Washington		91-1629814
(State or other jurisdiction of		(IRS Employer
incorporation or organization)		Identification No.)

PART I— FINANCIAL INFORMATION				3
Item 1.		Condensed Consolidated Financial Statements (Unaudited)		3
		Condensed Consolidated Balance Sheets as of December 31, 2001 and June 30, 2002		3
		Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2001 and 2002		4
		Condensed Consolidated Statement of Shareholders’ Equity for the Three and Six Months Ended June 30, 2002		5
		Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2001 and 2002		6
		Notes to Condensed Consolidated Financial Statements		7
Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations		18
Item 3.		Quantitative and Qualitative Disclosures About Market Risk		43
PART II— OTHER INFORMATION				44
Item 1.		Legal Proceedings		44
Item 4.		Submission of Matters to a Vote of Security Holders		44
Item 5.		Other Information		44
Item 6.		Exhibits and Reports on Form 8-K		45
SIGNATURES				46

		December 31, 2001				June 30, 2002
ASSETS
Current assets:
Cash and cash equivalents		$	15,868			$	28,148
Restricted cash			—				500
Accounts receivable, less allowances of $2,079 in 2001 and $1,080 in 2002			20,029				15,735
Prepaid expense and other			2,596				4,444
Total current assets			38,493				48,827
Property and equipment, net			12,884				10,149
Purchased technology, net			751				475
Other intangible assets, net			3,467				1,879
Goodwill, net			7,396				8,180
Other assets			1,520				1,447
Total assets		$	64,511			$	70,957
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	2,826			$	1,641
Salary and benefits payable			1,833				2,293
Accrued liabilities			3,260				3,318
Income taxes payable			695				960
Current portion of capital-lease obligations			173				155
Current portion of restructuring-related liabilities			15,384				14,398
Deferred revenues			19,191				18,543
Total current liabilities			43,362				41,308
Capital-lease obligations, less current portion			248				168
Restructuring-related liabilities, less current portion			9,930				9,205
Deferred tax liability			1,223				640
Minority interest in joint venture			1,613				800
Shareholders’ equity:
Preferred stock, $0.01 par value:
Authorized shares—20,000,000 shares;
Designated shares—none			—				—
Common stock, $0.01 par value:
Authorized shares—80,000,000 shares;
Issued and outstanding shares—43,949,874 shares at December 31, 2001 and 50,557,536 at June 30, 2002			118,557				139,162
Deferred stock-based compensation			(809	)			(180	)
Accumulated deficit			(108,291	)			(119,519	)
Accumulated other comprehensive loss			(1,322	)			(627	)
Total shareholders’ equity			8,135				18,836
Total liabilities and shareholders’ equity		$	64,511			$	70,957

		Three Months Ended June 30,								Six Months Ended June 30,
		2001				2002				2001				2002
Revenue:
License		$	11,779			$	6,509			$	24,767			$	9,563
Support and service			17,986				12,001				33,943				23,562
Total revenue			29,765				18,510				58,710				33,125
Cost of revenue:
License			588				226				1,488				397
Amortization of acquired technology			204				138				408				276
Support and service			10,572				5,051				20,876				10,259
Total cost of revenue			11,364				5,415				22,772				10,932
Gross margin			18,401				13,095				35,938				22,193
Operating expenses:
Sales and marketing			16,196				7,062				35,384				13,059
Research and development			5,844				4,023				13,073				7,976
General and administrative			4,658				2,437				8,665				4,976
Restructuring and other related charges			3,589				3,941				3,589				6,558
Amortization and impairment of goodwill and other acquisition-related intangibles			1,623				209				3,246				418
Amortization of stock-based compensation			226				65				536				152
Total operating expenses			32,136				17,737				64,493				33,139
Loss from operations			(13,735	)			(4,642	)			(28,555	)			(10,946	)
Interest and other income (expense), net			125				31				357				(342	)
Equity investment losses and impairment			(500	)			—				(2,000	)			—
Loss before income taxes			(14,110	)			(4,611	)			(30,198	)			(11,288	)
Income tax provision (benefit)			(8	)			398				(102	)			412
Minority interest in loss of consolidated subsidiary			(414	)			(339	)			(668	)			(472	)
Net loss		$	(13,688	)		$	(4,670	)		$	(29,428	)		$	(11,228	)
Net loss per share:
Basic and diluted		$	(0.35	)		$	(0.09	)		$	(0.76	)		$	(0.23	)
Shares used in calculation of net loss per share:
Basic and diluted			39,213				50,418				38,505				49,275

Common Stock

Deferred Stock-Based Compensation

Accumulated Deficit

Accumulated Other Comprehensive Loss

Shareholders’ Equity