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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

For the year ended December 31, 2003

OR

Commission File Number: 000-27389

INTERWOVEN, INC.

(Exact name of registrant as specified in its charter)

803 11^th Avenue

Sunnyvale, California 94089

(Address of principal executive offices)

(408) 774-2000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

None

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, $.001 par value

(Title of Class)

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.  x

Indicate by check mark whether the registrant is an accelerated filer as defined in Rule 12b-2 of the Act.    Yes  x    No  ¨

The aggregate market value of the voting stock held by non-affiliates of the Registrant as of June 30, 2003 was approximately $232,760,000 (based on the last reported sale price of $8.80 on June 30, 2003 on the NASDAQ National Market).

The number of shares outstanding of the registrant’s common stock as of March 8, 2004 was approximately 40,368,000.

DOCUMENTS INCORPORATED BY REFERENCE

Parts of the Proxy Statement for Registrant’s 2004 Annual Meeting of Stockholders to be held June 10, 2004 are incorporated by reference in Part III of this Annual Report on Form 10-K.

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INTERWOVEN, INC.

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Interwoven, TeamSite, Content Networks, OpenDeploy, MetaTagger, DataDeploy, DeskSite, iManage, MailSite, MediaBin, MetaCode, MetaFinder, MetaSource, OpenTransform, Primera, TeamPortal, TeamXML, TeamXpress, VisualAnnotate, WorkKnowledge, WorkDocs, WorkPortal, WorkRoute, WorkTeam, the respective taglines, logos and service marks are trademarks of Interwoven, Inc., which may be registered in certain jurisdictions. All other trademarks are owned by their respective owners.

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CAUTION REGARDING FORWARD LOOKING STATEMENTS

Some of the statements contained in this Annual Report on Form 10-K constitute forward-looking statements that involve substantial risks and uncertainties. In some cases, you can identify these statements by forward-looking words such as “expect,” “plan,” “anticipate,” “believe,” “estimate” or “continue” and variations of these words or comparable words. In addition, any statements which refer to expectations, projections or other characterizations of future events or circumstances are forward-looking statements. Our Management’s Discussion and Analysis of Financial Condition and Results of Operations contain many such forward-looking statements. These forward-looking statements involve known and unknown risks, uncertainties and situations that may cause our or our industry’s actual results, level of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these statements. The risk factors contained in this report, as well as any other cautionary language in this report, provide examples of risks, uncertainties and events that may cause our actual results to differ from the expectations described or implied in our forward-looking statements.

We cannot guarantee the future results, levels of activity, performance or achievements reflected in the forward looking statements contained in this Annual Report on Form 10-K. You should not place undue reliance on these forward-looking statements, which apply only as of the date of this report. Except as required by law, we do not undertake to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

PART I

ITEM 1. BUSINESS

Overview

Interwoven, Inc. (“Interwoven”) provides enterprise content management (“ECM”) software and services that enable businesses to create, review, manage, distribute and archive critical business content, such as documents, spreadsheets, emails and presentations, as well as Web images, graphics, content and applications code across the enterprise and its value chain of customers, partners and suppliers. Our ECM platform consists of six integrated software product offerings, enabling customers to do end-to-end content lifecycle management. Customers have deployed our products for enterprise initiatives such as brand management, enterprise portals, global Web content management, content distribution, corporate governance, deal management, document management and online self-service. To date, we have licensed our software products to more than 2,700 organizations worldwide.

We were incorporated in California in March 1995 and reincorporated in Delaware in October 1999. Our principal offices are located at 803 11^th Avenue, Sunnyvale, California 94089 and our telephone number at that location is (408) 774-2000. We maintain a Website at www.interwoven.com. Investors can obtain copies of our filings with the Securities and Exchange Commission from this site free of charge, as well as from the Securities and Exchange Commission Website at www.sec.gov.

On November 18, 2003, we completed the merger with iManage, Inc. (“iManage”), a provider of collaborative document management software. For the purposes of this report, descriptions of our products and business organization will reflect the present, merged organization.

The Interwoven Solution

Interwoven 6, the latest release of our ECM product suite, integrates six software product offerings with a set platform of services enabling enterprises to manage, deliver and archive large volumes of content inside and outside the enterprise. Built as an open, scaleable platform, Interwoven 6 enables enterprises to leverage existing technology investments and integrations at a low total cost of ownership. All components of our ECM product suite leverage a service-oriented architecture that supports industry standard Java 2 (“J2EE”) and Microsoft NET environments. Our six software product offerings, providing end-to-end content lifecycle management, include: collaboration, e-mail management, document management, Web content management, digital asset management and records management. Our platform services include: content intelligence services, content deployment services, content integration services and the enterprise application connectors.

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Global enterprises developing content-rich applications, including enterprise portals and extranets, rely on the Interwoven 6 ECM platform to manage the content lifecycle across their organizations. All content types are tracked and version-controlled for auditability and compliance purposes. Content provisioned across heterogeneous applications can be expired and deployed to an online or offline records management facility dictated by existing business processes in place. Interwoven 6 offers interoperability with the products of leading application server and portal server vendors in the marketplace.

While we have historically provided our ECM products and solutions to global enterprises and government agencies, our customer base has expanded to include professional services companies with the completion of the iManage merger. Our ECM products offer capabilities for professional services companies such as law firms, by combining collaboration, e-mail management, document management and records management components of the Interwoven 6 ECM suite. This suite enables law firms to reduce the ratio of non-billable to billable staff; reduce hard paper shipping costs and improve customer service; maintain consistency of work product; facilitate distributed teams to share information effectively; re-use previous work product and improve profitability.

Products

We currently offer the following software products:

Interwoven 6 Applications:

Web Content Management – Interwoven TeamSite Content Server Software. Interwoven TeamSite Content Server powers the creation, contribution, collaboration and management of content across the enterprise. TeamSite allows content contributors – from the expert developer to the novice – to securely develop, share and publish enterprise content to Websites, portals, intranets and extranets. Through its patented features, its ability to preview content and its scalable repository, TeamSite Content Server provides enterprises with the capabilities needed to support the most demanding business environments. This software product has been our flagship product since its initial introduction in 1997.

Digital Asset Management – Interwoven MediaBin Asset Server Software. Interwoven MediaBin Asset Server, at the core of our patented Digital Asset Management product line, provides businesses with a central library for the multiple digital assets used to promote their products and brands. With the MediaBin Asset Server, marketing teams can easily catalog, manage, transform, search for, repurpose and deploy digital assets, including product photographs, rich graphics, marketing collateral, presentations, documents and videos.

Collaboration – Interwoven WorkSite Server Software and Interwoven WorkSite MP Server Software. Interwoven WorkSite Server Suite provides users complete control over the creation, editing, sharing, approval, publishing and life cycle management of business-critical content among departments and across the enterprise. WorkSite is a patented software platform that enables teams to gather, strategize, plan, review and execute their work. WorkSite enables team leaders to set up collaborative, virtual workspaces quickly, with defined team members, rights and permissions, and core elements, such as shared calendars, issues tracking and discussion threads, to discuss and collaborate on all facets of a project. These virtual workspaces allow both the remote and mobile workforce to conduct business tasks such as contracts negotiations, global account management, new product launches, deal management, supplier relationship management, mergers and acquisitions and outsourced manufacturing.

Document Management – Interwoven WorkSite MP Server and WorkSite Server. Interwoven WorkSite MP Server and WorkSite Server solutions deliver easy storage and access to unstructured content, including documents, spreadsheets, e-mails, presentations and drawings, through either a Web browser or Microsoft Office applications. Our document management products allow companies to share critical up-to-date documents from multiple access points in a variety of platforms and computing environments. WorkSite MP is a fully integrated, Internet-based application suite that delivers scalable collaborative document management solutions that include document management, secure information sharing within and beyond the enterprise, and full featured workflow—all easily accessible through a portal.

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E-mail Management – Interwoven MailSite and WorkSite Communications Server Software. Interwoven MailSite and WorkSite Communications Server captures and manages e-mail content, storing all e-mail in a single repository that allows companies to maintain a record of correspondence, meet compliance requirements and respond more effectively to clients or inquiries by regulators. With the significant growth of e-mail and related documents, we believe our solution not only reduces the cost of storage and discovery, but it also increases the productivity of knowledge workers who often spend up to 2 to 3 hours per day creating, filing and searching for business content in desktop applications and e-mail. Additionally, with a single storage location, this software product helps optimize data accountability and compliance with record retention policies.

Records Management – Interwoven Records Server Software. Interwoven Records Server is a solution for applying formal records management policies and practices to electronic and non-electronic documents. By combining Interwoven Records Server with products such as WorkSite Document Server, businesses gain the archival and compliance benefits of advanced records management. Interwoven Records Server helps organizations to meet the standards mandated for financial document compliance, the United States Department of Defense 5015.2 standard and the records management rules promoted by various regulators.

Interwoven 6 Platform Services:

Content Distribution – Interwoven OpenDeploy Distribution Server Software. Interwoven OpenDeploy Distribution Server automates the distribution of enterprise content and application code from multiple sources to multiple network touchpoints or servers, from a handful of production Web servers to an entire enterprise network. Also available as a standalone offering since 2003, Interwoven OpenDeploy Distribution Server is an ideal open platform for enterprise content distribution.

Content Intelligence – Interwoven MetaTagger Intelligence Server Software. Interwoven MetaTagger Intelligence Server provides enterprises with a metadata management system that is designed to provide appropriate content to the users on demand. MetaTagger enriches enterprise content with metadata (information about a piece of content) that is relevant to the enterprise’s portal, search and customer relationship management applications. MetaTagger provides metadata management capabilities, from simple keyword generation and categorization to full-scale enterprise taxonomy development and management.

Content Integration – Interwoven Content Integration Server Software. Interwoven Content Integration Server gives enterprises the ability to leverage and re-purpose content stored in repositories and file systems throughout the enterprise within content-rich applications. Content Integration Server allows users to search a desired repository to find existing content, aggregate that content within TeamSite, and transform the content from various file types into more extensible formats. Within Content Integration Server, companies can leverage content from repositories hosted by Documentum, Inc., FileNet Corporation, International Business Machines Corporation (“IBM”) and Open Text Corporation.

Connectors – Enterprise Application Connector Suite Software. To help customers realize value from their content, we offer a suite of Web service-enabled connectors between our Interwoven 6 platform and enterprise applications provided by software vendors including BEA Systems, Inc., IBM, Oracle Corporation, PeopleSoft, Inc. and Siebel Systems, Inc. These connectors support the distribution of content from our software to a customer’s applications, and the ability to access and use our platform directly from the user interfaces in the other vendors’ enterprise applications.

Support and Service

Consulting. We offer professional services to our customers for the deployment of our software and the integration of our applications with third-party software, as well as strategic consulting services. Our professional services team works directly with our customers as well as with resellers and strategic partners. We have also employed third-party subcontractors in the past to accommodate customer demands in excess of the capacity of our in-house consulting organization or to provide services in locations where we have no permanent consulting staff. Our consulting services are generally offered on a time and materials basis.

Customer Support. We offer comprehensive customer support designed to allow our customers to quickly and effectively address technical issues as they arise and receive product updates. Our support personnel provide resolution of customer technical inquiries and are available to customers by telephone, e-mail and through our Website. We use a customer service automation system to track each customer inquiry until it is satisfactorily resolved. Our technical support is generally offered on an annual subscription basis.

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Training. We offer a comprehensive training curriculum designed for customers, partners and system integrators to provide the knowledge and skills to deploy, use and maintain our products successfully. These classes focus on the technical aspects of our products as well as related business issues and processes. We hold classes in various locations, including our training facilities in Sunnyvale, California, Chicago, Illinois and in Europe and Asia Pacific. We generally charge a daily fee for such classes. Web-based training is also available at a price per online course.

Customers

Our software products and services are marketed and sold to a diverse group of customers operating in a broad range of industries. Our customers include established companies migrating their operations online, companies looking to increase channel and partner effectiveness by establishing sales extranets and companies whose objective is to deploy and manage critical business content within and across their organization. Many of our customers typically consider ECM applications to be critical to their future success. As of December 31, 2003, over 2,700 companies had licensed our software products. No single customer accounted for ten percent or more of our total revenues in 2003, 2002 or 2001. Sales to customers in North America accounted for 65%, 66% and 68% of our total revenues in 2003, 2002 and 2001, respectively. See Note 13 of Notes to Consolidated Financial Statements.

Sales and Marketing

We license our software products and services through our direct sales force and our indirect sales channel in the Americas, Europe and Asia Pacific. We have direct sales offices and maintain operations in Australia, Canada, France, Germany, Hong Kong, Italy, India, Japan, the Netherlands, People’s Republic of China, Singapore, South Korea, Spain, Taiwan, the United Kingdom and in various locations throughout the United States. We have introduced localized versions of our applications for the major European and Asia Pacific markets.

We have developed an indirect sales channel by establishing relationships with technology vendors, professional services firms and systems integrators that recommend and, when appropriate, resell our products. Several of our partners also build add-on products to extend the functionality of our software. In connection with the iManage merger, we continued to maintain substantially all of the iManage strategic reseller and partner relationships both internationally and in the United States. We believe that our business is not substantially dependent on any one technology vendor, professional service firm or system integrator, however, our relationships with these entities on the whole are critical to our success.

Our ability to achieve revenue growth in future periods will depend in large part on how successfully we recruit, train and retain sufficient direct sales, technical and customer support personnel, and our ability to establish and maintain relationships with our strategic partners.

Research and Development

Since our inception, we have devoted significant resources to develop our products and technologies. We believe that our future success will depend, in large part, on a strong development effort that enhances and extends the features of our products. Our product development organization is responsible for product architecture, core technology, quality assurance, documentation and expanding the ability of our products to operate with leading hardware platforms, operating systems, database management systems and key electronic commerce transaction processing standards.

Our research and development expenditures were $24.6 million for 2003, $26.6 million for 2002 and $32.2 million for 2001. All research and development expenditures have been expensed as incurred. We expect to continue to devote substantial resources to our research and development activities.

We may fail to complete our product development efforts within anticipated schedules, and, even if completed, the products developed may not have the features necessary for success in the marketplace. Future delays or problems in the development or marketing of product enhancements or new products could harm our business. See “Factors That May Impact Our Business.”

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Acquisitions

On November 18, 2003, we completed the merger with iManage, a provider of collaborative document management software. The aggregate purchase price of the merger was $181.7 million, which included cash of $30.6 million, issuance of 13.3 million shares of our common stock with an estimated fair value of $122.2 million, assumed stock options with a fair value of $18.9 million, estimated employee severance and facilities closure costs of $5.8 million and transaction costs of $4.2 million.

On June 27, 2003, we acquired MediaBin, Inc. (“MediaBin”). MediaBin developed standards-based enterprise brand management solutions to help companies manage, produce, share and deliver volumes of digital assets, such as product photographs, advertisements, brochures, presentations, video clips and other marketing collateral. The aggregate purchase price of this acquisition was $12.9 million, which included cash of $4.2 million, issuance of 0.7 million shares of our common stock with an estimated fair value of $6.4 million, assumed stock options with a fair value of $683,000, estimated employee severance costs of $775,000 and transaction costs of $899,000.

Competition

We have experienced and expect to continue to experience increased competition from current and potential competitors. Many of these companies have greater name recognition, longer operating histories, larger customer bases and significantly greater financial, technical, marketing, sales, distribution and other resources than we have. We believe that our primary competitors are Documentum, Inc., which was recently acquired by EMC Corporation, and, in the legal vertical market, Hummingbird Ltd. We also face competition from:

Competitive pressures may also increase with the consolidation of competitors within our market and partners in our distribution channel, such as the acquisition of Kramer Lee & Associates by Hummingbird Ltd., TOWER Technology Pty Ltd. and Epicentric, Inc. by Vignette Corporation, Presence Online Pty Ltd. by IBM, and Documentum, Inc. by EMC Corporation.

We believe that we may face additional competition from operating system vendors, online service providers and client/server applications and tools vendors. If any of our competitors were to become the industry standard or were to enter into or expand relationships with significantly larger companies through mergers, acquisitions or other similar transactions, our business could be seriously harmed. In addition, potential competitors may bundle their products or incorporate functionality into existing products in a manner that discourages users from purchasing our products.

We believe that the principal competitive factors in the market for enterprise content management solutions are:

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Although we believe that we currently compete favorably with respect to many of these factors, our market is relatively new and is evolving rapidly. We may not be able to maintain our competitive position against current and potential competitors.

Seasonality

Our business is influenced by seasonal factors, largely due to customer buying patterns. In recent years, we have generally had weaker demand for our software products and services in the March and September quarters. Our consulting and training services are negatively impacted in the fourth quarter due to the holiday season, which results in fewer billable hours for our consultants and fewer training classes.

Intellectual Property and Other Proprietary Rights

Our success depends in part on the development and protection of the proprietary aspects of our technology as well as our ability to operate without infringing on the proprietary rights of others. To protect our technology, we rely primarily on patent, trademark, service mark, trade secret and copyright laws and contractual restrictions.

We require our customers to enter into license agreements that impose restrictions on their ability to reproduce, distribute and use our software. In addition, we seek to avoid disclosure of our trade secrets through a number of means, including restricting access to our source code and object code and requiring those entities and persons with access to agree to confidentiality terms that restrict their use and disclosure. We seek to protect our software, documentation and other written materials under trade secret and copyright laws, which afford only limited protection.

We currently have 29 issued United States patents and 25 issued foreign patents. These patents have remaining lives ranging from 3 to 17 years, with an average remaining life of 11 years. We also have applied for 15 other patents in the United States and we have 50 pending foreign patent applications. It is possible that no patents will be issued from our currently pending patent applications and that our existing patents may be found to be invalid or unenforceable, or may be successfully challenged. It is also possible that any patent issued to us may not provide us with competitive advantages or that we may not develop future proprietary products or technologies that are patentable. Additionally, we have not performed comprehensive analysis of the patents of others that may limit our ability to do business. While our patents are an important element of our success, our business as a whole is not materially dependent on any one patent or on the combination of all of our patents.

We license technologies from several software providers that are embedded into our products. These agreements expire in various periods from December 2004 through December 2008 and are renewable automatically and/or renewable with written consent of the parties. In general, either party may terminate these agreements for cause before the expiration date with 90 days written notice. If we cannot renew these licenses, shipments of our products could be delayed until equivalent software could be developed or licensed and integrated into our products. These types of delays could seriously harm our business.

Despite our efforts to protect our proprietary rights and technology, unauthorized parties may attempt to copy aspects of our products or obtain the source code to our software or use other information that we regard as proprietary or could develop software competitive to ours. 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 may become a problem. Our means of protecting our proprietary rights may not be adequate. 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. Any such litigation could result in substantial costs and diversion of resources, which could have a material adverse effect on our business, operating results and financial condition.

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It is possible that in the future, a third party may file lawsuits claiming that our products infringe its patents or copyrights or misappropriate its trade secrets. Any claims, with or without merit, could be costly and time-consuming to defend, divert our management’s attention or cause product delays. If our product was found to infringe a third party’s proprietary rights, we may be required to enter into royalty or licensing agreements to be able to sell our product. Such royalty and licensing agreements, if required, may not be available on terms acceptable to us, if at all, which could harm our business.

Employees

As of December 31, 2003, we employed 696 people, including 239 in sales and marketing, 176 in support and professional services, 199 in research and development and 82 in general and administrative functions. Of our employees, 66 were located in the Asia Pacific region, 80 were located in Europe and 550 were located in North America. Our future success will depend in part on our ability to attract, hire and retain qualified personnel. None of our employees are represented by a labor union (other than statutory unions required by law in certain European countries). We have not experienced any work stoppages and consider our relations with our employees to be good.

ITEM 2. PROPERTIES

Our principal offices are located in a leased facility in Sunnyvale, California, which consist of approximately 175,000 square feet that will expire in 2007. We also occupy other leased facilities in the United States, in Europe, Asia Pacific, Australia and Canada under leases totaling approximately 85,000 square feet that expire at various times through July 2016.

As part of our restructuring programs in 2003, 2002 and 2001, we vacated various facilities and accrued the remaining lease payments less our estimate of potential sublease income from these facilities. These excess facilities are being marketed for sublease and most are currently unoccupied. We may be unable to sublease these remaining facilities or terminate these leases on acceptable terms.

We believe that our existing facilities are adequate for our current needs.

ITEM 3. LEGAL PROCEEDINGS

Beginning 2001, Interwoven and certain of our officers and directors and certain investment banking firms, were separately named as defendants in a securities class-action lawsuit filed in the United States District Court Southern District of New York, which was subsequently consolidated with more than 300 substantially identical proceedings against other companies. Similar suits were filed against iManage, its directors and certain of its officers. The consolidated complaint asserts that the prospectuses for our October 8, 1999 initial public offering, our January 26, 2000 follow-on public offering and iManage’s November 17, 1999 initial public offering, failed to disclose certain alleged actions by the underwriters for the offerings. In addition, the consolidated complaint alleges claims under Section 11 and 15 of the Securities Act of 1933 against iManage and us and certain of iManage’s and our officers and directors. The plaintiff seeks damages in an unspecified amount. In June 2003, following the dismissal of iManage’s and our respective officers and directors from the litigation without prejudice and after several months of negotiation, the plaintiffs named in the consolidated compliant and iManage and Interwoven, together with the other issuers named in those complaints and their respective insurance carriers, agreed to settle the litigation and dispose of any remaining claims against the issuers named in the consolidated compliant, in each case without admitting any wrongdoing. As part of this settlement, iManage’s and our respective insurance carriers have agreed to assume iManage’s and our entire payment obligation under the terms of the settlement. This settlement will be presented to the United States District Court for approval in the coming months; however, we cannot assure you that the District Court will approve the settlement.

In October 2002, a former employee of iManage filed a first amended complaint in the Circuit Court of Cook County, Illinois against iManage and certain of its then-current executive officers. The complaint alleges the plaintiff’s entitlement to 18,000 shares of iManage common stock that were never issued, breach of contract, breach of fiduciary duty and fraudulent concealment. The plaintiff is seeking damages of approximately $700,000 plus unspecified punitive damages. We believe that the allegations against iManage and its former officers are without merit, and intend to contest this matter vigorously. We cannot assure you, however, that this matter will be resolved without costly litigation or in a manner that is not adverse to our consolidated financial position, results of operations or cash flows.

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We are a party to other threatened legal action and various employment-related lawsuits arising from the normal course of business activities. In our opinion, resolution of these matters is not expected to have a material adverse impact on our consolidated results of operations or financial position. However, an unfavorable resolution of a matter could materially affect our consolidated results of operations or financial position in a particular period.

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

We held a special meeting of stockholders in Sunnyvale, California on November 18, 2003. Of the 26,476,204 shares outstanding as of the record date, 22,380,294 were present or represented by proxy at the meeting. At this meeting, the following actions were voted upon:

PART II

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

Price Range of Common Stock

Our common stock is listed on the NASDAQ National Market under the symbol “IWOV.”

The following table sets forth, for the periods indicated, the high and low sales prices for our common stock for the last eight quarters, all as reported on the NASDAQ National Market. The prices included below have been adjusted to give retroactive effect to all stock splits that have occurred since our inception.

Holders of Record

The approximate number of holders of record of the shares of our common stock was 619 as of March 8, 2004. This number does not include stockholders whose shares are held by other entities. The actual number of holders is greater than the number of holders of record.

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Dividend Policy

We have not declared or paid any cash dividends on our capital stock since our incorporation in March 1995. We currently intend to retain future earnings, if any, for use in our business and, therefore, do not anticipate paying any cash dividends in the foreseeable future. See Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources.”

ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA

The following selected consolidated financial data is qualified in its entirety by, and should be read in conjunction with, the consolidated financial statements and the notes thereto, and Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations. The selected consolidated statements of operations data and consolidated balance sheet data as of and for each of the five years in the period ended, and as of December 31, 2003, have been derived from the audited consolidated financial statements. All share and per share amounts have been adjusted to give retroactive effect to stock splits that have occurred since our inception.

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

The following contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Words such as “anticipates,” “expects,” “believes,” “seeks,” “estimates” and similar expressions identify such forward-looking statements. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those indicated in the forward-looking statements. Factors, which could cause actual results to differ materially, include those set forth in the following discussion, and, in particular, the risks discussed below under the subheading “Factors That May Impact Our Business” and in other documents we file with the Securities and Exchange Commission. Unless required by law, we do not undertake any obligation to update any forward-looking statements or risk factors.

Overview

Incorporated in March 1995, Interwoven provides enterprise content management software and services that enable businesses to create, review, manage, distribute and archive critical business content, such as documents, spreadsheets, emails and presentations, as well as Web images, graphics, content and applications code, across the enterprise and its value chain of customers, partners and suppliers. Our ECM platform consists of six integrated software product offerings,

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delivering customers end-to-end content lifecycle management. Customers have deployed our products for enterprise initiatives such as brand management, enterprise portals, global Web content management, content distribution, corporate governance, deal management and online self-service. To date, we have licensed our software products to more than 2,700 organizations worldwide. We market and license our software products and services primarily through a direct sales force and augment our sales efforts through relationships with technology vendors, professional service firms, systems integrators and other strategic partners. Our revenues to date have been derived primarily from accounts in North America; however revenues from outside of North America accounted for 35% of our total revenues in 2003. We had 696 employees as of December 31, 2003.

In June 2003, we completed the acquisition of MediaBin and, in November 2003, we completed our merger with iManage. The results of operations of MediaBin and iManage have been included prospectively from the closing dates of these transactions through year-end. Accordingly, our financial results in 2003 are not directly comparable to those in 2002. Additionally, on November 18, 2003, we effected a one-for-four reverse stock split. All share and per share information included in these consolidated financial statements have been retroactively adjusted to reflect the reverse stock split.

Results of Operations

In 2003 and 2002, our consolidated results of operations were adversely impacted by weak economic conditions domestically and internationally. As a result of the economic slowdown, customer spending on information technology initiatives decreased sharply in 2002 and remained weak throughout most of 2003. Our revenues were further impacted by a shift away from public facing Web applications, such as our primary product, TeamSite, to internal productivity enhancing applications. As a result of these factors, our revenues declined 12% from 2002 to 2003 and 38% from 2001 to 2002. In response to declining revenues, we initiated a series of strategic actions designed to expand our product offerings and create a broader suite of ECM products. During 2003, we acquired MediaBin and merged with iManage to extend our product offerings into digital asset management and collaborative document management, thereby creating product offerings that we believe address a greater market opportunity. We further expect that these combinations will allow us to achieve greater economies of scale in our sales, marketing, development and administrative functions. We also undertook a series of restructuring actions to align our cost structure with expected revenues. These restructuring actions included staff reductions in all functional areas of our business, reduced marketing and promotional spending and the abandonment of certain facilities in excess of current and expected future needs.

Revenues