007
    
    
    1,4052008
    
    
    1,1332009
    
    
    9692010
    
    
    102011
    
    
    6Thereafter
    
    
    Total
    
    
    3,523
   
  Purchase obligations
 
 Stock options
  
 F-20




---



##### Table of Contents



INFOVISTA
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except for share and per share data)
 Guarantees and indemnification obligations
   11
 EXPOSURE TO MARKET RISKS AND FINANCIAL INSTRUMENTS
 Potential legal contingencies
  Concentrations of credit risk
  Foreign currency risk
     
 F-21




---



##### Table of Contents



INFOVISTA
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except for share and per share data)
 Interest rate risk
  12
 EMPLOYEE RETIREMENT PLANS
  French employee retirement plan
      
 U.S. defined contribution plan
   
 13
CAPITAL (COMMON STOCK AND CAPITAL IN EXCESS OF PAR VALUE)
 Capital
 
  Dividend rights
 F-22




---



##### Table of Contents



INFOVISTA
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except for share and per share data)
 
 Treasury Stock
  Stock options
      F-23




---



##### Table of Contents



INFOVISTA
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except for share and per share data)
  Options to subscribe forshares
    
    
    Options to purchase sharesWeighted
    
    
    
    
    
    
    WeightedNumber of
    
    
    Average
    
    
    Number
    
    
    AverageShares
    
    
    Exercise Price
    
    
    of Shares
    
    
    Exercise PriceBalance, June 30, 2003
    
    
    2,783,393
    
    
    
    3.17
    
    
    
    0
    
    
    
    0.00Granted
    
    
    1,225,730
    
    
    
    2.97
    
    
    
    295,180
    
    
    
    2.15Forfeited/Cancelled
    
    
    (888,447
    )
    
    
    2.50
    
    
    
    (11,300
    )
    
    
    2.15Exercised
    
    
    (124,950
    )
    
    
    2.00
    
    
    
    
    
    
    
    Balance, June 30, 2004
    
    
    2,995,726
    
    
    
    2.82
    
    
    
    283,880
    
    
    
    2.15Granted
    
    
    517,600
    
    
    
    3.53
    
    
    
    392,200
    
    
    
    4.18Forfeited/Cancelled
    
    
    (241,345
    )
    
    
    5.43
    
    
    
    (28,780
    )
    
    
    3.07Exercised
    
    
    (268,255
    )
    
    
    2.12
    
    
    
    (1,160
    )
    
    
    2.15Balance, June 30, 2005
    
    
    3,003,726
    
    
    
    3.22
    
    
    
    646,140
    
    
    
    3.34Granted
    
    
    22,500
    
    
    
    5.03
    
    
    
    217,500
    
    
    
    5.20Forfeited/Cancelled
    
    
    (145,871
    )
    
    
    4.64
    
    
    
    (19,400
    )
    
    
    3.97Exercised
    
    
    (771,595
    )
    
    
    2.53
    
    
    
    (19,895
    )
    
    
    2.29Balance, June 30, 2006
    
    
    2,108,760
    
    
    
    3.40
    
    
    
    824,345
    
    
    
    3.84
   Outstanding
    
    
    ExercisableWeighted-
    
    
    
    
    
    
    
    
    
    
    Weighted-Average
    
    
    Weighted-
    
    
    
    
    
    
    AverageNumber of
    
    
    Remaining Life
    
    
    Average
    
    
    Number
    
    
    ExerciseRange of Exercise Prices/Share
    
    Shares
    
    
    (in Years)
    
    
    Exercise Price
    
    
    of Shares
    
    
    PriceFrom 1.01 to 2.00
    
    
    529,562
    
    
    
    3.72
    
    
    
    1.75
    
    
    
    429,562
    
    
    
    1.74From 2.01 to 3.00
    
    
    907,543
    
    
    
    5.79
    
    
    
    2.41
    
    
    
    802,158
    
    
    
    1.83From 3.01 to 4.00
    
    
    861,175
    
    
    
    7.59
    
    
    
    3.72
    
    
    
    209,825
    
    
    
    3.83From 4.01 to 5.00
    
    
    307,075
    
    
    
    7.26
    
    
    
    4.46
    
    
    
    117,950
    
    
    
    4.57Over 5.00
    
    
    327,750
    
    
    
    7.43
    
    
    
    7.84
    
    
    
    103,250
    
    
    
    13.57Total
    
    
    2,933,105
    
    
    
    6.28
    
    
    
    3.49
    
    
    
    1,622,745
    
    
    
    2.98
 F-24




---



##### Table of Contents



INFOVISTA
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except for share and per share data)
 Stock warrants
  TotalSeries C
    
    
    Series E
    
    
    Series F
    
    
    Total
    
    
    IssuableWarrants
    
    
    Warrants
    
    
    Warrants
    
    
    Warrants
    
    
    SharesBalance, June 30, 2003
    
    
    57,500
    
    
    
    140,624
    
    
    
    165,624
    
    
    
    393,748
    
    
    
    349,998Granted
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0
    
    
    
    0Forfeited
    
    
    
    
    
    
    (25,000
    )
    
    
    (16,667
    )
    
    
    (41,667
    )
    
    
    (41,667
    )Exercised
    
    
    
    
    
    
    
    
    
    
    (8,333
    )
    
    
    (38,333
    )
    
    
    (23,333
    )Balance, June 30, 2004
    
    
    57,500
    
    
    
    115,624
    
    
    
    140,624
    
    
    
    313,748
    
    
    
    284,998Granted
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0
    
    
    
    0Forfeited
    
    
    (57,500
    )
    
    
    
    
    
    
    
    
    
    
    (57,500
    )
    
    
    (28,750
    )Exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0
    
    
    
    0Balance, June 30, 2005
    
    
    0
    
    
    
    115,624
    
    
    
    140,624
    
    
    
    256,248
    
    
    
    256,248Granted
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0
    
    
    
    0Forfeited
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0
    
    
    
    0Exercised
    
    
    
    
    
    
    (90,624
    )
    
    
    (140,624
    )
    
    
    (231,248
    )
    
    
    (231,248
    )Balance, June 30, 2006
    
    
    0
    
    
    
    25,000
    
    
    
    0
    
    
    
    25,000
    
    
    
    25,000
   
  
  
 F-25




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##### Table of Contents



INFOVISTA
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except for share and per share data)
 14
 SEGMENT INFORMATION
 Reportable segments
   Geographic areas
  Revenue analysis
 Year ended June 30,2006
    
    
    2005
    
    
    2004EuropeFrance
    
    
    5,758
    
    
    
    4,966
    
    
    
    3,666Others
    
    
    12,678
    
    
    
    11,584
    
    
    
    10,152Total
    
    
    18,436
    
    
    
    16,550
    
    
    
    13,818Asia-Pacific
    
    
    4,786
    
    
    
    2,577
    
    
    
    2,806Americas
    
    
    17,389
    
    
    
    15,214
    
    
    
    12,063Total sales
    
    
    40,611
    
    
    
    34,341
    
    
    
    28,687
 Operating income (loss) analysis
 Year ended June 30,2006
    
    
    2005
    
    
    2004EuropeFrance
    
    
    (14,662
    )
    
    
    (10,268
    )
    
    
    (11,616
    )Others
    
    
    8,655
    
    
    
    7,171
    
    
    
    5,907Total
    
    
    (6,007
    )
    
    
    (3,097
    )
    
    
    (5,709
    )Asia-Pacific
    
    
    1,721
    
    
    
    216
    
    
    
    1,199Americas
    
    
    4,393
    
    
    
    2,665
    
    
    
    (1,962
    )Total operating income (loss)
    
    
    107
    
    
    
    (216
    )
    
    
    (6,472
    )
 F-26




---



##### Table of Contents



INFOVISTA
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except for share and per share data)
 Carrying amount of long-lived assets
  As of June 30,2006
    
    
    2005EuropeFrance
    
    
    3,004
    
    
    
    2,730Others
    
    
    45
    
    
    
    77Total
    
    
    3,049
    
    
    
    2,807Asia-Pacific
    
    
    87
    
    
    
    82Americas
    
    
    542
    
    
    
    469Total carrying amount of long-lived assets
    
    
    3,678
    
    
    
    3,358
 Information about major customers
  15
 RELATED PARTY TRANSACTIONS
 ClariTeam
  
 Ecensity
    
 F-27




---



##### Table of Contents



INFOVISTA
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except for share and per share data)
 16
 RESTRUCTURING COSTS
  Year ended June 302006
    
    
    2005
    
    
    2004Reduction in its workforce
    
    
    
    
    
    
    
    
    
    
    795Office rationalization
    
    
    
    
    
    
    
    
    
    
    1,700Total restructuring costs
    
    
    0
    
    
    
    0
    
    
    
    2,495
  Utilization
    
    
    
    
    
    
    Non-cashInitial
    
    
    fiscal year
    
    
    Ending
    
    
    portion ofprovision
    
    
    2004
    
    
    balance
    
    
    provisionReduction in its workforce
    
    
    795
    
    
    
    (795
    )
    
    
    
    
    
    
    Office rationalization
    
    
    1,700
    
    
    
    (1,700
    )
    
    
    
    
    
    
    Total restructuring costs
    
    
    2,495
    
    
    
    (2,495
    )
    
    
    0
    
    
    
    0
  
 17
 VALUATION AND QUALIFYING ACCOUNTS
  Balance atbeginning of
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Currency
    
    
    Balance atyear
    
    
    Provisions
    
    
    Reversals
    
    
    Write-offs
    
    
    variation
    
    
    end of yearFiscal year 2004
    
    
    460
    
    
    
    113
    
    
    
    
    
    
    
    (165
    )
    
    
    (21
    )
    
    
    387Fiscal year 2005
    
    
    387
    
    
    
    89
    
    
    
    (109
    )
    
    
    (110
    )
    
    
    (4
    )
    
    
    253Fiscal year 2006
    
    
    253
    
    
    
    49
    
    
    
    (47
    )
    
    
    (10
    )
    
    
    (2
    )
    
    
    243
 18
 PERSONNEL COSTS
     
 F-28




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##### Table of Contents



INFOVISTA
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except for share and per share data)
 19  COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICIERS
   
  
    
    Mr. Gad Tobaly, Chief Executive Officer, is entitled to receive
compensation equal to twelve months of his compensation and fully accelerated vesting
of his stock options, if the Group terminates his employment other than for cause.
    
    Mr. Philippe Ozanian, Chief Financial Officer, is entitled to receive
compensation equal to twelve months of his compensation (including fixed salary and
100% of his variable salary along with indemnities linked with his employment contract
at the date of the event), if either his employment contract is terminated for any
reason other than for cause or if he resigns on the basis of a change in his position
or responsibilities.
 
 20  NET INCOME (LOSS) PER SHARE
  Year ended June 30,2006
    
    
    2005
    
    
    2004Net income (loss)
    
    
    520
    
    
    
    124
    
    
    
    (6,204
    )Weighted average common shares outstanding
    
    
    17,810,281
    
    
    
    17,271,717
    
    
    
    17,778,929Dilutive effect of stock options and warrants
    
    
    1,504,736
    
    
    
    3,664,465
    
    
    
    Dilutive weighted average common shares outstanding
    
    
    19,315,017
    
    
    
    20,936,182
    
    
    
    17,778,929Basic net income (loss) per share
    
    
    0.03
    
    
    
    0.01
    
    
    
    (0.35
    )Diluted net income (loss) per share
    
    
    0.03
    
    
    
    0.01
    
    
    
    (0.35
    )
 F-29




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##### Table of Contents



INFOVISTA
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except for share and per share data)
 21
 SUBSEQUENT EVENTS
  
 F-30




---



##### Table of Contents



SIGNATURE
  INFOVISTA S.A.Dated:
October 10, 2006
    
    By : /s/ GAD TOBALY

Gad TobalyChief Executive Officer
 F-31




---



##### Table of Contents



Exhibits Index
 1
    
    Statuts, or by-laws, of InfoVista (unofficial English translation up to date as of July 26, 2006)4.1
    
    License to Commercialize ObjectStore, ObjectStore Performance Expert and ObjectStore
Runtime, between eXcelon Corporation and InfoVista dated August 23, 2000**
(incorporated by reference to exhibit 4.1 to Form 20-F, Commission File Number 000-30838).4.2
    
    1996 Stock Option Plan (unofficial English translation) (incorporated by reference to exhibit
10.5 to Form F-1, Commission File Number 333-12160)4.3
    
    1999 Stock Option Plan (unofficial English translation) (incorporated by reference to exhibit
10.6 to Form F-1, Commission File Number 333-12160)4.4
    
    2000 Stock Option Plan, as amended (unofficial English translation) (incorporated by reference to
exhibit 10.7 to Form F-1, Commission File Number 333-12160)4.5
    
    2001 Stock Option Plan, as amended (unofficial English translation) (incorporated by reference to
exhibit 4.3 to Form S-8, Commission File Number 333-81300)4.6
    
    2003 Stock Option Plan (unofficial English translation) (incorporated by reference to exhibit 4.6
to Form 20-F, Commission File Number 000-30838)8
    
    Subsidiaries of the Registrant (see Information on the Company  General Information Concerning
the Share capital of the Company  Subsidiaries and Investments).10.1
    
    Consent of Ernst & Young Audit10.2
    
    Consent of PricewaterhouseCoopers
Audit12.1
    
    Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes Oxley Act of
2002.12.2
    
    Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes Oxley Act of
2002.13.1
    
    Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
 
 *
    
    Confidential treatment has been requested with respect to certain portions of this exhibit.
Omitted portions have been filed separately with the Securities and Exchange Commission.*
    
    Financial statement schedules are omitted because they are not applicable or because the
information required F-32