##### Table of Contents



UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, D.C.
    20549
      Form 10-K
      þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the year ended December 31, 2005oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)   OF
    THE SECURITIES EXCHANGE ACT OF 1934   Commission File Number:
    000-27389
  INTERWOVEN, INC.
 (Exact name of registrant as
    specified in its charter)
  Delaware

77-0523543(State or other jurisdiction
    of

(I.R.S. Employerincorporation or
    organization)

Identification No.)   803
    11th Avenue
    Sunnyvale, California 94089 (Address
    of principal executive offices and zip code)
  (408) 774-2000
 (Registrants telephone
    number, including area code)
  Securities registered pursuant to Section 12(b) of the
    Act:
 None
  Securities registered pursuant to Section 12(g) of the
    Act:
  Common Stock, $.001 par value (Title of Class)
  o þ
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K. þ
  Rule 12b-2
 o þ o
  Rule 12b-2 o þ
      DOCUMENTS
    INCORPORATED BY REFERENCE
  Form 10-K.




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##### 



INTERWOVEN,
    INC.
  TABLE OF
    CONTENTS
   
 Page No.PART IItem 1.

Business


1Item 1A.

Risk Factors


8Item 1B.

Unresolved Staff
    Comments


19Item 2.

Properties


19Item 3.

Legal
    Proceedings


20Item 4.

Submission of
    Matters to a Vote of Security Holders


20PART IIItem 5.

Market for the
    Registrants Common Equity, Related Stockholder Matters and
    Issuer Purchases of Equity Securities


21Item 6.

Selected Financial
    Data


21Item 7.

Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations


22Item 7A.

Quantitative and
    Qualitative Disclosures About Market Risk


36Item 8.

Financial
    Statements and Supplementary Data


38Item 9.

Changes in and
    Disagreements with Accountants on Accounting and Financial
    Disclosure


38Item 9A.

Controls and
    Procedures


38Item 9B.

Other
    Information


40PART IIIItem 10.

Directors and
    Executive Officers of the Registrant


40Item 11.

Executive
    Compensation


41Item 12.

Security Ownership
    of Certain Beneficial Owners and Management and Related
    Stockholder Matters


41Item 13.

Certain
    Relationships and Related Transactions


41Item 14.

Principal
    Accountant Fees and Services


41PART IVItem 15.

Exhibits and
    Financial Statement Schedules


41Signatures


77EXHIBIT 3.02EXHIBIT 10.05EXHIBIT 10.09EXHIBIT 10.13EXHIBIT 10.14EXHIBIT 10.19EXHIBIT 10.21EXHIBIT 10.22EXHIBIT 10.23EXHIBIT 21.01EXHIBIT 23.01EXHIBIT 31.01EXHIBIT 31.02EXHIBIT 32.01EXHIBIT 32.02




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##### Table of Contents



CAUTION
    REGARDING FORWARD LOOKING STATEMENTS
  Form 10-K Form 10-K
   PART I  ITEM 1.
    BUSINESS  Overview
  e-mails
  th (408) 774-2000. www.interwoven.com Form 10-K, Form 10-Q, Form 8-K www.sec.gov
  Interwoven
    Enterprise Content Management Solutions and Products
  Solutions
    
    Content Provisioning Solution  The
    Interwoven Content Provisioning solution standardizes the way
    code, content and configuration changes are aggregated,
    synchronized and deployed throughout testing, staging and
    production environments. The solution gives information
    technology (IT) operations full control over the
    provisioning of application assets, delivers reporting, version
    control and rollback capabilities, and features configurable
    workflows to streamline the release process. The solution meets
    key IT compliance requirements by delivering an auditable,
    historical snapshot of all application changes. We believe the
    solution also reduces release management costs by automating
    error-prone manual processes, while accelerating application
    time to market. 1




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
    Deal Management  The Interwoven Deal
    Management solution is a collaborative application that is used
    to manage proposals, contracts, negotiations, deal processes and
    all forms of communications, including email, keeping extended
    functional teams informed about a transaction or an account,
    with an objective of decreasing deal closing time and improving
    efficiency.
    Electronic Content Management for Accounting
    Firms  The Interwoven Electronic Content
    Management solution enables accounting firms to easily and
    efficiently create and manage complete client engagement
    files  including electronic documents, scanned
    paper documents,
    e-mails and
    records in one central
    Web-based
    system. As a result, firms can expedite client service, improve
    organizational efficiency and retain talent.
    Matter-Centric Collaboration for Law
    Firms  Interwovens Matter-Centric
    Collaboration solution for law firms is based on a user-centric
    design which enables professional services practitioners to
    manage client and matter-related content in the electronic world
    the way they have traditionally done in the physical world.
    Legal professionals can consolidate documents, records,
    e-mails,
    billings, contacts and all other relevant content for any given
    client or matter in a single integrated electronic file that is
    accessible both internally and externally across departments and
    locations.
    Over-the-Counter
    Derivatives Documentation Automation  We
    offer a complete solution for the automation of
    over-the-counter
    derivatives documentation, including trade confirmations. Our
    solution allows financial services customers to more quickly and
    easily conduct complex non-exchange-based trades with other
    financial institutions, clear compliance hurdles, reduce costs
    and increase processing efficiencies.
    SalesSite  Interwovens SalesSite
    solution is an
    out-of-the-box
    sales intranet that is specifically designed to help improve and
    streamline communication between marketing and sales
    organizations. The solution is built on top of Interwovens
    Web content management platform, including TeamSite and
    LiveSite. The solution addresses the challenges of ease of
    contribution and of efficient organization of information.
    SalesSite not only helps get a sales intranet up and running in
    a minimum amount of time, but it allows for the ongoing
    maintenance with minimum intervention from IT.  Products
    
    Document Management  Interwovens
    WorkSitetm
    Collaboration and Document Server provide the ability to
    capture, develop, manage, review, approve and archive documents.
    WorkSite provides a comprehensive set of document handling
    features, including check-in/check-out, version control,
    full-text and metadata search and document-level security and
    permissions. The design goal of WorkSite is to provide the
    specific documents individuals need for their immediate tasks,
    and to surround them with the context needed to optimize their
    work within a team environment, such as additional documents,
    tasks, calendar items and team
    e-mail. The
    breadth of capabilities and intuitive interfaces offered by
    WorkSite remove the challenges typically found in front office
    deployments  such as large training efforts,
    process re-engineering and general lack of adoption, resulting
    in improved user adoption and more rapid return on investment.
    Web Content Management  Interwoven
    TeamSitetm
    is among the industrys most advanced Web content
    management software for the enterprise. TeamSite underpins a
    wide range of enterprise applications  from
    intranets and internal portals to public Web sites, dealer
    portals and extranets  to enable businesses to
    manage their mission-critical information and gain competitive
    advantage. 2




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
    Content Publishing  Interwoven LiveSite
    Content Publishing
    Servertm
    empowers business professionals to publish dynamic,
    business-driven Web sites. LiveSite provides a WYSIWYG
    (What You See Is What You Get) publishing platform
    for creating, deploying and managing dynamic Web sites. Using
    LiveSite, business professionals can quickly assemble dynamic
    Web pages and sites from design templates, site components and
    reusable content, and then easily customize the presentation,
    content and functionality to meet changing business needs.
    Digital Asset Management  MediaBin Asset
    Servertm
    provides businesses with a central library for the thousands of
    digital assets used to promote their products and brands. With
    MediaBin, marketing teams can catalog, manage, transform and
    deploy digital assets, including product photographs, graphics,
    marketing collateral, presentations, documents and videos.
    Records Management  Interwoven
    RecordsManager provides for the management of paper, electronic
    documents and
    e-mail in a
    single solution. By enabling the management of all forms of
    records  even in other
    systems  from a single policy management and
    application engine, Interwoven RecordsManager helps
    organizations to control records consistently and effectively
    across offices, media types and systems, reducing the cost of
    managing records and the risk from inconsistent application of
    records policies. Interwoven RecordsManager is fully integrated
    with WorkSite.
    E-Mail
    Management  Interwoven
    E-Mail
    Management assists businesses in storing
    e-mail in a
    scalable document management system enables firms to make
    e-mail part
    of a unified engagement, project or matter file. Interwoven
    E-mail
    Management reduces the burden on
    e-mail
    servers, and transforms
    e-mail from
    an isolated knowledge source, visible only to the person to whom
    it is addressed, into an asset that can be shared across all
    locations, easily and securely.
    Content Intelligence  Interwoven
    MetaTaggertm
    Content Intelligence Server drives content relevance for
    critical initiatives such as portals, enterprise search and
    business applications, enabling organizations to reduce costs,
    realize higher revenues and improve workforce productivity. The
    MetaTagger Content Intelligence Server provides enterprises with
    a metadata management system that is designed to power the right
    content to the right user at the right time, and in the right
    context. MetaTagger enriches enterprise content with metadata,
    or information about a piece of content that is critical to
    enterprise portal, search and customer relationship management
    applications.
    Content Distribution  Interwoven
    OpenDeploy®
    Distribution Server provides cost-effective aggregation and
    distribution of any type of content (Web content, code,
    documents, media, etc.) to any application (comprised of Web
    servers, application servers, database servers or simple file
    servers) in any physical location within a network. OpenDeploy
    also ensures that code and content reflected in applications
    worldwide are accurate, secure and easily synchronized.
    Content Integration  Interwoven Content
    Integration Server gives enterprises the ability to leverage and
    re-purpose content stored in repositories and file systems
    throughout the enterprise within content-rich applications. The
    Content Integration Server allows users to search virtually any
    desired repository to find existing content, aggregate that
    content into TeamSite, and then transform the content from
    various file types into more extensible formats. The Content
    Integration Server can also leverage content from other
    applications including IBM Content Management, Lotus Notes and
    FileNet.
    Interwoven Enterprise Application Connector
    Suite  Interwovens Enterprise
    Application Connector Suite ensures that team members throughout
    the enterprise collaborate, share and manage knowledge through
    everyday business portals. Portal-specific adaptors ensure a
    tightly-coupled experience that enables businesses to consume
    information, while easily contributing information, reviewing
    tasks and participating in review and approval cycles, all
    through the familiar face of the portal.
    Imaging  Underpinned by 11 world-class
    imaging partners, Interwoven Imaging delivers business process
    efficiency, control and security to over 600 customers.
    End-to-end
    image processing encompasses document capture, document
    management and records management. The image processing offering
    is central to automating core business processes such as
    accounts payable, claims processing, legal document processing,
    contract management and complying with various regulations. For
    companies requiring image 3




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processing as part of a larger collaborative document management
    requirement, Interwoven provides capabilities to convert paper,
    forms and fax documents to digital format for on-going use in a
    collaborative context, record retention and archival.  
    Interwoven Developer Suite  The
    Interwoven Developer Suite provides developers with a set of
    tools that assist with the development, customization and
    integration of applications with the Interwoven content
    management platform. The suite includes the Interwoven
    ContentServices SDK, a Web services-based API that supports
    implementation of a service-oriented architecture, and the
    Interwoven Developer Server, which is a separate and safe
    environment for testing new applications, customizations, and
    upgrades.  Support
    and Service
  Customer Support. e-mail
  Consulting.
  Training.
  Customers
  time-to-value
  Sales and
    Marketing
     4




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Research
    and Development
      Acquisitions
         5




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Competition
    
    companies addressing needs of the market in which we compete
    such as EMC Corporation, FileNet Corporation, Hummingbird Ltd.,
    IBM, Microsoft Corporation, Open Text Corporation, Oracle
    Corporation, Stellent, Inc., Vignette Corporation and Xerox
    Corporation;
    intranet and groupware companies, such as IBM, Microsoft
    Corporation and Novell, Inc.;
    open source vendors, such as RedHat, Inc., OpenCms and
    Mambo; and
    in-house development efforts by our customers and partners.      
    breadth of the enterprise content management solution;
    product functionality and features;
    coverage of sales force and distribution channel;
    availability of global support;
    quality and depth of integration of the individual software
    modules across the full ECM suite;
    ease and speed of product implementation;
    hardware implications and the total cost of ownership required
    to deploy ECM solutions;
    financial condition of vendors;
    vendor and product reputation;
    ability of products to support large numbers of concurrent users;
    price;
    security;
    interoperability with established software;
    scalability; and
    ease of access and use. 6




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Seasonality
    Intellectual
    Property and Other Proprietary Rights
           7




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Employees
    ITEM 1A.
    RISK
    FACTORS  Form 10-K
  We
    have incurred losses throughout our operating history and may
    not be able to achieve consistent profitability.
    Many
    factors can cause our operating results to fluctuate and if we
    fail to satisfy the expectations of investors or securities
    analysts, our stock price may decline.
    
    the discretionary nature of our customers purchases and
    their budget cycles;
    the inherent complexity, length and associated unpredictability
    of our sales cycle;
    the success or failure of any of our product offerings to meet
    with customer acceptance;
    delays in recognizing revenue from license transactions;
    timing of new product releases;
    timing of large customer orders; 8




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
    changes in competitors product offerings;
    sales force capacity and the influence of resellers and systems
    integrator partners;
    our ability to integrate newly acquired products with our
    existing products and effectively sell newly acquired
    products; and
    the level of our sales incentive and commission related expenses.    Sales
    cycles for our products are generally long and unpredictable, so
    it is difficult to forecast our future results.
    
    Licensing of our software products is often an enterprise-wide
    decision by our customers that involves many customer-specific
    factors, so our ability to make a sale may be affected by
    changes in the strategic importance of a particular project to a
    customer, its budgetary constraints or changes in customer
    personnel.
    Customer approval and expenditure authorization processes can be
    difficult and time consuming, and delays in the process could
    impact the timing and amount of revenues recognized in a quarter.
    Changes in our sales incentive plans may have unexpected effects
    on our sales cycle and contracting activities.
    The significance and timing of our software enhancements, and
    the introduction of new software by our competitors, may affect
    customer purchases.     9




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Our
    revenues depend on a small number of products and markets, so
    our results are vulnerable to unexpected shifts in
    demand.
        The
    timing of large customer orders may have a significant impact on
    our consolidated financial results from period to
    period.
    Contractual
    issues may arise during the negotiation process that may delay
    anticipated transactions and revenue.
       10




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Support
    and service revenues have represented a large percentage of our
    total revenues. Our support and service revenues are vulnerable
    to reduced demand and increased competition.
      We may
    not realize the anticipated benefits of past or future
    acquisitions, and integration of these acquisitions may disrupt
    our business and management.
    
    difficulty in assimilating the operations and personnel of the
    acquired company;
    difficulty in effectively integrating the acquired technologies
    or products with our current products and technologies;
    difficulty in maintaining controls, procedures and policies
    during the transition and integration;
    disruption of our ongoing business and distraction of our
    management and employees from other opportunities and challenges
    due to integration issues;
    difficulty integrating the acquired companys accounting,
    management information, human resources and other administrative
    systems;
    inability to retain key technical and managerial personnel of
    the acquired business;
    inability to retain key customers, distributors, vendors and
    other business partners of the acquired business;
    inability to achieve the financial and strategic goals for the
    acquired and combined businesses;
    incurring acquisition-related costs or amortization costs for
    acquired intangible assets that could impact our operating
    results;
    potential impairment of our relationships with employees,
    customers, partners, distributors or third-party providers of
    technology or products;
    potential failure of the due diligence processes to identify
    significant issues with product quality, architecture and
    development, integration obstacles or legal and financial
    contingencies, among other things;
    incurring significant exit charges if products acquired in
    business combinations are unsuccessful;
    incurring additional expenses if disputes arise in connection
    with any acquisition; 11




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
    potential inability to assert that internal controls over
    financial reporting are effective;
    potential inability to obtain, or obtain in a timely manner,
    approvals from governmental authorities, which could delay or
    prevent such acquisitions; and
    potential delay in customer and distributor purchasing decisions
    due to uncertainty about the direction of our product offerings.      Increasing
    competition could cause us to reduce our prices and result in
    lower gross margins or loss of market share.
    
    companies addressing needs of the market in which we compete
    such as EMC Corporation, FileNet Corporation, Hummingbird Ltd.,
    IBM, Microsoft Corporation, Open Text Corporation, Oracle
    Corporation, Stellent, Inc., Vignette Corporation and Xerox
    Corporation;
    intranet and groupware companies, such as IBM, Microsoft
    Corporation and Novell, Inc.;
    open source vendors, such as OpenCms, Mambo and RedHat,
    Inc.; and
    in-house development efforts by our customers and partners.     12




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Our
    future revenues depend in part on our installed customer base
    continuing to license additional products, renew customer
    support agreements and purchase additional
    services.
    Charges
    to earnings resulting from the application of the purchase
    method of accounting and asset impairments may adversely affect
    the market value of our common stock.
      Economic
    conditions and significant world events have harmed and could
    continue to negatively affect our revenues and results of
    operations.
   13




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We
    must attract and retain qualified personnel to be successful and
    competition for qualified personnel is increasing in our
    market.
      We
    have experienced transitions in our management team and our
    Board of Directors in the past and may continue to do so in the
    future.
    Our
    stock price may be volatile, and your investment in our common
    stock could suffer a decline in value.
    
    actual or anticipated variations in quarterly operating results;
    changes in financial estimates by us or in financial estimates
    or recommendations by any securities analysts who cover our
    stock;
    operating performance and stock market price and volume
    fluctuations of other publicly traded companies and, in
    particular, those that are Internet-related or otherwise deemed
    comparable to us; 14




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
    announcements by us or our competitors of new products or
    services, technological innovations, significant acquisitions,
    strategic relationships or divestitures;
    announcements of investigations or regulatory scrutiny of our
    operations or lawsuits filed against us;
    announcements of negative conclusions about our internal
    controls;
    articles in periodicals covering us, our competitors or our
    markets;
    reports issued by market research and financial analysts;
    capital outlays or commitments;
    additions or departures of key personnel;
    sector factors including conditions or trends in our industry
    and the technology arena; and
    overall stock market factors, such as the price of oil futures,
    interest rates and the performance of the economy.    Our
    failure to deliver defect-free software could result in losses
    and harmful publicity.
       15




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Because
    a significant portion of our revenues are influenced by
    referrals from strategic partners and, in some cases, sold
    through resellers, our future success depends in part on those
    partners, but their interests may differ from
    ours.
          Our
    revenues from international operations are a significant part of
    our overall operating results.
    
    difficulties in attracting and retaining staff (particularly
    sales personnel) and managing foreign operations;
    the expense of foreign operations and compliance with applicable
    laws;
    political and economic instability;
    the expense of localizing our products for sale in various
    international markets;
    reduced protection for intellectual property rights in some
    countries; 16




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
    protectionist laws and business practices that favor local
    competitors;
    difficulties in the handling of transactions denominated in
    foreign currency and the risks associated with foreign currency
    fluctuations;
    changes in multiple tax and regulatory requirements;
    the effect of longer sales cycles and collection periods or
    seasonal reductions in business activity; and
    economic conditions in international markets.    Fluctuations
    in the exchange rates of foreign currency, particularly in Euro,
    British Pound and Australian Dollar and the various other local
    currencies of Europe and Asia, may harm our
    business.
    Workforce
    reductions may require us to incur severance costs and reduce
    our facilities commitments, which may cause us to incur expenses
    or recognize additional financial statement
    charges.
      If our
    products cannot scale to meet the demands of thousands of
    concurrent users, our targeted customers may not license our
    software, which will cause our revenues to
    decline.
     17




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If our
    products do not operate with a wide variety of hardware,
    software and operating systems used by our customers, our
    revenues would be harmed.
      Difficulties
    in introducing new products and product upgrades and integrating
    new products with our existing products in a timely manner will
    make market acceptance of our products less
    likely.
    Our
    products may lack essential functionality if we are unable to
    obtain and maintain licenses to
    third-party
    software and applications.
     18




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When
    we account for stock-based compensation using the fair value
    method, it will significantly increase our compensation costs
    and increase our net loss.
  Share-Based Payment fair-value-based
  We
    might not be able to protect and enforce our intellectual
    property rights, a loss of which could harm our
    business.
      ITEM 1B.
    UNRESOLVED
    STAFF COMMENTS    ITEM 2.
    PROPERTIES   19




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ITEM 3.
    LEGAL
    PROCEEDINGS  class-action
    ITEM 4.
    SUBMISSION
    OF MATTERS TO A VOTE OF SECURITY HOLDERS   20




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PART II  ITEM 5.
    MARKET
    FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS
    AND ISSUER PURCHASES OF EQUITY SECURITIES  Price
    Range of Common Stock
      High


LowYear ended December 31,
    2005:Fourth quarter

$
10.00


$
7.96Third quarter

$
8.61


$
6.78Second quarter

$
8.78


$
7.21First quarter

$
11.29


$
7.52Year ended December 31,
    2004:Fourth quarter

$
11.30


$
7.22Third quarter

$
10.06


$
6.40Second quarter

$
11.42


$
8.04First quarter

$
15.45


$
9.51   Holders
    of Record
    Dividend
    Policy
    Unregistered
    Sales of Equity Securities
    Purchases
    of Equity Securities by the Issuer and Affiliated
    Purchasers
    ITEM 6.
    SELECTED
    FINANCIAL DATA   21




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Years Ended
    December 31,2005


2004


2003


2002


2001(In thousands, except per share
    amounts)Selected Consolidated
    Statements of Operations Data:Total revenues

$
175,037


$
160,388


$
111,512


$
126,832


$
204,633Gross profit

$
117,745


$
108,628


$
73,868


$
84,230


$
139,787Loss from operations

$
(1,869
)

$
(24,406
)

$
(49,861
)

$
(153,497
)*

$
(136,215
)Net income (loss)

$
617


$
(23,667
)

$
(47,531
)

$
(148,616
)*

$
(129,175
)Basic and diluted net income
    (loss) per common share

$
0.01


$
(0.58
)

$
(1.72
)

$
(5.80
)

$
(5.17
)Shares used in computing basic net
    income (loss) per common share


41,751



40,494



27,585



25,607



24,985Shares used in computing diluted
    net income (loss) per common share


42,390



40,494



27,585



25,607



24,985   December 31,2005


2004


2003


2002


2001(In thousands)Selected Consolidated Balance
    Sheet Data:Cash, cash equivalents and
    short-term investments

$
137,199


$
133,757


$
140,487


$
181,669


$
219,968Working capital

$
85,969


$
85,474


$
94,401


$
147,445


$
186,999Total assets

$
398,606


$
393,776


$
421,825


$
298,657


$
438,110Bank borrowings

$



$



$
1,213


$



$
Total stockholders equity

$
298,199


$
288,622


$
300,934


$
203,725


$
352,005     *
    
    For the year ended
    December 31, 2002, the loss from operations, net loss and
    net loss per common share includes an impairment charge of
    $76.4 million reflecting the write-down of the carrying
    value of goodwill to its estimated fair value.   ITEM 7.
    MANAGEMENTS
    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
    OPERATIONS  Overview
  e-mails time-to-value
   22




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Results
    of Operations
      Revenues
  Years Ended
    December 31,


Percentage Change2005


2004


2003


2004 to 2005


2003 to 2004(In thousands, except
    percentages)License

$
67,754


$
67,341


$
45,936



1
%


47
%Percentage of total revenues


39
%


42
%


41
%Support and service


107,283



93,047



65,576



15
%


42
%Percentage of total revenues


61
%


58
%


59
%$
175,037


$
160,388


$
111,512



9
%


44
%     License.
  Support and Service.
 23




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Cost of
    Revenues
  Years Ended
    December 31,


Percentage Change2005


2004


2003


2004 to 2005


2003 to 2004(In thousands, except
    percentages)Cost of license revenues

$
15,262


$
13,336


$
5,368



14
%


148
%Percentage of license revenues


23
%


20
%


12
%Percentage of total revenues


9
%


8
%


5
%Cost of support and service
    revenues


42,030



38,424



32,276



9
%


19
%Percentage of support and service
    revenues


39
%


41
%


49
%Percentage of total revenues


24
%


24
%


29
%$
57,292


$
51,760


$
37,644



11
%


37
%   License.
    Support and Service.
 24




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##### Table of Contents



Operating
    Expenses
  Sales
    and Marketing
  Years Ended
    December 31,


Percentage Change2005


2004


2003


2004 to 2005


2003 to 2004(In thousands, except
    percentages)Sales and marketing

$
70,352


$
70,824


$
57,959



(1
)%


22
%Percentage of total revenues


40
%


44
%


52
%       Research
    and Development
  Years Ended
    December 31,


Percentage Change2005


2004


2003


2004 to 2005


2003 to 2004(In thousands, except
    percentages)Research and development

$
31,268


$
30,825


$
24,613



1
%


25
%Percentage of total revenues


18
%


19
%


22
%    25




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##### Table of Contents



General
    and Administrative
  Years Ended
    December 31,


Percentage Change2005


2004


2003


2004 to 2005


2003 to 2004(In thousands, except
    percentages)General and administrative

$
13,585


$
12,080


$
12,474



12
%


(3
)%Percentage of total revenues


8
%


8
%


11
%     Amortization
    of Stock-Based Compensation
  Years Ended
    December 31,


Percentage Change2005


2004


2003


2004 to 2005


2003 to 2004(In thousands, except
    percentages)Amortization of stock-based
    compensation

$
1,743


$
4,982


$
2,348



(65
)%


112
%Percentage of total revenues


1
%


3
%


2
%   Accounting for
    Stock Appreciation Rights and Other Variable Stock Option or
    Award Plans (An Interpretation of APB Opinions No. 15 and
    25)
  Years Ended
    December 31,2005


2004


2003Cost of support and service
    revenues

$
250


$
319


$
57Sales and marketing


366



1,708



957Research and development


221



1,049



1,157General and administrative


906



1,906



177$
1,743


$
4,982


$
2,348   Accounting for Stock Issued to
    Employees
 26




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##### Table of Contents



out-of-the-money
  fair-value-based
  Amortization
    of Intangible Assets
  Years Ended
    December 31,


Percentage Change2005


2004


2003


2004 to 2005


2003 to 2004(In thousands, except
    percentages)Amortization of intangible assets

$
3,358


$
4,541


$
2,348



(26
)%


93
%Percentage of total revenues


2
%


3
%


2
%     In-Process
    Research and Development
  Years Ended
    December 31,


Percentage Change2005


2004


2003


2004 to 2005


2003 to 2004(In thousands, except
    percentages)In-process research and development

$



$



$
5,174



*
%


*
%Percentage of total revenues



%



%


5
%     *
    
    Percentage is not meaningful   27




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##### Table of Contents



Restructuring
    and Excess Facilities Charges (Recoveries)
  Years Ended
    December 31,


Percentage Change2005


2004


2003


2004 to 2005


2003 to 2004(In thousands, except
    percentages)Restructuring and excess
    facilities charges (recoveries)

$
(692
)

$
9,782


$
18,813



*
%


(48
)%Percentage of total revenues


*
%


6
%


17
%     *
    
    Percentage is not meaningful      Accounting for Costs Associated
    with Exit or Disposal Activities.
    Interest
    Income and Other, Net
  Years Ended
    December 31,


Percentage Change2005


2004


2003


2004 to 2005


2003 to 2004(In thousands, except
    percentages)Interest income and other, net

$
3,574


$
1,725


$
3,401



107
%


(49
)%Percentage of total revenues


2
%


1
%


3
%    28




---



##### Table of Contents



Provision
    for Income Taxes
  Years Ended
    December 31,


Percentage Change2005


2004


2003


2004 to 2005


2003 to 2004(In thousands, except
    percentages)Provision for income taxes

$
1,088


$
986


$
1,071



10
%


(8
)%Percentage of total revenues


1
%


1
%


1
%     Liquidity
    and Capital Resources
  December 31,


Percentage Change2005


2004


2003


2004 to 2005


2003 to 2004(In thousands, except
    percentages)Cash, cash equivalents and
    short-term investments

$
137,199


$
133,757


$
140,487



3
%


(5
)%Working capital

$
85,969


$
85,474


$
94,401



1
%


(9
)%Stockholders equity

$
298,199


$
288,622


$
300,934



3
%


(4
)%          29




---



##### Table of Contents



Bank Borrowings.
    Facilities.
 30




---



##### Table of Contents



Excess FacilitiesOccupied


Minimum Lease


Estimated
    Sub-


Estimated


NetYears Ending
    December 31,

Facilities


Commitments


Lease Income


Costs


Outflows


Total2006

$
9,965


$
7,332


$
1,015


$
926


$
7,243


$
17,2972007


6,620



5,498



587



1,145



6,056



12,1182008


2,006



1,973



647



285



1,611



3,9792009


842



1,258



348



286



1,196



2,1002010


711



1,049



291



238



996



1,760Thereafter


4,380



















4,380$
24,524


$
17,110


$
2,888


$
2,880



17,102


$
41,634Present value discount of future
    lease payments


(189
)Obligations for excess facilities
    as of December 31, 2005

$
16,913         StandbyLetters ofYears Ending
    December 31,

Credit2006

$
11,9672007

$
3,0942008

$
2,5002009

$
2,5002010

$
2,500After 2010

$
1,000    31




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##### Table of Contents



Financial
    Risk Management
      available-for-sale
  Off-Balance-Sheet
    Arrangements
  Regulation S-K.
      Critical
    Accounting Policies
    
    revenue recognition;
    estimating the allowance for doubtful accounts and sales returns;
    estimating the accrual for restructuring and excess facilities
    costs; 32




---



##### Table of Contents




    accounting for stock-based compensation;
    accounting for income taxes; and
    valuation of long-lived assets, intangible assets and goodwill.  Revenue Recognition.
  Software Revenue Recognition SOP 98-9, Modification of
    SOP 97-2,
    Software Revenue Recognition with Respect to Certain
    Transactions. SOP 97-2
  SOP 97-2,
  case-by-case
  time-and-materials
    SOP 81-1, Accounting for Performance of Construction-Type and Certain
    Production-Type Contracts
 33




---



##### Table of Contents



Allowance for Doubtful Accounts.
  Allowance for Sales Returns. Revenue Recognition When Right of
    Return Exists.
  Restructuring and Excess Facilities
    Accrual.
      Accounting for Stock-Based
    Compensation. Accounting for Stock Issued to Employees. Accounting for Stock-Based
 34




---



##### Table of Contents



Compensation Accounting
    for Stock-Based Compensation  Transition and
    Disclosure Share-Based
    Payment
  Accounting for Income Taxes.
    Impairment of Goodwill and Long-Lived
    Assets. Goodwill and Other Intangible
    Assets.
  
    Step 1  We compare the fair value of our
    reporting unit to its carrying value, including goodwill. If the
    reporting units carrying value, including goodwill,
    exceeds the units fair value, we move on to Step 2. If the
    units fair value exceeds the carrying value, no further
    work is performed and no impairment charge is necessary.
    Step 2  We perform an allocation of the fair
    value of the reporting unit to its identifiable tangible and
    non-goodwill intangible assets and liabilities. This allocation
    derives an implied fair value for the reporting units
    goodwill. We then compare the implied fair value of the
    reporting units goodwill with the carrying amount of the
    reporting units goodwill. If the carrying amount of the
    reporting units goodwill is greater than the implied fair
    value of its goodwill, an impairment charge shall be recognized
    for the excess.      Accounting for the
    Impairment or Disposal of Long-Lived Assets.
 35




---



##### Table of Contents



Amortization


Amortizationof Intangible


of PurchasedYears Ending
    December 31,

Assets


Technology


Total2006

$
3,312


$
12,828


$
16,1402007


2,939



3,752



6,6912008


307



2,064



2,3712009






325



325$
6,558


$
18,969


$
25,527     Recent
    Accounting Pronouncements
    ITEM 7A.
    QUANTITATIVE
    AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK    Interest
    Rate Risk
       36




---



##### Table of Contents



AverageCarrying


InterestValue


RateCash equivalents

$
49,601



2.47
%Short-term investments


63,581



3.14
%$
113,182



2.94
%     Foreign
    Currency Risk
  Derivative Instruments and Hedging
    Activities
    ContractNotional


ExchangePrincipal


Rate(Dollars in thousands)Australian Dollars

$
883



0.73Euros


2,740



1.18British Pounds


2,155



1.72$
5,778Estimated fair value of liability

$
19       Commodity
    Price Risk
   37




---



##### Table of Contents



ITEM 8.
    FINANCIAL
    STATEMENTS AND SUPPLEMENTARY DATA  Quarterly
    Financial Information (Unaudited)
  Three Months EndedDecember 31,


September 30,


June 30,


March 31,2005


2005


2005


2005(In thousands, except per share
    amounts)Total revenues

$
47,579


$
43,939


$
41,034


$
42,485Gross profit

$
31,932


$
29,334


$
27,483


$
28,996Total operating expenses

$
31,600


$
30,224


$
28,132


$
29,658Income (loss) from operations

$
332


$
(890
)

$
(649
)

$
(662
)Net income (loss)

$
1,116


$
(184
)

$
(66
)

$
(249
)Basic net income (loss) per common
    share

$
0.03


$
(0.00
)

$
(0.00
)

$
(0.01
)Shares used in computing basic net
    income (loss) per common share


42,244



41,988



41,635



41,137Diluted net income (loss) per
    common share

$
0.03


$
(0.00
)

$
(0.00
)

$
(0.01
)Shares used in computing diluted
    net income (loss) per common share


43,085



41,988



41,635



41,137   Three Months EndedDecember 31,


September 30,


June 30,


March 31,2004


2004


2004


2004(In thousands, except per share
    amounts)Total revenues

$
43,238


$
40,261


$
39,495


$
37,394Gross profit

$
29,985


$
27,169


$
26,677


$
24,797Total operating expenses

$
29,934


$
28,896


$
42,153


$
32,051Income (loss) from operations

$
51


$
(1,727
)

$
(15,476
)

$
(7,254
)Net income (loss)

$
405


$
(1,502
)

$
(15,586
)

$
(6,984
)Basic net income (loss) per common
    share

$
0.01


$
(0.04
)

$
(0.39
)

$
(0.17
)Shares used in computing basic net
    income (loss) per common share


41,855



40,564



40,420



40,137Diluted net income (loss) per
    common share

$
0.01


$
(0.04
)

$
(0.39
)

$
(0.17
)Shares used in computing diluted
    net income (loss) per common share


41,940



40,564



40,420



40,137   period-to-period
  Form 10-K.
  ITEM 9.
    CHANGES
    IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
    FINANCIAL DISCLOSURE    ITEM 9A.
    CONTROLS
    AND PROCEDURES  Form 10-K Rule 13a-14
 38




---



##### Table of Contents



Form 10-K
  Evaluation
    of Disclosure Controls and Procedures
  Rule 13a-15 Rules 13a-15(e) 15d-15(e)
  Form 10-K.
    Changes
    in Internal Control over Financial Reporting
    Inherent
    Limitations on Effectiveness of Controls
    Managements
    Report on Internal Control over Financial Reporting
  Rule 13a-15(f) Internal Control-Integrated Framework
 39




---



##### Table of Contents



ITEM 9B.
    OTHER
    INFORMATION  2006
    Executive Officer Incentive Bonus Plan
                2006
    Sales Compensation Plan for Steven J. Martello
    PART III  Form 10-K
  ITEM 10.
    DIRECTORS
    AND EXECUTIVE OFFICERS OF THE REGISTRANT   40




---



##### Table of Contents



ITEM 11.
    EXECUTIVE
    COMPENSATION    ITEM 12.
    SECURITY
    OWNERSHIP OF CERTAIN BENEFICAL OWNERS AND MANAGEMENT AND RELATED
    STOCKHOLDER MATTERS    ITEM 13.
    CERTAIN
    RELATIONSHIPS AND RELATED TRANSACTIONS    ITEM 14.
    PRINCIPAL
    ACCOUNTANT FEES AND SERVICES   PART IV  ITEM 15.
    EXHIBITS AND
    FINANCIAL STATEMENT SCHEDULES    Consolidated Financial Statements:
  Reports of Independent Registered
    Public Accounting FirmConsolidated Financial Statements:Consolidated Balance Sheets at
    December 31, 2005 and 2004Consolidated Statements of
    Operations for the years ended December 31, 2005, 2004 and
    2003Consolidated Statements of
    Stockholders Equity and Comprehensive Loss for the years
    ended December 31, 2005, 2004 and 2003Consolidated Statements of Cash
    Flows for the years ended December 31, 2005, 2004 and 2003Notes to Consolidated Financial
    Statements  41




---



##### Table of Contents



Financial Statement Schedule:
  Schedule II  Valuation
    and Qualifying Accounts
    (In thousands)
  Balance





Charged





Balanceat Beginning





(Credited) to





at EndDescription

of Period


Write-Offs


Expenses


Adjustments


of PeriodAllowance for doubtful accounts
    and sales returns:Year ended December 31, 2005

$
1,631


$
(496
)

$
(35
)

$



$
1,100Year ended December 31, 2004

$
2,243


$
(558
)

$
(54
)

$



$
1,631Year ended December 31, 2003

$
1,926


$
(531
)

$
292


$
556
*

$
2,243     *
    
    Adjustment related to balances recorded as a result of
    acquisitions.  Exhibits:
  Incorporated by
    Reference

FiledNumber

Exhibit Title

Form

Date

Number

Herewith3
.01

Registrants Fourth Amended
    and Restated Certificate of Incorporation

S-8


11/19/03



4.083
.02

Registrants Amended and
    Restated Bylaws











X4
.01

Form of Certificate for
    Registrants common stock

S-1


09/23/99



4.0110
.01

Form of Indemnity Agreement
    between Registrant and each of its directors and executive
    officers

S-1


07/27/99



10.0110
.02*

1996 Stock Option Plan and related
    agreements

S-1


07/27/99



10.0210
.03*

1998 Stock Option Plan and related
    agreements

S-1


07/27/99



10.0310
.04*

1999 Equity Incentive Plan

S-8


01/24/01



4.0110
.05*

Forms of Option Agreements and
    Stock Option Exercise Agreements related to the 1999 Equity
    Incentive Plan











X10
.06*

1999 Employee Stock Purchase Plan

10-Q


11/09/05



10.0110
.07*

Forms of Enrollment Form,
    Subscription Agreement, Notice of Withdrawal and Notice of
    Suspension related to the 1999 Employee Stock Purchase Plan

S-1


09/03/99



10.0510
.08*

2000 Stock Incentive Plan

S-8


09/26/00



4.0110
.09*

Forms of Stock Option Agreement
    and Stock Option Exercise Agreements related to the 2000 Stock
    Incentive Plan











X10
.10*

Forms of Incentive Stock Option
    Agreement and Nonstatutory Stock Option Agreement under iManage,
    Inc. 1997 Stock Option Plan

S-8


11/19/03



4.0210
.11*

iManage, Inc. 2000 Non-Officer
    Stock Option Plan and related forms of stock option and option
    exercise agreements

S-8


11/19/03



4.0310
.12*

2003 Acquisition Plan

S-8


11/19/03



4.0710
.13*

Forms of Stock Option Agreement
    and Stock Option Exercise Agreements related to the 2003
    Acquisition Plan











X10
.14*

Form of Notice of Stock Option
    Acceleration and Share Restrictions











X10
.15

Regional Prototype Profit Sharing
    Plan and Trust/Account Standard Plan Adoption Agreement AA #001

S-1


07/27/99



10.0610
.16*

Summary of Non-employee Director
    Compensation

8-K


09/21/05



10.110
.17*

Employment Agreement between
    Registrant and Martin W. Brauns dated February 27, 1998

S-1


07/27/99



10.07 42




---



##### Table of Contents



Incorporated by
    Reference

FiledNumber

Exhibit Title

Form

Date

Number

Herewith10
.18*

Employment arrangement between
    Registrant and Martin W. Brauns

10-Q


08/13/03



10.0410
.19*

Separation agreement and release
    between Registrant and Martin W. Brauns











X10
.20*

Notice of Grant of Stock Options
    and Option Agreement and related Stock Option Agreement between
    Martin W. Brauns

10-Q


08/13/03



10.0210
.21*

Compensatory Arrangements with
    Executive Officers











X10
.22*

2006 Executive Officer Incentive
    Bonus Plan











X10
.23*

2006 Compensation Plan for Steven
    J. Martello











X10
.24

Preferred Stock Warrant to
    Purchase Shares of Series E Preferred Stock of Registrant

S-1


09/03/99



10.2510
.25

Ariba Plaza Sublease dated
    June 28, 2001 between Registrant and Ariba, Inc.

10-Q


08/14/01



10.0110
.26

Amended and Restated Ariba Plaza
    Sublease dated August 6, 2001 between Registrant and Ariba,
    Inc.

10-Q


11/14/01



10.0110
.27

Amended and Restated First
    Amendment to Amended and Restated Sublease dated May 6,
    2001 between Registrant and Ariba, Inc.

10-Q


11/08/04



10.0110
.28

Office Lease for 303 East Wacker,
    Chicago, Illinois between 303 Wacker Realty LLC and iManage,
    Inc. dated March, 17, 2003

(1)


(1
)


(1
)10
.29

First Amendment to Lease dated
    November 12, 2003 between iManage, Inc. and 303 Wacker
    Realty LLC

10-K


03/15/05



10.2710
.30

Sublease between Hyperion
    Solutions Corporation and iManage, Inc. dated January 17,
    2002

(2)


(2
)


(2
)10
.31

Revolving Line of Credit Note
    dated August 2, 2001, between Registrant and Wells Fargo
    Bank

10-Q


08/14/01



10.0210
.32

Amendment to Line of Credit
    Agreement dated June 1, 2004 between Registrant and Wells
    Fargo Bank

10-Q


11/08/04



10.0210
.33

Amendment of Line of Credit
    Agreement, dated July 25, 2005, between Registrant and
    Wells Fargo Bank

10-Q


11/09/05



10.0321
.01

Subsidiaries of the Registrant











X23
.01

Consent of Independent Registered
    Public Accounting Firm











X31
.01

Rule 13a-14(a)/15d-15(a)
    certification of the Chief Executive Officer











X31
.02

Rule 13a-14(a)/15d-15(a)
    certification of the Chief Financial Officer











X32
.01

Section 1350 certification of
    Chief Executive Officer











X32
.02

Section 1350 certification of
    the Chief Financial Officer











X     (1)
    
    Incorporated by reference to
    Exhibit 10.18 of the iManage, Inc. Annual Report
    Form 10-K
    filed with the Commission on March 26, 2003.(2)
    
    Incorporated by reference to
    Exhibit 10.13 of the iManage, Inc. Annual Report
    Form 10-K
    filed with the Commission on March 29, 2002.*
    
    Management contract, compensatory
    plan or arrangement.
    
    Confidential treatment has been
    requested with regard to certain portions of this document. Such
    portions were filed separately with the commission.
    
    Portions of this exhibit have been
    omitted pursuant to an order granting confidential treatment. 43




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
           Internal
    Control  Integrated Framework
      44




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
     , Internal
    Control  Integrated Framework
        Internal
    Control  Integrated Framework Internal Control  Integrated
    Framework
        45




---



##### Table of Contents



INTERWOVEN,
    INC.
  CONSOLIDATED
    BALANCE SHEETS
  December 31,2005


2004(In thousands, except per share
    data)ASSETSCurrent assets:Cash and cash equivalents

$
73,618


$
22,466Short-term investments


63,581



111,291Accounts receivable, net of
    allowances of $1,100 and $1,631 in 2005 and 2004, respectively


31,542



28,292Prepaid expenses and other current
    assets


5,193



8,450Total current assets


173,934



170,499Property and equipment, net


5,044



5,831Goodwill, net


191,595



185,464Other intangible assets, net


25,527



30,035Other assets


2,506



1,947Total assets

$
398,606


$
393,776LIABILITIES AND
    STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable

$
4,491


$
5,568Accrued liabilities


22,198



20,370Restructuring and excess
    facilities accrual


7,266



8,966Deferred revenues


54,010



50,121Total current liabilities


87,965



85,025Accrued liabilities


2,761



3,413Restructuring and excess
    facilities accrual


9,681



16,716Total liabilities


100,407



105,154Commitments and contingenciesStockholders equity:Preferred stock, $0.001 par
    value, 5,000 shares authorized at December 31, 2005
    and 2004






Common stock, $0.001 par
    value, 125,000 shares authorized at December 31, 2005
    and 2004; 42,386 shares and 41,087 shares issued and
    outstanding at December 31, 2005 and 2004, respectively


42



41Additional paid-in capital


705,908



697,860Deferred stock-based compensation


(1,002
)


(2,067
)Accumulated other comprehensive
    loss


(359
)


(205
)Accumulated deficit


(406,390
)


(407,007
)Total stockholders equity


298,199



288,622Total liabilities and
    stockholders equity

$
398,606


$
393,776    46




---



##### Table of Contents



INTERWOVEN,
    INC.
  CONSOLIDATED
    STATEMENTS OF OPERATIONS
  Years Ended
    December 31,2005


2004


2003(In thousands, except per share
    data)Revenues:License

$
67,754


$
67,341


$
45,936Support and service


107,283



93,047



65,576Total revenues


175,037



160,388



111,512Cost of revenues:License


15,262



13,336



5,368Support and service


42,030



38,424



32,276Total cost of revenues


57,292



51,760



37,644Gross profit


117,745



108,628



73,868Operating expenses:Sales and marketing


70,352



70,824



57,959Research and development


31,268



30,825



24,613General and administrative


13,585



12,080



12,474Amortization of stock-based
    compensation


1,743



4,982



2,348Amortization of intangible assets


3,358



4,541



2,348In-process research and development










5,174Restructuring and excess
    facilities charges (recoveries)


(692
)


9,782



18,813Total operating expenses


119,614



133,034



123,729Loss from operations


(1,869
)


(24,406
)


(49,861
)Interest income and other, net


3,574



1,725



3,401Income (loss) before provision for
    income taxes


1,705



(22,681
)


(46,460
)Provision for income taxes


1,088



986



1,071Net income (loss)

$
617


$
(23,667
)

$
(47,531
)Basic net income (loss) per common
    share

$
0.01


$
(0.58
)

$
(1.72
)Shares used in computing basic net
    income (loss) per common share


41,751



40,494



27,585Diluted net income (loss) per
    common share

$
0.01


$
(0.58
)

$
(1.72
)Shares used in computing diluted
    net income (loss) per common share


42,390



40,494



27,585    47




---



##### Table of Contents



INTERWOVEN,
    INC.
    CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY AND 
    COMPREHENSIVE INCOME (LOSS)
    For the Three Years Ended December 31, 2005
  AccumulatedAdditional


Deferred


Other





TotalCommon Stock


Paid-in


Stock-Based


Comprehensive


Accumulated


StockholdersShares


Amount


Capital


Compensation


Income (Loss)


Deficit


Equity(In thousands)Balances, December 31, 2002


25,634


$
26


$
541,351


$
(2,166
)

$
323


$
(335,809
)

$
203,725Components of comprehensive loss:Net loss






















(47,531
)


(47,531
)Unrealized loss on investments


















(298
)






(298
)Comprehensive loss


























(47,829
)Stock issued and options assumed in
    acquisitions


14,041



14



148,048















148,062Repurchase of common stock


(24
)






(10
)














(10
)Issuance of common stock under
    stock plans


357







2,459















2,459Deferred stock-based compensation










1,925



(9,746
)










(7,821
)Amortization of stock-based
    compensation














2,348











2,348Balances, December 31, 2003


40,008



40



693,773



(9,564
)


25



(383,340
)


300,934Components of comprehensive loss:Net loss






















(23,667
)


(23,667
)Unrealized loss on investments


















(264
)






(264
)Cumulative translation adjustment


















34







34Comprehensive loss


























(23,897
)Stock issued in acquisition


118







782















782Issuance of common stock under
    stock plans


961



1



5,820















5,821Reversal of stock-based
    compensation for terminated employees










(2,515
)


2,515











Amortization of stock-based
    compensation














4,982











4,982Balances, December 31, 2004


41,087



41



697,860



(2,067
)


(205
)


(407,007
)


288,622Components of comprehensive income:Net income






















617



617Unrealized loss on investments


















(129
)






(129
)Cumulative translation adjustment


















(25
)






(25
)Comprehensive income


























463Options assumed in acquisition










1,354















1,354Issuance of common stock under
    stock plans


1,299



1



7,101















7,102Income tax related to exercise of
    common stock options










80















80Reversal of stock-based
    compensation for terminated employees










(487
)


487











Deferred stock-based compensation














(1,165
)










(1,165
)Amortization of stock-based
    compensation














1,743











1,743Balances, December 31, 2005


42,386


$
42


$
705,908


$
(1,002
)

$
(359
)

$
(406,390
)

$
298,199    48




---



##### Table of Contents



INTERWOVEN,
    INC.
  CONSOLIDATED
    STATEMENTS OF CASH FLOWS
  Years Ended
    December 31,2005


2004


2003(In thousands)Cash flows from operating
    activities:Net income (loss)

$
617


$
(23,667
)

$
(47,531
)Adjustments to reconcile net
    income (loss) to net cash used in operating activities:Depreciation


3,728



4,276



6,312Amortization of deferred
    stock-based compensation


1,743



4,982



2,348Amortization of intangible assets
    and purchased technology


15,499



15,177



4,310In-process research and development










5,174Reduction in allowance for
    doubtful accounts and sales returns


(531
)


(612
)


(239
)Changes in operating assets and
    liabilities:Accounts receivable


(1,749
)


6,154



(6,556
)Prepaid expenses and other assets


2,423



579



638Accounts payable and accrued
    liabilities


(992
)


528



(4,318
)Restructuring and excess
    facilities accrual


(8,735
)


(20,620
)


2,070Deferred revenues


3,515



5,971



5,021Net cash provided by (used in)
    operating activities


15,518



(7,232
)


(32,771
)Cash flows from investing
    activities:Purchases of property and equipment


(2,848
)


(2,704
)


(859
)Purchases of investments


(86,274
)


(118,378
)


(93,153
)Maturities and sales of investments


134,275



117,249



122,051Acquisition of businesses and
    technology, net of cash acquired


(16,596
)


(1,172
)


(9,502
)Net cash provided by (used in)
    investing activities


28,557



(5,005
)


18,537Cash flows from financing
    activities:Payment of bank borrowings






(1,213
)


(201
)Net proceeds from issuance of
    common stock


7,102



5,821



2,459Repurchases of common stock and
    treasury stock










(10
)Net cash provided by financing
    activities


7,102



4,608



2,248Effect of exchange rates


(25
)


34



Net increase (decrease) in cash
    and cash equivalents


51,152



(7,595
)


(11,986
)Cash and cash equivalents at
    beginning of period


22,466



30,061



42,047Cash and cash equivalents at end
    of period

$
73,618


$
22,466


$
30,061Supplemental disclosures of cash
    flow information:Cash paid for interest expense

$
1


$
37


$
11Cash paid for income taxes, net of
    refunds

$
267


$
313


$
189Supplemental disclosures of
    non-cash investing and financing activities:Unrealized loss on investments

$
(129
)

$
(264
)

$
(298
)Common stock issued and stock
    options assumed in acquisitions

$
1,354


$
782


$
148,062    49




---



##### Table of Contents



INTERWOVEN,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
  1.
    Organization
    and Business  e-mails
  2.
    Summary
    of Significant Accounting Policies  Basis
    of Presentation
      Use of
    Estimates
    Revenue
    Recognition
  Software Revenue
    Recognition SOP 98-9, Modification of
    SOP 97-2 Software Revenue Recognition with Respect to Certain
    Transactions. SOP 97-2 SOP 98-9,
  SOP 97-2,
 50




---



##### Table of Contents



INTERWOVEN,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Persuasive evidence of an arrangement
    exists.
  Delivery has occurred.
  The fee is fixed or determinable.
  Collectibility is probable. case-by-case
    time-and-materials
    SOP 81-1, Accounting for Performance of Construction-Type and Certain
    Production-Type Contracts
 51




---



##### Table of Contents



INTERWOVEN,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Cash,
    Cash Equivalents and Short- and Long-Term
    Investments
    available-for-sale
  Allowance
    for Doubtful Accounts
    Allowance
    for Sales Returns
    Concentration
    of Risk
     52




---



##### Table of Contents



INTERWOVEN,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     Financial
    Instruments
  Derivative Instruments and Hedging
    Activities
    Property
    and Equipment
      Goodwill
    and Other Intangible Assets
  Goodwill and Other Intangible
    Assets
  
    Step 1  The Company has determined that it has
    one reporting unit and compares the fair value of its reporting
    unit to its carrying value, including goodwill. If the reporting
    units carrying value, including goodwill, exceeds the
    units fair value, the Company moves on to Step 2. If the
    units fair value exceeds the carrying value, no further
    work is performed and no impairment charge is necessary.
    Step 2  The Company performs an allocation of
    the fair value of the reporting unit to its identifiable
    tangible and non-goodwill intangible assets and liabilities.
    This allocation derives an implied fair value for the reporting
    units goodwill. The Company then compares the implied fair
    value of the reporting units goodwill with the carrying
    amount of the reporting units goodwill. If the carrying
    amount of the reporting units goodwill is greater than the
    implied fair value of its goodwill, an impairment charge shall
    be recognized for the excess. 53




---



##### Table of Contents



INTERWOVEN,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
       Impairment
    of Long-Lived Assets
  Accounting for the Impairment or Disposal of Long-Lived
    Assets.
  Software
    Development Costs
    Restructuring
    and Related Expenses
  Accounting
    for Costs Associated with Exit or Disposal Activities. No. 94-3, Liability Recognition for Certain Employee Termination
    Benefits and Other Costs To Exit an Activity (Including Certain
    Costs Associated with a Restructuring) No. 88-10, Costs Associated with Lease Modification or Termination. No. 88-10 No. 94-3
   54




---



##### Table of Contents



INTERWOVEN,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    88-10 No. 94-3. 94-3.
  and/or 88-10. and/or No. 88-10, and/or
  Income
    Taxes
  Accounting for Income
    Taxes.
  Advertisement
    and Sales Promotion Expenses
    Stock-based
    Compensation
  Accounting
    for Stock Issued to Employees Accounting for Stock-Based Compensation. Accounting for
    Stock Appreciation Rights and Other Variable Stock Option or
    Awards Plans.
 55




---



##### Table of Contents



INTERWOVEN,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Pro
    Forma Net Loss and Net Income (Loss) per Share
    Years Ended
    December 31,2005


2004


2003Net income (loss):As reported

$
617


$
(23,667
)

$
(47,531
)Stock-based employee compensation
    included in net income (loss) as reported, net of related tax


1,743



4,982



2,348Stock-based employee compensation
    using the fair value method, net of related tax


(22,168
)


(19,411
)


(15,151
)Pro forma

$
(19,808
)

$
(38,096
)

$
(60,334
)Basic and diluted net income
    (loss) per common share:As reported

$
0.01


$
(0.58
)

$
(1.72
)Pro forma

$
(0.47
)

$
(0.94
)

$
(2.19
)     Years Ended
    December 31,2005

2004

2003Expected lives from grant date (in
    years)

1.8 - 5.0

1.8 - 5.0

2.0 - 5.0Risk-free interest rate

3.2% - 4.5%

2.6% - 3.7%

3.0%Dividend yield

0.0%

0.0%

0.0%Volatility

39.2% - 70.9%

58.9% - 118.9%

115.1%     Years Ended
    December 31,2005

2004

2003Expected lives from grant date (in
    years)

0.5 to 2

0.5 to 2

0.5Risk-free interest rate

3.1% - 4.1%

1.1% - 2.6%

1.0%Dividend yield

0.0%

0.0%

0.0%Volatility

27.9% - 56.1%

45.0% - 73.6%

56.8%   , out-of-the-money
 56




---



##### Table of Contents



INTERWOVEN,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Share-Based Payment
  24-month 6-month 6-month
  Business
    Segment and Major Customer Information
  Disclosures about Segments of an
    Enterprise and Related Information
      Foreign
    Currency Translation
  Foreign Currency
    Translation
  Comprehensive
    Income (Loss)
   57




---



##### Table of Contents



INTERWOVEN,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     Years Ended
    December 31,2005


2004


2003Net income (loss)

$
617


$
(23,667
)

$
(47,531
)Other comprehensive income (loss):Unrealized loss on
    available-for-sale
    investments


(129
)


(264
)


(298
)Cumulative translation adjustment


(25
)


34



(154
)


(230
)


(298
)Comprehensive income (loss)

$
463


$
(23,897
)

$
(47,829
)     Years Ended
    December 31,2005


2004


2003Unrealized gain (loss) on
    available-for-sale
    investments

$
(368
)

$
(239
)

$
25Cumulative translation adjustment


9



34



$
(359
)

$
(205
)

$
25   Net
    Income (Loss) per Common Share
      Years Ended
    December 31,2005


2004


2003Basic net income (loss) per common
    share:Net income (loss)

$
617


$
(23,667
)

$
(47,531
)Shares used in computing basic net
    income (loss) per common share


41,751



40,494



27,585Basic net income (loss) per common
    share

$
0.01


$
(0.58
)

$
(1.72
)Diluted net income (loss) per
    common share:Net income (loss)

$
617


$
(23,667
)

$
(47,531
)Shares used in computing diluted
    net income (loss) per common share


42,390



40,494



27,585Diluted net income (loss) per
    common share

$
0.01


$
(0.58
)

$
(1.72
)    58




---



##### Table of Contents



INTERWOVEN,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Recent
    Accounting Pronouncements
  Accounting Changes and Error Corrections. Reporting Accounting Changes in Interim
    Financial Statements
  Accounting for Conditional Asset Retirement Obligations Accounting for Asset Retirement Obligations
  fair-value-based
  3.
    Mergers
    and Acquisitions   59




---



##### Table of Contents



INTERWOVEN,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      end-to-end
      Net tangible assets acquired

$
25,720Customer list


11,056Patent and patent applications


4,032Purchased technology


24,648In-process research and development


4,575Intrinsic value of stock options
    assumed


7,821Goodwill


103,858Total purchase price

$
181,710    60




---



##### Table of Contents



INTERWOVEN,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
       December 31,2003Revenue(1)

$
150,765Net loss(2)

$
(76,702
)Basic and diluted earnings per
    share

$
(1.95
)Weighted-average common shares and
    dilutive stock options outstanding


39,364     (1)
    
    The pro forma results of operations
    for the year ended December 31, 2003 include the reported
    revenues of iManage for the period from January 1, 2003
    through November 18, 2003. However, the purchase method of
    accounting requires the Company to reduce iManages
    reported deferred revenue to an amount equal to the fair value
    of the legal liability, resulting in lower revenue in periods
    following the merger than iManage would have achieved as a
    separate company. Therefore, revenues from iManage products for
    the period from November 18, 2003 to December 31, 2003
    included in the pro forma results of operations reflect the
    lower amortization of deferred revenue stemming from this
    purchase accounting adjustment.(2)
    
    Pro forma net loss for 2003
    includes in-process research and development costs of
    $4.6 million from the iManage acquisition.      Net tangible liabilities acquired

$
(2,557
)Customer list


220Patent and patent applications


474Purchased technology


2,721In-process research and development


599Goodwill


11,455Total purchase price

$
12,912  61




---



##### Table of Contents



INTERWOVEN,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
       4.
    Cash,
    Cash Equivalents and Short-term Investments    December 31, 2005Gross


Gross


EstimatedUnrealized


Unrealized


FairCost


Gains


Losses


ValueCash

$
24,017


$



$



$
24,017Cash equivalents:Government agencies


10,671











10,671Commercial paper


33,498











33,498Money market funds


5,432











5,432Total cash equivalents


49,601











49,601Total cash and cash equivalents


73,618











73,618Short-term investments:Government agencies


60,060



1



(326
)


59,735Corporate obligations


3,359



1



(12
)


3,348Commercial paper


530







(32
)


498Total short-term investments


63,949



2



(370
)


63,581Total cash, cash equivalents and
    short-term investments

$
137,567


$
2


$
(370
)

$
137,199   62




---



##### Table of Contents



INTERWOVEN,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  December 31, 2004Gross


Gross


EstimatedUnrealized


Unrealized


FairCost


Gains


Losses


ValueCash

$
11,724


$



$



$
11,724Cash equivalents:Money market funds


10,742











10,742Total cash equivalents


10,742











10,742Total cash and cash equivalents


22,466











22,466Short-term investments:Government agencies


68,055



1



(213
)


67,843Commercial paper


6,383







(2
)


6,381Market auction preferred


32,490











32,490Corporate obligations


4,602







(25
)


4,577Total short-term investments


111,530



1



(240
)


111,291Total cash, cash equivalents and
    short-term investments

$
133,996


$
1


$
(240
)

$
133,757   No. 03-1, available-for-sale
  Less Than
    12 Months


More Than
    12 Months


TotalGross





Gross





GrossFair


Unrealized


Fair


Unrealized


Fair


UnrealizedValue


Losses


Value


Losses


Value


LossesGovernment agencies

$
43,986


$
(269
)

$
26,420


$
(57
)

$
70,406


$
(326
)Commercial paper


33,996



(32
)










33,996



(32
)Corporate obligations






(10
)


3,347



(2
)


3,348



(12
)$
77,982


$
(311
)

$
29,767


$
(59
)

$
107,750


$
(370
)       FairCost


ValueDue within one year

$
83,617


$
83,415Due one year to five years


29,933



29,767$
113,550


$
113,182  63




---



##### Table of Contents



INTERWOVEN,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   5.
    Property
    and Equipment    December 31,2005


2004Computer software and equipment

$
31,685


$
28,442Furniture, office equipment and
    automobiles


3,929



3,773Leasehold improvements


10,719



10,60446,333



42,819Less: Accumulated depreciation and
    amortization


41,289



36,988$
5,044


$
5,831     6.
    Goodwill
    and Other Intangible Assets    2005


2004Gross








GrossCarrying


Accumulated


Net


Carrying


Accumulated


NetAmount


Amortization


Amount


Amount


Amortization


AmountPurchased technology

$
42,381


$
(26,783
)

$
15,598


$
34,971


$
(16,344
)

$
18,627Patents and patent applications


4,506



(3,152
)


1,354



4,506



(1,690
)


2,816Customer list


12,831



(6,272
)


6,559



11,581



(3,221
)


8,360Acquired workforce


464



(464
)






464



(232
)


232Existing contract


251



(120
)


131











Non-compete agreements


9,009



(7,124
)


1,885



6,929



(6,929
)


Other intangible assets


69,442



(43,915
)


25,527



58,451



(28,416
)


30,035Goodwill


373,166



(181,571
)


191,595



367,035



(181,571
)


185,464$
442,608


$
(225,486
)

$
217,122


$
425,486


$
(209,987
)

$
215,499    64




---



##### Table of Contents



INTERWOVEN,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     December 31,2005


2004Beginning balance

$
185,464


$
185,991Goodwill recorded in business
    combinations


6,131



215Subsequent goodwill adjustments






(742
)Ending balance

$
191,595


$
185,464   7.
    Accrued
    Liabilities    December 31,2005


2004Accrued compensation

$
12,624


$
11,694Professional services


1,616



1,996Accrued acquisition costs


298



152Deferred rent


3,705



4,056Sales and income taxes


2,180



2,545Other


4,536



3,340$
24,959


$
23,783   8.
    Restructuring
    and Excess Facilities    Workforce
    Reductions
       65




---



##### Table of Contents



INTERWOVEN,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Excess
    Facilities
      Accounting for Costs Associated with Exit or Disposal
    Activities.
      Work Force


ExcessYears Ending
    December 31,

Reduction


Facilities


Total2006

$
34


$
7,243


$
7,2772007






6,056



6,0562008






1,611



1,6112009






1,196



1,1992010






996



99634



17,102



17,136Present value discount of future
    lease payments






(189
)


(189
)$
34


$
16,913


$
16,947  66




---



##### Table of Contents



INTERWOVEN,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     Non-CancelableWork


LeaseForce


CommitmentsCost


and Other


TotalBalance at January 1, 2003

$
1,042


$
37,688


$
38,730Restructuring and excess
    facilities charges


5,748



13,065



18,813Accrual recorded with iManage
    acquisition


2,622



3,128



5,750Deferred rent reclassifications






759



759Cash payments


(6,761
)


(11,172
)


(17,933
)Balance at December 31, 2003


2,651



43,468



46,119Restructuring and excess
    facilities charges


1,654



8,128



9,782Cash payments and other


(3,649
)


(26,570
)


(30,219
)Balance at December 31, 2004


656



25,026



25,682Restructuring and excess
    facilities charges (recoveries)


(365
)


(327
)


(692
)Cash payments


(257
)


(7,786
)


(8,043
)Balance at December 31, 2005

$
34


$
16,913


$
16,947   9.
    Bank
    Borrowings    10.
    Guarantees  Guarantors Accounting and Disclosure Requirements for
    Guarantees, Including Indirect Guarantees of Indebtedness of
    Others an Interpretation of FASB Statements No. 5, 57 and
    107 and Rescission of FASB Interpretation No. 34.
  and/or
 67




---



##### Table of Contents



INTERWOVEN,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
       11.
    Commitments
    and Contingencies      FutureOccupied


Excess


LeaseYears Ending
    December 31,

Facilities


Facilities


Payments2006

$
9,965


$
7,332


$
17,2972007


6,620



5,498



12,1182008


2,006



1,973



3,9792009


842



1,258



2,1002010


711



1,049



1,760After 2010


4,380







4,380$
24,524


$
17,110


$
41,634       class-action
 68




---



##### Table of Contents



INTERWOVEN,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Accounting for Contingencies.
  12.
    Stockholders
    Equity  Preferred
    Stock
  time-to-time
  Common
    Stock
    Employee
    Stock Option Plans
    Employee
    Stock Purchase Plan
   69




---



##### Table of Contents



INTERWOVEN,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  24-month 6-month 6-month
  Prior
    Stock Option Plans
    1999
    Equity Incentive Plan
       70




---



##### Table of Contents



INTERWOVEN,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2000
    Stock Incentive Plan
      2003
    Acquisition Plan
   71




---



##### Table of Contents



INTERWOVEN,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Plan
    Activity
    Years Ended
    December 31,2005


2004


2003Weighted





Weighted





WeightedAverage





Average





AverageNumber of


Exercise


Number of


Exercise


Number of


ExerciseShares


Price


Shares


Price


Shares


PriceOutstanding, beginning of period


10,867


$
20.52



9,925


$
25.83



6,467


$
44.80Granted


1,880


$
8.57



3,819


$
10.12



2,355


$
15.51Assumed


320


$
3.67











3,100


$
6.54Canceled


(1,973
)

$
25.56



(2,245
)

$
29.65



(1,771
)

$
42.18Exercised


(1,049
)

$
5.21



(632
)

$
5.95



(226
)

$
6.95Outstanding, end of period


10,045


$
18.36



10,867


$
20.58



9,925


$
25.83Exercisable, end of period


8,702







6,117







5,683Weighted average fair value of
    options granted with exercise prices equal to fair value at date
    of grant


1,880


$
3.62



3,819


$
7.23



2,355


$
6.94Weighted average fair value of
    options granted with exercise prices less than fair value at
    date of grant





$







$




500


$
10.78       Options OutstandingWeighted





Options ExercisableAverage


Weighted





WeightedRemaining


Average





AverageNumber of


Contractual


Exercise


Number of


ExerciseExercise Prices

Options


Life (Years)


Price


Options


Price$  0.18 to
    $  6.60


1,219



6.94


$
4.58



824


$
4.82$  6.69 to
    $  7.95


1,074



8.02


$
7.52



618


$
7.38$  7.96 to
    $  8.81


1,326



9.22


$
8.47



911


$
8.52$  8.83 to
    $  8.83


1,201



8.47


$
8.83



1,200


$
8.83$  9.07 to
    $  9.96


1,095



8.40


$
9.47



1,020


$
9.47$  9.97 to $ 13.60


1,037



7.13


$
11.99



1,036


$
11.99$ 13.72 to $ 14.80


1,021



7.46


$
14.09



1,021


$
14.09$ 14.92 to $ 49.38


1,254



5.17


$
34.73



1,254


$
34.73$ 58.52 to $289.64


817



3.98


$
83.47



817


$
83.47$310.36 to $310.36


1



4.56


$
310.36



1


$
310.3610,045



7.31


$
18.36



8,702


$
20.12   4-year
 72




---



##### Table of Contents



INTERWOVEN,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Stock-based
    Compensation
    Years Ended
    December 31,2005


2004


2003Cost of support and service
    revenues

$
250


$
319


$
57Sales and marketing


366



1,708



957Research and development


221



1,049



1,157General and administrative


906



1,906



177$
1,743


$
4,982


$
2,348   out-of-the-money
  13.
    Interest
    Income and Other    Years Ended
    December 31,2005


2004


2003Interest income

$
3,744


$
1,962


$
2,471Interest expense


(1
)


(43
)


(12
)Foreign currency gain (loss)


12



(73
)


943Other


(181
)


(121
)


(1
)$
3,574


$
1,725


$
3,401    73




---



##### Table of Contents



INTERWOVEN,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   14.
    Income
    Taxes    Years Ended
    December 31,2005


2004


2003United States

$
118


$
(24,021
)

$
(48,187
)Foreign


1,587



1,340



1,727$
1,705


$
(22,681
)

$
(46,460
)     Years Ended
    December 31,2005


2004


2003Current:Federal

$
75


$



$
State


96



107



121Foreign


917



879



950$
1,088


$
986


$
1,071     Years Ended
    December 31,2005


2004


2003Income tax benefit at federal
    statutory rate of 34%

$
580


$
(7,711
)

$
(15,796
)State taxes, net of federal
    benefits


77



71



80Non-deductible intangible assets






184



221Amortization of stock-based
    compensation


476



1,180



741In-process research and development










1,759Research and development credits


898



(274
)


(71
)Foreign tax credits


164



146



Timing differences not currently
    benefited


(1,534
)


6,448



13,764Other


427



942



373$
1,088


$
986


$
1,071    74




---



##### Table of Contents



INTERWOVEN,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    December 31,2005


2004Deferred tax assets:Net operating loss carryforwards

$
95,385


$
90,057Deferred revenues


597



1,543Restructuring and excess
    facilities charges


6,390



9,721Accrued liabilities and allowances


3,444



4,609Tax credit carryforwards


12,765



13,836Depreciation and amortization


17,546



17,307Valuation allowance


(126,976
)


(126,485
)9,151



10,588Deferred tax liabilities:Non-deductible intangible assets


(9,151
)


(10,588
)$



$
          75




---



##### Table of Contents



INTERWOVEN,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   15.
    Significant
    Customer Information and Segment Reporting  Disclosures about Segments of an
    Enterprise and Related Information
      Years Ended
    December 31,2005


2004


2003Revenues:United States

$
119,002


$
105,323


$
71,753International


56,035



55,065



39,759$
175,037


$
160,388


$
111,512   December 31,2005


2004Long-lived assets (excluding
    goodwill):United States

$
29,822


$
35,248International


749



618$
30,571


$
35,866     Years Ended
    December 31,2005


2004


2003License

$
67,754


$
67,341


$
45,936Customer support


76,755



65,219



42,406Consulting


25,911



23,553



19,028Training


4,617



4,275



4,142$
175,037


$
160,388


$
111,512  76




---



##### Table of Contents



SIGNATURES    INTERWOVEN, INC.
  By:
    /s/  MARTIN
    W. BRAUNS    Chief Executive Officer
    Form 10-K
  Signature

Title

Date/s/  MARTIN
    W. BRAUNSMartin
    W. Brauns

Chief Executive Officer(Principal Executive Officer)

March 13, 2006/s/  JOHN E. CALONICO,
    JR.John
    E. Calonico, Jr.

Senior Vice President and
    Chief Financial Officer
    (Principal Financial and Accounting Officer)

March 13, 2006/s/  FRANK J. FANZILLI,
    JR.Frank
    J. Fanzilli, Jr.

Chairman of the Board of Directors

March 13, 2006/s/  RONALD E.F. CODDRonald
    E.F. Codd

Director

March 13, 2006/s/  BOB L. COREYBob
    L. Corey

Director

March 13, 2006/s/  THOMAS L. THOMASThomas
    L. Thomas

Director

March 13, 2006/s/  ANTHONY ZINGALEAnthony
    Zingale

Director

March 13, 2006  77




---



##### Table of Contents



INTERWOVEN,
    INC.
  EXHIBITS TO
    FORM 10-K
    ANNUAL REPORT
 For the year ended December 31, 2005
  Incorporated by
    Reference

FiledNumber

Exhibit Title

Form

Date

Number

Herewith3
.01

Registrants Fourth Amended
    and Restated Certificate of Incorporation

S-8


11/19/03



4.083
.02

Registrants Amended and
    Restated Bylaws











X4
.01

Form of Certificate for
    Registrants common stock

S-1


09/23/99



4.0110
.01

Form of Indemnity Agreement
    between Registrant and each of its directors and executive
    officers

S-1


07/27/99



10.0110
.02*

1996 Stock Option Plan and related
    agreements

S-1


07/27/99



10.0210
.03*

1998 Stock Option Plan and related
    agreements

S-1


07/27/99



10.0310
.04*

1999 Equity Incentive Plan

S-8


01/24/01



4.0110
.05*

Forms of Option Agreements and
    Stock Option Exercise Agreements related to the 1999 Equity
    Incentive Plan











X10
.06*

1999 Employee Stock Purchase Plan

10-Q


11/09/05



10.0110
.07*

Forms of Enrollment Form,
    Subscription Agreement, Notice of Withdrawal and Notice of
    Suspension related to the 1999 Employee Stock Purchase Plan

S-1


09/03/99



10.0510
.08*

2000 Stock Incentive Plan

S-8


09/26/00



4.0110
.09*

Forms of Stock Option Agreement
    and Stock Option Exercise Agreements related to the 2000 Stock
    Incentive Plan











X10
.10*

Forms of Incentive Stock Option
    Agreement and Nonstatutory Stock Option Agreement under iManage,
    Inc. 1997 Stock Option Plan

S-8


11/19/03



4.0210
.11*

iManage, Inc. 2000 Non-Officer
    Stock Option Plan and related forms of stock option and option
    exercise agreements

S-8


11/19/03



4.0310
.12*

2003 Acquisition Plan

S-8


11/19/03



4.0710
.13*

Forms of Stock Option Agreement
    and Stock Option Exercise Agreements related to the 2003
    Acquisition Plan











X10
.14*

Form of Notice of Stock Option
    Acceleration and Share Restrictions











X10
.15

Regional Prototype Profit Sharing
    Plan and Trust/Account Standard Plan Adoption Agreement AA #001

S-1


07/27/99



10.0610
.16*

Summary of Non-employee Director
    Compensation

8-K


09/21/05



10.110
.17*

Employment Agreement between
    Registrant and Martin W. Brauns dated February 27, 1998

S-1


07/27/99



10.0710
.18*

Employment arrangement between
    Registrant and Martin W. Brauns

10-Q


08/13/03



10.0410
.19*

Separation agreement and release
    between Registrant and Martin W. Brauns











X10
.20*

Notice of Grant of Stock Options
    and Option Agreement and related Stock Option Agreement between
    Martin W. Brauns

10-Q


08/13/03



10.0210
.21*

Compensatory Arrangements with
    Executive Officers











X10
.22*

2006 Executive Officer Incentive
    Bonus Plan











X10
.23*

2006 Compensation Plan for Steven
    J. Martello











X10
.24

Preferred Stock Warrant to
    Purchase Shares of Series E Preferred Stock of Registrant

S-1


09/03/99



10.25




---



##### Table of Contents



Incorporated by
    Reference

FiledNumber

Exhibit Title

Form

Date

Number

Herewith10
.25

Ariba Plaza Sublease dated
    June 28, 2001 between Registrant and Ariba, Inc.

10-Q


08/14/01



10.0110
.26

Amended and Restated Ariba Plaza
    Sublease dated August 6, 2001 between Registrant and Ariba,
    Inc.

10-Q


11/14/01



10.0110
.27

Amended and Restated First
    Amendment to Amended and Restated Sublease dated May 6,
    2001 between Registrant and Ariba, Inc.

10-Q


11/08/04



10.0110
.28

Office Lease for 303 East Wacker,
    Chicago, Illinois between 303 Wacker Realty LLC and iManage,
    Inc. dated March, 17, 2003

(1)


(1
)


(1
)10
.29

First Amendment to Lease dated
    November 12, 2003 between iManage, Inc. and 303 Wacker
    Realty LLC

10-K


03/15/05



10.2710
.30

Sublease between Hyperion
    Solutions Corporation and iManage, Inc. dated January 17,
    2002

(2)


(2
)


(2
)10
.31

Revolving Line of Credit Note
    dated August 2, 2001, between Registrant and Wells Fargo
    Bank

10-Q


08/14/01



10.0210
.32

Amendment to Line of Credit
    Agreement dated June 1, 2004 between Registrant and Wells
    Fargo Bank

10-Q


11/08/04



10.0210
.33

Amendment of Line of Credit
    Agreement, dated July 25, 2005, between Registrant and
    Wells Fargo Bank

10-Q


11/09/05



10.0321
.01

Subsidiaries of the Registrant











X23
.01

Consent of Independent Registered
    Public Accounting Firm











X31
.01

Rule 13a-14(a)/15d-15(a)
    certification of the Chief Executive Officer











X31
.02

Rule 13a-14(a)/15d-15(a)
    certification of the Chief Financial Officer











X32
.01

Section 1350 certification of
    Chief Executive Officer











X32
.02

Section 1350 certification of
    the Chief Financial Officer











X     (1)
    Incorporated by reference to Exhibit 10.18 of the iManage,
    Inc. Annual Report
    Form 10-K
    filed with the Commission on March 26, 2003.(2)
    Incorporated by reference to Exhibit 10.13 of the iManage,
    Inc. Annual Report
    Form 10-K
    filed with the Commission on March 29, 2002.  *
    Management contract, compensatory plan or arrangement.
    Confidential treatment has been requested with regard to certain
    portions of this document. Such portions were filed separately
    with the Commission.  
    Portions of this exhibit have been omitted pursuant to an order
    granting confidential treatment.