1042431--3/13/2006--INTERWOVEN

related topics

{customer, product, revenue}

{system, service, information}

{product, market, service}

{operation, international, foreign}

{personnel, key, retain}

{tax, income, asset}

{cost, operation, labor}

{gas, price, oil}

{cost, contract, operation}

{acquisition, growth, future}

{condition, economic, financial}

{stock, price, operating}

{interest, director, officer}

Sales cycles for our products are generally long and unpredictable, so it is difficult to forecast our future results. 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. 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. Increasing competition could cause us to reduce our prices and result in lower gross margins or loss of market share. 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. 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. Our failure to deliver defect-free software could result in losses and harmful publicity. 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. 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. 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.

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1042431--3/13/2006--INTERWOVEN_INC