STELLENT INC - 10-K Annual Report

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 10-K
(MARK ONE)

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934

FOR THE FISCAL YEAR ENDED MARCH 31, 2002

OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM TO .

COMMISSION FILE NUMBER 0-19817

STELLENT, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

MINNESOTA 41-1652566
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)

7777 GOLDEN TRIANGLE DRIVE
EDEN PRAIRIE, MINNESOTA 55344-3736
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)

(952) 903-2000
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: PREFERRED SHARE
PURCHASE RIGHTS COMMON STOCK, PAR VALUE $.01 PER SHARE

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]

The aggregate market value of the registrant's common stock held by
non-affiliates of the registrant as of June 21, 2002, was $84,517,299 based on
the closing sale price for the registrant's common stock on that date as
reported by The Nasdaq Stock Market. For purposes of determining such aggregate
market value, all officers and directors of the registrant are considered to be
affiliates of the registrant, as well as shareholders holding 10% or more of the
outstanding common stock as reflected on Schedules 13D or 13G filed with the
registrant. This number is provided only for the purpose of this report on Form
10-K and does not represent an admission by either the registrant or any such
person as to the status of such person.

As of June 21 2002, the registrant had 22,400,330 shares of common stock
issued and outstanding.
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STELLENT, INC.

FORM 10-K
FOR THE FISCAL YEAR ENDED MARCH 31, 2002

TABLE OF CONTENTS

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant's definitive Proxy Statement dated for the
annual meeting of Shareholders to be held on September 4, 2002 are incorporated
by reference in Part III of this Annual Report on Form 10-K. (The Compensation
Committee Report and the stock performance graph contained in the registrant's
Proxy Statement are expressly not incorporated by reference in this Annual
Report on Form 10-K). The Proxy Statement will be filed within 120 days after
the end of the fiscal year ended March 31, 2002.

PART I

ITEM 1. BUSINESS

FORWARD-LOOKING STATEMENTS

The information presented in this Annual Report on Form 10-K under the
headings "Item 1. Business" and "Item 2. Properties" contains forward-looking
statements within the meaning of the safe harbor provisions of Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended. Such forward-looking statements are based on
the beliefs of our management as well as on assumptions made by and information
currently available to us at the time such statements were made. When used in
the Annual Report on Form 10-K, the words "anticipate," "believe," "estimate,"
"expect," "intend," and similar expressions, as they relate to us, are intended
to identify such forward-looking statements. Although we believe these
statements are reasonable, such statements are subject to risks and
uncertainties, including those discussed under "Risk Factors" in Item 7 of this
Annual Report on Form 10-K that could cause actual results to differ materially
from those projected. Because actual results may differ, readers are cautioned
not to place undue reliance on these forward-looking statements.

OVERVIEW

We develop, market, and service content management software with the
primary focus of helping organizations derive maximum value from their content
that exists in the normal course of business such as Microsoft Office documents,
Web pages, images, graphics, multimedia, CAD, and other files. Customers deploy
Stellent Content Management System to help them leverage this enterprise content
while streamlining the process of obtaining or accessing content from content
creators and delivering it to content consumers employees, partners, and
customers -- so that informed, timely decisions can be made. In order to
accomplish this mission, Stellent Content Management System fits seamlessly into
existing business processes as well as into the Information Technology
infrastructure. Stellent Content Management System can be deployed to satisfy
immediate needs at a line of business or departmental level as well as strategic
needs at an enterprise level.

MARKETS AND CUSTOMERS

More than 950 corporate accounts for content management and publishing,
more than 350 corporate accounts for desktop viewing and conversion and more
than 350 OEM customers have seamlessly integrated our technology into their
operations. The Stellent Content Management System is used by a large number of
the Global 2000 across a wide range of industries to help them bring critical
business content to the Web. In addition, our Outside In OEM technology is used
by many of the Internet search engines, many of the handheld devices, and many
services to provide robust viewing and conversion functionalities to their
customers.

From an industry perspective, our customers cover a wide range of
industries including: Government, Finance, Manufacturing, Consumer, Aerospace
and Transportation, Health Care/Insurance, and HighTech/Telecom. Our services
support these customers with a 24x7 support line as well as relationships with
the leading systems integrators and technology vendors.

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PRODUCTS

We offer three distinct sets of software products: enterprise software,
component software, and shrink-wrap software.

ENTERPRISE SOFTWARE

The Stellent Content Management System is a powerful end-to-end content
management solution that deploys enterprise information quickly via the Web,
delivers rapid return on investment and is highly scalable.

The Stellent Content Management System blends effortlessly into the
existing business process by offering content owners multiple methods for easy
content contribution of any type of content. Since many types of content are not
'consumption' friendly, we also provide the unique, automatic conversion of over
225 content types to 'consumption' friendly formats such as HTML, WML, cHTML,
XML, and PDF. Our flexible contribution methods and automatic conversion
capabilities allow the Stellent Content Management System to be quickly adopted
by users and easily integrated into their daily work lives. Through its open,
standards-based architecture, the Stellent Content Management System integrates
easily with enterprise infrastructure and e-business applications for a seamless
solution.

The Stellent Content Management System consists of three primary
components: the core content management system, the server extensions, and the
optional modules.

Core Stellent Content Management System includes:

- Stellent Content Server: Stellent Content Server is a fully functional
content management system providing end-to-end content management and
personalized delivery of that content. The back end provides a rich set
of library services such as check-in/check-out, revision control,
security, subscription services, discussion threads, graphical workflow,
metadata and full-text searching, archiving, thumb-nailing, and content
replication. The front end provides both native format contribution and
HTML based contribution templates, contribution through WebDAV,
personalized navigation, and a personalized search or content bookmark
capability. Stellent Content Server offers two content storage
options -- the traditional repository that is optimized for standard
business content and the Tamino XML repository which is optimized for
managing large amounts of pure XML content.

- Stellent Content Categorizer: Stellent Content Categorizer enables
organizations to quickly categorize and move content into a managed
environment, easily re-categorize managed content and efficiently
navigate and search for content. As an open API for third party
categorization engines, Content Categorizer enables customers to choose
the best categorization engine for their enterprise needs. Customers can
use our out-of-the-box categorization functionality or can leverage rule
sets and taxonomies from third-party categorization tools.

- Stellent Dynamic Converter: Stellent Dynamic Converter brings a new
level of simplicity and productivity to providing Web-viewable business
content. With Dynamic Converter, users only need to store native files.
Dynamic Converter generates Web-viewable formats on demand and is able to
convert more than 225 file formats to HTML, WML, or cHTML. With
sophisticated template technology, Stellent Dynamic Converter serves
content to Web sites with a consistent "look and feel." Using a metadata
rules-based mechanism, Webmasters can define conditions when files are
served as HTML or when particular templates are used. A graphical
template editor allows remote Web developers to create, edit, and modify
conversion templates, all through the Web based Stellent Content
Management System.

- Stellent XML Converter: Stellent XML Converter enables the automatic
publishing of native business content to XML format. Upon the check-in of
new business content, a conversion to XML will occur. This XML file can
then be accessed from other enterprise applications, as well as
dynamically rendered to HTML using the Stellent Dynamic Converter.

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- Stellent PDF Converter: Stellent PDF Converter enables the automatic
publishing of native business content to a Web-viewable PDF upon
check-in. This Adobe PDF rendition maintains the fidelity of the content
and enables Web viewing without the need for the native application.

- Stellent Content Publisher: Stellent Content Publisher provides advanced
template-based technology to automatically publish over 225
business-content formats to fully linked Web sites/pages in HTML, XML,
and wireless formats. Content may be managed in a Stellent Content Server
or stored in a standard file system. Features include single source
publishing, abstraction, personalization, XML support, scripting language
inclusions, content release scheduling, layout template design by HTML
Editors, and automated creation of navigation.

Server Extensions includes:

- Stellent Collaboration Server: Stellent Collaboration Server enables
individual users, such as employees and business partners, to easily
create and maintain online ad-hoc project teams without IT assistance.
Collaboration Server facilitates collaborative, team-based content
creation with ad-hoc security using Access Control Lists (ACL),
discussion threads, user-initiated content routing, and project level
search. Specific project content can also be "promoted" to Stellent
Content Server to be managed as enterprise business content. Stellent
Collaboration Server extends content management to the workgroup level
and provides the same revolutionary empowerment to the business user for
project team definition, collaboration and management that Stellent
Content Server does for enterprise business content management.

- Stellent Extrasite Server: Stellent Extrasite Server dynamically
assembles and delivers personalized enterprise content that is managed
within the Stellent Content Server or other content management
repositories. Built using Enterprise JavaBeans, Stellent Extrasite Server
is a Java 2 Enterprise Edition (J2EE)-compliant content server for
high-volume, consumption-oriented Web and wireless sites that operates
entirely within an application server. By distributing content from a
central loading area to multiple servers in a Web farm environment,
Stellent Extrasite Server offers enterprise scalability, high
performance, fail-over and load balanced operating efficiency.

- Stellent Connection Server: Stellent Connection Server provides access
to and management of all of the business content within an organization,
regardless of location or file format. Content from external media or a
variety of repositories can be moved into the Stellent Content Management
System environment for management and publishing to Web sites and
applications. Connection Server enhances the user's ability to easily
deploy content from staging environments to production environments and
to roll-back to earlier versions of Web sites. Connection Server's robust
content distribution capabilities allow users to move content to external
sites and remote users, including business partners and employees who may
be working either online or offline.

Optional modules include:

- Stellent Report Parser: Stellent Report Parser provides additional
functionality to the Stellent Content Server with report parsing and
loading capabilities. With Report Parser, business-critical information
from the enterprise reporting applications can easily be made available
in one centralized, secured, easy-to-use source. It allows customers to
intelligently read reports from disparate expert reporting systems, and
then manages the distribution of these reports through Content Server in
PDF, XML, text or HTML format.

- Stellent Legacy: Stellent Legacy automatically scans and converts an
organization's paper-based legacy data and content into Web-ready files.
Stellent Legacy uses both Adobe Acrobat Capture and Kofax Ascent Capture
scanning technology to provide users with a single, compact, fully
searchable file that exactly replicates the original paper version.

- Stellent Desktop: Stellent Desktop combines two powerful technologies to
directly link Stellent Content Server and enterprise authoring
applications. Stellent Desktop allows direct contribution from
ODMA-compliant applications, such as Word, WordPerfect, Excel, and
PowerPoint as well as drag

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and drop capabilities for non-ODMA or non-WebDAV compliant applications.
Our integration with Microsoft Outlook also allows direct contribution
from Microsoft Outlook, including email messages as well as attachments,
and it allows users to attach content pulled directly from the Stellent
Content Server.

- Stellent Audio/Video Indexer: Stellent Audio Video Indexer provides
additional functionality to the Stellent Content Server, allowing for
more robust searching and retrieval of audio and video files. Stellent
Audio Video Indexer allows for the indexing of the audio portions of the
following audio and video file types: .mpg, .avi, .asf, .wmv. The voice
recognition results and file property information are formatted in XML,
allowing the end user the ability to perform a full text search and find
the timestamp associated with the keyword. Stellent Audio/Video Indexer
also provides thumbnail images of the video on the search results screen.

- Stellent Compression: Stellent Compression provides the ability to
check-in large image files and automatically convert them to a compressed
MrSID format or the ability to check-in pre-processed MrSID files. The
MrSID representation will be visible as a thumbnail and will provide
consumers a lightweight Web-viewable image with panning and zooming
controls.

- Stellent InterCAD: Stellent InterCAD provides the ability to check-in an
AutoCAD (.dwg) file and automatically convert it to a Web-viewable format
(.dwf). This Web-viewable format can be viewed in a browser with browser
plug-in.

- Stellent Tiff Conversion: Stellent Tiff Conversion converts TIFF images
to a PDF format. Upon check-in of single or multi-page TIFF files, Tiff
Conversion will convert single TIFF images to a single PDF file, or
convert the multi-page TIFF file to a multi-page PDF file.

- Stellent PDF Interchange: Stellent PDF Interchange provides the ability
to deliver a PDF file to a consumer in an HTML format. This capability is
ideal for extranet environments where the consumers may not have the
Acrobat Reader plug-in installed on their system.

- Stellent PDF Watermark: Stellent PDF Watermark is used by contributors
to specify various security attributes that will be applied to a
published PDF file, including the ability to overlay or underlay a
watermark, disable printing, disable text selection, and disable note
creation. An example of a watermark may be the overlaying of the word
"CONFIDENTIAL" on a secure file within the Stellent repository.

- Stellent PDF Merge: Stellent PDF Merge is a Web-based content assembly
solution used to assemble disparate content into one composite PDF
document. The user may also apply a watermark, consecutively paginate the
document, add a Table of Contents, insert metadata, and personalize the
assembled document with delimited data files.

- Stellent Enterprise Search: Stellent Enterprise Search lets users search
for content across multiple Stellent Content Servers.

- Stellent Site Builder: Stellent Site Builder facilitates the use of
client software by a Webmaster to design, publish, and maintain Web
sites. Site Builder defines the site hierarchy, the mapping between the
Web site and source content, the published format (HTML, XML, ASP, JSP,
etc.) and the look and feel of the Web site.

- Stellent Content Tracker: Stellent Content Tracker delivers both static
and dynamic reports allowing administrators the ability to analyze Web
site traffic, perform clickstream analysis, and track users within
Stellent Content Server. Using key metrics to evaluate Web site
effectiveness and to examine granular areas of a site, Content Tracker
highlights areas of improvement to keep customers, partners, and
employees coming back to the site.

- Stellent Foremost Records Management Integration: Stellent ForeMost
Records Management Integration enables a link between Stellent Content
Server and TrueArc's Foremost Enterprise Electronic Record Keeping System
that allows content within Stellent Content Server to be treated as a
record in

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ForeMost. Records within ForeMost contain retention schedules and
disposition rules that clearly control and define the lifecycle of the
record or content.

- Stellent Web Based Training: Stellent Web Based Training simulates
Stellent Content Server to teach users how to contribute and consume
content, allowing them to experiment with Stellent without risk. Main
topics of Stellent Web Based Training include accessing Stellent, finding
content, viewing content, managing resources, and managing content.

COMPONENT SOFTWARE

Our Outside In Technology provides application developers, device
manufacturers and service providers with the ability to view and convert more
than 225 file formats without using native applications. These technologies and
applications support multiple operating systems and international environments.
Outside In enables access to documents in applications for diverse markets such
as content management, search and retrieval, mobile and wireless, messaging,
collaboration and publishing. From applications on desktop and handheld device
platforms to Web and wireless servers in high-throughput 7x24 environments, over
350 OEMs, including leading ISVs, device manufacturers, and service providers
license Outside In for critical information access functionality.

Outside In conversion technologies are designed to perform automatic
conversions of popular business documents for Web or mobile device access, or
for further processing or storage of a document as XML. The Outside In
conversion technologies include:

- Outside In Wireless Export: Outside In Wireless Export enables
application developers and wireless service providers to offer their
users access to information stored in business documents via smart
phones, handheld devices, WAB-enabled devices and wireless device
browsers. Outside In Wireless export automatically converts content to
formats supported by wireless devices, such as WML, cHTML/iMode, HDML,
XHTML, AvantGo HTML, and ASCII text.

- Outside In HTML Export: Outside In HTML Export automatically converts
word processing, spreadsheet, presentation, archive, drawing, and bitmap
files into high-quality HTML, GIF, JPEG, and PNG. Outside In HTML
Export's template-driven architecture supports customization of the
resulting HTML to the look-and-feel of the overall environment, taking
advantage of the browser's capabilities. Outside In HTML Export offers
application developers a straightforward way to provide browser-based Web
access to business documents.

- Outside In XML Export: Outside In XML Export automatically converts more
than 225 file formats to XML and tags all content, properties, and
structural information of the original document. Outside In XML Export is
designed for applications seeking to normalize document information to
XML or to obtain access to all content, formatting, and structure
information in a document.

- Outside In Content Access: Outside In Content Access extracts text and
document properties from more than 225 file formats and automatically
translates the text to a character set defined by the developer. This
process enables developers to extract document content from formatting
for applications such as indexing and search technologies and unified
communications.

- Outside In Wireless Document Server: Outside In Wireless Document Server
offers wireless integrators and email application providers on-demand
conversion of more than 225 file types for high fidelity viewing of
documents and email attachments on wireless devices. As a server-based
solution, Outside In Wireless Document Server is wireless device
independent, scalable, and robust.

- Transit: Transit provides the fastest and most cost-effective way to
create and maintain Web sites. Once users have identified their source
documents (in a file system), Transit publishes the document to the Web
in a HTML or XML format. When source content changes, users can update
the site easily and thereby ensure that it's well maintained, up-to-date,
and has reliable links.

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Outside In viewing technologies and applications offer developers file
viewing, printing, and data access capabilities with the highest fidelity, for
the broadest number of file types across multiple operating systems. These
technologies include:

- Outside In Viewer Technology for Desktop Environments: The Outside In
Viewer Technology is the only solution that brings software developers
the ability to open, view and print legacy and current file formats with
high fidelity on multiple platforms, in multiple languages without the
native applications. The Outside In Viewer Technology provides the
application developer with a consistent interface for viewing across
Windows, UNIX, and Linux platforms.

- Outside In Viewer Technology for Mobile Devices: Outside In Viewer
Technology enables mobile and wireless device manufacturers and
application developers to provide their users high-fidelity views of
critical business documents on Windows CE, Symbian, Tao/Elate, or
Embedded Linux devices, regardless of the applications available on the
device. With this viewing functionality, device users can easily and
quickly access information delivered as email attachments, found on the
Internet, or downloaded from corporate information sources. Outside In
Viewer Technology supports views of more than 70 file formats. It is
offered as an SDK or as a standalone application on Windows CE under the
Quick View Plus for Windows CE name.

SHRINK-WRAP SOFTWARE

Shrink-wrap software includes:

- Quick View Plus: Our Quick View Plus provides leading organizations with
access to information from virtually any business document in more than
225 Windows, UNIX, Macintosh, DOS and Internet file formats. With a
simple mouse click on the desktop, in a browser or in an email
application, Quick View Plus enables users to view the contents of a
document, print or copy and paste the document view, and compress a file
or add a file to an existing archive. With Quick View Plus' broad
coverage of legacy and current business applications, users can work
uninterrupted as they view and access the contents of files created in
word processing, spreadsheet, presentation, graphics and compressed file
formats from within their browser, email client, and desktop.

- Transit: Transit provides the fastest and most cost-effective way to
create and maintain Web sites. Once users have identified their source
documents (in a file system), Transit will publish the document to the
Web in a HTML or XML format. When source content changes, users can
update the site easily and thereby ensure that it's well maintained,
up-to-date, and has reliable links.

- Site Magic: Site Magic is a streamlined version of Transit providing a
wizard that guides the user through the source document selection, the
publishing template selection, and the target site location. When source
content changes, users can update the site easily and thereby ensure that
it's well maintained, up-to-date, and has reliable links.

All of our Shrink-wrap software is licensed by distributors who have
exclusive rights to these products.

CONSULTING SERVICES

Our consulting services professionals employ a combination of applied
software analysis, installation, configuration, development and integration
skills with experience-based project methodology and management knowledge to
facilitate the rollout of content management solutions at all levels of a
customer's organization. Available on a worldwide basis, we act as a business
partner to our customers by providing a broad spectrum of services including:

- Technical needs analysis, e.g. software, security and metadata analysis

- Solutions development and deployment strategies

- Software installation and configuration

- Custom application development
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- Third party product integration

- Project management

- Knowledge transfer

These services are sold in conjunction with our software products and are
offered for fees, the amount of which depends on the nature and scope of the
project. We are currently focusing on expanding our consulting services
offerings in response to customer requests for on-going content management
solution guidance and support.

PRODUCT SUPPORT

We offer a system of product support programs that allow customers to
select the offering(s) that best satisfies their Stellent maintenance and
support requirements. From the initial installation and configuration of
Stellent to the point of application deployment, our product support resources
strive to provide exceptional customer service through quick response time,
effective trouble-shooting and the delivery of complete and comprehensive
technical solutions. Customers may access product support resources on a
worldwide basis for assistance during the customer's normal business hours.
Additional support offerings are available which supplement the customer's
product support requirements.

Product support offerings are renewable on an annual basis and are priced
as a percentage of the product license fees.

PRODUCT TRAINING

A system of basic and advanced product training classes is available for
Stellent Content Management System customers. Both technical and end user
training classes are provided, each of which may be presented at designated
worldwide training facilities or at a customer's site. Pricing varies based on
class duration and location.

SALES AND MARKETING

We market and sell our products using a combination of direct and indirect
distribution channels primarily in North America and Europe. Our primary
distribution channel is our direct sales force, which targets mid- and
large-size organizations. Our sales approach typically includes technical
systems evaluation performed by our pre-sales personnel, followed by
demonstrations of our products' capabilities and direct negotiations with our
sales staff. In addition, we have an internal telemarketing operation that is
responsible for customer prospecting, lead generation and follow-up. These
activities identify and develop leads for further sales efforts by our direct
sales force. As of March 31, 2002, we had a worldwide total of 140 direct and
indirect sales and sales support personnel and 30 marketing personnel, which
includes business development and alliances.

We also use indirect sales channels to increase the distribution and
visibility of our products through strategic alliances with resellers, OEMs, key
systems integrators and other channel partners in both domestic and
international markets.

We currently have operations or collaborations in Australia, France,
Germany, Japan, Korea, the Netherlands, the United Kingdom and the United
States. Localized versions of our software were introduced in European and Asian
markets in fiscal year 2002. We intend to further expand our global sales and
marketing capabilities by increasing the size of our direct sales and marketing
organizations in Europe and in Asia Pacific and by continuing to develop our
indirect partner relationships. Our ability to achieve significant revenue
growth in the future will depend in large part on how successfully we recruit,
train and retain sufficient direct and indirect sales and support personnel, and
how well we continue to establish and maintain relationships with our strategic
partners, resellers, OEMs, key systems integrators and other channel partners.

We use a variety of marketing programs to build market awareness of our
brand name and of our products, as well as to attract potential customers to our
products. A broad mix of programs is used to
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accomplish these goals, including market research, product and strategy updates
with industry analysts, public relations activities, direct mail and
relationship marketing programs, seminars, trade shows, speaking engagements,
Web site marketing and joint marketing programs. Our marketing organization
produces marketing materials in support of sales to prospective customers that
include brochures, data sheets, white papers, presentations and demonstrations.

RESEARCH AND DEVELOPMENT

We have made substantial investments in research and development through
both internal development and technology acquisitions. Our research and
development expenditures for fiscal 2000, 2001 and 2002, were approximately $2.9
million, $9.8 million and $17.6 million, respectively. Research and development
expenses represented 13%, 15% and 20%, respectively, of total revenue in those
years. We expect that we will continue to commit significant resources to
research and development in the future. In fiscal year 2002, we capitalized $1.3
million in software development costs, related primarily to a J2E based server
project to build and deliver pages for high consumption web sites, which was
included as part of our version 6.0 Stellent Content Server released in March
2002, and for translation of certain of our products into various languages.
Additionally, we capitalized software costs of approximately $0.7 million
acquired through a third party. See note 3 of the financial statements in Item
14. (a) 1. As of March 31, 2002 we had 115 employees engaged in research and
development activities.

In order to continue to provide product leadership in the Web content
management market, we intend to make major product releases each year. The
success of new introductions is dependent on several factors, including timely
completion and market introduction, differentiation of new products and
enhancements from those of our competitors and market acceptance of new products
and enhancements.

The market for our products is characterized by rapid technological change,
frequent new product introductions and enhancements, evolving industry standards
and rapidly changing customer requirements. The introduction of products
incorporating new technologies and the emergence of new industry standards could
render existing products obsolete and unmarketable. Our future success will
depend in part on our ability to anticipate changes, enhance our current
products, develop and introduce new products that keep pace with technological
advancements and address the increasingly sophisticated needs of our customers.
We may not be successful in developing and marketing new products and
enhancements that respond to competitive and technological developments and
changing customer needs.

ACQUISITIONS

In September 1999, we acquired InfoAccess, a Web-based software company, in
a transaction accounted for using the pooling-of-interests method. This further
enhanced our conversion of various file types to Web formats, including XML and
HTML, and our ability to publish business data to the Web. Accordingly, our
financial information includes the results of operations of InfoAccess for all
periods presented.

In July 2000, we acquired the Information Exchange Division (now referred
to as Stellent Software Components Division or "SCD") of eBT International, Inc.
(formerly Inso Corporation). SCD is the market leader in mobile and wireless
device viewing technologies and applications and Web conversion. SCD's products
provide conversion of over 225 different file types to Web formats including
XML, HTML or Wireless Markup Language (WML). Additionally, SCD provides viewing
technology for the Windows CE and Symbian operating systems that allows users of
applicable mobile and wireless devices to readily view files from desktop
applications. The total cost of the acquisition, including transaction costs,
was approximately $55.3 million. The acquisition was accounted for as a purchase
business combination. Accordingly, the net fair value of tangible and intangible
assets acquired and liabilities assumed were recorded at their estimated fair
values at the effective date of the acquisition and the results of operations of
SCD are included with those of the Company for the periods subsequent to the
date of the acquisition.

In July 2001, we acquired select assets of RESoft, a leading provider of
end-to-end content management solutions for the real estate and legal
industries, for 200,000 shares of our common stock. The acquisition was valued
at approximately $5.6 million, including acquisition costs. This acquisition has
been accounted for
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under the purchase method of accounting, and approximately $4.6 million of the
purchase price was allocated to goodwill, $0.5 million to intangible assets and
$0.5 million to fixed assets.

COMPETITION

The market for Web business content management solutions is intensely
competitive, subject to rapid technological change and significantly affected by
new product introductions and other market activities of industry participants.
We expect competition to persist and intensify in the future. Our primary source
of competition is from Web content management products offered by companies such
as divine, inc., Documentum, Inc., FileNET Corporation, Interwoven, Inc.,
Microsoft Corporation and Vignette Corporation. We also compete with current or
potential customers who may develop solutions internally.

Many of our competitors have longer operating histories and significantly
greater financial, technical, marketing and other resources than we do and thus
may be able to respond more quickly to new or changing opportunities,
technologies and customer requirements. Also, many current and potential
competitors have greater name recognition and access to larger customer bases
than we have. Such competitors may be able to undertake more extensive
promotional activities and offer more attractive terms to purchasers than we
can. In addition, current and potential competitors have established or may
establish cooperative relationships among themselves or with third parties to
enhance their products. Accordingly, it is possible that new competitors or
alliances among competitors may emerge and rapidly acquire significant market
share.

Competition in our market could materially and adversely affect our ability
to obtain revenues from software license fees from new or existing customers on
terms favorable to us. Further, competitive pressures may require us to reduce
the price of our software. In either case, we cannot be sure that we will be
able to compete successfully with existing or new competitors or that
competition will not have a material adverse effect on our business, operating
results and financial condition.

PROPRIETARY RIGHTS AND LICENSING

We rely on a combination of copyright, trade secret, trademark,
confidentiality procedures and contractual provisions to protect our proprietary
rights. United States and international copyright laws provide limited
protections for our software, documentation and other written materials. We
license our products in object code format for limited use by customers. We
treat the source code for our products as a trade secret and we require all
employees and third-parties who need access to the source code to sign
non-disclosure agreements.

Despite our efforts to protect our proprietary rights, unauthorized parties
may attempt to copy aspects of our products or to obtain and use information
that we regard as proprietary. Policing unauthorized use of our products is
difficult, and while we are unable to determine the extent to which piracy of
our software exists, software piracy can be expected to be a persistent problem.
Litigation may be necessary in the future to enforce our intellectual property
rights, to protect our trade secrets, to determine the validity and scope of the
proprietary rights of others or to defend against claims of infringement or
invalidity. However, the laws of many countries do not protect our proprietary
rights to as great an extent as do the laws of the United States. Any litigation
could result in substantial costs and diversion of resources and could have a
material adverse effect on our business, operating results and financial
condition. Our efforts to protect our proprietary rights may not be adequate or
our competitors may independently develop similar technology. Our failure to
meaningfully protect our property could have a material adverse effect on our
business, operating results and financial condition.

We have not received notice of any claims of infringement by us, except
with respect to our Xpedio mark. With our adoption of the Stellent mark
replacing the Xpedio mark this matter has been resolved. We cannot be sure that
third parties will not make additional claims of infringement with respect to
our current or future products. We expect that developers of Web content
management products will increasingly be subject to infringement claims as the
number of products and competitors in our market grows and as the functionality
of products in different segments of the software industry increasingly
overlaps. Any claims, with or without merit, could be time consuming to defend,
result in costly litigation, divert management's attention and
9

resources, cause product shipment delays or require us to enter into royalty or
licensing agreements. Royalty or licensing agreements, if required, may not be
available on terms acceptable to us or at all. A successful claim of product
infringement against us and our failure or inability to license the infringed
technology or develop or license technology with comparable functionality could
have a material adverse effect on our business, operating results and financial
condition.

EMPLOYEES

As of March 31, 2002, we had 446 employees. Our future success will depend
in part on our ability to attract, retain, integrate and motivate highly
qualified sales, technical and management personnel, for whom competition is
intense. From time to time we also employ independent contractors to support our
services, product development, sales and marketing departments. Our employees
are not represented by any collective bargaining unit, and we have never
experienced a work stoppage. We believe our relations with our employees are
good.

ITEM 2. PROPERTIES

In July 2000, we began a five-year lease of approximately 32,000 square
feet in Eden Prairie, Minnesota, which is our corporate headquarters facilities.
We are currently sub-letting approximately 18,000 square feet of our former
headquarters pursuant to a lease expiring in July 2005.

Additionally, we lease approximately 8,000 square feet of office space in
Boston, Massachusetts with lease terms expiring June 2001 through September
2006; approximately 17,000 square feet of space in downtown Chicago, Illinois
with a lease term expiring September 2006; approximately 6,000 square feet of
office space in Scottsdale, Arizona expiring in February 2004; approximately
5,000 square feet of space in New York, New York with a lease term expiring in
January 2007; approximately 12,000 square feet in Redmond, Washington with a
lease term expiring in December 2007; approximately 7,000 square feet in
Minnetonka, Minnesota with a lease term expiring in July 2004, and approximately
9,000 square feet in London, United Kingdom with a lease term expiring in May
2016. Management believes that our facilities are suitable and adequate for
current office requirements.

ITEM 3. LEGAL PROCEEDINGS

We are currently not a party to any material legal proceeding.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matter was submitted to a vote of our security holders during the fourth
quarter of the fiscal year ended March 31, 2002.

ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT

(a) Executive Officers of the Registrant

The Executive Officers of our company are:

10

Robert F. Olson founded our business and has served as our Chairman of the
Board and our predecessor company since 1990. He also served as our Chief
Executive Officer and Chairman of the Board from October 2000 to July 2001, and
as our President, Chief Executive Officer and Chairman of the Board from 1990 to
October 2000. From 1987 to 1990, he served as the General Manager of the
Greatway Communications Division of Anderberg-Lund Printing Company, an
electronic publishing sales and service organization. Prior to that time, Mr.
Olson held management and marketing positions in several electronic publishing
service organizations.

Vernon J. Hanzlik has served as our Chief Executive Officer since July
2001, as our President since October 2000, as Vice President of Sales from
October 1999 to September 2000, as Vice President of Strategic Development from
April 1999 to October 1999 and as Vice President, Product Marketing from June
1996 to April 1999. Prior to that time, Mr. Hanzlik held marketing and
application consulting positions with Lee Data Corporation, a computer hardware
manufacturer.

Gregg A. Waldon has served as our Chief Financial Officer, Treasurer and
Secretary since April 1999. He has also served as a director from April 1999 to
August 2001. From 1992 to April 1999, he held various financial management
positions with GalaGen Inc., a publicly traded biopharmaceutical and nutritional
ingredients company, where he served as Chief Financial Officer since November
1994 and other positions since April 1992. Prior to that time, Mr. Waldon was
employed by PricewaterhouseCoopers LLP.

Daniel P. Ryan has served as our Senior Vice President of Marketing and
Business Development since April 2002. He has also served as our Senior Vice
President of Corporate and Business Development from November 2001 to April
2002. From April 1999 to November of 2001, he served as Vice President of
Marketing and business development. From September 1997 to April 1999, he served
as Vice President of Marketing for Foglight Software, Inc., a developer of
enterprise performance management solutions. Prior to that time, Mr. Ryan served
as Director of Marketing for Compact Devices, Inc.

Mitchell F. Berg has served as our Vice President of Operations since April
2001. From July 1998 to March 2001, he was a partner and held various management
positions with Asian Foods Inc., a privately held food service company where he
served as President of the St. Paul Operations since August 1999. From June 1997
to July 1998, Mr. Berg independently sold commercial investment real estate.
From 1989 to May 1997, he served as an Investment Real Estate Sales Consultant
for Welsh Companies, Inc. From 1984 to 1989, Mr. Berg held various Human
Resource management positions at Carlson Companies, Inc.

Katherine W. Bloomfield has served as our Vice President of Technical
Operations since April 2001. She has also served as Vice President of Operations
within the Consulting Services Department from December 2000 to March 2001. From
November 1998 to November 2000, she served as Vice President of Consulting
Services. From June 1997 to October 1998, she was a consultant with
PricewaterhouseCoopers LLP. Prior to that time, Ms. Bloomfield served as
Director of Professional Services for Apertus Technologies Incorporated.

Frank A. Radichel has served as our Vice President of Research and
Development since March 1995. Prior to that, Mr. Radichel served as CALS Project
Leader and Technical Architect for Alliant TechSystems, Inc.

Michael S. Rudy has served as our Vice President of Alliances and Services
since April 2002 and was our Vice President of Technology Alliances since
January 2001. From 1999 to 2000, Mr. Rudy was President and CEO of Hypertree
Corporation, a software startup providing web infrastructure for building
corporate portals. Prior to that time, Mr. Rudy was employed by Workgroup
Technology from 1994-1999 in various sales and management positions, and by
ELDEC from 1983-1994 in various information services positions.

Officers of our company are chosen by and serve at the discretion of the
Board of Directors. There are no family relationships among any of the directors
or officers of our company.

11

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Our common stock, par value $0.01 per share, is traded on the Nasdaq
National Market tier of The Nasdaq Stock Market under the symbol STEL. At June
21, 2002, our common stock was held by approximately 5,927 shareholders
consisting of 147 record holders and an estimated 5,686 shareholders whose stock
was held in the name of a bank, broker or other nominee. On June 21, 2002, the
closing sale price of a share of our common stock was $4.22.

The high and low sale prices per share of our common stock for the four
quarters during the fiscal years ended March 31, 2001 and 2002 were as follows:

We have never paid cash dividends on the common stock. The Board of
Directors does not anticipate paying cash dividends in the foreseeable future.

EQUITY COMPENSATION PLAN INFORMATION

The information required by Item 201 (d) of Regulation S-K is incorporated
by reference into Item 12 of this Annual Report on Form 10-K.

RECENT SALES OF UNREGISTERED SECURITIES

During the year ended March 31, 2002, we have issued the following
securities pursuant to exemptions from registration under the Securities Act of
1933, as amended (the "Securities Act"). All such sales were made in reliance
upon the exemptions from registration provided under Sections 3(b) and 4(2) of
the Securities Act.

None.

12

ITEM 6. SELECTED FINANCIAL DATA

The Selected Consolidated Financial Data (in thousands except per share
data) presented below as of and for each of the fiscal years in the five year
period ended March 31, 2002 have been derived from our Consolidated Financial
Statements. The Selected Consolidated Financial Data should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the Consolidated Financial Statements and the
related Notes.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

OVERVIEW

We develop, market, and service content management software with the
primary focus of helping organizations derive maximum value from their content
that exists in the normal course of business such as Microsoft Office documents,
Web pages, images, graphics, multimedia, CAD, and other files. Customers deploy
Stellent Content Management System to help them leverage this enterprise content
while streamlining the process of obtaining or accessing content from content
creators and delivering it to content consumers --employees, partners, and
customers -- so that informed, timely decisions can be made. In order to
accomplish this mission, Stellent Content Management System fits seamlessly into
existing business processes as well as into the IT infrastructure. Stellent
Content Management System can be deployed to satisfy immediate needs at a line
of business or departmental level as well as strategic needs at an enterprise
level. Our customers are primarily located throughout the United States and
Europe. We are responsible for developing our current business which was founded
in 1990. In July 1996, we merged with and into a publicly traded corporation,
which was organized under Minnesota law in November 1989. In September 1999, we
acquired InfoAccess, Inc. in a transaction accounted for as a
pooling-of-interests. In July 2000, we acquired the Information Exchange
Division of eBT International, Inc. (formerly Inso Corporation) in a transaction
accounted for as a purchase. In July 2001, we acquired select assets of RESoft,
a leading provider of end-to-end content management solutions for the real
estate and legal industries. This acquisition has been accounted for under the
purchase method of accounting. On August 29, 2001, we changed our name to
Stellent, Inc.

CRITICAL ACCOUNTING POLICIES AND JUDGMENTS

Revenue Recognition

We currently derive all of our revenue from licenses of software products
and related services. We recognize revenue in accordance with Statement of
Position (SOP) 97-2, Software Revenue Recognition, as amended by SOP 98-9,
Modification of SOP 97-2, Software Revenue Recognition with Respect to Certain
Transactions, and Securities and Exchange Commission Staff Accounting Bulletin
101, Revenue Recognition in Financial Statements.

Product license revenue is recognized under SOP 97-2 when (i) persuasive
evidence of an arrangement exists, for example, a signed agreement or purchase
order, (ii) delivery has occurred, as evidenced by shipping documents and
customer acceptance, (iii) the fee is fixed or determinable and payable within
twelve months,

14

(iv) collectibility is probable and supported by credit checks or past payment
history, and the arrangement does not require services that are essential to the
functionality of the software. Services revenue consists of fees from consulting
and post-contract customer support. Consulting services include needs
assessment, software integration, security analysis, application development and
training. We bill consulting fees either on a time and materials basis or on a
fixed-price schedule. Our customers typically purchase post-contract customer
support agreements annually, and our prices of post-contract customer support
agreements are based on a percentage of the product license fee. Customers
purchasing post-contract customer support agreements receive product upgrades,
Web-based technical support and telephone hot-line support. We recognize revenue
from maintenance agreements ratably over the term of the agreement, typically
one year.

Expenses

Cost of revenues consists of technology royalties, costs to manufacture,
package and distribute our products and related documentation, as well as
personnel and other expenses related to providing services. Sales and marketing
expenses consist primarily of employee salaries, commissions, and costs
associated with marketing programs such as advertising, public relations and
trade shows. Research and development expenses consist primarily of salaries and
related costs associated with the development of new products, the enhancement
of existing products and the performance of quality assurance and documentation
activities. General and administrative expenses consist primarily of salaries
and other personnel-related costs for executive, financial, human resources,
information services and other administrative personnel, as well as legal,
accounting, insurance costs and provisions for doubtful accounts.

Software Development Cost

Software development costs may be capitalized once the technological
feasibility of the project is established. The amount of software development
costs that may be capitalized is subject to limitations based on the net
realizable value of the potential product. Typically the period between
achieving technological feasibility of our products and the general availability
of the products has been short. Consequently, prior to fiscal year 2002,
software development costs qualifying for capitalization were immaterial and
were generally expensed to research and development costs.

Other

Since our inception through March 31, 2002, we have incurred substantial
costs to develop and acquire our technology and products, to recruit and train
personnel for our sales and marketing, research and development and services
departments, and to establish an administrative organization. As a result, we
had an accumulated deficit of $42.5 million at March 31, 2002.

Beginning in 2002, we have implemented several cost cutting measures,
including a reduction in work force of approximately 17% since our December 2001
quarter. These cost controlling and reducing measures are in response to the
current economic slowdown both in the United States and internationally and were
primarily in the research and development, marketing and general and
administrative areas. However, we are continuing to invest in the sales area in
order to expand our customer base and anticipate that, with evidence of a
sustained recovery of the United States and international economies, we would
continue to invest further across all areas of our company. Because of this, we
anticipate that the percentage of expenses as compared to total revenues
represented by sales and marketing expenses, research and development expenses
and general and administrative expenses will fluctuate from period to period
depending primarily on when we hire new personnel, the timing of certain sales
and marketing programs, the research programs that we put in place and the
potential expansion of operations. In addition, our limited operating history
makes it difficult for us to predict future operating results. We cannot be
certain that we will sustain revenue growth.

15

RESULTS OF OPERATIONS -- THREE MONTHS ENDED MARCH 31, 2002 COMPARED TO THREE
MONTHS ENDED MARCH 31, 2001

REVENUES

Total revenues decreased by $8.1 million, or 37%, to $14.0 million for the
three months ended March 31, 2002 from $22.1 million for the three months ended
March 31, 2001. The decrease in revenues was attributable to unanticipated
delays in information technology spending decisions by customers and difficult
economic conditions.

Product Licenses. Revenues for product licenses decreased by $9.5 million,
or 53%, to $8.3 million for the three months ended March 31, 2002 from $17.8
million for the three months ended March 31, 2001. The decrease in revenues was
attributable to unanticipated delays in information technology spending
decisions by customers and difficult economic conditions.

Services. Revenues for services, consisting of consulting services,
training and post-contract customer support, increased by $1.4 million, or 31%,
to $5.7 million for the three months ended March 31, 2002 from $4.3 million for
the three months ended March 31, 2001. Expressed as a percentage of total
service revenue, consulting services and training revenues were approximately
37% and post-contract customer support was 63% in the March 31, 2002 quarter,
respectively, and 49% and 51% in the March 31, 2001 quarter, respectively. The
increase in revenues for services was primarily attributable to post-contract
customer support from a larger installed base of products.

COST OF REVENUES AND GROSS PROFIT

Total cost of revenues increased by $1.1 million, or 28%, to $4.9 million
for the three months ended March 31, 2002 from $3.8 million for the three months
ended March 31, 2001. Total cost of revenues as a percentage of total revenues
was 35% for the three months ended March 31, 2002 compared to 17% for the three
months ended March 31, 2001. Gross profit decreased by $9.2 million, or 50%, to
$9.1 million for the three months ended March 31, 2002 from $18.3 million for
the three months ended March 31, 2001. Total gross profit as a percentage of
total revenues was 65% for the three months ended March 31, 2002 compared to 83%
for the three months ended March 31, 2001. The decrease in gross profit dollars
was primarily due to decreased revenues for product licenses.

Product Licenses. Cost of revenues for product licenses increased by $0.2
million, or 20%, to $1.5 million for the three months ended March 31, 2002 from
$1.3 million for the three months ended March 31, 2001. Gross profit as a
percentage of revenues for product licenses was 82% for the three months ended
March 31, 2002 compared to 93% for the three months ended March 31, 2001. The
decrease is due primarily to us having approximately $0.4 million of fixed costs
per quarter against a lower base of revenues and a change in product mix with us
licensing more products with variable royalty costs associated with them in the
March 31, 2002 quarter than we licensed in the March 31, 2001 quarter.

Services. Cost of revenues, consisting of primarily personnel for
consulting services, training and post-contract customer support, increased by
$0.9 million, or 32%, to $3.4 million for the three months ended March 31, 2002
from $2.5 million for the three months ended March 31, 2001. Expressed as a
percentage of total services costs, consulting services and training costs were
approximately 72% and post-contract customer support 28% in the March 31, 2002
quarter, respectively, and 76% and 24% in the March 31, 2001 quarter,
respectively. Gross profit as a percentage of revenues for services was 41% for
the three months ended March 31, 2002 and 2001.

OPERATING EXPENSES

Sales and Marketing. Sales and marketing expenses increased by $0.9
million, or 9%, to $11.0 million for the three months ended March 31, 2002 from
$10.1 million for the three months ended March 31, 2001. Sales and marketing
expenses as a percentage of total revenues were 78% for the three months ended
March 31, 2002 compared to 46% for the three months ended March 31, 2001. The
increase in sales and

16

marketing expense was primarily due to increased staffing and marketing expenses
for advertising, public relations and trade shows.

General and Administrative. General and administrative expenses increased
by $1.7 million, or 63% to $4.4 million for the three months ended March 31,
2002 from $2.7 million for the three months ended March 31, 2001. General and
administrative expenses as a percentage of total revenues were 31% for the three
months ended March 31, 2002 compared to 12% for the three months ended March 31,
2001. General and administrative expenses increased due primarily to an increase
in the provision for doubtful accounts of approximately $1.5 million.

Research and Development. Research and development expenses increased by
$1.3 million, or 42%, to $4.6 million for the three months ended March 31, 2002
from $3.3 million for the three months ended March 31, 2001. Research and
development expenses as a percentage of total revenues were 33% for the three
months ended March 31, 2002 compared to 15% for the three months ended March 31,
2001. The increase in research and development expenses was primarily due to
increased staffing and related costs of $0.8 million and purchased services of
$0.5 million, which were needed to improve current products as well as develop
and integrate new products and technologies.

OTHER INCOME (EXPENSE)

Interest income was $0.8 million for the three months ended March 31, 2002
compared to $1.5 million for the three months ended March 31, 2001. Interest
income is primarily related to marketable securities purchased with the proceeds
of our public stock offerings completed in June 1999 and March 2000. The
decrease in net interest income was primarily due to decreases in the interest
rates earned by invested funds resulting from decreases in market interest
rates, which have declined over 50%.

RESULTS OF OPERATIONS -- FISCAL YEAR ENDED MARCH 31, 2002 COMPARED TO FISCAL
YEAR ENDED MARCH 31, 2001

REVENUES

Total revenues increased by $21.6 million, or 32%, to $88.3 million for the
year ended March 31, 2002 from $66.7 million for the year ended March 31, 2001.
The increase in revenues was primarily attributable to the growth in of our
customer base and the increase in customers as a result of our acquisition of
SCD, increased sales to existing customers and increased sales of our Stellent
Content Management System.

Product Licenses. Revenues for product licenses increased by $13.0
million, or 24%, to $66.9 million for the year ended March 31, 2002 from $53.9
million for the year ended March 31, 2001. The increase in revenues was
primarily attributable to growth in our customer base and the increase in
customers as a result of our acquisition of SCD, increased sales to existing
customers and increased sales of our Stellent Content Management System, which
typically has a higher sales price than our other products.

Services. Revenues for services, consisting of consulting services,
training and post-contract customer support, increased by $8.6 million, or 67%,
to $21.4 million for the year ended March 31, 2002 from $12.9 million for the
year ended March 31, 2001. Expressed as a percentage of total service revenue,
consulting services and training revenues were approximately 45% and
post-contract customer support was 55% in the year ended March 31, 2002,
respectively, and 49% and 51% in the year ended March 31, 2001. The increase in
revenues for services was primarily attributable to a larger installed base of
products.

COST OF REVENUES AND GROSS PROFIT

Total cost of revenues increased by $7.3 million, or 66%, to $18.4 million
for the year ended March 31, 2002 from $11.1 million for the year ended March
31, 2001. Total cost of revenues as a percentage of total revenues was 21% for
the year ended March 31, 2002 compared to 17% for the year ended March 31, 2001.
Gross profit increased by $14.3 million, or 26%, to $69.9 million for the year
ended March 31, 2002 from $55.6 million for the year ended March 31, 2001. Total
gross profit as a percentage of total revenues was 79% for the year ended March
31, 2002 compared to 83% for the year ended March 31, 2001. The increase in
gross
17

profit dollars was primarily attributable to the increase in product license
revenues while the decrease in gross profit percentage was primarily due to
lower gross profits on services.

Product Licenses. Cost of revenues for product licenses increased by $1.1
million or 28%, to $5.0 million for the year ended March 31, 2002 from $3.9
million for the year ended March 31, 2001. Gross profit as a percentage of
revenues for product licenses was 93% for the years ended March 31, 2002 and
2001.

Services. Cost of revenues, consisting of primarily personnel for
consulting services, training and post-contract customer support, increased by
$6.2 million, or 86%, to $13.4 million for the year ended March 31, 2002 from
$7.2 million for the year ended March 31, 2001. Expressed as a percentage of
total service cost, consulting services and training costs were approximately
75% and post-contract customer support 25% in the year ended March 31, 2002 and
73% and 27% in the year ended March 31, 2001, respectively. The gross profit as
a percentage of revenues for services was 38% for the year ended March 31, 2002
compared to 44% for the year ended March 31, 2001. The decrease in the gross
profit as a percentage of revenues for services was primarily due to increased
employee headcount and other staffing costs for consulting services personnel
associated with increased training for our partners for which we receive minimal
revenue, and an increase in the amount of services work performed by our
partners, which typically would have been performed by us and which led to
under-utilization of certain of our employees in the September 2001 and December
2001 quarters.

OPERATING EXPENSES

Sales and Marketing. Sales and marketing expenses increased by $17.2
million, or 58%, to $46.7 million for the year ended March 31, 2002 from $29.5
million for the year ended March 31, 2001. Sales and marketing expenses as a
percentage of total revenues were 53% for the year ended March 31, 2002 compared
to 44% for the year ended March 31, 2001. Sales and marketing expenses increased
as a percentage of total revenues primarily due to the decrease in fourth
quarter fiscal year 2002 revenues.

General and Administrative. General and administrative expenses increased
by $2.9 million, or 32%, to $11.9 million for the year ended March 31, 2002 from
$9.0 million for the year ended March 31, 2001. General and administrative
expenses as a percentage of total revenues were 13% for the years ended March
31, 2002 and 2001. General and administrative expense dollars increased
primarily due to increased personnel expenses of approximately $2.4 million,
increased legal and other professional services of approximately $0.3 million,
and an increase in the provision for doubtful accounts of approximately $0.2
million.

Research and Development. Research and development expenses increased by
$7.8 million, or 80% to $17.6 million for the year ended March 31, 2002 from
$9.8 million for the year ended March 31, 2001. Research and development
expenses as a percentage of total revenues were 20% for the year ended March 31,
2002 and 15% for the year ended March 31, 2000. The increase in research and
development expenses was primarily due to increased staffing and related costs
of $6.3 million, purchased services of $0.7 million, and travel of $0.1 million.

Acquisition Costs. Acquisition and related amortization and in-process
research and development costs of $14.1 million in the year ended March 31, 2002
and $21.7 million in the year ended March 31, 2001 consisted primarily of
amortization of intangible assets acquired, write-off of acquired in-process
research and development and other uncapitalizeable costs related to our
acquisition of SCD in July 2000, accounted for as a purchase.

OTHER INCOME (EXPENSE)

Interest income was $3.8 million for the year ended March 31, 2002 compared
to $7.0 million for the year ended March 31, 2001. Interest income for both
years was primarily related to short-term investments purchased with the
proceeds of our public stock offerings completed in June 1999 and March 2000.
Other expenses of $5.7 million for the year ended March 31, 2002 related to the
permanent decline in the values of certain investments we made. The decrease in
net interest income was primarily due to decreases in the interest rates earned
by invested funds resulting from decreases in market interest rates, which have
declined over 50%.
18

RESULTS OF OPERATIONS -- FISCAL YEAR ENDED MARCH 31, 2001 COMPARED TO FISCAL
YEAR ENDED MARCH 31, 2000

REVENUES

Total revenues increased by $44.3 million, or 198%, to $66.7 million for
the year ended March 31, 2001 from $22.4 million for the year ended March 31,
2000. The increase in revenues was primarily attributable to the organic
expansion of our customer base and the expansion of customers as a result of our
acquisition of SCD, increased sales to existing customers and increased sales of
our Stellent Content Management System, which began in September 1999 and
typically has a higher sales price than our other products.

Product Licenses. Revenues for product licenses increased by $36.4
million, or 208%, to $53.9 million for the year ended March 31, 2001 from $17.5
million for the year ended March 31, 2000. The increase in revenues was
primarily attributable to the organic expansion of our customer base and the
expansion of customers as a result of our acquisition of SCD, increased sales to
existing customers and increased sales of our Stellent Content Management
System, which typically has a higher sales price than our other products.

Services. Revenues for services, consisting of consulting services,
training and post-contract customer support, increased by $8.0 million, or 164%,
to $12.9 million for the year ended March 31, 2001 from $4.9 million for the
year ended March 31, 2000. Expressed as a percentage of total service revenue,
consulting services and training revenues were approximately 49% and
post-contract customer support 51% in the year ended March 31, 2001, and 48% and
52% in the year ended March 31, 2000. The increase in revenues for services was
primarily attributable to a larger installed base of products, from which we
generated more post-contract customer support revenue.

COST OF REVENUES AND GROSS PROFIT

Total cost of revenues increased by $7.0 million, or 170%, to $11.1 million
for the year ended March 31, 2001 from $4.1 million for the year ended March 31,
2000. Total cost of revenues as a percentage of total revenues was 17% for the
year ended March 31, 2001 compared to 18% for the year ended March 31, 2000.
Gross profit increased by $37.3 million, or 205%, to $55.6 million for the year
ended March 31, 2001 from $18.3 million for the year ended March 31, 2000. Total
gross profit as a percentage of total revenues was 83% for the year ended March
31, 2001 compared to 82% for the year ended March 31, 2000. The increase in
gross profit was primarily attributable to the increase in product license
revenues and certain fixed royalty costs offset by increased service staffing.

Product Licenses. Cost of revenues for product licenses increased by $2.2
million or 128%, to $3.9 million for the year ended March 31, 2001 from $1.7
million for the year ended March 31, 2000. Gross profit as a percentage of
revenues for product licenses was 93% for the year ended March 31, 2001 compared
to 90% for the year ended March 31, 2000 the increase in gross margin percentage
is due primarily to an increase in our OEM business, which typically has higher
product margins, and to certain royalty amounts remaining constant while
revenues are increased.

Services. Cost of revenues, consisting of primarily personnel for
consulting services, training and post-contract customer support, increased by
$4.8 million, or 200%, to $7.2 million for the year ended March 31, 2001 from
$2.4 million for the year ended March 31, 2000. Expressed as a percentage of
total service cost, consulting services and training costs were approximately
73% and post-contract customer support 27% in the years ended March 31, 2001 and
2000, respectively. Gross profit as a percentage of revenues for services was
44% for the year ended March 31, 2001 compared to 51% for the year ended March
31, 2000. The decrease in the gross profit as a percentage of revenues for
services was primarily due to increased staffing.

OPERATING EXPENSES

Sales and Marketing. Sales and marketing expenses increased by $19.3
million, or 192%, to $29.4 million for the year ended March 31, 2001 from $10.1
million for the year ended March 31, 2000. Sales and marketing expenses as a
percentage of total revenues were 44% for the year ended March 31, 2001 compared

19

to 45% for the year ended March 31, 2000. Sales and marketing expenses decreased
as a percentage of total revenues primarily due to the increase in total
revenues.

General and Administrative. General and administrative expenses increased
by $5.1 million, or 134%, to $9.0 million for the year ended March 31, 2001 from
$3.9 million for the year ended March 31, 2000. General and administrative
expenses as a percentage of total revenues were 14% for the year ended March 31,
2001 and 17% for the year ended March 31, 2000. General and administrative
expenses increased primarily due to the acquisition of SCD, increased personnel
expenses and an increase in the provision for doubtful accounts of $0.6 million
but declined as a percentage of revenues due to increased revenue.

Research and Development. Research and development expenses increased by
$6.9 million, or 239%, to $9.8 million for the year ended March 31, 2001 from
$2.9 million for the year ended March 31, 2000. Research and development
expenses as a percentage of total revenues were 15% for the year ended March 31,
2001 and 13% for the year ended March 31, 2000. The increase in research and
development expenses was primarily due to increased staffing and costs related
to the acquisition of SCD.

Acquisition Costs. Acquisition and related amortization and in-process
research and development costs of $21.7 million in the year ended March 31, 2001
consisted primarily of amortization of intangible assets acquired, acquired
in-process research and development and other uncapitalizeable costs related to
our acquisition of SCD in July 2000, accounted for as a purchase. Acquisition
costs of $2.0 million in the year ended March 31, 2000 consisted primarily of
financial advisory, legal, accounting and other costs related to our acquisition
of InfoAccess, Inc. in September 1999, accounted for as a pooling-of-interests.

OTHER INCOME (EXPENSE)

Interest income was $7.0 million for the year ended March 31, 2001 compared
to $1.5 million for the year ended March 31, 2000. Interest income for both
years was primarily related to short-term investments purchased with the
proceeds of our public stock offerings completed in June 1999 and March 2000.
Other expenses of $0.4 million for the year ended March 31, 2001 related to the
permanent decline in the value of an investment we made in fiscal year 2000.

20

QUARTERLY RESULTS

The following tables present unaudited consolidated statements of
operations data both in absolute dollars and as a percentage of total revenues
for each of our last eight quarters. This data has been derived from unaudited
consolidated financial statements that have been prepared on the same basis as
the annual audited consolidated financial statements and, in our opinion,
include all normal recurring adjustments necessary for a fair presentation of
such information. These unaudited quarterly results should be read in
conjunction with the Consolidated Financial Statements and related Notes
appearing elsewhere in this Annual Report on Form 10-K. The consolidated results
of operations for any quarter are not necessarily indicative of the results for
any future period.

As a result of our limited operating history and the significant changes
that are occurring in the Web content management software sector in which we
compete, it is difficult for us to forecast our revenues or earnings accurately.
It is possible that in some future periods our results of operations may not
meet or exceed the expectations of current and future public market analysts and
investors. For instance, if revenues or earnings per share do not meet
projections, we expect our business, operating results and financial condition
to be materially adversely affected and the price of our common stock to
decline. We expect our revenues and operating results may vary significantly
from quarter to quarter. Factors that have caused our results to fluctuate in
the past, and will likely cause fluctuations in the future, include:

- demand for our products and services;

- the timing of new product introductions and sales of our products and
services;

- unexpected delays in introducing new products and services;

- increased expenses, whether related to sales and marketing, research and
development or administration;

- changes in the rapidly evolving market for Web content management
solutions;

- the mix of revenues from product licenses and services, as well as the
mix of products licensed;

- the mix of services provided and whether services are provided by our
staff or third-party contractors;

- the mix of domestic and international sales;

22

- costs related to possible acquisitions of technology or businesses;

- general economic conditions; and

- public announcements by our competitors.

In addition, our products are typically shipped when the orders are
received, so our license backlog at the beginning of any quarter in the past has
represented only a small portion of expected license revenues for that quarter.
Further, we recognize a substantial percentage of product license revenues in
the last month of the quarter, frequently in the last week or even the last days
of the quarter. As a result, our sales pipeline at the beginning of a quarter
may not give us reasonable assurance about the sales that will be closed in that
quarter, and the delay or cancellation of any large orders could result in a
significant shortfall from anticipated revenues. Since our expenses are
relatively fixed in the near term, any shortfall from anticipated revenues could
result in significant variations in operating results from quarter to quarter.

As a result of these and other factors, we believe that period-to-period
comparisons of our results of operations may not be meaningful and should not be
relied upon as indicators of our future performance.

PRO FORMA NET INCOME PER COMMON SHARE

Our pro forma basic net income per share is computed by dividing pro forma
net income by the weighted average number of outstanding common shares and our
pro forma diluted net income per share is computed by dividing pro forma net
income by the weighted average number of outstanding common shares and common
share equivalents relating to stock options and warrants, when dilutive. Common
stock equivalent shares consist of stock options and warrants (using the
treasury stock method). The accompanying pro forma supplemental financial
information is presented for informational purposes only and is not a substitute
for the historical financial information presented in accordance with accounting
principles generally accepted in the United States of America. In addition,
comparisons of the pro forma information between companies may not be
meaningful.

23

NET OPERATING LOSS CARRYFORWARDS

As of March 31, 2002, we had net operating loss carryforwards of
approximately $53.4 million. The net operating loss carryforwards will expire at
various dates beginning in 2011, if not utilized. The Tax Reform Act of 1986
imposes substantial restrictions on the utilization of net operating losses and
tax credits in the event of an "ownership change" of a corporation. Our ability
to utilize net operating loss carryforwards on an annual basis will be limited
as a result of "ownership changes" in connection with the sale of equity
securities. We have provided a valuation allowance against a portion of the
deferred tax asset because of uncertainty regarding its full realization. Our
accounting for deferred taxes involves the evaluation of a number of factors
concerning the realizability of our deferred tax assets. In concluding that a
valuation allowance was required, management considered such factors as our
history of operating losses, potential future losses and the nature of our
deferred tax assets.

LIQUIDITY AND CAPITAL RESOURCES

We have funded our operations and satisfied our capital expenditure
requirements primarily through revolving working capital and term loans from
banking institutions, private placements and public offerings of securities and
proceeds from the sales of assets related to prior lines of business. Net cash
used in operating activities was $2.9 million for the year ended March 31, 2002,
compared to net cash provided by operating activities of $3.7 million for the
year ended March 31, 2001. The decrease in cash provided by operations is due
primarily to higher operating expenses.

To date, we have invested our capital expenditures primarily in property
and equipment, consisting largely of computer hardware and software. Capital
expenditures for the year ended March 31, 2002 and 2001 were $3.4 million and
$2.5 million, respectively. We have also entered into capital and operating
leases for facilities and equipment. We expect that our capital expenditures
will increase as our employee base grows. At March 31, 2002, we did not have any
material commitments for capital expenditures.

As of March 31, 2002, we had $96.2 million in cash and marketable
securities and $102.9 million in working capital. Net cash provided by financing
activities was $1.1 million for the year ended March 31, 2002 and $28.7 million
for the year ended March 31, 2001. In March 2000, we completed a public offering
of our common stock that raised approximately $100.1 million in proceeds for us,
net of underwriting discounts and offering costs of approximately $5.7 million.
In April 2000, the underwriters exercised their over-allotment option, raising
additional net proceeds of approximately $22.7 million.

We currently believe that our cash and cash equivalents on hand will be
sufficient to meet our working capital requirements for the foreseeable future,
particularly through March 31, 2003. On a longer term basis, we may require
additional funds to support our working capital requirements or for other
purposes and may seek to raise such additional funds through public or private
equity financings or from other sources. We cannot be certain that additional
financing will be available on terms favorable to us, or on any terms, or that
any additional financing will not be dilutive.

We continue to evaluate potential strategic acquisitions that could utilize
equity and/or cash resources. Such opportunities could develop quickly due to
market and competitive factors.

RELATED PARTY TRANSACTIONS

In December 2001 we entered into a note receivable of $3.5 million with a
distributor. Through March 2002, the distributor had paid the minimum payments
required under the note receivable with its own cash, and at the end of March
2002, it paid off the remaining note receivable with short-term bridge
financing. The distributor completely repaid this short-term bridge financing in
April 2002 through a traditional banking relationship. The short-term bridge
financing was provided at normal market rates by Beartooth Capital, a venture
financing organization controlled and funded by Robert Olson, a shareholder and
our chairman. There was no relationship prior to the bridge financing, and there
is no existing relationship between Beartooth Capital and the distributor.
Furthermore, we provided no compensation or guarantees to Beartooth Capital or
Robert Olson for the short-term bridge financing, nor were we otherwise involved
in this transaction.

24

At March 31, 2002 we held investments in and notes with five non-public
start-up technology companies, owning approximately 3% to 12% of these
companies, and in a publicly traded technology company listed on Nasdaq, Active
IQ, of which we owned 5.4%, excluding warrants. The value of these investments
at March 31, 2002 is approximately $3.1 million. At March 31, 2002, the market
value of our equity in Active IQ was approximately $0.1 million more than our
investment value of $1.2 million. The offsetting amount does not effect the
consolidated statements of operations but is shown as "accumulated other
comprehensive income (loss)" in the shareholders' equity section on the
consolidated balance sheet.

During the year ended March 31, 2002, the Company recognized license
revenue of approximately $2.0 million from companies in which we had an equity
investment, with approximately $1.4 million from Active IQ in December 2001. At
March 31, 2002, the Company had an account receivable balance of $0.1 million
associated from these transactions. License revenue recognized for the years
ended March 31, 2000 and 2001 from companies in which we had an equity
investment was approximately $0.3 million and $2.4 million, respectively. The
Company also acquired intellectual property from Active IQ in April 2001 for
approximately $0.7 million, which was capitalized and is being amortized over a
three-year period.

Certain officers and a director of the Company also held an investment in
Active IQ during the year, approximating 2%, excluding warrants. These
investments were sold at no gain during the year.

NEW ACCOUNTING PRONOUNCEMENTS

Goodwill and Other Acquired Intangible Asset

The Financial Accounting Standards Board (FASB) issued Statement of
Financial Accounting Standards (SFAS) 141, Business Combinations, and SFAS 142,
Goodwill and Intangible Assets, in July 2001. Major provisions of these
Statements and their effective dates for us are as follows:

- All business combinations initiated after June 30, 2001 are to be
accounted for using the purchase method of accounting.

- Intangible assets acquired in a business combination must be recorded
separately from goodwill if they arise from contractual or other legal
rights or are separable from the acquired entity and can be sold,
transferred, licensed, rented or exchanged, either individually or as
part of a related contract, asset or liability.

- Goodwill, as well as intangible assets with indefinite lives, acquired
after June 30, 2001, will not be amortized. Effective April 1, 2002, all
previously recognized goodwill and intangible assets with indefinite
lives will no longer be subject to amortization.

- Effective April 1, 2002, goodwill and intangible assets with indefinite
lives will be tested for impairment annually and whenever there is an
impairment indicator.

- All acquired goodwill must be assigned to reporting units for purposes of
impairment testing and segment reporting.

Beginning on April 1, 2002, annual goodwill amortization of approximately
$5,300 and annual amortization of approximately $1,000 relating to intangible
assets with indefinite lives will no longer be recognized. By March 31, 2003, we
will have completed a transitional fair value based impairment test of goodwill
as of April 1, 2002. By June 30, 2002, we will have completed a transitional
impairment test of all intangible assets with indefinite lives. Impairment
losses, if any, resulting from the transitional testing would be recognized in
the quarter ended June 30, 2002, as a cumulative effect of a change in
accounting principle. We do not believe that adoption of this standard will have
a material effect on the financial position of us.

Impairment of Long-Lived Asset

In September 2001, the FASB issued SFAS 144, Accounting for the Impairment
or Disposal of Long-Lived Assets. This statement supercedes SFAS 121 and is
effective April 1, 2002 for us. This statement is not

25

anticipated to have a current material effect on the financial statements of us,
but could have a future effect in the event that an asset impairment has
occurred.

Consideration Paid to Reseller

In June 2001, the Emerging Issues Task Force (EITF) issued EITF Issue No.
00-25, Vendor Income Statement Characterization of Consideration Paid to a
Reseller of the Vendor's Products. This issue is effective for periods beginning
after December 15, 2001 and addresses whether consideration from a vendor to a
reseller is (a) an adjustment of the selling prices of the vendor's products and
should be deducted from revenue when recognized or (b) a cost incurred by the
vendor for assets or services received from the reseller and should be included
as a cost or expense when recognized. We enter into cooperative advertising
programs with some of our resellers. When we receive an identifiable benefit in
return for consideration, and we can reasonably estimate the fair value of the
benefit received, the cooperative advertising is accounted for as advertising
expense. If the fair value cannot be estimated or an identifiable benefit is not
received the cooperative advertising is accounted for as a reduction of revenue.
EITF 00-25, will be adopted by us on April 1, 2002, and is not anticipated to
have a material effect on our consolidated financial statements.

RISK FACTORS

DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

This Form 10-K for the fiscal year ended March 31, 2002 contains certain
forward-looking statements within the meaning of the safe harbor provisions of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. Such forward-looking statements are
based on the beliefs of our management as well as on assumptions made by and
information currently available to us at the time such statements were made.
When used in this Form 10-K, the words "anticipate", "believe", "estimate",
"expect", "intend" and similar expressions, as they relate us, are intended to
identify such forward-looking statements. Although we believe these statements
are reasonable, readers of this Form 10-K should be aware that actual results
could differ materially from those projected by such forward-looking statements
as a result of the risk factors listed below. Readers of this Form 10-K should
consider carefully the factors listed below, as well as the other information
and data contained in this Form 10-K. We caution the reader, however, that such
list of factors under the caption "Risk Factors" in the our Form 10-K may not be
exhaustive and that those or other factors, many of which are outside of the our
control, could have a material adverse effect on us and our results of
operations. All forward-looking statements attributable to us or persons acting
on our behalf are expressly qualified in their entirety by the cautionary
statements set forth hereunder. We undertake no obligation to update publicly
any forward-looking statements for any reason, even if new information becomes
available or other events occur in the future.

FLUCTUATIONS IN OUR OPERATING RESULTS MAY MAKE IT DIFFICULT TO PREDICT OUR
FUTURE PERFORMANCE.

While our products and services are not seasonal, our revenues and
operating results are difficult to predict and may fluctuate significantly from
quarter to quarter. If our quarterly revenues or operating results fall below
the expectations of investors or securities analysts, the price of our common
stock could fall substantially. A large part of our sales typically occurs in
the last month of a quarter, frequently in the last week or even the last days
of the quarter. If these sales were delayed from one quarter to the next for any
reason, our operating results could fluctuate dramatically. In addition, our
sales cycles may vary, making the timing of sales difficult to predict.
Furthermore, our infrastructure costs are generally fixed. As a result, modest
fluctuations in revenues between quarters may cause large fluctuations in
operating results. These factors all tend to make the timing of revenues
unpredictable and may lead to high period-to-period fluctuations in operating
results.

26

Our quarterly revenues and operating results may fluctuate for several
additional reasons, many of which are outside of our control, including the
following:

- demand for our products and services;

- the timing of new product introductions and sales of our products and
services;

- unexpected delays in introducing new products and services;

- increased expenses, whether related to sales and marketing, research and
development or administration;

- changes in the rapidly evolving market for Web content management
solutions;

- the mix of revenues from product licenses and services, as well as the
mix of products licensed;

- the mix of services provided and whether services are provided by our
staff or third-party contractors;

- the mix of domestic and international sales;

- costs related to possible acquisitions of technology or businesses;

- general economic conditions; and

- public announcements by our competitors.

OUR SUCCESS DEPENDS ON OUR ABILITY TO EXPAND OUR SALES FORCE AND DISTRIBUTION
CHANNELS.

To increase our market share and revenues, we must increase the size of our
sales force and the number of our distribution channel partners. Our failure to
do so may have a material adverse effect on our business, operating results and
financial condition. There is intense competition for sales personnel in our
business, and we cannot be sure that we will be successful in attracting,
integrating, motivating and retaining new sales personnel. Our existing or
future distribution channel partners may choose to devote greater resources to
marketing and supporting the products of other companies. In addition, we will
need to resolve potential conflicts, if any, among our sales force and
distribution channel partners.

POTENTIAL ACQUISITIONS MAY BE DIFFICULT TO COMPLETE OR TO INTEGRATE AND MAY
DIVERT MANAGEMENT'S ATTENTION.

We may seek to acquire or invest in businesses, products or technologies
that are complementary to our business. If we identify an appropriate
acquisition opportunity, we may be unable to negotiate favorable terms for that
acquisition, successfully finance the acquisition or integrate the new business
or products into our existing business and operations. In addition, the
negotiation of potential acquisitions and the integration of acquired businesses
or products may divert management time and resources from our existing business
and operations. To finance acquisitions, we may use a substantial portion of our
available cash or we may issue additional securities, which would cause dilution
to our shareholders.

WE MAY NOT BE PROFITABLE IN THE FUTURE.

Our revenues may not grow in future periods, may not grow at past rates and
we may not sustain our quarterly pro forma profitability. If we do not regain
our recent pro forma profitability, the market price of our stock may fall. Our
ability to regain our recent pro forma profitable operations depends upon many
factors beyond our direct control. These factors include, but are not limited
to:

- the demand for our products;

- our ability to quickly introduce new products;

- the level of product and price competition;

- our ability to control costs; and

- general economic conditions
27

THE INTENSE COMPETITION IN OUR INDUSTRY MAY REDUCE OUR FUTURE SALES AND PROFITS.

The market for our products is highly competitive and is likely to become
more competitive. We may not be able to compete successfully in our chosen
marketplace, which may have a material adverse effect on our business, operating
results and financial condition. Additional competition may cause pricing
pressure, reduced sales and margins, or prevent our products from gaining and
sustaining market acceptance. Many of our current and potential competitors have
greater name recognition, access to larger customer bases, and substantially
more resources than we have. Competitors with greater resources than ours may be
able to respond more quickly than we can to new opportunities, changing
technology, product standards or customer requirements.

WE MAY HAVE DIFFICULTY MANAGING OUR GROWTH.

Any failure to properly manage our growth may have a material adverse
effect on our business, operating results and financial condition. The rapid
growth that we have experienced places significant challenges on our management,
administrative and operational resources. To properly manage this growth, we
must, among other things, implement and improve additional and existing
administrative, financial and operational systems, procedures and controls on a
timely basis. We will also need to expand our finance, administrative and
operations staff. We may not be able to complete the improvements to our
systems, procedures and controls necessary to support our future operations in a
timely manner. Management may not be able to hire, train, integrate, retain,
motivate and manage required personnel and may not be able to successfully
identify, manage and exploit existing and potential market opportunities. In
connection with our expansion, we plan to increase our operating expenses to
expand our sales and marketing operations, develop new distribution channels,
fund greater levels of research and development, broaden services and support
and improve operational and financial systems. Our failure to generate
additional revenue commensurate with an increase in operating expenses during
any fiscal period could have a material adverse effect on our financial results
for that period.

WE DEPEND ON THE CONTINUED SERVICE OF OUR KEY PERSONNEL.

We are a small company and depend greatly on the knowledge and experience
of our senior management team and other key personnel. If we lose any of these
key personnel, our business, operating results and financial condition could be
materially adversely affected. Our success will depend in part on our ability to
attract and retain additional personnel with the highly specialized expertise
necessary to engineer, design and support our products and services. Like other
software companies, we face intense competition for qualified personnel. We may
not be able to attract or retain such personnel.

WE HAVE RELIED AND EXPECT TO CONTINUE TO RELY ON SALES OF OUR CONTENT MANAGEMENT
AND VIEWING SOFTWARE PRODUCTS FOR OUR REVENUES.

We currently derive all of our revenues from product licenses and services
associated with our system of content management and viewing software products.
The market for content management and viewing software products is new and
rapidly evolving. We cannot be certain that a viable market for our products
will emerge, or if it does emerge, that it will be sustainable. If we do not
continue to increase revenues related to our existing products or generate
revenues from new products and services, our business, operating results and
financial condition may be materially adversely affected. We will continue to
depend on revenues related to new and enhanced versions of our software products
for the foreseeable future. Our success will largely depend on our ability to
increase sales from existing products and generate sales from product
enhancements and new products.

We cannot be certain that we will be successful in upgrading and marketing
our existing products or that we will be successful in developing and marketing
new products and services. The market for our products is highly competitive and
subject to rapid technological change. Technological advances could make our
products less attractive to customers and adversely affect our business. In
addition, complex software product

28

development involves certain inherent risks, including risks that errors may be
found in a product enhancement or new product after its release, even after
extensive testing, and the risk that discovered errors may not be corrected in a
timely manner.

OUR SUCCESS DEPENDS ON OUR ABILITY TO PROTECT OUR PROPRIETARY TECHNOLOGY.

If we are unable to protect our intellectual property, or incur significant
expense in doing so, our business, operating results and financial condition may
be materially adversely affected. Any steps we take to protect our intellectual
property may be inadequate, time consuming and expensive. We currently have no
patents or pending patent applications. Without significant patent or copyright
protection, we may be vulnerable to competitors who develop functionally
equivalent products. We may also be subject to claims that our current products
infringe on the intellectual property rights of others. Any such claim may have
a material adverse effect on our business, operating results and financial
condition.

We anticipate that software product developers will be increasingly subject
to infringement claims due to growth in the number of products and competitors
in our industry, and the overlap in functionality of products in different
industries. Any infringement claim, regardless of its merit, could be
time-consuming, expensive to defend, or require us to enter into royalty or
licensing agreements. Such royalty or licensing agreements may not be available
on commercially favorable terms, or at all. We are not currently involved in any
intellectual property litigation.

We rely on trade secret protection, confidentiality procedures and
contractual provisions to protect our proprietary information. Despite our
attempts to protect our confidential and proprietary information, others may
gain access to this information. Alternatively, other companies may
independently develop substantially equivalent information.

OUR PRODUCTS MAY NOT BE COMPATIBLE WITH COMMERCIAL WEB BROWSERS AND OPERATING
SYSTEMS.

Our products utilize interfaces that are compatible with commercial Web
browsers. In addition, our Stellent Content Management System is a server-based
system written in Java that functions in both Windows NT and UNIX environments.
We must continually modify our products to conform to commercial Web browsers
and operating systems. If our products were to become incompatible with
commercial Web browsers and operating systems, our business would be harmed. In
addition, uncertainty related to the timing and nature of product introductions
or modifications by vendors of Web browsers and operating systems may have a
material adverse effect on our business, operating results and financial
condition.

WE COULD BE SUBJECT TO PRODUCT LIABILITY CLAIMS IF OUR PRODUCTS FAIL TO PERFORM
TO SPECIFICATIONS.

If software errors or design defects in our products cause damage to
customers' data and our agreements do not protect us from related product
liability claims, our business, operating results and financial condition may be
materially adversely affected. In addition, we could be subject to product
liability claims if our security features fail to prevent unauthorized third
parties from entering our customers' intranet, extranet or Internet Web sites.
Our software products are complex and sophisticated and may contain design
defects or software errors that are difficult to detect and correct. Errors,
bugs or viruses spread by third parties may result in the loss of market
acceptance or the loss of customer data. Our agreements with customers that
attempt to limit our exposure to product liability claims may not be enforceable
in certain jurisdictions where we operate.

FUTURE REGULATIONS COULD BE ADOPTED THAT RESTRICT OUR BUSINESS.

Federal, state or foreign agencies may adopt new legislation or regulations
governing the use and quality of Web content. We cannot predict if or how any
future laws or regulations would impact our business and operations. Even though
these laws and regulations may not apply to our business directly, they could
indirectly harm us to the extent that they impact our customers and potential
customers.
29

SIGNIFICANT FLUCTUATION IN THE MARKET PRICE OF OUR COMMON STOCK COULD RESULT IN
SECURITIES LITIGATION AGAINST US.

In the past, securities class action litigation has been brought against
publicly held companies following periods of volatility in the price of their
securities. If we were subject to such litigation due to volatility in our stock
price, we may incur substantial costs. Such litigation could divert the
attention of our senior management away from our business, which could have a
material adverse effect on our business, operating results and financial
condition.

The market price of our common stock has fluctuated significantly in the
past and may do so in the future. The market price of our common stock may be
affected by each of the following factors, many of which are outside of our
control:

- variations in quarterly operating results;

- changes in estimates by securities analysts;

- changes in market valuations of companies in our industry;

- announcements by us of significant events, such as major sales,
acquisitions of businesses or losses of major customers;

- additions or departures of key personnel; and

- sales of our equity securities.

OUR PERFORMANCE WILL DEPEND ON THE CONTINUING GROWTH AND ACCEPTANCE OF THE WEB.

Our products are designed to be used with intranets, extranets and the
Internet. If the use of these methods of electronic communication does not grow,
our business, operating results and financial condition may be materially
adversely affected. Continued growth in the use of the Web will require ongoing
and widespread interest in its capabilities for communication and commerce. Its
growth will also require maintenance and expansion of the infrastructure
supporting its use and the development of performance improvements, such as high
speed modems. The Web infrastructure may not be able to support the demands
placed on it by continued growth. The ongoing development of corporate intranets
depends on continuation of the trend toward network-based computing and on the
willingness of businesses to reengineer the processes used to create, store,
manage and distribute their data. All of these factors are outside of our
control.

OUR EXISTING SHAREHOLDERS HAVE SIGNIFICANT INFLUENCE OVER US.

As of March 31, 2002, Robert F. Olson, our Chairman, holds approximately
9.8% of our outstanding common stock. Accordingly, Mr. Olson is able to exercise
significant control over our affairs. Additionally, our directors and executive
officers beneficially own approximately 10.6% of our common stock. These persons
have significant influence over our affairs, including approval of the
acquisition or disposition of assets, future issuances of common stock or other
securities and the authorization of dividends on our common stock. Our directors
and executive officers could use their stock ownership to delay, defer or
prevent a change in control of our company, depriving shareholders of the
opportunity to sell their stock at a price in excess of the prevailing market
price.

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

Our Articles of Incorporation permit us to establish the rights,
privileges, preferences and restrictions, including voting rights, of unissued
shares of our capital stock and to issue such shares without approval from our
shareholders. The rights of holders of our common stock may suffer as a result
of the rights granted to holders of preferred stock that may be issued in the
future. In addition, we could issue preferred stock to

30

prevent a change in control of our company, depriving shareholders of an
opportunity to sell their stock at a price in excess of the prevailing market
price.

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

Our shareholder rights plan and certain provisions of Minnesota law may
have the effect of discouraging attempts to acquire Stellent without the
approval of our Board of Directors. Consequently, our shareholders may lose
opportunities to sell their stock for a price in excess of the prevailing Market
price.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our interest income on cash and marketable securities is affected by
changes in interest rates in the United States. Through March 31, 2002, changes
in these rates have had a significant effect on our company. Interest rates
earned on invested funds have fallen by over 50% since December 2000. We believe
that there may be future exposure to interest rate market risk.

Our investments are held in commercial paper which are affected by equity
price market risk and other factors. We do not anticipate that exposure to these
risks will have a material impact onus, due to the nature of our investments.

We have no history of, and do not anticipate in the future, investing in
derivative financial instruments. Most transactions with international customers
are entered into in U.S. dollars, precluding the need for foreign currency
hedges. Any transactions that are currently entered into in foreign currency are
not deemed material to the financial statements. Thus, the exposure to market
risk is not material.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The Financial Statements and notes thereto required pursuant to this Item
begin on page F-1 of this Annual Report on Form 10-K.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

(a) Directors of the Registrant

Incorporated herein by reference is the information appearing under the
headings "Election of Directors" and "Section 16(a) Beneficial Ownership
Reporting Compliance" in our definitive Proxy Statement for the annual meeting
of Shareholders to be held on September 4, 2002 (the "Proxy Statement").

(b) Executive Officers of the Registrant

Incorporated herein by reference is the information appearing herein under
Item 4a.

(c) Compliance with Section 16 (a) of the Exchange Act

Incorporated by reference is the information appearing under the heading
"Section 16(a) Beneficial Ownership Reporting Compliance" in our definitive
Proxy Statement.

ITEM 11. EXECUTIVE COMPENSATION

Incorporated herein by reference is the information appearing under the
headings "Executive Compensation" in our Proxy Statement.
31

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS

Incorporated herein by reference is the information appearing under the
heading "Security Ownership of Principal Shareholders" and "Equity Compensation
Plan Information" in our Proxy Statement and the information appearing under the
heading "Stock Options" in Note 5 of "Notes to Consolidated Financial
Statements" in the Financial Statements.

We assumed the InfoAccess, Inc. 1995 Stock Option Plan as part of our
merger with InfoAccess, Inc. on September 29, 1999. As of the time of the
merger, there were 126,303 shares in the plan. All of these shares were granted
to eligible individuals who became our employees at the time of the merger.

We assumed the InfoAccess, Inc. 1990 Stock Option Plan as part of our
merger with InfoAccess, Inc. on September 29, 1999. As of the time of the
merger, there were 260,245 shares in the plan. All of these shares were granted
to eligible individuals at the time of the merger.

In November 1999, the Board of Directors adopted the 1999 Employee Stock
Option and Compensation Plan. The plan authorizes the issuance of up to
1,000,000 shares of our common stock to employees who are not our officers or
directors. As of March 31, 2002, awards of approximately 840,000 shares had been
granted under this plan, and approximately 160,000 remain available for future
grant under this plan.

In May 2000, the Board of Directors adopted the 2000 Employee Stock
Incentive Plan. The original plan authorizes the issuance of up to 1,600,000
shares of our common stock to employees who are not our officers or directors.
The plan was amended in October 2001 to add an additional 700,000 shares to the
plan. As of March 31, 2002, awards of approximately 2,247,000 shares had been
granted under this plan, and approximately 53,000 shares remain available for
future grant under this plan.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Incorporated herein by reference is the information appearing under the
heading "Certain Relationships and Related Transactions" in our Proxy Statement.

32

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a) Documents filed as part of this report:

1. Financial Statements:

2. The following consolidated financial statement schedules of our
company are included in Item 14(d):

Schedule II Valuation and Qualifying Accounts

3. See Item 14(c) below for a listing of exhibits filed as part of
this Annual Report on Form 10K.

(b) Reports on Form 8-K:

No reports on Form 8-K were filed for the quarter ended March 31, 2002.

(c) Exhibits:

The following exhibits are filed as part of this Annual Report on Form 10-K
for the year ended March 31, 2002.

EXHIBITS

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

35

(d) Schedule Stellent, Inc and Subsidiaries

SCHEDULE II VALUATION OF QUALIFYING ACCOUNTS

- ---------------
* Includes $1,389 of additions resulting from the acquisition of SCD in July
2000, not recognized as expense, and a valuation allowance related to foreign
currency transactions.

36

REPORT OF INDEPENDENT CERTIFIED PUBLIC
ACCOUNTANTS ON SCHEDULE

To the Board of Directors and Shareholders
Stellent, Inc.

In connection with our audits of the consolidated financial statements of
Stellent, Inc. and subsidiaries referred to in our report dated April 26, 2002,
(except for Note 10 to the financial statements, as to which the date is May 29,
2002) which is included in the Annual Report to Shareholders and incorporated by
reference in Part II of this form, we have also audited Schedule II for each of
the three years in the period ended March 31, 2002. In our opinion, this
schedule, when considered in relation to the basic financial statements taken as
a whole, presents fairly, in all material respects, the information required to
be set forth therein.

/s/ GRANT THORNTON LLP

Minneapolis, Minnesota
April 26, 2002

37

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized, on June 28, 2002.
STELLENT, INC.

By /s/ VERNON J. HANZLIK
------------------------------------
Vernon J. Hanzlik, Chief Executive
Officer and President

POWER OF ATTORNEY

Each of the undersigned hereby appoints Vernon J. Hanzlik and Gregg A.
Waldon, and each of them (with full power to act alone), as attorneys and agents
for the undersigned, with full power of substitution, for and in the name, place
and stead of the undersigned, to sign and file with the Securities and Exchange
Commission under the Securities Act of 1934, as amended, any and all amendments
and exhibits to this Annual Report on Form 10-K and any and all applications,
instruments, and other documents to be filed with the Securities and Exchange
Commission pertaining to this Annual Report on Form 10-K or any amendments
thereto, with full power and authority to do and perform any and all acts and
things whatsoever requisite and necessary or desirable. Pursuant to the
requirements of the Securities Exchange Act of 1934, this report has been signed
by the following persons on behalf of the registrant and in the capacities
indicated on June 28, 2002.

/s/ VERNON J. HANZLIK
--------------------------------------
Vernon J. Hanzlik, Chief Executive
Officer and President
(Principal Executive Officer)

/s/ GREGG A. WALDON
--------------------------------------
Gregg A. Waldon, Chief Financial
Officer, Secretary, Treasurer
(Principal Financial Officer and
Principal Accounting Officer)

/s/ ROBERT F. OLSON
--------------------------------------
Robert F. Olson, Chairman
of the Board

/s/ MICHAEL W. FERRO
--------------------------------------
Michael W. Ferro, Director

/s/ KENNETH H. HOLEC
--------------------------------------
Kenneth H. Holec, Director

/s/ RAYMOND A. TUCKER
--------------------------------------
Raymond A. Tucker, Director

/s/ STEVEN C. WALDRON
--------------------------------------
Steven C. Waldron, Director
38

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Board of Directors and Shareholders
Stellent, Inc.

We have audited the accompanying consolidated balance sheets of Stellent,
Inc. and subsidiaries as of March 31, 2001 and 2002, and the related
consolidated statements of operations, shareholders' equity, and cash flows for
each of the three years in the period ended March 31, 2002. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Stellent, Inc.
and subsidiaries as of March 31, 2001 and 2002 and the consolidated results of
their operations and their consolidated cash flows for each of the three years
in the period ended March 31, 2002 in conformity with accounting principles
generally accepted in the United States of America.

/s/ GRANT THORNTON LLP

Minneapolis, Minnesota
April 26, 2002 (Except for Note 10,
as to which the date is May 29, 2002)

F-1

STELLENT, INC.

CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE DATA)

The accompanying notes are an integral part of the financial statements.

F-2

STELLENT, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)

The accompanying notes are an integral part of the financial statements.

F-3

STELLENT, INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(IN THOUSANDS)

The accompanying notes are an integral part of the financial statements.

F-4

STELLENT, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

The accompanying notes are an integral part of the financial statements.

F-5

STELLENT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2000, 2001 AND 2002
(IN THOUSANDS, EXCEPT PER SHARE DATA)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Stellent, Inc. (the "Company") develops, markets, and services content
management software with the primary focus of helping organizations derive
maximum value from their content that exists in the normal course of business
such as Microsoft Office documents, Web pages, images, graphics, multimedia,
CAD, and other files. With headquarters in Eden Prairie, Minnesota, the Company
maintains offices throughout the United States, Canada, and Europe. The
Company's customers are primarily located throughout the United States and
Europe.

Principles of Consolidation: The consolidated financial statements include
the accounts of the Company and its wholly-owned subsidiaries. All significant
intercompany transactions and balances have been eliminated.

Revenue Recognition: The Company currently derives all of its revenues
from licenses of software products and related services. The Company recognizes
revenue in accordance with Statement of Position (SOP) 97-2, Software Revenue
Recognition, as amended by SOP 98-9, Modification of SOP 97-2, Software Revenue
Recognition with Respect to Certain Transactions, and Securities and Exchange
Commission Staff Accounting Bulletin 101, Revenue Recognition in Financial
Statements.

Product license revenue is recognized under SOP 97-2 when (i) persuasive
evidence of an arrangement exists, for example, a signed agreement or purchase
order, (ii) delivery has occurred, as evidenced by shipping documents and
customer acceptance, (iii) the fee is fixed or determinable and payable within
twelve months, (iv) collectibility is probable and supported by credit checks or
past payment history, and the arrangement does not require services that are
essential to the functionality of the software. Services revenue consists of
fees from consulting and post-contract customer support. Consulting services
include needs assessment, software integration, security analysis, application
development and training. The Company bills consulting fees either on a time and
materials basis or on a fixed-price schedule. The Company's customers typically
purchase maintenance agreements annually, and the Company prices maintenance
agreements based on a percentage of the product license fee. Customers
purchasing maintenance agreements receive product upgrades, Web-based technical
support and telephone hot-line support. The Company recognizes revenue from
maintenance agreements ratably over the term of the agreement, typically one
year.

Customer advances and billed amounts due from customers in excess of
revenue recognized are recorded as deferred revenue.

Cost of Revenues: The Company expenses all manufacturing, packaging and
distribution costs associated with product license revenue as cost of revenues.
The Company also expenses all technical support service costs associated with
service revenue as cost of revenues.

Cash and Equivalents: The Company considers all short-term, highly liquid
investments that are readily convertible into known amounts of cash and have
original maturities of three months or less to be cash equivalents. At March 31,
2001 and 2002, $208 and $1,871 was held at various financial institutions
located in Europe, respectively.

Marketable Securities: Investments in debt securities with a remaining
maturity of one year or less at the date of purchase are classified as
short-term marketable securities. Investments in debt securities with a
remaining maturity of greater than one year are classified as long-term
marketable securities. All investments are classified as held to maturity and
recorded at amortized cost as the Company has the ability and positive intent to
hold to maturity. At March 31, 2001 and 2002, cost approximated market value of
these investments. Purchases of investments were $1,540,791 and $1,015,661 for
the years ended March 31, 2001 and 2002. Maturities of investments were
$1,573,815 and $1,026,855 for the years ended March 31, 2001 and 2002,

F-6

STELLENT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
MARCH 31, 2000, 2001 AND 2002
(IN THOUSANDS, EXCEPT PER SHARE DATA)

respectively. The contractual maturities of the marketable securities held at
March 31, 2002 are $72,985 in fiscal 2003 and $7,680 in fiscal 2004.

Investments in and Notes with Other Companies: Investments in other equity
securities and related notes with other companies in the software industry are
classified as long-term as the Company anticipates holding them for more than
one year. The Company holds a less than 20% interest in, and does not directly
or indirectly exert significant influence over any of the respective investees.

A portion of these investments are publicly traded and are deemed by
management to be available for sale. The Company uses the specific
identification method to determine cost and fair value for computing gains and
losses. Accordingly, these investments are reported at fair value with net
unrealized gains or losses reported within shareholders' equity as accumulated
other comprehensive income (loss). No sales of available for sale investments
have occurred through March 31, 2002. During fiscal 2001 and 2002, the Company
determined that permanent declines in the value one of the investments had
occurred. As a result, the Company recorded write-downs of $400 and $96 during
the years ended March 31, 2001 and 2002, respectively.

Investments in other companies also include investments in several
non-public, start-up technology companies for which the Company uses the cost
method of accounting. During fiscal 2002, the Company determined that a
permanent decline in value of certain investments had occurred and recorded a
$5,626 write-down on the investments in and advances to these entities.

Accounts Receivable: Accounts receivable are presented net of allowances
of $2,143 and $1,337 as of March 31, 2001 and 2002, respectively. No customer
accounted for 10% or more of the Company's revenues in the years ended March 31,
2000, 2001 and 2002. Credit is extended based on an evaluation of the customer's
financial condition and a cash deposit is generally not required. The Company
estimates its probable losses on trade receivables on an ongoing basis and
provides for anticipated losses in the period in which the revenues are
recognized. Credit losses have historically been within management's
expectations.

Property and Equipment: Property and equipment, including leasehold
improvements, are recorded at cost. Depreciation is provided using the
straight-line method over the estimated useful lives of the assets, ranging from
two to eight years, or the life of the lease for leasehold improvements,
whichever is shorter. Maintenance, repairs and minor renewals are expensed when
incurred.

Goodwill and Other Acquired Intangible Assets: Goodwill, representing the
excess of purchase price over the fair value of net assets acquired, has been
amortized on a straight-line basis over three years. Accumulated amortization
was $3,880 and $9,223 at March 31, 2001 and 2002, respectively.

Other acquired intangible assets, representing core technology, customer
base, workforce, capitalized software, trademarks, and other intangible assets
acquired through business acquisitions, have been amortized on a straight line
basis over three to four years. Accumulated amortization was $6,313 and $14,850
at March 31, 2001 and 2002, respectively.

Relative to these assets, the Financial Accounting Standards Board (FASB)
issued Statement of Financial Accounting Standards (SFAS) 141, Business
Combinations, and SFAS 142, Goodwill and Intangible Assets, in July 2001. Major
provisions of these Statements and their effective dates for the Company are as
follows:

- All business combinations initiated after June 30, 2001 are to be
accounted for using the purchase method of accounting.

F-7

STELLENT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
MARCH 31, 2000, 2001 AND 2002
(IN THOUSANDS, EXCEPT PER SHARE DATA)

- Intangible assets acquired in a business combination must be recorded
separately from goodwill if they arise from contractual or other legal
rights or are separable from the acquired entity and can be sold,
transferred, licensed, rented or exchanged, either individually or as
part of a related contract, asset or liability.

- Goodwill, as well as intangible assets with indefinite lives, acquired
after June 30, 2001, will not be amortized. Effective April 1, 2002, all
previously recognized goodwill and intangible assets with indefinite
lives will no longer be subject to amortization.

- Effective April 1, 2002, goodwill and intangible assets with indefinite
lives will be tested for impairment annually and whenever there is an
impairment indicator.

- All acquired goodwill must be assigned to reporting units for purposes of
impairment testing and segment reporting.

Beginning on April 1, 2002, annual goodwill amortization of approximately
$5,300 and annual amortization of approximately $1,000 relating to intangible
assets with indefinite lives will no longer be recognized. By March 31, 2003,
the Company will have completed a transitional fair value based impairment test
of goodwill as of April 1, 2002. By June 30, 2002, the Company will have
completed a transitional impairment test of all intangible assets with
indefinite lives. Impairment losses, if any, resulting from the transitional
testing would be recognized in the quarter ended June 30, 2002, as a cumulative
effect of a change in accounting principle. Management does not believe that
adoption of this standard will have a material effect on the financial position
of the company.

Impairment of Long-Lived Assets: The Company evaluates the recoverability
of its long-lived assets, including goodwill, in accordance with Statement of
Financial Accounting Standards No. 121, Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of. SFAS No. 121
requires recognition of impairment of long-lived assets in the event that events
or circumstances indicate an impairment may have occurred and when net book
value of such assets exceeds the future undiscounted cash flows attributed to
such assets.

In September 2001, the FASB issued SFAS 144, Accounting for the Impairment
or Disposal of Long-Lived Assets. This statement supercedes SFAS 121 and is
effective April 1, 2002 for the Company. This statement is not anticipated to
have a current material effect on the financial statements of the Company, but
could have a future effect in the event that an asset impairment has occurred.

Software Development Costs: Software development costs may be capitalized
once the technological feasibility of the project is established. The amount of
software development costs that may be capitalized is subject to limitations
based on the net realizable value of the potential product. Typically the period
between achieving technological feasibility of the Company's products and the
general availability of the products has been short. Consequently, prior to
fiscal year 2002, software development costs qualifying for capitalization were
immaterial and were generally expensed to research and development costs.

During fiscal 2002, the Company capitalized $2,000 in software development
costs of which $706 was acquired intellectual property from Active IQ. Prior to
fiscal 2002, software development costs have been immaterial. In addition, the
fair value of certain acquired capitalized software costs have been recorded
(see note 2). All capitalized software is amortized on a straight-line basis
over three years, and accumulated amortization was $328 at March 31, 2002.

Translation of Foreign Currencies: Foreign currency assets and liabilities
of the Company's international subsidiaries are translated using the exchange
rates in effect at the balance sheet date. Results of operations are translated
using the average exchange rates prevailing throughout the year. The effects of
F-8

STELLENT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
MARCH 31, 2000, 2001 AND 2002
(IN THOUSANDS, EXCEPT PER SHARE DATA)

exchange rate fluctuations on translating foreign currency assets and
liabilities into U.S. dollars are accumulated as part of the foreign currency
translation adjustment in shareholders' equity.

Comprehensive Income (Loss): Comprehensive income (loss) includes foreign
currency translation adjustments and unrealized gains or losses on the Company's
available-for-sale securities.

Advertising: The Company expenses the cost of advertising as it is
incurred. Advertising expense for the years ended March 31, 2000, 2001 and 2002
was $1,290, $3,044 and $4,451, respectively.

In June 2001, the Emerging Issues Task Force (EITF) issued EITF Issue No.
00-25, Vendor Income Statement Characterization of Consideration Paid to a
Reseller of the Vendor's Products. This issue is effective for periods beginning
after December 15, 2001 and addresses whether consideration from a vendor to a
reseller is (a) an adjustment of the selling prices of the vendor's products and
should be deducted from revenue when recognized or (b) a cost incurred by the
vendor for assets or services received from the reseller and should be included
as a cost or expense when recognized. The Company enters into cooperative
advertising programs with some of its resellers. When the Company receives an
identifiable benefit in return for consideration, and the Company can reasonably
estimate the fair value of the benefit received, the cooperative advertising is
accounted for as advertising expense. If the fair value cannot be estimated or
an identifiable benefit is not received the cooperative advertising is accounted
for as a reduction of revenue. EITF 00-25, will be adopted by the Company on
April 1, 2002, and is not anticipated to have a material effect on its
consolidated financial statements.

Net Income (Loss) per Common Share: The Company's basic net income (loss)
per share amounts have been computed by dividing net income (loss) by the
weighted average number of outstanding common shares. The Company's diluted net
income per share is computed by dividing net income by the weighted average
number of outstanding common shares and common share equivalents relating to
stock options and warrants, when dilutive. For the years ended March 31, 2001
and 2002, the Company incurred net losses and therefore, basic and diluted per
share amounts are the same. Common stock equivalent shares consist of stock
options and warrants (using the treasury stock method), of 1,595, 2,005 and
1,191 shares for the years ended March 31, 2000, 2001 and 2002, respectively.

Options and warrants to purchase 175, 906 and 3,607 shares of common stock
were outstanding at March 31, 2000, 2001, and 2002, but were excluded from the
computation of common share equivalents because they were antidilutive.

Stock-based Compensation: The Company utilizes the intrinsic value method
for stock-based compensation. Under this method, compensation expense is
recognized for the amount by which the market price of the common stock on the
date of grant exceeds the exercise price of an option.

Fair Value of Financial Instruments: The Company's financial instruments
including cash and cash equivalents, short-term marketable securities, long-term
marketable securities, accounts receivable and accounts payable, are carried at
cost, which approximates fair value due to the short-term maturity of these
instruments.

Use of Estimates: The preparation of financial statements in conformity
with accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.

Reclassifications: Certain reclassifications have been made to the 2000
and 2001 financial statements to conform to the presentation used in 2002.
F-9

STELLENT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
MARCH 31, 2000, 2001 AND 2002
(IN THOUSANDS, EXCEPT PER SHARE DATA)

2. BUSINESS COMBINATIONS

On September 29, 1999, the Company merged with InfoAccess, Inc.
(InfoAccess) in a transaction accounted for as a pooling-of-interests. In
recording the combination, the Company's consolidated statements of operations
for the year ended March 31, 1999 were combined with that of InfoAccess for the
year ended December 31, 1998. InfoAccess net income of $213 for the three months
ended March 31, 1999 was included in the Company's accumulated deficit for the
year ended March 31, 2000.

In connection with the merger, the former shareholders and option holders
of InfoAccess common stock received shares and options of Stellent, Inc. common
stock at the rate of .31230 shares of Stellent, Inc. common stock for each share
of InfoAccess common stock. The Company issued a total of 1,803 shares of
Stellent, Inc. common stock in exchange for all outstanding shares of InfoAccess
common stock and reserved 377 shares of common stock for issuance upon the
exercise of InfoAccess options assumed by the company pursuant to the merger
agreement. All costs associated with completion of this acquisition,
approximately $1,972, were expensed as incurred.

On July 10, 2000, the Company acquired the Information Exchange Division
("IED" now referred to as "SCD") of eBT International, Inc. (formerly Inso
Corporation ("Inso")). SCD is a producer of software products used in mobile and
wireless device viewing technologies, applications and Web file conversions. The
total cost of the acquisition, including transaction costs, was approximately
$55,270. The transaction was accounted for under the purchase method of
accounting and, accordingly, the acquired net assets were recorded at their
estimated fair values at the date of acquisition. The following table presents
the allocation of the purchase price:

In-process research and development......................... $10,400
Core technology............................................. 13,200
Customer base............................................... 3,500
Workforce................................................... 3,000
Capitalized software........................................ 2,800
Trademarks.................................................. 1,700
Other intangibles........................................... 1,400
Excess of cost over fair value of net assets acquired....... 15,212
Net fair value of tangible assets acquired and liabilities
assumed................................................... 4,058
-------
Purchase price.............................................. $55,270
=======

In connection with the acquisition of SCD, $10,400 of purchased in-process
research and development was charged to operations. The fair values of the
in-process research and development projects acquired were estimated utilizing a
discounted economic income method which is based on estimates of operating
results and capital expenditures for an eight to ten year estimated life
including a life-cycle phase out beginning in year seven to nine and a risk
adjusted discount rate of 26.0%. Since the acquisition date these projects have
been completed and the Company has begun to receive the resulting benefits. The
purchased in-process research and development consisted of the following:

OIVT Symbian Viewer -- The Symbian Viewer technology is a port of the
Outside in Viewer Technology to the Symbian operating system platform. The
technology is targeted at wireless devices built on the Symbian platform
that require viewing business documents. This project was estimated to be
75% complete as of the acquisition date. At the date of acquisition, the
fair value of the project was $3,000 and

F-10

STELLENT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
MARCH 31, 2000, 2001 AND 2002
(IN THOUSANDS, EXCEPT PER SHARE DATA)

the total cost to complete the project was estimated to be approximately
$500, primarily consisting of engineering salaries. The project was
completed as expected in August 2000.

WML Export -- The WML Export technology adds value to any wireless
application that requires access to documents created in current legacy
word processing, spreadsheet, and presentation applications. WML Export is
designed to be incorporated into a server-side application with no
additional software requirements on the wireless device beyond a
WAP-compatible micro-browser. This project was estimated to be 50% complete
as of the acquisition date with the Beta Version of WML Export for Windows
NT having been released on March 15, 2000 and SCD focusing on an additional
beta release. At the date of acquisition the fair value of the project was
$1,000 and the total cost to complete the project was estimated to be
approximately $10, primarily consisting of engineering salaries. The
project was completed as expected in July 2000.

XML Export -- XML Export provides fully attributed access to a wide range
of business documents through XML using an Inso defined DTD. This project
includes development of an enterprise grade XML-based transformation
architecture applicable to a wide range of conversion markets. As of the
acquisition date, the Beta 2 version was in the market and SCD was focused
on reaching the final release. This project was estimated to be 95%
complete as of the acquisition date. At the date of acquisition, the fair
value of the project was $6,400 and the total cost to complete the project
was estimated to be approximately $55, primarily consisting of engineering
salaries. The project was completed as expected in July 2000.

On July 10, 2001, the Company acquired certain assets of RESoft, a leading
provider of end-to-end content management solutions for the real estate and
legal industries, for 200 shares of Stellent common stock. The acquisition was
valued at approximately $5,600, including transaction costs, with approximately
$4,600 of the purchase price allocated to goodwill, $500 to intangible assets
and $500 to property and equipment. Goodwill related to this acquisition has not
been amortized.

3. RELATED PARTY TRANSACTIONS

In December 2001 Stellent entered into a note receivable of $3.5 million
with a distributor. Through March 2002, the distributor had paid the minimum
payments required under the note receivable with its own cash, and at the end of
March 2002, it paid off the remaining note receivable with short-term bridge
financing. The distributor completely repaid this short-term bridge financing in
April 2002 through a traditional banking relationship. The short-term bridge
financing was provided at normal market rates by Beartooth Capital, a venture
financing organization controlled and funded by Robert Olson, a shareholder and
chairman of Stellent. There was no relationship prior to the bridge financing,
and there is no existing relationship between Beartooth Capital and the
distributor. Furthermore, Stellent provided no compensation or guarantees to
Beartooth Capital or Robert Olson for the short-term bridge financing, nor was
Stellent otherwise involved in this transaction.

At March 31, 2002, the Company held investments in and notes with five
non-public start-up technology companies, owning approximately 3% to 12% of
these companies, and in a publicly traded company listed on Nasdaq, Active IQ,
in which the Company owned 5.4%, exclusive of warrants. Investments in these
companies were made with the intention of giving the Company opportunities to
have new technologies developed for the Company or to give the Company leverage
into certain vertical markets that the Company may not otherwise be able to
obtain on its own. The value of these investments at March 31, 2002 is
approximately $3.1 million. At March 31, 2002, the market value of the Company's
equity in Active IQ was approximately $127 more than our investment value of
$1,158. The offsetting amount does not effect the

F-11

STELLENT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
MARCH 31, 2000, 2001 AND 2002
(IN THOUSANDS, EXCEPT PER SHARE DATA)

consolidated statements of operations but is shown as "accumulated other
comprehensive income (loss)" in the shareholders' equity section on the
consolidated balance sheet.

During the year ended March 31, 2002, the Company recognized license
revenue of approximately $2,000 from companies in which we had an equity
investment, with approximately $1,400 from Active IQ in December 2001. At March
31, 2002, the Company had an account receivable balance of $125 associated from
these transactions. License revenue recognized for the years ended March 31,
2000 and 2001 from companies in which we had an equity investment was
approximately $300 and $2,400, respectively. The Company also acquired
intellectual property from Active IQ in April 2001 for approximately $700, which
was capitalized and is being amortized over a three-year period.

Certain officers and a director of the Company also held an investment in
Active IQ during the year, approximating 2%, excluding warrants. These
investments were sold at no gain during the year.

During fiscal 2000, the Company entered into a sales agreement with a
company whose president and CEO is a member of Stellent, Inc.'s Board of
Directors. Revenue of $340 was recorded under this contract during the year
ended March 31, 2000. No revenue was recorded under this agreement for the years
ended March 31, 2001 and 2002.

4. PROPERTY AND EQUIPMENT

Property and equipment consists of the following:

5. SHAREHOLDERS' EQUITY

Series A Convertible Preferred Stock: The Company previously issued $4,000
of Series A 5% convertible preferred stock, in the form of 800 units, each
consisting of one share of $5.00 stated value preferred stock and a warrant to
acquire one share of the Company's common stock at an exercise price of $5.18.
By March 31, 2000 all preferred shares were converted into common shares of the
Company.

Common Stock: On July 8, 1999, the Company completed a secondary stock
offering, including the underwriters' over allotment option of 3,715 shares of
its common stock and received net proceeds of approximately $27,000. On March 9,
2000, the Company completed a secondary offering of 2,305 shares of its common
stock and received net proceeds of approximately $100,000.

On April 10, 2000, 520 shares of the underwriters' over allotment option
from the Company's March 9, 2000 secondary offering were issued for net proceeds
of $22,646.

Warrants: The Company has 433 stock purchase warrants with exercise prices
of $5.18 to $45.93 outstanding at March 31, 2002. The warrants expire on various
dates through September 2005.

F-12

STELLENT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
MARCH 31, 2000, 2001 AND 2002
(IN THOUSANDS, EXCEPT PER SHARE DATA)

In February 2000, the Company issued a warrant with a five-year term in
exchange for various product related marketing services. The warrant entitles
the holder to purchase 150 shares of the Company's common stock at an exercise
price of $35.89 per share. An independent valuation of the warrant was used to
value the marketing services received at $460. During fiscal 2001, the Company
issued 75 additional warrants for product related marketing services at an
average exercise price of $42.78 per share. These services were valued at $248.

Stock Repurchase: In April 2000, the board of directors authorized the
repurchase of up to $10,000 of the Company's common stock at a price not
exceeding $20 per share. In September 2001, the board of directors authorized
the repurchase of up to $20,000 of the Company's common stock at a price not
exceeding $15 per share. During fiscal 2002, the Company reacquired 261 shares
of common stock at a cost of $3,592 which was equal to the fair value of the
shares on the date acquired.

Stock Options: The Company maintains the 1994-1997 Stock Option Plan, the
1997 Director Stock Option Plan, the 1999 Employee Stock Option and Compensation
Plan, the 2000 Employee Stock Incentive Plan and the 2000 Stock Incentive Plan
(collectively, the "Plan"), pursuant to which options and other awards to
acquire an aggregate of 3,100, 300, 1,000, 2,300 and 3,100 shares, respectively,
of the Company's common stock may be granted. The Company integrated all
previously granted options into the Plan. The Plan is administered by the Board
of Directors, which has the discretion to determine the number and purchase
price of shares subject to stock options (which may be below the fair market
value of the common stock on the date thereof), the term of each option, and the
terms of exercisability.

Certain options have exercise prices less than the fair market value of the
Company's common stock on the date of the grant. The Company recognizes the
compensation element of these grants over the vesting period of the related
options, generally five years. The options generally vest over periods of one to
five years.

Pro forma information regarding the fair value of stock options is
determined at the date of grant using the Black-Scholes option-pricing model
with the following weighted-average assumptions:

The Company's pro forma information had the fair value method been used is
as follows:

These pro forma results are not representative of future effects of
applying this method for the year ended March 31, 2000 because they do not take
into consideration the pro forma effect of grants made prior to 1996.

F-13

STELLENT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
MARCH 31, 2000, 2001 AND 2002
(IN THOUSANDS, EXCEPT PER SHARE DATA)

A summary of the Company's stock option activity, and related information
through March 31, 2002 is as follows:

F-14

STELLENT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
MARCH 31, 2000, 2001 AND 2002
(IN THOUSANDS, EXCEPT PER SHARE DATA)

The following table summarizes information about the stock options
outstanding at March 31, 2002:

6. EMPLOYEE BENEFIT PLANS

The Company maintains pre-tax salary reduction/profit sharing plans under
the provisions of Section 401(k) of the Internal Revenue Code. The plans cover
substantially all full-time employees who have reached the age of 21. Total
Company contributions to the plans for the years ended March 31, 2000, 2001, and
2002 were $41, $536 and $1,086, respectively.

During fiscal 2000, the Company adopted an employee stock purchase plan
(the Plan), which allows eligible employees to purchase stock of the Company at
85% of its fair market value through elected payroll deductions equal up to 10%
of their compensation. During fiscal 2001 and 2002, 21 and 46 shares of common
stock had been purchased under the Plan, respectively. Employees did not
purchase any stock under this plan prior to fiscal 2001.

F-15

STELLENT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
MARCH 31, 2000, 2001 AND 2002
(IN THOUSANDS, EXCEPT PER SHARE DATA)

7. INCOME TAXES

Due to net operating loss carryforwards through March 2002, the Company has
recorded no current income tax provision. The tax effects of temporary
differences giving rise to deferred income taxes consisted of the following:

Deferred tax liabilities and deferred tax assets reflect the net tax
effects of temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used for income tax
purposes. The valuation allowance has been established due to the uncertainty of
future taxable income, which is necessary to realize the benefits of the
deferred tax assets. The Company had net operating loss (NOL) carryforwards of
approximately $53,400 at March 31, 2002, which begin to expire in 2011. These
NOL's are subject to annual utilization limitations due to prior ownership
changes.

Although realization of the net deferred tax asset is not assured, the
Company believes that it is more likely than not that the net deferred tax asset
will be realized as it relates to timing differences resulting from book and tax
methods used for amortization of goodwill and intangible assets. The amount of
net deferred tax assets considered realizable however, could be adjusted in the
future based on changes in conditions or assumptions.

F-16

STELLENT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
MARCH 31, 2000, 2001 AND 2002
(IN THOUSANDS, EXCEPT PER SHARE DATA)

The Company's provision for income taxes differs from the expected tax
expense (benefit) amount computed by applying the statutory federal income tax
rate of 34.0% to income (loss) before taxes as a result of the following:

8. COMMITMENTS AND CONTINGENCIES

Operating leases -- The Company has entered into certain non-cancelable
operating lease agreements related to office/warehouse space, equipment and
vehicles. Total rent expense under operating leases net of sublease income, was,
$710, $2,804 and $5,104 for the years ended March 31, 2000, 2001 and 2002,
respectively.

Minimum remaining rental commitments under operating leases net of sublease
arrangements are as follows as of March 31, 2002:

For the year ended March 31,
2003...................................................... $ 4,195
2004...................................................... 3,081
2005...................................................... 2,268
2006...................................................... 1,790
2007...................................................... 1,117
Thereafter................................................ 3,309
-------
$15,760
=======

Software royalties -- The Company has entered into several software royalty
agreements whereby it is required to pay a royalty amount based upon
predetermined payment schedules. At March 31, 2001 and 2002, the Company
recorded advanced royalties as prepaid expense of $4,305 and $6,394,
respectively. Royalties are recognized as expense based on sales, and during the
years ended March 31, 2000, 2001 and 2002 royalty expense totaled $1,061, $3,064
and $3,490.

F-17

STELLENT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
MARCH 31, 2000, 2001 AND 2002
(IN THOUSANDS, EXCEPT PER SHARE DATA)

9. SEGMENTS OF BUSINESS AND GEOGRAPHIC AREA INFORMATION

The Company operates in a single reporting segment. A summary of the
Company's operations by geographic area follows:

Sales are attributed to countries or region based on the location of the
customer.

10. SUBSEQUENT EVENT

ACQUISITION

On April 3, 2002, the Company acquired certain assets and assumed certain
liabilities of Kinecta Corp., a provider of software infrastructure for digital
networks, for approximately $2,500 in cash, excluding acquisition costs.

RESTRUCTURING (UNAUDITED)

On April 12, 2002, the Company announced it had taken steps to make the
Company more efficient and developed and implemented a plan to return the
Company to profitability and growth. This plan included a restructuring of the
Company to strategically allocate and fully utilize it's resources. The Company
is estimating restructuring costs of approximately $3 million that will be
recorded in the first quarter of fiscal 2003, primarily related to severance
payments.

SHAREHOLDERS RIGHTS PLAN

On May 29, 2002, the Board of Directors of the Company approved a
shareholder rights plan which provides for fair and equal treatment of all
shareholders in the event that an unsolicited attempt to acquire the Company.
Under the plan, the Company declared a dividend of one preferred share purchase
right for each outstanding share of common stock of the Company, payable to
shareholders of record on June 13, 2002. Each right entitles the holder to
purchase from the Company one-hundredth of a Series A junior participating
preferred share of the Company at an exercise price of $75. The rights will
separate from the common shares and a distribution for the rights will occur,
subject to certain criteria, in the event an investor or group acquires fifteen
percent or more of the Company's common stock. The rights are not exercisable
until the distribution date and expire on June 13, 2012.
F-18

EXHIBITS

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* Management contract, compensation plan or arrangement.