MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS During the first quarter of fiscal 2002, in light of further economic uncertainties, our management made a decision to adjust our business plan by further reducing spending. This change in business plan consisted of a reduction in worldwide headcount of approximately 5% of the workforce and a reduction of certain future discretionary expenses. As a result of these measures, we recorded a restructuring charge of $2.6 million, primarily for severance, for the quarter ended September 30, 2001. During the year ended June 30, 2003, the following activity was recorded: In the third quarter of fiscal 2001, the revenues realized were below expectations as customers delayed spending in the widespread slowdown in information technology spending and the deferral of late-quarter purchasing decisions. At that time, we also reduced our revenue expectations for the fourth quarter of fiscal year 2001 and for the fiscal year 2002. Based on the reduced revenue expectations, management evaluated the business plan and made significant changes, resulting in a restructuring plan for our operations. This restructuring plan included a reduction in headcount, a substantial decrease in discretionary spending and a sharpening of our e-business focus to emphasize our marketplace solutions. The restructuring plan resulted in a pretax charge totaling $7.0 million. As of June 30, 2003, there was $0.7 million remaining in accrued expenses relating to the restructuring. During the year ended June 30, 2003, the following activity was recorded: In the fourth quarter of fiscal 1999, we undertook certain actions to restructure our business. The restructuring resulted from a lower than expected level of license revenues, which adversely affected fiscal year 1999 operating results. The license revenue shortfall resulted primarily from delayed decision making driven by economic difficulties among customers in certain of our core vertical markets. The restructuring plan resulted in a pre-tax restructuring charge totaling $17.9 million. As of June 30, 2003, there was $0.5 million remaining in the accrued expenses relating to the restructuring. During the year ended June 30, 2003, the following activity was recorded: We expect that the remaining obligations will be paid by December 2004. Fiscal 2001 Fiscal 1999 15 Closure/ Consolidation of Facilities Accrued expenses, June 30, 2002 $375 Net sub-lease receipts (lease payments) 147 Accrued expenses, June 30, 2003 $522 We expect that the remaining obligations will be paid by March 2008. Closure/ Employee Consolidation of Severance, Benefits, Facilities and Related Costs Total Accrued expenses, June 30, 2002 $1,137 $53 $1,190 Payments (397) (53) (450) Accrued expenses, June 30, 2003 $ 740 $ — $740 Closure/ Employee Consolidation of Severance, Benefits, Facilities and Related Costs Total Accrued expenses, June 30, 2002 $144 $19 $163 Payments (144) (19) (163) Accrued expenses, June 30, 2003 $ — $ — $ —