-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RwAofoWk0NeJShRqf1C9Lnj0R/dmmRL8Rt59wClXAzcgZMzHMQ4vw+oaA0sxkrsQ c8aPybnT+iFSGH+QAd0qXA== 0001193125-10-279391.txt : 20101213 0001193125-10-279391.hdr.sgml : 20101213 20101213163859 ACCESSION NUMBER: 0001193125-10-279391 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 37 CONFORMED PERIOD OF REPORT: 20101031 FILED AS OF DATE: 20101213 DATE AS OF CHANGE: 20101213 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NOVELL INC CENTRAL INDEX KEY: 0000758004 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 870393339 STATE OF INCORPORATION: DE FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-13351 FILM NUMBER: 101248349 BUSINESS ADDRESS: STREET 1: 404 WYMAN STREET, SUITE 500 CITY: WALTHAM STATE: MA ZIP: 02451 BUSINESS PHONE: 8018617000 MAIL ADDRESS: STREET 1: 1800 SOUTH NOVELL PLACE CITY: PROVO STATE: UT ZIP: 84606 10-K 1 d10k.htm FORM 10-K Form 10-K
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

Form 10-K

 

 

 

þ

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

For the Fiscal Year Ended October 31, 2010

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 0-13351

NOVELL, INC.

(Exact name of registrant as specified in its charter)

 

Delaware   87-0393339
(State or other jurisdiction of incorporation or organization)   (I.R.S. Employer Identification No.)

404 Wyman Street, Suite 500

Waltham, MA 02451

(Address of principal executive offices including zip code)

(781) 464-8000

(Registrant’s telephone number, including area code)

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

 

Title of Each Class

 

Name of Each Exchange on Which Registered

Common Stock, par value $.10 per share  

The NASDAQ Stock Market LLC

(NASDAQ Global Select Market)

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes   þ    No  ¨

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.  Yes  ¨    No  þ

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  þ    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes  þ    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.  þ

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer  þ    Accelerated filer  ¨    Non-accelerated filer ¨        Smaller reporting company  ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act)  Yes  ¨    No  þ

The aggregate market value of the registrant’s common stock held by non-affiliates as of April 30, 2010 (based on the last reported sales price of the common stock on the NASDAQ Global Select Market on such date) was $1,275,250,970. For purposes of this disclosure, shares of common stock held by persons who hold more than 5% of the outstanding common stock and common stock held by executive officers and directors of the registrant have been excluded because such persons are deemed to be “affiliates” as that term is defined under the rules and regulations promulgated under the Securities Act of 1933. This determination is not necessarily conclusive for other purposes.

As of November 30, 2010 there were 351,582,564 shares of the registrant’s common stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant’s definitive Proxy Statement to be filed with the Securities and Exchange Commission and delivered to stockholders in connection with the 2011 Annual Meeting of Stockholders are incorporated by reference into Part III of this report to the extent described herein.


Table of Contents

NOVELL, INC.

TABLE OF CONTENTS

 

          Page  
PART I   

Item 1.

   Business      1   

Item 1A.

   Risk Factors      15   

Item 1B.

   Unresolved Staff Comments      24   

Item 2.

   Properties      25   

Item 3.

   Legal Proceedings      25   

Item 4.

   (Removed and Reserved)      25   
PART II   

Item 5.

   Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities      26   

Item 6.

   Selected Financial Data      28   

Item 7.

   Management’s Discussion and Analysis of Financial Condition and Results of Operations      29   

Item 7A.

   Quantitative and Qualitative Disclosures About Market Risk      56   

Item 8.

   Financial Statements and Supplementary Data      58   

Item 9.

   Changes in and Disagreements with Accountants on Accounting and Financial Disclosure      105   

Item 9A.

   Controls and Procedures      105   

Item 9B.

   Other Information      106   
PART III   

Item 10.

   Directors, Executive Officers and Corporate Governance      107   

Item 11.

   Executive Compensation      107   

Item 12.

   Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters      107   

Item 13.

   Certain Relationships and Related Transactions and Director Independence      108   

Item 14.

   Principal Accounting Fees and Services      108   
PART IV   

Item 15.

   Exhibits, Financial Statement Schedules      109   

 

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NOVELL, INC.

FORM 10-K

This Annual Report on Form 10-K contains certain 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. All statements, other than statements of historical fact, regarding the impact of uncertainty associated with Company Developments (as defined below); our strategy; future operations; financial position and results; liquidity; future opportunities; company trends; customer priorities; timing of realization of projections; functionality, characteristics, quality and performance capabilities of our products and technology; results achievable and benefits attainable through deployment of our products and provision of services; product differentiation; consolidation of the software industry; realization of our net deferred tax assets; funding of liquidity needs; the success of our Intelligent Workload Management (“IWM”) strategy; market leadership; development of the markets we serve; the impact of our relationship with Microsoft; trends in intellectual property litigation; economic improvement, including strength and sustainability of a recovery; operation of OIN; opportunities; beliefs; and objectives constitute “forward-looking statements.” The words “may,” “will,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “potential,” or “continue” and similar types of expressions identify such statements, although not all forward-looking statements contain these identifying words. These statements are based upon information that is currently available to us and/or management’s current expectations, speak only as of the date hereof, and are subject to risks and uncertainties. We expressly disclaim any obligation, except as required by federal securities laws, or undertaking to update or revise any forward-looking statements contained herein to reflect any change of expectations with regard thereto or to reflect any change in events, conditions, or circumstances on which any such forward-looking statement is based, in whole or in part. Our actual results may differ materially from the results discussed in or implied by such forward-looking statements. We are subject to a number of risks, including, among others, risks relating to: the risk that the patent sale and the merger may be delayed or may not be consummated; the risk that the definitive merger agreement may be terminated in circumstances that require us to pay Attachmate Corporation a termination fee of $60 million; risks related to the diversion of management’s attention from our ongoing business operations; risks regarding the failure of Attachmate Corporation to obtain the necessary financing to complete the merger; the effect of the announcement of the patent sale or the merger on our business relationships (including, without limitation, partners and customers), operating results and business generally; risks related to obtaining the requisite consents to the patent sale and the merger, including, without limitation, the timing (including possible delays) and receipt of regulatory approvals from various governmental entities (including any conditions, limitations or restrictions placed on these approvals) and the risk that one or more governmental entities may deny approval; indirect sales; growth rates of our business units; renewal of SUSE® Linux Enterprise Server (“SLES™”) subscriptions with customers who have received certificates from Microsoft; decline rates of Open Enterprise Server (“OES”) and NetWare® revenue; development of products and services; the IWM market; software vulnerabilities; delays in product releases; reliance on open source software and third party technologies and specifications; adequacy of renewal rates; uncertain economic conditions; competition; rapid technological changes; failure to expand brand awareness; adequacy of technical support; pricing pressures; system failures; integration of acquisitions; industry consolidation; challenges resulting from a global business; foreign research and development operations; loss of key employees; intellectual property infringement; litigation matters; unpredictable financial results; impairments; the timing of revenue recognition; our investments; and effective use of our cash. Risks that may affect our business, operating results, or financial position, include, but are not limited to, those discussed in Part I Item 1A, titled “Risk Factors.” Readers should carefully review the risk factors described in this document and in other documents that we file from time to time with the Securities and Exchange Commission (“SEC”).

PART I

Item 1. Business

The Company

On November 21, 2010, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Attachmate Corporation, a Washington corporation (“Attachmate”), and Longview Software Acquisition Corp., a Delaware corporation and a wholly-owned subsidiary of Attachmate (“Merger Sub”). The Merger Agreement provides that, upon the terms and subject to the conditions set forth in the Merger Agreement, Merger Sub will be merged with and into us, with us continuing as the surviving corporation and a wholly-owned subsidiary of Attachmate. Pursuant to the terms of the Merger Agreement, at the time the merger is effective, each issued and outstanding share of our common stock, other than treasury shares, shares held by Attachmate, Merger Sub or any other direct or indirect wholly-owned subsidiary of Attachmate or us and shares held by stockholders who perfect their appraisal rights, will be converted into the right to receive $6.10 in cash, without interest and less any applicable withholding taxes. Consummation of the merger is subject to certain conditions to closing, including, among others, (i) the approval by our stockholders; (ii) the expiration or termination of the waiting period (and any extensions thereof) applicable to the consummation of the merger under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”), and the approval by the German antitrust authority, the Federal Cartel Office (“FCO”); (iii) the absence of any law, order or other action enjoining or otherwise prohibiting consummation of the merger; (iv) the absence of a material adverse effect on us; (v) the closing of the transactions contemplated by the Patent Purchase Agreement (as defined below); (vi) the accuracy of the parties’ respective representations and warranties; (vii) the parties’ respective compliance with agreements and covenants contained in the Merger Agreement; and (viii) the availability to us and our subsidiaries of cash and cash equivalents equal to approximately $1.03 billion. We are working towards completing the merger as quickly as possible and currently expect to consummate the merger in the first calendar quarter of 2011.

 

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NOVELL, INC.

BUSINESS (Continued)

 

The Company (Continued)

 

Also on November 21, 2010, we entered into a Patent Purchase Agreement (the “Patent Purchase Agreement”) with CPTN Holdings LLC, a Delaware limited liability company and consortium of technology companies organized by Microsoft Corporation (“CPTN”). The Patent Purchase Agreement provides that, upon the terms and subject to the conditions set forth in the Patent Purchase Agreement, we will sell to CPTN all of our right, title and interest in 882 issued patents and patent applications for $450 million in cash. Consummation of the patent sale is subject to certain conditions to closing, including, among others, (i) the expiration or termination of the waiting period applicable to the consummation of the patent sale under the HSR Act and certain other antitrust laws; and (ii) the satisfaction or waiver of each of the conditions to the consummation of the merger (other than the closing of the patent sale), and the parties to the Merger Agreement shall be ready, willing and able to consummate the merger, immediately after the closing of the patent sale.

We develop, sell and install enterprise-quality software that is positioned in the operating systems and infrastructure software layers of the information technology (“IT”) industry. We develop and deliver Linux operating system software for a range of computers from desktops to servers. In addition, we provide a portfolio of integrated IT management software for systems, identity and security management for both Linux and mixed-platform environments. We serve a range of enterprise sizes, and combined with the quality and flexibility of our open-platform software technology, offer customers an IT infrastructure that is responsive to the cost pressures and the expanding IT initiatives that are characteristic of today’s business environment.

In December 2009, we announced an evolution in our strategy – our intention to become an industry leader in the new market category of IWM. IWM is a new model of computing that enables IT organizations to manage and optimize computing resources in a policy-driven, secure and compliant manner across physical, virtual and cloud computing environments. Our differentiated approach to delivering IWM, called Workload IQ, integrates identity and systems management capabilities into an application workload. As a result, enterprises are able to reduce the risks and challenges of computing across multiple environments while granting their users secure and compliant access to the computing services they need.

As part of this strategy evolution, during the first quarter of fiscal 2010, we reorganized our business unit segment structure and management. We consolidated our business unit segments from four to two. Our former Open Platform Solutions, Identity and Security Management and Systems and Resource Management business unit segments were consolidated to form the new Security, Management and Operating Platforms business unit segment (“SMOP”). Our former Workgroup business unit segment was renamed Collaboration Solutions (“CS”). The products sold by each business unit segment are described below in more detail.

SMOP

SMOP was created to achieve our goal of becoming an industry leader in the IWM market. To accomplish this goal, we leveraged our competencies in Linux, identity and security management, and systems and resource management with the objective of providing the industry’s leading IWM solutions. Our product strategy focuses on the four pillars of IWM: build, secure, manage and measure. We deliver these four pillars through our product groupings of Open Platform Solutions, Identity and Security Management, and Systems and Resource Management. These product groupings are described in more detail below.

Open Platform Solutions

We deliver Linux and related solutions for the enterprise. The SUSE® Linux Enterprise platform underpins all of our products. SUSE Linux Enterprise is a leading distribution system that differentiates itself from other Linux distributions by focusing on interoperability, support for mission-critical computing requirements, and cross-platform virtualization support. We also offer the ability for users to customize their Linux installation, yet still receive full support for their SUSE Linux Enterprise distribution through our SUSE Appliance Program. Our primary Open Platform Solutions offerings are as follows:

 

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NOVELL, INC.

BUSINESS (Continued)

 

The Company (Continued)

 

Linux Platform Products:

 

   

SUSE Linux Enterprise Server (“SLES”) is an enterprise-class, open source server operating system designed to support more than 6,000 applications for professional deployment in heterogeneous IT environments of all sizes and sectors. This operating system includes the assets required to run in an enterprise data center or cloud computing deployment, including integrated virtualization, optimized guest performance, high availability, and security, for the cost-efficient operation of IT environments.

 

   

The SUSE Appliance Program is a set of tools and services that allow Independent Software Vendors (“ISVs”) to build customized software appliances, using the SUSE Linux Enterprise operating system, that are efficient and cost-effective to deploy, maintain and support. The SUSE Appliance Program provides a user-friendly solution for building a software appliance with a customized and supported operating system, along with associated tools for configuring, patching and updating the appliance.

 

   

SUSE Linux Enterprise Desktop® (“SLED”) is a business desktop operating system that brings together the Linux operating environment with a comprehensive set of business applications. Included among the more significant business applications are OpenOffice.org Novell Edition (an office productivity suite), Mozilla’s Firefox browser, and Novell® Evolution, an e-mail and collaboration tool.

Other Open Platform Solutions products include the following: openSUSE®, an operating system designed for home and non-commercial use, that enables users to browse the Web, send and receive e-mail, chat with friends, organize digital photographs, play movies and songs, and create documents and spreadsheets; products based on the Mono® open source project, which provides software to develop and run .NET server and client applications on different operating systems, including SUSE Linux Enterprise; and SUSE Engineering, a specialized product development program to deliver and support complex, individualized configurations based on SUSE Linux Enterprise.

Identity and Security Management

Our identity, security, and compliance management solutions are designed to help customers integrate, secure, and manage IT assets while reducing complexity and ensuring compliance with government and industry mandates. Adding this intelligence to every part of a customer’s IT environment may make their systems more agile and secure. Our solutions leverage automated, centrally-managed policies to provide insight into events happening throughout the enterprise. Our primary Identity and Security Management offerings are as follows:

Identity, Access and Compliance Management products:

 

   

Novell Identity Manager is a powerful data-sharing and synchronization solution, often referred to as a meta-directory solution, that automatically distributes new and updated information across each designated application and directory on a network. This is designed to ensure that trusted customers, partners, and suppliers are accessing consistent information. Identity Manager integrates with numerous key enterprise IT systems, such as SAP AG (“SAP”), to provide a common and consistent identity management framework across the enterprise. We distributed a new version of Identity Manager during fiscal 2010 and introduced a new family of identity management solutions.

 

   

Novell Access Manager helps customers maximize access without limiting security or control. It simplifies and safeguards online asset-sharing, allowing customers to control access to web-based and traditional business applications. Trusted users gain secure authentication and access to portals, web-based content, and enterprise applications.

 

   

Novell Sentinel automates the monitoring of IT effectiveness allowing users to detect and resolve threats in real-time. This enables enterprises to maintain a more secure network. Sentinel also provides documented evidence enabling users to comply with certain regulatory and industry compliance requirements.

 

   

Novell Compliance Management Platform is an integrated identity solution that is designed to provide “out-of-the-box” compliance assurance through real-time automation and validation. It enforces business policies and offers wizards to simplify deployment and configuration. Compliance Management Platform is comprised of Identity Manager, Access Manager and Sentinel.

 

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NOVELL, INC.

BUSINESS (Continued)

 

The Company (Continued)

 

 

   

Novell Cloud Security Service allows enterprises to extend their identity infrastructure to public clouds. Changes made to users or permissions are replicated in the cloud environment, thus ensuring one consistent identity and security framework for the enterprise, regardless of where the computing actually takes place.

Other Identity and Security Management products include Novell® eDirectory, a full-service, platform-independent directory designed to simplify the complexities of managing users and resources in a mixed Linux, NetWare®, UNIX, and Windows environment.

Systems and Resource Management

With our systems and resource management solutions, customers can define business and IT policies to automate the management of multiple IT resources, including the emerging challenge of managing virtual environments, as well as both public and private cloud computing deployments. Our systems and resource management solutions are designed to enable our customers to reduce IT effort, control IT costs, and reduce IT skill requirements to manage and leverage their IT investment. Our primary Systems and Resource Management products are as follows:

 

   

The ZENworks® product portfolio – Configuration Management, Patch Management, Asset Management, Endpoint Security Management, Application Virtualization, Linux Management, Handheld Management, and Network Access Control – is designed to leverage policy-based automation to centrally manage and secure a heterogeneous endpoint environment, including desktops, laptops, notebooks, and handheld devices, across Windows and Linux environments.

 

   

PlateSpin® workload mobility, workload protection, and workload management solutions are designed to reduce cost, maximize efficiency and provide disaster recovery capabilities in data centers. Our suite of products, which includes PlateSpin Migrate, PlateSpin Protect, PlateSpin Forge, and PlateSpin Recon, delivers integrated management of physical and virtual resources across mixed IT environments.

 

   

Novell Cloud Manager enables customers to create and securely manage a cloud computing environment as a seamless extension of existing data center resources. Novell Cloud Manager is designed for the heterogeneous reality of most IT environments, giving users the freedom and flexibility to create and manage private clouds which support leading hypervisors, operating systems and hardware management.

 

   

Novell Operations Center (formerly Novell Business Service Management solutions) enables IT organizations to measure real-time performance, availability and configuration compliance of services running the business, thereby providing control over the infrastructure in alignment with business objectives. The Business Service view of the environment enables a reduction of downtime, improved resource utilization, and control of risk in complex, mixed technology environments.

CS

Within our CS business unit segment, we provide comprehensive and adaptable collaboration solutions that provide the infrastructure, services, and tools customers require to effectively and securely collaborate across a myriad of devices. We offer the security, reliability, and manageability that enable our customers’ employees to efficiently share information and ideas to perform their jobs at lower cost. Our primary CS products are as follows:

Open Enterprise Server and NetWare-related products:

 

   

Open Enterprise Server (“OES”) is a secure, highly available suite of services that provides networking, communication, collaboration, and application services in an open, easy-to-deploy environment. OES provides customers the choice of deploying these services on either a NetWare or SLES kernel and provides common management tools, identity-based services, and our support.

 

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NOVELL, INC.

BUSINESS (Continued)

 

The Company (Continued)

 

 

   

NetWare is our proprietary operating system platform that offers secure continuous access to core network resources such as files, printers, directories, e-mail, and databases seamlessly across multiple types of networks, storage platforms, and client desktops. Although we no longer ship new versions of NetWare, we offer paid support for customers who have NetWare installed in their data centers, while actively encouraging them to upgrade to OES on Linux.

 

   

Cluster ServicesTM is a scalable, highly available Storage Area Network resource management tool that reduces the administrative costs and complexity of delivering uninterrupted access to information and resources.

 

   

Novell File Management Suite was introduced in January 2010. It is an integrated file storage solution designed to move, optimize and report on file storage based on user roles and customized business practices. Novell File Management Suite leverages identity so that an organization’s premium storage resources can be reserved for the data that is most important to the business.

Collaboration products:

 

   

Novell GroupWise® collaboration products provide personal e-mail, calendar and contact management in a customizable integrated collaborative environment supporting both Linux and Windows.

 

   

Novell Teaming provides team workspaces, wikis, blogs and social messaging to drive innovation in teams and projects.

 

   

Conferencing allows enterprises to conduct virtual meetings where users can share desktops, watch video, and collaborate on documents.

 

   

Data Synchronizer allows for real-time synchronization of data between business applications and mobile devices.

Other CS products:

 

   

Novell Open Workgroup Suite provides organizations of various sizes with a secure, flexible, and cost-effective IT infrastructure as well as collaboration services. Unlike a proprietary, Windows-centric solution, the Novell Open Workgroup Suite is comprised of a package of open standards-based software from our business unit segments. This suite offers a low-cost, open alternative to Microsoft products, includes an infrastructure and productivity solution from the desktop to the server, and includes OES, GroupWise, ZENworks Configuration Management, ZENworks Linux Management, SLED, and OpenOffice.org for Linux and Windows.

In addition to our technology offerings, within our business unit segments we offer a worldwide network of service personnel to help our customers and third-party partners utilize our software. We also have partnerships with application providers, hardware and software vendors, consultants and systems integrators. In this way, we can offer a broad solution to our customers, including:

 

   

Professional services: We provide technical expertise to deliver infrastructure solutions, based on an innovative approach focused on solving our customers’ business problems. We deliver services ranging from discovery workshops to strategy projects to solution implementations, using a consistent, well-defined methodology. Our professional services approach is based on a strong commitment to open standards, interoperability, and the right blend of our technology with technology from other leading vendors.

 

   

Technical support: We provide phone-based, web-based, and onsite technical support for our proprietary and open source products through our Premium ServiceSM program. Premium Service provides customers with the flexibility to select the appropriate level of technical support services, which may include stated response times, around-the-clock support, service account management, and dedicated resources, such as our most experienced engineers. The Dedicated Support Engineer, Primary Support Engineer, Advantage Support Engineer, and Account Management programs allow us to build an ongoing support relationship with our customers at an appropriate level for their needs. We have committed a significant amount of technical support resources to the Linux open source platform.

 

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NOVELL, INC.

BUSINESS (Continued)

 

The Company (Continued)

 

   

Training services: We accelerate the adoption and enable the effective use of our products and solutions through the delivery of timely and relevant instructor-led and technology-based training courses, assessments and performance services. Programs are delivered either directly to our customers or through our global channel of authorized training partners. Our courses provide customers with a thorough understanding of the implementation, configuration, and administration of our products and solutions. Additionally, we offer performance services that provide our customers and partners with an evaluation of their proficiencies and their knowledge gaps. We also deliver Advanced Technical TrainingTM at an engineer level to customers and partners on a global basis.

Revenue detail for fiscal 2010, 2009, and 2008 for our significant products is presented in Part II, Item 8, Note Y, “Segment Information,” which is incorporated by reference into this Part I, Item 1.

Strategy

We offer customers enterprise infrastructure software in a flexible combination of open source, mixed-source and proprietary technologies. In collaboration with our partners, we also offer a range of high-quality services to enable customers to succeed in their deployments of our solutions. We do this through the delivery of our interoperable Linux platform and a portfolio of integrated IT management software designed to help businesses reduce cost, complexity, and risk on virtually any platform. Deployed either directly to our customers or through our network of partners, our solutions are designed to enable our customers to devote more of their time, energy, and resources to driving their own businesses forward. A key component of our strategy is to ensure that our critical product functions operate on the Linux platform and in mixed IT environments.

Product Strategy

Our overall products and services strategy is to leverage our competencies in Linux, identity and security management, and systems and resource management with the objective of providing the industry’s leading IWM solutions. Our product strategy focuses on the four pillars of IWM: build, secure, manage and measure.

Build

To enable enterprises and ISVs to build intelligent workloads, we leverage our competency in operating systems in general and Linux in particular to provide easy-to-use and cost effective products for building and maintaining intelligent workloads and software appliances drawing on our experience with products such as SLES and the SUSE Appliance Program.

With regard to Linux adoption, we maintain strong support of the open source development community, and of the many open source organizations and projects to which we presently contribute. We continue to use our significant engineering and support resources to encourage customers to adopt Linux. We can accomplish this by developing and selling key product functions that operate on the Linux platform.

Secure

To help customers address their identity, security and compliance needs, we deliver a portfolio of solutions that are based on open standards, provide ease of implementation and offer quick time to value. Our strategy is to build upon our strong portfolio of existing products such as Identity Manager, Sentinel, and Compliance Management Platform and to integrate identity and security capabilities throughout our IWM solutions.

Manage

To help customers manage their physical and virtual environments and the migration between the two, we provide the PlateSpin Workload Management and ZENworks Management families of solutions. These solutions offer a service-driven approach to the management of the data center and endpoint devices. In support of our IWM strategy, we integrate and extend these management capabilities to the cloud in an effort to ensure optimized execution of workloads both on- and off-site.

 

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BUSINESS (Continued)

 

Strategy (Continued)

 

Measure

To help our customers measure and gain real time insight into their IT operations, we offer a suite of products including Novell Operations Center and Sentinel Log Manager. Our strategy is to extend these products to manage cloud environments to enable business service level reporting of workloads across physical, virtual and cloud environments.

We utilize our professional services to focus our IT services and training expertise on identity management solutions and open source software adoption, and to provide a range of support services for all our proprietary, mixed-source, and open source products, which may drive further product sales.

Alliances and Partnership Strategy

We partner with industry leaders in the software, hardware, consulting, and system integration industries to bring to market our solution offerings. We believe that a well-managed and supported partnership portfolio is critical to our success in today’s competitive solutions market and helps increase our revenue and customer reach. Our business partner strategy is based on having a single partner program with a goal of providing consistent interactions focused on technology enablement, certification, joint marketing, and sales initiatives.

To enhance partner efficiency, we have developed a partner ecosystem that combines our knowledge, services, and solutions with that of our partners to enable customers to adapt to, and profit from, the opportunities that open source and identity solutions bring to businesses. We contribute to the ecosystem by providing technology, programs, resources, and skills to create solutions and provide customers with the functionality and business value required to improve the bottom line results of their businesses.

At the beginning of fiscal 2007, we entered into a Business Collaboration Agreement, a Technical Collaboration Agreement, and a Patent Cooperation Agreement with Microsoft (“Microsoft Agreements”) that collectively were designed to build, market and support a series of new solutions to enhance the interoperability of our products with Microsoft’s products. The overarching purpose of our partnership with Microsoft is to increase the utility, customer value, and penetration of Linux by enabling its interoperation with Windows in a mixed environment that is easier to maintain and is supported by both us and Microsoft. We believe that our relationship with Microsoft has been, and will continue to be, successful in helping us deliver differentiated value to customers by giving them greater flexibility and effectiveness in their IT environments. The Business Collaboration Agreement with Microsoft enables Microsoft to distribute certificates that entitle customers to SLES support from us. The Technical Collaboration Agreement consists of several projects that improve the interoperability between various Microsoft and Open Source products. We believe that this partnership addresses pressing, industry-wide issues, puts customers’ needs first, and creates financial and strategic benefits.

In addition to our channel partnership with Microsoft, we have established global strategic alliances with Accenture Ltd. (“Accenture”), Affiliated Computer Services (“ACS”), Dell Inc. (“Dell”), Hewlett-Packard Co. (“HP”), International Business Machines Corporation (“IBM”), Intel Corporation, SAP and VMware, Inc. (“VMware”).

Multi-channel Sales Strategy

We deliver solutions through direct channels, by serving large organizations directly, with systems integration partners, or through telemarketing or web sales. We also deliver solutions through indirect channels, serving small- and medium-sized organizations through our channel partners. Our business partner and channel relationships, together with our emphasis on specialization, provide us a greater presence in the marketplace while lowering our distribution costs. To maximize our reach while seeking to ensure the highest quality of service to our customers, we provide our channel partners pervasive access to our tools, training, and methodologies.

Personnel Development Strategy

We believe that our employees are our most significant asset. We work continuously to update their skill sets by providing education and training to improve their productivity. We regularly assess their development progress and focus on key areas as appropriate.

 

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BUSINESS (Continued)

 

Acquisitions and Dispositions

We typically acquire companies or technologies only after we determine that the related products or technologies are strategic or complementary to our current or future product offerings. As we determine that parts of our business are no longer strategic to us as a whole, or are not profitable, we will look for alternatives such as divestitures or other capital structures. Details of our acquisitions and dispositions are presented in Part II, Item 8, Note C, “Acquisitions”, and Note D, “Divestitures”, respectively, of the notes to the consolidated financial statements of this report, which is incorporated by reference into this Part I, Item 1.

On November 21, 2010, we entered into a Merger Agreement with Attachmate and Merger Sub. The Merger Agreement provides that, upon the terms and subject to the conditions set forth in the Merger Agreement, Merger Sub will be merged with and into us, with us continuing as the surviving corporation and a wholly-owned subsidiary of Attachmate. Pursuant to the terms of the Merger Agreement, at the time the merger is effective, each issued and outstanding share of our common stock, other than treasury shares, shares held by Attachmate, Merger Sub or any other direct or indirect wholly-owned subsidiary of Attachmate or us and shares held by stockholders who perfect their appraisal rights, will be converted into the right to receive $6.10 in cash, without interest and less any applicable withholding taxes. Consummation of the merger is subject to certain conditions to closing, including, among others, (i) the approval by our stockholders; (ii) the expiration or termination of the waiting period (and any extensions thereof) applicable to the consummation of the merger under the HSR Act and the approval by the German antitrust authority, the FCO; (iii) the absence of any law, order or other action enjoining or otherwise prohibiting consummation of the merger; (iv) the absence of a material adverse effect on us; (v) the closing of the transactions contemplated by the Patent Purchase Agreement; (vi) the accuracy of the parties’ respective representations and warranties; (vii) the parties’ respective compliance with agreements and covenants contained in the Merger Agreement; and (viii) the availability to us and our subsidiaries of cash and cash equivalents equal to approximately $1.03 billion. We are working towards completing the merger as quickly as possible and currently expect to consummate the merger in the first calendar quarter of 2011.

Also on November 21, 2010, we entered into a Patent Purchase Agreement with CPTN. The Patent Purchase Agreement provides that, upon the terms and subject to the conditions set forth in the Patent Purchase Agreement, we will sell to CPTN all of our right, title and interest in 882 issued patents and patent applications for $450 million in cash. Consummation of the patent sale is subject to certain conditions to closing, including, among others, (i) the expiration or termination of the waiting period applicable to the consummation of the patent sale under the HSR Act and certain other antitrust laws; and (ii) the satisfaction or waiver of each of the conditions to the consummation of the merger (other than the closing of the patent sale), and the parties to the Merger Agreement shall be ready, willing and able to consummate the merger, immediately after the closing of the patent sale.

Segment and Geographical Information

Segment and geographical disclosures for fiscal 2010, 2009, and 2008 are presented in Part II, Item 8, Note Y, “Segment Information”, of the notes to the consolidated financial statements of this report, which is incorporated by reference into this Part I, Item 1. For a discussion of risks attendant to our global business, see also Part I, Item 1A, “Risk Factors.”

Product Development

We conduct product development activities throughout the world in order to meet the needs of our worldwide customer base. Our commitment to deliver world-class products means continued investment in product development. We also contract some product development activities to third-party developers.

In addition to technology developed in-house, some of our products also include technology developed by the open source community. Some of our product development engineers work as a part of open source development teams across the world. This involvement establishes our role in leading technical advances, developing new features, and influencing the timing of releases, as well as other information related to the development of Linux and other open source projects.

Product development expenses for fiscal 2010, 2009, and 2008 are discussed in Part II, Item 7 of this report, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, which is incorporated by reference into this Part I, Item 1.

 

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NOVELL, INC.

BUSINESS (Continued)

 

Sales and Marketing

We sell our software and services primarily to corporations, government entities, educational institutions, independent hardware and software vendors, resellers, and distributors both domestically and internationally. Our sales and marketing strategy targets customers seeking solutions in the following three focus areas: data center, end-user computing, and identity and security. Within these focus areas we currently market and sell eight distinctive solutions via multi-channel specialized sales and marketing models. Our partner ecosystem includes value added partners such as demand agents, vertical market resellers, systems integrator distributors, and original equipment manufacturers (“OEMs”) who meet our criteria. We also sell directly to enterprise customers. We conduct sales and marketing activities and provide technical support, training, and field service to our customers from our 10 U.S. and 44 international sales offices.

Distributors. We have established a network of independent distributors who sell our products to resellers, value added resellers (“VARs”) and computer retail outlets.

VARs and Systems Integrators. We also sell directly to VARs and systems integrators who provide solutions across multiple vertical market segments and whose volume of purchases warrants buying directly from us.

OEMs/Independent Hardware Vendors (“IHVs”)/Independent Software Vendors (“ISVs”). We license subsets of products to domestic and international OEMs, IHVs, and ISVs for integration with their products and/or solutions.

End-User Customers. We have assembled worldwide field resources to work directly with enterprise end-users. Additionally, product upgrades and software maintenance are sold directly to end-users. Customers can also purchase products and services under license agreements through partners or resellers in or near their geographic locations.

Marketing Strategy. Our marketing strategy is to clearly articulate our value in the markets we serve, and in doing so, attract and retain satisfied customers. To do this, we employ multiple channels of communications to raise awareness, generate demand, and provide tools for our multi-channel field sales and services organizations. We examine and select market opportunities that best fit our current product portfolio and solutions strengths. This includes researching geographic and industry markets, determining product life cycle maturity, and assessing competitive strategies. Our marketing strategy is driven by a key set of metrics that include the measurement of awareness across geographies, specific lead generation metrics, and deliverables to support the sales process. Our target marketing audience is the CIO and other senior IT executives responsible for key IT functions across the enterprise.

Marketing Initiatives. To more closely align our offerings with customer needs, we developed a series of strategic campaigns that address customer needs and align them with our capabilities. Specifically, our campaigns are focused on helping customers create a more agile data center, improve the productivity of their end-user computing environments, and create and maintain a trusted computing environment. Our marketing campaigns are based on our commitment to interoperability and our positioning of “Making IT Work As OneTM.” We believe this positioning best serves us in increasing our relevance to our customers. We recently announced our new product vision of WorkloadIQ as our portfolio umbrella for the products that compete in the IWM market. Our strategy is to label some products, which come primarily from our SMOP business unit segment, as “WorkloadIQ products” to convey the integration of such products and the increased value that customers receive by deploying multiple products in concert.

Major Customers

No single customer accounted for more than 10% of our revenue in fiscal 2010, 2009, or 2008. During fiscal 2007, we received $355.6 million in cash payments from Microsoft related to the Microsoft Agreements discussed above, which we have been recognizing as revenue since the beginning of fiscal 2007. In fiscal 2008, Microsoft agreed to purchase up to $100 million of additional SLES certificates by January 1, 2012. Payment will be made in $25 million increments as the certificates are distributed. We received the first $25 million payment in November 2008. Only this first $25 million payment is nonrefundable and we have not received any further payments.

 

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BUSINESS (Continued)

 

Manufacturing Suppliers

Our physical products, which consist primarily of discs, manuals, our openSUSE Linux box product, and PlateSpin’s “Forge” product, are duplicated and manufactured by outside vendors. Multiple high-volume manufacturers are available, though we currently utilize only one manufacturer for each of these products. We do not rely on a single provider for our raw materials, nor have we encountered problems with our existing manufacturing suppliers. Total sales of our physical products represent less than 1% of recognized revenue in fiscal 2010.

Backlog

Lead times for our products are relatively short. Consequently, we do not believe that backlog is a reliable indicator of future revenue or earnings. Our practice is to ship products promptly upon the receipt of purchase orders from our customers and, therefore, backlog is not significant. Because much of the revenue we invoice is deferred and recognized over time, we consider invoicing, or bookings, to be a key indicator of current sales force performance and future revenue performance.

We have a significant amount of deferred revenue recorded on our consolidated balance sheets, the majority of which relates to maintenance and subscription contracts which are recognized ratably over the related contract periods, typically one to three years. Deferred revenue related to our agreements with Microsoft is recognized ratably over various related service periods, which can extend up to five years.

Competition

The market for our business unit segments is highly competitive and subject to rapid technological change. We expect competition to continue to increase both from existing competitors and new market entrants. We believe that competitive factors common to all of our segments include the following:

 

   

our ability to preserve our traditional customer base;

   

our ability to sell overall solutions comprised of products and services provided by us and our partners;

   

the timing and market acceptance of new solutions developed by us and our competitors;

   

brand and product awareness;

   

the ability of Linux and open source solutions to provide a lower total cost of ownership;

   

the ability of our suite of products and solution offerings to solve customer problems;

   

our ability to establish and maintain key strategic relationships with distributors, resellers, ISVs, and other partners; and

   

the pricing of our products and services and the pricing strategies of our competitors.

Primary competitors of our Identity and Security Management and Systems and Resource Management product solutions include Microsoft, IBM, Oracle Corporation (“Oracle”), HP, Symantec (“Symantec”), BMC Software, Inc. (“BMC”), VMware and Computer Associates (“CA”). Primary competitors for our Linux and platform services solutions include Microsoft, Oracle, and Red Hat, Inc. (“Red Hat”). The primary competitors for our collaboration products are Microsoft, IBM, and Google Inc (“Google”).

In fiscal 2007, we entered into the Microsoft Agreements to build, market, and support a series of new solutions designed to make our products work better with Microsoft’s products. Under the Microsoft Agreements, Microsoft agreed to covenant with our customers not to assert its patents against our customers for their use of our products and services for which we receive revenue directly or indirectly, with certain exceptions, while we agreed to covenant with Microsoft’s customers not to assert our patents against Microsoft’s customers for their use of Microsoft products and services for which Microsoft receives revenue directly or indirectly, with certain exceptions. In addition, we and Microsoft each irrevocably released the other party, and its customers, from any liability for patent infringement arising prior to November 2, 2006, with certain exceptions. We will continue to compete with Microsoft, but through these agreements, Microsoft can serve as an important indirect source for our Linux sales.

 

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NOVELL, INC.

BUSINESS (Continued)

 

Copyright, Licenses, Patents, and Trademarks

We rely on copyright, patent, trade secret, and trademark law, as well as provisions in our license, distribution, and other agreements to protect our intellectual property rights. Our portfolio of patents, copyrights, and trademarks as a whole is material to our business but no individual element of intellectual property is critical to our business. We have what we consider to be valuable patents and have numerous other patents pending. No assurance can be given that the pending patents will be issued or, if issued, will provide protection for our competitive position. Notwithstanding our efforts to protect our intellectual property through contractual measures, unauthorized parties may still attempt to violate our intellectual property rights. While the durations of our patents vary, we believe that the durations of our patents are adequate relative to the expected lives of our products.

Our business includes a mix of proprietary offerings and offerings based on open source technologies. With respect to proprietary offerings, we perform the majority of our development efforts internally, but we also acquire and license technologies from third parties. No one license is critical to our business. Our open source offerings are primarily comprised of open source components developed by independent third parties over whom we exercise no control. The collective licenses to those open source technologies are critical to our business. If we are unable to maintain licenses to these third-party open source materials, our distribution of relevant offerings may be delayed until we are able to develop, license, or acquire replacement technologies. Such a delay could have a material adverse impact on our business.

In November 2005, Open Invention Network, LLC (“OIN”) was established by us, IBM, Koninklijke Philips Electronics N.V., Red Hat and Sony Corporation. OIN is a privately-held company that has and is expected to continue to acquire patents to promote Linux and open source by offering its patents on a royalty-free basis to any company, institution or individual that agrees not to assert its patents against the Linux operating system or certain Linux-related applications. In addition, OIN, in its discretion, may enforce its patents to the extent it believes such action will serve to further protect and promote Linux and open source. In fiscal 2007, NEC Corporation became an investor in OIN, with the same rights, privileges and obligations as the original investors.

The software industry is characterized by frequent litigation regarding patent, copyright, and other intellectual property rights, and trends suggest that this may increase. From time to time, we have had infringement claims asserted by third parties against us and our products. While there are no known pending or threatened claims against us for which we expect to have an unsatisfactory resolution that would have a material adverse effect on our results of operations, financial condition or cash flow, there can be no assurance that such claims will not be asserted, or, if asserted, will be resolved in a satisfactory manner. In addition, there can be no assurance that third-parties will not assert other claims against us with respect to any third-party technology. In the event of litigation to determine the validity of any third-party claims, such litigation could result in significant expense to us and divert the efforts of our technical and management personnel, whether or not such litigation is determined in our favor.

In the event of an adverse result in any such litigation, we could be required to expend significant resources to develop non-infringing technology or to obtain licenses to the technology that was the subject of the litigation. There can be no assurance that we would be successful in such development or that any such licenses would be available.

In addition, the laws of certain countries in which our products are or may be developed, manufactured, or sold may not protect our products and intellectual property rights to the same extent as the laws of the United States.

Seasonality

All segments of our business often experience a higher volume of invoicing at the end of each quarter due to the spending cycles of our customers and the negotiation patterns typical in the software industry. In addition, we experience a higher volume of invoicing in our third and fourth fiscal quarters due to the high level of customer maintenance contracts that typically renew in this period. As a result, operating cash flows historically peak in the second half of our fiscal year, decline in our first fiscal quarter and are negative in our second fiscal quarter.

 

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NOVELL, INC.

BUSINESS (Continued)

 

Corporate Information

Novell was incorporated in Delaware on January 25, 1983. Our headquarters and principal executive offices are located at 404 Wyman Street, Suite 500, Waltham, MA 02451. Our telephone number at that address is (781) 464-8000. We also have offices located in Provo, Utah, and our telephone number at that location is (801) 861-7000. Our website is www.novell.com.

Our Annual Report, SEC filings, earnings announcements, and other financial information are available on our Investor Relations website URL at http://www.novell.com/ir. We make our annual, quarterly, and current reports, including any amendments to those reports, freely available on our website as soon as reasonably practicable after they are filed with or furnished to the SEC. This and other information that we file with or furnish to the SEC is also freely available on the SEC’s website at www.sec.gov. Mailed copies of these reports, including exhibits, can be obtained free of charge through our automated telephone access system at (800) 317-3195 or by e-mailing our investor relations department at irmail@novell.com. The information on our website, including the documents identified above, is not and should not be considered part of this Annual Report on Form 10-K and our website addresses are intended to be an inactive textual reference only.

Employees

We currently have approximately 3,400 employees. None of our employees are represented by a labor union, and we consider our employee relations to be good.

Executive Officers of the Registrant

Set forth below are the names, ages, and titles of the persons currently serving as our executive officers.

 

Name

   Age   

Position

Ronald W. Hovsepian    49   

President and Chief Executive Officer

Javier F. Colado    45   

Senior Vice President, Worldwide Sales

John K. Dragoon    50   

Senior Vice President and Chief Marketing Officer

James P. Ebzery    51   

Senior Vice President and General Manager, Security, Management and Operating Platforms

Colleen A. O’Keefe    54   

Senior Vice President and General Manager, Collaboration Solutions and Global Services

Russell C. Poole    56   

Senior Vice President, Human Resources

Dana C. Russell    49   

Senior Vice President and Chief Financial Officer

Scott N. Semel    54   

Senior Vice President, General Counsel and Secretary

Joseph H. Wagner    50   

Senior Vice President and General Manager, Global Alliances

Ronald W. Hovsepian

Ronald W. Hovsepian has served as one of our directors and as our President and Chief Executive Officer since June 2006. Mr. Hovsepian served as our President and Chief Operating Officer from October 2005 to June 2006. From May 2005 to November 2005, Mr. Hovsepian served as Executive Vice President and President, Worldwide Field Operations. Mr. Hovsepian joined us in June 2003 as President, Novell North America. Before joining us, Mr. Hovsepian was a Managing Director with Bear Stearns Asset Management, a technology venture capital fund, from February 2002 to December 2002. From March 2000 to February 2002, Mr. Hovsepian served as Managing Director for Internet Capital Group, a venture capital firm. Prior to that, Mr. Hovsepian served in a number of executive positions with IBM over an approximate 17-year period. Mr. Hovsepian is also the non-employee chairman of the Board of Directors of Ann Taylor Corporation.

 

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BUSINESS (Continued)

 

Executive Officers of the Registrant (Continued)

 

Javier F. Colado

Javier F. Colado has served as Senior Vice President, Worldwide Sales since November 2010. Prior to that, Mr. Colado served as President and General Manager, Novell EMEA (Europe, Middle East & Africa) from January 2009 to November 2010, Channel Chief from August 2008 to January 2009, and Vice President and General Manager for EMEA West from February 2006 to August 2008. Prior to joining us, Mr. Colado held various positions at McAfee, a security technology company, from 2000 to 2006, where he served as Senior Vice President Global Service Providers from September 2004 to February 2006, and Regional Vice President for McAfee EMEA from January 2002 to September 2004. Prior to his tenure at McAfee, Mr. Colado served in a number of sales and management positions at AT&T and Lucent Technologies from 1991 to 2000 and at Ericsson from 1989 to 1991.

John K. Dragoon

John K. Dragoon has served as our Senior Vice President and Chief Marketing Officer since March 2006. Mr. Dragoon joined us in October 2003 as Vice President, Worldwide Field Marketing. Prior to joining us, from April 2002 to September 2003, Mr. Dragoon was the Senior Vice President of Marketing and Product Management at Art Technology Group, a provider of Internet commerce, service, and marketing solutions and from April 2001 to March 2002 served as Vice President, Operations, of Internet Capital Group, a venture capital firm. Prior to his tenure at Internet Capital Group, Mr. Dragoon served in a number of sales and marketing positions at IBM from 1984 to 2000.

James P. Ebzery

James P. Ebzery has served as our Senior Vice President and General Manager, Security, Management and Operating Platforms (“SMOP”) since January 2010. Prior to that, Mr. Ebzery served as our Senior Vice President & General Manager, Identity & Security Management business unit, from May 2007 to December 2009. Before joining us, Mr. Ebzery was President of the Viisage Division at L-1 Identity Solutions, a leading provider of advanced technology identity solutions, from January 2006 to May 2007. Mr. Ebzery was Senior Vice President of Sales and Marketing of Viisage, from November 2002 to January 2006. Prior to that, Mr. Ebzery served as Vice President of Operations for Internet Capital Group, a venture capital firm, from April 2000 to February 2002. In addition, Mr. Ebzery spent approximately 17 years at IBM in various sales, marketing, and general management roles.

Colleen A. O’Keefe

Colleen A. O’Keefe has served as our Senior Vice President and General Manager, Collaboration Solutions (“CS”) and Global Services since January 2010. In this role, she is responsible for product strategy, management and development of the collaboration solutions as well as for Global Services. Ms. O’Keefe joined us in December 2006 as our Senior Vice President of Services to oversee our global technical support group, technical training services, and professional services to customers. Prior to joining us, from September 2002 to November 2006, Ms. O’Keefe held several key leadership positions in the Payment Solutions and Worldwide Services divisions at NCR Corporation, a global technology company that specializes in improving and streamlining customer interactions for companies across many industries. From September 1999 to March 2002, she served as Senior Vice President, Customer Services, at Global Crossing. In addition, Ms. O’Keefe served in a number of positions in the telecommunications industry, including 18 years at Southern New England Telephone and two years at AT&T.

Russell C. Poole

Russell C. Poole has served as our Senior Vice President, Human Resources since November 2009. Prior to that, Mr. Poole served as our Vice President - Senior HR Partner in the Human Resources organization, from September 2007 to November 2009, providing valuable direction and leadership within Human Resources as well as partnering with the Sales and Services organizations. Mr. Poole served as our Vice President – Law – People from November 2002 to September 2007. Prior to joining us, Mr. Poole had also held various supervisory and management positions over a 20-year period in which he evaluated, managed, and resolved human resource, employment, benefit and transactional issues.

 

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NOVELL, INC.

BUSINESS (Continued)

 

Executive Officers of the Registrant (Continued)

 

Dana C. Russell

Dana C. Russell has served as our Senior Vice President and Chief Financial Officer since February 2007. Prior to that, Mr. Russell served as our Vice President and Interim Chief Financial Officer from June 2006 to February 2007, and as Vice President of Finance from March 2000 to June 2006. Mr. Russell served as the Corporate Controller from June 2003 to June 2006, and was also the Treasurer from December 2005 to June 2006. Mr. Russell joined us in 1994. Prior to joining us, Mr. Russell worked at Price Waterhouse in Salt Lake City, Utah. Mr. Russell is a CPA licensed in the State of Utah.

Scott N. Semel

Scott N. Semel joined us in September 2008 as our Senior Vice President, General Counsel and Secretary and from April 2009 to November 2009, also served as our interim Senior Vice President, Human Resources. Prior to joining us, Mr. Semel was Chief Legal Officer and Corporate Secretary at Tele Atlas N.V., a Dutch Euronext company providing digital mapping and navigation solutions, from late 2006 to June 2008. Mr. Semel also engaged in the private practice of law with GTC Law Group LLC, a boutique law firm that specializes in IP strategy, mergers and acquisitions, and business and technology transactions, during 2006. Mr. Semel served as Vice President, General Counsel and Secretary to Ascential Software Corporation, a NASDAQ listed company providing enterprise data integration, from 2001 through April 2005, when Ascential was sold to IBM, after which Mr. Semel served as Associate General Counsel-Legal Transition Executive at IBM. Prior to that, he served as Vice President, General Counsel and Secretary to NaviSite, Inc., a NASDAQ listed company. Before that, he also served as general counsel to other public and private companies and engaged in the private practice of law.

Joseph H. Wagner

Joseph H. Wagner has served as our Senior Vice President and General Manager, Global Alliances since January 2010. Prior to that, Mr. Wagner served as Senior Vice President and General Manager of the Systems and Resource Management business unit from June 2006, and as Vice President of Global Operations responsible for the global field strategy, structure, incentives and productivity, customer operations, and the global partner organization from October 2005 to May 2006. Mr. Wagner joined us in August 2003 as Vice President of North America Operations where he led the roll-out of the North America and global field model now in place. Before joining us, Mr. Wagner was Vice President of Transportation Solutions for Manhattan Associates and was the Senior Vice President of Global Sales and Marketing at Logistics.com prior to their acquisition by Manhattan Associates. Additionally, Mr. Wagner has held numerous sales, marketing and operational executive positions over a 20-year high technology career at Unitech Systems, Quantra Corporation and IBM.

 

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NOVELL, INC.

RISK FACTORS

Item 1A. Risk Factors

The announcement and pendency of the merger and the patent sale could adversely impact us.

The announcement and pendency of the merger and the patent sale could cause disruptions in our business. For example, customers may delay, reduce or even cease making purchases from us until they determine whether the merger or patent sale will affect our products and services, including, but not limited to, pricing, performance, support, or continued product availability. Our partners may give greater priority to products of our competitors until they determine whether the merger or patent sale will affect our products and services or our relationship with them. Uncertainty concerning potential changes to us and our business could also harm our ability to enter into agreements with new customers and partners. In addition, key personnel may depart for a variety of reasons, including perceived uncertainty as to the effect of the merger on their employment. The pendency of the merger and the patent sale could also divert the time and attention of our management from our ongoing business operations. These disruptions may increase over time until the closing of the merger, which may occur after the first calendar quarter of 2011, if at all.

Further, the Merger Agreement generally requires us to operate our business in the ordinary course pending consummation of the merger, and it restricts us, subject to certain limited exceptions, including, without limitation, Attachmate’s prior written consent, from taking certain specified actions until the merger is complete or the agreement is terminated, including, without limitation, not exceeding a certain amount in capital expenditures, not making certain acquisitions, not entering into certain types of contracts and other matters. These restrictions may prevent us from pursuing attractive business opportunities that may arise prior to the completion of the merger with Attachmate that could be favorable to us and our stockholders.

All of the matters described above, alone or in combination, could materially and adversely affect our business, operating results, financial position and stock price.

Our merger with Attachmate may be delayed or not occur at all for a variety of reasons, including the termination of the Merger Agreement prior to the completion of the merger, and the failure to complete the merger could adversely affect us.

There can be no assurance that our merger with Attachmate will occur. Consummation of the merger is subject to certain conditions to closing, including, among others, (i) the approval by our stockholders; (ii) the expiration or termination of the waiting period (and any extensions thereof) applicable to the consummation of the merger under the HSR Act and the approval by the German antitrust authority, the FCO; (iii) the absence of any law, order or other action enjoining or otherwise prohibiting consummation of the merger; (iv) the absence of a material adverse effect on us; (v) the closing of the transactions contemplated by the Patent Purchase Agreement; (vi) the accuracy of the parties’ respective representations and warranties; (vii) the parties’ respective compliance with agreements and covenants contained in the Merger Agreement; and (viii) the availability to us and our subsidiaries of cash and cash equivalents equal to approximately $1.03 billion. There can be no assurance that these and other conditions to closing will be satisfied. For example, the requisite consents to the merger and receipt of regulatory approvals from various governmental entities may not be obtained. In addition, if the closing of the patent sale is delayed, the closing of the merger may also be delayed, and if the patent sale is not completed, the merger may also not be completed.

Further, if Attachmate is unable to consummate its proposed financing, it may be unable to pay the merger consideration.

The Merger Agreement also contains certain termination rights for both us and Attachmate, and in certain specified circumstances upon termination of the Merger Agreement, including a termination by us to enter into an agreement for a superior proposal, we will be required to pay Attachmate a termination fee equal to $60 million. This payment could affect the structure, pricing and terms proposed by a third party seeking to acquire or merge with us and could deter such third party from making a competing acquisition proposal.

The Merger Agreement provides for limited remedies for us in the event of a breach by Attachmate or its affiliates, including the right to a reverse termination fee of $120 million payable under certain specified circumstances. There can be no assurance that a remedy will be available to us in the event of a breach or that any damages incurred by us in connection with the merger will not exceed the amount of the reverse termination fee.

A failed transaction may result in negative publicity and a negative impression of us in the investment community. Further, any disruptions to our business resulting from the announcement and pendency of the merger, including any adverse changes in our relationships with our customers, partners and employees, could continue or accelerate in the event of a failed transaction. In addition, if the merger is not completed, the share price of our common stock may change to the extent that the current market price of our common stock reflects an assumption that the merger will be completed. There can be no assurance that our business, these relationships or our financial position will not be adversely affected, as compared to the condition prior to the announcement of the merger, if the merger is not consummated.

 

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NOVELL, INC.

RISK FACTORS (Continued)

 

Litigation relating to the merger and/or the patent sale could require us to incur significant costs and suffer management distraction, as well as delay and/or enjoin the transactions.

As discussed in Part II, Item 8, Note S, “Legal Proceedings,” of this report, individuals and/or entities claiming to be our stockholders filed putative class action lawsuits challenging our pending merger with Attachmate, and two of those actions also allege, among other things, that our directors failed to fulfill their fiduciary duties with regard to the patent sale to CPTN. The plaintiffs in these actions seek orders that, among other things, certify the cases as class actions, enjoin our merger with Attachmate, award plaintiffs and the putative class damages in the event that our merger with Attachmate is consummated, and award plaintiffs costs and expenses, including attorneys’ fees. We also could be subject to additional litigation related to the merger and/or the patent sale whether or not those transactions are consummated. While we believe that there are substantial legal and factual defenses to the claims and intend to pursue them vigorously, these actions create additional uncertainty relating to the merger and patent sale and defending the actions is costly and distracting to management. While there can be no assurance as to the ultimate disposition of the litigation, we do not believe that its resolution will have a material adverse effect on our financial position, results of operations or cash flows.

We may not be able to attract and retain new customers through indirect sales, which may result in decreased or fluctuating revenue. In addition, our reliance on an indirect sales channel for the distribution of our products could adversely affect the sales of our products.

Our ability to attract and retain new customers and achieve significant revenue growth in the future will depend in large part on our ability to continue to establish and maintain strategic distribution and other collaborative relationships with industry-leading hardware manufacturers, distributors, software vendors and enterprise solutions providers such as Microsoft, SAP, ACS, Dell, HP, IBM, Cap Gemini S.A., Atos Origin S.A., Accenture, Verizon Business, VMware and other third parties that are willing to recommend, design and implement solutions that include our products. These relationships create the potential to distribute our products to a much larger customer base than we would otherwise be able to reach through our direct sales and marketing efforts. We have invested significant resources to maintain and further develop these distribution relationships and may continue to do so.

The distribution of our products through indirect channel partners presents a number of special risks, including but not limited to:

 

   

our ability to retain or attract a sufficient number of existing or future distribution partners;

   

our lack of control over the delivery of our products to end-users;

   

the ability of resellers and distributors to terminate their relationships with us on short notice;

   

the failure of our indirect channel partners to recommend, or continue to recommend, or support our products effectively or to release their products in which our products are embedded in a timely manner;

   

our inability to effectively manage conflicts between our indirect channel partners and the end-users of our products;

   

the impact of economic conditions or industry demand on our indirect channel partners; and

   

the failure of indirect channel partners to devote sufficient resources to marketing and supporting our products.

Our inability to establish or maintain successful relationships with distribution partners could have a material adverse effect on our business, financial condition, and operating results. In addition, revenues derived from indirect channel partners may fluctuate significantly, which could have a material adverse effect on our business, financial condition, and operating results.

If SMOP does not grow at the rate we anticipate, or if the growth rate declines, our financial results, including cash flow, will be negatively impacted.

Our near-term growth strategy focuses on SMOP, which serves the IWM market. We have focused on this business because we believe that it represents the best current opportunity for us to profitably grow our revenue. Our ability to achieve success with this strategy is dependent on a number of factors including, but not limited to, the following:

 

   

the growth of this market;

   

our development of key products and upgrades;

   

delivery of product milestones in a timely manner;

   

the acceptance of our products particularly by enterprise companies, large industry partners and major accounts;

   

the decisions by customers to upgrade from older versions of our products to newer versions; and

 

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the attractiveness of our products to current and future distribution partners.

If this business unit segment does not grow at the rates we anticipate or declines, our business, financial condition, and operating results could be adversely affected.

Our inability to renew SLES subscriptions with those customers who have received SLES certificates from Microsoft, or renewals of such subscriptions at deeply discounted rates, or failure to maintain our channel partnership with Microsoft at historical levels, could adversely affect our future sales and profitability.

The Microsoft Agreements have been a significant contributor to our product revenue and the increase in our gross and operating margins over the past few years. Most of the Microsoft SLES certificate sales have been three-year arrangements that began to expire in the first quarter of fiscal 2010. Accordingly, the ongoing financial benefit of the Microsoft Agreements will depend on our ability to renew SLES subscriptions with those customers who received SLES certificates from Microsoft and the pricing we are able to obtain in connection with such renewals. We have experienced declines in SLES certificate renewal rates, and pricing of renewed certificates has generally been at reduced levels. If we are unable to renew the remaining SLES subscriptions as they expire, or if renewed subscriptions continue to be at a lower price than Microsoft paid us for the SLES certificates, our financial results could be adversely affected. There can be no assurance that Microsoft will continue to operate as a distribution partner for us after our agreement with Microsoft expires or terminates, or that the channel partnership will be maintained at historical levels.

Our OES and NetWare-related revenue stream may decline at accelerated rates which would adversely affect our business, operating results and cash flow.

Sales of our OES and NetWare-related products have been declining for many years and declines at accelerated rates could offset or out-pace any growth in sales of our other products. We terminated general support of our NetWare products beginning in March 2010. While customers are eligible to receive extended support for NetWare, some NetWare customers may migrate to a competing platform which would negatively impact our revenue. Our strategy is to stabilize these sales declines to the extent practicable with new product releases and other efforts; however, combined OES and NetWare-related product revenue declined by $12.1 million, or 7%, in fiscal 2010, compared to the prior year. The announcement and pendency of the merger and the patent sale could cause further declines. If our strategy is unsuccessful, our combined OES and NetWare-related revenue stream may decline more rapidly than any growth of other revenue streams from our other products, which could have a material adverse effect on our business, financial condition, and operating results.

If we are unable to develop new and enhanced products and services that achieve widespread market acceptance, or if we are unable to continually improve the performance, features, and reliability of our existing products and services or adapt our business model to keep pace with industry trends, our business and operating results would be adversely affected.

Our success depends on our ability to respond to the rapidly changing needs of our customers by developing or introducing new products, product upgrades, and services on a timely basis. We have in the past incurred, and will continue to incur, significant research and development expenses as we strive to remain competitive. New product development and introduction involves a significant commitment of time and resources and is subject to a number of risks and challenges including:

 

   

managing the length of the development cycle for new products and product enhancements, which has frequently been longer than we originally estimated;

   

adapting to emerging and evolving industry standards and to technological developments by our competitors and customers;

   

entering into new or unproven markets with which we have limited experience;

   

shifting our skill set to new strategic areas;

   

managing new product and service strategies;

   

incorporating acquired products and technologies; and

   

developing or expanding efficient sales channels.

If we are not successful in managing these risks and challenges, or if our new products, product upgrades, and services are not technologically competitive or do not achieve market acceptance, our business and operating results would be adversely affected.

 

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The success of our IWM strategy is contingent upon the realization and development of the IWM market.

In December 2009, we announced our strategy to compete in the emerging market for IWM solutions. Although we have encountered interest in IWM-oriented products throughout 2010, the IWM market is still developing. It is difficult to accurately predict the scale of the IWM market, the timing of development of the IWM market, and our ability to penetrate the IWM market. Our strategy to win in the IWM market is to offer differentiated products and solutions under the marketing banner of “WorkloadIQ” to help customers manage and optimize their computing resources in a policy-driven, secure, and compliant manner across physical, virtual, and cloud environments. While we anticipate that our solutions will be differentiated and thus more attractive to customers within the IWM market, we are investing at an early stage in the market’s development. Success in the IWM market, if achieved, will require time and resources. It is uncertain whether or when the IWM market will realize its potential, as well as the extent and timing of our impact within the IWM market. Other enterprise software vendors have also entered the IWM market with solutions that directly compete with our offerings and with marketing messages that are similar to our message. Our ability to capture market share will depend on the relative timing of product offerings; capabilities, design and functionality of our products relative to products of our competitors; and strategic fit of our products within the IWM market.

Our software may have vulnerabilities, defects and errors, which may lead to a loss of revenue or product liability claims.

Software products are internally complex and occasionally contain defects or errors, especially when first introduced or when new versions or enhancements are released. Despite extensive testing, we may not detect defects or errors in our new products, platforms or product enhancements until after we have commenced commercial shipments. If defects or errors, including security flaws or incompatibilities, are discovered in our existing or acquired products, platforms or product enhancements, then potential customers may delay or forego purchases; our reputation in the marketplace may be damaged; we may incur additional service and warranty costs; and we may have to divert additional development resources to correct the defects or errors. If any or all of the foregoing occur, we may lose revenues or incur higher operating expenses and lose market share, any of which could severely harm our financial condition and operating results.

We have experienced, and may continue to experience, delays in the introduction of new products due to various factors, which result in lost revenue.

In the past, we have experienced delays in the introduction of new products due to a number of factors including: the complexity of software products, the need for extensive testing of software to ensure compatibility of new releases with a wide variety of application software and hardware devices, the need to ensure quality of products prior to extensive distribution, and with regard to our open source products, our continuing reliance on the work of third parties not employed by us. Our open source offerings depend to a large extent on the efforts of developers not employed by us for the creation and modification of open source technologies. For example, Linus Torvalds, the original developer of the Linux kernel, and a small group of engineers, many of whom are not employed by us, are primarily responsible for the development and evolution of the Linux kernel that is a key component of our OES and SUSE Linux Enterprise offerings. The timing and nature of new releases of the Linux kernel are controlled by these third parties. Delays in developing, completing, or shipping new or enhanced products could continue to result in delayed or reduced revenue for those products and could adversely impact customer acceptance of those offerings.

Our inability to rely on software licensed from third parties, including open source contributions of third-party programmers and corporations, would adversely affect our business and operating results.

We use various types of software licensed from unaffiliated third parties. Our open source offerings, for example, are primarily comprised of open source components developed by independent third parties over whom we exercise no control. The collective licenses to third-party technologies are critical to our business. If we are unable to maintain licenses to third-party materials, our distribution of relevant offerings may be delayed until we are able to develop, license, or acquire replacement technologies. Such a delay could have a material adverse impact on our business.

If key developers or a significant percentage of developers or corporations decide to cease development of the Linux kernel or other open source software, or if we are unable to maintain licenses to proprietary software or such software is no longer available to us on commercially reasonable terms, we would have to either rely on another party (or parties) to develop these technologies, develop them ourselves, or adapt our product strategy accordingly. This could increase our development expenses, delay our product releases and upgrades, and adversely impact customer acceptance of our relevant offerings.

 

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In addition, we may be unable to predict the future course of open source technology development, which could impact the market appeal of our products as well as our reputation.

Because of the characteristics of open source software, there are few technology barriers to entry in the open source market by new competitors and it may be relatively easy for new competitors with greater resources than we have to enter our markets and compete with us.

One of the characteristics of open source software is that any open source licensee can modify the existing software or develop new software that competes with existing open source software. Such competition can develop without the degree of overhead and lead time required by traditional proprietary software companies. It is possible for new competitors with greater resources than ours to develop their own open source solutions, potentially reducing the demand for, and putting price pressure on, our solutions. In addition, some competitors make their open source software available for free download and use, or may position their open source software as a loss leader. We cannot guarantee that we will be able to compete successfully against current and future competitors or that competitive pressure and/or the availability of open source software will not result in price reductions, reduced operating margins and loss of market share, any one of which could seriously harm our business.

If our customers do not renew their maintenance and subscription agreements with us, our operating results may be adversely impacted.

Our customers may elect not to renew their maintenance and subscriptions for our service after expiration of their agreements. In addition, our customers may opt for a lower priced service option. Our customers’ renewal rates may decline or fluctuate as a result of a number of factors, including their level of satisfaction with our services and their ability to continue their operations and spending levels. Renewal rates may also decline as a result of elections by customers to use our products on an unsupported basis. If we experience a decline in the renewal rates for our customers or they opt for a lower priced service option or fewer subscriptions, our operating results may be adversely impacted.

Uncertain economic conditions and reductions in IT spending could adversely affect our business, financial condition, and operating results.

In the past, unfavorable or uncertain economic conditions have resulted in reduced global IT spending rates that have adversely affected the markets in which we do business. While the economy has shown signs of improvement, there has been renewed concern about the strength and sustainability of a recovery, particularly given recent events in Europe, which has been impacted by the risk of sovereign debt defaults in certain European Union countries. Accordingly, current and/or future weakness in the United States economy and/or in the economies of the other geographic regions in which we operate could have a negative impact on our revenues and operating results. While we are unable to accurately predict changes in general economic conditions and how the current global financial and market conditions will affect global IT spending rates, we believe that there is always the potential for a slowdown in global IT spending. This could result in reductions in sales of our products, longer sales cycles, slower adoption of new technologies, and increased price competition. Any of these events would likely harm our business, financial condition, and operating results.

We may not be able to successfully compete in a challenging market for infrastructure software services.

The industries in which we compete are highly competitive, and customer requirements evolve rapidly. We expect competition to continue to increase both from existing competitors and from new market entrants. Our SMOP competitors include, but are not limited to, Microsoft, IBM, Oracle, HP, Symantec, BMC, VMware, CA, Citrix Systems, Inc., and Red Hat. Our primary competitors for CS include, but are not limited to, Microsoft, IBM, and Google. Many of our competitors have greater financial, technical and marketing resources than we have. We believe that competitive factors common to both of our segments include:

 

   

the pricing of products and services as well as pricing strategies;

   

the availability of open source or free-ware alternatives;

   

the timing and market acceptance of new products;

   

brand and product awareness;

   

the performance, reliability and security of products;

   

the ability to preserve an existing customer base;

   

the ability to compete in a consolidating industry;

   

the impact of current macroeconomic conditions;

   

the ability to establish and maintain key strategic relationships with distributors, resellers, and other partners; and

   

the ability to attract and retain highly qualified development, services, and managerial personnel.

 

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Our inability to maintain a strong brand could impact our future success.

We believe that the future success of our business depends on our ability to maintain and enhance our brand, and expand brand awareness into emerging strategic markets. If we fail to promote and maintain our brand, we may not be able to expand our customer base or attract talented employees, and our business, financial condition, and operating results could be materially and adversely affected.

Our inability to meet customer demand for technical support services could adversely affect our customer relationships.

We offer technical support services with many of our products. There may be situations where we are unable to respond adequately to accommodate short-term increases in customer demand for support services. We also may be unable to modify the format of our support services to compete with changes in support services provided by our competitors. Any failure to maintain adequate customer support could cause customer dissatisfaction, result in reduced sales of products and reductions in the renewals of software maintenance and support agreements, and, accordingly, have a material adverse affect on our business, financial condition, and operating results.

Our professional services clients may cancel or reduce the scope of their engagements with us on short notice.

If our clients cancel or reduce the scope of a professional services engagement, we may be unable to reassign our professionals to new engagements without delay. Because these expenses are relatively fixed, and because we establish the levels of these expenses well in advance of any particular quarter, cancellations or reductions in the scope of client engagements could result in the under-utilization of our professional services employees, leading to reduced profitability.

We are vulnerable to system failures, which could harm our reputation and business.

Although we have outsourced much of our internal IT services, we are still vulnerable to system failures. We rely on our technology infrastructure and outsourcing partner, among other functions, to sell our products and services, support our partners, fulfill orders and bill, collect and make payments. Our systems are vulnerable to damage or interruption from natural disasters, power loss, telecommunication failures, terrorist attacks, computer intrusions and viruses, computer denial-of-service attacks and other events. A significant number of our systems are not redundant, and our disaster recovery planning is not sufficient to address every eventuality. Our systems are also subject to break-ins, sabotage and intentional acts of vandalism by internal employees, contractors and third-parties. Despite any precautions we may take, such problems could result in, among other consequences, interruptions in our services, which could harm our reputation, business and financial condition. We do not carry business interruption insurance sufficient to protect us from all losses that may result from interruptions in our services as a result of system failures or to cover all contingencies.

The success of our acquisitions is dependent on our ability to integrate personnel, operations, and technology, and if we are not successful, our financial and operating results may be adversely affected.

Achieving the benefits of acquisitions depends on the successful integration of personnel, operations and technology. The integration of acquisitions is subject to risks and requires significant expenditure of time and resources. During fiscal 2009, we made two acquisitions. The most recent acquisition was completed in February 2009. The challenges involved in integrating acquisitions include the following:

 

   

obtaining synergies from the companies’ organizations and service and product offerings effectively and quickly;

   

bringing together marketing efforts so that the market receives useful information about the combined companies and their products;

   

coordinating sales efforts so that customers can do business easily with the combined companies;

   

integrating product offerings, technology, back office, human resources, and accounting and financial systems;

   

assimilating employees with diverse corporate cultural backgrounds into a common business culture revolving around our corporate strategy; and

   

retaining key officers and employees who possess the necessary skills and experience to quickly and effectively transition and integrate the businesses.

 

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Failure to effectively and timely complete the integration of acquisitions could materially harm the business and operating results of the combined companies. Furthermore, we may assume significant liabilities in connection with acquisitions and/or incur substantial accounting charges for restructuring and related expenses, the write-off of purchased in-process research and development, impairment of goodwill and intangible assets, and stock-based compensation expense. Using our cash for acquisitions may prevent us from pursuing other business opportunities. For example, during fiscal 2009 it was determined that $270.0 million of our goodwill, and $5.7 million of PlateSpin’s and $3.4 million of Managed Objects’ developed technology and customer relationship intangible assets were impaired.

The consolidation of our industry may adversely affect our acquisition program.

We believe that the software industry will continue to undergo considerable consolidation and changes during the next several years. This consolidation could increase the competition we face to acquire businesses and increase the prices we must pay for the businesses that we acquire. In response to this consolidation, we consider from time to time additional strategies to enhance stockholder value. In considering various strategies, we evaluate the consequences, including, among other things, the implications to our liquidity and capital structure, tax effects and accounting consequences, any of which could have a material adverse impact on our financial condition.

The risks associated with conducting a global business could adversely affect our results.

We are a global corporation with subsidiaries, offices and employees around the world and, as such, we face certain risks in doing business abroad that we do not face domestically. Risks inherent in transacting business internationally could negatively impact our operating results, including:

 

   

costs and difficulties in staffing and managing international operations;

   

unexpected changes in regulatory requirements;

   

tariffs and other trade barriers;

   

difficulties in enforcing contractual and intellectual property rights;

   

longer payment cycles;

   

local political and economic conditions;

   

potentially adverse tax consequences, including restrictions on repatriating earnings and the threat of “double taxation”; and

   

fluctuations in foreign currency exchange rates, which can affect demand, increase our costs and affect our net income.

Increasing our foreign research and development operations exposes us to risks that are beyond our control and could affect our ability to operate successfully.

In order to enhance the cost-effectiveness of our operations, we have shifted portions of our research and development operations to jurisdictions outside of the United States. The transition of even a portion of our research and development operations to a foreign country involves a number of logistical and technical challenges that could result in product development delays and operational interruptions, which could reduce our revenues and adversely affect our business. We may encounter complications associated with the set-up, migration and operation of business systems and equipment in expanded or new facilities. This could result in delays in our research and development efforts and otherwise disrupt our operations. If such delays or disruptions occur, they could damage our reputation and otherwise adversely affect our business, financial condition, and operating results.

We cannot be certain that any shifts in our operations to offshore jurisdictions will ultimately produce sustained cost savings. We cannot predict the extent of government support, availability of qualified workers, future labor rates, or monetary and economic conditions in any offshore location where we may operate.

The relocation of labor resources may have a negative impact on our existing employees, which could negatively impact our operations. In addition, we will likely be faced with competition in these offshore markets for qualified personnel, including skilled design and technical personnel, and we expect this competition to increase as other companies expand their operations offshore. If the supply of qualified personnel becomes limited due to increased competition or otherwise, it could increase our costs and employee turnover rates.

 

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We may not be able to attract and retain qualified personnel because of the intense competition for qualified personnel in the software industry. Furthermore, the loss of certain key individuals could adversely affect our performance and could have a material adverse affect on our business, financial condition, and operating results.

Our ability to maintain and enhance our competitive technological position depends, in large part, on our ability to attract and retain highly qualified development, services, and managerial personnel. Furthermore, our future success depends on the services and effectiveness of a number of key officers and employees, including our CEO. Competition for personnel of the highest caliber is intense in the software industry. The loss of the technical knowledge and industry expertise of certain key individuals could seriously impede our success. Moreover, the loss of these individuals, particularly to a competitor, some of which may be in a position to offer greater compensation, and any resulting loss of customers or market confidence could reduce our market share, diminish our brand and adversely affect our business. Key personnel may also depart for a variety of reasons relating to our merger with Attachmate, including perceived uncertainty as to the effect of the merger on their employment, and this uncertainty may impact our ability to attract qualified replacement candidates. If we do not succeed in retaining and motivating our key employees, and attracting new key personnel, our business, its financial performance and our stock price may decline.

If third parties claim that we infringed their intellectual property, our ability to use some technologies and products could be limited and we may incur significant costs to resolve these claims.

Litigation regarding intellectual property rights is common in the software industry. We have from time to time received letters or been the subject of claims suggesting that we are infringing the intellectual property rights of others. In addition, we have faced and expect to continue to face from time to time disputes over rights and obligations concerning intellectual property, including with respect to third party proprietary and open source components. The cost and time of defending ourselves can be significant. If an infringement claim is successful, we and our customers may be required to obtain one or more licenses from third parties, and we may be obligated to pay or reimburse our customers for monetary damages. In such instances, we or our customers may not be able to obtain necessary licenses from third parties at a reasonable cost or at all, and may face delays in product shipment while developing or arranging for alternative technologies, which could adversely affect our operating results.

In the event claims for indemnification are brought for intellectual property infringement, we could incur significant expenses, thereby adversely affecting our operating results.

We indemnify customers against certain claims that our products, including open source components thereof, infringe the intellectual property rights of others. Although indemnification programs for proprietary software are common in our industry, indemnification programs that cover open source software are less so. In the event that we are required to indemnify our customers against claims for intellectual property infringement, we could incur significant expense reimbursing customers for their legal costs and, in the event those claims are successful, for damages.

We may not be able to protect our confidential information, and this could adversely affect our business.

We generally enter into contractual relationships with our employees and third parties to protect our confidential information. The misappropriation of our trade secrets or other proprietary information could harm our business. In addition, we may not be able to timely detect unauthorized use of our intellectual property and take appropriate steps to enforce our rights. In the event we are unable to enforce these contractual obligations and our intellectual property rights, our business could be adversely affected.

Failure to maintain effective internal controls over financial reporting could have a material adverse effect on our business, operating results and stock price.

We must continue to document and test our internal controls over financial reporting in order to satisfy the requirements of Section 404 of the Sarbanes-Oxley Act of 2002 (“Section 404”), which requires an annual management assessment of the effectiveness of our internal controls over financial reporting and a report by our independent registered public accounting firm addressing this assessment. During the course of our documentation and testing we may identify deficiencies that we may not be able to remediate in time to meet the deadlines imposed by Section 404 for continuing compliance with the requirements of Section 404. If we fail to maintain the adequacy of our internal controls, as such standards are modified, supplemented or amended from time to time, we and/or our independent registered public accounting firm may not be able to conclude at each fiscal year-end that we have effective internal controls over financial reporting in accordance with Section 404. In addition, we may incur increased costs in order to address the requirements of Section 404. The extent and timing of incurrence of any such costs is difficult to predict. Moreover, effective internal controls, particularly those related to revenue recognition, are necessary for us to produce reliable financial reports and are important to helping prevent financial fraud. If, in any year, we and/or our independent registered public accounting firm cannot attest that we have effective internal controls over financial reporting in accordance with Section 404, our business and operating results could be harmed and result in a negative market reaction.

 

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RISK FACTORS (Continued)

 

Our financial and operating results may fluctuate from quarter to quarter, which may cause the price of our common stock to decline.

Our financial and operating results may fluctuate from quarter to quarter due to a variety of factors including, but not limited to:

 

   

the timing of orders from customers and shipments to customers;

   

the decisions of our current and future customers not to renew their subscription agreements with us;

   

the impact of foreign currency exchange rates on the price of our products in international locations;

   

the inability to respond to the decline in revenue through the distribution channel; and

   

the inability to deliver products that are satisfactory to our customers and distribution partners.

In addition, we often experience a higher volume of revenue at the end of each quarter. Because of this, fixed costs that are not appropriate for prevailing revenue levels may not be detected until late in any given quarter and operating results could be adversely affected. Due to these factors or other unanticipated events, our financial and operating results in any one quarter may not be a reliable indicator of our future performance.

If our goodwill or intangible assets become further impaired, we may be required to record a significant charge to earnings.

Under generally accepted accounting principles, we review our intangible assets for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. Goodwill is tested for impairment at least annually. In determining whether an asset is impaired, we must make assumptions regarding recoverability of costs, estimated future cash flows from the asset, intended use of the asset and other related factors. Fair values are estimated using the combination of a discounted cash flow methodology and a market analysis and weighting the results. Factors that may be considered a change in circumstances, indicating that the carrying value of our goodwill or amortizable intangible assets may not be recoverable, include a decline in stock price and market capitalization, reduced future cash flow estimates, and slower growth rates in our industry. We may be required to record a significant charge in our financial statements during the period in which any impairment of our goodwill or amortizable intangible assets is determined, negatively impacting our operating results. For example, during fiscal 2009 we were required to record an impairment charge of $270.0 million on our goodwill. For more information on this goodwill impairment charge, see Part II, Item 8, Note K, “Goodwill and Intangible Assets” in the consolidated financial statements.

Changes to the estimates used in the analysis, including estimated future cash flows, could cause either of our business unit segments or our indefinite-lived intangibles to be valued differently in future periods. It is at least reasonably possible that future analyses could result in additional material non-cash goodwill impairment charges.

Because we recognize revenue from maintenance and subscriptions over the term of the agreements, downturns or upturns in sales may not be immediately reflected in our operating results.

We recognize maintenance and subscription revenue from customers ratably over the term of their agreements, which are generally one to three years. As a result, much of the revenue we report in each quarter is deferred revenue from maintenance and subscription agreements entered into during previous quarters. Consequently, a decline in maintenance and/or subscriptions sales in any one quarter will not necessarily be fully reflected in the revenue in that quarter and will negatively affect our revenue in future quarters. In addition, we may be unable to adjust our cost structure to reflect this reduced revenue. Accordingly, the effect of significant downturns in sales and market acceptance of our products may not be fully reflected in our operating results until future periods. Our maintenance and subscription model also makes it difficult for us to rapidly increase our revenue through additional sales in any period, as revenue from new customers must be recognized over the term of the applicable agreement.

We may experience risks in our investments due to changes in the market, which could adversely affect the value or liquidity of our investments.

At October 31, 2010, we had $1.1 billion in cash, cash equivalents and short-term investments. We maintain a portfolio of cash equivalents and short-term investments in a variety of securities that may include commercial paper, certificates of deposit, money market funds and government debt securities. These available-for-sale investments are subject to interest rate risk, credit risk, general market risk, and currency risk and may decline in value.

 

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Our investments are subject to general credit, liquidity, market, currency and interest rate risks. As a result, we may experience reductions in value or loss of liquidity of our investments. In addition, should any investment cease paying or reduce the amount of interest paid to us, our interest income would suffer. These market risks associated with our investment portfolio could have a material adverse effect on our business, financial condition, and operating results.

We have real estate lease commitments for unoccupied space and restoration obligations, and if we are unable to sublet this space on acceptable terms our operating results and financial condition could be adversely affected.

We are party to real estate leases worldwide for a total of approximately 692,000 square feet. At October 31, 2010, we actively utilized approximately 93% of this space, or 647,000 square feet. We own 995,000 square feet of office space. At October 31, 2010, approximately 26%, or 260,000 square feet of our owned space is currently unoccupied. Approximately 19%, or 188,000 square feet of the owned space is sublet to third parties. If we are unable to sublet unoccupied space on acceptable terms, our operating results and financial condition could be adversely affected.

Our stock price may be volatile in the future, and the stock price may decline.

The market price of our common stock has experienced significant fluctuations in the past and may continue to fluctuate in the future. The market price of our common stock may be affected by a number of factors, including:

 

   

announcements of quarterly operating results and revenue and earnings forecasts by us that fail to meet or be consistent with our earlier projections or the expectations of our investors or securities analysts;

   

announcements by either our competitors or our customers that fail to meet or be consistent with their earlier projections or the expectations of our investors or securities analysts;

   

rumors, announcements, or press articles regarding our, or our competitors’ operations, management, organization, financial condition, or financial statements;

   

changes in revenue and earnings estimates by us, our investors, or securities analysts;

   

accounting charges, including charges relating to the impairment of goodwill, intangible assets or other assets;

   

announcements of planned acquisitions or dispositions by us or by our competitors;

   

announcements of new or planned products by us, our competitors, or our customers;

   

gain or loss of a significant customer or partner;

   

the inception of, or material developments in relation to, litigation initiated by us or brought against us;

   

inquiries by the SEC, NASDAQ, law enforcement, or other regulatory bodies;

   

acts of terrorism, the threat of war, and other crises or emergency situations;

   

economic slowdowns or the perception of an oncoming economic slowdown in any of the major markets in which we operate; and

   

a delay in consummating, or a failure to consummate, the merger with Attachmate.

The stock market in general, and the market prices of stocks of technology companies in particular, have experienced extreme price volatility that has adversely affected, and may continue to adversely affect, the market price of our common stock.

Item 1B. Unresolved Staff Comments

None.

 

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PROPERTIES

Item 2. Properties

In the U.S., we own approximately 898,000 (and occupy approximately 552,000) square feet of office space on 51 acres in Provo, Utah. We use that space for administrative offices and a product development center. We are consolidating our occupancy on the Provo campus and have leased approximately 167,000 square feet and are currently marketing another 178,000 square feet of space for lease. We also have other facilities for warehouse space in and around Provo for operational support. Our corporate headquarters and principal executive offices in Waltham, Massachusetts are leased. We lease offices that host sales, support and/or product development activity in Arkansas, Georgia, Illinois, Michigan, New York, and Virginia. Our two business unit segments share the use of almost all of our facilities.

Internationally, we own approximately 85,000 square feet of office space in the United Kingdom, of which we sublease a portion and in South Africa, we own approximately 18,000 square feet of office space, of which we sublease a portion. We use these office buildings for sales, support and administrative offices.

We lease and occupy a shared service center in Dublin, Ireland and product development centers in Toronto, Canada; Nuremberg, Germany; Prague, Czech Republic; Bangalore, India; and Beijing, China. In addition, each of our subsidiaries in Australia, Belgium, Brazil, China, Denmark, France, Germany, India, Italy, Japan, Netherlands, New Zealand, Portugal, Singapore, South Africa, Spain, Sweden, Switzerland, Taiwan, and United Kingdom leases a small facility used as sales and support offices.

The terms of the above leases vary from month-to-month to up to 20 years. We believe that our existing facilities are adequate to meet our current requirements and we anticipate that suitable additional or substitute space will be available, as necessary, upon reasonable terms.

Item 3. Legal Proceedings

Incorporated by reference to Part II, Item 8, Note S, “Legal Proceedings,” of this report.

Item 4. (Removed and Reserved)

 

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NOVELL, INC.

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities

Our common stock trades on the NASDAQ Global Select Market under the symbol “NOVL.” The following chart sets forth the high and low sales prices of our common stock during each quarter of the last two fiscal years:

 

     First
Quarter
     Second
Quarter
     Third
Quarter
     Fourth
Quarter
 

Fiscal 2010

           

High

   $ 4.84       $ 6.15       $ 6.36       $ 6.53   

Low

   $ 3.84       $ 4.43       $ 5.06       $ 5.50   

Fiscal 2009

           

High

   $ 4.86       $ 4.54       $ 4.98       $ 4.85   

Low

   $ 3.43       $ 2.97       $ 3.70       $ 4.06   

No dividends have been declared on our common stock. We have no current plans to pay dividends on our common stock, and currently intend to retain our earnings for use in our business. In addition, the Merger Agreement generally restricts, subject to certain limited exceptions, including, without limitation, Attachmate’s prior written consent, our ability to pay dividends on our common stock during the interim period between the execution of the Merger Agreement and the consummation of the merger (or the date on which the Merger Agreement is earlier terminated). We had 6,338 stockholders of record at November 30, 2010.

Issuances of Unregistered Common Stock

Not Applicable

Issuer Purchases of Equity Securities

The following table presents information regarding purchases of shares of our common stock pursuant to our share repurchase program during the three months ended October 31, 2010.

 

                         

Approximate

dollar value of

 
                   Total number of      shares that  
                   shares purchased      may yet be  
(In thousands, except per share amounts)    Total number      Average price      as part of publicly      purchased  
     of shares      paid per      announced plans      under the plans  

Period

   purchased      share      or programs      or programs  

August 1, 2010 through August 31, 2010

     13       $ 5.55               $ 33,180   

September 1, 2010 through September 30, 2010

     24         5.82                 33,180   

October 1, 2010 through October 31, 2010

     8         5.94                 33,180   
                       

Total

     45       $ 5.76               $ 33,180   
                       

The total number of shares purchased was for shares surrendered to us to satisfy tax withholding obligations in connection with our equity plans.

During fiscal 2008, our Board of Directors authorized the repurchase of up to $100 million of our outstanding common stock. There is no fixed termination date for the repurchase program. There were no repurchases under the program during fiscal 2010 or fiscal 2009. As of October 31, 2010, $33.2 million remains available to be used for repurchasing our common stock under the current Board authorization. The Merger Agreement generally restricts, subject to certain limited exceptions, including, without limitation, Attachmate’s prior written consent, our ability to repurchase our outstanding common stock during the interim period between the execution of the Merger Agreement and the consummation of the merger (or the date on which the Merger Agreement is earlier terminated).

 

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NOVELL, INC.

PERFORMANCE GRAPH

Performance Graph

The following graph compares the total return on a cumulative basis, assuming the reinvestment of dividends, of $100 invested on October 31, 2005 in our common stock, the Standard & Poor’s 500 Composite Stock Price Index, and the Dow Jones U.S. Software Index. The comparisons in the graph below are based upon historical data and are not indicative of, nor intended to forecast, future performance of our common stock.

COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*

Among Novell, Inc., the S&P 500 Index

and the Dow Jones US Software Index

LOGO

 

*

Copyright© 2010 Standard & Poor’s, a division of The McGraw-Hill Companies Inc. All rights reserved.

  

Copyright© 2010 Dow Jones & Company. All rights reserved.

 

     Base      Indexed/Cumulative Returns  
     Period      Fiscal Year Ended October 31,  

Company/Index Name

   2005      2006      2007      2008      2009      2010  

Novell, Inc.

   $ 100         78.74         99.21         61.15         53.67         77.82   

S&P 500 Index

   $ 100         116.34         133.28         85.17         93.52         108.97   

Dow Jones U.S. Software

   $ 100         114.47         141.24         91.69         116.55         136.23   

 

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NOVELL, INC.

SELECTED FINANCIAL DATA

Item 6. Selected Financial Data

The following selected historical consolidated financial data should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our audited consolidated financial statements and related notes to those statements included in this report. The selected historical consolidated financial data for the periods presented have been derived from our audited consolidated financial statements. The financial data below may not be indicative of our future performance due in part to uncertainties related to our merger with Attachmate and the patent sale to CPTN.

 

    Fiscal Year Ended October 31,  
    2010 (a)     2009 (b)     2008     2007     2006  
    (In thousands, except per share data)  

Statements of operations

         

Net revenue (c)

  $ 811,871      $ 862,185      $ 956,513      $ 932,499      $ 919,331   

Gross profit (c)

    638,266        675,354        721,274        674,180        638,319   

Income (loss) from operations (c)

    84,437        (206,492     4,776        (55,768     (42,194

Income (loss) from continuing operations before taxes

    102,087        (203,974     22,878        8,415        27,180   

Income tax (benefit) expense

    (275,279     10,666        35,217        34,691        22,642   

Income (loss) from continuing operations

    377,366        (214,640     (12,339     (26,276     4,538   

Income (loss) from discontinued operations, net of taxes

    610        1,904        3,594        (18,184     15,015   

Income (loss) before accounting change

    377,976        (212,736     (8,745     (44,460     19,553   

Cumulative effect of accounting change, net of tax (d)

                                (897

Net income (loss)

    377,976        (212,736     (8,745     (44,460     18,656   

Income (loss) from continuing operations, diluted

  $ 377,366      $ (214,640   $ (12,339   $ (26,276   $ 4,332   

Net income (loss) available to common stockholders, diluted

  $ 377,976      $ (212,736   $ (8,745   $ (44,460   $ 18,220   

Income (loss) from continuing operations per common share, diluted

  $ 1.07      $ (0.62   $ (0.04   $ (0.08   $ 0.01   

Net income (loss) per common share, diluted

  $ 1.07      $ (0.62   $ (0.02   $ (0.13   $ 0.05   

Balance sheet

         

Cash, cash equivalents and short-term investments

  $ 1,126,690      $ 983,465      $ 1,067,847      $ 1,857,637      $ 1,466,287   

Working capital

    713,645        546,417        486,059        1,332,218        1,075,580   

Total assets

    2,225,998          1,902,908        2,269,349        2,854,394        2,449,723   

Senior convertible debentures

                  125,668        600,000        600,000   

Series B Preferred Stock

                                9,350   

Total stockholders’ equity (e)

  $   1,335,548      $ 934,522      $   1,087,528      $   1,158,326      $   1,104,650   

 

(a)

In the fourth quarter of fiscal 2010, we released $277.2 million of our valuation allowance on our U.S. deferred tax assets (see Note L, “Income Taxes” in the consolidated financial statements contained in this report).

 

(b)

In the fourth quarter of fiscal 2009, we recognized goodwill and intangible asset impairment charges of $279.1 million (see Note K, “Goodwill and Intangible Assets” in the consolidated financial statements contained in this report).

 

(c)

Net revenue, gross profit and income (loss) from operations for all periods presented excludes the results of divested subsidiaries that were classified as discontinued operations (see Note D, “Divestitures,” in the consolidated financial statements contained in this report).

 

(d)

In May 2006, we adopted accounting rules for asset retirement obligations that required us to recognize the cumulative effect of initially applying these rules as a change in accounting principle.

 

(e)

We decreased beginning retained earnings at November 1, 2007 by $1.4 million as part of our implementation of new rules for accounting for uncertainty in income tax reserves.

 

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NOVELL, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

On March 20, 2010, we announced that our Board of Directors authorized a thorough review of various alternatives to enhance stockholder value that included but was not limited to, a return of capital to stockholders through a stock repurchase or cash dividend, strategic partnerships and alliances, joint ventures, a recapitalization and a sale of the company. We believe that the uncertainty associated with these company developments (“Company Developments”) negatively impacted our operating results during the remainder of fiscal 2010.

On November 21, 2010, we entered into a Merger Agreement with Attachmate and Merger Sub. The Merger Agreement provides that, upon the terms and subject to the conditions set forth in the Merger Agreement, Merger Sub will be merged with and into us, with us continuing as the surviving corporation and a wholly-owned subsidiary of Attachmate. Pursuant to the terms of the Merger Agreement, at the time the merger is effective, each issued and outstanding share of our common stock, other than treasury shares, shares held by Attachmate, Merger Sub or any other direct or indirect wholly-owned subsidiary of Attachmate or us and shares held by stockholders who perfect their appraisal rights, will be converted into the right to receive $6.10 in cash, without interest and less any applicable withholding taxes. Consummation of the merger is subject to certain conditions to closing, including, among others, (i) the approval by our stockholders; (ii) the expiration or termination of the waiting period (and any extensions thereof) applicable to the consummation of the merger under the HSR Act and the approval by the German antitrust authority, the FCO; (iii) the absence of any law, order or other action enjoining or otherwise prohibiting consummation of the merger; (iv) the absence of a material adverse effect on us; (v) the closing of the transactions contemplated by the Patent Purchase Agreement; (vi) the accuracy of the parties’ respective representations and warranties; (vii) the parties’ respective compliance with agreements and covenants contained in the Merger Agreement; and (viii) the availability to us and our subsidiaries of cash and cash equivalents equal to approximately $1.03 billion. We are working towards completing the merger as quickly as possible and currently expect to consummate the merger in the first calendar quarter of 2011.

Also on November 21, 2010, we entered into a Patent Purchase Agreement with CPTN. The Patent Purchase Agreement provides that, upon the terms and subject to the conditions set forth in the Patent Purchase Agreement, we will sell to CPTN all of our right, title and interest in 882 issued patents and patent applications for $450 million in cash. Consummation of the patent sale is subject to certain conditions to closing, including, among others, (i) the expiration or termination of the waiting period applicable to the consummation of the patent sale under the HSR Act and certain other antitrust laws; and (ii) the satisfaction or waiver of each of the conditions to the consummation of the merger (other than the closing of the patent sale), and the parties to the Merger Agreement shall be ready, willing and able to consummate the merger, immediately after the closing of the patent sale.

The pendency of these transactions may impact our operations and continuation of historical trends in future periods, including for those matters referred to in Part I, Item 1A, “Risk Factors.” Therefore, the discussion and analysis of our financial condition and results of operations below may not be indicative of future operating results or financial condition for these reasons as well as for other reasons, including the potential realization of the risks identified elsewhere in this Annual Report on Form 10-K, including in Part I, Item 1A “Risk Factors”, or other risks and uncertainties we may face. The remainder of this Management’s Discussion and Analysis of Financial Condition and Results of Operations does not take into account or give any effect to the pendency or other potential impact of our merger with Attachmate or the patent sale to CPTN.

In December 2009, we announced our business unit segment structural and management reorganization, designed to better align our business with our strategic objective of becoming an industry leader in the emerging Intelligent Workload Management market, while continuing to develop collaboration solutions. As part of this reorganization, we consolidated our reportable business unit segments from four to two. Our former Open Platform Solutions, Identity and Security Management and Systems and Resource Management business unit segments were consolidated to form the new Security, Management and Operating Platforms business unit segment (“SMOP”). Our former Workgroup business unit segment was renamed Collaboration Solutions (“CS”).

During fiscal 2010, total revenue decreased 6% compared to the prior year. Product and services revenues were lower by 4% and 16%, respectively, in fiscal 2010 compared to the prior year. The lower product revenue primarily resulted from weakness in our legacy products as well as, we believe, the uncertainty associated with Company Developments. The lower services revenue in fiscal 2010 compared to the prior year is due primarily to lower revenue from our consulting services customers, which is consistent with our lower software licenses revenue, and lower renewal rates on technical support contracts related to our legacy products. Foreign currency exchange rate fluctuations, as measured using the prior year period foreign currency exchange rates on non-U.S. dollar denominated revenue and expenses, favorably impacted revenue by $4.5 million, or 1%, in fiscal 2010, compared to the prior year.

 

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NOVELL, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

 

Overview (Continued)

 

During fiscal 2010, total revenue from SMOP decreased $10.8 million, or 2%, compared to the prior year and total revenue from CS decreased $39.5 million, or 11%, compared to the prior year.

Because much of the revenue we invoice is deferred and recognized over time, we consider invoicing, or bookings, to be a key indicator of current sales performance and future revenue performance. Higher SMOP product invoicing of 2% was offset by lower CS product invoicing of 11% such that total product invoicing was lower by 3% for fiscal 2010 compared to the prior year.

Total gross profit as a percentage of revenue was 79% for fiscal 2010, compared to 78% for fiscal 2009. The increase in total gross profit as a percentage of revenue reflected the benefits of our cost reduction initiatives, including prior restructuring actions, and the benefits of realigning our services business to be more product focused, resulting in a shift to higher-margin product revenue. However, total gross profit was lower in fiscal 2010 compared to fiscal 2009, due primarily to the 6% decrease in total net revenue.

Despite lower revenue, our operating margins continue to improve, reflecting the positive impacts of recent restructuring and other cost-cutting initiatives. For fiscal 2010, we reported an operating margin of 10%, compared to negative 24% for the prior year. In fiscal 2009, we recorded goodwill and intangible asset impairment charges of $270.0 million and $9.1 million, respectively, related to our Systems and Resource Management reporting unit. The goodwill and intangible asset impairment charges were 32% of fiscal 2009 revenue. Foreign currency exchange rate fluctuations, as measured using the prior year period foreign currency exchange rates on non-U.S. dollar denominated revenue and expenses, unfavorably impacted income from operations by $5.6 million, or 6%, in fiscal 2010 compared to the prior year.

In the first quarter of fiscal 2010, we recorded net restructuring expenses of $2.8 million related primarily to termination benefits for certain executive employees as part of our business unit segment structural and management reorganization discussed above. We did not record any restructuring charges in the second, third or fourth quarters of fiscal 2010.

Critical Accounting Policies

An accounting policy is deemed to be critical if it requires us to make an accounting estimate based on assumptions about matters that are uncertain at the time an accounting estimate is made, and if different estimates that reasonably could have been used or changes in the accounting estimate that are reasonably likely to occur periodically could materially change the financial statements. We consider accounting policies related to revenue recognition and related reserves, impairment of long-term assets, valuation of deferred tax assets, loss contingency accruals and restructurings, and share-based payments to be critical accounting policies due to the judgments and estimation processes involved in each.

Revenue Recognition and Related Reserves

Our revenue is derived primarily from the sale of software licenses, software maintenance, subscriptions of SUSE Linux Enterprise Server (“SLES”), technical support, training, and professional services. Our customers include: distributors, who sell our products to resellers and VARs; OEMs, who integrate our products with their products or solutions; VARs, who provide solutions across multiple vertical market segments which usually include services; and end-users, who may purchase our products and services directly from us or from other partners or resellers. Except for our SUSE Linux product, distributors do not order to stock and only order products when they have an end customer order. With respect to our SUSE Linux product, distributors place orders and the product is then sold to end customers principally through the retail channel. OEMs report the number of copies duplicated and sold via an activity or royalty report. Software maintenance, technical support, and subscriptions of SLES typically involve one- to three-year contract terms. Our standard practice is to provide customers with a 30-day general right of return. Such return provision allows for a refund and/or credit of any amount paid by our customers.

When an arrangement does not require significant production, modification, or customization of software or does not contain services considered to be essential to the functionality of the software, revenue is recognized when the following four criteria are met:

 

   

Persuasive evidence of an arrangement exists — We require evidence of an agreement with a customer specifying the terms and conditions of the products or services to be delivered typically in the form of a signed contract or statement of work accompanied by a purchase order.

 

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NOVELL, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

 

Critical Accounting Policies (Continued)

 

 

   

Delivery has occurred — For software licenses, delivery takes place when the customer is given access to the software programs via access to a website or shipped medium. For services, delivery takes place as the services are provided.

   

The fee is fixed or determinable — Fees are fixed or determinable if they are not subject to cancellation or other payment terms that exceed our standard payment terms.

   

Collection is probable — We perform a credit review of all customers with significant transactions to determine whether a customer is creditworthy and collection is probable. Prior credit history with us, credit reports, financial statements, and bank references are used to assess creditworthiness.

In general, revenue for transactions that do not involve software customization or services considered essential to the functionality of the software is recognized as follows:

 

   

Software fees for our SUSE Linux product are recognized when the product is sold to an end customer;

   

Software license fees for sales through OEMs are recognized upon receipt of license activity or royalty reports;

   

All other software license fees are recognized upon delivery of the software;

   

Software maintenance, technical support, and subscriptions of SLES are recognized ratably over the contract term; and

   

Professional services, training and other similar services are recognized as the services are performed.

If the fee due from the customer is not fixed or determinable, revenue is recognized as payments become due from the customer. If collection is not considered probable, revenue is recognized when the fee is collected. We record provisions against revenue for estimated sales returns and allowances on product and service-related sales in the same period as the related revenue is recorded. We also record a provision to operating expenses for bad debts resulting from customers’ inability to pay for the products or services they have received. These estimates are based on historical sales returns and bad debt expense, analyses of credit memo data, and other known factors, such as bankruptcy. If the historical data we use to calculate these estimates does not accurately reflect future returns or bad debts, adjustments to these reserves may be required that would increase or decrease revenue or net income.

Many of our software arrangements include multiple elements. Such elements typically include any or all of the following: software licenses, rights to additional software products, software maintenance, technical support, training and professional services. For multiple-element arrangements that do not involve significant modification or customization of the software and do not involve services that are considered essential to the functionality of the software, we allocated value to each element based on its relative fair value for transactions prior to fiscal 2009.

Prior to the start of fiscal 2009, we sold software licenses individually as well as combined with other products (multi-element arrangements), allowing us to determine vendor-specific objective evidence (“VSOE”) of fair value for substantially all software license products. Accordingly, when we sold multi-element arrangements we used the relative fair value, or proportional, revenue accounting method to allocate the value of multi-element arrangements proportionally to the software license and other components.

At the start of fiscal 2009, we made a sales program change requiring all customers to initially purchase maintenance with licenses, which is common industry practice. As a result of eliminating stand-alone software license sales, VSOE of fair value for software licenses no longer existed. Accordingly, beginning in the first quarter of fiscal 2009, the residual method as defined in current accounting standards is now used to allocate the value of multi-element arrangements to the various components, which is also common industry practice. Under the residual method, each undelivered element (typically maintenance) is allocated value based on Novell-specific objective evidence of fair value for that element and the remainder of the total arrangement fee is allocated to the delivered element, typically the software. This method results in discounts being allocated to the software license rather than spread proportionately over all elements. Therefore, when a discount exists, less revenue is recognized at the time of sale under the residual method than under the relative fair value method, which we used prior to fiscal 2009. We believe that the impact of the change to the residual method was not material to net revenue in fiscal 2009 or 2010.

If sufficient Novell-specific objective evidence of fair value does not exist for all undelivered elements and the arrangement involves rights to unspecified additional software products, all revenue is recognized ratably over the term of the arrangement. If the arrangement involves rights to unspecified additional software products, all revenue is initially deferred until the only remaining undelivered element is software maintenance or technical support, at which time the entire fee is recognized ratably over the remaining maintenance or support term.

 

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NOVELL, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

 

Critical Accounting Policies (Continued)

 

In the case of multiple-element arrangements that involve significant modification or customization of the software or involve services that are considered essential to the functionality of the software, contract accounting is applied. When Novell-specific objective evidence of fair value exists for software maintenance or technical support in arrangements requiring contract accounting, the professional services and license fees are combined and revenue is recognized on the percentage of completion basis. The percentage of completion is generally calculated using hours incurred to date relative to the total expected hours for the entire project. The cumulative impact of any revision in estimates to complete or recognition of losses on contracts is reflected in the period in which the changes or losses become known. The maintenance or support fee is unbundled from the other elements and revenue is recognized ratably over the maintenance or support term. When Novell-specific objective evidence of fair value does not exist for software maintenance or support, then all revenue is deferred until completion of the professional services, at which time the entire fee is recognized ratably over the remaining maintenance or support period.

For consolidated statements of operations classification purposes only, we allocate the revenue first to those elements for which we have Novell-specific objective evidence of fair value, and any remaining recognized revenue is then allocated to those items for which we lack Novell-specific objective evidence of fair value.

Professional services contracts are either time-and-materials or fixed-price contracts. Revenue from time-and-materials contracts is recognized as the services are performed. Revenue from fixed-price contracts is recognized based on the proportional performance method, generally using estimated time to complete, to measure the completed effort. The cumulative impact of any revision in estimates to complete or recognition of losses on contracts is reflected in the period in which the changes or losses become known. Professional services revenue includes reimbursable expenses charged to our clients.

Microsoft Agreements-related revenue

On November 2, 2006, we entered into the Microsoft Agreements. Each of the agreements is scheduled to expire on January 1, 2012.

Under the Business Collaboration Agreement, we are marketing a combined offering with Microsoft. The combined offering consists of a subscription for SLES support along with Microsoft Windows Server, Microsoft Virtual Server and Microsoft Hyper-V, and is offered to customers desiring to deploy Linux and Windows in a virtualized setting. Microsoft made an upfront payment to us of $240 million for SLES subscription “certificates,” which Microsoft may use, resell or otherwise distribute over the term of the agreement, allowing the certificate holder to redeem single or multi-year subscriptions for SLES support from us (entitling the certificate holder to upgrades, updates and technical support). Microsoft agreed to spend $60 million over the term of the agreement for marketing Linux and Windows virtualization scenarios and also agreed to spend $34 million over the term of the agreement for a Microsoft sales force devoted primarily to marketing the combined offering. Microsoft agreed that for three years following the initial date of the agreement it will not enter into an agreement with any other Linux distributor to encourage adoption of other company’s Linux/Windows Server virtualization through a program substantially similar to the SLES subscription “certificate” distribution program.

The Technical Collaboration Agreement focuses primarily on four areas:

 

   

Development of technologies to optimize SLES and Windows, each running as guests in a virtualized setting on the other operating system;

   

Development of management tools for managing heterogeneous virtualization environments, to enable each party’s management tools to command, control and configure the other party’s operating system in a virtual machine environment;

   

Development of translators to improve interoperability between Microsoft Office and OpenOffice.org document formats; and

   

Collaboration on improving directory and identity interoperability and identity management between Microsoft Active Directory software and Novell eDirectory software.

Under the Technical Collaboration Agreement, Microsoft agreed to provide funding to help accomplish these broad objectives, subject to certain limitations.

Under the Patent Cooperation Agreement, Microsoft agreed to covenant with our customers not to assert its patents against our customers for their use of our products and services for which we receive revenue directly or indirectly, with certain exceptions, while we agreed to covenant with Microsoft’s customers not to assert our patents against Microsoft’s customers for their use of Microsoft products and services for which Microsoft receives revenue directly or indirectly, with certain exceptions. In addition, we and Microsoft each irrevocably released the other party, and its customers, from any liability for patent infringement arising prior to November 2, 2006, with certain exceptions. Both we and Microsoft have payment obligations under the Patent Cooperation Agreement. Microsoft made an upfront net balancing payment to us of $108 million, and we are making ongoing payments to Microsoft totaling a minimum of $40 million over the five-year term of the agreement based on a percentage of our Open Platform Solutions and Open Enterprise Server revenues.

 

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

 

Critical Accounting Policies (Continued)

 

As the three agreements are interrelated and were negotiated and executed simultaneously, for accounting purposes we considered all of the agreements to constitute one arrangement containing multiple elements. The SLES subscription purchases of $240 million are being accounted for based on VSOE of fair value. We recognize the revenue ratably over the respective subscription terms beginning upon customer activation, or for subscriptions which expire un-activated, if any, we recognize revenue upon subscription expiration. Objective evidence of the fair value of elements within the Patent Cooperation Agreement and Technical Collaboration Agreement did not exist. As such, we combined the $108 million for the Patent Cooperation Agreement payment and amounts we are receiving under the Technical Collaboration Agreement and are recognizing this revenue ratably over the contractual term of the agreements of five years. Our periodic payments to Microsoft are recorded as a reduction of revenue. The contractual expenditures by Microsoft, including the dedicated sales force of $34 million and the marketing funds of $60 million, do not obligate us to perform, and, therefore, do not have an accounting consequence to us.

Impairment of Long-term Assets

Our long-term assets include goodwill, other intangible assets, and net property, plant and equipment. At October 31, 2010, our long-term assets included $353.4 million of goodwill, $156.0 million of net property, plant and equipment, and $28.7 million of other identifiable intangible assets.

Goodwill and indefinite-lived intangible assets

We evaluate the recoverability of goodwill and indefinite-lived intangible assets annually as of August 1, or more frequently if events or changes in circumstances warrant, such as a material adverse change in the business. Goodwill is considered to be impaired when the carrying value of a reporting unit exceeds its estimated fair value. Indefinite-lived intangible assets are considered impaired if their carrying value exceeds their estimated fair value. Fair values are estimated using the combination of a discounted cash flow methodology and a market analysis, and weighting the results. In assessing the recoverability of our goodwill and indefinite-lived intangible assets, we must make assumptions regarding estimated future cash flows and other factors to determine the fair value of the respective assets. This process requires subjective judgment at many points throughout the analysis. Changes in reporting units and changes to the estimates used in the analyses, including estimated future cash flows, could cause one or more of the reporting units or indefinite-lived intangibles to be valued differently in future periods. Future analysis could potentially result in a non-cash goodwill impairment charge of up to $353.4 million, the full amount of our goodwill, depending on the estimated value of the reporting units and the value of the net assets attributable to those reporting units at that time. In fiscal 2009, we recorded a goodwill impairment charge of $270.0 million. For more information about this charge see the subsection below entitled, “Impairment of Goodwill and Intangible Assets.”

Almost all of our trademarks/trade names have indefinite lives and therefore are not amortized but are reviewed for impairment at least annually. During fiscal 2009, we recorded a $9.1 million impairment charge for certain intangible assets we acquired as part of our PlateSpin and Managed Objects acquisitions. During fiscal 2008, we recorded a $7.7 million impairment charge for developed technology intangible assets that we acquired but later determined that we would not utilize as initially planned.

Net property, plant and equipment

We periodically review our net property, plant and equipment for impairment whenever events or changes in circumstances indicate that the carrying value of the asset may not be recoverable. Factors that could indicate an impairment include significant underperformance of the asset as compared to historical or projected future operating results, significant changes in the actual or intended use of the asset, or significant negative industry or economic trends. When we determine that the carrying value of an asset may not be recoverable, the related estimated future undiscounted cash flows expected to result from the use and eventual disposition of the asset are compared to the carrying value of the asset. If the sum of the estimated future undiscounted cash flows is less than the carrying amount, we record an impairment charge based on the difference between the carrying value of the asset and its fair value, which we estimate based on discounted expected future cash flows. In determining whether an asset is impaired, we must make assumptions regarding recoverability of costs, estimated future cash flows from the asset, intended use of the asset and other related factors. If these estimates or their related assumptions change, we may be required to record impairment charges for these assets. For fiscal 2010, 2009, and 2008, we have not identified or recorded any impairment of our net property, plant and equipment.

 

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NOVELL, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

 

Critical Accounting Policies (Continued)

 

Valuation of Deferred Tax Assets

We regularly assess our ability to realize our deferred tax assets. Assessments of the future realization of deferred tax assets require that management consider all available evidence, both positive and negative, and make significant judgments about many factors, including the amount and likelihood of future income.

As a result of this assessment, at October 31, 2010, given that we now have three years of cumulative earnings in the U.S. and are forecasting continued profitability, we determined that it was appropriate to release the valuation allowance on certain of our U.S. federal deferred tax assets (See Note L, “Income Taxes”). This release resulted in a $277.2 million increase to net income. We continue to maintain a valuation allowance on selected U.S. federal, state and international net deferred tax assets. As deferred tax assets or liabilities increase or decrease in the future, adjustments to the remaining valuation allowance will increase or decrease future income tax provisions or additional paid-in capital. If realization of the deferred tax asset is assessed not to be “more likely than not” then a valuation allowance is recorded against the deferred tax asset.

Loss Contingency Accruals and Restructurings

We are required to make accruals for certain loss contingencies related to litigation. We accrue for losses we believe are probable and can be reasonably estimated. However, the estimation of the amount to accrue requires significant judgment. Litigation accruals require us to make assumptions about the future outcome of each case based on current information.

We evaluate our tax reserves and recognize the benefit of an income tax position only if it is more likely than not (greater than 50%) that the tax position will be sustained upon tax examination, based solely on the technical merits of the tax position. Otherwise, no benefit is recognized. The tax benefits recognized are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. Additionally, we accrue interest and related penalties, if applicable, on all tax exposures for which reserves have been established consistent with jurisdictional tax laws. Interest and penalties on tax reserves continue to be classified as income tax expense in our consolidated statements of operations. During fiscal 2010 we released a net $22.0 million of tax reserves primarily as a result of the lapse of statutes of limitations.

When our restructurings include leased facilities we are required to make assumptions about future sublease income, which would offset our costs and decrease our accrual. Changes in these assumptions can impact our statements of operations.

Share-based Payments

Under the fair value recognition guidance of stock-based compensation accounting rules, stock-based compensation cost is estimated at the grant date based on the fair value of the award and is recognized as expense over the requisite service period of the award. The fair value of restricted stock awards, including units, is determined by reference to the fair market value of our common stock on the date of grant. We use the Black-Scholes model to value both service condition and performance condition option awards. For awards with only service conditions and graded-vesting features, we recognize compensation cost on a straight-line basis over the requisite service period. For awards with performance conditions, we recognize stock-based compensation expense based on the graded-vesting method. To value market-based awards we use the Monte Carlo simulation method. We recognize compensation cost for market-based awards on a graded-vesting basis over the derived service period calculated by the Monte Carlo simulation.

Determining the appropriate fair value model and related assumptions requires judgment, including estimating stock price volatility, forfeiture rates, and expected terms. The expected volatility rates are estimated based on historical and implied volatilities of our common stock. The expected term represents the average time that options that vest are expected to be outstanding based on the vesting provisions and our historical exercise, cancellation and expiration patterns. We estimate pre-vesting forfeitures when recognizing stock-based compensation expense based on historical rates and forward-looking factors. We update these assumptions at least on an annual basis and on an interim basis if significant changes to the assumptions are warranted.

 

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NOVELL, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

 

Critical Accounting Policies (Continued)

 

We issue performance-based equity awards, typically to senior executives, which vest upon the achievement of certain financial performance goals, including revenue and income targets. Determining the appropriate amount to expense based on the anticipated achievement of the stated goals requires judgment, including forecasting future financial results. The estimate of expense is revised periodically based on the probability of achieving the required performance targets and adjustments are made as appropriate. The cumulative impact of any revision is reflected in the period of change. If the financial performance goals are not met, the award does not vest, so no compensation cost is recognized and any previously recognized stock-based compensation expense is reversed.

We issue market-based equity awards, typically to senior executives, which vest upon the achievement of certain stock price targets. If the awards are forfeited prior to the completion of the derived service period, any recognized compensation is reversed. If the awards are forfeited after the completion of the derived service period, the compensation cost is not reversed, even if the awards never vest.

Acquisitions

Fortefi

On February 10, 2009, we acquired certain assets of Fortefi Ltd., a United Kingdom-based company, and Fortefi Corporation, a Delaware corporation (collectively referred to as “Fortefi”). Fortefi is a supplier of an identity management solution that controls “super user” access rights. Fortefi was a small operation of which the revenues, net operating results, assets and liabilities were immaterial to us. The purchase price consisted of $3.0 million in cash, plus merger and transaction costs of $0.1 million. Fortefi’s products have been integrated into the Identity and Security Management component of our SMOP business unit segment.

Managed Objects

On November 13, 2008, we acquired 100% of the outstanding stock of Managed Object Solutions, Inc. (“Managed Objects”), a supplier of business service management solutions, through a merger of Managed Objects into a wholly-owned subsidiary. The purchase price consisted of $46.3 million in cash, plus merger and transaction costs of $1.1 million. Managed Objects’ products have been integrated into the Systems and Resource Management component of our SMOP business unit segment.

PlateSpin

On March 26, 2008, we acquired 100% of the outstanding stock of PlateSpin, a leader in support solutions for complete workload life cycle management and optimization for Windows, UNIX and Linux operating systems in the physical and virtual data center. The purchase price consisted of $204.1 million in cash, plus merger and transaction costs of $3.8 million. PlateSpin’s products have been integrated into the Systems and Resource Management component of our SMOP business unit segment.

SiteScape

On February 13, 2008, we acquired 100% of the outstanding stock of SiteScape, Inc. (“SiteScape”), a provider of open collaboration software, including Teaming + Conferencing products. The purchase price consisted of $18.5 million in cash, plus merger and transaction costs of $0.4 million. SiteScape’s products have been integrated into our CS business unit segment.

 

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NOVELL, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

 

Divestitures

Discontinued Operations

Our discontinued operations include the divestitures of our Cambridge Technology Partners (Switzerland) SA (“CTP Switzerland”) subsidiary in fiscal 2008, our Salmon Ltd. (“Salmon”) subsidiary in fiscal 2007 and Celerant consulting (“Celerant”) in fiscal 2006. Detailed discussions of each of these divestitures follow:

CTP Switzerland

On October 31, 2007, we signed an agreement to sell our CTP Switzerland subsidiary to a management-led buyout group for $0.8 million. No further payments are due from the CTP Switzerland buyout group. As of January 31, 2008, we ceased stockholder and operational relationships with CTP Switzerland.

When we signed the agreement, we began classifying CTP Switzerland’s results as a discontinued operation in our consolidated statements of operations and reclassified our results of operations for the prior comparable period. In fiscal 2007, we recognized an estimated loss on disposal of $8.9 million resulting from the expected sale. During fiscal 2008, we recognized a gain on final liquidation of CTP Switzerland of $1.4 million, for a total net loss on the disposition of $7.4 million.

Salmon

On March 12, 2007, we sold our shares in our wholly-owned Salmon subsidiary to Okam Limited, a U.K. Limited Holding Company, for $4.9 million, plus an additional contingent payment of £2.0 million (approximately $3.1 million) all of which has been received. With respect to the contingent payment amount, gains of $1.9 million and $1.2 million were recognized as this amount was earned in fiscal 2009 and 2008, respectively.

Celerant

On May 24, 2006, we sold our shares in Celerant to a group comprised of Celerant management and Caledonia Investments plc for $77.0 million in cash. As part of the Celerant divestiture agreement, Celerant was responsible for the administration and was legally liable for its two pension plans, but we agreed to fund any shortages to the respective plans. It was our intention that we would be able to negotiate “buy outs” of the plans. The completion of the buy outs has taken much longer than anticipated due to delays related to updating the actuarial valuations, reaching agreement with the insurance company and receiving proper approvals from the pensioners and the German government. In October 2010, we were able to reach a conclusion on this matter for $0.6 million less than the original estimate. This accrual release is shown in the line item “Income from discontinued operations” in our consolidated statements of operations.

The results of discontinued operations (CTP Switzerland, Salmon and Celerant) for fiscal 2010, 2009 and 2008 are as follows:

 

     Fiscal Year Ended October 31,  
(In thousands)            2010                      2009                      2008          

CTP Switzerland net revenue

   $       $       $ 6,566   
                          

CTP Switzerland income before taxes

   $       $       $ 105   
                          

Salmon gain on sale

             1,904         1,223   

CTP Switzerland gain on sale

                     1,430   

Celerant gain on sale

     610                   
                          

Gain on discontinued operations

     610         1,904         2,653   

Income tax benefit on discontinued operations

                     (836
                          

Income from discontinued operations

   $ 610       $ 1,904       $ 3,594   
                          

The net cash proceeds from the sale of our discontinued operations (CTP Switzerland and Salmon) are as follows:

  
     Fiscal Year Ended October 31,  
(In thousands)    2010      2009      2008  

CTP Switzerland net cash distributions

   $       $       $ (2,667

Salmon net cash proceeds

     938         1,036         3,231   
                          

Net cash proceeds from sale of discontinued operations

   $ 938       $ 1,036       $ 564   
                          

 

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NOVELL, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

 

Divestitures (Continued)

 

Sales of Subsidiaries

Our sales of subsidiaries include the divestitures of our Chile subsidiary in fiscal 2009 and our Mexico and Argentina subsidiaries in fiscal 2008. We sold all three of these subsidiaries to one of our Latin America distribution partners. We will continue to sell products to customers in these countries through the distribution partner. Accordingly, we will have continuing cash flows from these businesses and have not presented them as discontinued operations in our consolidated statements of operations. Detailed discussions of each of these divestitures follow:

Chile subsidiary

Our Chile subsidiary, which we sold during fiscal 2009 for an insubstantial amount, was a very small operation with an immaterial net book value. The loss recorded on this sale was $0.1 million and is shown as a component of the line item “(Gain) loss on sale of subsidiaries” on our consolidated statements of operations.

Mexico and Argentina subsidiaries

During fiscal 2008, we sold our Mexico and our Argentina subsidiaries and recorded a total loss on the sale of both subsidiaries of $3.7 million. These subsidiaries were primarily sales operations and sold products from both our business unit segments. During fiscal 2009, we reached final settlement related to working capital adjustments on the sale of our Mexico and Argentina subsidiaries. This resulted in a non-cash gain of $0.2 million related to our Mexico subsidiary and a non-cash loss of $0.1 million related to our Argentina subsidiary. These gains and losses are shown as a component of the line item “(Gain) loss on sale of subsidiaries” on our consolidated statements of operations.

The cumulative recognized loss on the sale of our subsidiaries is as follows:

 

(In thousands)    Mexico     Argentina     Chile     Total  

Loss before income taxes recognized in fiscal 2008

   $       (3,065   $         (629   $           —      $       (3,694

Gain (loss) before income taxes recognized in fiscal 2009

     200        (72     (112     16   
                                

Total loss before income taxes

   $     (2,865   $ (701   $ (112   $     (3,678
                                

The net cash distributions from the sale of our Mexico and Argentina subsidiaries are as follows (Chile had an insignificant net cash distribution):

 

(In thousands)    Fiscal Year Ended
October 31,

2008
 

Mexico net cash distributed

   $ (13

Argentina net cash distributed

     (158
        

Net cash distributions from sale of subsidiaries

   $ (171
        

 

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NOVELL, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

 

Results of Operations – Fiscal 2010 as compared to Fiscal 2009

As more fully described above in the section entitled, “Overview,” during the first quarter of fiscal 2010, we reorganized our business unit segment structure and management resulting in a change to our reportable business unit segments. In connection with this reorganization, we evaluated our internal cost structure to ensure the resulting business unit segment gross profit and operating income were reflective of our business unit segment management structure. As a result of this evaluation, we determined that the allocation and assignment of costs between maintenance and subscriptions and services within cost of revenue should be adjusted to be reflective of the new business unit segment management structure. For fiscal 2009 and 2008, in our consolidated statements of operations, $37.6 million and $36.6 million of costs, respectively, were moved from the services cost of revenue line item to the maintenance and subscriptions cost of revenue line item. This change impacted only the components of cost of revenue and had no impact on revenue, total cost of revenue or total gross profit.

Certain other amounts reported in prior periods have been reclassified from what was previously reported to conform to the current year’s presentation. These reclassifications did not have any impact on the statements of operations.

Revenue

We sell our software and services primarily to businesses, government entities, educational institutions, independent hardware and software vendors, resellers, and distributors both domestically and internationally. In our consolidated statements of operations, we categorize revenue as software licenses, maintenance and subscriptions, and services. Software licenses revenue includes sales of proprietary licenses and certain royalties. Maintenance and subscriptions revenue includes product maintenance agreements and Linux subscriptions. Services revenue includes professional services, stand-alone technical support, and training.

Total net revenue was as follows:

 

     Fiscal Year Ended October 31,      Change  
(Dollars in thousands)    2010      2009     

Software licenses

   $ 105,108       $ 116,919         (10)%   

Maintenance and subscriptions

     618,542         640,745         (3)%   

Services

     88,221         104,521         (16)%   
                    

Total net revenue

   $ 811,871       $ 862,185         (6)%   
                    

Revenue in our software licenses category decreased during fiscal 2010 compared to the prior year as software licenses revenue declined in both SMOP and CS, reflecting continued weakness in our legacy products and, we believe, the uncertainty associated with Company Developments.

Maintenance and subscriptions revenue decreased in fiscal 2010 compared to the prior year primarily from a $23.9 million, or 9%, decrease in CS, partially offset by a $1.7 million, or less than 1%, increase in SMOP. The SMOP maintenance and subscriptions revenue increase in fiscal 2010 compared to the prior year resulted primarily from Identity, Access and Compliance Management products, which increased $8.3 million, or 10%.

The lower services revenue in fiscal 2010 compared to the prior year is due primarily to lower revenue from our consulting services customers, which is consistent with our lower software licenses revenue, and lower renewal rates on technical support contracts related to our legacy products.

Foreign currency exchange rate fluctuations, as measured by using prior year foreign currency exchange rates on non-U.S. dollar denominated revenue, favorably impacted total net revenue by $4.5 million, or 1%, during fiscal 2010 compared to the prior year.

Net revenue in SMOP was as follows:

 

     Fiscal Year Ended October 31,      Change  
(Dollars in thousands)    2010      2009     

Software licenses

   $ 65,582       $ 67,804         (3)%   

Maintenance and subscriptions

     372,564         370,894         —%   

Services

     63,879         74,138         (14)%   
                    

Total net revenue

   $ 502,025       $ 512,836         (2)%   
                    

 

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NOVELL, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

 

Results of Operations – Fiscal 2010 as compared to Fiscal 2009 (Continued)

 

Revenue from SMOP decreased in fiscal 2010 compared to the prior year primarily as a result, we believe, of the uncertainty associated with Company Developments. SMOP product invoicing increased 2% in fiscal 2010 compared to the prior year.

Revenue associated with our Linux Platform Products decreased by $4.8 million, or 3%, compared to the prior year. Invoicing for Linux Platform Products increased 11% compared to the prior year. The higher invoicing for our Linux Platform Products resulted from significant growth in our non-Microsoft invoicing, partially offset by lower invoicing associated with the Microsoft SLES certificates, and we believe, the uncertainty associated with Company Developments. Renewals of Microsoft SLES certificates began in early fiscal 2010, and as anticipated, the renewals have been invoiced at much lower amounts than under the original agreement. (See the subsection entitled, “Microsoft Agreements–Related Revenue” in the Critical Accounting Policies section above for more details on the Microsoft SLES certificates and related agreements.)

Revenue from Identity, Access and Compliance Management products increased $10.9 million, or 10%, compared to the prior year. Invoicing from Identity, Access and Compliance Management products declined 1% compared to the prior year. The revenue increase was due in part to several significant revenue deals in the first quarter of fiscal 2010. However, we believe this positive momentum was negatively impacted in the remainder of fiscal 2010 by the uncertainty associated with Company Developments, which contributed to the decrease in invoicing compared to the prior year.

Revenue from Systems and Resource Management products decreased $4.7 million, or 3%, compared to the prior year. Invoicing from Systems and Resource Management products decreased 2% compared to the prior year. The revenue and invoicing declines for Systems and Resource Management products were primarily due to the continued weakness in our legacy products, challenges with our new products gaining traction in this market segment, and we believe, the uncertainty associated with Company Developments.

Net revenue in CS was as follows:

 

     Fiscal Year Ended October 31,      Change  
(Dollars in thousands)    2010      2009     

Software licenses

   $ 39,526       $ 49,115         (20)%   

Maintenance and subscriptions

     245,978         269,851         (9)%   

Services

     24,342         30,383         (20)%   
                    

Total net revenue

   $ 309,846       $ 349,349         (11)%   
                    

Revenue from CS decreased in fiscal 2010 compared to the prior year primarily as a result of the mature lifecycle stage of our CS products and, we believe, of the uncertainty associated with Company Developments. This is reflected in decreases in Collaboration product revenue of $13.1 million, or 13%, combined OES and NetWare-related product revenue of $12.1 million, or 7%, and services revenue of $6.0 million, or 20%. Overall, product invoicing for CS decreased 11% in fiscal 2010 compared to the prior year.

Deferred Revenue

We had total deferred revenue of $651.0 million at October 31, 2010 compared to $688.8 million at October 31, 2009. Deferred revenue represents revenue that is expected to be recognized in future periods primarily under maintenance contracts and subscriptions that are recognized ratably over the related contract periods, typically one to three years. Deferred revenue related to our agreements with Microsoft is recognized ratably over various related service periods, which can extend up to five years. The decrease in total deferred revenue of $37.8 million compared to October 31, 2009 is primarily attributable to lower invoicing during fiscal 2010 and from the recognition of $71.2 million of deferred revenue related to our agreement with Microsoft.

 

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NOVELL, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

 

Results of Operations – Fiscal 2010 as compared to Fiscal 2009 (Continued)

 

Gross Profit

 

     Fiscal Year Ended October 31,     Change  
(Dollars in thousands)    2010     2009    

Software licenses gross profit

   $         96,602      $         107,745        (10)%   

percentage of related revenue

     92     92  

Maintenance and subscriptions gross profit

   $ 530,095      $ 548,132        (3)%   

percentage of related revenue

     86     86  

Services gross profit

   $ 11,569      $ 19,477        (41)%   

percentage of related revenue

     13     19  

Total gross profit

   $ 638,266      $ 675,354        (5)%   

percentage of revenue

     79     78  

Software licenses, maintenance and subscriptions, and services gross profit all decreased in fiscal 2010 compared to the prior year primarily due to the 6% decrease in total net revenue. Services gross margins decreased as a percentage of sales as we entered into several low margin service engagements that drove product sales during fiscal 2010 and from expenses not declining as fast as revenue as we have elected to retain certain expertise and capabilities within our consulting and training services business. Our services offerings are focused on supporting product sales, not generating stand-alone revenue or profits, in line with our strategic initiatives.

       

Foreign currency exchange rate fluctuations, as measured using the prior year period foreign currency exchange rates on non-U.S. dollar denominated revenue and expenses, positively impacted gross profit by $2.4 million in fiscal 2010 compared to the prior year.

   

Gross profit by business unit segment was as follows:

  
     Fiscal Year Ended October 31,     Change  
(Dollars in thousands)    2010     2009    

SMOP

   $         384,029      $         393,461        (2)%   

percentage of related revenue

     76     77  

CS

   $ 262,185      $ 294,526        (11)%   

percentage of related revenue

     85     84  

Common unallocated operating costs(1)

   $ (7,948   $ (12,633     37%   

Total gross profit

   $ 638,266      $ 675,354        (5)%   

percentage of revenue

     79     78  

 

  (1)

Common unallocated operating costs include items such as stock-based compensation, acquisition-related intangible asset amortization, restructuring, certain litigation related activity and other unusual items that are not considered part of our ongoing ordinary business.

Gross profit was lower in both SMOP and CS for fiscal 2010 compared to the prior year primarily due to lower revenue. However, gross profit as a percentage of revenue was essentially flat for both business unit segments for fiscal 2010 compared to the respective prior year periods, reflecting the positive impacts of our prior cost reduction initiatives, including our prior restructuring actions.

 

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NOVELL, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

 

Results of Operations – Fiscal 2010 as compared to Fiscal 2009 (Continued)

 

Operating Expenses

 

     Fiscal Year Ended October 31,      Change  
(Dollars in thousands)    2010      2009     

Sales and marketing

   $         282,402       $         295,998         (5)%   

as a percent of net revenue

     35%         34%      

Product development

   $ 160,188       $ 181,383         (12)%   

as a percent of net revenue

     20%         21%      

General and administrative

   $ 108,465       $ 102,345         6%   

as a percent of net revenue

     13%         12%      

Restructuring expenses

   $ 2,774       $ 25,200         (89)%   

as a percent of net revenue

     —%         3%      

Impairment of goodwill

   $ —        $ 270,044         —%   

as a percent of net revenue

     —%         31%      

Impairment of intangible assets

   $ —        $ 9,091         —%   

as a percent of net revenue

     —%         1%      

Gain on sale of subsidiaries

   $ —        $ (16)         —%   

as a percent of net revenue

     —%         —%      

Gain on sale of property, plant and equipment, net

   $ —        $ (2,199)         —%   

as a percent of net revenue

     —%         —%      

Total operating expenses

   $ 553,829       $ 881,846         (37)%   

as a percent of net revenue

     68%         102%      

Sales and marketing

Sales and marketing expenses decreased in fiscal 2010 compared to the prior year primarily from $7.2 million of reduced sales compensation expense due in part to a $4.6 million change in accounting estimate related to fiscal 2009 sales compensation expense that reduced expenses in the first quarter of fiscal 2010, and to our lower revenues in fiscal 2010. Sales and marketing expenses also decreased in fiscal 2010 compared to the prior year due to lower intangible asset amortization resulting primarily from the impairment in fiscal 2009 of PlateSpin’s and Managed Objects’ customer relationship intangible assets (See the subsection below entitled, “Review of long-lived assets”). Also benefiting sales and marketing expenses in fiscal 2010 compared to the prior year were the positive impacts of our prior cost reduction initiatives, including our prior restructuring actions. These decreases were partially offset by unfavorable foreign currency exchange rate fluctuations of $4.5 million and higher stock-based compensation expenses of $1.0 million due primarily to fewer equity grants in fiscal 2009.

Product development

Product development expenses in fiscal 2010 decreased compared to the prior year primarily from the positive impacts of cost reduction initiatives, including our prior restructuring actions, lower outside services expenses and less discretionary spending. In addition, product development expenses were also impacted by lower stock-based compensation expense of $1.1 million primarily from decreased headcount. These expense reductions were partially offset by unfavorable foreign currency exchange rate fluctuations of $1.8 million. Product development headcount decreased by 63 employees, or 5%, at the end of fiscal 2010 compared to the prior year.

General and administrative

General and administrative expenses increased in fiscal 2010 compared to the prior year primarily from $9.2 million of expenses related to Company Developments, $2.9 million of higher stock-based compensation expense due primarily to the vesting of certain market-based awards in the second quarter of fiscal 2010, and unfavorable foreign currency exchange rate fluctuations of $1.7 million. These increases were partially offset by the positive impacts of our cost reduction initiatives, including our prior restructuring actions. General and administrative headcount was lower by 24 employees, or 6%, at the end of fiscal 2010 compared to the prior year.

 

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NOVELL, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

 

Results of Operations – Fiscal 2010 as compared to Fiscal 2009 (Continued)

 

Restructuring expenses

In the first quarter of fiscal 2010, we recorded net restructuring expenses of $2.8 million. This was comprised of $2.9 million primarily for termination benefits for certain executive employees as part of our business unit segment structural and management reorganization, partially offset by $0.1 million in reductions to accruals for changes in estimates related to prior period restructuring activities. No other restructuring actions were undertaken throughout the remainder of fiscal 2010.

Impairment of goodwill and intangible assets

As more fully described above in the section entitled, “Overview,” during the first quarter of fiscal 2010, our former Open Platform Solutions, Identity and Security Management, and Systems and Resource Management business unit segments were consolidated to form SMOP. The three components of SMOP will continue to be considered reporting units for goodwill impairment testing purposes. Our former Workgroup business unit segment was renamed CS, and continues to be a reporting unit. As there were no changes to the reporting units, no interim goodwill impairment tests were required.

Annual goodwill impairment test

Annually on August 1, we perform our goodwill impairment test. The first step (“step one”) in evaluating impairment is to determine if the estimated fair value of a reporting unit is less than its carrying value. If step one indicates that the fair value is less than the carrying value of the reporting unit, then impairment potentially exists, and the second step (“step two”) is performed to measure the amount of impairment, if any. To estimate the fair value of each of our reporting units for step one, management made estimates and judgments about future cash flows based on assumptions that are consistent with both short-term plans and long-range forecasts used to manage the business. We also considered factors such as our market capitalization and current economic events in assessing the fair value of the reporting units. This process requires subjective judgment at many points throughout the analysis. Changes to the estimates used in the analysis, including estimated future cash flows, could cause one or more of the reporting units or indefinite-lived intangibles to be valued differently in future periods.

Based on the results of our analysis, we determined that no goodwill impairment existed at August 1, 2010, 2009 or 2008. For our fiscal 2010 test, the excess of the fair value over the carrying value of our reporting units was as follows: 428% for Open Platform Solutions, 268% for Systems and Resource Management, 244% for Identity and Security Management, and 279% for CS. The calculation of fair value was determined on a consistent basis with prior years.

Events subsequent to annual goodwill impairment test as of August 1, 2009

In the week leading up to the September 22, 2009 Board of Directors annual budget meeting, management updated its long-range forecast concurrent with the completion of the fiscal 2010 budgeting process. Management reduced its long-range revenue growth assumptions late in the annual planning process due to company trends, a revised market outlook and continued economic uncertainty.

Management’s revised long-range forecast lowered the projected revenue and operating income utilized in the August 1, 2009 discounted cash flow model valuation. We considered this lowered financial outlook to be an impairment trigger event for both goodwill and long-lived assets, requiring us to re-perform the step one test for potential impairment, which we did as of September 30, 2009, our closest balance sheet date. Also, because long-term revenue projections were lowered in all four of our reporting units, each reporting unit had to be reviewed for potential impairment.

As discussed under “Goodwill impairment test as of September 30, 2009” below, the lower long-term projections resulted in the failure of the step one test for our Systems and Resource Management reporting unit because the estimated fair value of this reporting unit was lower than its carrying value. All other reporting units passed the step one test. Because the Systems and Resource Management reporting unit failed the step one test, we were required to perform the step two test, which utilizes a notional purchase price allocation using the estimated fair value from step one as the purchase price to determine the implied value of the reporting unit’s goodwill. The completion of the step two test resulted in the determination that $270.0 million of the Systems and Resource Management reporting unit’s goodwill was impaired. The $270.0 million impairment charge is shown in the line item “Impairment of goodwill” in our consolidated statements of operations.

 

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NOVELL, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

 

Results of Operations – Fiscal 2010 as compared to Fiscal 2009 (Continued)

 

Goodwill impairment test as of September 30, 2009

In performing step one of the goodwill impairment test, it was necessary to determine the fair value of each of the four reporting unit segments. The fair values of all reporting units, except for CS, were estimated using a weighted average of a discounted cash flow methodology (“DCF”) and a market analysis. The market analysis included looking at the valuations of comparable public companies, as well as recent acquisitions of comparable companies. For CS only, the DCF was utilized as it was felt that there was no comparable market information, due to the uniqueness of CS which is forecasted to have a long-term declining revenue stream, yet have high operating margins. With respect to the other three reporting units, a 10% weighting was given to the market analysis. As a result, a weighting of 90% was given to the DCF.

Two key inputs to the DCF analysis were our future cash flow projection and the discount rate. We used a ten-year future cash flow projection, based on management’s long-range forecast, discounted to present value, and an estimate of terminal values, which was also discounted to present value. Terminal values represent the present value an investor would pay today for the rights to cash flows of the reporting unit for the years subsequent to the ten-year cash flow projection period. As noted above, the long-range forecast that was utilized for the impairment test after the September 22, 2009 Board meeting was lower than what was utilized in both the August 1, 2009 valuation and the fiscal 2008 valuation. The lower forecast was the primary reason for the lower fair values that resulted in the need to perform a step two impairment valuation for the Systems and Resource Management reporting unit. A driver of the lower forecast for the Systems and Resource Management reporting unit was the underperformance of our ZENworks products as well as our recent acquisitions.

The other major input into the DCF analysis was the discount rate, which was determined by estimating each reporting unit’s weighted average cost of capital, reflecting the nature of the respective reporting unit and the perceived risk of the underlying cash flows. We used the following discount rates in our DCF methodology for each of our reporting units: 16.0% for Open Platform Solutions, 15.6% for Identity and Security Management, 14.6% for Systems and Resource Management and 13.0% for CS. If we had increased our discount rates by 1%, it would not have impacted the ultimate results of our step one test. The excess of the fair value over the carrying value of our reporting units was as follows: 68% for Open Platform Solutions, 139% for Identity and Security Management, and 379% for CS.

The step two test involves allocating the fair value of the Systems and Resource Management reporting unit to all of its assets and liabilities on a fair value basis, with the excess amount representing the implied value of goodwill. As part of this process the fair value of the Systems and Resource Management reporting unit’s identifiable intangible assets, including in-process research and development, developed technology, customer relationships and trademarks/trade names were determined. The fair values of these assets were determined primarily through the use of the DCF method. The fair values of Systems and Resource Management’s property, plant and equipment were determined primarily through the use of third party broker quotes. The fair value of Systems and Resource Management’s deferred revenue was based upon the estimate of the amount that would be required to pay a third party to assume the obligation. After determining the fair value of all Systems and Resource Management reporting unit assets and liabilities, it was determined that the implied value of goodwill was $56.0 million. The September 30, 2009 carrying value of the Systems and Resource Management reporting unit’s goodwill was $326.0 million, which, when compared to the implied goodwill value of $56.0 million resulted in the impairment charge of $270.0 million.

The above described process requires subjective judgment at many points throughout the analysis. Changes to the estimates used in the analysis, including estimated future cash flows, could cause one or more of the reporting units or indefinite-lived intangibles to be valued differently in future periods. It is at least reasonably possible that future analyses could result in additional material non-cash goodwill impairment charges.

 

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NOVELL, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

 

Results of Operations – Fiscal 2010 as compared to Fiscal 2009 (Continued)

 

Review of long-lived assets as of September 30, 2009

As noted above, we concurrently performed an assessment of long-lived assets for impairment at September 30, 2009. These assets, which include tangible and intangible assets, need to be tested for impairment before the step two goodwill impairment analysis can be completed because any change in these assets would impact the carrying value of the Systems and Resource Management reporting unit.

To test the recoverability of our long-lived assets and liabilities, which for us is primarily long-lived assets, they were grouped with other assets at the lowest level for which identifiable cash flows were largely independent of the cash flows of other assets. With the exception of our Systems and Resource Management reporting unit, we determined that our asset groups were our reporting units, as that was the lowest level at which cash flows could be separated from other assets. For the Systems and Resource Management reporting unit, separate identifiable cash flows were available for PlateSpin and Managed Objects products, with all other cash flows belonging to our remaining Systems and Resource Management business (primarily ZENworks). Therefore, the Systems and Resource Management reporting unit had three asset groups.

The test for recoverability compares undiscounted future cash flows of the long-lived asset group to its carrying value. The future cash flow period was based on the future service life of the primary asset within the long-lived asset group.

If the future cash flows exceed the carrying values of the asset group, the asset group is not considered to be impaired. If the carrying values of the asset group exceed the future cash flows, the asset group is considered to be potentially impaired. It was determined that for all asset groups except for PlateSpin and Managed Objects, the future cash flows exceeded the carrying values of the respective asset groups.

As the PlateSpin and Managed Objects asset groups had carrying values in excess of their estimated undiscounted future cash flows, it was necessary to determine the fair value of the individual assets within the asset group. Because the aggregate fair values of the individual assets of the group were less than their carrying values, an impairment was recorded equal to the excess of the aggregated carrying value of the asset group over the aggregate fair value. This loss was allocated to each asset within the group that had a fair value less than its carrying value, based on their relative carrying values, with no asset reduced below its fair value. As a result of this test, it was determined that $5.7 million of PlateSpin’s and $3.4 million of Managed Objects’ developed technology and customer relationships were impaired. These impairment charges, totaling $9.1 million, are shown in the line item, “Impairment of intangible assets” in our consolidated statements of operations.

During fiscal 2010, there were no impairments of any intangible assets.

Gain on sale of subsidiaries

The fiscal 2009 gain on sale of subsidiaries relates to a net gain recognized upon the finalization of working capital adjustments related to the sales of our Mexico and Argentina subsidiaries, partially offset by a loss on the sale of our Chile subsidiary, discussed in the “Divestitures” section, above.

Gain on sale of property, plant and equipment, net

During fiscal 2009, we sold certain corporate real estate assets and computer equipment for net proceeds of $10.7 million that had a net book value of $8.1 million. The sales also included other fees and expenses of $0.4 million and resulted in a $2.2 million gain.

 

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NOVELL, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

 

Results of Operations – Fiscal 2010 as compared to Fiscal 2009 (Continued)

 

Foreign currency exchange rate fluctuations

Foreign currency exchange rate fluctuations during fiscal 2010 compared to the prior year, as measured using the prior year period foreign currency exchange rates on non-U.S. dollar denominated revenue and expenses, favorably impacted revenue by $4.5 million, unfavorably impacted operating expenses by $10.1 million and unfavorably impacted income from continuing operations by $5.6 million. Since a large portion of our recognized revenue is deferred revenue that was recorded at different foreign currency exchange rates, the impact to revenue of changes in foreign currency exchange rates is recognized over time, whereas the impact to expenses is more immediate, as expenses are recognized at the current foreign currency exchange rate in effect at the time the expense is incurred.

Other Income (Expense), Net

 

     Fiscal Year Ended October 31,        
(Dollars in thousands)    2010     2009     Change  

Investment income

   $ 13,088      $ 22,420        (42)%   

as a percent of net revenue

     2     3  

Gain on sale of previously impaired investments, net

   $ 7,413      $ 300        2,371%   

as a percent of net revenue

     1      

Impairment of investments

   $      $ (5,466     —%   

as a percent of net revenue

         (1 )%   

Interest expense and other, net

   $ (2,851   $ (14,736     81%   

as a percent of net revenue

         (2 )%   

Total other income, net

   $ 17,650      $ 2,518        601%   

as a percent of net revenue

     2      

Investment income includes income from short-term and long-term investments. Investment income for fiscal 2010 decreased compared to the prior year due primarily to lower interest rates.

During fiscal 2010, we sold our remaining auction-rate securities (“ARSs”) with a book value of $5.6 million for $12.2 million, resulting in a gain of $6.6 million. During fiscal 2010, we also recognized a gain of $0.8 million related to the sales of direct investments that were previously fully impaired. During fiscal 2009, we recorded other-than-temporary impairment charges of $5.5 million related to our ARSs.

Interest expense and other, net for fiscal 2010 decreased compared to the prior year due primarily to the repurchase in fiscal 2009 of our 0.5% senior convertible debentures due 2024 (“Debentures”), which resulted in lower interest expense. In fiscal 2010, interest expense and other, net was comprised primarily of losses associated with our equity investment in Open Invention Network, LLC (“OIN”).

Income Tax (Benefit) Expense on Income From Continuing Operations

 

     Fiscal Year Ended October 31,        
(Dollars in thousands)    2010     2009     Change  

Income tax (benefit) expense

   $ (275,279   $ 10,666        2,680%   

Effective tax rate

     (270 )%      (5 )%   

The effective tax rate on continuing operations for fiscal 2010 was (270)% compared to (5)% for fiscal 2009. This was primarily due to the $277.2 million release in valuation allowance on certain of our U.S. net deferred tax assets and the $22.0 million reduction in reserve for uncertain tax positions resulting from expiration of the statute of limitations on a previously uncertain tax position.

The fiscal 2009 rate of (5%) is the result of recording tax expense on a pre-tax book loss. This was primarily due to the $279.1 million of goodwill and intangible asset impairment charges recorded for book purposes in fiscal 2009 for which we received minimal current tax benefit. In the U.S. these impairment charges are either non-deductible or deductible over 15 years with a valuation allowance on the deferred asset, and outside the U.S. these impairment charges are attributable to jurisdictions where we receive little or no tax benefit.

 

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NOVELL, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

 

Results of Operations – Fiscal 2010 as compared to Fiscal 2009 (Continued)

 

Net Income (Loss) Components

 

     Fiscal Year Ended October 31,  
(In thousands)            2010              2009  

Income (loss) from continuing operations

   $ 377,366       $ (214,640

Income from discontinued operations, net of tax

     610         1,904   
                 

Net income (loss)

   $ 377,976       $ (212,736
                 

Discontinued operations for fiscal 2010 and 2009 relates to gains from the May 2006 sale of Celerant and the March 2007 sale of Salmon, respectively, as discussed in the “Divestitures” section, above.

Results of Operations – Fiscal 2009 as compared to Fiscal 2008

Revenue

 

     Fiscal Year Ended October 31,         
(Dollars in thousands)    2009      2008      Change  

Software licenses

   $ 116,919       $ 188,983         (38)%   

Maintenance and subscriptions

     640,745         616,493         4%   

Services

     104,521         151,037         (31)%   
                    

Total net revenue

   $ 862,185       $ 956,513         (10)%   
                    

Our overall revenue decline of 10% in fiscal 2009 compared to fiscal 2008, reflected the impact of the economic climate in effect during fiscal 2009.

Revenue in our software licenses category decreased during fiscal 2009 compared to the prior year as software licenses revenue declined in both SMOP and CS. The lower software licenses revenue reflected the impact of the economic climate, which affected our industry more severely in fiscal 2009 than in fiscal 2008.

Revenue from maintenance and subscriptions increased in fiscal 2009 compared to the prior year primarily due to increased revenue from SMOP, including our Linux Platform Products, which increased $25.8 million, or 21%. Maintenance and subscriptions revenue from CS decreased $11.0 million, or 4%, in fiscal 2009 compared to the prior year. In general, despite challenges posed by the economic climate, maintenance and subscriptions revenue continued at relatively steady rates due primarily to consistent renewal rates with respect to existing software deployments. Revenue from maintenance and subscriptions also benefited from our acquisitions. Incremental maintenance and subscriptions revenue in the first year after acquiring PlateSpin and from Managed Objects accounted for $7.3 million of new revenue.

While our services offerings are focused increasingly on supporting product sales, rather than generating stand-alone revenue or profits, the decline in services revenue in fiscal 2009 compared to the prior year was greater than anticipated as customers reduced their discretionary spending in response to economic conditions.

Foreign currency exchange rate fluctuations, as measured by using prior period foreign currency exchange rates on non-U.S. dollar denominated revenue, negatively impacted total net revenue by $16.8 million, or 2%, during fiscal 2009.

Net revenue in SMOP was as follows:

 

     Fiscal Year Ended October 31,         
(Dollars in thousands)    2009      2008      Change  

Software licenses

   $ 67,804       $ 104,913         (35)%   

Maintenance and subscriptions

     370,894         335,624         11%   

Services

     74,138         101,531         (27)%   
                    

Total net revenue

   $ 512,836       $ 542,068         (5)%   
                    

 

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NOVELL, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

 

Results of Operations – Fiscal 2009 as compared to Fiscal 2008 (Continued)

 

Revenue from SMOP decreased in fiscal 2009 compared to the prior year primarily due to lower software license revenue, reflecting the impact of the economic climate, longer sales cycles and shortened contract duration, and lower services revenue reflecting lower discretionary spending available to our customers. This was partially offset by higher maintenance and subscriptions revenue. Product invoicing decreased 12% in fiscal 2009 compared to the prior year.

Revenue associated with our Linux Platform Products increased by $25.8 million, or 21%. Invoicing for Linux Platform Products in fiscal 2009 decreased 18% compared to the prior year. The invoicing change in fiscal 2009 compared to the prior year is primarily the result of a decrease in the number of significant revenue deals that closed in fiscal 2009 compared to fiscal 2008, and lower levels of SLES certificates distributed by Microsoft. Essentially all of the remaining balance of the original $240 million agreement with Microsoft has been invoiced. In fiscal 2009, the SLES certificates distributed by Microsoft accounted for 32% of Linux Platform Products invoicing.

Revenue from our Identity, Access and Compliance Management products decreased $12.0 million, or 10%, from the prior year. Invoicing from Identity, Access and Compliance Management products declined 7% in fiscal 2009 compared to the prior year. The decreases in product revenue and invoicing were primarily due to the economic climate, longer sales cycles and shortened contract duration.

Revenue from our Systems and Resource Management products decreased $9.4 million, or 6%, from the prior year. Invoicing for Systems and Resource Management products decreased 10% in fiscal 2009 compared to the prior year. The decreases were primarily due to lower software licenses revenue from our ZENworks products, the impact of the economic climate and integration challenges with respect to the PlateSpin and Managed Objects acquisitions. These revenue declines were also impacted by longer sales cycles and shortened contract duration and were partially offset by additional revenue in the first year after acquiring PlateSpin and from Managed Objects which resulted in incremental revenue of $13.6 million. In the second half of fiscal 2009, PlateSpin revenue was $2.9 million lower compared to the prior year period.

Net revenue in CS was as follows:

 

     Fiscal Year Ended October 31,         
(Dollars in thousands)    2009      2008      Change  

Software licenses

   $ 49,115       $ 84,070         (42)%   

Maintenance and subscriptions

     269,851         280,869         (4)%   

Services

     30,383         49,506         (39)%   
                    

Total net revenue

   $ 349,349       $ 414,445         (16)%   
                    

Revenue from CS decreased in fiscal 2009 compared to the prior year primarily from lower combined OES and NetWare-related product revenue of $28.1 million, lower services revenue of $19.1 million and lower Collaboration product revenue of $13.8 million. Invoicing for the combined OES and NetWare-related products decreased 18% in fiscal 2009 compared to the prior year. Product invoicing for CS decreased 18% in fiscal 2009 compared to the prior year. These declines were attributable to the economic climate and the life cycle stage of our CS products, and further reflect longer sales cycles and decreased contract duration.

Deferred Revenue

We had total deferred revenue of $688.8 million at October 31, 2009 compared to $730.1 million at October 31, 2008. The decrease in total deferred revenue of $41.3 million is primarily attributable to the recognition of deferred revenue related to our agreement with Microsoft to purchase SLES certificates.

 

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NOVELL, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

 

Results of Operations – Fiscal 2009 as compared to Fiscal 2008 (Continued)

 

Gross Profit

 

     Fiscal Year Ended October 31,        
(Dollars in thousands)    2009     2008     Change  

Software licenses

   $ 107,745      $ 173,748        (38)%   

percentage of related revenue

     92     92  

Maintenance and subscriptions

   $ 548,132      $ 528,816        4%   

percentage of related revenue

     86     86  

Services

   $ 19,477      $ 18,710        4%   

percentage of related revenue

     19     12  

Total gross profit

   $ 675,354      $ 721,274        (6)%   

percentage of revenue

     78     75  

The increase in gross profit as a percentage of revenue during fiscal 2009 compared to the prior year reflected the benefits of our cost reduction initiatives, including our prior restructuring actions, and the benefits of realigning our services business to be more efficient and product focused, resulting in a shift to higher-margin product revenue. Our services offerings are increasingly focused on supporting product sales, not generating stand-alone revenue or profits, in line with our strategic initiatives.

Total gross profit was lower for fiscal 2009 compared to the prior year primarily due to the 10% decrease in total net revenue. Foreign currency exchange rate fluctuations, as measured using the prior year period foreign currency exchange rates on non-U.S. dollar denominated revenue and expenses, unfavorably impacted gross profit by $9.8 million, or 1%, in fiscal 2010 compared to the prior year period.

Gross profit by business unit segment was as follows:

 

     Fiscal Year Ended October 31,        
(Dollars in thousands)    2009     2008     Change  

SMOP

   $ 393,461      $ 387,886        1%   

percentage of related revenue

     77     72  

CS

   $ 294,526      $ 346,226        (15)%   

percentage of related revenue

     84     84  

Common unallocated operating costs(1)

   $ (12,633   $ (12,838     2%   

Total gross profit

   $ 675,354      $ 721,274        (6)%   

percentage of revenue

     78     75  

 

(1)

Common unallocated operating costs include items such as stock-based compensation, acquisition-related intangible asset amortization, restructuring, certain litigation related activity and other unusual items that are not considered part of our ongoing ordinary business.

Gross profit in SMOP increased in fiscal 2009 as compared to the prior year both as a percentage of revenue and in total primarily from a more favorable mix of higher-margin product revenue and cost containment efforts. Gross profit in CS remained flat as a percentage of revenue, but decreased in total due to lower revenues.

 

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NOVELL, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

 

Results of Operations – Fiscal 2009 as compared to Fiscal 2008 (Continued)

 

Operating Expenses

 

     Fiscal Year Ended October 31,        
(Dollars in thousands)    2009     2008     Change  

Sales and marketing

   $ 295,998      $ 368,719        (20 )% 

as a percent of net revenue

     34     39  

Product development

   $ 181,383      $ 191,547        (5 )% 

as a percent of net revenue

     21     20  

General and administrative

   $ 102,345      $ 113,529        (10 )% 

as a percent of net revenue

     12     12  

Restructuring expenses

   $ 25,200      $ 28,645        (12 )% 

as a percent of net revenue

     3     3  

Impairment of goodwill

   $ 270,044      $       

as a percent of net revenue

     31      

Impairment of intangible assets

   $ 9,091      $ 7,664        19

as a percent of net revenue

     1     1  

(Gain) loss on sale of subsidiaries

   $ (16   $ 3,694        100

as a percent of net revenue

          

Gain on sale of property, plant and equipment, net

   $ (2,199   $       

as a percent of net revenue

          

Purchased in-process research and development

   $      $ 2,700       

as a percent of net revenue

          

Total operating expenses

   $ 881,846      $ 716,498        23

as a percent of net revenue

     102     75  

Sales and marketing

Sales and marketing expenses decreased in fiscal 2009 compared to fiscal 2008 primarily due to cost reduction initiatives, including our prior restructuring actions, lower program spending, reduced travel and entertainment and outside service costs, and favorable foreign currency exchange rate fluctuations of $15.3 million, partially offset by incremental sales and marketing expenses in the first year after acquiring PlateSpin and Managed Objects. Sales and marketing headcount was lower by 60 employees, or 6%, at the end of fiscal 2009 compared to fiscal 2008.

Product development

Product development expenses decreased in fiscal 2009 compared to fiscal 2008 primarily from cost reduction initiatives, including our prior restructuring actions, and favorable foreign currency exchange rate fluctuations of $7.6 million, partially offset by incremental product development expenses in the first year after acquiring PlateSpin and Managed Objects. Product development headcount decreased by 124 employees, or 9%, at the end of fiscal 2009 compared to fiscal 2008.

General and administrative

General and administrative expenses decreased in fiscal 2009 compared to fiscal 2008 primarily due to cost reduction initiatives, including our prior restructuring actions, and favorable foreign currency exchange rate fluctuations of $2.4 million. General and administrative headcount was lower by 176 employees, or 29%, at the end of fiscal 2009 compared to fiscal 2008, reflecting the outsourcing of the majority of our IT support functions to ACS as part of the agreement that was signed in the third quarter of fiscal 2009 (the “ACS Agreement”). This decrease in headcount-related expense was offset by an increase in outside service costs as a result of the ACS Agreement.

 

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NOVELL, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

 

Results of Operations – Fiscal 2009 as compared to Fiscal 2008 (Continued)

 

Restructuring expenses

During fiscal 2009, we recorded net restructuring expenses of $25.2 million. This was comprised of $10.2 million in restructuring expenses under our restructuring plan that we implemented in the second half of fiscal 2009 in response to economic conditions, $13.9 million for restructuring actions incurred for the completion of the restructuring plan that we began during the fourth quarter of fiscal 2006 and completed during the second quarter of fiscal 2009, and $1.1 million in additions to accruals for changes in estimates related to prior period restructuring activities. As part of both restructuring actions, during fiscal 2009, we reduced our headcount by 341 employees. At October 31, 2009, our total headcount was approximately 3,600.

Impairment of goodwill and intangible assets

See the section “Impairment of Goodwill and Intangible Assets” above for detail on the impairment of $279.1 million of goodwill and intangible assets during fiscal 2009.

In the third quarter of fiscal 2008, we acquired $12.0 million of developed technology, which was integrated into our Identity and Security Management reporting unit. During the fourth quarter of fiscal 2008, we completed our detailed internal reviews of the technology and determined that we would not utilize all of the acquired developed technology as initially planned. These reviews determined that only a portion of the acquired developed technology would be utilized in our products. We used discounted cash flow models to estimate the fair value of this acquired developed technology based upon the updated plans, and determined that $7.7 million had become impaired. This intangible asset was written down and the related charge was recorded as a component of operating expenses in the consolidated statements of operations during fiscal 2008. The entire $7.7 million impairment charge related to the Identity and Security Management reporting unit. As part of this review, it was determined that the estimated useful life of the remaining asset would be four years.

(Gain) loss on sale of subsidiaries

The fiscal 2009 gain on sale of subsidiaries relates to a net gain recognized upon the finalization of working capital adjustments related to the sales of our Mexico and Argentina subsidiaries, partially offset by a loss on the sale of our Chile subsidiary, discussed in the “Divestitures” section, above. The fiscal 2008 loss on sale of subsidiaries resulted from the divestiture of our Mexico and Argentina subsidiaries discussed in the “Divestitures” section, above.

Gain on sale of property, plant and equipment, net

During fiscal 2009, we sold certain corporate real estate assets and computer equipment for net proceeds of $10.7 million that had a net book value of $8.1 million. The sales also included other fees and expenses of $0.4 million and resulted in a $2.2 million gain.

Purchased in-process research and development

Purchased in-process research and development of $2.7 million during fiscal 2008 related to the PlateSpin acquisition. At the acquisition date, PlateSpin was developing the next release of its three major products. These releases had not yet reached technological feasibility at the time of the acquisition. The purchased in-process research and development did not have any alternative future use and did not otherwise qualify for capitalization. As a result, this amount was expensed upon acquisition.

Foreign currency exchange rate fluctuations

Foreign currency exchange rate fluctuations during fiscal 2009 compared to fiscal 2008 unfavorably impacted revenue by $16.8 million, favorably impacted operating expenses by $32.3 million and favorably impacted income from continuing operations by $15.5 million.

 

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NOVELL, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

 

Results of Operations – Fiscal 2009 as compared to Fiscal 2008 (Continued)

 

Other Income (Expense), Net

 

     Fiscal Year Ended October 31,        
(Dollars in thousands)    2009     2008     Change  

Investment income

   $ 22,420      $ 69,671        (68)%   

as a percent of net revenue

     3     7  

Gain on sale of previously impaired investments, net

   $ 300      $ 1,969        (85)%   

as a percent of net revenue

          

Impairment of investments

   $ (5,466   $ (30,024     82%   

as a percent of net revenue

     (1 )%      (3 )%   

Interest expense and other, net

   $ (14,736   $ (23,514     37%   

as a percent of net revenue

     (2 )%      (2 )%   

Total other income, net

   $ 2,518      $ 18,102        (86)%   

as a percent of net revenue

         2  

Investment income includes income from short-term and long-term investments. Investment income for fiscal 2009 decreased compared to fiscal 2008 due primarily to lower interest rates and to a decrease in cash, cash equivalents and short-term investments resulting primarily from cash expended for repurchasing the remainder of our Debentures, and acquisitions.

During fiscal 2009 and 2008, we recognized gains of $0.3 million and $2.0 million, respectively, related to the sales of direct investments that were previously fully impaired.

During fiscal 2009, we recorded an other-than-temporary impairment charge of $5.5 million related to our ARSs based on our assessment that it is likely that the fair value of the ARSs will not fully recover in the foreseeable future, given a combination of factors, including the duration, severity and continued declining trend of the fair value of these securities as well as a deterioration in some of the securities’ credit ratings.

Interest expense and other, net for fiscal 2009 decreased compared to fiscal 2008 due primarily to the Debenture repurchase, which resulted in lower interest expense.

Income Tax Expense on Income From Continuing Operations

 

     Fiscal Year Ended October 31,        
(Dollars in thousands)    2009     2008     Change  

Income tax expense

   $ 10,666      $ 35,217        (70)%   

Effective tax rate

     (5 )%      154  

The effective tax rate on continuing operations for fiscal 2009 was (5%) compared to 154% for fiscal 2008. The fiscal 2009 rate of (5%) is the result of recording tax expense on a pre-tax book loss. This was primarily due to the $279.1 million of goodwill and intangible asset impairment charges recorded for book purposes in fiscal 2009 for which we received minimal current tax benefit. In the U.S. these impairment charges are either non-deductible or deductible over 15 years with a valuation allowance on the deferred asset, and outside the U.S. these impairment charges are attributable to jurisdictions where we receive little or no tax benefit.

In fiscal 2008 we had significant book to tax basis differences that increased fiscal 2008 taxable income primarily as a result of a large one-time cash payment to us in fiscal 2007 that we deferred for tax purposes to fiscal 2008. Because of these book-to-tax differences, we recorded significantly higher tax expense in the U.S. in fiscal 2008 when compared to fiscal 2009, resulting in the higher overall effective tax rate in fiscal 2008 compared to fiscal 2009. Included in the fiscal 2008 effective tax rate are $3.3 million in adjustments related to settlements of prior period audits and tax filings.

 

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NOVELL, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

 

Results of Operations – Fiscal 2009 as compared to Fiscal 2008 (Continued)

 

Net Loss Components

 

     Fiscal Year Ended October 31,  
(In thousands)    2009     2008  

Loss from continuing operations

   $ (214,640   $ (12,339

Income from discontinued operations, net of tax

     1,904        3,594   
                

Net loss

   $ (212,736   $ (8,745
                

Discontinued operations for fiscal 2009 and 2008 relates to gains from the March 2007 sale of Salmon and the October 2007 sale of CTP Switzerland, respectively, as discussed in the “Divestitures” section, above.

Restructuring Expenses

Fiscal 2010

In the first quarter of fiscal 2010, we recorded net restructuring expenses of $2.8 million. This was comprised of $2.9 million primarily for termination benefits for five employees as part of our business unit segment structural and management reorganization, partially offset by $0.1 million in reductions to accruals for changes in estimates related to prior period restructuring activities. No other restructuring actions were undertaken throughout the remainder of fiscal 2010. The following table summarizes the activity related to this restructuring action:

 

(In thousands)        Severance    
and
Benefits
 

Original reserve

   $ 2,876   

Cash payments

     (2,158
        

Balance at October 31, 2010

   $ 718   
        

The remaining unpaid balance as of October 31, 2010 is for severance and benefits, which we expect to pay over the first half of fiscal 2011.

Fiscal 2009

During fiscal 2009, we recorded net restructuring expenses of $25.2 million. This was comprised of $10.2 million in restructuring expenses under our restructuring plan that we implemented in the second half of fiscal 2009 in response to economic conditions, $13.9 million for restructuring actions incurred for the completion of the restructuring plan that we began during the fourth quarter of fiscal 2006 and completed during the second quarter of fiscal 2009, and $1.1 million in additions to accruals for changes in estimates related to prior period restructuring activities. As part of both restructuring actions, during fiscal 2009, we reduced our headcount by 341 employees. The following table summarizes the activity related to these restructuring actions:

 

(In thousands)        Severance    
and
Benefits
    Excess
     Facilities    
    Other
  Restructuring   
Related Costs
        Total      

Original reserve

   $ 18,753      $ 4,934      $ 419      $ 24,106   

Cash payments

     (12,147     (1,484     (419     (14,050
                                

Balance at October 31, 2009

     6,606        3,450               10,056   

Cash payments

     (6,447     (1,288            (7,735

Non-cash adjustments

     (133     (262            (395
                                

Balance at October 31, 2010

   $ 26      $ 1,900      $      $ 1,926   
                                

The remaining unpaid balance as of October 31, 2010 is primarily for lease costs for redundant facilities, which we expect to pay over the respective remaining contract terms, the longest of which extends to 2018.

 

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NOVELL, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

 

Restructuring Expenses (Continued)

 

Fiscal 2008

During fiscal 2008, we recorded net restructuring expenses of $28.6 million. This was comprised of $31.0 million in restructuring activities recognized during fiscal 2008 and $2.4 million in reductions of accruals for restructuring activities recorded in prior periods.

The restructuring actions undertaken during fiscal 2008 were a continuation of the restructuring plan that we began during the fourth quarter of fiscal 2006. The restructuring plan is related to our strategy to implement a comprehensive transformation of our business and to achieve competitive operating margins. Specific actions taken during fiscal 2008 included reducing our workforce by 364 employees. The following table summarizes the activity related to the fiscal 2008 restructuring:

 

(In thousands)        Severance    
and
Benefits
    Excess
     Facilities    
    Other
  Restructuring   
Related Costs
        Total      

Original reserve

   $ 25,583      $ 3,492      $ 1,949      $ 31,024   

Cash payments

     (10,893     (2,213     (1,576     (14,682

Non-cash adjustments

     37        (41     (144     (148
                                

Balance at October 31, 2008

     14,727        1,238        229        16,194   

Cash payments

     (15,006     (734     (217     (15,957

Non-cash adjustments

     901        331        (12     1,220   
                                

Balance at October 31, 2009

     622        835               1,457   

Cash payments

     (194     (663            (857

Non-cash adjustments

     335        233               568   
                                

Balance at October 31, 2010

   $ 763      $ 405      $      $ 1,168   
                                

The remaining unpaid balance as of October 31, 2010 is primarily for lease costs for redundant facilities, which we expect to pay over the respective remaining contract terms, the longest of which extends to 2013, and for severance, which is currently being contested in court and currently represents our best estimate of the amount that we may have to pay. While the outcome cannot be predicted with certainty, we do not believe that the outcome will have a material adverse effect, individually, or in the aggregate, on our consolidated financial position, results of operations or cash flows.

Liquidity and Capital Resources

 

(Dollars in thousands)        October 31,    
2010
         October 31,    
2009
         Percentage    
Change
 

Cash, cash equivalents, and short-term investments

   $ 1,126,690       $ 983,465         15%     

Percentage of total assets

     51%         52%      

An overview of the significant cash flow activities are explained below:

 

(in thousands)      Fiscal 2010         Fiscal 2009         Fiscal 2008    

Net cash provided by operating activities

   $ 75,547      $ 68,770      $ 55,870   

Change in restricted cash

     53,033        (332     (52,701

Purchases of property, plant and equipment

     (17,648     (22,087     (37,716

Issuance of common stock

     8,940        3,566        13,297   

Proceeds from sales of and distributions from long-term investments

     8,847        4,209        24,757   

Net cash paid for acquisitions

            (48,472     (219,553

Purchase of intangible assets

                   (12,000

Common stock repurchases/retirements

                   (66,820

(Repayment) issuance of debt

            (4,658     4,795   

Debenture repurchases

            (125,537     (456,500

 

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NOVELL, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

 

Liquidity and Capital Resources (Continued)

 

The Merger Agreement generally requires us to operate our business in the ordinary course pending consummation of the merger, and subject to certain limited exceptions, including, without limitation, Attachmate’s prior written consent, it restricts us from taking certain specified actions until the merger is complete or the agreement is terminated, including, without limitation, not exceeding a certain amount in capital expenditures, not making certain acquisitions, not entering into certain types of contracts and other matters. In addition, one of the conditions to close the merger is that we and our subsidiaries will have available cash and cash equivalents equal to approximately $1.03 billion. However, there can be no assurances that we and our subsidiaries will have available cash and cash equivalents equal to this amount.

As of October 31, 2010, we had cash, cash equivalents, and short-term investments of $482.7 million held in accounts outside the United States, which may be subject to taxation if repatriated. Our short-term investment portfolio is diversified among security types, industry groups, and individual issuers. As of October 31, 2010, our short-term investment portfolio includes gross unrealized gains of $8.8 million and less than $0.1 million of gross unrealized losses.

During fiscal 2010 and 2008, the U.S. dollar value of our foreign-denominated cash and cash equivalent holdings decreased due to changes in foreign currency exchange rates by a net $3.2 million and $22.2 million, respectively. During fiscal 2009, the U.S. dollar value of our foreign-denominated cash and cash equivalent holdings increased due to changes in foreign currency exchange rates by a net $14.8 million. The decrease in fiscal 2010 resulted from the strengthening of the U.S. dollar against certain foreign currencies, primarily the Euro. As foreign currency exchange rates continue to fluctuate, especially the Euro, we may see further changes in the U.S. dollar value of our foreign-denominated cash and cash equivalent holdings.

In relation to the appeal we filed in the Amer Jneid legal matter, we were required by the court to post a $51.5 million bond during fiscal 2008 (See Note S, “Legal Proceedings”). The amount of the bond was determined by statutory regulations and had no connection to the amount we may ultimately pay in this matter. The bond was held in an interest-bearing account in our name, but was restricted and classified as such on our consolidated balance sheet as of October 31, 2009. During fiscal 2010, the bond amount plus interest, which totaled $53.0 million, was returned to us.

Purchases of property, plant and equipment continue to decline, reflecting our efforts to conserve cash and to be more restrictive on capital project approvals.

During fiscal 2010, we sold our remaining ARSs for proceeds of $12.2 million, which was comprised of $8.0 million of ARSs classified as long-term investments and $4.2 million of ARSs classified as short-term investments. During fiscal 2010, we also recognized a gain of $0.8 million related to the sales of direct investments that were previously fully impaired. These gains are shown as a component of the line item “Gain on sale of previously impaired investments, net” in our consolidated statements of operations.

According to the terms of the OIN agreement under which we have a $20.0 million or 17% interest in OIN, we could be required to make future cash contributions that we plan to fund with cash from operating activities and cash on hand. OIN is a privately-held company that has and is expected to continue to acquire patents to promote Linux and open source by offering its patents on a royalty-free basis to any company, institution or individual that agrees not to assert its patents against the Linux operating system or certain Linux-related applications.

During fiscal 2008, our Board of Directors authorized the repurchase of up to $100 million of our outstanding common stock. There is no fixed termination date for the repurchase program. There were no repurchases under the program during fiscal 2010 or 2009. As of October 31, 2010, $33.2 million remains available to be used for repurchasing common stock under the current Board authorization. The Merger Agreement generally restricts, subject to certain limited exceptions, including, without limitation, Attachmate’s prior written consent, our ability to repurchase our outstanding common stock during the interim period between the execution of the Merger Agreement and the consummation of the merger (or the date on which the Merger Agreement is earlier terminated).

 

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NOVELL, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

 

Liquidity and Capital Resources (Continued)

 

Our contractual obligations as of October 31, 2010 are as follows:

 

     Payments Due by Period  
(in millions)          Total              Less Than    
1 Year
(2011)
     1-3 Years
     (2012-2013)
     3-5 Years
     (2014-2015)  
       More Than
5  Years
(2015+)
 

Purchase obligations (a) (b)

   $ 92.6       $ 27.0       $ 49.6       $ 16.0       $   

Operating lease obligations

     42.5         13.0         17.3         8.1         4.1   

Uncertain tax reserves (c)

     20.9         3.8         6.0         1.8         9.3   

Letters of credit

     2.8         1.4         0.6         0.4         0.4   
                                            

Total

   $ 158.8       $ 45.2       $ 73.5       $ 26.3       $ 13.8   
                                            

 

(a)

Purchase obligations represent future contracted payments entered into as a part of the normal course of business that are not recorded as liabilities at October 31, 2010.

 

(b)

Included in this amount is the remaining four years of the five-year contract to outsource the majority of our internal IT systems and operations to ACS.

 

(c)

The timing of the payouts is estimated and subject to change.

Our principal sources of liquidity continue to be from operating activities, cash on hand, and short-term investments. Our liquidity needs for the next twelve months and beyond are principally for the financing of fixed assets, any repurchases of common stock under our share repurchase plan, payments under prior restructuring plans, product development investments, and maintaining flexibility in a dynamic and competitive operating environment.

Barring unforeseen circumstances, we anticipate being able to fund these liquidity needs for the next twelve months with existing cash, cash equivalents, and short-term investments together with cash generated from operating activities and investment income. We believe that offerings of equity or debt securities are possible for expenditures beyond the next twelve months, if the need arises, although such offerings may not be available to us on acceptable terms and are dependent on market conditions at such time.

Off-Balance Sheet Arrangements

At October 31, 2010, we had no off-balance sheet arrangements as defined by applicable SEC rules.

Recent Pronouncements

In June 2009, the FASB issued new guidance to replace the quantitative-based risks and rewards calculation for initially determining which enterprise, if any, has a controlling financial interest in, and will be required to consolidate, a variable interest entity. A variable interest entity is defined as an entity that will need additional funding to operate. Companies are now required to follow a more qualitative approach, focused on identifying which enterprise has the power to direct the activities of the variable interest entity that most significantly impacts the variable interest entity’s economic performance. Companies are also required to perform ongoing assessments of which enterprise, if any, will have to consolidate the variable interest entity. Additional disclosures are also required. This guidance is effective for fiscal years beginning after November 15, 2009 (our fiscal 2011). Currently, the impact of this pronouncement on our financial position and results of operations is anticipated to be immaterial.

In January 2010, the FASB issued updated guidance to improve disclosures regarding fair value measurements. In addition to certain portions that were effective and implemented in prior periods, this update requires entities to present separately (i.e. on a gross basis rather than as a net amount), information about purchases, sales, issuances, and settlements in the roll forward of changes in level 3 fair value measurements. These new disclosure requirements are effective for fiscal years beginning after December 15, 2010 (our fiscal 2012). As this is only disclosure-related, and we currently do not have any level 3 fair value measurements, it is presently anticipated that this guidance will not have an impact on our financial position and results of operations.

 

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NOVELL, INC.

PART II

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

We are exposed to financial market risks, including changes in interest rates, foreign currency exchange rates, and market prices of equity securities. To mitigate some of these risks, we utilize currency forward contracts. We do not use derivative financial instruments for speculative or trading purposes, and no significant derivative financial instruments were outstanding at October 31, 2010.

Credit Risk

The fair market values of our investment portfolio and cash balances are exposed to counterparty credit risk. Accordingly, while we periodically review our portfolio for risk mitigation, the principal values of our cash balances, money market accounts and investments in available-for-sale securities could suffer a loss of value.

Interest Rate Risk

The primary objective of our short-term investment activities is to preserve principal while maximizing yields without significantly increasing risk. Our strategy is to invest in widely diversified short-term investments, consisting primarily of investment grade securities, substantially all of which either mature within the next twelve months or have characteristics of short-term investments. A hypothetical 50 basis point increase in interest rates would result in an approximate $3.9 million decrease (less than 0.9%), and $3.5 million decrease (less than 1%) in the fair value of our available-for-sale securities at October 31, 2010 and 2009, respectively.

Market Risk

We hold available-for-sale equity securities in our short-term investment portfolio related to our deferred compensation plan. As of October 31, 2010, the gross unrealized gain before tax effect on the short-term public equity securities totaled $0.1 million. A reduction in prices of 10% of these short-term equity securities would result in an approximately $0.8 million decrease (less than 0.1%) in the fair value of our short-term investments. As of October 31, 2009, the gross unrealized loss before tax effect on the short-term public equity securities totaled $1.0 million. A reduction in prices of 10% of these short-term equity securities would have resulted in an approximately $0.7 million decrease (less than 0.2%) in the fair value of our short-term investments.

We have in the past experienced market risk and liquidity issues related to our investment funds and we continue to closely monitor current economic and market events to minimize our market risk on our investment portfolio. Barring unforeseen circumstances, we anticipate being able to fund our liquidity needs for the next twelve months with existing cash, cash equivalents, and short-term investments together with cash generated from operating activities and investment income.

Foreign Currency Risk

We use derivatives to hedge those net assets and liabilities that, when re-measured or settled according to accounting principles generally accepted in the United States, impact our consolidated statements of operations. Through our hedging program, we utilize currency forward contracts for the sole purpose of hedging an existing or anticipated currency exposure, not for speculation or trading purposes. Gains and losses on currency forward contracts should generally be offset by corresponding gains and losses on the net foreign currency assets and liabilities that they hedge, resulting in negligible net gain or loss overall on the hedged exposures. Gains and losses on currency forward contracts used in our hedging program are recognized in other income (expense) in our consolidated statements of operations in the same period that the gains and losses on the re-measurement of the related foreign currency denominated assets and liabilities occur. Gains and losses related to foreign exchange contracts are included in cash flows from operating activities in our consolidated statements of cash flows. Our hedging program reduces, but does not entirely eliminate, the impact of foreign currency exchange rate movements. If we do not hedge against foreign currency exchange rate movements, an increase or decrease of 10% in exchange rates would result in an increase or decrease in income before taxes of approximately $3.3 million, and $9.7 million as of October 31, 2010 and 2009, respectively. The lower impact of a 10% increase or decrease in exchange rates as of October 31, 2010 compared to October 31, 2009 resulted primarily from lower levels of non-U.S. dollar denominated net assets. These amounts represent the exposure related to balance sheet re-measurements only and assumes that all currencies move in the same direction at the same time relative to the U.S. dollar.

 

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NOVELL, INC.

PART II

 

Item 7A. Quantitative and Qualitative Disclosures About Market Risk (Continued)

 

We do not currently hedge currency risk related to revenues or expenses denominated in foreign currencies. Foreign currency exchange rate fluctuations during fiscal 2010 compared to fiscal 2009, as measured using the prior year period foreign currency exchange rates on non-U.S. dollar denominated revenue and expenses, favorably impacted revenue by $4.5 million, unfavorably impacted operating expenses by $10.1 million and unfavorably impacted income from continuing operations by $5.6 million. Foreign currency exchange rate fluctuations during fiscal 2009 compared to fiscal 2008, unfavorably impacted revenue by $16.8 million, favorably impacted operating expenses by $32.3 million and favorably impacted (loss) income from continuing operations by $15.5 million. The general strengthening of the U.S. dollar against other foreign currencies during fiscal 2010 resulted in the favorable impact to revenue and unfavorable impact to income from continuing operations in fiscal 2010 compared to fiscal 2009. The general weakening of the U.S. dollar against other foreign currencies during fiscal 2009 resulted in the unfavorable impact to revenue and favorable impact to (loss) income from continuing operations in fiscal 2009 compared to fiscal 2008.

If the U.S. dollar were to strengthen 10%, it is anticipated that the impact to revenue would be approximately 3%. This assumes that all currencies move in the same direction at the same time and the ratio of non-U.S. dollar denominated revenue and expenses to U.S. dollar denominated revenue and expenses does not change from current levels. Since a large portion of our recognized revenue is deferred revenue that is recorded at different foreign currency exchange rates, the impact to revenue of changes in foreign currency exchange rates is recognized over time, whereas the impact to expenses is more immediate, as expenses are recognized at the current foreign currency exchange rate in effect at the time the expense is incurred.

All of the potential changes noted above are based on sensitivity analyses performed on our financial position at October 31, 2010 and 2009. Actual results may differ materially.

During fiscal 2010 and 2009, the U.S. dollar value of our foreign-denominated cash and cash equivalent holdings decreased by a net $3.2 million and increased by a net $14.8 million, respectively. The decrease in fiscal 2010 resulted from the strengthening of the U.S. dollar against certain foreign currencies, primarily the Euro. As foreign currency exchange rates continue to fluctuate, especially the Euro, we may see further changes in the U.S. dollar value of our foreign-denominated cash and cash equivalents.

For more information on risks associated with our investments, see Part I, Item 1A, “Risk Factors.”

 

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NOVELL, INC.

PART II

 

Item 8. Financial Statements and Supplementary Data

Novell, Inc.

 

     Page  

Consolidated Statements of Operations

     59   

Consolidated Balance Sheets

     60   

Consolidated Statements of Stockholders’ Equity

     61   

Consolidated Statements of Cash Flows

     62   

Notes to Consolidated Financial Statements

     63   

Report of PricewaterhouseCoopers LLP, Independent Registered Public Accounting Firm

     104   

Selected Consolidated Quarterly Financial Data — Unaudited

     105   

 

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NOVELL, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Amounts in thousands, except per share data)

 

     Fiscal Year Ended October 31,  
     2010     2009     2008  

Net revenue:

      

Software licenses

   $ 105,108      $ 116,919      $ 188,983   

Maintenance and subscriptions

     618,542        640,745        616,493   

Services

     88,221        104,521        151,037   
                        

Total net revenue

     811,871        862,185        956,513   
                        

Cost of revenue:

      

Software licenses

     8,506        9,174        15,235   

Maintenance and subscriptions

     88,447        92,613        87,677   

Services

     76,652        85,044        132,327   
                        

Total cost of revenue

     173,605        186,831        235,239   
                        

Gross profit

     638,266        675,354        721,274   
                        

Operating expenses (income):

      

Sales and marketing

     282,402        295,998        368,719   

Product development

     160,188        181,383        191,547   

General and administrative

     108,465        102,345        113,529   

Restructuring expenses

     2,774        25,200        28,645   

Impairment of goodwill

            270,044          

Impairment of intangible assets

            9,091        7,664   

(Gain) loss on sale of subsidiaries

            (16     3,694   

Gain on sale of property, plant and equipment, net

            (2,199       

Purchased in-process research and development

                   2,700   
                        

Total operating expenses

     553,829        881,846        716,498   
                        

Income (loss) from operations

     84,437        (206,492     4,776   
                        

Other income (expense):

      

Investment income

     13,088        22,420        69,671   

Gain on sale of previously impaired investments, net

     7,413        300        1,969   

Impairment of investments

            (5,466     (30,024

Interest expense and other, net

     (2,851     (14,736     (23,514
                        

Total other income, net

     17,650        2,518        18,102   
                        

Income (loss) from continuing operations before taxes

     102,087        (203,974     22,878   

Income tax (benefit) expense

     (275,279     10,666        35,217   
                        

Income (loss) from continuing operations

     377,366        (214,640     (12,339

Income from discontinued operations before taxes (including gain on disposal of $610, $1,904 and $2,653 in fiscal 2010, 2009 and 2008, respectively)

     610        1,904        2,758   

Income tax benefit on discontinued operations

                   (836
                        

Income from discontinued operations

     610        1,904        3,594   
                        

Net income (loss)

   $ 377,976      $ (212,736   $ (8,745
                        

Basic earnings per share:

      

Income (loss) from continuing operations

   $ 1.08      $ (0.62   $ (0.04

Discontinued operations

                   0.02   
                        

Net income (loss) per share

   $ 1.08      $ (0.62   $ (0.02
                        

Diluted earnings per share:

      

Income (loss) from continuing operations

   $ 1.07      $ (0.62   $ (0.04

Discontinued operations

                   0.02   
                        

Net income (loss) per share

   $ 1.07      $ (0.62   $ (0.02
                        

Weighted-average shares outstanding – Basic

     349,741        345,493        350,207   

Weighted-average shares outstanding – Diluted

     353,447        345,493        350,207   

See notes to consolidated financial statements.

 

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NOVELL, INC.

CONSOLIDATED BALANCE SHEETS

(Amounts in thousands, except share and per share data)

 

         October 31,    
2010
        October 31,    
2009
 
ASSETS     

Current assets:

    

Cash and cash equivalents

   $ 685,594      $ 591,656   

Short-term investments

     441,096        391,809   

Restricted cash

            53,033   

Receivables (net of allowances of $2,261 and $4,085 at October 31, 2010 and 2009, respectively)

     171,607        177,898   

Prepaid expenses

     16,233        17,708   

Current deferred income taxes

     49,169        5,521   

Other current assets

     33,725        26,747   
                

Total current assets

     1,397,424        1,264,372   

Property, plant and equipment, net

     156,033        170,459   

Long-term investments

            10,303   

Goodwill

     353,415        356,033   

Intangible assets, net

     28,746        36,621   

Deferred income taxes

     243,583        26,717   

Other assets

     46,797        38,403   
                

Total assets

   $ 2,225,998      $ 1,902,908   
                
LIABILITIES AND STOCKHOLDERS’ EQUITY     

Current liabilities:

    

Accounts payable

   $ 26,785      $ 37,628   

Accrued compensation

     83,181        87,928   

Other accrued liabilities

     86,223        97,154   

Deferred revenue

     487,590        495,245   
                

Total current liabilities

     683,779        717,955   

Deferred income taxes

     7,622        8,403   

Long-term deferred revenue

     163,394        193,526   

Other long-term liabilities

     35,655        48,502   
                

Total liabilities

     890,450        968,386   
                

Commitments and contingences (Notes Q and R)

    

Stockholders’ equity:

    

Preferred stock, par value $.10 per share, Authorized — 500,000 shares; no shares issued

              

Common stock, par value $.10 per share, Authorized — 600,000,000 shares;

    

Issued — 366,670,140 and 362,175,921 shares at October 31, 2010 and 2009, respectively;

    

Outstanding — 351,576,048 and 347,072,762 shares at October 31, 2010 and 2009, respectively

     36,667        36,218   

Additional paid-in capital

     476,482        441,798   

Treasury stock, at cost — 15,094,092 and 15,103,159 shares at October 31, 2010 and 2009, respectively

     (124,224     (124,299

Retained earnings

     937,799        559,823   

Accumulated other comprehensive income

     8,824        20,982   
                

Total stockholders’ equity

     1,335,548        934,522   
                

Total liabilities and stockholders’ equity

   $ 2,225,998      $ 1,902,908   
                

See notes to consolidated financial statements.

 

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NOVELL, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Amounts in thousands)

 

        Common    
Stock
Shares
        Common    
Stock
Amount
        Treasury    
Stock
Shares
        Treasury    
Stock
Amount
        Additional    
Paid-In
Capital
    Retained
     Earnings    
    Accumulated
Other
Comprehensive
Income (Loss)
            Total          

Balance at October 31, 2007

    365,739      $ 36,574        (15,129   $ (124,512   $ 413,182      $ 795,984      $ 37,098      $ 1,158,326   

Stock issued from stock plans

    5,216        522        11        88        12,656                      13,266   

Stock-based compensation expense

                                33,818                      33,818   

Excess tax effects from stock-based compensation

                                18,500                      18,500   

Shares cancelled

    (802     (80                   (5,118                   (5,198

Shares repurchased and retired

    (11,627     (1,163                   (52,369     (13,288            (66,820

Impact to initially adopt new rules on accounting for tax uncertainties

                                       (1,392            (1,392

Amortization included in net periodic pension costs

                                              2,234        2,234   

Change in unrealized gain on investments

                                              (3,602     (3,602

Cumulative translation adjustment

                                              (52,859     (52,859

Net loss

                                       (8,745            (8,745
                     

Comprehensive loss

                                                     (62,972
                                                               

Balance at October 31, 2008

    358,526        35,853        (15,118     (124,424     420,669        772,559        (17,129     1,087,528   

Stock issued from stock plans

    4,811        481        15        125        2,845                      3,451   

Stock-based compensation expense

                                25,881                      25,881   

Excess tax effects from stock-based compensation

                                (2,775                   (2,775

Shares cancelled

    (1,161     (116                   (4,822                   (4,938

Amortization included in net periodic pension costs

                                              755        755   

Change in unrealized gain on investments

                                              13,802        13,802   

Cumulative translation adjustment

                                              23,554        23,554   

Net loss

                                       (212,736            (212,736
                     

Comprehensive loss

                                                     (174,625
                                                               

Balance at October 31, 2009

    362,176        36,218        (15,103     (124,299     441,798        559,823        20,982        934,522   

Stock issued from stock plans

    5,385        538        9        75        8,313                      8,926   

Stock-based compensation expense

                                29,057                      29,057   

Excess tax effects from stock-based compensation

                                2,226                      2,226   

Shares cancelled

    (891     (89                   (4,912                   (5,001

Amortization included in net periodic pension costs

                                              (4,837     (4,837

Change in unrealized gain on investments

                                              (2,245     (2,245

Cumulative translation adjustment

                                              (5,076     (5,076

Net income

                                       377,976               377,976   
                     

Comprehensive income

                                                     365,818   
                                                               

Balance at October 31, 2010

    366,670      $ 36,667        (15,094   $ (124,224   $ 476,482      $ 937,799      $ 8,824      $ 1,335,548   
                                                               

See notes to consolidated financial statements.

 

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NOVELL, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

 

     Fiscal Year Ended October 31,  
     2010     2009     2008  

Cash flows from operating activities

      

Net income (loss)

   $       377,976      $         (212,736   $ (8,745

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

      

Stock-based compensation expense

     29,057        25,881        33,818   

Depreciation and amortization

     30,298        40,675        42,892   

Change in accounts receivable allowances

     (1,833     444        (254

Utilization of previously reserved acquired net operating losses

            2,580        5,026   

Purchased in-process research and development

                   2,700   

Deferred income taxes

     (261,878     8,610        (19,078

Gain on sale of property, plant and equipment, net

            (2,199       

(Gain) loss on sale of subsidiaries

            (16     3,694   

Gain on disposal of discontinued operations, before taxes

     (610     (1,904     (2,653

Impairment of investments

            5,466        30,024   

Gain on sale of previously impaired investments

     (8,227     (300     (1,969

Loss on sale of previously impaired investments

     814                 

Gain on debenture repurchases

            (11     (4,606

Impairment of goodwill

            270,044          

Impairment of intangible assets

            9,091        7,664   

Changes in assets and liabilities, excluding acquisitions and dispositions:

      

Receivables

     8,866        23,951        11,782   

Prepaid expenses

     147        3,377        7,997   

Other current assets

     (20,399     6,166        402   

Accounts payable

     (4,535     (7,420     (7,586

Accrued liabilities

     (33,443     (53,939     (6,225

Deferred revenue

     (40,686     (48,990     (39,013
                        

Net cash provided by operating activities

     75,547        68,770        55,870   
                        

Cash flows from investing activities

      

Purchases of short-term investments

     (328,270     (341,500     (427,549

Maturities of short-term investments

     43,221        62,263        128,137   

Sales of short-term investments

     242,386        284,337        655,335   

Proceeds from sales of and distributions from long-term investments

     8,847        4,209        24,757   

Change in restricted cash

     53,033        (332     (52,701

Net cash proceeds from sale of discontinued operations

     938        1,036        564   

Net cash distributions from sale of subsidiaries

                   (171

Net cash paid for acquisitions

            (48,472     (219,553

Purchase of intangible assets

                   (12,000

Purchases of property, plant and equipment

     (17,648     (22,087     (37,716

Net proceeds from the sale of property, plant and equipment

            10,748          

Other

     7,899        7,228        (5,793
                        

Net cash provided by (used in) investing activities

     10,406        (42,570     53,310   
                        

Cash flows from financing activities

      

Issuance of common stock

     8,940        3,566        13,297   

Excess tax effects from stock-based compensation

     2,226        (2,775     18,500   

Common stock repurchases/retirements

                   (66,820

(Repayment) issuance of debt

            (4,658     4,795   

Debenture repurchases

            (125,537     (456,500
                        

Net cash provided by (used in) financing activities

     11,166        (129,404     (486,728
                        

Effect of exchange rate changes on cash

     (3,181     14,826        (22,237
                        

Increase (decrease) in cash and cash equivalents

     93,938        (88,378     (399,785

Cash and cash equivalents — beginning of year

     591,656        680,034        1,079,819   
                        

Cash and cash equivalents — end of year

   $ 685,594      $ 591,656      $         680,034   
                        

See notes to consolidated financial statements.

 

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NOVELL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

A. Summary of Business Operations

We develop, sell and install enterprise-quality software that is positioned in the operating systems and infrastructure software layers of the information technology (“IT”) industry. We develop and deliver Linux operating system software for a range of computers from desktops to servers. In addition, we provide a portfolio of integrated IT management software for systems, identity and security management for both Linux and mixed-platform environments. We serve a range of enterprise sizes, and combined with the quality and flexibility of our open-platform software technology, offer customers an IT infrastructure that is responsive to the cost pressures and the expanding IT initiatives that are characteristic of today’s business environment.

We were incorporated in the State of Delaware on January 25, 1983 and have established a reputation for innovation and industry leadership. We currently have approximately 3,400 employees in 54 offices worldwide.

On November 21, 2010, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Attachmate Corporation, a Washington corporation (“Attachmate”), and Longview Software Acquisition Corp., a Delaware corporation and a wholly-owned subsidiary of Attachmate (“Merger Sub”). Also on November 21, 2010, we entered into a Patent Purchase Agreement (the “Patent Purchase Agreement”) with CPTN Holdings LLC, a Delaware limited liability company and consortium of technology companies organized by Microsoft Corporation (“CPTN”). The pendency of these transactions may impact our operations and continuation of historical trends in future periods. For more information on these agreements and the transactions contemplated by these agreements, see Note Z, “Subsequent Events.”

In December 2009, we announced an evolution in our strategy – our intention to become an industry leader in the new market category of Intelligent Workload Management (“IWM”). IWM is a new model of computing that enables IT organizations to manage and optimize computing resources in a policy-driven, secure and compliant manner across physical, virtual and cloud computing environments. Our differentiated approach to delivering IWM, called Workload IQ, integrates identity and systems management capabilities into an application workload. As a result, enterprises are able to reduce the risks and challenges of computing across multiple environments while granting their users secure and compliant access to the computing services they need.

As part of this strategy evolution, during the first quarter of fiscal 2010, we reorganized our business unit segment structure and management. We consolidated our business unit segments from four to two. Our former Open Platform Solutions, Identity and Security Management and Systems and Resource Management business unit segments were consolidated to form the new Security, Management and Operating Platforms business unit segment (“SMOP”). Our former Workgroup business unit segment was renamed Collaboration Solutions (“CS”). Our business unit segments are described below in more detail.

SMOP

SMOP was created to achieve our goal of becoming an industry leader in the IWM market. To accomplish this goal, we leveraged our competencies in Linux, identity and security management, and systems and resource management with the objective of providing the industry’s leading IWM solutions. Our product strategy focuses on the four pillars of IWM: build, secure, manage and measure. We deliver these four pillars through our product groupings of Open Platform Solutions, Identity and Security Management, and Systems and Resource Management. These product groupings are described in more detail below.

Open Platform Solutions

We deliver Linux and related solutions for the enterprise. The SUSE® Linux Enterprise platform underpins all of our products. SUSE Linux Enterprise is a leading distribution system that differentiates itself from other Linux distributions by focusing on interoperability, support for mission-critical computing requirements, and cross-platform virtualization support. We also offer the ability for users to customize their Linux installation, yet still receive full support for their SUSE Linux Enterprise distribution through our SUSE Appliance Program.

Identity and Security Management

Our identity, security, and compliance management solutions are designed to help customers integrate, secure, and manage IT assets while reducing complexity and ensuring compliance with government and industry mandates. Adding this intelligence to every part of a customer’s IT environment may make their systems more agile and secure. Our solutions leverage automated, centrally-managed policies to provide insight into events happening throughout the enterprise.

 

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NOVELL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

 

A. Summary of Business Operations (Continued)

 

Systems and Resource Management

With our systems and resource management solutions, customers can define business and IT policies to automate the management of multiple IT resources, including the emerging challenge of managing virtual environments, as well as both public and private cloud computing deployments. Our systems and resource management solutions are designed to enable our customers to reduce IT effort, control IT costs, and reduce IT skill requirements to manage and leverage their IT investment.

CS

Within our CS business unit segment, we provide comprehensive and adaptable collaboration solutions that provide the infrastructure, services, and tools customers require to effectively and securely collaborate across a myriad of devices. We offer the security, reliability, and manageability that enable our customers’ employees to efficiently share information and ideas to perform their jobs at lower cost.

In addition to our technology offerings, within our business unit segments we offer a worldwide network of service personnel to help our customers and third-party partners utilize our software. We also have partnerships with application providers, hardware and software vendors, consultants, and systems integrators. In this way, we can offer a full solution to our customers.

B. Summary of Significant Accounting Policies

The accompanying consolidated financial statements reflect the application of significant accounting policies as described in this note and elsewhere in the accompanying consolidated financial statements.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of Novell, Inc., and its wholly-owned and majority-owned subsidiaries. All inter-company accounts and transactions have been eliminated in consolidation.

Management’s Estimates and Uncertainties

The preparation of financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the amounts reported and related disclosure of contingent assets and liabilities in the financial statements and accompanying notes. Actual results could differ materially from those estimates.

Reclassifications

As more fully described above in Note A, “Summary of Business Operations,” during the first quarter of fiscal 2010, we reorganized our business unit segment structure and management resulting in a change to our reportable business unit segments. In connection with this reorganization, we evaluated our internal cost structure to ensure the resulting business unit segment gross profit and operating income were reflective of our business unit segment management structure. As a result of this evaluation, we determined that the allocation and assignment of costs between maintenance and subscriptions and services within cost of revenue should be adjusted to be reflective of the new business unit segment management structure. For fiscal 2009 and 2008, in our consolidated statements of operations, $37.6 million and $36.6 million of costs, respectively, were moved from the services cost of revenue line item to the maintenance and subscriptions cost of revenue line item. This change impacted only the components of cost of revenue and had no impact on revenue, total cost of revenue or total gross profit.

Certain other amounts reported in prior periods have been reclassified from what was previously reported to conform to the current year’s presentation. These reclassifications did not have any impact on the statements of operations.

 

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NOVELL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

 

B. Summary of Significant Accounting Policies (Continued)

 

Foreign Currency Translation

The functional currency of all of our international subsidiaries, except for our Irish subsidiaries and a German holding company, is the local currency. These subsidiaries generate and expend cash primarily in their respective local currencies. The assets and liabilities of these subsidiaries are translated at current month-end exchange rates. Revenue and expenses are translated monthly at the average monthly exchange rate. Translation adjustments are recorded in the “Accumulated other comprehensive income” line item in the consolidated balance sheets. With respect to our Irish subsidiaries and German holding company, the functional currency is the U.S. dollar for which translation gains and losses are included in the line item, “Interest expense and other, net” in the consolidated statements of operations. All transaction gains and losses are reported in the line item, “Interest expense and other, net,” in the consolidated statements of operations. Foreign currency exchange rate fluctuations resulted in net foreign exchange gains of $0.2 million during fiscal 2010, and losses of $6.6 million and $5.6 million in fiscal 2009 and 2008, respectively.

Cash, Cash Equivalents and Short-Term Investments

All investments with an initial term to maturity of three months or less at the date of purchase are classified as cash equivalents. Short-term investments are diversified and: 1) mature greater than 3 months but within the next 12 months; 2) have characteristics of short-term investments; or 3) are available to be used for current operations, even if some maturities may extend beyond one year.

All marketable debt and equity securities that are included in short-term investments are considered available-for-sale and are carried at fair value. We have only acquired investment grade securities. Temporary increases or decreases in fair value are recorded as unrealized gains or losses in the “Accumulated other comprehensive income” line item in our consolidated balance sheets. In April 2009, the Financial Accounting Standards Board (“FASB”) amended the existing guidance on determining whether an impairment for investments in debt securities is other-than-temporary. Effective in our third quarter of fiscal 2009, impairment is considered to be other-than-temporary if there is intent to sell the debt security or it is more likely than not that the debt security will be required to be sold before its anticipated recovery. If these conditions are not evident, the present value of cash flows expected to be collected from the debt security should be compared to the amortized cost basis of the security to determine the other-than-temporary impairment. These new accounting rules require the separation of the total other-than-temporary impairment to the portion due to credit loss and the portion related to all other factors, typically considered market risks. The portion related to credit loss is recognized in earnings in the “Impairment of investments” line item in the consolidated statements of operations, while the portion related to other factors is recognized in the “Accumulated other comprehensive income” line item in our consolidated balance sheets.

For our equity securities, impairment is considered to be other-than-temporary if we have the intent to sell the security or we do not have both the intent and the ability to hold the equity security until its anticipated recovery. Additionally, we consider an equity security to be other-than-temporarily impaired if events and circumstances indicate that a decline in the value of an equity security has occurred and is other than temporary. When an equity security is considered to be other-than-temporarily impaired, we record the loss in the “Impairment of investments” line item in the consolidated statements of operations, for the difference between fair value and cost at the balance sheet date.

Long-Term Investments

As of October 31, 2010, we do not have any investments classified as long-term. At October 31, 2009, all of our Auction Rate Securities (“ARSs”) were classified as long-term investments in our consolidated balance sheets, and were our only long-term investments. At October 31, 2010, we no longer hold any ARSs.

We estimated the fair value of these ARSs using a discounted cash flow analysis that considered the following key inputs: (i) the underlying structure of each security; (ii) the present value of the future principal and interest payments discounted at rates considered to reflect current market conditions and the relevant risk associated with each security; and (iii) consideration of the time horizon that the market value of each security could return to its cost. When available, we also include market information and weigh this with our discounted cash flow analysis to estimate fair value. We estimated that the fair market value of these securities at October 31, 2009 was $10.3 million. At October 31, 2009, the original cost of the remaining ARSs was $29.8 million.

 

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NOVELL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

 

B. Summary of Significant Accounting Policies (Continued)

 

Concentrations of Credit Risk/Significant Customers

Financial instruments that subject us to credit risk primarily consist of cash equivalents, short-term investments, accounts receivable, and amounts due under subleases. Our credit risk is managed by investing cash and cash equivalents primarily in high-quality money market instruments, securities of the U.S. government and its agencies, highly rated corporate debt, and highly rated asset-backed securities all of which are of short duration.

Accounts receivable include amounts owed by geographically dispersed end-users, distributors, resellers, original equipment manufacturers (“OEMs”) and other customers. No collateral is required. Accounts receivable are not sold or factored. At October 31, 2010 and 2009, there were no receivables greater than 10% of our total receivables outstanding with any one customer. We generally have not experienced any material losses related to receivables from individual customers or groups of customers. Due to these factors, no significant additional credit risk, beyond amounts provided for, is believed by management to be inherent in our accounts receivable. During fiscal 2010, 2009 and 2008, there were no customers who accounted for more than 10% of total net revenue.

Our subleases are with many different parties and thus no concentration of credit risk exists at October 31, 2010.

Equity Investments

We account for our equity investments where we hold more than 20 percent of the outstanding stock of the investee’s stock or where we have the ability to significantly influence the operations or financial decisions of the investee under the equity method of accounting. We initially record the investment at cost and adjust the carrying amount each period to recognize our share of the earnings or losses of the investee based on our percentage of ownership. We review our equity investments periodically for indicators of impairment.

Property, Plant and Equipment

Property, plant and equipment are carried at cost, less accumulated depreciation and amortization. Depreciation and amortization is computed on the straight-line method over the estimated useful lives of the assets, or lease term, if shorter. Such lives are as follows:

 

Asset Classification

   Useful Lives  

Buildings

     30 years   

Furniture and equipment

     2 – 7 years   

Leasehold improvements and other

     3 – 10 years   

We periodically review our net property, plant and equipment for impairment whenever events or changes in circumstances indicate that the carrying value of the asset may not be recoverable. Factors that could indicate an impairment include significant underperformance of the asset as compared to historical or projected future operating results, significant changes in the actual or intended use of the asset, or significant negative industry or economic trends. When we determine that the carrying value of an asset may not be recoverable, the related estimated future undiscounted cash flows expected to result from the use and eventual disposition of the asset are compared to the carrying value of the asset. If the sum of the estimated future undiscounted cash flows is less than the carrying amount, we record an impairment charge based on the difference between the carrying value of the asset and its fair value, which we estimate based on discounted expected future cash flows. In determining whether an asset is impaired, we must make assumptions regarding recoverability of costs, estimated future cash flows from the asset, intended use of the asset and other related factors. If these estimates or their related assumptions change, we may be required to record impairment charges for these assets. For fiscal 2010, 2009, and 2008, we have not identified or recorded any impairment of our net property, plant and equipment.

Goodwill and Intangible Assets

We evaluate the recoverability of goodwill and indefinite-lived intangible assets annually as of August 1, or more frequently if events or changes in circumstances warrant, such as a material adverse change in the business. Goodwill is considered to be impaired when the carrying value of a reporting unit exceeds its estimated fair value. Fair values are estimated using the combination of a discounted cash flow methodology and a market analysis and weighting the results. Our reporting units are the three components of SMOP, which are: Open Platform Solutions, Identity and Security Management, and Systems and Resource Management; and our CS business unit segment.

 

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NOVELL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

 

B. Summary of Significant Accounting Policies (Continued)

 

We do not amortize goodwill or intangibles with indefinite lives resulting from acquisitions. We review these assets periodically for potential impairment issues. Separable intangible assets that are not deemed to have an indefinite life are amortized over their estimated useful lives.

We review our finite-lived intangible assets for indicators of impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. When we determine that the carrying value of an asset may not be recoverable, the related estimated future undiscounted cash flows expected to result from the use and eventual disposition of the asset are compared to the carrying value of the asset. If the sum of the estimated future undiscounted cash flows is less than the carrying amount, we record an impairment charge based on the difference between the carrying value of the asset and its fair value, which we estimate based on discounted expected future cash flows.

Disclosure of Fair Value of Financial Instruments

Our financial instruments mainly consist of cash and cash equivalents, short-term investments, accounts receivable, accounts payable, accrued expenses, and at October 31, 2009, long-term investments. The carrying amounts of our cash equivalents, accounts receivable, accounts payable, and accrued expenses approximate fair value due to the short-term nature of these instruments. Our long-term investments as of October 31, 2009 approximated fair value and were comprised entirely of our ARSs. As of October 31, 2010 and 2009, we did not hold any publicly-traded long-term equity investments (See Note G, “Long-Term Investments”).

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between willing market participants on the measurement date. Valuation techniques used to measure fair value should maximize the use of observable inputs and minimize the use of unobservable inputs. The fair value hierarchy is based on three levels of market inputs (Levels 1, 2 & 3), of which the first two are considered observable and the last unobservable, that may be used to measure fair value.

Our level 1 financial instruments are valued using quoted prices in active markets for identical instruments. Level 2 financial instruments are valued using quoted prices for identical instruments in less active markets or using other observable market inputs for comparable instruments. Level 3 financial instruments are valued using unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. As of October 31, 2010, we had no level 2 or 3 financial instruments.

Revenue Recognition and Related Reserves

Our revenue is derived primarily from the sale of software licenses, software maintenance, subscriptions of SUSE Linux Enterprise Server (“SLES”), technical support, training, and professional services. Our customers include: distributors, who sell our products to resellers, and value added resellers (“VARs”); OEMs, who integrate our products with their products or solutions; VARs, who provide solutions across multiple vertical market segments which usually include services; and end-users, who may purchase our products and services directly from us or from other partners or resellers. Except for our SUSE Linux product, distributors do not order to stock and only order products when they have an end customer order. With respect to our SUSE Linux product, distributors place orders and the product is then sold to end customers principally through the retail channel. OEMs report the number of copies duplicated and sold via an activity or royalty report. Software maintenance, technical support, and subscriptions of SLES typically involve one- to three-year contract terms. Our standard practice is to provide customers with a 30-day general right of return. Such return provision allows for a refund and/or credit of any amount paid by our customers.

When an arrangement does not require significant production, modification, or customization of software or does not contain services considered to be essential to the functionality of the software, revenue is recognized when the following four criteria are met:

 

   

Persuasive evidence of an arrangement exists — We require evidence of an agreement with a customer specifying the terms and conditions of the products or services to be delivered typically in the form of a signed contract or statement of work accompanied by a purchase order.

   

Delivery has occurred — For software licenses, delivery takes place when the customer is given access to the software programs via access to a website or shipped medium. For services, delivery takes place as the services are provided.

   

The fee is fixed or determinable — Fees are fixed or determinable if they are not subject to cancellation or other payment terms that exceed our standard payment terms.

 

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Collection is probable — We perform a credit review of all customers with significant transactions to determine whether a customer is creditworthy and collection is probable. Prior credit history with us, credit reports, financial statements, and bank references are used to assess creditworthiness.

In general, revenue for transactions that do not involve software customization or services considered essential to the functionality of the software is recognized as follows:

 

   

Software fees for our SUSE Linux product are recognized when the product is sold to an end customer;

   

Software license fees for sales through OEMs are recognized upon receipt of license activity or royalty reports;

   

All other software license fees are recognized upon delivery of the software;

   

Software maintenance, technical support, and subscriptions of SLES are recognized ratably over the contract term; and

   

Professional services, training and other similar services are recognized as the services are performed.

If the fee due from the customer is not fixed or determinable, revenue is recognized as payments become due from the customer. If collection is not considered probable, revenue is recognized when the fee is collected. We record provisions against revenue for estimated sales returns and allowances on product and service-related sales in the same period as the related revenue is recorded. We also record a provision to operating expenses for bad debts resulting from customers’ inability to pay for the products or services they have received. These estimates are based on historical sales returns and bad debt expense, analyses of credit memo data, and other known factors, such as bankruptcy. If the historical data we use to calculate these estimates does not accurately reflect future returns or bad debts, adjustments to these reserves may be required that would increase or decrease revenue or net income.

Many of our software arrangements include multiple elements. Such elements typically include any or all of the following: software licenses, rights to additional software products, software maintenance, technical support, training and professional services. For multiple-element arrangements that do not involve significant modification or customization of the software and do not involve services that are considered essential to the functionality of the software, we allocated value to each element based on its relative fair value for transactions prior to fiscal 2009.

Prior to the start of fiscal 2009, we sold software licenses individually as well as combined with other products (multi-element arrangements), allowing us to determine vendor-specific objective evidence (“VSOE”) of fair value for substantially all software license products. Accordingly, when we sold multi-element arrangements we used the relative fair value, or proportional, revenue accounting method to allocate the value of multi-element arrangements proportionally to the software license and other components.

At the start of fiscal 2009, we made a sales program change requiring all customers to initially purchase maintenance with licenses, which is common industry practice. As a result of eliminating stand-alone software license sales, VSOE of fair value for software licenses no longer existed. Accordingly, beginning in the first quarter of fiscal 2009, the residual method as defined in current accounting standards is now used to allocate the value of multi-element arrangements to the various components, which is also common industry practice. Under the residual method, each undelivered element (typically maintenance) is allocated value based on Novell-specific objective evidence of fair value for that element and the remainder of the total arrangement fee is allocated to the delivered element, typically the software. This method results in discounts being allocated to the software license rather than spread proportionately over all elements. Therefore, when a discount exists, less revenue is recognized at the time of sale under the residual method than under the relative fair value method, which we used prior to fiscal 2009. We believe that the impact of the change to the residual method was not material to net revenue in fiscal 2009 or 2010.

If sufficient Novell-specific objective evidence of fair value does not exist for all undelivered elements and the arrangement involves rights to unspecified additional software products, all revenue is recognized ratably over the term of the arrangement. If the arrangement involves rights to unspecified additional software products, all revenue is initially deferred until the only remaining undelivered element is software maintenance or technical support, at which time the entire fee is recognized ratably over the remaining maintenance or support term.

In the case of multiple-element arrangements that involve significant modification or customization of the software or involve services that are considered essential to the functionality of the software, contract accounting is applied. When Novell-specific objective evidence of fair value exists for software maintenance or technical support in arrangements requiring contract accounting, the professional services and license fees are combined and revenue is recognized on the percentage of completion basis. The percentage of completion is generally calculated using hours incurred to date relative to the total expected hours for the entire project. The cumulative impact of any revision in estimates to complete or recognition of losses on contracts is reflected in the period in which the changes or losses become known. The maintenance or support fee is unbundled from the other elements and revenue is recognized ratably over the maintenance or support term. When Novell-specific objective evidence of fair value does not exist for software maintenance or support, then all revenue is deferred until completion of the professional services, at which time the entire fee is recognized ratably over the remaining maintenance or support period.

 

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For consolidated statements of operations classification purposes only, we allocate the revenue first to those elements for which we have Novell-specific objective evidence of fair value, and any remaining recognized revenue is then allocated to those items for which we lack Novell-specific objective evidence of fair value.

Professional services contracts are either time-and-materials or fixed-price contracts. Revenue from time-and-materials contracts is recognized as the services are performed. Revenue from fixed-price contracts is recognized based on the proportional performance method, generally using estimated time to complete, to measure the completed effort. The cumulative impact of any revision in estimates to complete or recognition of losses on contracts is reflected in the period in which the changes or losses become known. Professional services revenue includes reimbursable expenses charged to our clients.

Microsoft Agreements-related revenue

On November 2, 2006, we entered into the Microsoft Agreements. Each of the agreements is scheduled to expire on January 1, 2012.

Under the Business Collaboration Agreement, we are marketing a combined offering with Microsoft. The combined offering consists of a subscription for SLES support along with Microsoft Windows Server, Microsoft Virtual Server and Microsoft Hyper-V, and is offered to customers desiring to deploy Linux and Windows in a virtualized setting. Microsoft made an upfront payment to us of $240 million for SLES subscription “certificates,” which Microsoft may use, resell or otherwise distribute over the term of the agreement, allowing the certificate holder to redeem single or multi-year subscriptions for SLES support from us (entitling the certificate holder to upgrades, updates and technical support). Microsoft agreed to spend $60 million over the term of the agreement for marketing Linux and Windows virtualization scenarios and also agreed to spend $34 million over the term of the agreement for a Microsoft sales force devoted primarily to marketing the combined offering. Microsoft agreed that for three years following the initial date of the agreement it will not enter into an agreement with any other Linux distributor to encourage adoption of other company’s Linux/Windows Server virtualization through a program substantially similar to the SLES subscription “certificate” distribution program.

The Technical Collaboration Agreement focuses primarily on four areas:

 

   

Development of technologies to optimize SLES and Windows, each running as guests in a virtualized setting on the other operating system;

   

Development of management tools for managing heterogeneous virtualization environments, to enable each party’s management tools to command, control and configure the other party’s operating system in a virtual machine environment;

   

Development of translators to improve interoperability between Microsoft Office and OpenOffice.org document formats; and

   

Collaboration on improving directory and identity interoperability and identity management between Microsoft Active Directory software and Novell eDirectory software.

Under the Technical Collaboration Agreement, Microsoft agreed to provide funding to help accomplish these broad objectives, subject to certain limitations.

Under the Patent Cooperation Agreement, Microsoft agreed to covenant with our customers not to assert its patents against our customers for their use of our products and services for which we receive revenue directly or indirectly, with certain exceptions, while we agreed to covenant with Microsoft’s customers not to assert our patents against Microsoft’s customers for their use of Microsoft products and services for which Microsoft receives revenue directly or indirectly, with certain exceptions. In addition, we and Microsoft each irrevocably released the other party, and its customers, from any liability for patent infringement arising prior to November 2, 2006, with certain exceptions. Both we and Microsoft have payment obligations under the Patent Cooperation Agreement. Microsoft made an upfront net balancing payment to us of $108 million, and we are making ongoing payments to Microsoft totaling a minimum of $40 million over the five-year term of the agreement based on a percentage of our Open Platform Solutions and Open Enterprise Server revenues.

 

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As the three agreements are interrelated and were negotiated and executed simultaneously, for accounting purposes we considered all of the agreements to constitute one arrangement containing multiple elements. The SLES subscription purchases of $240 million are being accounted for based on VSOE of fair value. We recognize the revenue ratably over the respective subscription terms beginning upon customer activation, or for subscriptions which expire un-activated, if any, we recognize revenue upon subscription expiration. Objective evidence of the fair value of elements within the Patent Cooperation Agreement and Technical Collaboration Agreement did not exist. As such, we combined the $108 million for the Patent Cooperation Agreement payment and amounts we are receiving under the Technical Collaboration Agreement and are recognizing this revenue ratably over the contractual term of the agreements of five years. Our periodic payments to Microsoft are recorded as a reduction of revenue. The contractual expenditures by Microsoft, including the dedicated sales force of $34 million and the marketing funds of $60 million, do not obligate us to perform, and, therefore, do not have an accounting consequence to us.

Cost of Revenue

Cost of revenue includes the amortization of intangible assets related to products or services sold, royalty costs, and costs associated with personnel providing professional services and technical support services.

Expenses

Product development costs are expensed as incurred. Costs incurred subsequent to the establishment of technological feasibility but prior to the general release of the product have not been significant and therefore have not been capitalized.

Advertising costs are expensed as incurred. Advertising expenses totaled $3.9 million, $4.9 million, and $5.9 million, in fiscal 2010, 2009, and 2008, respectively.

Share-based Payments

Under the fair value recognition guidance of stock-based compensation accounting rules, stock-based compensation cost is estimated at the grant date based on the fair value of the award and is recognized as expense over the requisite service period of the award. The fair value of restricted stock awards, including units, is determined by reference to the fair market value of our common stock on the date of grant. We use the Black-Scholes model to value both service condition and performance condition option awards. For awards with only service conditions and graded-vesting features, we recognize compensation cost on a straight-line basis over the requisite service period. For awards with performance conditions, we recognize stock-based compensation expense based on the graded-vesting method. To value market-based awards we use the Monte Carlo simulation method. We recognize compensation cost for market-based awards on a graded-vesting basis over the derived service period calculated by the Monte Carlo simulation.

Determining the appropriate fair value model and related assumptions requires judgment, including estimating stock price volatility, forfeiture rates, and expected terms. The expected volatility rates are estimated based on historical and implied volatilities of our common stock. The expected term represents the average time that options that vest are expected to be outstanding based on the vesting provisions and our historical exercise, cancellation and expiration patterns. We estimate pre-vesting forfeitures when recognizing stock-based compensation expense based on historical rates and forward-looking factors. We update these assumptions at least on an annual basis and on an interim basis if significant changes to the assumptions are warranted.

We issue performance-based equity awards, typically to senior executives, which vest upon the achievement of certain financial performance goals, including revenue and income targets. Determining the appropriate amount to expense based on the anticipated achievement of the stated goals requires judgment, including forecasting future financial results. The estimate of expense is revised periodically based on the probability of achieving the required performance targets and adjustments are made as appropriate. The cumulative impact of any revision is reflected in the period of change. If the financial performance goals are not met, the award does not vest, so no compensation cost is recognized and any previously recognized stock-based compensation expense is reversed.

We issue market-based equity awards, typically to senior executives, which vest upon the achievement of certain stock price targets. If the awards are forfeited prior to the completion of the derived service period, any recognized compensation is reversed. If the awards are forfeited after the completion of the derived service period, the compensation cost is not reversed, even if the awards never vest.

 

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B. Summary of Significant Accounting Policies (Continued)

 

Valuation of Deferred Tax Assets

We regularly assess our ability to realize our deferred tax assets. Assessments of the future realization of deferred tax assets require that management consider all available evidence, both positive and negative, and make significant judgments about many factors, including the amount and likelihood of future income.

As a result of this assessment, at October 31, 2010, given that we now have three years of cumulative earnings in the U.S. and are forecasting continued profitability, we determined that it was appropriate to release the valuation allowance on certain of our U.S. federal deferred tax assets (See Note L, “Income Taxes”). This release resulted in a $277.2 million increase to net income. We continue to maintain a valuation allowance on selected U.S. federal, state and international net deferred tax assets. As deferred tax assets or liabilities increase or decrease in the future, adjustments to the remaining valuation allowance will increase or decrease future income tax provisions or additional paid-in capital. If realization of the deferred tax asset is assessed not to be “more likely than not” then a valuation allowance is recorded against the deferred tax asset.

Net Income (Loss) Per Share

Basic net income (loss) per share is computed by dividing net income (loss) by the actual weighted-average number of common shares outstanding during the period. Diluted net income per share for the period presented is based on the basic calculation and includes the dilutive effect of potential common shares under the treasury stock method. Diluted net loss for the periods presented is the same as the basic net loss per share calculation due to the anti-dilutive effect of potential common shares under the treasury stock method as a result of our net losses. Potential dilutive common shares include stock options, unvested restricted stock, and unvested restricted stock units.

Derivative Instruments

A large portion of our revenue, expense, and capital purchasing activities are transacted in U.S. dollars. However, we enter into transactions in other currencies, primarily the Euro, the British Pound Sterling, and certain other European, Latin American and Asian currencies. To protect against reductions in value caused by changes in foreign currency exchange rates, we have established balance sheet and inter-company hedging programs. We hedge currency risks of some assets and liabilities denominated in foreign currencies through the use of one-month foreign currency forward contracts. We do not currently hedge currency risks related to revenue or expenses denominated in foreign currencies.

Under our hedging program, we utilize one-month foreign currency forward contracts. We enter into these contracts two business days before the end of each month and settle them two business days before the end of the following month. We do not account for any of our derivatives as hedging instruments; rather, we record the impact of any gains or losses on our hedging program in the consolidated statements of operations. Due to the short period of time between entering into the forward contracts and our fiscal year-end, the fair value of the derivatives as of October 31, 2010 and 2009 is immaterial to our consolidated balance sheets. Gains and losses recognized during the year on these foreign currency contracts are recorded in the line item, “Interest expense and other, net,” in the consolidated statements of operations and would generally be offset by corresponding losses or gains on the related hedged items.

Recent Pronouncements

In June 2009, the FASB issued new guidance to replace the quantitative-based risks and rewards calculation for initially determining which enterprise, if any, has a controlling financial interest in, and will be required to consolidate, a variable interest entity. A variable interest entity is defined as an entity that will need additional funding to operate. Companies are now required to follow a more qualitative approach, focused on identifying which enterprise has the power to direct the activities of the variable interest entity that most significantly impacts the variable interest entity’s economic performance. Companies are also required to perform ongoing assessments of which enterprise, if any, will have to consolidate the variable interest entity. Additional disclosures are also required. This guidance is effective for fiscal years beginning after November 15, 2009 (our fiscal 2011). Currently, the impact of this pronouncement on our financial position and results of operations is anticipated to be immaterial.

In January 2010, the FASB issued updated guidance to improve disclosures regarding fair value measurements. In addition to certain portions that were effective and implemented in prior periods, this update requires entities to present separately (i.e. on a gross basis rather than as a net amount), information about purchases, sales, issuances, and settlements in the roll forward of changes in level 3 fair value measurements. These new disclosure requirements are effective for fiscal years beginning after December 15, 2010 (our fiscal 2012). As this is only disclosure-related, and we currently do not have any level 3 fair value measurements, it is presently anticipated that this guidance will not have an impact on our financial position and results of operations.

 

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C. Acquisitions

Fortefi

On February 10, 2009, we acquired certain assets of Fortefi Ltd., a United Kingdom-based company, and Fortefi Corporation, a Delaware corporation (collectively referred to as “Fortefi”). Fortefi is a supplier of an identity management solution that controls “super user” access rights. Fortefi was a small operation of which the revenues, net operating results, assets and liabilities were immaterial to us. The purchase price consisted of $3.0 million in cash, plus merger and transaction costs of $0.1 million. Of the $3.1 million purchase price, $2.2 million was allocated to goodwill, $0.7 million was allocated to developed technology and $0.2 million was allocated to customer relationships.

Goodwill from the acquisition resulted from our belief that the products developed by Fortefi that control “super user” access rights are a valuable addition to our Identity and Security Management offerings. We believe these products will help us remain competitive in the Identity and Security Management market and increase our Identity and Security Management revenue. The goodwill from the Fortefi acquisition was allocated to the Identity and Security Management component of our SMOP business unit segment and is tax-deductible.

Managed Objects

On November 13, 2008, we acquired 100% of the outstanding stock of Managed Object Solutions, Inc. (“Managed Objects”), a supplier of business service management solutions, through a merger of Managed Objects into a wholly-owned subsidiary. The purchase price, consisting of $46.3 million in cash, plus merger and transaction costs of $1.1 million, was allocated as follows:

 

(In thousands)    Estimated
Fair  Value
     Estimated
Useful Life
 

Net tangible assets acquired

   $ 3,410         N/A   

Identifiable intangible assets:

     

Developed technology

     5,800         3 years   

Customer relationships

     3,000         3 years   

Goodwill

     35,176         Indefinite   
           

Total net assets acquired

   $         47,386      
           

The acquired net tangible assets of Managed Objects consisted primarily of cash and cash equivalents, accounts receivable, prepaid expenses and property, plant and equipment, partially offset by accounts payable, and other current liabilities that we assumed.

Developed technology relates to Managed Objects products that were commercially available and could be combined with our products and services. Discounted expected future cash flows attributable to the products were used to determine the fair value of developed technology. This resulted in a valuation of $5.8 million related to developed technology that had reached technological feasibility.

Customer relationships of $3.0 million relate primarily to customers under maintenance agreements. The fair value of these relationships was determined based on discounted future cash flows expected to be received as a result of the agreements and assumptions about their renewal rates.

Goodwill from the acquisition resulted from our belief that the business service management products developed by Managed Objects are a valuable addition to our Systems and Resource Management offerings. We believe they will help us remain competitive in the Systems and Resource Management market and increase our Systems and Resource Management revenue. The goodwill from the Managed Objects acquisition was allocated to the Systems and Resource Management component of our SMOP business unit segment and is not tax-deductible.

 

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C. Acquisitions (Continued)

 

Managed Objects’ revenue and income were immaterial in prior years and would not have had a material impact to our reported financial results.

We analyze our intangible assets periodically for indicators of impairment. During the fourth quarter of fiscal 2009, we determined that we had experienced an impairment trigger event. As a result, we incurred an impairment charge of $2.2 million and $1.2 million, related to Managed Objects’ developed technology and customer relationship intangible assets, respectively. For more information on this charge, see Note K, “Goodwill and Intangible Assets.”

PlateSpin

On March 26, 2008, we acquired 100% of the outstanding stock of PlateSpin, a leader in support solutions for complete workload life cycle management and optimization for Windows, UNIX and Linux operating systems in the physical and virtual data center. The purchase price, consisting of $204.1 million in cash, plus merger and transaction costs of $3.8 million, was allocated as follows:

 

(In thousands)    Estimated
Fair Value
     Estimated
Useful Life
 

Net tangible assets acquired

   $ 3,303         N/A   

Purchased in-process research and development

     2,700         N/A   

Identifiable intangible assets:

     

Developed technology

     12,600         3 years   

Customer relationships

     11,900         3 years   

Trade name

     900         3 years   

Goodwill

     176,480         Indefinite   
           

Total net assets acquired

   $       207,883      
           

The acquired net tangible assets of PlateSpin consisted primarily of cash and cash equivalents, accounts receivable, prepaid expenses and property, plant and equipment, partially offset by accounts payable, and other current liabilities that we assumed.

Purchased in-process research and development, valued at $2.7 million, pertained to technology that was not technologically feasible at the date of the acquisition, meaning it had not reached the working model stage, did not contain all of the major functions planned for the product, and was not ready for initial customer testing. At the acquisition date, PlateSpin was working on the next release of its three major products: PowerConvert®, PowerRecon, and Forge, all of which were planned for release at various dates in the latter part of calendar year 2008. These releases had not yet reached technological feasibility at the time of the acquisition. The purchased in-process research and development was valued based on discounting estimated future cash flows from the related products. The purchased in-process research and development does not have any alternative future use and did not otherwise qualify for capitalization. As a result, this amount was expensed upon acquisition.

Developed technology relates to PlateSpin products that were commercially available and could be combined with our products and services. Discounted expected future cash flows attributable to the products were used to determine the fair value of developed technology. This resulted in a valuation of $12.6 million related to developed technology that has reached technological feasibility.

Customer relationships of $11.9 million relate primarily to customers under maintenance agreements. The fair value of these relationships was determined based on discounted expected future cash flows to be received as a result of the agreements and assumptions about their renewal rates.

PlateSpin’s trade name, with a fair value of $0.9 million, was determined using the relief-from-royalty method, which assigns a royalty rate to the revenue streams that were expected from the products using the trade name. The royalty rate was determined based on the history of PlateSpin’s trade name, the expected life, and information from comparable market transactions, applied to the product revenue and discounted to a present value.

Goodwill from the acquisition resulted from our belief that the workload life cycle management products developed by PlateSpin are a valuable addition to the Systems and Resource Management component of our SMOP business unit segment. We believe they will help us remain competitive in the Systems and Resource Management market and increase our Systems and Resource Management revenue. The goodwill from the PlateSpin acquisition was allocated to the Systems and Resource Management component of our SMOP business unit segment and is tax deductible due to a tax election that treats the acquisition of a foreign company as an asset purchase.

 

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C. Acquisitions (Continued)

 

We analyze our intangible assets periodically for indicators of impairment. During the fourth quarter of fiscal 2009, we determined that we had experienced an impairment trigger event. As a result, we incurred an impairment charge of $3.4 million and $2.3 million, related to PlateSpin’s developed technology and customer relationship intangible assets, respectively. For more information on this charge, see Note K, “Goodwill and Intangible Assets.”

SiteScape

On February 13, 2008, we acquired 100% of the outstanding stock of SiteScape, Inc. (“SiteScape”), a provider of open collaboration software, including Teaming + Conferencing products. The purchase price, consisting of $18.5 million in cash, plus merger and transaction costs of $0.4 million, was allocated as follows:

 

(In thousands)    Estimated
Fair  Value
    Estimated
Useful Life
 

Net liabilities assumed

   $ (3,792     N/A   

Identifiable intangible assets:

    

Developed technology

     1,800        3 years   

Customer relationships

     1,200        3 years   

Goodwill

     19,723        Indefinite   
          

Total net assets acquired

   $           18,931     
          

The assumed net liabilities of SiteScape consisted primarily of accounts payable and other current liabilities, partially offset by acquired cash and cash equivalents and accounts receivable.

Developed technology relates to SiteScape products that were commercially available and could be combined with our products and services. Discounted expected future cash flows attributable to the products were used to determine the fair value of developed technology. This resulted in a valuation of $1.8 million related to developed technology that has reached technological feasibility.

Customer relationships of $1.2 million relate primarily to customers under maintenance agreements. The fair value of these relationships was determined based on discounted expected future cash flows to be received as a result of the agreements and assumptions about their renewal rates.

Goodwill from the acquisition resulted from our belief that the open collaboration products developed by SiteScape are a valuable addition to our CS product offerings. We believe they will help us remain competitive in the CS market and increase our CS business unit segment revenue. The goodwill from the SiteScape acquisition was allocated to our CS business unit segment and is not tax deductible.

If the PlateSpin and SiteScape acquisitions had occurred on November 1, 2007 (fiscal 2008), our unaudited pro forma results of operations would have been as follows:

 

(Amounts in thousands, except per share amounts)    Fiscal Year Ended
October  31,
2008
 

Net revenue

   $       967,767   

Net loss

     (19,835

Net loss per share

   $ (0.06

Our pro forma net loss for fiscal 2008 includes $2.7 million of non-recurring purchased in-process research and development costs.

 

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D. Divestitures

Discontinued Operations

Our discontinued operations include the divestitures of our Cambridge Technology Partners (Switzerland) SA (“CTP Switzerland”) subsidiary in fiscal 2008, our Salmon Ltd. (“Salmon”) subsidiary in fiscal 2007 and Celerant consulting (“Celerant”) in fiscal 2006. Detailed discussions of each of these divestitures follow:

CTP Switzerland

On October 31, 2007, we signed an agreement to sell our CTP Switzerland subsidiary to a management-led buyout group for $0.8 million. No further payments are due from the CTP Switzerland buyout group. As of January 31, 2008, we ceased stockholder and operational relationships with CTP Switzerland.

When we signed the agreement, we began classifying CTP Switzerland’s results as a discontinued operation in our consolidated statements of operations and reclassified our results of operations for the prior comparable period. In fiscal 2007, we recognized an estimated loss on disposal of $8.9 million resulting from the expected sale. During fiscal 2008, we recognized a gain on final liquidation of CTP Switzerland of $1.4 million, for a total net loss on the disposition of $7.4 million.

The net loss on the sale of CTP Switzerland was calculated as follows:

 

(In thousands)       

Sales price

   $ 750   

Costs to sell

     (304
        
     446   
        

Net book value of CTP Switzerland:

  

Cash

     3,417   

Accounts receivable, net

     3,508   

Other current assets

     1,718   

Other long-term assets

     315   

Current liabilities

     (3,322

Realization of cumulative translation adjustment

     (1,668

Impairment of goodwill

     3,903   
        
     7,871   
        

Net loss on sale of CTP Switzerland before income taxes

   $             (7,425
        

Loss before income taxes recognized in fiscal 2007

   $ (8,855

Gain before income taxes recognized in fiscal 2008

   $ 1,430   

Salmon

On March 12, 2007, we sold our shares in our wholly-owned Salmon subsidiary to Okam Limited, a U.K. Limited Holding Company, for $4.9 million, plus an additional contingent payment of £2.0 million (approximately $3.1 million) all of which has been received. With respect to the contingent payment amount, gains of $1.9 million and $1.2 million were recognized as this amount was earned in fiscal 2009 and 2008, respectively.

Celerant

On May 24, 2006, we sold our shares in Celerant to a group comprised of Celerant management and Caledonia Investments plc for $77.0 million in cash. As part of the Celerant divestiture agreement, Celerant was responsible for the administration and was legally liable for its two pension plans, but we agreed to fund any shortages to the respective plans. It was our intention that we would be able to negotiate “buy outs” of the plans. The completion of the buy outs has taken much longer than anticipated due to delays related to updating the actuarial valuations, reaching agreement with the insurance company and receiving proper approvals from the pensioners and the German government. In October 2010, we were able to reach a conclusion on this matter for $0.6 million less than the original estimate. This accrual release is shown in the line item “Income from discontinued operations” in our consolidated statements of operations.

 

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D. Divestitures (Continued)

 

The results of discontinued operations (CTP Switzerland, Salmon and Celerant) for fiscal 2010, 2009 and 2008 are as follows:

 

    Fiscal Year Ended October 31,  
(In thousands)           2010                     2009                     2008          

CTP Switzerland net revenue

  $      $      $ 6,566   
                       

CTP Switzerland income before taxes

  $      $      $ 105   
                       

Salmon gain on sale

           1,904        1,223   

CTP Switzerland gain on sale

                  1,430   

Celerant gain on sale

    610                 
                       

Gain on discontinued operations

    610        1,904        2,653   

Income tax benefit on discontinued operations

                  (836
                       

Income from discontinued operations

  $ 610      $ 1,904      $ 3,594   
                       

The net cash proceeds from the sale of our discontinued operations (CTP Switzerland and Salmon) are as follows:

 

    Fiscal Year Ended October 31,  
(In thousands)           2010                     2009                     2008          

CTP Switzerland net cash distributions

  $      $      $ (2,667

Salmon net cash proceeds

    938        1,036        3,231   
                       

Net cash proceeds from sale of discontinued operations

  $ 938      $ 1,036      $ 564   
                       

Sales of Subsidiaries

Our sales of subsidiaries include the divestitures of our Chile subsidiary in fiscal 2009 and our Mexico and Argentina subsidiaries in fiscal 2008. We sold all three of these subsidiaries to one of our Latin America distribution partners. We will continue to sell products to customers in these countries through the distribution partner. Accordingly, we will have continuing cash flows from these businesses and have not presented them as discontinued operations in our consolidated statements of operations. Detailed discussions of each of these divestitures follow:

Chile subsidiary

Our Chile subsidiary, which we sold during fiscal 2009 for an insubstantial amount, was a very small operation with an immaterial net book value. The loss recorded on this sale was $0.1 million and is shown as a component of the line item “(Gain) loss on sale of subsidiaries” on our consolidated statements of operations.

Mexico and Argentina subsidiaries

During fiscal 2008, we sold our Mexico and our Argentina subsidiaries and recorded a total loss on the sale of both subsidiaries of $3.7 million. These subsidiaries were primarily sales operations and sold products from both our business unit segments. During fiscal 2009, we reached final settlement related to working capital adjustments on the sale of our Mexico and Argentina subsidiaries. This resulted in a non-cash gain of $0.2 million related to our Mexico subsidiary and a non-cash loss of $0.1 million related to our Argentina subsidiary. These gains and losses are shown as a component of the line item “(Gain) loss on sale of subsidiaries” on our consolidated statements of operations.

The cumulative recognized loss on the sale of our subsidiaries is as follows:

 

(In thousands)        Mexico           Argentina             Chile                   Total          

Loss before income taxes recognized in fiscal 2008

   $ (3,065   $ (629   $      $ (3,694

Gain (loss) before income taxes recognized in fiscal 2009

     200        (72     (112     16   
                                

Total loss before income taxes

   $ (2,865   $ (701   $ (112   $ (3,678
                                

 

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NOVELL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

 

D. Divestitures (Continued)

 

The net cash distributions from the sale of our Mexico and Argentina subsidiaries are as follows (Chile had an insignificant net cash distribution):

 

(In thousands)

   Fiscal Year Ended
October  31,
2008
 

Mexico net cash distributed

   $ (13

Argentina net cash distributed

     (158
        

Net cash distributions from sale of subsidiaries

   $             (171
        

E. Cash and Short-Term Investments

The following is a summary of our short-term available-for-sale investments at October 31, 2010 and 2009:

 

(In thousands)    Cost at
    October 31,    
2010
     Gross
   Unrealized
Gains
     Gross
   Unrealized
Losses
        Fair Market    
Value at
October 31,
2010
 

Short-term investments:

          

U.S. government, state and agency securities

   $ 189,328       $ 3,621       $      $ 192,949   

Corporate notes and bonds

     203,210         4,793         (9     207,994   

Asset-backed securities

     31,418         285         (26     31,677   

Equity securities

     8,367         109                8,476   
                                  

Total short-term investments

   $ 432,323       $ 8,808       $ (35   $ 441,096   
                                  
(In thousands)    Cost at
October 31,
2009
     Gross
Unrealized
Gains
     Gross
Unrealized
Losses
    Fair Market
Value at
October 31,
2009
 

Short-term investments:

          

U.S. government, state and agency securities

   $ 183,062       $ 2,633       $      $ 185,695   

Corporate notes and bonds

     169,685         4,269         (12     173,942   

Asset-backed securities

     24,828         439                25,267   

Equity securities

     7,923                 (1,018     6,905   
                                  

Total short-term investments

   $ 385,498       $ 7,341       $ (1,030   $ 391,809   
                                  

At October 31, 2010, the $8.5 million market value of our equity securities is designated for deferred compensation payments, which are paid out as requested by the participants of the plan upon termination.

At October 31, 2010, contractual maturities of our short-term investments were:

 

(In thousands)    Cost      Fair Market
Value
 

Less than one year

   $ 48,914       $ 49,463   

Due in one to two years

     158,552         161,624   

Due in two to three years

     155,437         158,401   

Due in more than three years

     61,053         63,132   

No contractual maturity

     8,367         8,476   
                 

Total short-term investments

   $       432,323       $       441,096   
                 

We had net unrealized gains related to short-term investments of $8.8 million and $6.3 million at October 31, 2010 and October 31, 2009, respectively. At October 31, 2010, no investments had been in a continuous unrealized loss position for more than 12 months. At October 31, 2010, $14.6 million market value of investments with gross unrealized losses of less than $0.1 million had been in a continuous unrealized loss position for less than 12 months. We did not record any impairment losses on short-term investments during fiscal 2010 and 2009, as we considered the unrealized losses to be temporary. With respect to our debt securities that are in an unrealized loss position, we expect to recover the entire cost basis of these securities before we sell them, therefore they are not considered to be other-than-temporarily impaired.

 

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NOVELL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

 

E. Cash and Short-Term Investments (Continued)

 

During fiscal 2008, as a result of Lehman Brother’s bankruptcy announcement, we recorded a $1.3 million other-than temporary impairment charge on the $1.5 million of Lehman Brothers’ securities that we held at that time. During fiscal 2009 we sold this security for a minimal gain.

Realized gains and losses related to our short-term investments were as follows:

 

     Fiscal Year Ended October 31,  
(In thousands)            2010                      2009                      2008          

Realized gains

   $ 5,165       $ 4,835       $ 10,614   

Realized losses

   $ 540       $ 1,469       $ 2,637   

During fiscal 2010 and 2008, the U.S. dollar value of our foreign-denominated cash and cash equivalent holdings decreased due to changes in foreign currency exchange rates by a net $3.2 million and $22.2 million, respectively. During fiscal 2009, the U.S. dollar value of our foreign-denominated cash and cash equivalent holdings increased due to changes in foreign currency exchange rates by a net $14.8 million. The decrease in fiscal 2010 resulted from the strengthening of the U.S. dollar against certain foreign currencies, primarily the Euro. As foreign currency exchange rates continue to fluctuate, especially the Euro, we may see further changes in the U.S. dollar value of our foreign-denominated cash and cash equivalent holdings.

F. Restricted Cash

In relation to the appeal we filed in the Amer Jneid legal matter, we were required by the court to post a $51.5 million bond during fiscal 2008 (See Note S, “Legal Proceedings”). The amount of the bond was determined by statutory regulations and had no connection to the amount we may ultimately pay in this matter. The bond was held in an interest-bearing account in our name, but was restricted and classified as such on our consolidated balance sheet as of October 31, 2009. During fiscal 2010, the bond amount plus interest, which totaled $53.0 million, was returned to us.

G. Long-Term Investments

At October 31, 2010, we do not have any investments classified as long-term. At October 31, 2009, $10.3 million of our ARSs were classified as long-term investments in our consolidated balance sheets, and were our only long-term investments. At October 31, 2010, we no longer hold any ARSs.

During fiscal 2010, ARSs with a book value of $5.6 million were sold for $12.2 million, resulting in a net gain on sale of $6.6 million. This net gain is a component of the line item “Gain on sale of previously impaired investments, net” in our consolidated statements of operations. We reversed $5.4 million in unrealized gains associated with these securities that were recorded in the “Accumulated other comprehensive income” line item in our consolidated balance sheets in prior periods.

During fiscal 2010, we also recognized a gain of $0.8 million related to the sales of direct investments that we had previously fully impaired. These gains are shown as a component of the line item “Gain on sale of previously impaired investments, net” in our consolidated statements of operations.

H. Fair Value Measurements

Our level 1 financial instruments are valued using quoted prices in active markets for identical instruments. We did not have any level 2 or level 3 financial instruments at October 31, 2010. The composition of our level 1 financial instruments can be found in the table in Note E, “Cash and Short-Term Investments.”

 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

 

H. Fair Value Measurements (Continued)

 

The following table summarized the composition and fair value hierarchy of our financial assets as of October 31, 2009. We did not have any level 2 financial instruments at October 31, 2009. Our ARSs were our only level 3 financial assets at October 31, 2009 and were valued using unobservable inputs that were supported by little or no market activity and that were significant to the fair value of the investments.

 

                  Fair Value Measurements Using      
(In thousands)    Total as of
October 31,
2009
     Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)
     Significant
Unobservable
Inputs
(Level 3)
 

Total short-term investments

     391,809         391,809           

Long-term investments

     10,303                 10,303   
                          

Total

   $         402,112       $       391,809       $       10,303   
                          

The following table summarizes the change in composition and fair value hierarchy of our level 3 financial assets, which were comprised entirely of our ARSs, during fiscal 2010 and fiscal 2009.

 

     Fiscal Year Ended October 31,  
(In thousands)    2010     2009  

Beginning balance

   $       10,303      $       11,063   

Total gains or (losses):

    

Impairment included in earnings

            (5,466

Book value of assets sold

     (5,597       

(Removed from) included in accumulated other comprehensive income

     (4,706     4,706   
                

Ending balance

   $      $ 10,303   
                

See Note G, “Long-Term Investments” for more information on the sales of the $5.6 million book value of ARSs that occurred during fiscal 2010.

I. Derivative Instruments and Hedging Activities

The net notional amount of foreign currency exchange contracts hedging foreign currency transactions was $43.6 million and $27.0 million at October 31, 2010 and October 31, 2009, respectively. The fair value of these contracts was immaterial at both October 31, 2010 and October 31, 2009.

During fiscal 2010 and 2009, we recognized $0.5 million of gains and $7.3 million of losses on our foreign currency exchange contracts, respectively. These losses are shown as a component of the line item, “Interest expense and other, net” in our consolidated statements of operations.

J. Property, Plant and Equipment

Property, plant and equipment consist of the following:

 

(In thousands)    October 31,
2010
    October 31,
2009
 

Buildings and land

   $ 183,219      $ 181,949   

Furniture and equipment

     130,152        164,789   

Leasehold improvements and other

     37,133        45,773   
                

Property, plant and equipment, at cost

     350,504        392,511   

Accumulated depreciation

     (194,471     (222,052
                

Property, plant and equipment, net

   $       156,033      $       170,459   
                

 

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NOVELL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

 

J. Property, Plant and Equipment (Continued)

 

Depreciation and amortization expense related to property, plant and equipment totaled $22.4 million, $23.0 million, and $27.4 million, in fiscal 2010, 2009, and 2008, respectively. During fiscal 2010, we retired fixed assets, primarily computer equipment and software, with a cost basis of approximately $50 million and no net book value as these assets were no longer in use. These reductions are reflected in the above table.

During fiscal 2009, we sold certain corporate real estate assets and computer equipment for net proceeds of $10.7 million that had a net book value of $8.1 million. The sales also included other fees and expenses of $0.4 million and resulted in a $2.2 million gain.

K. Goodwill and Intangible Assets

Goodwill

During the first quarter of fiscal 2010, our former Open Platform Solutions, Identity and Security Management, and Systems and Resource Management business unit segments were consolidated to form the new SMOP business unit segment (See Note A, “Summary of Business Operations,” for more information on our business unit segment structural and management reorganization). The three components of SMOP will continue to be considered reporting units for goodwill impairment testing purposes. As there were no changes to the reporting units, no interim goodwill impairment tests were required. Our CS business unit segment continues to be considered its own reporting unit for goodwill testing purposes.

Goodwill at carrying value allocated to our business unit segments as of October 31, 2010 and 2009 is as follows:

 

(In thousands)    SMOP     CS     Total  

Goodwill as of October 31, 2008:

   $     432,459      $     149,658      $     582,117   

Activity during fiscal 2009:

      

Managed Objects acquisition

     35,176               35,176   

Fortefi acquisition

     2,222               2,222   

Impact of foreign currency exchange translation

     9,222               9,222   

Adjustments

     (2,031     (629     (2,660

Impairment

     (270,044            (270,044
                        

Goodwill as of October 31, 2009:

     207,004        149,029        356,033   

Activity during fiscal 2010:

      

Release of merger liability

     (1,811     (1,435     (3,246

Impact of foreign currency exchange translation

     628               628   
                        

Goodwill as of October 31, 2010:

   $ 205,821      $ 147,594      $ 353,415   
                        

As described in the “Goodwill impairment test as of September 30, 2009” section below, we recorded a goodwill impairment of $270.0 million during fiscal 2009. This represents our accumulated goodwill impairment losses at October 31, 2010 and 2009.

Adjustments

During fiscal 2010, we assigned to a subtenant a facility lease related to our April 2005 acquisition of Tally Systems Corp. At the time of the acquisition, this lease had a nine-year term and therefore a merger liability was established as part of the acquisition purchase price allocation. Because the cost of exiting this lease was less than the estimated merger liability, we released this excess, reducing the cost of the acquired company. This adjustment to the purchase price resulted in a $3.2 million reduction to total goodwill, reducing SMOP and CS business unit segment goodwill by $1.8 million and $1.4 million, respectively.

Adjustments during fiscal 2009 decreased goodwill by $2.7 million and related primarily to the reversal of deferred tax asset valuation allowances for acquired net operating loss carryforwards that were utilized by income generated during fiscal 2009 for the Managed Objects, Senforce, SiteScape, Tally, e-Security, and SilverStream acquisitions. For information on our Managed Objects acquisition, see Note C, “Acquisitions.”

 

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NOVELL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

 

K. Goodwill and Intangible Assets (Continued)

 

In fiscal 2010 and 2009, goodwill increased $0.6 million and $9.2 million, respectively, due to the impact of foreign currency translation on the portion of goodwill related to PlateSpin that is denominated in Canadian dollars, and therefore, subject to foreign currency exchange rate fluctuations.

Annual goodwill impairment test

Annually on August 1, we perform our goodwill impairment test. The first step (“step one”) in evaluating impairment is to determine if the estimated fair value of a reporting unit is less than its carrying value. If step one indicates that the fair value is less than the carrying value of the reporting unit, then impairment potentially exists, and the second step (“step two”) is performed to measure the amount of impairment, if any. To estimate the fair value of each of our reporting units for step one, management made estimates and judgments about future cash flows based on assumptions that are consistent with both short-term plans and long-range forecasts used to manage the business. We also considered factors such as our market capitalization and current economic events in assessing the fair value of the reporting units. This process requires subjective judgment at many points throughout the analysis. Changes to the estimates used in the analysis, including estimated future cash flows, could cause one or more of the reporting units or indefinite-lived intangibles to be valued differently in future periods.

Based on the results of our analysis, we determined that no goodwill impairment existed at August 1, 2010, 2009 or 2008. For our fiscal 2010 test, the excess of the fair value over the carrying value of our reporting units was as follows: 428% for Open Platform Solutions, 268% for Systems and Resource Management, 244% for Identity and Security Management, and 279% for CS. The calculation of fair value was determined on a consistent basis with prior years.

Events subsequent to annual goodwill impairment test as of August 1, 2009

In the week leading up to the September 22, 2009 Board of Directors annual budget meeting, management updated its long-range forecast concurrent with the completion of the fiscal 2010 budgeting process. Management reduced its long-range revenue growth assumptions late in the annual planning process due to company trends, a revised market outlook and continued economic uncertainty.

Management’s revised long-range forecast lowered the projected revenue and operating income utilized in the August 1, 2009 discounted cash flow model valuation. We considered this lowered financial outlook to be an impairment trigger event for both goodwill and long-lived assets, requiring us to re-perform the step one test for potential impairment, which we did as of September 30, 2009, our closest balance sheet date. Also, because long-term revenue projections were lowered in all four of our reporting units, each reporting unit had to be reviewed for potential impairment.

As discussed under “Goodwill impairment test as of September 30, 2009” below, the lower long-term projections resulted in the failure of the step one test for our Systems and Resource Management reporting unit because the estimated fair value of this reporting unit was lower than its carrying value. All other reporting units passed the step one test. Because the Systems and Resource Management reporting unit failed the step one test, we were required to perform the step two test, which utilizes a notional purchase price allocation using the estimated fair value from step one as the purchase price to determine the implied value of the reporting unit’s goodwill. The completion of the step two test resulted in the determination that $270.0 million of the Systems and Resource Management reporting unit’s goodwill was impaired. The $270.0 million impairment charge is shown in the line item “Impairment of goodwill” in our consolidated statements of operations.

Goodwill impairment test as of September 30, 2009

In performing step one of the goodwill impairment test, it was necessary to determine the fair value of each of the four reporting unit segments. The fair values of all reporting units, except for CS, were estimated using a weighted average of a discounted cash flow methodology (“DCF”) and a market analysis. The market analysis included looking at the valuations of comparable public companies, as well as recent acquisitions of comparable companies. For CS only, the DCF was utilized as it was felt that there was no comparable market information, due to the uniqueness of CS which is forecasted to have a long-term declining revenue stream, yet have high operating margins. With respect to the other three reporting units, a 10% weighting was given to the market analysis. As a result, a weighting of 90% was given to the DCF.

 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

 

K. Goodwill and Intangible Assets (Continued)

 

Two key inputs to the DCF analysis were our future cash flow projection and the discount rate. We used a ten-year future cash flow projection, based on management’s long-range forecast, discounted to present value, and an estimate of terminal values, which was also discounted to present value. Terminal values represent the present value an investor would pay today for the rights to cash flows of the reporting unit for the years subsequent to the ten-year cash flow projection period. As noted above, the long-range forecast that was utilized for the impairment test after the September 22, 2009 Board meeting was lower than what was utilized in both the August 1, 2009 valuation and the fiscal 2008 valuation. The lower forecast was the primary reason for the lower fair values that resulted in the need to perform a step two impairment valuation for the Systems and Resource Management reporting unit. A driver of the lower forecast for the Systems and Resource Management reporting unit was the underperformance of our ZENworks products as well as our recent acquisitions.

The other major input into the DCF analysis was the discount rate, which was determined by estimating each reporting unit’s weighted average cost of capital, reflecting the nature of the respective reporting unit and the perceived risk of the underlying cash flows. We used the following discount rates in our DCF methodology for each of our reporting units: 16.0% for Open Platform Solutions, 15.6% for Identity and Security Management, 14.6% for Systems and Resource Management and 13.0% for CS. If we had increased our discount rates by 1%, it would not have impacted the ultimate results of our step one test. The excess of the fair value over the carrying value of our reporting units was as follows: 68% for Open Platform Solutions, 139% for Identity and Security Management, and 379% for CS.

The step two test involves allocating the fair value of the Systems and Resource Management reporting unit to all of its assets and liabilities on a fair value basis, with the excess amount representing the implied value of goodwill. As part of this process the fair value of the Systems and Resource Management reporting unit’s identifiable intangible assets, including in-process research and development, developed technology, customer relationships and trademarks/trade names were determined. The fair values of these assets were determined primarily through the use of the DCF method. The fair values of Systems and Resource Management’s property, plant and equipment were determined primarily through the use of third party broker quotes. The fair value of Systems and Resource Management’s deferred revenue was based upon the estimate of the amount that would be required to pay a third party to assume the obligation. After determining the fair value of all Systems and Resource Management reporting unit assets and liabilities, it was determined that the implied value of goodwill was $56.0 million. The September 30, 2009 carrying value of the Systems and Resource Management reporting unit’s goodwill was $326.0 million, which, when compared to the implied goodwill value of $56.0 million resulted in the impairment charge of $270.0 million.

The above described process requires subjective judgment at many points throughout the analysis. Changes to the estimates used in the analysis, including estimated future cash flows, could cause one or more of the reporting units or indefinite-lived intangibles to be valued differently in future periods. It is at least reasonably possible that future analyses could result in additional material non-cash goodwill impairment charges.

Review of long-lived assets as of September 30, 2009

As noted above, we concurrently performed an assessment of long-lived assets for impairment at September 30, 2009. These assets, which include tangible and intangible assets, need to be tested for impairment before the step two goodwill impairment analysis can be completed because any change in these assets would impact the carrying value of the Systems and Resource Management reporting unit.

To test the recoverability of our long-lived assets and liabilities, which for us is primarily long-lived assets, they were grouped with other assets at the lowest level for which identifiable cash flows were largely independent of the cash flows of other assets. With the exception of our Systems and Resource Management reporting unit, we determined that our asset groups were our reporting units, as that was the lowest level at which cash flows could be separated from other assets. For the Systems and Resource Management reporting unit, separate identifiable cash flows were available for PlateSpin and Managed Objects products, with all other cash flows belonging to our remaining Systems and Resource Management business (primarily ZENworks). Therefore, the Systems and Resource Management reporting unit had three asset groups.

 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

 

K. Goodwill and Intangible Assets (Continued)

 

The test for recoverability compares undiscounted future cash flows of the long-lived asset group to its carrying value. The future cash flow period was based on the future service life of the primary asset within the long-lived asset group.

If the future cash flows exceed the carrying values of the asset group, the asset group is not considered to be impaired. If the carrying values of the asset group exceed the future cash flows, the asset group is considered to be potentially impaired. It was determined that for all asset groups except for PlateSpin and Managed Objects, the future cash flows exceeded the carrying values of the respective asset groups.

As the PlateSpin and Managed Objects asset groups had carrying values in excess of their estimated undiscounted future cash flows, it was necessary to determine the fair value of the individual assets within the asset group. Because the aggregate fair values of the individual assets of the group were less than their carrying values, an impairment was recorded equal to the excess of the aggregated carrying value of the asset group over the aggregate fair value. This loss was allocated to each asset within the group that had a fair value less than its carrying value, based on their relative carrying values, with no asset reduced below its fair value. As a result of this test, it was determined that $5.7 million of PlateSpin’s and $3.4 million of Managed Objects’ developed technology and customer relationships were impaired. These impairment charges, totaling $9.1 million, are shown in the line item, “Impairment of intangible assets” in our consolidated statements of operations.

Intangible Assets

The following is a summary of intangible assets:

 

     October 31, 2010      October 31, 2009         
(In thousands)    Gross
Amount
     Accumulated
   Amortization  
    Net Book
Value
     Gross
Amount
     Accumulated
   Amortization  
    Net Book
Value
     Asset
Lives
 

Developed technology

   $   30,765       $   (27,761   $ 3,004       $ 30,765       $ (22,546   $ 8,219         3-4 years   

Trademarks/trade names

     25,511         (1,165     24,346         25,511         (865     24,646        
 
3 years or
Indefinite
  
  

Customer relationships

     15,701         (14,305     1,396         15,701         (11,945     3,756         3 years   
                                                      

Total intangible assets

   $ 71,977       $ (43,231   $   28,746       $   71,977       $   (35,356   $   36,621      
                                                      

Acquisitions

During fiscal 2009, we acquired developed technology and customer relationships of $5.8 million and $3.0 million, respectively, related to the Managed Objects acquisition, which was integrated into our Systems and Resource Management reporting unit. Further discussion was presented above in the subsection entitled, “Review of long-lived assets as of September 30, 2009,” with regards to the fiscal 2009 impairment of a portion of these intangible assets. During fiscal 2009, we also acquired developed technology and customer relationships of $0.7 million and $0.2 million, respectively, related to our acquisition of Fortefi, which was integrated into our Identity and Security Management reporting unit.

Developed technology at October 31, 2010 related primarily to the Systems and Resource Management reporting unit as a result of our acquisitions of Managed Objects, PlateSpin, and Senforce, and to our Identity and Security Management reporting unit primarily from our acquisition of developed technology from the Hewlett-Packard Co., and the acquisitions of e-Security and Fortefi. Trademarks and trade names at October 31, 2010 related primarily to the SUSE and PlateSpin individual product names, which we continue to use, of which $24.2 million relates to SUSE, and has an indefinite life. Customer relationships at October 31, 2010 related primarily to the customers we acquired as a part of our acquisitions of PlateSpin and Managed Objects in our Systems and Resource Management reporting unit.

Amortization

Amortization expense on intangible assets was $7.9 million, $17.3 million, and $13.0 million in fiscal 2010, 2009, and 2008, respectively. Amortization of intangible assets is estimated to be $4.0 million in fiscal 2011 and $0.5 million in fiscal 2012 with nothing thereafter. The weighted average amortization period of our developed technology, customer relationships, trademarks/trade names, and in total is 0.8 years, 1.0 years, 0.4 years and 0.9 years, respectively.

 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

 

K. Goodwill and Intangible Assets (Continued)

 

Impairment analysis

During fiscal 2010, there were no impairments of any intangible assets. As discussed above, it was determined in fiscal 2009 that $5.7 million of PlateSpin’s and $3.4 million of Managed Objects’ developed technology and customer relationships were impaired.

During the fourth quarter of fiscal 2008, we completed our detailed internal reviews of the $12.0 million of developed technology acquired in the third quarter of fiscal 2008 and determined that we would not utilize all of this developed technology as initially planned. These reviews determined that only a portion of the acquired developed technology would be utilized in our products. We used discounted cash flow models to estimate the fair value of this acquired developed technology based upon the updated plans, and determined that $7.7 million had become impaired. This intangible asset was written down and the related charge was recorded in the line item, “Impairment of intangible assets” in our consolidated statements of operations during fiscal 2008. The entire $7.7 million impairment charge related to the Identity and Security Management reporting unit. As part of this review, it was determined that the estimated useful life of the remaining asset would be four years.

In the intangible asset table above, the impairment charges recorded during fiscal 2009 were reflected in the column, “Gross Amount.”

L. Income Taxes

The components of income tax expense attributable to continuing operations consist of the following:

 

     Fiscal Year Ended October 31,  
(In thousands)            2010                     2009                     2008          

Income tax expense

      

Current:

      

Federal

   $ (9,125   $ (2,939   $ 48,778   

State

     682        1,009        4,884   

Foreign

     (9,750     13,226        (1,875
                        

Total current income tax (benefit) expense

     (18,193     11,296        51,787   
                        

Deferred:

      

Federal

     (258,982     1,847        (23,961

State

     1,675                 

Foreign

     221        (2,477     7,391   
                        

Total deferred income tax (benefit) expense

     (257,086     (630     (16,570
                        

Total income tax (benefit) expense from continuing operations

   $ (275,279   $ 10,666      $ 35,217   
                        

 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

 

L. Income Taxes (Continued)

 

Differences between the U.S. statutory and effective tax rates computed as a percentage of income from continuing operations before income taxes are as follows:

 

     Fiscal Year Ended October 31,  
             2010                     2009                     2008          

U.S. statutory rate

     35.0     35.0     35.0

State income taxes, net of federal tax effect

     1.0        0.9        1.5   

Research and development tax credits

     (0.3     1.1        (9.9

Foreign income taxed at different rates than U.S. statutory rate

     (12.6     (2.4     (6.1

Goodwill impairment

            (19.5       

Valuation allowances

     (269.4     (12.2     233.2   

Stock-based compensation

     2.1        (1.0     12.2   

Adjustments to prior year tax provisions

     (5.2     (3.9     (4.4

Change in assertion for unremitted earnings

                   (110.8

Recognition of previously unrecognized tax benefits

     (21.3            (1.3

Other, net

     1.0        (3.2     4.5   
                        

Effective tax rate on continuing operations

     (269.7 )%      (5.2 )%      153.9
                        

Domestic and foreign components of income (loss) from continuing operations before taxes are as follows:

  
     Fiscal Year Ended October 31,  
(In thousands)            2010                     2009                     2008          

Domestic

   $ 55,399      $ (123,823   $ 280   

Foreign

     46,688        (80,151     22,598   
                        

Total income (loss) from continuing operations before taxes

   $ 102,087      $ (203,974   $ 22,878   
                        

Cash paid for income taxes

   $ 14,828      $ 35,565      $ 12,854   
                        

Income Tax Expense

The effective tax rate for fiscal 2010 differs from the federal statutory rate of 35% primarily due to the $277.2 million release in valuation allowance on certain of our U.S. net deferred tax assets and the $22.0 million reduction in reserve for uncertain tax positions primarily resulting from expiration of the statute of limitations on a previously uncertain tax position. A quantitative reconciliation of our effective tax rate to the U.S. statutory rate is provided in the above tables.

The effective tax rate on continuing operations for fiscal 2010 was a benefit of (270%) compared to (5%) for fiscal 2009. This was primarily due to the release of the valuation allowance against certain U.S. deferred tax assets and the reduction in reserve for uncertain tax positions resulting from expiration of the statute of limitations on a previously uncertain tax position.

The effective tax rate on continuing operations for fiscal 2009 was a benefit of (5%) compared to a provision of 154% for fiscal 2008. The fiscal 2009 rate of (5%) is the result of recording tax expense on a pre-tax loss. This was primarily due to the $279.1 million of goodwill and intangible asset impairment charges recorded for financial reporting purposes in fiscal 2009 for which we received minimal tax benefit. In the U.S., these impairment charges are either non-deductible or deductible over 15 years with a valuation allowance on the deferred asset, and outside the U.S., these impairment charges are attributable to jurisdictions where we receive little or no tax benefit.

In fiscal 2008 we had significant financial reporting to tax basis differences that increased fiscal 2008 taxable income primarily as a result of a large one-time cash payment to us in fiscal 2007 that we deferred for tax purposes to fiscal 2008. Because of these differences between financial reporting and tax treatment, we recorded significantly higher tax expense in the U.S. in fiscal 2008 when compared to fiscal 2010 and 2009, resulting in the higher overall effective tax rate in fiscal 2008 compared to fiscal 2010 and 2009. Included in the fiscal 2008 effective tax rate are $3.3 million in adjustments related to settlements of prior period audits and tax filings.

 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

 

L. Income Taxes (Continued)

 

Deferred Tax Assets

The components of deferred tax assets at October 31, 2010 and 2009 are as follows:

 

(In thousands)        October 31,    
2010
        October 31,    
2009
 

Deferred income taxes:

    

Deferred tax assets:

    

Accruals

   $ 71,516      $ 86,706   

Capital loss carryforwards

     49,611        32,457   

Credit carryforwards

     149,017        138,894   

Net operating loss carryforwards

     114,138        120,807   

Intangibles from acquisitions

     36,515        41,967   

Investment impairments

     9,891        33,222   

Receivable valuation accounts

     628        1,238   

Stock-based compensation expense

     10,093        16,809   

Other items

     14,161        12,065   
                

Gross deferred tax assets

     455,570        484,165   

Valuation allowance

     (170,362     (459,795
                

Total deferred tax assets

     285,208        24,370   
                

Deferred tax liabilities:

    

Depreciation

     (78     (535
                

Net deferred tax assets

   $         285,130      $         23,835   
                

We record deferred tax assets and liabilities based upon the future tax consequence of differences between the financial reporting and tax basis of assets and liabilities, and other tax attributes. We also assess our ability to realize deferred tax assets based upon a “more likely than not” standard; a valuation allowance is recorded for any deferred tax assets not deemed more likely than not realizable.

We follow tax ordering laws to determine the sequence in which deductions, net operating loss carryforwards, and tax credits are utilized. For fiscal years including 2005 through 2009, substantially all of the benefit received from our net operating loss carryforwards used to offset U.S. taxable income has been credited to additional paid-in capital or goodwill and not to income tax expense. In addition, the windfall tax benefits associated with stock-based compensation have been credited to additional paid-in capital. Beginning in fiscal 2010, as a result of new accounting rules for business combinations, the benefit from our remaining acquisition-related net operating loss carryforwards used, or expected to be used to offset U.S. taxable income was credited to income tax expense.

As of October 31, 2010, we had $180.4 million in net operating loss carryforwards from acquired companies that will expire in years 2019 through 2028. These loss carryforwards from acquired companies can be utilized to offset future taxable income, but are subject to certain annual limitations. In addition, we have approximately $166.5 million of foreign loss carryforwards, of which $23.7 million, $3.1 million, and $9.4 million are subject to expiration in years 2011, 2012, and 2013 through 2028, respectively. The remaining losses do not expire. We have $129.7 million in capital loss carryforwards, which, if not utilized, will expire in fiscal years 2011 through 2015. We have foreign tax credit carryforwards of $31.7 million that expire between fiscal years 2011 and 2020, general business credit carryforwards of $94.4 million that expire between fiscal years 2011 and 2030, and alternative minimum tax credit carryforwards of $8.3 million that do not expire. We also have various state net operating loss and credit carryforwards that expire in accordance with the respective state statutes.

Valuation Allowance

At October 31, 2010, we recorded a $277.2 million release to the valuation allowance on our U.S. net deferred tax assets due to changes in our expectations regarding our ability to realize certain deferred tax assets. This resulted from a determination that it was more likely than not that a portion of the net deferred tax assets would be realized. In reaching this determination, we have evaluated all significant available positive and negative evidence including, but not limited to, our three-year cumulative results, trends in our businesses, expected future results and the character and amount of the net deferred tax assets. The underlying assumptions we used in forecasting future income required significant judgment and took into account our recent performance.

 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

 

L. Income Taxes (Continued)

 

We continue to maintain a valuation allowance on a portion of our U.S. and foreign net deferred tax assets. The U.S. net deferred tax assets on which a valuation allowance is maintained include capital losses, foreign tax credits, state net operating losses and credits, and $16.6 million in federal credits related to stock-based compensation deductions for which the benefit will be accounted for as a credit to additional paid-in capital. The valuation allowance on our foreign net deferred tax assets primarily involves net operating losses. The determination of the realization of these foreign benefits is made on a country-by-country basis.

As deferred tax assets or liabilities increase or decrease in the future, or if a portion or all of the valuation allowance is no longer deemed to be necessary, the adjustments to the valuation allowance will increase or decrease future income tax provisions or additional paid-in-capital.

Foreign Earnings

As of October 31, 2010, we have not provided deferred taxes relative to undistributed earnings of foreign subsidiaries as such undistributed earnings are considered to be indefinitely reinvested. Prior to fiscal 2008, we had provided deferred taxes on the undistributed earnings of certain foreign subsidiaries, but such deferred taxes were reversed during fiscal 2008 based on our assertion to remain indefinitely reinvested in all foreign subsidiaries. We consider the earnings to be indefinitely reinvested based on management’s overall business strategy, including anticipated future uses of global cash balances for operations. Total undistributed earnings of approximately $280.3 million at October 31, 2010, may become taxable upon their remittance as dividends or upon the sale or liquidation of these foreign subsidiaries. It is not practicable to determine the amounts of net additional income tax that may be payable if such earnings were repatriated. The Merger Agreement provides that, at Attachmate’s request, we will use our reasonable best efforts to repatriate cash on hand held by our foreign subsidiaries prior to closing the merger. Accordingly, we expect to record deferred taxes corresponding to undistributed earnings of certain foreign subsidiaries in fiscal 2011.

Income Tax Reserves

As of October 31, 2010, we had reserves for unrecognized tax benefits totaling $21.4 million, excluding interest, of which $14.4 million would favorably impact our effective tax rate if recognized. As of October 31, 2009, we had reserves for unrecognized tax benefits totaling $37.3 million, excluding interest. The $15.9 million decrease in reserves for unrecognized tax benefits, excluding interest, during fiscal 2010 relates primarily to benefits recognized as a result of the lapse of the statute of limitations on a previously uncertain tax position.

During fiscal 2010, we reduced our accrual for interest by $6.1 million related to unrecognized tax benefits. During fiscal 2009 and 2008, we increased our accrual for interest by $1.9 million and $0.3 million, respectively, related to unrecognized tax benefits. These accrual adjustments were recorded in our consolidated statements of operations for the respective fiscal years. We had $3.2 million, $9.3 million, and $7.4 million accrued for the payment of interest related to unrecognized tax benefits as of October 31, 2010, 2009, and 2008, respectively.

As of October 31, 2010, we have recorded a $17.6 million liability for unrecognized tax benefits and related interest in the line item “Other long-term liabilities” on our consolidated balance sheet.

The difference between the total unrecognized tax benefits and those affecting the effective tax rate is due to certain unrecognized tax benefits that would have a full valuation allowance if recognized. As of October 31, 2010, we believe it is reasonably possible that $3.8 million of unrecognized tax benefits and accrued interest will decrease within the next 12 months as the result of statutes of limitations expiring in various jurisdictions.

 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

 

L. Income Taxes (Continued)

 

The following is a reconciliation of our change in uncertain tax positions:

 

(In thousands)    Total Gross
Unrecognized
    Tax Benefits    
 

Balance at November 1, 2008

   $ 49,862   

Increases related to fiscal 2009 tax positions

     1,091   

Increases related to prior fiscal year tax positions

     4,496   

Decreases related to settlement of prior fiscal year tax positions

     (17,471

Expiration of statute of limitations for assessment of taxes

     (670
        

Balance at October 31, 2009

     37,308   

Increases related to fiscal 2010 tax positions

     543   

Increases related to prior fiscal year tax positions

     255   

Decreases related to settlement of prior fiscal year tax positions

     (1,352

Expiration of statute of limitations for assessment of taxes

     (15,380
        

Balance at October 31, 2010

   $ 21,374   
        

We conduct business globally. As a result, we file income tax returns and are subject to examination by taxing authorities in various jurisdictions throughout the world. In the U.S., we are currently in appeals with the Internal Revenue Service regarding two issues related to its examination of tax years 2005 and 2006. We do not anticipate that the settlement of the two outstanding issues will have a material impact on our financial position or results of operations. In addition, we are at various stages in examinations in some state and foreign jurisdictions. With few exceptions, we are no longer subject to U.S. federal, state and local income tax examinations for years prior to fiscal 2002 or non-U.S. income tax examinations for years prior to fiscal 2005.

M. Other Accrued Liabilities

Other accrued liabilities consist of the following:

 

(In thousands)        October 31,    
2010
         October 31,    
2009
 

Accrued property and other taxes

   $ 16,336       $ 14,069   

Accrued royalties

     12,662         10,735   

Accrued marketing expenses

     9,223         7,279   

Merger liabilities

     5,748         10,098   

Restructuring reserves

     4,021         12,843   

Other accrued expenses

     38,233         42,130   
                 

Total other accrued liabilities

   $ 86,223       $ 97,154   
                 

N. Restructuring Expenses and Merger Liabilities

Fiscal 2010

In the first quarter of fiscal 2010, we recorded net restructuring expenses of $2.8 million. This was comprised of $2.9 million primarily for termination benefits for five employees as part of our business unit segment structural and management reorganization, partially offset by $0.1 million in reductions to accruals for changes in estimates related to prior period restructuring activities. No other restructuring actions were undertaken throughout the remainder of fiscal 2010. The following table summarizes the activity related to this restructuring action:

 

(In thousands)        Severance    
and
Benefits
 

Original reserve

   $ 2,876   

Cash payments

     (2,158
        

Balance at October 31, 2010

   $ 718   
        

 

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N. Restructuring Expenses and Merger Liabilities (Continued)

 

The remaining unpaid balance as of October 31, 2010 is for severance and benefits, which we expect to pay over the first half of fiscal 2011.

Fiscal 2009

During fiscal 2009, we recorded net restructuring expenses of $25.2 million. This was comprised of $10.2 million in restructuring expenses under our restructuring plan that we implemented in the second half of fiscal 2009 in response to economic conditions, $13.9 million for restructuring actions incurred for the completion of the restructuring plan that we began during the fourth quarter of fiscal 2006 and completed during the second quarter of fiscal 2009, and $1.1 million in additions to accruals for changes in estimates related to prior period restructuring activities. As part of both restructuring actions, during fiscal 2009, we reduced our headcount by 341 employees. The following table summarizes the activity related to these restructuring actions:

 

(In thousands)        Severance    
and
Benefits
    Excess
       Facilities      
    Other
Restructuring
    Related Costs    
          Total        

Original reserve

   $ 18,753      $ 4,934      $ 419      $ 24,106   

Cash payments

     (12,147     (1,484     (419     (14,050
                                

Balance at October 31, 2009

     6,606        3,450               10,056   

Cash payments

     (6,447     (1,288            (7,735

Non-cash adjustments

     (133     (262            (395
                                

Balance at October 31, 2010

   $ 26      $ 1,900      $      $ 1,926   
                                

The remaining unpaid balance as of October 31, 2010 is primarily for lease costs for redundant facilities, which we expect to pay over the respective remaining contract terms, the longest of which extends to 2018.

Fiscal 2008

During fiscal 2008, we recorded net restructuring expenses of $28.6 million. This was comprised of $31.0 million in restructuring activities recognized during fiscal 2008 and $2.4 million in reductions of accruals for restructuring activities recorded in prior periods.

The restructuring actions undertaken during fiscal 2008 were a continuation of the restructuring plan that we began during the fourth quarter of fiscal 2006. The restructuring plan is related to our strategy to implement a comprehensive transformation of our business and to achieve competitive operating margins. Specific actions taken during fiscal 2008 included reducing our workforce by 364 employees. The following table summarizes the activity related to the fiscal 2008 restructuring:

 

(In thousands)        Severance    
and
Benefits
    Excess
       Facilities      
    Other
Restructuring
    Related Costs    
          Total        

Original reserve

   $ 25,583      $ 3,492      $ 1,949      $ 31,024   

Cash payments

     (10,893     (2,213     (1,576     (14,682

Non-cash adjustments

     37        (41     (144     (148
                                

Balance at October 31, 2008

     14,727        1,238        229        16,194   

Cash payments

     (15,006     (734     (217     (15,957

Non-cash adjustments

     901        331        (12     1,220   
                                

Balance at October 31, 2009

     622        835               1,457   

Cash payments

     (194     (663            (857

Non-cash adjustments

     335        233               568   
                                

Balance at October 31, 2010

   $ 763      $ 405      $      $ 1,168   
                                

The remaining unpaid balance as of October 31, 2010 is primarily for lease costs for redundant facilities, which we expect to pay over the respective remaining contract terms, the longest of which extends to 2013, and for severance, which is currently being contested in court and currently represents our best estimate of the amount that we may have to pay. While the outcome cannot be predicted with certainty, we do not believe that the outcome will have a material adverse effect, individually, or in the aggregate, on our consolidated financial position, results of operations or cash flows.

 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

 

N. Restructuring Expenses and Merger Liabilities (Continued)

 

Fiscal 2007 to Fiscal 2003

During fiscal 2007, 2005, 2004, and 2003, we recorded net restructuring expenses of $43.1 million, $57.7 million, $19.1 million, and $37.8 million, respectively. The remaining balances of these actions, which relates to lease costs for redundant facilities, are not material to the consolidated financial statements presented in this Annual Report on Form 10-K.

Merger Liabilities

The following table summarizes the merger liabilities balance as of October 31, 2010 and activity during fiscal 2010:

 

(In thousands)    Balance at
October 31, 2009
     Payments/
  Adjustments   
    Balance at
October 31, 2010
 

Facilities related

   $ 9,971       $ (4,223   $     5,748   

Other

     127         (127       
                         

Total merger liabilities

   $ 10,098       $ (4,350   $ 5,748   
                         

During the second quarter of fiscal 2010, we assigned a facility lease to a subtenant, and as a result released $3.2 million of merger liabilities (See Note K, “Goodwill and Intangible Assets”).

As of October 31, 2010, the remaining unpaid merger liabilities balance relates to lease costs for redundant facilities, which we expect to pay over the respective remaining contract terms, the longest of which extends to 2025.

O. Line of Credit

We have a $10.0 million bank line of credit available for letter of credit purposes. As of October 31, 2010, there were standby letters of credit of $1.3 million outstanding under this line, all of which are collateralized by cash. The bank line of credit expires on July 31, 2011. The bank line of credit is subject to the terms of a credit agreement containing financial covenants and restrictions, none of which are expected to affect our operations. As of October 31, 2010, we are in compliance with the financial covenants and restrictions contained in this credit agreement. In addition, as of October 31, 2010, we had outstanding letters of credit at several other banks that total $1.5 million.

P. Senior Convertible Debentures

On July 2, 2004, we issued and sold $600 million aggregate principal amount of 0.5% senior convertible debentures due 2024 (“Debentures”). The Debentures paid interest at 0.50% per annum, payable semi-annually on January 15 and July 15 of each year, commencing January 15, 2005. Each $1,000 principal amount of Debentures was convertible, at the option of the holders, into approximately 86.79 shares of our common stock prior to July 15, 2024 if (1) the price of our common stock traded above 130% of the conversion price for a specified duration, (2) the trading price of the Debentures was below a certain threshold, subject to specified exceptions, (3) the Debentures had been called for redemption, or (4) specified corporate transactions had occurred. None of the conversion triggers were met.

During fiscal 2008, we received authorization from our Board of Directors to repurchase, from time to time, up to $600 million face value of the Debentures in such quantities, at such prices and in such manner as may be directed by our management.

During fiscal 2008, we purchased and retired $474.3 million face value of the Debentures for total cash consideration of $456.5 million, including $0.6 million of accrued interest. The portions of the unamortized debt issuance costs and prepaid interest related to the Debentures that were repurchased were written off, resulting in a $4.6 million gain during fiscal 2008. This gain is shown as a component of the line item “Interest expense and other, net” in our consolidated statements of operations.

During fiscal 2009, in accordance with the terms of the Debentures, we offered to repurchase our outstanding Debentures. As a result, we purchased and retired the remaining $125.7 million face value of the Debentures under this plan for total cash consideration of $125.5 million, including less than $0.1 million of accrued interest.

 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

 

P. Senior Convertible Debentures (Continued)

 

During fiscal 2009 and 2008, we incurred interest expense of $3.2 million and $18.8 million, respectively, including the amortization of deferred financing costs related to the Debentures. During fiscal 2009, we made cash payments for interest of $0.6 million.

Q. Guarantees

Like most software vendors, we are party to a variety of agreements, primarily with customers, resellers, distributors, and independent hardware and software vendors (generally, “Customers”), pursuant to which we may be obligated to indemnify the Customer against third-party allegations of intellectual property infringement resulting from the Customer’s use of our offerings or distribution of our software, either of which may include proprietary and/or open source materials. In such circumstances, the Customer must satisfy specified conditions to qualify for indemnification. Our obligations under these agreements may be limited in terms of time and/or amount, and in some instances we may have recourse against third parties.

It is not possible to predict the maximum potential amount of future payments under these guarantees and indemnifications or similar agreements due to the conditional nature of our obligations and the unique facts and circumstances involved in each particular agreement. To date, we have not been required to make any payment related to guarantees and indemnifications. We do not record a liability for potential litigation claims related to indemnification agreements with our Customers unless and until we conclude the likelihood of a material obligation is probable and estimable.

R. Commitments and Contingencies

As of October 31, 2010, we have various operating leases related to our facilities. These leases have minimum annual lease commitments of $13.0 million in fiscal 2011, $10.8 million in fiscal 2012, $6.5 million in fiscal 2013, $4.3 million in fiscal 2014, $3.8 million in fiscal 2015, and $4.1 million thereafter. We also have $26.9 million of minimum rentals to be received in the future from subleases.

Rent expense, net of sublease rental income, for operating and month-to-month leases was $12.8 million, $14.9 million, and $17.5 million, in fiscal 2010, 2009, and 2008, respectively.

During fiscal 2008, we issued $4.8 million of debt to finance leasehold improvements for our Bangalore, India product development facility. During fiscal 2009, we repaid this obligation in full. Interest expense in fiscal 2009 related to this debt was $0.3 million.

S. Legal Proceedings

SilverStream, which we acquired in July 2002, and several of its former officers and directors, as well as the underwriters who handled SilverStream’s two public offerings, were named as defendants in several class action complaints that were filed in July 2001. The complaints were filed by former stockholders of SilverStream who purchased shares of SilverStream common stock between August 16, 1999 and December 6, 2000. The original complaints were closely related to similar complaints brought against 309 other issuers and underwriters, and allege violations of U.S. Securities laws, including that there was undisclosed compensation received by the underwriters and that false information prepared by the underwriters resulted in hundreds of millions of dollars in damages to stockholders. A Consolidated Amended Complaint with respect to all of these complaints was filed in the U.S. District Court, Southern District of New York, on April 19, 2002. While we believe that SilverStream and its former officers and directors have meritorious defenses to the claims, various parties, including the many underwriters, participated in settlement discussions and reached a proposed settlement agreement. After notice to the plaintiff class, the settlement agreement received final approval from the Court on September 10, 2009. Certain parties have filed Notices of Appeal from the Court’s decision. We believe it is probable that any settlement payment will be covered by our insurance carrier. Thus, we do not believe that resolution of this litigation will have a material adverse effect on our financial position, results of operations or cash flows.

 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

 

S. Legal Proceedings (Continued)

 

On July 12, 2002, Amer Jneid and other related plaintiffs filed a complaint in the Superior Court of California, Orange County, alleging claims for breach of contract, fraud in the inducement, misrepresentation, infliction of emotional distress, rescission, slander and other claims against us in connection with our purchase of so-called “DeFrame” technology from the plaintiffs and two affiliated corporations (TriPole Corporation and Novetrix), and employment agreements that we entered into with the plaintiffs in connection with the purchase. The complaint sought unspecified damages, including punitive damages. The dispute (resulting in these claims) arises out of the plaintiffs’ assertion that we failed to properly account for license distributions which the plaintiffs claim would have entitled them to certain bonus payouts under the purchase and employment agreements. After a lengthy jury trial, the jury returned a verdict in favor of the various plaintiffs on certain contract claims and in favor of us on various remaining claims. We then pursued an appeal of the judgment and the related orders to the California Court of Appeals. We accrued $27.0 million in prior fiscal periods for this matter. As part of the appeal process and during the first quarter of fiscal 2008, we posted a $51.5 million bond in conjunction with our appeal of this judgment. On December 17, 2009, the California Court of Appeals reversed the judgment against us and remanded the case for a new trial. The Court of Appeals also awarded attorneys’ fees and costs to the plaintiffs related to certain discovery and trial related fees. Since the reversal by the Court of Appeals, the bond plus interest has been released back to us. In addition, the new trial court has awarded the plaintiffs’ certain fees and costs associated with the first trial in the total amount of $4.2 million. We anticipate pursuing an appeal of such award. Notwithstanding any such appeal, we have utilized a portion of the accrued funds to satisfy amounts that have now been paid to the plaintiffs. These payments have reduced our original accrual to $24.7 million as of October 31, 2010. Preparations for a new trial are now moving forward with the trial tentatively scheduled for January 2011. While there can be no assurance as to the ultimate disposition of the litigation, we do not believe that its resolution will have a material adverse effect on our financial position or results of operations.

On January 20, 2004, the SCO Group, Inc. (“SCO”) filed suit against us in the Third Judicial District Court of Salt Lake County, State of Utah. Upon our motion, the action was removed to the U.S. District Court, District of Utah. SCO’s original complaint alleged that our public statements and filings regarding the ownership of the copyrights in UNIX and UnixWare harmed SCO’s business reputation and affected its efforts to protect its ownership interest in UNIX and UnixWare. Our answer set forth numerous affirmative defenses and counterclaims alleging slander of title and breach of contract, and seeking declaratory actions and actual, special and punitive damages in an amount to be proven at trial. On February 3, 2006, SCO filed a Second Amended Complaint alleging that we had violated supposed non-competition provisions of the agreement under which we sold certain UNIX-related assets to SCO, that we infringed SCO’s copyrights, and that we are engaging in unfair competition by attempting to deprive SCO of the value of the UNIX technology. SCO sought to require us to assign all copyrights that we have registered in UNIX and UnixWare to SCO, to prevent us from representing that we have any ownership interest in the UNIX and UnixWare copyrights, to require us to withdraw all representations we have made regarding our ownership of the UNIX and UnixWare copyrights, and to cause us to pay actual, special and punitive damages in an amount to be proven at trial. As a result of SCO’s Second Amended Complaint, our wholly-owned subsidiary, SUSE Linux AG (“SUSE”), filed a demand for arbitration before the International Court of Arbitration in Zurich, Switzerland, pursuant to a “UnitedLinux Agreement” in which SCO and SUSE were parties. On August 10, 2007, the U.S. District Court Judge issued a Memorandum Decision and Order that granted us summary judgment against SCO on significant issues in the litigation. The District Court determined that we own the UNIX copyrights and dismissed certain of SCO’s claims against us. On September 14, 2007, SCO filed a petition for relief under Chapter 11 of the U.S. Bankruptcy Code. On July 16, 2008, the U.S. District Court issued Findings of Fact and Conclusions of Law wherein the Court determined that SCO did not have authority to enter into an agreement with Sun Microsystems, Inc. in 2003 (the “Sun Agreement”) and owed us $2.5 million plus prejudgment interest, of which we have since received $0.6 million. The Sun Agreement included SCO’s purported expansion of Sun’s rights to Unix source code and resulted in Sun’s distribution of Open Solaris. Based on the Court’s ruling, we believe that the purported license of Unix code is invalid. The Court further concluded that SCO’s licenses to Microsoft and other “SCOsource licensees” included an “incidental” license to Unix SVRX code and therefore we were not entitled to any proceeds from such licenses. On November 20, 2008, the U.S. District Court entered Final Judgment dismissing SCO’s remaining claims against us and awarded us $3.5 million. On November 25, 2008, SCO filed a Notice of Appeal from that decision to the U.S. Tenth Circuit Court of Appeals. On August 24, 2009, a three Judge Panel from the U.S. Tenth Circuit Court of Appeals issued an opinion that reversed in part and affirmed in part the District Court’s decision. The Circuit Court affirmed the award to us of $3.5 million but remanded the remainder of the case back to the District Court for trial on the issue of whether the UNIX copyrights had been or should be transferred to SCO. On August 25, 2009, the U.S. Bankruptcy Court entered an Order appointing an independent Chapter 11 Trustee to manage the SCO bankruptcy estate. On March 30, 2010, the U.S. District Court jury returned a verdict in our favor and determined that under the asset purchase agreement as amended, we retained the UNIX and UnixWare copyrights. SCO’s subsequent request to set aside the jury verdict was rejected by the Court as was SCO’s claims for immediate transfer of UNIX copyrights and a determination that we did not have authority to direct SCO to waive claims against certain SVRX licensees. On July 7, 2010, SCO filed a Notice of Appeal to the U.S. Tenth Circuit Court of Appeals. While there can be no assurance as to the ultimate disposition of the litigation, we do not believe that its resolution will have a material adverse effect on our financial position, results of operations or cash flows.

 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

 

S. Legal Proceedings (Continued)

 

On November 12, 2004, we filed suit against Microsoft in the U.S. District Court, District of Utah. We are seeking treble and other damages under the Clayton Act, based on claims that Microsoft eliminated competition in the office productivity software market during the time that we owned the WordPerfect word-processing application and the Quattro Pro spreadsheet application. Among other claims, we allege that Microsoft withheld certain critical technical information about the Windows operating system (“Windows”) from us, thereby impairing our ability to develop new versions of WordPerfect and other office productivity applications, and that Microsoft integrated certain technologies into Windows designed to exclude WordPerfect and other applications owned by us from relevant markets. In addition, we allege that Microsoft used its monopoly power to prevent original equipment manufacturers from offering WordPerfect and other applications to customers. On June 10, 2005, Microsoft’s motion to dismiss the complaint was granted in part and denied in part. On October 15, 2007, the U.S. Fourth Circuit Court of Appeals affirmed the District Court’s ruling. On March 18, 2008, the United States Supreme Court rejected Microsoft’s Petition for a Writ of Certiorari seeking to appeal the Fourth Circuit’s Decision. As a result of these rulings, we elected to proceed with the remaining claims against Microsoft. On March 29, 2010, the Federal District Court ruled that our underlying claims against Microsoft had been assigned to Caldera, Inc., in connection with the transfer of the DR DOS business by us in approximately 1996. Accordingly, the court dismissed our complaint against Microsoft. We have filed a notice of appeal to the U.S. Fourth Circuit Court of Appeals and intend to seek review of the District Court’s decision dismissing the complaint.

On October 11, 2007, IP Innovations (a patent litigation company), filed a complaint in the U.S. District Court for the Eastern District of Texas alleging that the distribution of Linux-based products by both Red Hat (a co-defendant in the case) and us violates certain U.S. Patents. Specifically, the complaint alleged that certain functionality within Linux related to the “user interface with multiple workspaces for sharing display system objects” infringed the plaintiff’s patents. The complaint sought unspecified damages and an injunction from further distribution of the alleged infringing technology. In prior periods, we accrued $1.3 million for this matter. On April 30, 2010, a U.S. District Court jury returned a verdict in our favor ruling that we did not infringe the patents in suit and, in addition, concluding that the patents were invalid on multiple grounds. As a result of this ruling, we released our accrual related to this matter during the second quarter of fiscal 2010. Plaintiff’s post-trial motion seeking to set aside the jury verdict was rejected by the U.S. District Court on October 13, 2010, and plaintiff did not pursue an appeal. Accordingly, we believe this matter is fully and finally resolved in our favor, and will, therefore, have no material adverse effect on our financial position, results of operations or cash flows.

In November and December 2010, individuals and/or entities claiming to be our stockholders filed putative class action lawsuits challenging our pending merger with Attachmate. As of December 7, 2010, ten actions had been filed in the Delaware Court of Chancery, one action had been filed in the Superior Court of Massachusetts, and three actions had been filed in the United States District Court for the District of Massachusetts. All of the actions are brought against the members of our Board of Directors, and all but one of the actions also name us as a defendant. In addition: (i) all of the actions except for one name Attachmate as a defendant; (ii) all of the actions except for two name Merger Sub as a defendant; (iii) seven of the actions name CPTN as a defendant; (iv) three of the actions name Microsoft and Elliott Associates, L.P. as defendants; (v) two of the actions name our Senior Vice President and Chief Financial Officer as a defendant; and (vi) one of the actions names “Golden Gate Private Equity,” “Francisco Partners,” and “Thoma Cressey Bravo,” as defendants.

The plaintiffs allege, among other things, that our directors failed to fulfill their fiduciary duties with regard to our pending merger with Attachmate by failing to maximize our value to our public stockholders and that the entities named in the complaints aided and abetted those alleged breaches. Two of the actions also allege, among other things, that our directors failed to fulfill their fiduciary duties with regard to the pending patent sale to CPTN. The plaintiffs seek orders that, among other things, certify the cases as class actions, enjoin our merger with Attachmate, award plaintiffs and the putative class damages in the event that our merger with Attachmate is consummated, and award plaintiffs costs and expenses, including attorneys’ fees. We believe that there are substantial legal and factual defenses to the claims and intend to pursue them vigorously. While there can be no assurance as to the ultimate disposition of the litigation, we do not believe that its resolution will have a material adverse effect on our financial position, results of operations or cash flows.

In addition to the matters discussed above, we are currently party to various legal proceedings and claims involving former employees, either asserted or unasserted, which arise in the ordinary course of business. While the outcome of these matters cannot be predicted with certainty, we do not believe that the outcome of any of these claims will have a material adverse effect, individually or in the aggregate, on our consolidated financial position, results of operations or cash flows.

We accrue for losses that we believe are probable and can be reasonably estimated. We evaluate the adequacy of our legal reserves based on our assessment of many factors, including our interpretations of the law and our assumptions about the future outcome of each case based on current information. It is reasonably possible that our legal reserves could be increased or decreased in the near term based on our assessment of these factors.

 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

 

T. Stockholders’ Equity

Stock Repurchase

On May 13, 2008, our Board of Directors authorized the repurchase of up to $100.0 million of our outstanding common stock. There is no fixed termination date for the repurchase program. There were no repurchases under the program during fiscal 2010 or 2009. As of October 31, 2010, 11.6 million shares of common stock have been repurchased and retired under this program at an average price of $5.75 per share. The total amount paid for the repurchase of our common stock was $66.8 million, leaving $33.2 million remaining to be repurchased under the current Board authorization. The Merger Agreement generally restricts, subject to certain limited exceptions, including, without limitation, Attachmate’s prior written consent, our ability to repurchase our outstanding common stock during the interim period between the execution of the Merger Agreement and the consummation of the merger (or the date on which the Merger Agreement is earlier terminated) (See Note Z, “Subsequent Events”).

Preferred Stock

We have 500,000 authorized shares of Preferred Stock with a par value of $0.10 per share, none of which were issued or outstanding at October 31, 2010 or October 31, 2009.

The 2009 Plan

In fiscal 2009, our stockholders approved the Novell, Inc. 2009 Omnibus Incentive Plan (“2009 Plan”). No new awards can be granted under our prior plans; however, we continue to manage outstanding awards under those plans, which are discussed in more detail below.

When granting stock options, we typically grant nonstatutory options at fair market value on the grant date, defined in the stock award plans as the closing price of our stock on the day prior to grant. Our current practice is to grant nonstatutory options or restricted units to mid- and upper-management at the time of hire. We also maintain an ongoing grant program under which certain employees are eligible for consideration based on their past performance or future retention requirement.

The 2009 Plan provides for the grant of stock options, stock appreciation rights, restricted stock and restricted stock units, performance shares and performance units, and other cash-based and stock-based awards. It also provides for the issuance of common stock equivalents (“CSEs”). As of October 31, 2010, a total of 11.5 million potential shares from stock awards were outstanding.

As of October 31, 2010, 51.6 million shares are authorized under the 2009 Plan, of which 37.0 million shares are available for grant. For purposes of determining future shares available for grant, shares granted as full value awards, including restricted stock units and restricted stock, reduce the shares available for grant by 1.5 shares. All other types of grants reduce the shares available for grant by one share. We currently expect that under the 2009 Plan we will continue substantially the same stock-based compensation practices followed under prior plans. Stock options are granted with prices at fair market value on the grant date, defined in the 2009 Plan as the closing price of our stock on the day prior to grant and generally expire eight years from the date of grant. Upon vesting, restricted stock units are automatically converted into shares of common stock on a one-for-one basis without the payment of any additional consideration. Restricted stock is deemed outstanding at grant, but subject to a repurchase right held by us until the restricted stock award vests. CSEs may be issued to non-employee members of our Board of Directors who elect to have all or a portion of their board retainer fees deferred through the purchase of CSEs. The purchase price for CSEs is equal to the fair market value (as defined in the 2009 Plan) of our common stock on the date of purchase. Participating board members who defer compensation into the award of CSEs specify the future date, within specified parameters, that such CSEs will be converted into shares of our common stock.

Prior Stock Plans

The 1991 Stock Plan, 2000 Stock Plan, 2000 Nonqualified Stock Option Plan, Novell/SilverStream 1997 Stock Option Plan, and Novell/SilverStream 2001 Stock Option Plan were all suspended by the approval of the 2009 Plan. No new awards can be granted under these plans; however, we continue to manage outstanding awards under all of these plans. Shares granted from these plans include nonqualified stock options, incentive stock options, restricted stock units, restricted stock, and CSEs. As of October 31, 2010, a total of 18.9 million potential shares from stock awards were authorized and outstanding. Shares outstanding from these plans that are forfeited, cancelled, expire or are otherwise not converted into common shares are available for grant under the 2009 Plan. Shares that are converted into common stock through exercise or release and then surrendered for payment of the exercise price or tax obligations are considered cancelled and are not available for grant.

 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

 

T. Stockholders’ Equity (Continued)

 

Expired Plans

The Stock Option Plan for Non-Employee Directors (the “Director Plan”) expired in April 2008. As of October 31, 2010, a total of 0.6 million potential shares from stock awards remain authorized and outstanding. Options previously granted under this plan that have not yet expired or otherwise become unexercisable continue to be administered under the Director Plan, and any portions that expire or become unexercisable under this expired plan for any reason shall be cancelled and be unavailable for future issuance.

A summary of the status of our stock award plans as of October 31, 2010, 2009 and 2008 is presented below.

 

     Fiscal 2010      Fiscal 2009      Fiscal 2008  

(Number of awards in thousands)

 

    Number of 
Awards
    Weighted-
Average
    Exercise    
Price
      Number of 
Awards
    Weighted-
Average
    Exercise    
Price
      Number of 
Awards
    Weighted-
Average
    Exercise    
Price
 

Outstanding at beginning of year

     30,451      $ 4.73         32,921      $ 4.84         39,070      $ 5.71   

Granted:

              

Price at fair value

     5,330        4.36         4,153        3.70         3,902        6.62   

Price at less than fair value

     5,907        0.00         3,007        0.00         5,050        0.00   

Exercised

     (5,288     1.67         (4,548     0.41         (4,982     2.29   

Cancelled:

              

Forfeited

     (2,003     3.26         (2,060     3.14         (2,590     3.16   

Expired

     (3,464     8.53         (3,022     7.42         (7,529     9.30   
                                

Outstanding at end of year

     30,933      $ 3.96         30,451      $ 4.73         32,921      $ 4.84   
                                

Exercisable at end of year

     12,535      $ 6.30         15,892      $ 6.70         16,724      $ 6.71   
                                

The following table summarizes information about stock awards outstanding at October 31, 2010:

 

     Awards Outstanding      Awards Exercisable  

(Number of awards in thousands)

 

  

Number of

Awards

     Weighted-
Average
Remaining
    

Weighted-

Average

    

Number of

Awards

    

Weighted-

Average

 
Range of Exercise Prices        Outstanding            Contractual Life           Exercise Price             Exercisable             Exercise Price     

$0.00 – $3.64

     12,585         2.65       $ 1.01         1,442       $ 3.23   

$3.64 – $3.99

     3,788         5.78         3.95         973         3.85   

$3.99 – $4.68

     3,611         5.08         4.62         1,197         4.65   

$4.68 – $5.55

     2,354         2.36         5.49         2,310         5.50   

$5.55 – $6.44

     2,398         4.01         6.06         1,742         6.10   

$6.44 – $6.71

     2,347         4.89         6.70         1,176         6.69   

$6.71 – $9.62

     2,296         3.51         7.78         2,141         7.83   

$9.62 – $11.26

     1,554         1.18         10.97         1,554         10.97   
                          

Total

     30,933         3.56       $ 3.96         12,535       $ 6.30   
                          

The following table summarizes general information as of October 31, 2010 and October 31, 2009:

 

(Number of shares and awards in thousands)        October 31,    
2010
         October 31,    
2009
 

Awards available for future grants

     37,002         45,740   

Shares of common stock outstanding

     351,576         347,073   

Awards granted during the year as a percentage of outstanding common stock

     3.2%         2.1%   

Employee Stock Purchase Plan

Through July 2009, we had an Employee Stock Purchase Plan (the “Purchase Plan”) under which we were authorized to issue up to 34.0 million shares of our common stock to our employees who work at least 20 hours a week and more than five months a year. The maximum number of shares that could be purchased by employees during any fiscal year was 3.0 million shares. Under the terms of the Purchase Plan, there were two six-month offer periods per year, and employees could choose to have up to 10% of their eligible compensation withheld to purchase our common stock at 95% of the fair market value of our common stock on the purchase date. The Purchase Plan was considered non-compensatory under U.S. GAAP and, accordingly, no stock-based compensation expense has been recorded for issuances under the Purchase Plan. The Purchase Plan expired in July 2009 and was not renewed.

 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

 

T. Stockholders’ Equity (Continued)

 

Under the Purchase Plan, we issued 0.3 million and 0.2 million shares to employees in fiscal 2009 and 2008, respectively.

Shares Reserved for Future Issuance

As of October 31, 2010, there were 71.0 million shares of common stock reserved for issuance under our stock award plans. Except for awards outstanding as of the date of the Merger Agreement, the Merger Agreement generally restricts, subject to certain limited exceptions, including, without limitation, Attachmate’s prior written consent, our ability to issue shares of our common stock during the interim period between the execution of the Merger Agreement and the consummation of the merger (or the date on which the Merger Agreement is earlier terminated) (See Note Z, “Subsequent Events”).

U. Stock-Based Compensation

Our consolidated statements of operations include the following amounts of stock-based compensation expense in the respective captions:

 

     Fiscal Year Ended October 31,  
(In thousands)            2010                      2009                      2008          

Cost of revenue

   $ 3,053       $ 2,649       $ 3,621   
                          

Sales and marketing

     8,038         7,015         10,134   

Product development

     8,227         9,332         10,363   

General and administrative

     9,739         6,885         9,700   
                          

Operating expenses

     26,004         23,232         30,197   
                          

Total stock-based compensation expense

   $ 29,057       $ 25,881       $ 33,818   
                          

Total unrecognized stock-based compensation expense expected to be recognized over an estimated weighted-average amortization period of 1.7 years was $38.1 million at October 31, 2010.

The benefits of tax deductions in excess of recognized compensation cost are reported as a financing cash flow. In fiscal 2010 and 2008, this requirement decreased our net operating cash flows and increased our net financing cash flows by $2.2 million and $18.5 million, respectively. In fiscal 2009, this requirement increased our net operating cash flows and decreased our net financing cash flows by $2.8 million.

Stock Plans

All stock-based compensation awards are administered under one of the stock award plans discussed in Note T, “Stockholders’ Equity.” When granting stock options, we grant nonstatutory options at fair market value on the date of grant (defined as the closing price on the day prior to the grant date). We also grant restricted stock and restricted stock units.

Time-Based Stock Awards

Our weighted-average assumptions used in the Black-Scholes valuation model for equity awards with time-based vesting provisions granted during fiscal 2010, 2009, and 2008 are shown below:

 

     Fiscal Year Ended October 31,  
               2010                           2009                           2008             

Expected volatility

     42%         55%         37%   

Expected dividends

     0%         0%         0%   

Expected term

     4.9 years         4.7 years         4.0 years   

Risk-free interest rate

     1.1 – 2.6%         0.9 – 3.0%         2.9 – 4.7%   

 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

 

U. Stock-Based Compensation (Continued)

 

The expected volatility rate was estimated based on equal weighting of the historical volatility of our common stock over a period coinciding with the expected term and the implied volatilities of our common stock. The expected term was estimated based on our historical experience of exercise, cancellation, and expiration patterns. The risk-free interest rates are based on U.S. Treasury STRIPS with maturities that approximate the expected term.

The estimated pre-vesting forfeiture rate used for fiscal 2010, 2009 and 2008 was 10%, which was based on historical rates and forward-looking factors. We adjust the estimated forfeiture rate to our actual experience upon vesting or as additional information about future forfeitures become available.

A summary of the time-based stock awards, which include stock options, restricted stock, and restricted stock units, as of October 31, 2010, and changes during the fiscal year then ended, is as follows:

 

         Shares         Weighted-
Average
    Exercise    
Price
     Weighted-
Average
Remaining
  Contractual  
Term
         Aggregate    
Intrinsic
Value
 
     (In thousands)            (Years)      (In thousands)  

Stock Awards

          

Outstanding at November 1, 2009

     25,156      $ 4.81         

Granted:

          

Price equal to fair market value

     5,330        4.36         

Price less than fair market value

     4,677                

Exercised or released

     (4,243     2.08         

Forfeited or expired

     (4,524     6.74         
                

Outstanding at October 31, 2010

     26,396      $     3.97         3.32       $ 64,629   
                                  

Exercisable at October 31, 2010

     11,929      $ 6.27         2.63       $ 8,482   
                                  

The weighted-average grant-date fair value of time-based stock awards granted during fiscal 2010 was $3.27. The total intrinsic value of awards exercised or released during fiscal 2010 was $14.5 million. As of October 31, 2010, there was $36.8 million of unrecognized stock-based compensation cost related to time-based stock awards. That cost is expected to be recognized over a weighted-average period of 1.8 years.

Performance-Based and Market-Condition Awards

We have issued performance-based equity awards to certain senior executives. These awards have the potential to vest over one to four years upon the achievement of certain specific financial performance goals, specifically related to the achievement of budgeted revenue and operating income targets in each fiscal year. The performance-based options were granted at an exercise price equal to the fair market value of our common stock on the date the option was granted and have a contractual life of up to eight years.

The fair value of each performance-based option was estimated using the closing price of our stock on the day prior to grant utilizing the Black-Scholes option valuation model without consideration of the performance measures. The inputs for expected volatility, expected term, expected dividends, and risk-free interest rate used in estimating the fair value of performance-based awards in fiscal 2010 are the same as those noted above under time-based stock awards.

We have issued restricted stock units to executives that will vest based on the achievement of certain stock price targets. The stock-based compensation cost and derived service periods for these restricted stock units were estimated using the Monte Carlo simulation method, utilizing a volatility of 46.4% and a risk-free rate of 2.9%. The weighted-average fair value of these awards is $3.25 and the derived service periods range from approximately one year to approximately two and one-third years. During the second quarter of fiscal 2010, one-third of the market award vested due to the achievement of the target applicable to that portion of the award. This resulted in the recognition of $1.4 million in stock-based compensation during fiscal 2010 related to that portion of the award. If the remaining targets are not met, the restricted stock units will expire on the seventh anniversary of the grant date and will not convert into shares of common stock.

 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

 

U. Stock-Based Compensation (Continued)

 

A summary of the performance-based options, restricted stock units and market-condition restricted stock units as of October 31, 2010, and changes during the fiscal year then ended, is as follows:

 

     Shares       Weighted-  
Average
Exercise
Price
     Weighted-
Average
Remaining
  Contractual  
Term
       Aggregate  
Intrinsic
Value
 
     (In thousands)            (Years)      (In thousands)  

Stock Awards

          

Outstanding at November 1, 2009

     3,393      $ 4.24         

Fair value determined during year

     865        4.88         

Granted:

          

Price less than fair market value

     1,230                

Exercised or released

     (1,045             

Forfeited or expired

     (942     5.93         
                

Outstanding at October 31, 2010

     3,501        3.72         4.88       $ 10,626   
                                  

Exercisable at October 31, 2010

     606      $             6.91         3.76       $             —   
                                  

The weighted-average grant-date fair value of market-based awards granted during fiscal 2010 was $3.25. No new performance awards were granted during fiscal 2010. The total intrinsic value of performance and market-based awards exercised or released during fiscal 2010 was $5.0 million. As of October 31, 2010, there was $1.3 million of unrecognized compensation cost related to performance and market-based awards. That cost is expected to be recognized ratably over a one to two year period.

As of October 31, 2010, there were 1.0 million performance stock awards that have been granted and remain outstanding but have not yet been valued because all of the conditions necessary to establish the grant date for U.S. GAAP purposes have not yet occurred. The grant date of these stock awards will occur once budgets are approved by our Board of Directors for the respective years specified in the performance targets.

V. Employee Savings and Retirement Plans

We adopted a 401(k) savings and retirement plan in December 1986. The plan covers all of our U.S. employees who are 21 years of age or older who are scheduled to complete 1,000 hours of service during any consecutive 12-month period. Our 401(k) savings and retirement plan allows us to contribute an amount equal to 100% of each employee’s contribution up to the higher of 4% of the employee’s compensation or the maximum contribution allowed by tax laws. We made matching contributions on our 401(k) savings and retirement plan and other retirement plans of $12.9 million, $15.7 million, and $15.3 million, in fiscal 2010, 2009, and 2008, respectively. Fiscal 2010 was lower than fiscal 2009 and 2008 in part due to a suspension of matching contributions during the first half of fiscal 2010 as part of a broader cost-saving plan.

The defined benefit pension plan sponsored by one of our German subsidiaries covers 74 current employees and 220 former employees or retirees as of October 31, 2010. The plan was closed to new members as of November 2004. Actuarial gains or losses are being amortized over a 17.5 year period, and the amortization charges are included within the overall net periodic pension costs, which are charged to the statements of operations.

 

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NOVELL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

 

V. Employee Savings and Retirement Plans (Continued)

 

Other plan information is as follows:

 

(In thousands)    Fiscal 2010     Fiscal 2009     Fiscal 2008  

Change in benefit obligation

      

Benefit obligation at beginning of fiscal year

   $ 13,103      $ 10,534      $ 13,204   

Service cost

     428        464        610   

Interest cost

     721        699        692   

Actuarial loss (gain)

     4,371        (180     (2,617

Benefits paid

     (38     (39     (29

Foreign exchange

     (790     1,625        (1,326
                        

Benefit obligation at end of fiscal year

   $ 17,795      $ 13,103      $ 10,534   
                        

Accrued benefit cost

   $         (17,795   $         (13,103   $         (10,534
                        

Components of accumulated other comprehensive income

      

Pension transition obligation

   $ (413   $ (531   $ (540

Pension actuarial (loss) gain

     (26     4,929        4,183   
                        

Total recognized in accumulated other comprehensive income

   $ (439   $ 4,398      $ 3,643   
                        
           Fiscal Year Ended October 31,  
(Dollars in thousands)          2010     2009  

Weighted-average assumptions

      

Discount rate

       4.6%        6.0%   

Rate of salary increase

       3.0%        3.0%   

Post-retirement pension increases

       2.0%        2.0%   

Net periodic pension cost

     $ 1,492      $ 1,146   

As the amount of amortization of the pension components of accumulated other comprehensive income is anticipated to be insignificant to the consolidated financial statements, there will be no amortization in fiscal 2011. Estimated benefit payments for fiscal 2011, 2012, 2013, 2014, 2015 and thereafter are $46 thousand, $50 thousand, $101 thousand, $133 thousand, $145 thousand, and $1.1 million, respectively. At October 31, 2010, we had assets valued at $16.2 million designated to fund the German pension obligation, which do not qualify as plan assets.

We also have other retirement plans in certain foreign countries in which we employ personnel. Each plan is consistent with local laws and business practices.

 

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NOVELL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

 

W. Income (Loss) Per Share From Continuing Operations

The following table reconciles the numerators and denominators of the income (loss) per share calculation for fiscal 2010, 2009, and 2008:

 

     Fiscal Year Ended October 31,  
(In thousands, except per share data)    2010      2009     2008  

Basic income (loss) per share from continuing operations computation:

       

Income (loss) from continuing operations

   $         377,366       $         (214,640   $         (12,339
                         

Weighted-average common shares outstanding, excluding unvested restricted stock

     349,741         345,493        350,207   
                         

Basic income (loss) per share from continuing operations

   $ 1.08       $ (0.62   $ (0.04
                         

Diluted income (loss) per share from continuing operations computation:

       

Income (loss) from continuing operations

   $ 377,366       $ (214,640   $ (12,339
                         

Weighted-average common shares outstanding, excluding unvested restricted stock

     349,741         345,493        350,207   

Incremental shares attributable to the assumed exercise of outstanding options, unvested restricted stock units, unvested restricted stock, and other share plans

     3,706                  
                         

Total adjusted weighted-average common shares restricted stock

     353,447         345,493        350,207   
                         

Diluted income (loss) per share from continuing operations

   $ 1.07       $ (0.62   $ (0.04
                         

Incremental shares of 2.3 million and 1.5 million attributable to the assumed exercise of outstanding awards with exercise prices that were below the average market price (“in-the-money”) were not included in the calculation of diluted loss per share for fiscal 2009 and 2008, respectively, as their effect would have been anti-dilutive due to the loss in those periods. Incremental shares attributable to options with exercise prices that were at or greater than the average market price (“out-of-the-money”) at October 31, 2010, 2009, and 2008 were also excluded from the calculation of diluted earnings per share as their effect would have been anti-dilutive. At October 31, 2010, 2009, and 2008, there were 15.1 million, 22.0 million, and 16.1 million out-of-the-money options, respectively.

X. Comprehensive Income

Our accumulated other comprehensive income is comprised of the following:

 

          Fiscal Year Ended October 31,  
(In thousands)         2010     2009  

Net unrealized gain on investments

    $ 8,773      $ 11,018   

Pension actuarial (loss) gain

      (26     4,929   

Pension transition obligation

      (413     (531

Cumulative translation adjustment

      490        5,566   
                 

Total accumulated other comprehensive income

    $             8,824      $             20,982   
                 
Changes to accumulated other comprehensive income are as follows:   
    Fiscal Year Ended October 31,  
(In thousands)   2010     2009     2008  

Total change in gross unrealized gain/loss on investments during the year

  $ (6,870   $ 15,601      $ (9,631

Adjustment for net realized gains (losses) on investments included in net loss

    4,625        (1,799     6,029   
                       

Net change in unrealized gain/loss on investments

    (2,245     13,802        (3,602

Pension adjustment

    (4,837     755        2,234   

Cumulative translation adjustments

    (5,076     23,554        (52,859
                       

Total change to other comprehensive income

  $         (12,158   $         38,111      $         (54,227
                       

 

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NOVELL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

 

X. Comprehensive Income (Continued)

 

In fiscal 2010, we released a portion of the valuation allowance on the capital loss carryforward deferred tax assets such that there was no net tax impact on our unrealized gain/loss on investments. The other components of accumulated other comprehensive income were not tax affected due to the fact that the related deferred tax assets were fully reserved at October 31, 2010, 2009, and 2008. We continue to maintain a valuation allowance on selected U.S. federal, state and international net deferred tax assets.

Y. Segment Information

During the first quarter of fiscal 2010, our former Open Platform Solutions, Identity and Security Management, and Systems and Resource Management business unit segments were consolidated to form the new SMOP business unit segment (See Note A, “Summary of Business Operations,” for more information on our business unit segment structural and management reorganization).

Our performance is evaluated by our chief executive officer and our other chief decision makers based on reviewing revenue and operating income (loss) information for each business unit segment. Our software and services are sold both directly by our business unit segments and indirectly through original equipment manufacturers, resellers, and distributors who sell to end users.

Operating results by segment are as follows:

 

     Fiscal 2010  
(In thousands)    Net Revenue      Gross Profit     Operating
Income  (Loss)
 

SMOP

   $ 502,025       $ 384,029      $ (13,836

CS

     309,846         262,185        145,326   

Common unallocated operating costs

             (7,948     (47,053
                         

Total per statements of operations

   $         811,871       $         638,266      $         84,437   
                         
     Fiscal 2009  
(In thousands)    Net Revenue      Gross Profit     Operating
Income (Loss)
 

SMOP(a)

   $ 512,836       $ 393,461      $ (303,957

CS

     349,349         294,526        163,784   

Common unallocated operating costs

             (12,633     (66,319
                         

Total per statements of operations

   $ 862,185       $ 675,354      $ (206,492
                         
     Fiscal 2008  
(In thousands)    Net Revenue      Gross Profit     Operating
Income (Loss)
 

SMOP

   $ 542,068       $ 387,886      $ (90,028

CS

     414,445         346,226        187,119   

Common unallocated operating costs

             (12,838     (92,315
                         

Total per statements of operations

   $ 956,513       $ 721,274      $ 4,776   
                         

(a) Includes goodwill impairment of $270.0 million and intangible asset impairments of $9.1 million.

Segment operating income (loss) is comprised of business unit segment gross profit, less operating expenses attributable to each business unit segment. Beginning in fiscal 2010, operating expenses, including sales and marketing, product development, and general and administrative expenses, have been allocated to the business unit segments. All prior period amounts have been reclassified to conform to the current year’s presentation. Common unallocated operating costs include items such as stock-based compensation, acquisition-related intangible asset amortization, restructuring, certain litigation related activity and other unusual items that are not considered part of our ongoing, ordinary business.

 

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NOVELL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

 

Y. Segment Information (Continued)

 

Below is a table detailing our revenue by our business unit segments:

 

     Fiscal Year Ended October 31,  
(In thousands)    2010      2009      2008  

Net revenue:

        

SMOP:

        

Linux platform products

   $ 144,411       $ 149,162       $ 123,386   

Other open platform products

     8,197         7,717         9,740   

Identity, access and compliance management products

     123,145         112,248         124,277   

Other identity and security management products

     6,342         8,802         12,968   

Systems and resource management products

     156,051         160,769         170,166   

Services

     63,879         74,138         101,531   
                          

Total SMOP

     502,025         512,836         542,068   
                          

CS:

        

OES and NetWare-related products

     165,625         177,756         205,875   

Collaboration products

     86,837         99,945         113,782   

Other collaboration solutions products

     33,042         41,265         45,282   

Services

     24,342         30,383         49,506   
                          

Total CS

     309,846         349,349         414,445   
                          

Total net revenue

   $         811,871       $         862,185       $         956,513   
                          

Geographic Information

Our revenue is generated from all parts of the world. In fiscal 2010 and 2009, revenue from customers residing in Germany accounted for 10% of our net revenue. No other country outside of the U.S. accounted for 10% or more of our net revenue in any period. For purposes of the table below we have grouped our revenue as follows:

 

   

U.S.

   

Rest of Americas – includes Canada and South America

   

EMEA – includes Europe, Middle East, and Africa

   

Asia Pacific – includes China, Southeast Asia, Australia, New Zealand, Japan and India

 

     Fiscal Year Ended October 31,  
(In thousands)    2010      2009      2008  

Net revenue:

        

U.S.

   $ 387,192       $ 424,606       $ 461,400   

Rest of Americas

     56,649         55,011         70,534   

EMEA

     290,589         300,883         343,255   

Asia Pacific

     77,441         81,685         81,324   
                          

Total foreign revenue

     424,679         437,579         495,113   
                          

Total net revenue

   $ 811,871       $ 862,185       $ 956,513   
                          

Long-lived assets at fiscal year end (1):

        

U.S.

   $         115,671       $         124,346       $         121,459   

Rest of Americas

     7,999         9,901         10,811   

EMEA

     29,537         33,300         37,431   

Asia Pacific

     2,826         2,912         5,277   
                          

Total foreign long-lived assets at fiscal year end

     40,362         46,113         53,519   
                          

Total long-lived assets at fiscal year end

   $ 156,033       $ 170,459       $ 174,978   
                          

 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

 

Y. Segment Information (Continued)

 

Reconciliation of long-lived assets to total assets is as follows:

 

(In thousands)    October 31,
2010
     October 31,
2009
 

Long-lived assets (1)

   $ 156,033       $ 170,459   

Goodwill and intangible assets, net

     382,161         392,654   

Deferred income taxes

     243,583         26,717   

Other long-term assets

     46,797         48,706   

Current assets

     1,397,424         1,264,372   
                 

  Total assets

   $     2,225,998       $     1,902,908   
                 

 

(1)

Long-lived assets in this context is defined in the segment reporting accounting guidance as tangible long-lived assets and for us are comprised entirely of our property, plant and equipment, net.

In fiscal 2010, 2009, and 2008, sales to international customers were $424.7 million, $437.6 million, and $495.1 million, respectively. In fiscal 2010, 2009, and 2008, revenue in EMEA accounted for 68%, 69%, and 69%, of our total international revenue, respectively. There were no customers who accounted for more than 10% of revenue in any period. The risks associated with operating a global business are discussed in Part I, Item 1A. “Risk Factors,” of this Form 10-K.

Z. Subsequent Events

On November 21, 2010, we entered into a Merger Agreement with Attachmate and Merger Sub. The Merger Agreement provides that, upon the terms and subject to the conditions set forth in the Merger Agreement, Merger Sub will be merged with and into us, with us continuing as the surviving corporation and a wholly-owned subsidiary of Attachmate. Pursuant to the terms of the Merger Agreement, at the time the merger is effective, each issued and outstanding share of our common stock, other than treasury shares, shares held by Attachmate, Merger Sub or any other direct or indirect wholly-owned subsidiary of Attachmate or us and shares held by stockholders who perfect their appraisal rights, will be converted into the right to receive $6.10 in cash, without interest and less any applicable withholding taxes. Consummation of the merger is subject to certain conditions to closing, including, among others, (i) the approval by our stockholders; (ii) the expiration or termination of the waiting period (and any extensions thereof) applicable to the consummation of the merger under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”), and certain other antitrust laws; (iii) the absence of any law, order or other action enjoining or otherwise prohibiting consummation of the merger; (iv) the absence of a material adverse effect on us; (v) the closing of the transactions contemplated by the Patent Purchase Agreement; (vi) the accuracy of the parties’ respective representations and warranties; (vii) the parties’ respective compliance with agreements and covenants contained in the Merger Agreement; and (viii) the availability to us and our subsidiaries of cash and cash equivalents equal to approximately $1.03 billion. We are working towards completing the merger as quickly as possible and currently expect to consummate the merger in the first calendar quarter of 2011.

Also on November 21, 2010, we entered into a Patent Purchase Agreement with CPTN. The Patent Purchase Agreement provides that, upon the terms and subject to the conditions set forth in the Patent Purchase Agreement, we will sell to CPTN all of our right, title and interest in 882 issued patents and patent applications for $450 million in cash. Consummation of the patent sale is subject to certain conditions to closing, including, among others, (i) the expiration or termination of the waiting period applicable to the consummation of the patent sale under the HSR Act and certain other antitrust laws; and (ii) the satisfaction or waiver of each of the conditions to the consummation of the merger (other than the closing of the patent sale), and the parties to the Merger Agreement shall be ready, willing and able to consummate the merger, immediately after the closing of the patent sale.

 

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NOVELL, INC.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of Novell, Inc.:

In our opinion, the consolidated financial statements listed in the index appearing under Item 15 (a)(1) present fairly, in all material respects, the financial position of Novell, Inc. and its subsidiaries at October 31, 2010 and 2009, and the results of their operations and their cash flows for each of the three years in the period ended October 31, 2010 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedules listed in the index appearing under Item 15(a)(2) presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of October 31, 2010, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for these financial statements and financial statement schedules, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Annual Report on Internal Control over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on these financial statements, on the financial statement schedules and on the Company’s internal control over financial reporting based on our integrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

As discussed in Note L to the consolidated financial statements, the Company changed the manner in which it accounts for unrecognized tax benefits in fiscal 2008 and business combinations in fiscal 2010.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ PRICEWATERHOUSECOOPERS LLP

Boston, Massachusetts

December 13, 2010

 

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NOVELL, INC.

SELECTED CONSOLIDATED QUARTERLY FINANCIAL DATA

Unaudited

 

(In thousands, except per share data)    First
  Quarter  
     Second
  Quarter  
     Third
  Quarter  
     Fourth
  Quarter  
      Fiscal Year    

Fiscal Year Ended October 31, 2010

             

Net revenue

   $   202,366       $   204,014       $   198,980       $   206,511      $   811,871   

Gross profit

     158,648         162,702         155,473         161,443        638,266   

Income from continuing operations before taxes

     28,095         25,089         23,955         24,948        102,087   

Income from continuing operations

     20,189         19,912         15,677         321,588        377,366   

Net income

     20,189         19,912         15,677         322,198        377,976   

Income from continuing operations per share, basic

   $ 0.06       $ 0.06       $ 0.04       $ 0.92      $ 1.08   

Income from continuing operations per share, diluted

   $ 0.06       $ 0.06       $ 0.04       $ 0.90      $ 1.07   

Net income per share, basic

   $ 0.06       $ 0.06       $ 0.04       $ 0.92      $ 1.08   

Net income per share, diluted

   $ 0.06       $ 0.06       $ 0.04       $ 0.91      $ 1.07   

Fiscal Year Ended October 31, 2009

             

Net revenue

   $ 214,871       $ 215,595       $ 216,084       $ 215,635      $ 862,185   

Gross profit

     167,974         170,313         169,101         167,966        675,354   

Income (loss) from continuing operations before taxes

     16,008         17,828         20,508         (258,318     (203,974

Income (loss) from continuing operations

     9,641         15,051         16,357         (255,689     (214,640

Net income (loss)

     10,677         15,617         16,659         (255,689     (212,736

Income (loss) from continuing operations per share, basic

   $ 0.03       $ 0.04       $ 0.05       $ (0.74   $ (0.62

Income (loss) from continuing operations per share, diluted

   $ 0.03       $ 0.04       $ 0.05       $ (0.74   $ (0.62

Net income (loss) per share, basic

   $ 0.03       $ 0.05       $ 0.05       $ (0.74   $ (0.62

Net income (loss) per share, diluted

   $ 0.03       $ 0.05       $ 0.05       $ (0.74   $ (0.62

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None

Item 9A. Controls and Procedures

Effectiveness of Disclosure Controls and Procedures.

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures as of the end of the period covered by this report (i) were appropriately designed to provide reasonable assurance of achieving their objectives and (ii) were effective and provided reasonable assurance that the information required to be disclosed by us in reports filed under the Securities Exchange Act of 1934, as amended (“Exchange Act”) is (a) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (b) accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

 

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NOVELL, INC.

PART II

 

Item 9A. Controls and Procedures (Continued)

 

Management’s Annual Report on Internal Control over Financial Reporting.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act as a process designed by, or under the supervision of, our Chief Executive Officer and Chief Financial Officer and effected by our Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:

 

   

pertain to the maintenance of records that in reasonable detail accurately and fairly reflect transactions and dispositions of our assets;

 

   

provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and

 

   

provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Our management assessed the effectiveness of our internal control over financial reporting as of October 31, 2010 using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework. Based on this assessment using those criteria, our management concluded that, as of October 31, 2010, our internal control over financial reporting was effective. The effectiveness of our internal control over financial reporting as of October 31, 2010 has been audited by PricewaterhouseCoopers LLP, our independent registered public accounting firm, as stated in their report, which appears under Item 8.

Changes in Internal Control Over Financial Reporting.

No change in our internal control over financial reporting occurred during our fourth quarter of fiscal 2010 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Item 9B. Other Information

None

 

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NOVELL, INC.

PART III

Item 10. Directors, Executive Officers and Corporate Governance

Information about our Directors is incorporated by reference to the information contained in the section captioned “Election of Directors” in our definitive proxy statement for our 2011 Annual Meeting of Stockholders, which will be filed no later than 120 days after the end of our fiscal year. In the event that our definitive proxy statement for our 2011 Annual Meeting of Stockholders is not filed within 120 days after the end of our fiscal year, we expect to file an amendment to this Annual Report on Form 10-K within such time. Information about compliance with Section 16(a) of the Exchange Act is incorporated by reference to the information contained in the section captioned “Section 16(a) Beneficial Ownership Reporting Compliance” in our definitive proxy statement for our 2011 Annual Meeting of Stockholders, which will be filed no later than 120 days after the end of our fiscal year. In the event that our definitive proxy statement for our 2011 Annual Meeting of Stockholders is not filed within 120 days after the end of our fiscal year, we expect to file an amendment to this Annual Report on Form 10-K within such time.

Information about our Code of Business Ethics governing our employees, including our Chief Executive Officer and our Chief Financial Officer and Principal Accounting Officer, and the Non-Employee Director Code of Ethics governing our Directors, is incorporated by reference to the information contained in the section captioned “Corporate Governance — Codes of Ethics” in our definitive proxy statement for our 2011 Annual Meeting of Stockholders, which will be filed no later than 120 days after the end of our fiscal year. In the event that our definitive proxy statement for our 2011 Annual Meeting of Stockholders is not filed within 120 days after the end of our fiscal year, we expect to file an amendment to this Annual Report on Form 10-K within such time. Our Code of Business Ethics meets the definition of “code of ethics” under the rules and regulations of the SEC and is posted on our website at http://www.novell.com/company/ir/cg through the Corporate Governance page.

Information regarding material changes to the procedures by which our stockholders may recommend nominees to our Board of Directors, if any, is incorporated by reference to the information contained in the section captioned “Corporate Governance — Director Nominations” in our definitive proxy statement for our 2011 Annual Meeting of Stockholders, which will be filed no later than 120 days after the end of our fiscal year. In the event that our definitive proxy statement for our 2011 Annual Meeting of Stockholders is not filed within 120 days after the end of our fiscal year, we expect to file an amendment to this Annual Report on Form 10-K within such time.

Information about our Audit Committee, including the members of the Audit Committee and our Audit Committee financial experts, is incorporated by reference to the information contained in the section captioned “Corporate Governance — Board Committees” in our definitive proxy statement for our 2011 Annual Meeting of Stockholders, which will be filed no later than 120 days after the end of our fiscal year. In the event that our definitive proxy statement for our 2011 Annual Meeting of Stockholders is not filed within 120 days after the end of our fiscal year, we expect to file an amendment to this Annual Report on Form 10-K within such time.

The balance of the information required by this item is contained in the discussion entitled, “Executive Officers of the Registrant” in Part I of this Form 10-K.

Item 11. Executive Compensation

The information required by Item 11 of Form 10-K is incorporated by reference to the information contained in the sections captioned “Executive Compensation,” “Compensation Committee Interlocks and Insider Participation” and “Compensation Committee Report” in our definitive proxy statement for our 2011 Annual Meeting of Stockholders, which will be filed no later than 120 days after the end of our fiscal year. In the event that our definitive proxy statement for our 2011 Annual Meeting of Stockholders is not filed within 120 days after the end of our fiscal year, we expect to file an amendment to this Annual Report on Form 10-K within such time.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information required by Item 12 of Form 10-K is incorporated by reference to the information contained in the sections captioned “Share Ownership by Principal Stockholders, Directors and Management” and “Equity Compensation Plan Information” in our definitive proxy statement for our 2011 Annual Meeting of Stockholders, which will be filed no later than 120 days after the end of our fiscal year. In the event that our definitive proxy statement for our 2011 Annual Meeting of Stockholders is not filed within 120 days after the end of our fiscal year, we expect to file an amendment to this Annual Report on Form 10-K within such time.

 

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PART III

Item 13. Certain Relationships and Related Transactions and Director Independence

The information required by Item 13 of Form 10-K is incorporated by reference to the information contained in the sections captioned “Corporate Governance – Related Person Transactions Policy and Procedures,” “Corporate Governance – Transaction with Related Person,” and “Corporate Governance – Board of Directors and Director Independence” in our definitive proxy statement for our 2011 Annual Meeting of Stockholders, which will be filed no later than 120 days after the end of our fiscal year. In the event that our definitive proxy statement for our 2011 Annual Meeting of Stockholders is not filed within 120 days after the end of our fiscal year, we expect to file an amendment to this Annual Report on Form 10-K within such time.

Item 14. Principal Accounting Fees and Services

The information required by Item 14 of Form 10-K is incorporated by reference to the information contained in the section captioned “Information About Our Independent Registered Public Accounting Firm” in our definitive proxy statement for our 2011 Annual Meeting of Stockholders, which will be filed no later than 120 days after the end of our fiscal year. In the event that our definitive proxy statement for our 2011 Annual Meeting of Stockholders is not filed within 120 days after the end of our fiscal year, we expect to file an amendment to this Annual Report on Form 10-K within such time.

 

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PART IV

Item 15. Exhibits, Financial Statement Schedules

(a) (1.) Financial Statements:

The following documents are filed as a part of this Annual Report on Form 10-K for Novell, Inc.:

Consolidated Statements of Operations for the fiscal years ended October 31, 2010, October 31, 2009 and October 31, 2008.

Consolidated Balance Sheets at October 31, 2010 and October 31, 2009.

Consolidated Statements of Stockholders’ Equity for the fiscal years ended October 31, 2010, October 31, 2009 and October 31, 2008.

Consolidated Statements of Cash Flows for the fiscal years ended October 31, 2010, October 31, 2009 and October 31, 2008.

Notes to Consolidated Financial Statements.

Report of PricewaterhouseCoopers LLP, Independent Registered Public Accounting Firm.

(2.) Financial Statement Schedules:

The following consolidated financial statement schedule is included on page 112 of this Form 10-K:

Schedule II — Valuation and Qualifying Accounts

Schedules other than that listed above are omitted because they are not required, not applicable or because the required information is shown in the consolidated financial statements or notes thereto.

(3.) Exhibits:

A list of the exhibits required to be filed as part of this report is set forth in the Exhibit Index on page 113 of this Form 10-K, which immediately precedes such exhibits, and is incorporated herein by reference.

(b) Exhibits

See Item 15(a)(3).

(c) Financial Statement Schedules

See Item 15(a)(2).

 

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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.

 

Novell, Inc.

(Registrant)

By:

 

/S/ RONALD W. HOVSEPIAN

  Ronald W. Hovsepian,
  President and Chief Executive Officer

Date: December 13, 2010

 

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

 

Name

  

Title

 

Date

/S/ RONALD W. HOVSEPIAN

   President, Chief Executive Officer and Director   December 13, 2010
Ronald W. Hovsepian    (Principal Executive Officer)  

/S/ DANA C. RUSSELL

   Senior Vice President and Chief Financial   December 13, 2010
Dana C. Russell   

Officer (Principal Financial and

Accounting Officer)

 

/S/ ALBERT AIELLO

   Director   December 13, 2010
Albert Aiello     

/S/ FRED CORRADO

   Director   December 13, 2010
Fred Corrado     

/S/ RICHARD L. CRANDALL

   Director   December 13, 2010
Richard L. Crandall     

/S/ GARY G. GREENFIELD

   Director   December 13, 2010
Gary G. Greenfield     

/S/ JUDITH HAMILTON

   Director   December 13, 2010
Judith Hamilton     

/S/ PATRICK S. JONES

   Director   December 13, 2010
Patrick S. Jones     

/S/ RICHARD L. NOLAN

   Director   December 13, 2010
Richard L. Nolan     

/S/ JOHN W. PODUSKA, SR.

   Director   December 13, 2010
John W. Poduska, Sr.     

 

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NOVELL, INC.

SCHEDULE II — VALUATION AND QUALIFYING ACCOUNTS

Accounts Receivable Allowance

 

(In thousands)    Balance at
   Beginning  
of Period
     Additions
Charged to
Return
 Allowances 
     Additions
Charged to
Bad Debt
 Allowances 
     Additions
from
 Acquisition 
     Deductions
from
Return
 Allowances 
     Deductions
from Bad
Debt
 Allowances 
     Balance
at End
  of Period  
 

Fiscal year ended

                    

October 31, 2008

   $ 3,897       $ 1,920       $ 266       $ 43       $ 1,760       $ 687       $ 3,679   

October 31, 2009

     3,679         1,783         593                 1,948         22         4,085   

October 31, 2010

   $ 4,085       $ 941       $ 113       $       $ 2,010       $ 868       $ 2,261   

Deferred Tax Valuation Allowance

 

(In thousands)    Balance at
   Beginning  
of Period
     Additions
Charged to
Costs and
 Expenses 
     Additions
Charged to
Other
 Accounts 
     Deductions      Balance
at End
  of Period  
 

Fiscal year ended

              

October 31, 2008

   $ 408,422       $ 165       $ 22,303       $ 21,671       $ 409,219   

October 31, 2009

     409,219         2,131         57,356         8,911         459,795   

October 31, 2010

   $ 459,795       $       $ 1,724       $ 291,157       $ 170,362   

 

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NOVELL, INC.

EXHIBIT INDEX

 

Exhibit

Number

 

Description

2.1

  Agreement and Plan of Merger, dated as of November 21, 2010, by and among the Registrant, Attachmate Corporation and Longview Software Acquisition Corp. (29) (Exhibit 2.1)

3.1

  Restated Certificate of Incorporation. (1) (Exhibit 3.1) and (2) (Exhibit 3.1)

3.2

  By-Laws. (4) (Exhibit 3.2)

4.1

  Form of certificate representing the shares of Novell common stock. (5) (Exhibit 4.3)

4.2

  Indenture, dated as of July 2, 2004, between the Registrant and Wells Fargo Bank, National Association, as Trustee. (6) (Exhibit 4.1)

4.3

  First Supplemental Indenture, dated as of November 9, 2006, between the Registrant and Wells Fargo Bank, National Association, as Trustee. (7) (Exhibit 99.2)

10.1

  Registration Rights Agreement, dated July 2, 2004, between the Registrant and Citigroup Global Markets Inc., for itself and on behalf of certain purchasers. (6) (Exhibit 10.1)

10.2*

  Novell, Inc. 1989 Employee Stock Purchase Plan (As Amended April 17, 2001). (8) (Exhibit 4.1)

10.3*

  Novell, Inc. 1991 Stock Plan (As Amended April 12, 1995). (9) (Exhibit 4.3)

10.4*

  Novell, Inc. 2000 Stock Plan (As Amended April 3, 2003 and May 13, 2008). (23) (Exhibit 10.1)

10.5*

  Novell, Inc. 2000 Nonstatutory Stock Option Plan. (10) (Exhibit 4.1)

10.6*

  Novell, Inc. Stock Option Plan for Non-Employee Directors (As Amended January 12, 1996). (11) (Exhibit 4.1)

10.7*

  Novell, Inc./SilverStream Software, Inc. Amended and Restated 1997 Stock Incentive Plan. (12) (Exhibit 4.2)

10.8*

  Novell, Inc./SilverStream Software, Inc. 2001 Stock Incentive Plan. (12) (Exhibit 4.3)

10.9*

  Novell, Inc./SilverStream Software, Inc./Bondi Software, Inc. Employee Stock Option Plan, As Amended, Effective November 1, 1999. (12) (Exhibit 4.5)

10.10*

  Novell, Inc. 2009 Omnibus Incentive Plan. (13)

10.11*

  Form of Restricted Stock Unit Agreement. (27) (Exhibit 10.4)

10.12*

  Form of Restricted Stock Unit Agreement. (27) (Exhibit 10.1)

10.13*

  Form of Restricted Stock Agreement. (27) (Exhibit 10.2)

10.14*

  Form of Restricted Stock Unit Grant Agreement. (15) (Exhibit 10.6)

10.15*

  Form of Restricted Stock Unit Agreement. (14) (Exhibit 10.2)

10.16*

  Form of Restricted Stock Unit Agreement. (14) (Exhibit 10.3)

10.17*

  Form of Nonqualified Stock Option Grant Agreement. (27) (Exhibit 10.3)

10.18*

  Form of 2010 Restricted Stock Unit Agreement. (27) (Exhibit 10.5)

10.19*

  Form of Nonqualified Stock Option Grant Agreement. (15) (Exhibit 10.5)

10.20*

  Form of Nonqualified Stock Option Grant Agreement. (14) (Exhibit 10.4)

10.21*

  Form of Nonqualified Stock Option Grant Agreement. (14) (Exhibit 10.5)

10.22*

  Novell, Inc. Stock-Based Deferred Compensation Plan (As Amended and Restated, Effective January 1, 2009). (17) (Exhibit 10.4)

10.23*

  Novell, Inc. Stock-Based Deferred Compensation Plan -- Stock Purchase Assistance Subplan, Effective as of October 14, 2004. (16) (Exhibit 10.13)

10.24*

  First Amendment to the Novell, Inc. Deferred Compensation Plan (As Amended and Restated, Effective January 1, 2005 for Internal Revenue Code Section 409A). (18) (Exhibit 10.1)

10.25*

  Severance Agreement, dated as of May 29, 2003, between the Registrant and Ronald W. Hovsepian. (19) (Exhibit 10.17)

10.26*

  Amendment 2005-1 to Severance Agreement, dated as of October 31, 2005, between the Registrant and Ronald W. Hovsepian. (20) (Exhibit 10.18)

 

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NOVELL, INC.

EXHIBIT INDEX (Continued)

 

10.27*

  Severance Agreement, dated as of November 28, 2005, between the Registrant and Jeffrey M. Jaffe. (20) (Exhibit 10.23)

10.28*

  Severance Agreement, dated as of April 24, 2007, between the Registrant and Dana C. Russell. (21) (Exhibit 10.1)

10.29*

  Severance Agreement, dated as of February 8, 2007, between the Registrant and John K. Dragoon. (17) (Exhibit 10.5)

10.30*

  Amendment 2007-1 to Severance Agreement, dated as of May 2, 2007, between the Registrant and John K. Dragoon. (17) (Exhibit 10.6)

10.31*

  Amendment to Severance Agreement, dated as of September 15, 2008, between the Registrant and John K. Dragoon. (17) (Exhibit 10.7)

10.32*

  Amendment to Severance Agreement, dated as of September 15, 2008, between the Registrant and Ronald W. Hovsepian. (17) (Exhibit 10.10)

10.33*

  Amendment to Severance Agreement, dated as of September 15, 2008, between the Registrant and Dana C. Russell. (17) (Exhibit 10.11)

10.34*

  Amendment to Severance Agreement, dated as of September 15, 2008, between the Registrant and Jeffrey M. Jaffe. (17) (Exhibit 10.12)

10.35*

  Severance Agreement, dated as of February 1, 2007, between the Registrant and Colleen O’Keefe. (26) (Exhibit 10.5)

10.36*

  Form of Indemnification Agreement. (3) (Exhibit 10.3)

10.37*

  Form of Amendment to Severance Agreement. (3) (Exhibit 10.4)

10.38*

  Amendment to Severance Agreement, dated as of September 15, 2008, between the Registrant and Colleen O’Keefe. (26) (Exhibit 10.6)

10.39*

  Novell, Inc. Non-Employee Director Remuneration and Expense Reimbursement Summary. (30)

10.40*

  Stock Option Amendment Agreement, dated as of January 10, 2008, between the Registrant and Dana C. Russell. (23) (Exhibit 10.3)

10.41*

  Novell, Inc. Deferred Compensation Plan (As Amended and Restated, effective January 1, 2005 for Internal Revenue Code Section 409A). (17) (Exhibit 10.3)

10.42*

  Offer letter, dated and countersigned May 27, 2003, between the Registrant and Ronald W. Hovsepian. (22) (Exhibit 10.28)

10.43*

  Offer letter, dated and countersigned November 7, 2005, between the Registrant and Jeffrey M. Jaffe. (22) (Exhibit 10.32)

10.44*

  Novell, Inc. Amendment to 2009 Annual Bonus Program for Executives. (24)

10.45*

  Novell, Inc. 2010 Annual Incentive Plan for Executives. (25)

10.46+

  Second Amended and Restated Technical Collaboration Agreement effective November 2, 2006 between the Registrant and Microsoft Corporation. (22) (Exhibit 10.33)

10.47+

  First Amended and Restated Business Collaboration Agreement effective November 2, 2006 between the Registrant and Microsoft Corporation. (22) (Exhibit 10.34)

10.48*

  Separation of Employment and General Release Agreement between the Registrant and Jeffrey M. Jaffe. (26) (Exhibit 10.2)

10.49*

  Offer letter, dated October 30, 2006, and countersigned November 3, 2006 between the Registrant and Colleen O’Keefe. (26) (Exhibit 10.4)

10.50*

  One-time incremental retainer to Chairman. (27) (Exhibit 10.6)

10.51*

  Letter agreement with Thomas G. Plaskett to amend (1) a Restricted Stock Unit Agreement dated April 7, 2009, (2) a Nonqualified Stock Option Agreement, dated April 7, 2009, and (3) a Stock Option Agreement Outside Directors Grant dated June 3, 2008. (27) (Exhibit 10.8)

10.52*

  Letter agreement with Kathy Brittain White to amend (1) a Restricted Stock Unit Agreement dated April 7, 2009, (2) a Nonqualified Stock Option Agreement dated April 7, 2009, and (3) a Stock Option Agreement Outside Directors Grant dated June 3, 2008. (27) (Exhibit 10.9)

10.53*

  Amendment, dated as of June 30, 2010, and Severance Agreement, dated April 30, 2007, between the Registrant and James Ebzery. (28) (Exhibit 10.1)

10.54

  Patent Purchase Agreement, dated as of November 21, 2010, by and between CPTN Holdings LLC and the Registrant. (30)

10.55+

  Second BCA Joint Memorandum by Microsoft Corporation and the Registrant, dated as of January 16, 2007. (30)

10.56+

  Participation Agreement, dated as of January 16, 2007, by and between Microsoft Ireland Operations Limited and Novell Ireland Software Limited. (30)

 

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NOVELL, INC.

EXHIBIT INDEX (Continued)

 

10.57+

  Third Joint Memorandum by Microsoft Corporation and the Registrant, dated as of May 1, 2007. (30)

10.58+

  Fourth Joint Memorandum by Microsoft Corporation and the Registrant, dated as of December 21, 2007. (30)

10.59+

  Fifth Joint Memorandum by Microsoft Corporation and the Registrant, dated as of January 17, 2008. (30)

10.60+

  Sixth Joint Memorandum by Microsoft Corporation and the Registrant, dated as of April 10, 2008. (30)

10.61+

  Seventh Joint Memorandum by Microsoft Corporation and the Registrant, dated as of December 22, 2008. (30)

10.62

  Eighth Joint Memorandum by Microsoft Corporation and the Registrant, dated as of January 23, 2009. (30)

10.63+

  First Joint Memorandum by Microsoft Ireland Operations Limited and Novell Ireland Software Limited, dated as of April 9, 2009. (30)

10.64+

  Ninth Joint Memorandum by Microsoft Corporation and the Registrant, dated as of January 25, 2010. (30)

10.65+

  Statement of Work No. 2 under the Technical Collaboration Agreement, between Microsoft Corporation and the Registrant, effective as of September 30, 2008. (30)

10.66+

  Statement of Work No. SRM 2 under the Technical Collaboration Agreement, between Microsoft Corporation and the Registrant, effective as of December 4, 2008. (30)

10.67+

  Statement of Work under the Technical Collaboration Agreement, between Microsoft Corporation and the Registrant, effective as of March 24, 2010. (30)

10.68+

  Statement of Work Regarding Open XML under the Second Amended and Restated Technical Collaboration Agreement, between Microsoft Corporation and the Registrant, effective as of April 1, 2010. (30)

10.69+

  Amended and Restated Patent Cooperation Agreement, between Microsoft Corporation, Microsoft Licensing, GP and the Registrant, dated as of June 28, 2007. (30)

10.70*

  Non-Employee Director Remuneration and Expense Reimbursement Summary. (27) (Exhibit 10.7)

10.71*

  Non-Employee Director Remuneration and Expense Reimbursement Summary. (26) (Exhibit 10.3)

21

  Subsidiaries of the Registrant. (30)

23.1

  Consent of PricewaterhouseCoopers LLP, Independent Registered Public Accounting Firm. (30)

31.1

  Rule 13a-14(a) Certification. (30)

31.2

  Rule 13a-14(a) Certification. (30)

32.1

  18 U.S.C. Section 1350 Certification. (31)

32.2

  18 U.S.C. Section 1350 Certification. (31)

101.INS**

  XBRL Instance. (30)

101.SCH**

  XBRL Taxonomy – Extension Schema. (30)

101.CAL**

  XBRL Taxonomy – Extension Calculation. (30)

101.DEF**

  XBRL Taxonomy – Extension Definition. (30)

101.LAB**

  XBRL Taxonomy – Extension Labels. (30)

101.PRE**

  XBRL Taxonomy – Extension Presentation. (30)

 

*

Indicates management contracts or compensatory plans.

 

**

Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934 and otherwise are not subject to liability under these sections.

 

+

Confidential treatment requested for portions of this Exhibit pursuant to Rule 24b-2 of the Securities Exchange Act of 1934 as amended, which portions are omitted and filed separately with the Securities and Exchange Commission.

 

(1)

Incorporated by reference to the Exhibit identified in parentheses, filed as an exhibit to the Registrant’s Quarterly Report on Form 10-Q, filed for the fiscal quarter ended April 30, 2004 (File No. 0-13351).

 

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(2)

Incorporated by reference to the Exhibit identified in parentheses, filed as an exhibit to the Registrant’s Current Report on Form 8-K, filed June 19, 2009 (File No. 0-13351).

 

(3)

Incorporated by reference to the Exhibit identified in parentheses, filed as an exhibit to the Registrant’s Quarterly Report on Form 10-Q, filed for the fiscal quarter ended April 30, 2009 (File No. 0-13351).

 

(4)

Incorporated by reference to the Exhibit identified in parentheses, filed as an exhibit to the Registrant’s Current Report on Form 8-K, filed March 3, 2010 (File No. 0-13351).

 

(5)

Incorporated by reference to the Exhibit identified in parentheses, filed as an exhibit to the Registrant’s Registration Statement on Form S-1, filed November 30, 1984, and amendments thereto (File No. 2- 94613).

 

(6)

Incorporated by reference to the Exhibit identified in parentheses, filed as an exhibit to the Registrant’s Quarterly Report on Form 10-Q, filed for the fiscal quarter ended July 31, 2004 (File No. 0-13351).

 

(7)

Incorporated by reference to the Exhibit identified in parentheses, filed as an exhibit to the Registrant’s Current Report on Form 8-K, filed November 15, 2006 (File No. 0-13351).

 

(8)

Incorporated by reference to the Exhibit identified in parentheses, filed as an exhibit to the Registrant’s Registration Statement on Form S-8, filed October 12, 2001 (File No. 333-71502).

 

(9)

Incorporated by reference to the Exhibit identified in parentheses, filed as an exhibit to the Registrant’s Post-Effective Amendment No. 1 to its Registration Statement on Form S-8, filed May 30, 1996 (File No. 033-48395).

 

(10)

Incorporated by reference to the Exhibit identified in parentheses, filed as an exhibit to the Registrant’s Registration Statement on Form S-8, filed July 13, 2000 (File No. 333-41328).

 

(11)

Incorporated by reference to the Exhibit identified in parentheses, filed as an exhibit to the Registrant’s Registration Statement on Form S-8, filed May 30, 1996 (File No. 333-04823).

 

(12)

Incorporated by reference to the Exhibit identified in parentheses, filed as an exhibit to the Registrant’s Registration Statement on Form S-8, filed August 6, 2002 (File No. 333-97713).

 

(13)

Incorporated by reference from Appendix A of the Company’s Definitive Proxy Statement on Schedule 14A, filed with the Securities and Exchange Commission on February 25, 2009.

 

(14)

Incorporated by reference to the Exhibit identified in parentheses, filed as an exhibit to the Registrant’s Current Report on Form 8-K, filed April 9, 2009 (File No. 0-13351).

 

(15)

Incorporated by reference to the Exhibit identified in parentheses, filed as an exhibit to the Registrant’s Quarterly Report on Form 10-Q, filed for the fiscal quarter ended July 31, 2009 (File No. 0-13351).

 

(16)

Incorporated by reference to the Exhibit identified in parentheses, filed as an exhibit to the Registrant’s Annual Report on Form 10-K, filed for the fiscal year ended October 31, 2004 (File No. 0-13351).

 

(17)

Incorporated by reference to the Exhibit identified in parentheses, filed as an exhibit to the Registrant’s Quarterly Report on Form 10-Q, filed for the fiscal quarter ended January 31, 2009 (File No. 0-13351).

 

(18)

Incorporated by reference to the Exhibit identified in parentheses, filed as an exhibit to the Registrant’s Current Report on Form 8-K, filed November 2, 2009 (File No. 0-13351).

 

(19)

Incorporated by reference to the Exhibit identified in parentheses, filed as an exhibit to the Registrant’s Annual Report on Form 10-K, filed for the fiscal year ended October 31, 2003 (File No. 0-13351).

 

(20)

Incorporated by reference to the Exhibit identified in parentheses, filed as an exhibit to the Registrant’s Annual Report on Form 10-K, filed for the fiscal year ended October 31, 2005 (File No. 0-13351).

 

(21)

Incorporated by reference to the Exhibit identified in parentheses, filed as an exhibit to the Registrant’s Current Report on Form 8-K, filed April 27, 2007 (File No. 0-13351).

 

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NOVELL, INC.

EXHIBIT INDEX (Continued)

 

(22)

Incorporated by reference to the Exhibit identified in parentheses, filed as an exhibit to the Registrant’s Annual Report on Form 10-K, filed for the fiscal year ended October 31, 2006 (File No. 0-13351).

 

(23)

Incorporated by reference to the Exhibit identified in parentheses, filed as an exhibit to the Registrant’s Quarterly Report on Form 10-Q, filed for the fiscal quarter ended July 31, 2008 (File No. 0-13351).

 

(24)

Incorporated by reference to the information provided pursuant to Item 5.02(e) of the Registrant’s Current Report on Form 8-K, filed April 13, 2009 (File No. 0-13351).

 

(25)

Incorporated by reference to the information provided pursuant to Item 5.02(e) of the Registrant’s Current Report on Form 8-K, filed December 11, 2009 (File No. 0-13351).

 

(26)

Incorporated by reference to the Exhibit identified in parentheses, filed as an exhibit to the Registrant’s Quarterly Report on Form 10-Q, filed for the fiscal quarter ended January 31, 2010 (File No. 0-13351).

 

(27)

Incorporated by reference to the Exhibit identified in parentheses, filed as an exhibit to the Registrant’s Quarterly Report on Form 10-Q, filed for the fiscal quarter ended April 30, 2010 (File No. 0-13351).

 

(28)

Incorporated by reference to the Exhibit identified in parentheses, filed as an exhibit to the Registrant’s Quarterly Report on Form 10-Q, filed for the fiscal quarter ended July 31, 2010 (File No. 0-13351).

 

(29)

Incorporated by reference to the Exhibit identified in parentheses, filed as an exhibit to the Registrant’s Current Report on Form 8-K/A, filed November 22, 2010 (File No. 0-13351).

 

(30)

Filed herewith.

 

(31)

Furnished herewith.

 

117

EX-10.39 2 dex1039.htm NOVELL, INC. NON-EMPLOYEE DIRECTOR REMUNERATION & EXPENSE REIMBURSEMENT SUMMARY Novell, Inc. Non-Employee Director Remuneration & Expense Reimbursement Summary

Exhibit 10.39

Non-Employee Director Remuneration

and

Expense Reimbursement Summary

 

1. Cash Compensation

 

  a) Annual Retainers

 

   

A non-employee Chairperson of the Board of Directors will receive an annual Board retainer of $125,000 paid quarterly in advance on May 1, August 1, November 1, and February 1.

 

   

Each non-employee member of the Board of Directors other than the non-employee Chairperson will receive an annual Board retainer of $50,000 paid quarterly in advance on May 1, August 1, November 1, and February 1.

 

   

The non-employee director who serves as Chairperson of the Audit Committee will receive, in addition to his or her Board retainer, an annual Committee retainer of $20,000 paid quarterly in advance on May 1, August 1, November 1, and February 1.

 

   

Each non-employee director who serves as Chairperson of a Board Committee other than the Audit Committee will receive, in addition to his or her Board retainer, an annual Committee retainer of $10,000 paid quarterly in advance on May 1, August 1, November 1, and February 1.

 

   

Retainers are paid through the end of the quarter in which service as a Director terminates.

 

   

Pursuant to a deferral program effective for calendar years prior to 2010 (the “Prior Deferral Program”), non-employee directors were permitted to convert all or any portion of their annual Board retainers (but not their Committee retainers) to Common Stock Equivalents (the “Retainer CSEs”).

 

   

Retainer CSEs are purchased on each date an installment of the annual Board retainer is paid.

 

   

Any non-employee director who elects to purchase Retainer CSEs will receive a supplemental credit equal to 25% of the portion of the annual Board retainer used to purchase Retainer CSEs (referred to as the “Match”).

 

   

The Match may be applied only to the purchase of additional CSEs (“Match CSEs”).

 

   

The number of Retainer CSEs and Match CSEs to be received is based on the closing price of Novell common stock on the day before the purchase date.

 

   

Retainer CSEs are fully vested at the time of purchase.

 

   

Match CSEs, unlike Retainer CSEs, are subject to a cliff vesting period of three years from the date of purchase.

 

   

The Retainer CSEs will be converted into shares of Novell common stock on the earlier to occur of (i) the termination of service as a non-employee director and (ii) a date prior to the termination of service as a non-employee director specified by the non-employee director (the “Deferral Payment Date”).

 

   

Vested Match CSEs will be converted into shares of Novell common stock on the

 

Revision November 2010

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termination of service as a non-employee director.

 

   

With respect to calendar year 2010 but terminating on November 21, 2010, non-employee directors may convert their annual Board retainers to Retainer CSEs pursuant to the Novell, Inc. 2009 Directors Deferral Plan, a sub-plan of the Novell, Inc. 2009 Omnibus Incentive Plan (the “2009 Deferral Program”).

 

   

Under the 2009 Deferral Program, (i) Retainer CSEs are purchased on each date an installment of the annual Board retainer is paid; (ii) any non-employee director who elects to purchase Retainer CSEs will receive Match CSEs; (iii) the number of Retainer CSEs and Match CSEs to be received is based on the closing price of Novell common stock on the day before the purchase date; and (iv) Retainer CSEs are fully vested at the time of purchase.

 

   

Under the 2009 Deferral Program, Retainer CSEs will be paid out on the earliest to occur of (i) a change of control; (ii) a non-employee director’s separation from service; or (iii) if elected, the Deferral Payment Date.

 

   

Under the 2009 Deferral Program, Match CSEs become 100% vested on the earliest to occur of (i) the third anniversary of the last date CSEs are purchased with the Match in the relevant calendar year; (ii) a change of control; (iii) the non-employee director’s retirement; or (iv) the non-employee director’s death.

 

   

The vested Match CSEs are paid to the non-employee director on the earliest to occur of (i) his or her separation from service, (ii) a change of control, or (iii) the later to occur of the Deferral Payment Date or the date on which the Match CSEs vest.

 

  b) Meeting Fees

 

   

Each non-employee director will receive $1,500 for each Board and Board telephonic meeting he or she attends.

 

   

Each non-employee director will receive $1,500 for each Committee and Committee telephonic meeting he or she attends as a Committee member.

 

  c) Exceptional Circumstances

 

   

If approved by the Board, a non-employee director may be eligible to receive a special, incremental payment in recognition of specific circumstances designated by the Board, such as increased work effort or time commitment or significant involvement in activities requested by the Board.

 

2. Cash in lieu of Equity Compensation

 

   

Each non-employee director will receive an annual cash award with a value of $130,000 (the “Annual Cash Award”).

 

   

The Annual Cash Award will be granted at the first Compensation Committee meeting following Novell’s Annual Meeting of Stockholders.

 

   

Non-employee directors may not sell shares of Novell common stock unless they continue to own an amount of Novell common stock equal to three times their annual Board retainer.

 

Revision November 2010

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Non-employee Chairperson of the Board of Directors Total Stock Ownership Requirement (“Total SOR”) is $375,000 ($125k x 3)

 

   

Other non-employee directors Total SOR is $150,000 ($50k x 3)

 

   

Forms of equity that count towards Total SOR consist of shares that are already owned and held, shares acquired on the open market, shares acquired upon the exercise of stock options, vested restricted stock units, vested shares of restricted stock, Retainer CSEs, and any vested Match CSEs

 

3. Reimbursements

 

  a) Meetings

 

   

Novell will provide reimbursement for attendance to all Board and Committee meetings covering the following:

 

   

first class airfare ticket or equivalent

 

   

lodging

 

   

meals

 

   

ground transportation to and from the meeting

 

  b) Conferences

 

   

Novell will provide reimbursement for attendance to one conference per year covering the following:

 

   

registration fees

 

   

first class airfare ticket or equivalent

 

   

lodging

 

   

meals

 

   

ground transportation to and from the conference

 

  c) Orientation

 

   

Novell will provide reimbursement for new non-employee directors for attendance to one third-party orientation program covering the following:

 

   

registration fees

 

   

first class airfare ticket or equivalent

 

   

lodging

 

   

meals

 

   

ground transportation to and from the orientation program

 

Revision November 2010

Page 3 of 3

EX-10.54 3 dex1054.htm PATENT PURCHASE AGREEMENT, DATED AS OF NOVEMBER 21, 2010 Patent Purchase Agreement, dated as of November 21, 2010

Exhibit 10.54

EXECUTION COPY

PATENT PURCHASE AGREEMENT

This PATENT PURCHASE AGREEMENT (“Agreement”) is entered into on November 21, 2010 (“Effective Date”), by and between CPTN Holdings LLC, a Delaware limited liability company (“Purchaser”), and Novell, Inc., a Delaware corporation (“Seller”).

RECITALS

Seller owns the Assigned Patents (as defined below) and wishes to sell to Purchaser its entire right, title and interest in such Assigned Patents.

Purchaser wishes to purchase such Assigned Patents on the terms and conditions set forth herein.

In consideration for the mutual covenants contained herein and other good and valuable consideration, the sufficiency of which is hereby acknowledged, the parties agree as set forth herein.

AGREEMENT

 

1. DEFINITIONS

1.1 As used in this Agreement, the following terms have the meanings set forth below:

(a) “Assigned Patents” means all patents and patent applications listed in Exhibit A hereto.

(b) “Governmental Entity” means any federal, national, supranational, state, provincial, local or other governmental, regulatory or administrative authority, agency or commission, quasi-governmental authority or other political subdivision thereof, any government-owned or controlled commercial enterprise, any entity, authority, instrumentality or body exercising executive, legislative, judicial, regulatory or administrative functions of any such government, quasi-governmental authority or other political subdivision, any public international organization, and any supranational organization exercising such functions for any sovereign states, whether international, multinational, regional or otherwise, or any court, tribunal, or judicial or arbitral body of competent jurisdiction.

(c) “Law” means any federal, state, local or foreign law, statute, rule, regulation, final and enforceable ordinance or Order of any Governmental Entity.

(d) “Lien” means any lien, pledge, charge, option, right to acquire, security interest or like encumbrance or restriction on transfer or rights.


(e) “Order” means any decision, order, injunction, judgment, decree or ruling enacted, adopted, promulgated or applied by a Governmental Entity that is binding upon a party hereto or its property.

(f) “Transfer Taxes” means sales, use, value added, excise, and other transfer taxes and charges imposed on the sale, transfer and assignment of the Assigned Patents to Purchaser as contemplated by this Agreement. For the avoidance of doubt, income taxes (whether based on gross or net income or receipts) imposed on such sale, transfer and assignment of the Assigned Patents are excluded from the definition of Transfer Taxes.

1.2 Terms defined in this Agreement as having a particular meaning have such meaning throughout this Agreement.

 

2. TRANSFER OF ASSIGNED PATENTS

2.1 Patent Assignment. Upon the terms and subject to the conditions of this Agreement, as provided in Section 5.1 hereof, at the Closing, Seller shall sell, assign, transfer and convey to Purchaser all right, title and interest it has in and to the Assigned Patents, including without limitation, any and all legal rights entitled by the original owner of the Assigned Patents and all rights of Seller to collect royalties under such Assigned Patents, to prosecute all existing Assigned Patents worldwide, to apply for additional Assigned Patents worldwide and to have Assigned Patents issued in the name of Purchaser.

2.2 Assignment of Causes of Action. Upon the terms and subject to the conditions of this Agreement, as provided in Section 5.1 hereof, at the Closing, Seller shall sell, assign, transfer and convey to Purchaser all right, title and interest it has to sue for past, present and future infringement of the Assigned Patents, including without limitation all right, title and interest Seller has in and to all causes of action and enforcement rights, whether known, unknown, currently pending, filed, or otherwise, in respect of the Assigned Patents, and all rights to pursue damages, injunctive relief and other remedies for past, current and future infringement of the Assigned Patents.

 

3. HART-SCOTT-RODINO AND OTHER COMPETITION LAW FILINGS

3.1 As promptly as practicable consistent with securing regulatory clearance in the earliest practicable timeframe following the Effective Date, each of Purchaser and Seller shall file the notification and report forms required under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and Purchaser and Seller shall make such other filings under the competition laws of any other relevant jurisdiction as are required in connection with the transactions provided for in this Agreement (collectively, “Competition Laws”), and Purchaser and Seller shall as promptly as practicable furnish any supplemental information regarding the Assigned Patents that may be requested by any Governmental Entity in connection with any such

 

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filing. Each of Purchaser and Seller shall, to the extent permitted, request early termination of the application waiting period in respect of any such filing under the Competition Laws.

3.2 Each of Purchaser and Seller shall bear its own costs and expenses in connection with any such filing and provision of information made by it, and each shall bear the costs of any filing fee required to be paid by it under the Competition Laws. With respect to any filings under the Competition Laws required in connection with the transaction contemplated hereby, and subject to applicable Law, each of Purchaser and Seller (a) shall consult with each other prior to taking any material substantive position in discussions with, or filings to be submitted to, any Governmental Entity, (b) shall permit the other to review and discuss in advance, and consider in good faith the views of the other in connection with, any analyses, presentations, memoranda, briefs, arguments, opinions and proposals to be submitted to any Governmental Entity, (c) shall not participate in any meeting or have any communication with any such Governmental Entity unless it has given the other an opportunity to consult with it in advance and, to the extent permitted by such Governmental Entity, give the other party the opportunity to attend and participate therein, and (d) shall coordinate with the other in preparing and exchanging such information and promptly provide the other (and its counsel) with copies of all filings, presentations or submissions (and a summary of any oral presentations) made by such party with any Governmental Entity.

3.3 Each of Purchaser and Seller agrees to respond promptly to any inquiries from any Governmental Entity concerning any such filing, and shall cooperate with each other and shall promptly furnish to the other all information regarding the Assigned Patents that is necessary in connection with the other party’s compliance with the Competition Laws. Purchaser and Seller shall keep each other fully advised with respect to any requests from or communications with Governmental Entities concerning such filings. Each of Purchaser and Seller shall use its commercially reasonable efforts to take all actions necessary and appropriate in connection with any filing under applicable Competition Law as soon as practicable; provided, however, that in no event shall either Purchaser or Seller, or any of their respective affiliates, be required to agree to (i) any divestiture, transfer or licensing of any properties, assets (including any Assigned Patents) or businesses, or to the imposition of any limitation on its ability to conduct its business or to own or exercise control of any of its assets or properties, (ii) provide directly or indirectly any surety, indemnification or guarantee of the obligations of the other party or such party’s affiliates or with respect to any of the Assigned Patents, or (iii) any restriction, limitation or other condition on its ongoing properties, assets (including any Assigned Patents) or businesses; provided, further, that in no event shall Purchaser or Seller be obligated to litigate any suit brought by any Governmental Entity related to the transactions contemplated by this Agreement. The foregoing shall not require any action by any member of Purchaser. If any filing in connection with the purchase and sale contemplated hereby or the formation of Purchaser require any filing by any members of Purchaser, Purchaser shall use its commercially reasonable efforts to cause its members to reasonably cooperate with Seller in connection therewith and to make any necessary filing under applicable Competition Law as soon as practicable, and to respond promptly to any inquiries from any relevant Governmental Entity in connection therewith; provided, however, that in no event shall any member of Purchaser, or any of their respective affiliates, be required to agree to (a) any divestiture, transfer or licensing of any properties, assets (including any Assigned Patents) or businesses, or to the imposition of any limitation on its

 

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ability to conduct its business or to own or exercise control of any of its assets or properties, (b) provide directly or indirectly any surety, indemnification or guarantee of the obligations of the other party or such party’s affiliates or with respect to any of the Assigned Patents, or (c) any restriction, limitation or other condition on its ongoing properties, assets (including any Assigned Patents) or businesses; provided, further, that in no event shall any member of Purchaser or any of their respective affiliates be obligated to litigate any suit brought by any Governmental Entity related to the transactions contemplated by this Agreement or the formation of Purchaser.

 

4. COVENANTS

4.1 Docket Report. Attached hereto as Exhibit D is a docket report for the Assigned Patents as of November 8, 2010. On or within two (2) business days before the Closing Date, Seller shall provide to Purchaser such updated form of Exhibit D as is then-currently generated by Seller’s docketing system.

4.2 Continued Prosecution. Between the Effective Date and the Closing Date (inclusive thereof), Seller (at its expense) shall continue to prosecute the Assigned Patents, and shall pay all maintenance fees, annuities and the like related to the Assigned Patents for which the fees are due and payable on or prior to the Closing Date even if the surcharge date or final deadline for payment of any such fee would be after the Closing Date, and shall notify Purchaser on or before the Closing Date in writing separate from any other disclosures made hereunder of all due dates for maintenance fees, annuities or responses to office actions related to prosecution, filing or maintenance of the Assigned Patents that will occur within sixty (60) days after the Closing Date to prevent abandonment of an Assigned Patent or payment of a surcharge.

4.3 Delivery of Documents. As soon after the Effective Date as is reasonably practical but on or before the Closing Date, Seller shall deliver to Purchaser copies of all files concerning the Assigned Patents in Seller’s legal department files for each of the Assigned Patents, including, without limitation, to the extent available and existing therein, copies of (a) all original letters patent for the Assigned Patents, (b) all original assignments for the Assigned Patents, (c) all original documents, files and materials evidencing dates of invention and reduction to practice of inventions set forth in the Assigned Patents, (d) all original files reflecting the prosecution history for all issued, pending and abandoned Assigned Patents, (e) all original files regarding the issued Assigned Patents, and (f) all original files regarding any action, suit, investigation, communication, claim or proceeding (in each case, whether before an administrative, arbitral or judicial body), whether or not outstanding, adjudicated to final resolution or settled, concerning the Assigned Patents.

4.4 Coordination of Outside Counsel. As soon after the Effective Date as is reasonably practical, Purchaser shall specify to Seller those attorneys and patent agents Purchaser desires to have prosecute and maintain the Assigned Patents. As soon after receipt of notice from Purchaser of the names of such attorneys and patent agents as is reasonably practical, Seller shall direct the attorneys and patent agents currently responsible for the prosecution and maintenance of the Assigned Patents to cooperate in good faith with those attorneys and patent agents

 

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specified by Purchaser so as to ensure a smooth transition of prosecution and maintenance obligations for the Assigned Patents after the Closing Date.

4.5 Cooperation After Closing Date. For two (2) years after the Closing Date (a) each of Seller (and Seller’s successors and permitted assigns) and Purchaser shall, upon the reasonable request of the other party hereto, execute and deliver to such other party any other documents and materials, and take any further actions (including using its commercially reasonable efforts to ensure the cooperation of the named inventors), that are reasonably necessary to give effect to the transactions provided for in this Agreement, and (b) Seller shall take such reasonable actions as Purchaser may request to assist Purchaser in protecting Purchaser’s rights in the Assigned Patents (including without limitation to permit Purchaser to perfect its title, or enforce its rights, in the Assigned Patents), provided that Seller shall bear all costs incurred by it through the first (1st) anniversary of the Closing Date in complying with this Section 4.5, and Purchaser shall thereafter reimburse Seller for its reasonable out of pocket expenses actually incurred by Seller following such first (1st) anniversary in complying with this Section 4.5.

 

5. CLOSING, DELIVERY AND PAYMENT

5.1 Closing and Delivery on Closing Date. No later than two (2) business days prior to the date on which the closing of the Merger (as defined below) or the merger under the Alternate Merger Agreement (as defined below) is expected to occur, Seller shall deliver to Purchaser written notice stating that the closing of the Merger is expected to occur on such date, provided, that if Purchaser has elected to go forward with this Agreement pursuant to Section 6.1(b) in circumstances in which there is no Merger Agreement or Alternate Merger Agreement, the Closing shall take place two (2) business days following the satisfaction of all the conditions to Closing set forth in Section 5.3 at the offices of Skadden, Arps, Slate, Meagher & Flom LLP, 1 Beacon Street, Boston, Massachusetts 02108. Subject to the foregoing proviso, provided that all of the conditions to Closing set forth in Section 5.3 shall have been satisfied or, to the extent permitted under applicable Law, waived (other than those conditions that by their nature can only be satisfied at Closing, but subject to the satisfaction or waiver of those conditions at Closing), the consummation of the transactions contemplated by Section 2.1 and Section 2.2 pursuant to the terms and conditions of this Agreement (“Closing”) shall take place at the offices of Skadden, Arps, Slate, Meagher & Flom LLP, 1 Beacon Street, Boston, Massachusetts 02108 on the same date as the closing of the merger (the “Merger”) provided for in the Agreement and Plan of Merger dated as of November 21, 2010, by and among Seller, Attachmate Corporation, a Washington corporation (“Parent”), and Longview Software Acquisition Corp., a Delaware corporation (“Sub”) and a wholly owned subsidiary of Parent (the “Merger Agreement”), with the time of Closing to be immediately prior to the closing of the Merger, unless otherwise waived by Purchaser in which event the time of the Merger shall be as consented to by Purchaser, or at such other place and time or such other date as Seller and Purchaser may mutually determine in writing (the date on which Closing actually occurs is referred to as the “Closing Date”), provided that such Closing Date shall be at least two (2) business days after all of such conditions in Sections 5.3(a)-(f) have been satisfied or waived. In the event that Purchaser has elected to continue this Agreement in full force and effect in accordance with Section 6.1(b) in circumstances involving an Alternate Merger Agreement, Closing shall occur

 

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on the same day as the closing of the merger under the Alternate Merger Agreement, unless otherwise waived by Purchaser in which event the time of the Merger shall be as consented to by Purchaser, if all of the conditions to Closing set forth in Section 5.3 shall have been satisfied or, to the extent permitted under applicable Law, waived (other than those conditions that by their nature can only be satisfied at Closing, but subject to the satisfaction or waiver of those conditions at Closing); provided that such Closing Date shall be at least two (2) business days after all of such conditions in Section 5.3 have been satisfied or waived; provided, further, that if the conditions to Closing are not satisfied on such day, Closing shall occur on the second (2nd) business day following the first day on which the conditions to Closing shall have been satisfied or, to the extent permitted under applicable Law, waived (other than those conditions that by their nature can only be satisfied at Closing, but subject to the satisfaction or waiver of those conditions at Closing). At the Closing, (a) Seller shall deliver to Purchaser an executed original of the assignment attached as Exhibit B to this Agreement (the “Assignment”) and such other executed originals of assignments as Purchaser may reasonably request, (b) Seller shall deliver to Purchaser all original documents (to the extent available) concerning the Assigned Patents in the possession of Seller, including, without limitation, (i) all original letters patent for the Assigned Patents, (ii) all original assignments for the Assigned Patents, (iii) all original documents, files and materials evidencing dates of invention and reduction to practice of inventions set forth in the Assigned Patents, (iv) all original files reflecting the prosecution history for all issued, pending and abandoned Assigned Patents, (v) Seller’s original files regarding the issued Assigned Patents, and (vi) Seller’s original files regarding any action, suit, investigation, communication, claim or proceeding (in each case, whether before an administrative, arbitral or judicial body), whether or not outstanding, adjudicated to final resolution or settled, concerning the Assigned Patents, (c) Seller shall direct its attorneys and patent agents responsible for the prosecution and maintenance of the Assigned Patents as of the Closing Date to transfer responsibility for such prosecution and maintenance to those attorneys and patent agents specified by Purchaser, and (d) as a condition of the assignment, transfer and conveyance of the Assigned Patents, Purchaser hereby agrees, solely with respect to the Assigned Patents, to (and shall cause any of its direct assignees of the Assigned Patents to) take such assignment, transfer and conveyance subject to all licenses, covenants not to sue and similar restrictions in effect prior to the Effective Date, in each case solely as identified on Exhibit C (as such Exhibit C is updated as described in the last sentence of this Section 5.1, it being understood and agreed that such updated Exhibit C shall not in any way affect, modify or qualify the representations and warranties set forth in Section 7 or the conditions to Closing set forth in Section 5.3(g)), but only (i) to the same extent Seller would be subject to such licenses, covenants not to sue and similar restrictions if Seller had not assigned the Assigned Patent and (ii) only to the extent any such license, covenant not to sue or similar restrictions (x) is in effect prior to the Closing Date, (y) involves a license, covenant not to sue or similar restriction on the Assigned Patents, and (z) requires Seller to have subsequent assignees agree to comply with such licenses, covenant not to sue or similar restrictions. For the avoidance of doubt, Purchaser also agrees solely with respect to the Assigned Patents to take such assignment, transfer and conveyance subject to all licenses, covenants not to sue and similar restrictions in effect on Seller prior to the Effective Date that would in each case transfer to Purchaser as a matter of law. Seller shall deliver to Purchaser no later than five (5) business days prior to Closing hereunder the final version of Exhibit C that has been updated through the Closing Date in accordance with the immediately preceding sentence for Purchaser’s information only; it being understood and agreed that such updated Exhibit C

 

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shall not in any way affect, modify or qualify the representations and warranties set forth in Section 7 or the conditions to Closing set forth in Section 5.3(g). Assuming Seller has provided Purchaser with the written notice referenced in the first sentence of this Section 5.1, on the Closing Date, prior to the Closing, Purchaser shall deliver to Seller a written notice confirming that Purchaser is prepared to, and at the Closing will have sufficient available funds to, consummate the transactions contemplated by Section 2.1 and Section 2.2 pursuant to the terms of this Agreement, subject to the satisfaction at Closing of the conditions to Closing set forth in Section 5.3.

5.2 Payment. In consideration for the assignment of such rights, title and interest in the Assigned Patents and the other obligations of Seller as set forth in this Agreement, Purchaser shall, at the Closing, subject to and following the satisfaction by Seller of all of its delivery obligations under Section 5.1 and the satisfaction (or waiver by Seller and Purchaser, if permissible under applicable Law) of the conditions set forth in Section 5.3, pay Seller the amount of four hundred and fifty million US Dollars ($450,000,000) (“Payment”), by wire transfer of immediately available funds, to an account identified in writing by Seller to Purchaser at least two (2) business days prior to Closing.

5.3 Conditions to Closing. The obligations of Seller, on the one hand, and Purchaser, on the other hand, to effect the Closing are subject to the satisfaction (or waiver by Seller and Purchaser, if permissible under applicable Law) of the following conditions precedent:

(a) No Governmental Entity of competent jurisdiction shall have enacted or issued any Law or Order or taken any other action enjoining or otherwise precluding or prohibiting consummation of the transactions contemplated under this Agreement;

(b) there shall not be threatened, instituted or pending any action (1) by any Governmental Entity of competent jurisdiction (A) challenging or seeking to prevent, enjoin, alter or materially delay the transactions contemplated under this Agreement, (B) seeking to restrain, prohibit or otherwise interfere with the operation of Purchaser or the Assigned Patents (C) seeking to require Purchaser or any of its members or its affiliates to take any of the actions that Sections 3.2 and 3.3 do not require Purchaser or any of its members or affiliates to take or otherwise to impose material restraints or damages on Purchaser or any of its members or their affiliates, or (2) with respect only to Purchaser, by any other person (other than any party to the Merger Agreement or any of their affiliates) that (A) Purchaser reasonably believes, after consultation with outside counsel, is reasonably likely to prevail in preventing, enjoining, materially altering or materially delaying the transactions contemplated under this Agreement beyond a reasonable period of time under the circumstances and (B) if successful, would reasonably be expected to adversely affect the benefits of the transaction to Purchaser in any material respect;

(c) with respect to a party, the other party shall have, in all material respects, performed or complied with all agreements, obligations or covenants required to be performed or complied with by it under this Agreement at or prior to the Closing;

 

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(d) as notified by Seller to Purchaser pursuant to Section 5.1, each of the conditions to the consummation of the Merger, other than the consummation of the transactions contemplated by Section 2.1 and Section 2.2 pursuant to the terms of this Agreement, shall have been satisfied or waived (if permissible under applicable Law) and the parties to the Merger Agreement or the Alternate Merger Agreement, as the case may be, shall be ready, willing, and able to consummate the Merger or merger under the Alternate Merger Agreement, as the case may be, immediately after the Closing on the terms and conditions set forth therein; provided that for purposes of determining whether the conditions to Purchaser’s obligation to effect the Closing have been satisfied, the conditions to the consummation of the Merger shall be the conditions to the consummation of the Merger contained in the Merger Agreement as of the date hereof or, in the case of an Alternate Merger Agreement, the conditions set forth therein, unless otherwise waived by Purchaser; provided further that if Purchaser has elected to continue this Agreement pursuant to Section 6.1(b) in circumstances in which there is no Merger Agreement or Alternate Merger Agreement, this condition shall be null and void;

(e) all waiting periods, notices, approvals and consents under applicable Competition Law with respect to Seller, Purchaser or any of its members shall have expired, been terminated, granted or made, as applicable;

(f) any required approvals of a Governmental Entity under any applicable Law shall have been obtained; and

(g) with respect to a party, all representations and warranties made by the other party under this Agreement shall have been true and correct when made on the Effective Date and shall be true and correct as of the Closing, as if all such representations and warranties were made on and as of the Closing , and each party shall have received a certificate signed on behalf of the other party by a duly authorized officer (in each case, without any personal liability attaching to such authorized officer or representative for signing such certificate), in the case of Seller, and a duly authorized representative, in the case of Purchaser, to the effect that such officer or representative, as the case may be, has read Sections 5.3(c) and 5.3(g) and that the conditions set forth in Sections 5.3(c) and 5.3(g), with respect to the party such officer or representative is acting on behalf of, have been satisfied.

5.4 Allocation of Payment. Seller and Purchaser shall jointly prepare, within ninety (90) days after the Closing Date, a schedule allocating the Payment among the Assigned Patents (the “Allocation Schedule”), which allocation shall take into account the relative fair market values of the U.S. and non-U.S. Assigned Patents. Seller and Purchaser shall (a) reasonably cooperate with each other in preparing the Allocation Schedule, (b) promptly provide each other with any information reasonably requested by the other party to prepare the Allocation Schedule and (c) attempt in good faith to resolve any dispute with respect to the Allocation Schedule. If within ninety (90) days after the Closing Date, Seller and Purchaser are unable to resolve any dispute with respect to the Allocation Schedule, Seller and Purchaser, or, if applicable, the relevant members and affiliates of Purchaser, shall refer the dispute to a mutually agreeable, independent accounting firm of international standing (the “Accounting Firm”) for resolution within sixty (60) days. The Accounting Firm shall determine, based solely on written submissions by Seller

 

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and Purchaser, or, if applicable, the relevant members and affiliates of Purchaser (and not by independent review) only those issues in dispute and shall render a written report as to the resolution of the dispute and the resulting Allocation Schedule. In resolving any disputed item, the Accounting Firm may not assign a fair market value to any Assigned Patent (i) greater than the greatest fair market value for such Assigned Patent claimed by any party or (ii) less than the smallest fair market value for such Assigned Patent claimed by any party. Each of Purchaser and Seller shall bear and be responsible for one-half of the fees, costs and expenses of the Accounting Firm. The Accounting Firm’s resolution will be binding on both Seller and Purchaser (and their respective affiliates) and will be incorporated into the Allocation Schedule. The Allocation Schedule shall be revised to take into account subsequent adjustments, if any, to the Payment. The Allocation Schedule derived pursuant to this Section 5.4 shall be binding on Seller and Purchaser (and their respective affiliates) for all tax reporting purposes, and neither Seller nor Purchaser shall agree to any proposed adjustment to the Allocation Schedule by any taxing authority without first giving the other party prior written notice and the opportunity to challenge such proposed adjustment.

5.5 Indemnity for Taxes of Seller. Seller shall indemnify, defend and hold harmless Purchaser and any of Purchaser’s direct or indirect owners (collectively, the “Purchaser Indemnified Parties”) for any taxes (of any kind or nature, whether federal, state, local, or foreign, and including any interest, penalties, and additions to tax) (a) of Seller for any taxable period, or portion thereof, that ends on or prior to the Closing Date or (b) imposed on the sale, transfer and assignment of the Assigned Patents to Purchaser as contemplated by this Agreement (including the portion of Transfer Taxes payable by Seller, but excluding the portion of Transfer Taxes payable by Purchaser, under Section 8.14(b)). Notwithstanding anything else to the contrary in this Agreement, the indemnity for taxes in this Section 5.5 shall survive until sixty (60) days after the expiration of the applicable statute of limitation.

5.6 Other Acquisition Proposals. Seller shall as promptly as reasonably practicable, and in any event within the earlier of (i) forty-eight (48) hours and (ii) one (1) business day after receipt, notify Purchaser orally and in writing of the receipt of any Acquisition Proposal or any inquiry, proposal, indication of interest or offer (whether in writing or otherwise) from any person (other than Purchaser) to acquire or license any of the Assigned Patents (collectively, a “Proposal”) and of the price and other material terms and conditions of each such Proposal (including the identity of the person making such Proposal) and of any changes or supplements thereto.

5.7 Merger Agreement Amendment. Seller shall not agree to the amendment of the conditions to, or the termination of, the Merger Agreement, or the amendment of any other provisions of the Merger Agreement, in each case that would adversely affect, impair or delay the rights of Purchaser hereunder in any material respect.

 

6. TERMINATION

6.1 This Agreement will terminate (a) upon mutual written agreement of Purchaser and Seller, (b) automatically, without requirement of any action by either Seller or Purchaser, upon

 

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the termination of the Merger Agreement in accordance with the terms of the Merger Agreement prior to the consummation of the Merger, provided that, notwithstanding the foregoing, in the event that Seller receives an Acquisition Proposal (within the meaning of the Merger Agreement as in effect on the Effective Date, or within the meaning of any comparable term in any amended version of the Merger Agreement after the Effective Date) that contemplates an acquisition of Seller other than by an acquirer whose acquisition proposal contemplates that Seller will retain all of the Assigned Patents, Seller will provide Purchaser with notice thereof, and if Purchaser provides written notice to Seller at any time within three (3) days following written notice from Seller that it has received such an Acquisition Proposal, that Purchaser elects to continue this Agreement, and Seller deems such Acquisition Proposal to be a Superior Proposal (within the meaning of the Merger Agreement as in effect on the Effective Date, or within the meaning of any comparable term in any amended version of the Merger Agreement after the Effective Date), this Agreement shall remain in full force and effect and shall not have been considered to have been terminated, and references contained in this Agreement to the “Merger Agreement” shall automatically be deemed to be to the Agreement and Plan of Merger (or other form of acquisition agreement) between Seller and the party from which Seller has accepted such Superior Proposal (the “Alternate Merger Agreement”); and provided further that notwithstanding the foregoing, in the event that the Merger Agreement is terminated for any other reason other than the receipt by Seller of an Acquisition Proposal (within the meaning of the Merger Agreement as in effect on the Effective Date, or within the meaning of any comparable term in any amended version of the Merger Agreement after the Effective Date) for all of Seller that Seller deems to be a Superior Proposal, Seller will provide Purchaser with notice thereof, and if Purchaser provides written notice to Seller, at any time within three (3) days following written notice from Seller that the Merger Agreement has been terminated, that Purchaser elects to continue this Agreement, this Agreement shall remain in full force and effect and shall not have been considered to have been terminated, and references contained in this Agreement to the “Merger Agreement” shall automatically be deemed to not have any force or effect; (c) by either party, upon written notice to the other party, if the Closing Date has not occurred on or prior to April 20, 2011, unless the April 20, 2011 date is extended under the terms of the Merger Agreement, in which event such date shall be as extended under the Merger Agreement; provided that if Purchaser elects to continue this Agreement in full force and effect following Seller’s termination of the Merger Agreement in accordance with its terms prior to consummation of the Merger to accept a Superior Proposal pursuant to the immediately preceding subclause (b), such date shall be extended to the outside termination date provided for in the Alternate Merger Agreement, as identified in good faith by Purchaser to Seller; provided, further that this termination right shall not be available to any party if its breach of this Agreement has been the cause of, or resulted in, the failure to consummate the transactions contemplated by this Agreement by the Closing Date, (d) by either party, upon written notice to the other party, if it will not be possible for the Closing Date to occur by the outside termination date applicable under subclause (c) above, provided that this termination right shall not be available to any party if its breach of this Agreement has been the cause of, or resulted in, the failure to consummate the transactions contemplated by this Agreement by the Closing Date, or (e) by either party, upon written notice to the other party, in the event the Closing occurs but the Merger does not occur immediately thereafter on the Closing Date, such notice to be given no later than the business day immediately succeeding the Closing Date (unless such timing of the Merger has been waived by Purchaser in which event the time of the Merger shall be as

 

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consented to by Purchaser and the termination right in this subclause (e) shall be as consented to by Purchaser in connection with such waiver); provided that this termination right shall not be available to any party if its actions have been the cause of, or resulted in, the failure to consummate the transactions contemplated by the Merger Agreement by the Closing Date; provided, further, that in the event of such termination pursuant to subclause (e), Seller shall immediately return to Purchaser the Payment and the transactions contemplated by Sections 2.1 and 2.2 shall be null and void and Purchaser shall return any documents delivered thereby. In the event that Purchaser has elected to continue this Agreement pursuant to Section 6.1(b), Purchaser and Seller shall enter into a royalty-free, fully paid-up patent cross license for no additional consideration, effective as of Closing, with respect to all patents and patent applications owned or controlled by them on mutually acceptable terms that are no less favorable in the aggregate to either party than the terms of any other patent cross license offered by Purchaser to any other person (other than any member of Purchaser or an affiliate of any such member). The parties agree that the obligations of Seller pursuant to subclause (e) of this Section 6.1 shall be specific to the terms of such subclause (e) and Purchaser shall have the right to seek specific performance from the other party for failure to return the Payment under such subclause (e). If Seller terminates the Merger Agreement in accordance with its terms prior to the consummation of the Merger to accept a Superior Proposal or otherwise, Seller shall provide Purchaser written notice of such action no later than the time it notifies Sub of its decision to terminate the Merger Agreement.

6.2 Upon termination of this Agreement as provided in Section 6.1, this Agreement shall be deemed null and void and Purchaser will return all confidential materials provided by Seller within five (5) business days from the date of notice of termination; provided that (i) no such termination shall relieve any party from any damages, liabilities or obligations relating to any intentional breach of this Agreement prior to such termination, and the other party to this Agreement shall continue to have the right to pursue any and all remedies in respect of such breach following such termination and (ii) this Section 6.2 and Sections 8.2-8.18 shall survive any such termination and remain in full force and effect.

 

7. REPRESENTATIONS AND WARRANTIES

7.1 Seller hereby represents and warrants to Purchaser that, as of the date hereof and as of the Closing:

(a) Authority. Seller has the right and authority, and has been duly authorized by all necessary corporate and other actions of Seller, to execute and deliver this Agreement and to perform its obligations hereunder and requires no third party consent, approval, and/or other authorization to execute and deliver this Agreement and to perform its obligations hereunder, including, without limitation, to assign the Assigned Patents to Purchaser. Neither the execution and delivery of this Agreement by Seller, nor the performance by Seller of its obligations hereunder, will (i) conflict with or result in any material breach or violation of any of the terms or conditions of, or constitute a default under, any instrument, contract or other agreement to which Seller is a party or by which Seller or any of the Assigned Patents is bound, (ii) result in the imposition of any Lien upon the Assigned Patents, (iii) conflict with or result in any breach

 

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of any provision of Seller’s certificate of incorporation or bylaws or (iv) violate any Order applicable to Seller or the Assigned Patents.

(b) Title and Contest. Except as set forth in Exhibit C, Seller, and only Seller, has good and marketable title to the Assigned Patents, including, without limitation, all rights, title, and interest in the Assigned Patents and the right to sue for past, present and future infringement thereof. Except as set forth in Exhibit C, Seller has obtained and properly recorded previously executed assignments for the Assigned Patents as necessary to fully perfect Seller’s rights and title therein in accordance with the Law in each respective jurisdiction. Except as set forth in Exhibit C, the Assigned Patents are free and clear of all Liens. There are no actions, suits, investigations, communications, correspondence, claims or proceedings pending or, to the knowledge of Seller, threatened relating in any way to the validity, enforcement, construction, use or ownership of the Assigned Patents. There are no Orders that restrict any of Seller’s rights, or would restrict any of Purchaser’s or its successors’ and assigns’ rights, to the Assigned Patents.

(c) Existing Licenses and Rights. Except as set forth in Exhibit C and implied licenses for the sale by Seller of its own products, no past, current or future patent rights or patent licenses, including, without limitation, any other implied licenses granted or retained by Seller, have been expressly or implicitly granted or retained under or in connection with the Assigned Patents, including without limitation through the contribution of code or through any implied or express patent rights or patent licenses granted or retained by Seller, any prior owners, the inventors or any other third parties, and Purchaser and its successors and assigns will not be subject to any covenant not to sue for patent infringement or similar restrictions or immunities with regard to, or exhaustion of rights under, the Assigned Patents, or any representations or commitments on its enforcement, control or enjoyment of the Assigned Patents after the transactions contemplated in this Agreement, or as a result of any prior transaction related to the Assigned Patents. None of the Assigned Patents are subject to any exclusive patent licenses or patent rights.

(d) Restrictions on Rights. Except as set forth in Exhibit C, (i) Seller has not made any commitments or declaration of Patents to, and is not (and the Assigned Patents are not) otherwise subject to, any standards or other organization regarding licensing or not asserting the Assigned Patents, (ii) Seller is not otherwise obligated to license or refrain from asserting the Assigned Patents and (iii) none of the Assigned Patents have been identified by Seller as, or to Seller’s knowledge by any third party as, nor does Seller believe any of the Assigned Patents to be, essential to such organizations.

(e) Certain Matters Pertaining to OIN. Other than as set out in (i) the Limited Liability Company Agreement of Open Invention Network effective November 8, 2005, (ii) the Corporate License Agreement entered on November 11, 2005, (iii) the license agreement available at http://www.openinventionnetwork.com/pat_license_agreement.php (as of the date hereof), the Assigned Patents are not subject to any licenses, restrictions, conditions or other terms of the Open Invention Network.

 

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(f) Enforcement. Except as set forth in Exhibit C, Seller has not put a third party on notice of infringement of any of the Assigned Patents.

(g) Assigned Patent Office Proceedings. Except as set forth in Exhibit C, none of the Assigned Patents have been or are currently involved in any reexamination, reissue, interference proceeding, or any similar proceeding and no such proceedings are pending or, to Seller’s knowledge, threatened.

(h) Fees. All maintenance fees owed to any applicable patent registration authority with respect to the Assigned Patents have been timely paid.

(i) Validity and Enforceability. The Assigned Patents have never been found invalid or unenforceable for any reason in any administrative, arbitration, judicial or other proceeding.

(j) Merger Agreement. Prior to the execution and delivery of this Agreement, Seller provided to Purchaser a true and complete copy of the Merger Agreement in the form that will be executed and delivered by each of the parties thereto.

(k) No Brokers. Seller has not made any agreement with any party which would entitle such party to claim any fee, commission or reimbursement of expenses from Purchaser or any of its affiliates in connection with the execution and delivery of this Agreement, or the closing of any transaction pursuant to this Agreement.

(l) No Undisclosed Information. Seller is not aware of any facts or matters that have not been disclosed to Purchaser with respect to the Assigned Patents that would be reasonably expected to be material to Purchaser in connection with its consideration of this Agreement and the transactions contemplated by this Agreement.

7.2 Purchaser hereby represents and warrants to Seller that:

(a) Authority. Purchaser has the right and authority, and has been duly authorized by all necessary limited liability company and other actions of Purchaser, to execute and deliver this Agreement and to perform its obligations hereunder and, except for any consents or approvals required under Competition Laws and the consents of its members, which has been obtained subject to the satisfaction of the conditions set forth herein, requires no third party consent, approval, and/or other authorization to enter into this Agreement and to carry out its obligations hereunder. Neither the execution and delivery of this Agreement by Purchaser, nor the performance by Purchaser of its obligations hereunder, will (i) conflict with or result in any material breach or violation of any of the terms or conditions of, or constitute a default under, any instrument, contract or other agreement to which Purchaser is a party or by which Purchaser or any of its assets is bound or (ii) conflict with or result in any breach of any provision of Purchaser’s limited liability company agreement.

 

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(b) Equity Commitment. Purchaser has received valid and binding equity commitments from each of its members, or their respective subsidiaries, which in the aggregate equal or exceed the Payment and which will be available to Purchaser to make the Payment provided for in Section 5.2.

(c) No Brokers. Purchaser has not made any agreement with any party which would entitle such party to claim any fee, commission or reimbursement of expenses from Seller or any of its affiliates in connection with the execution and delivery of this Agreement, or the closing of any transaction pursuant to this Agreement.

 

8. MISCELLANEOUS

8.1 Continued Access. Between the Effective Date and the Closing Date, Seller agrees to cooperate in good faith with Purchaser’s due diligence efforts and, in connection therewith, shall, and shall cause its applicable subsidiaries to, grant Purchaser, its members and their respective authorized representatives access to all such information relating to the Assigned Patents as is reasonably requested by Purchaser, including, without limitation, books and records, licenses, contracts, documents and other related data in Purchaser’s or any of its subsidiaries’ possession. For the avoidance of doubt, as part of such due diligence efforts, Seller agrees to permit Purchaser, its members and their respective authorized representatives access to the business and properties of Seller, at Purchaser’s own expense, to inspect, copy and take extracts from any pertinent documents as are reasonably requested by Purchaser, and to consult the appropriate officers, employees and other representatives (including external counsel) of Seller as necessary, all upon reasonable notice and at such reasonable times during normal business hours and as often as may reasonably be requested.

8.2 Applicable Law; Waiver of Trial by Jury. The validity, construction, and performance of this Agreement shall be governed by and construed first in accordance with the federal laws of the United States to the extent federal subject matter jurisdiction exists, and second in accordance with the laws of the State of Delaware, exclusive of its choice of law rules. With respect to all civil actions or other legal or equitable proceedings directly arising between the parties or any of their affiliates under this Agreement, the parties consent to exclusive jurisdiction and venue in the United States District Court District of Delaware (the “Forum”) unless no federal jurisdiction exists, in which case the parties consent to exclusive jurisdiction and venue in any state court in the State of Delaware (the “Alternate Forum”). Each party irrevocably consents to personal jurisdiction and waives the defense of forum non conveniens in the Forum, or Alternate Forum, if applicable, with respect to itself and its affiliates. Process may be served on either party in the manner authorized by applicable law or court rule. EACH PARTY HERETO IRREVOCABLY WAIVES ANY AND ALL RIGHTS TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY.

8.3 LIMITATION ON CONSEQUENTIAL DAMAGES. EXCEPT IN THE CASE OF FRAUD, NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR LOSS OF PROFITS OR ANY SPECIAL, CONSEQUENTIAL OR INCIDENTAL DAMAGES, HOWEVER

 

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CAUSED, KNOWN OR UNKNOWN, ANTICIPATED OR UNANTICIPATED, EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGE. THE PARTIES ACKNOWLEDGE THAT THESE LIMITATIONS ON POTENTIAL DAMAGES WERE AN ESSENTIAL ELEMENT IN SETTING CONSIDERATION UNDER THIS AGREEMENT.

8.4 LIMITATION OF LIABILITY. EXCEPT IN THE CASE OF FRAUD, WITHOUT WAIVING ANY OTHER RIGHTS OF THE PARTIES, INCLUDING ANY RIGHT TO SEEK SPECIFIC PERFORMANCE OR SEEK OTHER EQUITABLE RELIEF, NEITHER PARTY’S TOTAL LIABILITY (INCLUDING PAYMENT OBLIGATIONS) UNDER THIS AGREEMENT SHALL EXCEED THE PAYMENT AMOUNTS REQUIRED PURSUANT TO SECTION 5.2. THE PARTIES ACKNOWLEDGE THAT THESE LIMITATIONS ON POTENTIAL LIABILITIES WERE AN ESSENTIAL ELEMENT IN SETTING CONSIDERATION UNDER THIS AGREEMENT. EXCEPT IN THE CASE OF FRAUD, NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS AGREEMENT, EACH PARTY’S SOLE AND EXCLUSIVE REMEDY FOR THE FAILURE OF ANY REPRESENTATION OR WARRANTY MADE BY THE OTHER PARTY HEREUNDER TO BE TRUE AND CORRECT WHEN MADE ON THE EFFECTIVE DATE OR WHEN MADE AS OF THE CLOSING DATE IS TO TERMINATE THIS AGREEMENT PURSUANT TO SECTION 6.1 OR TO EFFECT THE CLOSING NOTWITHSTANDING SUCH FAILURE AND THEREBY TO WAIVE SUCH FAILURE.

8.5 Compliance with Laws. Notwithstanding anything contained in this Agreement to the contrary, the obligations of the parties shall be subject to all Laws and Orders of any Governmental Entity having jurisdiction over the parties, this Agreement and the transactions contemplated by this Agreement.

8.6 Confidentiality of Terms. Each of Seller and Purchaser shall, and shall cause their respective agents to, keep this Agreement confidential and shall not now or hereafter divulge this Agreement or any of its terms to any third party except: (a) with the prior written consent of the other party hereto; (b) as required by Law, by any Governmental Entity or by any self-regulatory agency or stock exchange on which such party’s securities are listed or which has regulatory or supervisory authority over such party, and to such party’s regulators and in the course of inspections, examinations or inquiries by regulatory agencies or self-regulatory organizations that have requested or required the inspection of records that contain or reflect this Agreement; it being understood that this Agreement will be filed as an exhibit to Seller’s annual report on Form 10-K and as an annex to Seller’s proxy statement in respect of the Merger and will be summarized in any Form 8-K filing to be made in connection with the execution of this Agreement; and it being further understood that Seller shall provide Purchaser with a reasonable opportunity to review and comment on the portions of any filings that relate to this Agreement; and it being further understood that Seller shall only make such disclosures as are required by Law, by any such stock exchange or self-regulatory agency or by any Governmental Entity and after consultation with Purchaser, to the extent practicable; (c) during the course of litigation, so long as the disclosure of such terms and conditions are restricted in the same manner as is the confidential information of other litigating parties; (d) in confidence to its legal counsel, accountants, banks and financing sources and their advisors in their capacity of advising the disclosing party in such matters; (e) in confidence to the auditors of the disclosing party or (f)

 

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with respect to any disclosure to a tax authority required by any tax Law; provided that, (i) with respect to (c) above, the disclosing party shall use all legitimate and legal means available to minimize the disclosure to third parties; and (ii) with respect to (b), the disclosing party shall give the other party reasonable opportunity to review and comment on any filings and coordinate with the other party on all other correspondence with any Governmental Entity, to the extent any such filing or correspondence relates to the transactions contemplated by this Agreement; and (iii) with respect to (c), if permitted under applicable Law, with at least ten (10) business days’ prior written notice of such disclosure. In addition, Purchaser may disclose this Agreement to its members and their representatives, and Seller may disclose this Agreement to Parent and Sub. To the extent that this Agreement, its existence or any of its terms, is publicly disclosed not in violation of this Section 8.6, the information so disclosed shall no longer be regarded as confidential or subject to the terms of this Section 8.6 but only to the extent so disclosed.

8.7 Publicity. Each party (and each party’s successors and permitted assigns) shall, and shall cause its representatives to, obtain written consent of the other party (such consent to be not unreasonably withheld or delayed), prior to issuing any press releases or making any other public announcements or public disclosures regarding this Agreement, the transactions contemplated by this Agreement, the other party or of the members of Purchaser, except as required by Law, by any Governmental Entity or by any self-regulatory agency or stock exchange on which such party’s securities are listed or which otherwise has regulatory or supervisory authority over such party. In the case of any such press release, public announcement or public disclosure, or disclosure to be made as required by Law, by any such Governmental Entity (other than with respect to taxes) or by any self-regulatory agency or stock exchange, the party proposing to make such disclosure shall provide the other party a reasonable opportunity to review and comment on any reference to this Agreement, the transactions contemplated by this Agreement, or to the extent such reference relates to this Agreement, the other party or the members of Purchaser, prior to issuing or making any such press release, public announcement or public disclosure (and such disclosing party shall review and consider any such comments in good faith); provided that the disclosing party shall not be required to provide the other party with the opportunity to review and comment on any disclosure if the text of such disclosure has previously been publicly disclosed by Seller in accordance with the terms of this Agreement.

8.8 Entire Agreement; Third Party Beneficiaries. The terms and conditions of this Agreement, including its exhibits, constitutes the entire agreement between the parties with respect to the subject matter hereof, and merges and supersedes all prior oral and written agreements, understandings, negotiations and discussions. Neither of the parties shall be bound by any conditions, definitions, warranties, understandings, or representations with respect to the subject matter hereof other than as expressly provided herein. The section headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Nothing in this Agreement, express or implied, is intended to confer upon any person or entity other than Purchaser, Seller, or their respective successors or permitted assigns, any rights or remedies under or by reason of this Agreement, other than, with respect to Section 5.5 only, the Purchaser Indemnified Parties and with respect to Section 8.18, the persons referenced therein. This Agreement may be executed in two (2) or more separate counterparts, all of which, taken together, shall be regarded as one and the same instrument.

 

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8.9 Notices: All notices required or permitted to be given hereunder shall be in writing, shall make reference to this Agreement, and shall be delivered by hand, or dispatched by prepaid air courier or by registered or certified airmail, postage prepaid, addressed as follows or to such other party or parties as Seller or Purchaser may direct from time to time:

 

If to Seller   If to Purchaser

Novell, Inc.

404 Wyman Street, Suite 500

Waltham, Massachusetts 02451

Facsimile: (781) 464-8062

Attention: General Counsel

 

Microsoft Corporation

One Microsoft Way

Redmond, WA 98052

Facsimile: (425) 936-7329

Attn: Director of IP Licensing Law and

Corporate Affairs

with a copy (which shall not constitute notice) to:   with a copy (which shall not constitute notice) to:

Skadden, Arps, Slate, Meagher & Flom LLP

1 Beacon Street

Boston, Massachusetts 02108

Facsimile:          (617) 573-4822

Attention:          Margaret A. Brown

 

Sullivan & Cromwell LLP

125 Broad Street

New York, New York 10004

Facsimile:          (212) 558-3588

Attention:           John Evangelakos

                           Alexandra D. Korry

Such notices shall be deemed delivered when received by addressee or, if delivery is not accomplished by reason of some fault of the addressee, when tendered for delivery. Any party may give written notice to the other party of a change of address or instruction to deliver notice to another party (at the address indicated by such party) and, after notice of such change has been received, any notice or request shall thereafter be given to such party or parties at such changed address or to such other party or parties, as the case may be.

8.10 Relationship of Parties. The parties hereto are independent contractors. Neither party has any express or implied right or authority to assume or create any obligations on behalf of the other or to bind the other to any contract, agreement or undertaking with any third party. Nothing in this Agreement shall be construed to create a partnership, joint venture, employment or agency relationship between Seller and Purchaser.

8.11 Severability. The terms and conditions stated herein are declared to be severable. If any paragraph, provision, or clause in this Agreement shall be found or be held to be invalid or unenforceable in any jurisdiction in which this Agreement is being performed, the remainder of this Agreement shall be valid and enforceable if the intent of the parties can still be realized thereby, and the parties shall use good faith to negotiate a substitute, valid and enforceable provision which most nearly effects the parties’ intent in entering into this Agreement.

 

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8.12 Amendment; Waiver. Any provision of this Agreement may be amended or waived if, and only if, such amendment or waiver is in writing and signed, in case of an amendment, by Purchaser and Seller, or in case of a waiver, by the party against whom the waiver is to be effective. Failure by either party to enforce any term of this Agreement shall not be deemed a waiver of future enforcement of that or any other term in this Agreement.

8.13 Assignment of Agreement. The terms and conditions of this Agreement shall inure to the benefit of any successors, assigns and other legal representatives of Purchaser, and shall be binding upon Seller, its successor, assigns and other legal representatives. In connection with the dissolution, liquidation or winding up of Purchaser after the Closing, Purchaser may assign this Agreement to each of the members of Purchaser to the extent of the Assigned Patents assigned, transferred or conveyed to each such member, in which case the terms and conditions of this Agreement shall inure to the benefit of each such member (and its successors and assigns) with respect to such Assigned Patents assigned, transferred or conveyed to it; provided, however, that any such assignment, transfer or conveyance will be subject to acceptance by the assignee of the obligations of Purchaser set forth in Section 5.1(d) with respect to the Assigned Patents so assigned. Seller shall not assign or delegate this Agreement or any of its rights or obligation under this Agreement, without the prior written consent of Purchaser, except in connection with the Merger by operation of law. Any such purported assignment or delegation by Seller without such prior written consent shall be null and void.

8.14 Expenses.

(a) All costs and expenses incurred in connection with the negotiation, preparation, execution and performance of this Agreement and the consummation of the transactions contemplated herein shall be paid by the party incurring such costs and expenses, whether or not any of such transactions are consummated. For the avoidance of doubt, Seller shall remain responsible for, and pay, all fees, commissions and reimbursement of expenses claimed by any party based upon arrangements made by or on behalf of Seller or any of its affiliates in connection with the execution and delivery of this Agreement, or the closing of any transaction pursuant to this Agreement, and Purchaser shall remain responsible for, and pay, all fees, commissions and reimbursement of expenses claimed by any party based upon arrangements made by or on behalf of Purchaser or any of its affiliates in connection with the execution and delivery of this Agreement, or the closing of any transaction pursuant to this Agreement.

(b) Each of the Purchaser and the Seller shall be responsible for fifty percent (50%) of all Transfer Taxes, irrespective of the party on which liability for such Transfer Taxes is imposed. Additionally, the Purchaser shall be responsible for all fees and expenses incurred in connection with the recordation of the purchase of the Assigned Patents. Seller and Purchaser agree to cooperate and take all actions reasonably requested by the other side (including, without limitation, all actions necessary to effect the electronic delivery of the Assigned Patents, in the manner and to the extent requested by Purchaser) to minimize the amount of Transfer Taxes payable under this Section 8.14(b).

 

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8.15 Interim Operations of Seller. Between the Effective Date and the Closing Date, Seller agrees that it shall not, nor shall it permit any of its subsidiaries to, enter into any enforceable contract, agreement, commitment or arrangement that would make the representations and warranties of the Seller untrue or incorrect as of the Closing.

8.16 Non-Survival of Representations and Warranties. None of the representations and warranties in this Agreement or in any schedule, instrument or other document delivered pursuant to this Agreement shall survive the Closing Date or the termination of this Agreement.

8.17 Specific Performance. Each party agrees that the failure of any other party to perform its agreements and covenants hereunder will cause irreparable damage to the first party and that the first party would not have any adequate remedy at law in such event. It is accordingly agreed that, unless and until this Agreement is terminated in accordance with its terms, notwithstanding anything to the contrary in this Agreement, each party shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement in any court referred to in Section 8.2, this being in addition to any other remedy to which such party is entitled at law or in equity and neither party shall assert that the other has an adequate remedy at law.

8.18 No Recourse. Seller, on behalf of itself, its stockholders and its affiliates, acknowledges and agrees that none of Seller, its stockholders or its affiliates has any right to recovery (whether on their own behalf or on behalf of Seller) against, and no personal liability shall attach to, in each case with respect to any damages, losses or other liabilities, any member in Purchaser or any of Purchaser’s or any such member’s affiliates or their respective employees, officers, stockholders, general or limited partners, members, directors, or agents, and Purchaser, on behalf of itself, its members or their affiliates, acknowledges and agrees that none of Purchaser, its members and their affiliates has any right to recovery (whether on their own behalf or on behalf of Purchaser) against, and no personal liability shall attach to, in each case with respect to any damages, losses or other liabilities, any of Seller’s or its affiliates’ employees, officers, stockholders, general or limited partners, members, directors, or agents.

8.19 Commercially Reasonable Efforts. Subject to Sections 3.2, 3.3, 5.3, 6.1 and applicable Law, the parties shall cooperate with each other and use commercially reasonable efforts to consummate the transactions contemplated by this Agreement. Seller shall use its commercially reasonable efforts to effect the Merger, in accordance with and subject to the terms and conditions of the Merger Agreement.

8.20 Seller Liability for Pre-Closing Liabilities. For avoidance of doubt, except as previously provided in Section 5.1(d), none of Purchaser or any of its affiliates or members is assuming any liabilities of Seller, and all pre-Closing liabilities relating to or arising out of the Assigned Patents shall remain the responsibility of Seller (and Seller’s successors and permitted assigns).

8.21 Notification of Certain Matters. Purchaser shall notify Seller prior to Closing of any information it obtains that would reasonably be expected to adversely affect the benefits of the transaction to Purchaser in any material respect.

 

19


In witness whereof, the parties have executed this Patent Purchase Agreement as of the Effective Date:

 

20


 

NOVELL, INC.       CPTN HOLDINGS LLC

/s/ Ronald W. Hovsepian

     

/s/ Benjamin Ornforff

Signature       Signature

Ronald W. Hovsepian

     

Benjamin Orndorff

Printed Name       Printed Name

President and Chief Executive Officer

     

Manager

Title       Title

November 21, 2010

     

November 21, 2010

Date       Date
EX-10.55 4 dex1055.htm SECOND BCA JOINT MEMORANDUM BY MICROSOFT CORPORATION AND THE REGISTRANT Second BCA Joint Memorandum by Microsoft Corporation and the Registrant

Exhibit 10.55

Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality requested. Omissions are designated as [***]. A complete version of this exhibit has been filed separately with the United States Securities and Exchange Commission.

January 16, 2007

Second BCA Joint Memorandum by Microsoft Corporation and Novell, Inc.

Re:    Impact of January 16, 2007 Participation Agreement Entered into between the Parties’ respective Irish subsidiaries (the “PA Agreement”) on the Business Collaboration Agreement Dated 11/2/2006 Between Novell, Inc. (“Novell”) and Microsoft Corporation (“Microsoft”) (such agreement, the “BCA Agreement”).

This Second BCA Joint Memorandum (“BCA Amendment”) is written to memorialize the Parties’ mutual agreement that, effective upon the execution of the PA Agreement, Microsoft’s Total Minimum Commitment under Section 4.2(a) of the BCA is [***].

The parties further acknowledge and agree that the PA Agreement is a stand alone agreement between the parties’ respective Irish subsidiaries. As such, the PA Agreement is not part of the BCA Agreement and any references to the BCA Agreement do not include the PA Agreement.

Except as expressly amended and supplemented by this BCA Amendment, the terms and conditions of the BCA Agreement will remain in effect and unchanged.

Accepted and Agreed by Novell, Inc.

 

  Signature:  

    /s/ Joseph A. LaSala, Jr.

  Printed Name:  

    Joseph A. LaSala, Jr.

  Title:  

                     SVP. General Counsel

  Date:  

                     1/16/07

Accepted and Agreed by Microsoft Corp.

 

  Signature:  

      /s/ Bradford L. Smith

  Printed Name:  

Bradford L. Smith

  Title:  

                General Counsel

  Date:  

                 1/16/07

 

[*** Confidential Treatment Requested]

EX-10.56 5 dex1056.htm PARTICIPATION AGREEMENT, DATED AS OF JANUARY 16, 2007 Participation Agreement, dated as of January 16, 2007

Exhibit 10.56

Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality requested. Omissions are designated as [***]. A complete version of this exhibit has been filed separately with the United States Securities and Exchange Commission.

PARTICIPATION AGREEMENT

EFFECTIVE DATE OF THIS PARTICIPATION AGREEMENT (“PA”): January 15, 2007

RECITAL: The parties desire to enter into an agreement under which Microsoft Ireland Operations Limited (“Buyer”) may purchase from Novell Ireland Software Limited (“Supplier”), and may distribute, the right to enroll in SLES Subscriptions in a manner similar to an arrangement entered into by the parties’ parent corporations, all pursuant to the terms and conditions set forth below

AGREEMENT: This PA adopts and incorporates by reference the following terms and conditions of the Business Collaboration Agreement (“BCA”) in effect as of November 2, 2006, as amended January 18, 2007, between Microsoft Corporation and Novell, inc.:

 

  1. Section 4.1

 

  2. Section 4.2(a), except that the [***] under this PA shall [***], and such [***] shall be paid no later than [***].

 

  3. Sections 4.2(b) & (c)

 

  4. Section 4.3(a), (b) & (c)

 

  5. Section 4.3(d), except that the plans developed thereunder will be substantially similar to those developed under the BCA.

 

  6. Section 4.4

 

  7. Section 8.1, excluding the reference to Section 8.2.

 

  8. Section 9

 

  9. Section 10 except that as between Buyer and Supplier under this PA, Section 10.2 shall read as follows:

 

  10.2 LIMITATION OF LIABILITY. SUBJECT TO SECTION 10.4 BELOW AND EXCEPT WITH REGARD TO BUYER’S PAYMENT OBLIGATION AND SUPPLIER’S CORRESPONDING OBLIGATION TO DISTRIBUTE SUBSCRIPTION CERTIFICATES UNDER SECTI0N 4.2(a) ABOVE, TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, THE MAXIMUM AGGREGATE LIABILITY OF EACH PARTY TO THE OTHER PARTY FOR ANY AND ALL CLAIMS WHATSOEVER ARISING OUT OF OR UNDER THIS AGREEMENT WILL NOT EXCEED [***].

 

  10. Section 11.2(b) & 11.2(d)

 

  11. Section 11.3, with respect to sections listed therein that are adopted in this PA

 

  12. Sections 12.2, 12.3, 12.4, and 12.5

 

[*** Confidential Treatment Requested]


 

  13. Section 12.6, except that notices shall be addressed as follows:

 

If to Supplier:

Novell Ireland Software Limited

Corrig Court, Corrig Road

Sandyford Industrial Estate

Sandyford, Dublin 18

Ireland

Attn: Managing Director

Fax +353-1-605-8200

  

If to Buyer:

Microsoft Ireland Operations Limited

Atrium Building Block B

Carmenhall Road

Sandyford Industrial Estate, Dublin 18

Ireland

Attn: Licensing Processing Team

Email: LMurtagh@novell.com

Email cc: EMEA Contract Admin@novell.com

  

With a copy to:

Microsoft Corporation

Vice President, Intellectual Property and

Licensing

Group Legal and Corporate Affairs

One Microsoft Way

Redmond, WA 98052

United States of America

Fax: (425) 708-5891

Email: jpnotice@microsoft.com

 

  14. Sections 12.8, 12.10 and 12.11

 

  15. All BCA definitions for terms used in the BCA sections identified above or otherwise used this PA, unless otherwise defined or specified in this PA.

For the purpose of this PA, the following terms shall have the following meanings where used in the BCA provisions adopted and incorporated herein; “Microsoft” means Buyer, “Novell” means Supplier, “Agreement’ means this PA, and “Effective Date” means the PA Effective Date above.

This PA does not adopt and incorporate any subsequent amendments to the BCA unless agreed to in writing by the parties to this PA.

ADDITIONAL TERMS: The following terms and conditions are included in this PA.

1. Taxes: Prices are exclusive of all applicable sales or value added or similar taxes which shall be paid by the Buyer to the Supplier in addition to such prices. Buyer agrees to pay and bear the liability for all applicable taxes associated with the marketing, sale, delivery, redemption or activation of Prepaid Subscription Rights and Subscription Certificates ordered, redeemed or activated under this PA, including but not limited to sales, use, excise, value added and similar taxes and all customs, duties or governmental impositions, but excluding taxes on Novell’s and Supplier’s net income or capital or any withholding taxes where such withholding tax is required by law. In the event Buyer is required to withhold taxes, Buyer agrees to furnish Supplier all required receipts and documentation substantiating such payment. If Supplier is required by law to remit any tax or duty upon the marketing, sale, delivery, redemption or activation of the Subscription Certificates, Buyer agrees to reimburse Supplier within 30 days after Supplier notifies Buyer in writing of such remittance.

2. Choice of Law: This PA will be governed by the substantive law, excluding private International law rules, of the Republic of Ireland. To the extent their exclusion is permissible, the terms of the United Nations Convention on the International Sale of Goods will not apply to this PA, even where they have been adopted as part of the domestic law of the country whose law governs the contract as specified herein.

3. Order of Precedence: in the event of any conflict in the applicable terms, the order of precedence will be: (i) this Participation Agreement; and (ii) the BCA.

4. Term: The term of this PA will be the same as the term of the BCA; if the BCA terminates or expires for any reason, this PA will terminate at the same time.

 

[*** Confidential Treatment Requested]


5. Assignment: Neither party shall assign this Agreement or any covenants, releases or other privileges received hereunder to any third party under action of law or otherwise, including in connection with a Change of Control, Spin Off, or the insolvency or bankruptcy of the party, except (a) either party may assign the Agreement as a whole to its parent corporation, or (b) with the written consent of the other party. Any attempted assignment In derogation of this Section shall be void.

6. Signatures: Each party acknowledges it has read this PA, understands its terms, and has full authority to enter into this Participation Agreement.

 

ACCEPTED AND AGREED TO:      ACCEPTED AND AGREED TO:
Microsoft Ireland Operations Limited      Novell Ireland Software Limited
By:                                                                                                       By:                                                                                                 

/s/ Ben Orndorff                     Jan 16, 2007

    

/s/ Lorcan Murtagh                 16 Jan 2007

Buyer Signature                     Date      Buyer Signature                       Date

Ben Orndorff

    

Lorcan Murtagh

Printed Name      Printed Name

Director

    

Finance Director

Title & Organization      Title & Organization
Buyer Address:      Buyer Address:
Atrium Building Block B      Corrig Court, Corring Road
Carmenhail Road      Sandyford Industrial Estate
Sandyford Industrial Estate, Dublin 18      Sandyford, Dublin 18
Ireland      Ireland

 

[*** Confidential Treatment Requested]

EX-10.57 6 dex1057.htm THIRD JOINT MEMORANDUM BY MICROSOFT CORPORATION AND THE REGISTRANT Third Joint Memorandum by Microsoft Corporation and the Registrant

Exhibit 10.57

Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality requested. Omissions are designated as [***]. A complete version of this exhibit has been filed separately with the United States Securities and Exchange Commission.

April 26, 2007

Third Joint Memorandum by Microsoft Corporation (“Microsoft”) and Novell, Inc. (“Novell”)

 

  Re: Expanded SLES Subscriptions available under Prepaid Subscription Rights

Background on Prior Joint Memoranda/Amendments: On November 2, 2006, Microsoft and Novell entered into a Business Collaboration Agreement (“Original BCA”). On December 28, 2006, the parties executed a Joint Memorandum (“BCA Amendment #1”) regarding participation by the parties’ respective Irish subsidiaries in the Original BCA. On January 16, 2007, the parties executed a First Amended and Restated Business Collaboration Agreement, superseding the Original BCA (such First Amended and Restated Business Collaboration Agreement, the “BCA”). Also on January 16, 2007, the parties executed a Second Joint Memorandum (“BCA Amendment #2”) regarding the impact of a January 16, 2007 participation agreement entered into between the parties’ respective Irish subsidiaries on the BCA.

This Third Joint Memorandum: This Third Joint Memorandum (“BCA Amendment #3”) is written to memorialize certain BCA changes to enable Microsoft, using Prepaid Subscription Rights, to provide Subscription Certificates to Dell that entitle certain qualified Dell customers to receive from Novell SLES Basic Subscriptions (as defined below), [***]. All capitalized terms not defined herein shall have the same meaning as set forth in the BCA.

Amendment: Solely for the purpose of transacting business with Dell under Section 4.3(a)(ii) below, the BCA is hereby modified as follows:

 

1. Section 1.18. Section 1.18 of the BCA is amended as follows:

 

  1.18 SLES Subscription” means either a SLES Priority Subscription or a SLES Standard Subscription. In addition, for the purpose of Section 4.3(a)(ii), SLES Subscription may also mean a SLES Basic Subscription. Further, where used elsewhere in the BCA (or where incorporated into the definition of terms used elsewhere in the BCA), the term “SLES Subscription” may mean a SLES Basic Subscriptions that may be made available through Microsoft’s distribution of Subscription Certificates under Section 4.3(a)(ii). As used herein, “SLES Basic Subscription” means a subscription for Shared Customers or other SLES licensees to receive the same support as that provided, as of the Effective Date, under Novell’s standard “SUSE Linux Enterprise Server Basic Subscription” subscription. [***].

 

[*** Confidential Treatment Requested]


 

2. Section 4.3(a). Section 4.3 of the BCA is amended by numbering the original paragraph as 4.3(a)(i), and by adding a new second paragraph (ii) as follows:

 

  4.3(a)(ii) Novell Further authorizes Microsoft to distribute (directly or indirectly) up to [***] Subscription Certificates for SLES Basic Subscription for delivery by Dell to Qualified Customers. As used herein. “Qualified Customers” means an existing or target Dell customer that has been approved by both Microsoft and Novell pursuant to the process outlined in Exhibit A of this BCA Amendment #3. With respect to any Qualified Customer, Microsoft may also identify [***] SLES Standard Subscriptions to be distributed to Dell, for further redistribution by Dell to such Qualified Customer. For purposes of this section 4.3(a)(ii), the [***] (as defined below) will be used by Novell to track its delivery to Microsoft of Subscription Certificates [***]. For clarification, nothing in this Section 4.3(a)(ii) restricts Microsoft from distributing, or requires Novell approval to distribute, Subscription Certificates for SLES Standard Subscriptions or SLES Priority Subscriptions to Dell or its customers as authorized under Section 4 of the BCA, but Microsoft is only authorized to distribute SLES Basic Subscriptions pursuant to the terms of this Section 4.3(a)(ii) unless the parties mutually agree otherwise in writing. The parties will agree on a process for ordering Subscription Certificates under this section 4.3(a)(ii), and will specify in such order that it is for a Qualified Customer and any other information agreed upon by the parties in writing, and any such order will constitute an order of “additional Subscription Certificates” under section 4.2 of the BCA.

 

3. Section 4.2(a). Section 4.2(a) of the BCA is amended by adding the following sentence at the end of the paragraph:

 

  4.2(a) For purposes of determining the value of Subscription Certificates delivered to Microsoft under section 4.3(a)(ii), for further delivery to Qualified Customers in conjunction with this BCA Amendment #3, each SLES Basic Subscription and SLES Standard Subscriptions shall carry a purchase price [***].

 

4. Termination: If the Novell-Dell Lighthouse Amendment dated             , 2007 (“Novell-Dell Amendment”) expires or terminates, Novell may terminate this BCA Amendment by issuing to Microsoft thirty (30) days prior written notice of the expiration or termination of the Novell-Dell Amendment. If Novell terminates this BCA Amendment #3 in such manner, then the following provisions of the BCA will continue to apply with respect to Subscription Certificates ordered by Microsoft from Novell pursuant to Section 4.3(a)(ii), prior to such termination, for distribution under Section 4.3(a)(ii), and the SLES Subscriptions associated therewith (regardless of whether activated before or after such termination): Sections 4.3(c), 6.1, 8.1, 8.2, 9, 10, 11.3, 12.3, 12.5-12.8 and Exhibit B (in accordance with its terms).

 

[*** Confidential Treatment Requested]


 

5. Effect. Except as expressly amended and supplemented by this BCA Amendment #3, the parties hereby ratify and confirm that terms and conditions of the BCA remain in full force and effect.

 

6. Counterparts. This BCA Amendment #3 may be executed in counterparts, each of which shall be deemed an original, but each together shall constitute one and the same instrument. For purposes hereof, a facsimile copy of this BCA Amendment #3, including the signature pages hereto, shall be deemed to be an original. Notwithstanding the foregoing, the parties shall deliver original signature copies of this BCA Amendment #3 to the other party as soon as practicable following execution thereof.

Accepted and Agreed by Novell, Inc.

 

  Signature:  

    /s/ Joseph A. LaSala, Jr.

  Printed Name:  

Joseph A. LaSala, Jr.

  Title:  

                General Counsel

  Date:  

                May 1, 2007

Accepted and Agreed by Microsoft Corp.

 

  Signature:  

    /s/ Bradford L. Smith

  Printed Name:  

Bradford L. Smith

  Title:  

                General Counsel

  Date:  

                April 27, 2007

 

[*** Confidential Treatment Requested]


Exhibit A

DELL CUSTOMER APPROVAL PROCESS

 

1. Dell will identify to Microsoft from time to time customers or target customers that Dell would like to have receive Subscription Certificates for SLES Basic Subscriptions, including the number of Subscription Certificates that Dell is seeking from Microsoft (collectively, the “Dell SLES Subscription Request”).

 

2. If Microsoft, in its sole discretion, approves the Dell SLES Subscription Request, Microsoft will submit the request in writing to Novell for approval.

 

3. Novell will approve in writing or reject each Dell SLES Subscription Request submitted to Novell by Microsoft within ten (10) business days of such submittal. Failure to respond will constitute an approval. Once approved by Novell, a given Dell customer or target customer shall be deemed approved by Novell for all subsequent Dell SLES Subscription Requests pertaining to that customer or target customer.

 

4. Only those Dell customers or target customers who have been approved by both Microsoft and Novell pursuant to the foregoing will constitute “Qualified Customers.”

 

[*** Confidential Treatment Requested]

EX-10.58 7 dex1058.htm FOURTH JOINT MEMORANDUM BY MICROSOFT CORPORATION AND THE REGISTRANT Fourth Joint Memorandum by Microsoft Corporation and the Registrant

Exhibit 10.58

Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality requested. Omissions are designated as [***]. A complete version of this exhibit has been filed separately with the United States Securities and Exchange Commission.

December 21, 2007

Fourth Joint Memorandum by Microsoft Corporation (“Microsoft”) and Novell, Inc. (“Novell”)

 

  Re: Incremental Prepayment for SLES Subscription Rights for Asia Pacific Region

Background on Prior Joint Memoranda/Amendments: On November 2, 2006, Microsoft and Novell entered into a Business Collaboration Agreement (“Original BCA”). The Original BCA defines the terms and conditions under which Novell will sell to Microsoft for distribution to prospective shared customers and other SUSE Linux Enterprise Server (“SLES”) licensees, the right to enroll in SLES support subscriptions (“Prepaid Subscription Rights”).

On December 28, 2006, the parties executed a Joint Memorandum (“BCA Amendment #1”) regarding participation by the parties’ respective Irish subsidiaries in the Original BCA. On January 16, 2007, the parties executed a First Amended and Restated Business Collaboration Agreement, superseding the Original BCA (such First Amended and Restated Business Collaboration Agreement, the “BCA”). Also on January 16, 2007, the parties executed a Second Joint Memorandum (“BCA Amendment #2”) regarding the impact of a January 16, 2007 participation agreement entered into between the parties’ respective Irish subsidiaries on the BCA. On May 1, 2007 the parties executed a Third Joint Memorandum (“BCA Amendment #3”) regarding certain expanded SLES Subscriptions available under Prepaid Subscription Rights.

This Fourth Joint Memorandum: This Fourth Joint Memorandum (“BCA Amendment #4”) is entered into as of December 21, 2007 (“4th Effective Date”) and is written to promote the use of SLES in the Asia Pacific region. All capitalized terms not defined herein shall have the same meaning as set forth in the BCA.

Amendment: The following BCA amendments apply solely to the incremental purchase of SLES Subscription certificates (and distribution of such certificates) by Microsoft [***]. The BCA (including all amendments thereto) is hereby modified as follows:

 

1. Section 4.1 of the BCA is amended by inserting the following as the last sentence:

Solely with respect to the SLES Subscription certificates purchased under this BCA Amendment #4 for distribution in the Asia Pacific region, Microsoft’s purchase price for the right to enroll in a single SLES Subscription shall equal [***].

 

2. Section 4.2 of the BCA is amended by adding the following as a new section 4.2(d):

 

  4.2(d) Microsoft will purchase from Novell [***] Prepaid Subscription Rights for delivery to Shared Customers or SLES licensees in the Asia Pacific region, including through any Microsoft-authorized reseller (the “Asia Pacific Commitment”). Microsoft may use up to half (or such other proportion on which the parties may otherwise agree) of the Asia Pacific Commitment to purchase Multi-Year Subscriptions. Microsoft will pay Novell the Asia Pacific Commitment [***]. Novell will deliver to Microsoft Subscription Certificates reflecting such Prepaid Subscription Rights as follows: [***], and will include as part of such delivery any Multi-Year Subscriptions requested by Microsoft. Microsoft may also order delivery of additional Subscription Certificates purchased through the Asia Pacific Commitment [***].

 

[*** Confidential Treatment Requested]


 

3. The BCA is amended by adding the following as a new section 4.3(e):

 

  4.3(e) Territorial Restriction. For the SLES Subscription certificates made available under this BCA Amendment #4, the parties anticipate sale and delivery of all such certificates to customers located in the People’s Republic of China. If, however, opportunities arise for selling and delivering the certificates to other countries in the Asia Pacific region (e.g., Japan), the parties agree to execute any necessary agreements to enable the proper Novell and Microsoft entities to participate as sellers and buyers of record in such countries.

 

4.

Marketing. The parties further agree to develop a mutually acceptable field marketing plan, [***], to promote the sale and delivery of SLES Subscription certificates in the Asia Pacific region. Within 30 days after the 4th Memorandum Effective Date, the parties will define a sales and marketing plan for this Asia Pacific Commitment.

 

5. Termination: This BCA Amendment #4 shall run concurrently with the Agreement and be subject to the same termination provisions.

 

6. Effect. Except as expressly amended and supplemented by this BCA Amendment #4, the parties hereby ratify and confirm that terms and conditions of the BCA remain in full force and effect.

 

7. Counterparts. This BCA Amendment #4 may be executed in counterparts, each of which shall be deemed an original, but each together shall constitute one and the same instrument. For purposes hereof, a facsimile copy of this BCA Amendment #4, including the signature pages hereto, shall be deemed to be an original. Notwithstanding the foregoing, the parties shall deliver original signature copies of this BCA Amendment #4 to the other party as soon as practicable following execution thereof.

 

Accepted and Agreed by Novell, Inc.      Accepted and Agreed by Microsoft Corp.
Signature: /s/ Joseph A. LaSala Jr.      Signature: /s/ Mary Snapp              
Printed Name: Joseph A. LaSala Jr.      Printed Name: Mary Snapp            
Title: General Counsel      Title: Corporate Vice President & Deputy General Counsel
Date: 12/21/07      Date: 12/21/07                            

 

[*** Confidential Treatment Requested]

EX-10.59 8 dex1059.htm FIFTH JOINT MEMORANDUM BY MICROSOFT CORPORATION AND THE REGISTRANT Fifth Joint Memorandum by Microsoft Corporation and the Registrant

Exhibit 10.59

Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality requested. Omissions are designated as [***]. A complete version of this exhibit has been filed separately with the United States Securities and Exchange Commission.

January 16, 2008

Fifth Joint Memorandum by Microsoft Corporation (“Microsoft”) and Novell, Inc. (“Novell”)

 

  Re: Expanded SLES Subscriptions available under Prepaid Subscription Rights

Background on Prior Joint Memoranda/Amendments: On November 2, 2006, Microsoft and Novell entered into a Business Collaboration Agreement (“Original BCA”). On December 28, 2006, the parties executed a Joint Memorandum

(“BCA Amendment #1”) regarding participation by the parties’ respective Irish subsidiaries in the Original BCA. On January 16, 2007, the parties executed a First Amended and Restated Business Collaboration Agreement, superseding the Original BCA (such First Amended and Restated Business Collaboration Agreement, the “BCA”). Also on January 16, 2007. the parties executed a Second Joint Memorandum (“BCA Amendment #2”) regarding the impact of a January 16, 2007 participation agreement entered into between the parties’ respective Irish subsidiaries on the BCA. On May 1, 2007 the parties executed a Third Joint Memorandum (“BCA Amendment #3”) regarding certain expanded SLES Subscriptions available under Prepaid Subscription Rights. On December 21, 2007, the parties executed a Fourth joint Memorandum (“BCA Amendment #4”) regarding promotion of SLES in the Asia Pacific region.

This Fifth Joint Memorandum: This Fifth Joint Memorandum (“BCA Amendment #5”) is written to memorialize certain BCA changes to enable Microsoft, using a portion of its Prepaid Subscription Rights, to provide Subscription Certificates that entitle certain customers to receive from Novell SLES High Performance Computing (“HPC”) Subscriptions (as defined below), as well as to memorialize the agreed-upon pricing for such Subscription Certificates for purposes of Section 4.2(a) of the BCA. All capitalized terms not defined herein shall have the same meaning as set forth in the BCA.

Amendment: Solely for the purpose of creating a HPC Subscription under Section 4.3(a)(iii) below, the BCA is hereby modified as follows:

 

1. Section 1.18. Section 1.18 of the BCA is amended by adding the following to the end of the subsection:

 

  1.18 In addition, for the purpose of Section 4.3(a)(iii), SLES Subscription may also mean a SLES HPC Subscription. Further, where used elsewhere in the BCA (or where incorporated into the definition of terms used elsewhere in the BCA), the term “SLES Subscription” may mean a SLES HPC Subscription that may be made available through Microsoft’s distribution of

 

[*** Confidential Treatment Requested]


 

Subscription Certificates under Section 4.3(a)(iii). As used herein, “SLES HPC Subscription” means a subscription for Shared Customers or other SLES licensees to receive the same support as that provided, as of the Effective Date, under Novell’s standard “SUSE Linux Enterprise Server HPC Subscription” offering. A SLES HPC Subscription is equivalent to a SLES Priority Subscription as defined in Section 1.16, with the exception that the duration of each SLES HPC Subscription is for three years only.

 

2. Section 4.3(a). Section 4.3 of the BCA is amended by adding a new third paragraph (iii) as follows:

 

  4.3(a)(iii) Novell further authorizes Microsoft to distribute (directly or indirectly) Subscription Certificates for SLES HPC Subscriptions to HPC Customers. As used herein, an “HPC Customer” is a Shared Customer or other SLES licensee utilizing one or more high performance computing applications (as defined by Novell) and meeting mutually approved sales guidelines of the Novell and Microsoft sales teams. It is the intention of the parties that an HPC Customer will be a new Novell customer, i.e. not having purchased operating system software from Novell in the previous 36 months, and will place an initial minimum order of 500 subscription units. For clarification, nothing in this Section 4.3(a)(iii) restricts Microsoft from distributing, or requires Novell approval to distribute, Subscription Certificates for SLES Standard Subscriptions or SLES Priority Subscriptions to its customers as authorized under Section 4 of the BCA, but Microsoft is only authorized to distribute SLES HPC Subscriptions pursuant to the terms of this Section 4.3(a)(iii) unless the parties mutually agree otherwise in writing. The parties will agree on a process for ordering SLES HPC Subscription Certificates under this section 4.3(a)(iii), and will specify in such order that it is for an HPC Customer and any other information agreed upon by the parties in writing. [***] shall be available as Prepaid Subscription Rights [***], and any such order will constitute an order of “additional Subscription Certificates” under section 4.2 of the BCA. [***], any future orders for SLES HPC Subscriptions will follow the same pricing set forth in section 4.2(a) below.

 

3. Section 4.2(a). Section 4.2(a) of the BCA is amended by adding the following sentence at the end of the paragraph:

 

  4.2(a) For purposes of determining the value, or purchase price, of Subscription Certificates delivered to Microsoft under section 4.3(a)(iii), for further delivery to HPC, Customers in conjunction with this BCA Amendment #5, each SLES HPC Subscription shall [***].

 

[*** Confidential Treatment Requested]


 

4. Effect. Except as expressly amended and supplemented by this BCA Amendment #5, the parties hereby ratify and confirm that terms and conditions of the BCA remain in full force and effect.

 

5. Counterparts. This BCA Amendment #5 may be executed in counterparts, each of which shall be deemed an original, but each together shall constitute one and the same instrument. For purposes hereof, a facsimile copy of this BCA Amendment #5, including the signature pages hereto, shall be deemed to be an original. Notwithstanding the foregoing, the parties shall deliver original signature copies of this BCA Amendment #5 to the other party as soon as practicable following execution thereof.

Accepted and Agreed by Novell, Inc.

 

Signature:  

/s/ Ryan Richards

Printed Name:  

Ryan Richards

Title:  

VP and Acting General Counsel

Date:  

1-17-08

Accepted and Agreed by Microsoft Corp.

 

Signature:  

/s/ Horacio Gutierrez

Printed Name:  

Horacio Gutierrez

Title:  

Vice President and Deputy General Counsel

Date:  

January 16, 2008

 

[*** Confidential Treatment Requested]

EX-10.60 9 dex1060.htm SIXTH JOINT MEMORANDUM BY MICROSOFT CORPORATION AND THE REGISTRANT Sixth Joint Memorandum by Microsoft Corporation and the Registrant

Exhibit 10.60

Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality requested. Omissions are designated as [***]. A complete version of this exhibit has been filed separately with the United States Securities and Exchange Commission.

April 10, 2008

Sixth Joint Memorandum by Microsoft Corporation (“Microsoft”) and Novell, Inc. (“Novell”)

 

  Re:   Expansion of Territory for Existing Asia Pacific Commitment

Background on Prior Joint Memoranda/Amendments: On November 2, 2006, Microsoft and Novell entered into a Business Collaboration Agreement (“Original BCA”). The Original BCA defines the terms and conditions under which Novell will sell to Microsoft for distribution to prospective shared customers and other SUSE Linux Enterprise Server (“SLES”) licensees, the right to enroll in SLES support subscriptions (“Prepaid Subscription Rights”).

On December 28, 2006, the parties executed a Joint Memorandum (“BCA Amendment #1”) regarding participation by the parties’ respective Irish subsidiaries in the Original BCA. On January 16, 2007, the parties executed a First Amended and Restated Business Collaboration Agreement, superseding the Original BCA (such First Amended and Restated Business Collaboration Agreement, the “BCA”). Also on January 16, 2007, the parties executed a Second Joint Memorandum (“BCA Amendment #2”) regarding the impact of a January 16, 2007 participation agreement entered into between the parties’ respective Irish subsidiaries in the BCA. On May 1, 2007 the parties executed a Third Joint Memorandum (“BCA Amendment #3”) regarding certain expanded SLES Subscriptions available under Prepaid Subscription Rights. On December 21, 2007, the parties executed a Fourth Joint Memorandum (“BCA Amendment #4”) regarding promotion of SLES Subscriptions in the Asia Pacific region. On January 17, 2007, the parties executed a Fifth Joint Memorandum (“BCA Amendment #5”) regarding the creation of SLES High Performance Computing Subscriptions.

This Sixth Joint Memorandum: This Sixth Joint Memorandum (“BCA Amendment #6”) is entered into as of March 24, 2008 (“6th Memorandum Effective Date”) and is written to modify the territorial restrictions outlined in BCA Amendment #4. All capitalized terms not defined herein shall have the same meaning as set forth in the BCA or the applicable amendment.

Amendment: The following BCA amendments apply solely to modify the territorial restrictions on the distribution of the Asia Pacific Commitment, as originally provided for under BCA Amendment #4. The BCA (and all amendments thereto) is hereby modified as follows:

 

1. Section 4.1 is amended by inserting the following as the last sentence:

With respect to all SLES Subscription certificates purchased under BCA Amendment #4, as amended to provide for worldwide distribution by this BCA Amendment #6, Microsoft’s purchase price for the right to enroll in a single SLES Subscription shall equal [***].

 

2. Section 4.2(d) of the BCA, introduced as a new subsection in BCA Amendment #4, is amended by inserting the following at the end of the paragraph:

Novell will deliver to Microsoft Subscription Certificates reflecting such Prepaid Subscription Rights as follows: [***], Novell will deliver Subscription Certificates equivalent in value to [***] the Asia Pacific Commitment, and will include as part of such delivery any Multi-Year Subscriptions requested by Microsoft. Microsoft may also order delivery of additional Subscription Certificates purchased through the Asia Pacific Commitment (i.e., a number of Subscription Certificates in [***] Asia Pacific Commitment), in which case [***]. With respect

 

[*** Confidential Treatment Requested]


to the total Prepaid Subscription Rights acquired by Microsoft under BCA Amendment #4, as of January 1, 2008, Microsoft may distribute the entire original Asia Pacific Commitment to Shared Customers and SLES licensees located anywhere in the world, subject to the provision below.

 

3. Section 4.3(e) of the BCA is amended by inserting the following as the last sentence:

With respect to the Prepaid Subscription Rights acquired by Microsoft under BCA Amendment #4, the territorial restriction is amended by this BCA Amendment #6 and is hereby eliminated such that Microsoft is authorized to distribute the SLES Subscription certificates on a worldwide basis. Such certificates may be distributed to Shared Customers or SLES licensees located in Europe, the Middle East, or Africa provided a separate agreement between the parties’ respective Irish subsidiaries is first negotiated and executed with respect to that portion of the [***] SLES Subscription certificates expected to be marketed and sold to EMEA customers.

 

4.

Marketing. The parties further agree to develop a mutually acceptable field marketing plan, using a portion of the marketing funds available under section 3.1(b) of the BCA, to promote the sale and delivery of SLES Subscription certificates worldwide. Within 30 days after the 6th Memorandum Effective Date, the parties will define a sales and marketing plan for worldwide distribution of SLES Subscriptions.

 

5. Termination: This BCA Amendment #6 shall run concurrently with the BCA and be subject to the same termination provisions.

 

6. Effect. Except as expressly amended and supplemented by this BCA Amendment #6, the parties hereby ratify and confirm that terms and conditions of the BCA remain in full force and effect.

 

7. Counterparts. This BCA Amendment #6 may be executed in counterparts, each of which shall be deemed an original, but each together shall constitute one and the same instrument. For purposes hereof, a facsimile copy of this BCA Amendment #6, including the signature pages hereto, shall be deemed to be an original. Notwithstanding the foregoing, the parties shall deliver original signature copies of this BCA Amendment #6 to the other party as soon as practicable following execution thereof.

 

Accepted and Agreed by Novell, Inc.   

Accepted and Agreed by Microsoft Corp.

 

Signature:   /s/ Ryan L. Richards                                        Signature: /s/ Bradford L. Smith                            
Printed Name: Ryan L. Richards                                              Printed Name: Bradford L. Smith                            
Title: VP & Acting General Counsel                                    Title: General Counsel                                             
Date: 04/10/08                                                                         Date: 04/10/08                                                         

 

[*** Confidential Treatment Requested]

EX-10.61 10 dex1061.htm SEVENTH JOINT MEMORANDUM BY MICROSOFT CORPORATION AND THE REGISTRANT Seventh Joint Memorandum by Microsoft Corporation and the Registrant

Exhibit 10.61

Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality requested. Omissions are designated as [***]. A complete version of this exhibit has been filed separately with the United States Securities and Exchange Commission.

December 8, 2008

Seventh Joint Memorandum by Microsoft Corporation (“Microsoft”) and Novell, Inc. (“Novell”)

 

  Re: Modifications to Multi-Year Subscription Restriction and Delivery Schedule

Background on Prior Joint: Memoranda/Amendments: On November 2, 2006, Microsoft and Novell entered into a Business Collaboration Agreement (“Original BCA”). The Original BCA defines the terms and conditions under which Novell will sell to Microsoft for distribution to prospective shared customers and other SUSE Linux Enterprise Server (“SLES”) licensees, the right to enroll in SLES support subscriptions (“Prepaid Subscription Rights”).

On December 28, 2006, the parties executed a Joint Memorandum (“BCA Amendment #1”) regarding participation by the parties respective Irish subsidiaries in the Original BCA. On January 16, 2007, the parties executed a First Amended and Restated Business Collaboration Agreement, superseding tee Original BOA (such First Amended and Restated Business Collaboration Agreement, the “BCA”). Also on January 16, 2007, the parties executed a Second Joint Memorandum (“BCA Amendment #2”) regarding the impact of a January 16, 2007 participation agreement entered into between the parties’ respective Irish subsidiaries in the BCA. On May 1, 2007 the parties executed a Third Joint Memorandum (“BCA Amendment #3”) regarding certain expanded SLES subscriptions available under Prepaid Subscription Rights. On December 21, 2007, the parties executed a Fourth Joint Memorandum (“BCA Amendment #4”) regarding promotion of SLES licenses in the Asia Pacific region. On January 17, 2008, the parties executed a Fifth Joint Memorandum (“BCA Amendment #5”) regarding the creation of SLES High Performance Computing Subscriptions, On April 10, 2008, the parties executed a Sixth Joint Memorandum (“BCA Amendment #6”) regarding the territorial restrictions on the Asia Pacific Commitment.

This Seventh Joint Memorandum: This Seventh Joint Memorandum (“BCA Amendment #7”) is entered into as of December 8, 2008 (“7th Memorandum Effective Date”) and is written to modify the multi-year subscription and delivery schedule required by the BCA. All capitalized terms not defined herein shall have the same meaning as set forth in the BCA. or the applicable amendment.

Amendment: The following BCA amendments apply solely to modify the multi-year subscription restriction and delivery schedule for all Prepaid Subscription Rights remaining available for distribution under the BCA. The BCA (and all amendments thereto is hereby modified as follows:

 

  1. Section 4.2(a) is amended by deleting the following, second sentence of the paragraph:

Microsoft may use [***] (or such other proportion on which the parties may otherwise agree) of the Total Minimum Commitment to purchase Prepaid Subscription Rights for SLES Subscriptions with a duration of more then one (“Multi-Year Subscriptions”).

 

  2. Section 4.2(a) of the BCA is amended by replacing the final two sentences of the paragraph with the following language:

Notwithstanding anything to the contrary, the parties will recalculate, [***], Microsoft’s minimum quarterly purchase/ordering requirement according to [***].

 

  3. Termination: This BCA Amendment #7 shall run concurrently with the BCA and be subject to the same termination provisions.

 

[*** Confidential Treatment Requested]


 

  4. Effect. Except as expressly amended and supplemented by this BCA Amendment #7, the parties hereby ratify and confirm that terms and conditions of the BCA remain in full force and effect.

 

  5. Counterparts. This BCA Amendment #7 may be executed in counterparts, each of which shall be deemed an original, but each together shall constitute one and the same instrument. For purposes hereof, a facsimile copy of this BCA Amendment #7, including the signature pages hereto, shall be deemed to be an original. Nothwithstanding the foregoing, the parties shall deliver original signature copies of this BCA Amendment #7 to the other party as soon as practicable following execution thereof.

 

Accepted and Agreed by Novell, Inc.

 

     

Accepted and Agreed by Microsoft Corp.

 

Signature:   /s/ Ryan J. Taylor                                           Signature: /s/ Horacio Gutierrez                                    
Printed Name:  Ryan J. Taylor                                           Printed Name: Horacio Gutierrez                                    
Title: Director, Contracts                                                    Title: VP and Deputy General Counsel Microsoft Corp.
Date: 12/22/2008                                                                Date: 12/8/2008                                                         

 

[*** Confidential Treatment Requested]

EX-10.62 11 dex1062.htm EIGHTH JOINT MEMORANDUM BY MICROSOFT CORPORATION AND THE REGISTRANT Eighth Joint Memorandum by Microsoft Corporation and the Registrant

Exhibit 10.62

January 13, 2009

Eighth Joint Memorandum by Microsoft Corporation (“Microsoft”) and Novell, Inc. (“Novell”)

 

  Re: NEC Corporation’s distribution of Basic SLES Subscriptions

Background on Prior Joint Memoranda/Amendments: On November 2, 2006, Microsoft and Novell entered into a Business Collaboration Agreement (“Original BCA”). The Original BCA defines the terms and conditions under which Novell will sell to Microsoft for distribution to prospective shared customers and other SUSE Linux Enterprise Server (“SLES”) licensees, the right to enroll in SLES support subscriptions (“Prepaid Subscription Rights”).

On December 28, 2006, the parties executed a Joint Memorandum (“BCA Amendment #1”) regarding participation by the parties’ respective Irish subsidiaries in the Original BCA. On January 16, 2007, the parties executed a First Amended and Restated Business Collaboration Agreement, superseding the Original BCA (such First Amended and Restated Business Collaboration Agreement, the “BCA”). Also on January 16, 2007, the parties executed a Second Joint Memorandum (“BCA Amendment #2”) regarding the impact of a January 16, 2007 participation agreement entered into between the parties’ respective Irish subsidiaries in the BCA. On May 1, 2007 the parties executed a Third Joint Memorandum (“BCA Amendment #3”) regarding certain expanded SLES Subscriptions available under Prepaid Subscription Rights. On December 21, 2007, the parties executed a Fourth Joint Memorandum (“BCA Amendment #4”) regarding promotion of SLES licenses in the Asia Pacific region. On January 17, 2008, the parties executed a Fifth Joint Memorandum (“BCA Amendment #5”) regarding the creation of SLES High Performance Computing Subscriptions. On April 10, 2008, the parties executed a Sixth Joint Memorandum (“BCA Amendment #6”) regarding the territorial restrictions on the Asia Pacific Commitment. On December 22, 2008, the parties executed a Seventh Joint Memorandum (“BCA Amendment #7”) regarding a modification of the multi-year subscription and delivery schedule called for in the original BCA.

This Eighth Joint Memorandum: This Eighth Joint Memorandum (“BCA Amendment #8”) is written to memorialize certain BCA changes to enable Microsoft, using Prepaid Subscription Rights, to provide Basic Subscription Certificates (as defined below) to NEC Corporation (“NEC”). All capitalized terms not defined herein shall have the same meaning as set forth in the BCA.

Amendment: The BCA is hereby modified as follows:

 

  1. Section 1.18. Section 1.18 of the BCA is amended as follows:

SLES Subscription” means either a SLES Priority Subscription or a SLES Standard Subscription. In addition, for the purpose of Sections 4.3(a)(ii) and 4.3(a)(iv), SLES Subscription may also mean a SLES Basic Subscription. Further, where used elsewhere in the BCA (or where incorporated into the definition of terms used elsewhere in the BCA), the term “SLES Subscription” may mean a SLES Basic Subscription that may be made available through

 

Page 1 of 3


Microsoft’s distribution of Subscription Certificates under Section 4.3(a)(ii) and/or Section 4.3(a)(iv). As used herein, “SLES Basic Subscription” means a subscription for Shared Customers or other SLES licensees to receive the same support as that provided, as of the Effective Date, under Novell’s standard “SUSE Linux Enterprise Server Basic Support” subscription. A SLES Basic Subscription does not include any technical support (other than 30 days of installation support).

In addition, for the purpose of Section 4.3(iii), SLES Subscription may also mean a SLES HPC Subscription. Further, where used elsewhere in the BCA (or where incorporated into the definition of terms used elsewhere in the BCA), the term “SLES Subscription” may mean a SLES HPC Subscription that may be made available through Microsoft’s distribution of Subscription Certificates under Section 4.3(a)(iii). As used herein, “SLES HPC Subscription” means a subscription for Shared Customers or other SLES licensees to receive the same support as that provided, as of the Effective Date, under Novell’s standard “SUSE Linux Enterprise Server HPC Subscription” offering. A SLES HPC Subscription is equivalent to a SLES Priority Subscription as defined in Section 1.16 with the exception that the duration of each SLES HPC Subscription is for three years only.

 

  2. Section 4.3(a). Section 4.3(a) of the BCA is amended as follows:

 

  a. Section 4.3(a)(ii). Section 4.3(a)(ii) is amended by adding the following sentence at the end of the paragraph:

For purposes of this subsection 4.3(a)(ii), the duration of the SLES Basic Subscription certificates to be delivered by Dell are for one year only.

 

  b. Section 4.3(a)(iv). A new Section 4.3(a)(iv) is created by adding a new fourth paragraph (iv) to the end of section 4.3(a):

Novell further authorizes Microsoft to distribute (directly or indirectly) Subscription Certificates for SLES Basic Subscriptions for delivery by NEC to customers. For clarification, nothing in this Section 4.3(a)(iv) restricts Microsoft from distributing, or requires Novell approval to distribute, Subscription Certificates for SLES Standard Subscriptions or SLES Priority Subscriptions to NEC or its customers as authorized under Section 4 of the BCA, but Microsoft is only authorized to distribute SLES Basic Subscriptions pursuant to the terms of this Section 4.3(a)(iv) unless the parties mutually agree otherwise in writing. The parties will agree on a process for ordering Subscription Certificates under this section 4.3(a)(iv) and any such order will constitute an order of “additional Subscription Certificates” under section 4.2 of the BCA. For purposes of this subsection 4.3(a)(iv), the duration of the SLES Basic Subscription certificates to be delivered by NEC are for one year and/or three years.

 

  3. Effect. Except as expressly amended and supplemented by this BCA Amendment #8, the parties hereby ratify and confirm that terms and conditions of the BCA remain in full force and effect.

 

Page 2 of 3


  4. Counterparts. This BCA Amendment #8 may be executed in counterparts, each of which shall be deemed an original, but each together shall constitute one and the same instrument. For purposes hereof, a facsimile copy of this BCA Amendment #8, including the signature pages hereto, shall be deemed to be an original. Notwithstanding the foregoing, the parties shall deliver original signature copies of this BCA Amendment #8 to the other party as soon as practicable following execution thereof.

 

Accepted and Agreed by Novell, Inc.
Signature:  

/s/ Ryan J. Taylor

Printed Name:  

Ryan J. Taylor

Title:  

Director, Contracts

Date:  

23 Jan 09

Accepted and Agreed by Microsoft Corp.
Signature:  

/s/ Horacio Gutierrez

Printed Name:  

Horacio Gutierrez

Title:  

Deputy General Counsel Microsoft  Corp.

Date:  

01/23/2009

 

Page 3 of 3

EX-10.63 12 dex1063.htm FIRST JOINT MEMORANDUM First Joint Memorandum

Exhibit 10.63

Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality requested. Omissions are designated as [***]. A complete version of this exhibit has been filed separately with the United States Securities and Exchange Commission.

February 23, 2009

First Joint Memorandum by Microsoft Ireland Operations Limited (“Buyer”) and Novell Ireland Software Limited (“Supplier”)

 

  Re: Expansion of Territory for Existing Asia Pacific Commitment

Background: On January 16, 2007, Buyer and Supplier entered into a Participation Agreement (“Participation Agreement”). The Participation Agreement defines the terms and conditions under which Supplier will sell to Buyer for distribution to prospective shared customers and other SUSE Linux Enterprise Server (“SLES”) licensees, the right to enroll in SLES support subscriptions (“Prepaid Subscription Rights”).

This First Joint Memorandum: This First Joint Memorandum (“Participation Amendment #1”) is entered into as of February 23, 2009 (“PA Amendment #1 Effective Date”) and is written to:

 

  (a) address the distribution of certain additional SLES Subscription Certificates in line with BCA Amendment #6 of April 10th, 2008 between Microsoft Corporation and Novell, Inc.; and

 

  (b) modify the multi-year subscription and delivery schedule required by the BCA, in line with BCA Amendment #7 of December 22, 2008 between Microsoft Corporation and Novell, Inc.

All capitalized terms not defined herein shall have the same meaning as set forth in the Participation Agreement.

Amendments: The BCA provisions, as incorporated by reference in the Participation Agreement, are hereby modified as follows:

 

  1. Section 4.1 is amended by inserting at the end of such Section the following:

The parties acknowledge that [***] paid by Microsoft Corporation (“Microsoft”) to Novell, Inc. (“Novell”) under that certain BCA Amendment #4 entered into by and between Microsoft and Novell as of December 21, 2007 (“BCA Amendment #4”) for Prepaid Subscription Rights, has been transferred from Novell, Inc. to Supplier. In conjunction with the transfer of these funds [***] (the “Amendment #4 Funds”) from Novell to Supplier, Supplier agrees to deliver to Buyer, under the Participation Agreement, Subscription Certificates reflecting Prepaid Subscription Rights purchased by Buyer with such Amendment #4 Funds (with the purchase price for each right to enroll in a single SLES Subscription equaling [***] (the “Amendment #4 Certificates”). Delivery of these Subscription Certificates will be as follows:

 

  (a) in the October-December 2008 quarter, Supplier will deliver Subscription Certificates equivalent in value to [***], and will include as part of such delivery any Multi-Year Subscriptions requested by Buyer.

 

  (b) starting in the January-March 2009 quarter and for each remaining quarter during the Term, Supplier will deliver Subscription Certificates equivalent in value to [***], and will include as part of such delivery any Multi-Year Subscriptions requested by Buyer. Buyer may also order delivery of additional Amendment #4 Certificates (i.e., a number of Subscription Certificates in a given quarter that is greater in value than [***]. Buyer may distribute the Amendment #4 Certificates in Europe, the Middle East or Africa.

 

[*** Confidential Treatment Requested]

Page 1 of 2


The following amendments apply solely to modify the multi-year subscription restriction and delivery schedule for all Prepaid Subscription Rights remaining available for distribution under the Participation Agreement. The following BCA provisions, as incorporated by reference in the Participation Agreement, are hereby modified as follows:

 

  2. Section 4.2(a) is amended by deleting the following, second sentence of the paragraph:

Microsoft may use [***] (or such other proportion on which the parties may otherwise agree) of the Total Minimum Commitment to purchase Prepaid Subscription Rights for SLES Subscriptions with a duration of more than one year (“Multi-Year Subscriptions”).

 

  3. Section 4.2(a) is amended by replacing the final two sentences of the paragraph with the following language:

Notwithstanding anything to the contrary, the parties will recalculate, [***], Microsoft’s minimum quarterly purchase/ordering requirement according to [***].

 

  4. Termination. This Participation Amendment #1 shall run concurrently with the Participation Agreement and be subject to the same termination provisions.

 

  5. Effect. Except as expressly amended and supplemented by this Participation Amendment #1, the parties hereby ratify and confirm that the terms and conditions of the Participation Agreement remain in full force and effect.

 

  6. Counterparts. This Participation Amendment #1 may be executed in counterparts, each of which shall be deemed an original, but each together shall constitute one and the same instrument. For purposes hereof, a facsimile copy of this Participation Amendment #1, including the signature pages hereto, shall be deemed to be an original. Notwithstanding the foregoing, the parties shall deliver original signature copies of this Participation Amendment #1 to the other party as soon as practicable following execution thereof.

 

Accepted and Agreed by Supplier.    Accepted and Agreed by Buyer.
(Novell Ireland Software Limited)    (Microsoft Ireland Operations Limited)
Signature:     /s/ Lorcan Murtagh                                        Signature:     /s/ Tom Heerey                                                         
Printed Name: Lorcan Murtagh                                            Printed Name: Tom Heerey                                                         
Title:                                                                                          Title: Director, Attorney, Legal & Corporate Affairs        
Date: 9 April 2009                                                                     Date: 23 Feb 2009                                                                         

 

[*** Confidential Treatment Requested]

Page 2 of 2

EX-10.64 13 dex1064.htm NINTH JOINT MEMORANDUM BY MICROSOFT CORPORATION AND THE REGISTRANT Ninth Joint Memorandum by Microsoft Corporation and the Registrant

Exhibit 10.64

Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality requested. Omissions are designated as [***]. A complete version of this exhibit has been filed separately with the United States Securities and Exchange Commission.

January 25, 2010

Ninth Joint Memorandum by Microsoft Corporation (“Microsoft”) and Novell, Inc. (“Novell”)

 

  Re: Purchase of Additional SLES Subscriptions and Modified Discount

Background on Prior Joint Memoranda/Amendments:

 

   

On November 2, 2006, Microsoft and Novell entered into a Business Collaboration Agreement (“Original BCA”). The Original BCA defines the terms and conditions under which Novell will sell to Microsoft for distribution to prospective shared customers and other SUSE Linux Enterprise Server (“SLES”) licensees, the right to enroll in SLES support subscriptions (“Prepaid Subscription Rights”).

 

   

On December 28, 2006, the parties executed a Joint Memorandum (“BCA Amendment #1”) regarding participation by the parties’ respective Irish subsidiaries in the Original BCA.

 

   

On January 16, 2007, the parties executed a First Amended and Restated Business Collaboration Agreement, superseding the Original BCA (such First Amended and Restated Business Collaboration Agreement, the “BCA”).

 

   

Also on January 16, 2007, the parties executed a Second Joint Memorandum (“BCA Amendment #2”) regarding the impact of a January 16, 2007 participation agreement entered into between the parties’ respective Irish subsidiaries in the BCA.

 

   

On May 1, 2007 the parties executed a Third Joint Memorandum (“BCA Amendment #3”) regarding certain expanded SLES Subscriptions available under Prepaid Subscription Rights.

 

   

On December 21, 2007, the parties executed a Fourth Joint Memorandum (“BCA Amendment #4”) regarding promotion of SLES licenses in the Asia Pacific region.

 

   

On January 17, 2008, the parties executed a Fifth Joint Memorandum (“BCA Amendment #5”) regarding the creation of SLES High Performance Computing Subscriptions.

 

   

On April 10, 2008, the parties executed a Sixth Joint Memorandum (“BCA Amendment #6”) regarding the territorial restrictions on the Asia Pacific Commitment.

 

   

On December 22, 2008, the parties executed a Seventh Joint Memorandum (“BCA Amendment #7”) regarding a modification of the multi-year subscription and delivery schedule called for in the original BCA.

 

   

On January 23, 2009, the parties executed an Eighth Join Memorandum (“BCA Amendment #8”) regarding Basic Subscription Certificates to enable sales by NEC Corporation.

 

[*** Confidential Treatment Requested]

Page 1 of 2


Amendment:

The parties agree to further amend the BCA as follows solely to enable the purchase and resale of additional SLES Subscription certificates. All capitalized terms not defined herein shall have the same meaning as set forth in the BCA (as amended).

 

  1. Section 4.1. Section 4.1 of the BCA is amended by adding the sentence below at the end of the existing text:

“Effective as of the date of this Amendment #9, Microsoft’s purchase price for the right to enroll in a single SLES Subscription under the BCA shall equal [***] shall remain unchanged).”

 

  2. Section 4.2. Section 4.2 of the BCA is amended by adding the following new subsection 4.2(e):

“(e) Microsoft will purchase from Novell [***] of additional Prepaid Subscription Rights (“Amendment #9 Purchase”). Microsoft will pay Novell for such Amendment #9 Purchase no later than [***], and delivery of Subscription Certificates to Microsoft will be on an as-needed basis until the earlier of exhaustion of the Amendment #9 Purchase or [***]. If Microsoft is unable to sell some or all of the Subscription Certificates purchased under this Amendment #9 by [***].

 

  3. Effect. Except as expressly amended and supplemented by this BCA Amendment #9, the parties hereby ratify and confirm that terms and conditions of the BCA (as amended) remain in full force and effect.

 

  4. Counterparts. This BCA Amendment #9 may be executed, each of which shall be deemed an original, but each together shall constitute one and the same instrument. For purposes hereof, facsimile copy of this BCA, Amendment #9, including the signature pages hereto, shall be deemed to be an original. Notwithstanding the foregoing, the parties shall deliver original signature copies of this BCA Amendment #9 to the other party as soon as practicable execution thereof.

Accepted and Agreed by Novell, Inc.

 

Signature:  

/s/ Ron Warren

Printed Name:  

Ron Warren

Title:  

    Director, Contracts

Date:  

        01/25/10

Accepted and Agreed by Microsoft Corp.

 

Signature:  

/s/ Horacio Gutierrez

Printed Name:  

Horacio Gutierrez

Title:  

Corporate Vice President and Deputy

 

General Counsel

Date:  

    01/25/10

 

[*** Confidential Treatment Requested]

Page 2 of 2

EX-10.65 14 dex1065.htm STATEMENT OF WORK NO. 2 UNDER THE TECHNICAL COLLABORATION AGREEMENT Statement of Work No. 2 under the Technical Collaboration Agreement

Exhibit 10.65

Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality requested. Omissions are designated as [***]. A complete version of this exhibit has been filed separately with the United States Securities and Exchange Commission.

Statement of Work No.2

This SOW2 is entered into by and between Microsoft and Novell on the SOW2 Effective Date under the TCA.

 

  1. PROJECT TITLE AND DESCRIPTION

 

  (a) Title. Directory and Identity Interoperability

 

  (b) Description. In this Additional Project, Novell will provide interoperability between the Current ADFS and Access Manager via WS-Federation, and between the Current WCS and the Novell Products via ISIPvl.0.

 

  2. DEFINITIONS

 

  (a) Microsoft” means Microsoft Corporation.

 

  (b) Novell” means Novell, Inc.

 

  (c) Additional Project” is defined in section 5.5 of the TCA.

 

  (d) TCA” means the Technical Collaboration Agreement between the parties with an effective date as of November 2, 2006.

(e)

 

  (f) Current” means as of the SOW2 Effective Date.

 

  (g) SOW2” means this Statement of Work No. 2.

 

  (h) SOW2 Effective Date” means the first date by which both Parties have executed this SOW2.

 

  (i) ADFS” means the Microsoft Active Directory Federation Services component of Windows Server 2003 R2.

 

  (j) Access Manager” means a new version of, or update to a prior version of, Novell’s Access Manager product.

 

  (k) WS-Federation” means, with respect to the WS-Federation specification identified at http://www.microsoft.com/interop/osp/default.mspx as it existed on October 16, 2006 and any version of the specification resulting from further standardization efforts identified at http:www.oasis-open.org, the required portions of the specification that are described in detail and not merely referenced therein, as well as the required elements of optional portions of the specification. “WCS” means Microsoft Windows CardSpace.

 

  (l) Novell Products” and its variations means Access Manager and three (3) Selectors.

 

  (m) Selector” and its variations means an information card selector reference implementation that implements ISIPv1.0.

 

  (n) ISIPv1.0” means, with respect to the Identity Selector Interoperability Profile v1.0 specification identified at http://www.microsoft.com/interop/osp/default.mspx as it existed on October 16, 2006 and any version of the specification resulting from further standardization efforts, the required portions of the specification that are described in detail and not merely referenced therein, as well as the required elements of optional portions of the specification. “Acceptance Plan” means acceptance criteria for each of the Deliverables as described in Exhibit A.

 

[*** Confidential Treatment Requested]

Page 1 of 6


 

  (o) Deliverables” means:

 

  i. Access Manager interoperating via WS-Federation With Current ADFS and via ISIPvl.0 with Current WCS, all as set forth in the Acceptance Plan, with a beta or final version delivered by October 31, 2008.

 

  ii.

First, Second, and Third Selectors, accessible via C++, C”, and Java bindings, respectively, and interoperating via ISIPv1.0 with Current WCS, all as set forth in the Acceptance Plan, at least one of which is available for openSUSE 10.3, at least one of which is available for SUSE Linux Enterprise Server 10, at least one of which is available for Mac OS X, at least one of which is available to Firefox via a Plugin, and at least one of which is available to Safari via a Plugin, with the Selectors delivered by October 31, 2008.

 

  iii. The Firefox and Safari Plugins referenced above, delivered by [October 31,2008].

 

  (p) STS” means Security Token Service.

 

  (q) Mac OS X” means Mac OS X version 10.5, known as “leopard”.

 

  (r) Firefox” means Firefox 2.

 

  (s) Safari” means Safari 3.

 

  (t) Plugin” means a plug-in, add-in, add-on, or extension.

 

  (u) Deliverables Acceptance Date” means the first date by which Microsoft has, or is deemed to have, accepted all the Deliverables.

 

  (v) Subcontractor” means a third party with whom Novell contracts on a work made for hire basis to meet Novell’s obligations under this SOW2 on Novell’s behalf.

 

  3. PARTIES’ OBLIGATIONS

 

  (a) Novell Obligations.

 

  i. Provide interoperability for the Novell Products with Current WCS via ISIPv1.0 and for Access Manager with the Current ADFS via WS-Federation, all as set forth in the Acceptance Plan.

 

  ii. Make available, at a time and in a manner determined by Novell, the Novell Products.

 

  iii. Demonstrate the Novell Products at one industry event to be mutually agreed upon between the parties and to occur after the SOW2 Effective Date.

 

  iv. Publish, in connection with three Selectors, test scripts and test results from testing the Selectors against the Access Manager STS or the Higgins Project STS pursuant to the Acceptance Plan.

 

  v. Deliver to Microsoft for review and acceptance or rejection according to the Acceptance Plan the Deliverables.

 

  vi. Within twenty-one (21) days following the SOW2 Effective Date, use reasonable commercial efforts to perform and demonstrate the uses cases set forth in section 3 of the Acceptance Plan, substituting the Active Directory Federation Services component of Windows Server 2008 in place of ADFS.

 

  (b) Microsoft Obligations.

 

  i. Review and accept or reject the Deliverables according to the Acceptance Plan.

 

  ii. Pay Novell as described below.

 

  iii. Provide, on an ongoing basis for the term of this SOW2, information reasonably requested by Novell to complete the work described herein.

 

  iv. Demonstrate the interoperability of Microsoft products with the Novell Products at the one industry event mutually agreed upon between the parties and occurring after the SOW2 Effective Date, as referenced above.

 

  4. FEES

 

  (a) The cost incurred by Novell under this SOW2 is agreed by the parties to be [***] (“Fees”).

 

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  (b) The Fees shall be invoiced according to the following milestone schedule:

 

  i. [***]

 

  ii. [***]

 

  (c) In both parties’ judgment, only [***] identified in Section 3.4(e) of the TCA is needed for the Optimization Innovation Laboratory. The parties mutually agree that, pursuant to Section 5.5(e) of the TCA, [***] from Section 3.4(e) of the TCA [***] shall be applied to another TCA objective, namely, Additional Projects under Section 5.5 of the TCA. The parties further mutually agree that as a result of such application, [***]. For clarity, payment of the Fees by Microsoft under this SOW2 [***] of the TCA for Additional Projects.

 

  5. ACCEPTANCE

 

  (a) Each Deliverable shall be accepted by Microsoft provided that such Deliverable meets the applicable acceptance criteria set forth in the Acceptance Plan.

 

  6. TERM

 

  (a) The term of this SOW2 shall commence on the date on which Novell begins to perform the work, and shall end upon the later of Novell’s receipt of all Fees under the Fees Section above and 90 days after the Deliverables Acceptance Date; provided however that sections 3.a.ii, 3.a.iii and 3.b.iv shall survive the term of this SOW2.

 

  (b) Under no circumstance will termination or expiration of this SOW2 result in termination or expiration of the TCA.

 

  7. OTHER

 

  (a) Novell has no obligation under this SOW2 to support or maintain the Novell Products.

 

  (b) [intentionally omitted]

 

  (c) Novell may contract with a Subcontractor on terms requiring the Subcontractor to comply with the applicable terms of this SOW2 and the TCA.

 

  (d) This SOW2 does not change the ownership of anything created, developed, provided, delivered, published, made available, or demonstrated hereunder, and under no circumstances are the Deliverables hereunder works made for hire.

 

  (e) This SOW2 may be terminated by either party in the event that the other party has materially breached any term of this SOW2 upon receipt of written notice thereof if the nonperformance or breach is incapable of cure, or upon the expiration of ten (10) days (or such additional cure period as the non-defaulting party may authorize) after receipt of written notice thereof if the nonperformance or breach is capable of cure and has not been cured.

 

  (f) [***]. In addition, Novell may propose additional work deemed relevant to this Additional Project, and such work may be added to this SOW2 upon the mutual written consent of the parties.

 

  Novell, Inc.       Microsoft Corporation
By:  

/s/ Jeff Jaffe

    By:  

/s/ William Laing

Name:  

Jeff Jaffe

    Name:  

William Laing

Title:  

CTO & EVP

    Title:  

CVP

Date:  

9/28/08

    Date:  

9/30/08

 

[*** Confidential Treatment Requested]

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Exhibit A

Acceptance Plan

 

1. Overview. This Acceptance Plan contains acceptance criteria for each of the Deliverables In SOW2. The criteria for Access Manager are set forth in section 3 hereof, and the criteria for the Selectors are set forth in section 4 hereof, and Microsoft’s obligation to accept a Deliverable shall be contingent upon the Deliverable meeting the criteria prescribed herein.

 

2. Acceptance. Deliverables will be deemed satisfactory to and accepted by Microsoft unless within thirty (30) days after delivery, Microsoft gives Novell written notice of aspects in which a Deliverable does not meet the SOW2 requirements. Upon receipt of such written notice, Novell will use commercially reasonable efforts to make such changes as will be required to correct any deficiencies.

 

3. Acceptance Criteria: Access Manager. Either via a face to-face meeting or an application sharing collaboration meeting over the Internet, the following use cases will be demonstrated.

 

  3.1 Use Case One (WCS): NIDP (Novell Identity Provider) acting as a relying party. In Use Case One, a user has a personal card and would like to use that card to login to a system. The basic steps are:

 

  3.1.1 The user requests access to a protected resource that requires a WCS Authentication contract at the access gateway.

 

  3.1.2 The user is redirected to the NIDP for login.

 

  3.1.3 The NIDP requests a card from the user.

 

  3.1.4 A Selector prompts the user for which card to use, and the user picks a personal card.

 

  3.1.5 If this is the first time the NIDP has seen this card, then the following are performed:

 

  3.1.5.1   The user is prompted for his or her username and password.

 

  3.1.5.2   The username and password are verified against a user store.

 

  3.1.5.3   The card information is saved in a trust store.

 

  3.1.6 It this is not the first time the NIDP has seen this card, then the card is looked up in the trust store and the user is redirected back to the access gateway.

 

  3.1.7 The access gateway then uses any identity injection, authorization, or form fill policy with information either from the personal card or from the user store.

 

  3.1.8 The user is allowed access to the protected resource.

 

  3.2 Use Case Two (WCS): NIDP acting as an identity provider. In Use Case Two, a user has a managed card issued from an identity provider, and a relying party is requesting that this card be used for authentication. The basic steps are:

 

  3.2.1 The user requests access to a protected resource that requires a WCS Authentication contract at the access gateway.

 

  3.2.2 The user is redirected to the NIDP for login.

 

  3.2.3 The relying party requests a managed card from the NIDP.

 

  3.2.4 A Selector presents the user with a list of managed cards that will satisfy this request, prompts the user for which card to use, and the user picks a card.

 

  3.2.5 The Selector makes a request to the identity provider for authentication.

 

  3.2.6 The username and password for the identity provider is requested.

 

  3.2.7 The information from the managed card is given to the Selector, which passes it on to tile relying party.

 

  3.2.8 The user is then authenticated based on the trust associated between the identity provider and the relying party.

 

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  3.2.9 The access gateway then uses the information on the managed card or from a federated user store to get information for Access Manager policies.

 

  3.3 Use Case Three (WCS): NIDP acting as a card issuer. In Use Case Three, an NIDP will be issuing a managed card to a user that can either be backed by a username/password, or a personal card. The basic steps are:

 

  3.3.1 The user logs into the NIDP.

 

  3.3.2 The user goes to a page on the NIDP’s portal.

 

  3.3.3 The user requests the creation of a managed card.

 

  3.3.4 The user is asked if he or she wants to back the managed card with a personal card.

 

  3.3.5 If the user chooses to back the managed card with a personal card:

 

  3.3.5.1   The NIDP requests the personal card.

 

  3.3.5.2   A Selector asks the user to select the personal card, or to create a new personal card.

 

  3.3.5.3   The Selector sends the selected or created personal card to the NIDP.

 

  3.3.6 The user is given a managed card.

 

  3.4 Use Case Four (ADFS): NIDP providing authentication to a resource protected by Active Directory Federation Services. In Use Case Four, a user needs access to a resource that is protected by Active Directory Federation Services. The basic steps are:

 

  3.4.1 The user requests access to the resource.

 

  3.4.2 The resource asks for authentication by Active Directory Federation Services.

 

  3.4.3 An Active Directory Federation Services server is setup to know about an NIDP and gives the user the option of logging in at the NIDP.

 

  3.4.4 The user logs into the NIDP and is provided a token that is sent to the Active Directory Federation Services server and satisfies the request of the resource.

 

  3.4.5 The user is allowed to access the resource.

 

  3.5 Use Case Five (ADFS): Active Directory Federation Services providing authentication to a resource protected by NIDP. In Use Case Five, a user needs access to a resource that is protected by NIDP. The basic steps are the same as Use Case 4 with AD FS and NIDP switching places.

 

4. Acceptance Criteria: Selectors. The following will be demonstrated for the Selectors:

 

  4.1 Source Code. A reference to source code for:

 

  4.1.1

A Selector available for openSUSE 10.3 interoperating via ISIPv1.0 with the GetToken functionality of Current WCS and accessible via C++ bindings.

 

  4.1.2

A Selector available for Mac OS X interoperating via ISIPv1.0 with the GetToken functionality of Current WCS and accessible via C-+ bindings.

 

  4.1.3 A Selector for openSUSE 10.3 and SUSE Linux Enterprise Server 10 interoperating via ISIPvl.0 with the GetToken functionality of Current WCS.

 

  4.1.4 A Selector available for Linux interoperating via ISIPv1.0 with the GetToken functionality of Current WCS and accessible via Java bindings.

 

  4.1.5

A Selector available for Linux interoperating via ISIPvl.0 with the GetToken functionality of Current WCS and accessible via C# bindings.

 

  4.2 Interoperability. Either via a face-to-face meeting or an application-sharing collaboration meeting over the Internet, interoperability of the Selector Deliverables will be shown using:

 

  4.2.1 The Access Manager STS or the Higgins Project STS.

 

  4.2.2 Access Manager.

 

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  4.2.3 Firefox.

 

  4.2.4 Safari.

 

  4.3 Card Import/Export. Either via a face-to-face meeting or collaboration over the Internet, compatibility of the Selector Deliverables will be shown for card import/export.

 

  4.3.1 Cards exported from WCS are successfully imported into the Novell Selector, and user access to resources with those cards using the Novell Selector is preserved.

 

  4.3.2 Cards exported from the Novell Selector are successfully imported into WCS, and user access to resources with those cards using WCS is preserved.

 

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EX-10.66 15 dex1066.htm STATEMENT OF WORK NO. SRM 2 UNDER THE TECHNICAL COLLABORATION AGREEMENT Statement of Work No. SRM 2 under the Technical Collaboration Agreement

Exhibit 10.66

Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality requested. Omissions are designated as [***]. A complete version of this exhibit has been filed separately with the United States Securities and Exchange Commission.

Statement of Work No. SRM 2

Under the

Technical Collaboration Agreement

This Statement of Work No. SRM 2 is entered into by and between Microsoft and Novell on December 4, 2008 (“SOW SRM 2 Effective Date”) under that Technical Collaboration Agreement (TCA) between the parties with an Effective Date as of November 2, 2006 (“Agreement”).

 

1. PROJECT TITLE AND DESCRIPTION

Title: Novell - Microsoft Linux Management Pack (LMP) Development

Description:

 

  1. Novell will provide Management Packs for Microsoft System Center Operations Manager 2007 (or successor versions) to extend the Microsoft base Linux management capabilities to make SLES the best-managed Linux platform.

 

  2. Microsoft expects to contribute its code changes for OpenPegasus to the OpenGroup and its code changes for Openwsman to the Openwsman project (currently hosted by Intel) and to release its Linux management providers under the MSPL open-source license approved by the Open Source Initiative. Novell and Microsoft intend to collaborate to advance these technologies.

 

  3. Novell may create additional management packs, and the parties may collaborate in that effort as they may determine in the future.

 

2. DEFINITIONS

 

  (a) Microsoft” means Microsoft Corporation.

 

  (b) Novell” means Novell, Inc.

 

  (c) Additional Project” is defined in the TCA.

 

  (d) TCA” means the Technical Collaboration Agreement between the parties with an effective date as of November 2, 2006.

 

[*** Confidential Treatment Requested]


  (e) Interoperability” and its variations means the capability of technologies to exchange data via a compatible set of exchange formats and to use compatible protocols.

 

  (f) Current” means as of the SOW SRM 2 Effective Date.

 

  (g) “SOW SRM 2” means this Statement of Work No. SRM 2.

 

  (h) Subcontractor” means a third party with whom Novell contracts on a work made for hire basis to meet Novell’s obligations under this SOW SRM 2 on Novell’s behalf.

 

  (i) Management Pack” means a management pack or multiple management packs for OpsMgr 2007 conforming to the Microsoft management pack XML schema definition.

 

  (j) Novell Management Pack” means a Management Pack conforming to the features as listed in Exhibit A (currently code named “Rainier”).

 

  (k) IT Forum 2008” means the IT Forum 2008 conference in Barcelona Spain currently scheduled for November 3-8, 2008.

 

  (l) OpsMgr 2007” means Microsoft System Center Operations Manager 2007.

 

  (m) Linux Management Stack” means OpenPegasus and Openwsman as released by Microsoft for OpsMgr 2007 R2, and the Microsoft-developed basic Linux management providers, which Microsoft previously provided to Novell.

 

3. PARTIES’ OBLIGATIONS

 

  A. Novell Obligations:

 

  1. Develop the Novell Management Pack (whether by itself or in an open source development model and involving the community), and make the Novell Management Pack generally available. Novell may but is not obligated under this SOW SRM 2 to create or release any other Management Packs.

 

  2. Collaborate with Microsoft on the adoption and promotion of the Linux Management Stack, for SLES 11.

 

  3. Make support for the Novell Management Pack available to customers.

 

  B. Microsoft Obligations:

 

  1.

Upon request, provide Novell with any changes to the source code Microsoft previously provided to Novell for the Microsoft Linux management providers, Microsoft modifications to the OpenPegasus CIMOM, and Microsoft modifications to the Linux Openwsman protocol stack for review purposes only under a Reference License Form to the Master Source Code License Agreement. Notwithstanding anything to the

 

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contrary in this SOW SRM 2, nothing in this SOW SRM 2 will act to modify or waive any provision of the Master Source Code License Agreement or any applicable license forms thereunder.

Provide, on an ongoing basis for the term of this SOW SRM 2, information reasonably requested by a Novell full-time employee designated as Novell’s primary liaison for technical issues concerning this SOW SRM 2, to the Microsoft full-time employee designated as Microsoft’s primary liaison for technical issues concerning this SOW SRM 2, to complete the work described herein. Microsoft retains discretion over whether to provide non-public information requested by Novell.

 

  2. Demonstrate the Interoperability of Microsoft products with Novell products, in a manner to be agreed, at one industry event mutually agreed upon between the parties and occurring after the SOW SRM 2 Effective Date (such as IT Forum 2008).

 

  3. Pay Novell as described below.

 

  C. Joint Undertakings

 

  1. The parties intend to work together to develop a collaborative marketing plan for the Novell Management Pack that includes a demo at IT Forum 2008.

 

4. PAYMENTS

Notwithstanding anything to the contrary in the TCA, Microsoft and Novell have agreed that Microsoft will pay Novell [***] in [***] (subject to completion of the milestones indicated below), [***]. Accordingly, following each date indicated below, Novell will submit an invoice to Microsoft in the amount indicated below, [***].

 

Milestone

   Amount
SOW SRM 2 Effective Date    [***]
General availability of the Novell Management Pack    [***]

 

5. PROJECT TERM

 

  1. The term of this SOW SRM 2 shall commence on the SOW SRM 2 Effective Date.

 

  2. Under no circumstance will termination or expiration of this SOW SRM 2 result in termination or expiration of the TCA.

 

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6. OTHER

 

  a. Both parties acknowledge and agree that the [***] for any other Statements of Work shall not [***] without the parties’ express written agreement to such effect.

 

  b. Novell may contract with a Subcontractor on terms requiring the Subcontractor to comply with the applicable terms of this SOW SRM 2 and the TCA.

 

  c. This SOW SRM 2 does not change the ownership of anything created, developed, provided, delivered, published, made available, or demonstrated hereunder, and under no circumstances are the Management Packs hereunder works made for hire.

 

  d. This SOW SRM 2 may be terminated by either party in the event that the other party has materially breached any term of this SOW SRM 2 upon receipt of written notice thereof if the nonperformance or breach is incapable of cure, or upon the expiration of ten (10) days (or such additional cure period as the non-defaulting party may authorize) after receipt of written notice thereof if the nonperformance or breach is capable of cure and has not been cured.

 

7. CONFIDENTIALITY

The parties consider this SOW SRM 2 and all discussions regarding it as confidential information subject to the NDA between the parties dated as of April 1, 2004, as amended on May 12, 2004.

THIS STATEMENT of WORK is entered into by the parties as of date of the last signatory below.

 

Novell, Inc.     Microsoft Corporation
By:  

/s/ Robert Kain

    By:   

/s/ Brad R. Anderson

Name:  

Robert Kain

    Name:   

Brad R. Anderson

Title:  

VP, Corp. Dev.

    Title:   

General Manager

Date Signed:  

1/7/09

    Date Signed:   

2-14-2009

 

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Exhibit A

Rainier Features:

 

1. CIM Provider for:

 

   

BIND / DNS, Monitor named daemon. Start / stop / restart. List of allocated DNS names.

 

   

DHCP Server. Monitor named daemon. Start / stop / restart. List of allocated DHCP addresses.

 

   

SAMBA. Monitor smbd / nmbd / winbind daemons. Start / stop / restart. List of Samba shares.

 

   

NFS Server. Monitor nfsd daemon. Start / stop / restart. List of connections to NFS mount.

 

   

LDAP Server (OpenLDAP). Monitor LDAP daemon. Start / stop / restart.

 

   

Print Server (CUPS). Monitor supsd daemon. Start / stop / restart.

 

   

Firewall (SuSEfirewa1l2). Monitor SuSEfirewall2 daemon. Start / stop / restart.

 

2. XML Microsoft Management Pack schema file(s).

 

3. CMPI/ Python Interface.

 

4. Supported Languages: English-only

 

5. Proposed Schedule:

 

  a. Alpha: November, 2008 with CIM Provider support for the following four items in Point 1 above:

 

  i. BIND/DNS, DHCP, SAMBA, LDAP

 

  b. Beta: March 2009 with CIM Provider support for all items listed in Point 1 above.

 

  c. General Availability: April- May 2009 (Dependent on Microsoft’s Release Date).

 

[*** Confidential Treatment Requested]

EX-10.67 16 dex1067.htm STATEMENT OF WORK UNDER THE TECHNICAL COLLABORATION AGREEMENT Statement of Work under the Technical Collaboration Agreement

Exhibit 10.67

Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality requested. Omissions are designated as [***]. A complete version of this exhibit has been filed separately with the United States Securities and Exchange Commission.

Exhibit B

Form Statement of Work

This Statement of Work is entered into by and between Microsoft and Novell on             , 2010 (“Statement of Work Effective Date”) under that Technical Collaboration Agreement between the parties with an Effective Date as of November 2, 2006 (“Agreement”).

 

1.1 PROJECT TITLE AND DESCRIPTION

Title: Virtualization – Enhance Linux Integration Components (LIC) for Hyper-V

Description:

Novell will work with Microsoft to enhance the Linux Integration Components for Hyper-V in order to add several customer critical features. Feature enhancements will occur in Two Phases.

Phase 1: Critical customer features to be targeted on existing SLES releases (SLES l0 and SLES 11) as well as RHEL 5.4

Phase 2: New customer features to be targeted for the mainline kernel version of the LIC. These features will also be validated on SLES 10, SLES 11 and RHEL5 (with the latest service packs available)

Each Phase is described in more detail below.

 

1.2 DEFINITIONS

 

1.2.1. “LIC” means the Linux Integration Components for Hyper-V

1.2.2. “Subcontractor” means a third party with whom Novell contracts on a work made for hire basis to meet Novell’s obligations under this SOW on Novell’s behalf.

 

1.2.3. “RTM” means Release to Manufacturing

 

2. PHASE 1

 

2.1 PARTIES’ OBLIGATIONS

Microsoft and Novell will modify the Linux Integration Components for Hyper-V to implement customer critical features. All features will be developed for SLES10 and SLES11 guests (with the latest service packs available) for Hyper-V Release 2. Phase 1 features are:

 

 

SMP (up to 4 vCPUs per guest to be supported)

 

 

Time Synchronization/Time Source

 

 

Graceful Shutdown

 

 

Modify build process to deliver binary RPMs for LIC (this is a low priority feature, and only to be done if we have time)

 

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Novell will also provide a patch to RHEL 5.4 for Time Synchronization / Time Source. Microsoft will integrate this patch into RHEL 5.4 and distribute this patch to their customers. Novell will not support this code after delivering the patch to Microsoft.

The division of labor follows:

Novell:

Novell will be primarily responsible for development of the following features.

 

 

SMP (1, 2 and 4 vCPUs per guest to be supported)

 

 

Time Synchronization/Time Source (Linux side) for both SLES and RHEL distributions as noted above. For RHEL, Novell will develop the code, but will not be responsible for support of that code thereafter.

 

 

Advise Microsoft, as necessary, in their effort to move the Linux IC drivers from the staging area to the kernel mainline

 

 

Modify build process to deliver binary RPMs for LIC (this is a low priority feature, and only to be done if we have time)

 

 

Component Level Testing

 

 

Developer Documentation

In addition, Novell will provide technical consultation to Microsoft in the development of Graceful Shutdown.

Microsoft:

Microsoft will be primarily responsible for development of the following features

 

 

Time Synchronization/Time Source (VMBus side)

 

 

Graceful Shutdown

 

 

Mouse Integration Component restructuring

 

 

Component Level Testing

 

 

Developer Documentation

 

 

End User Documentation

In addition, Microsoft will provide technical consultation to Novell for understanding Hyper-V and their virtualization architecture as needed. This includes providing:

 

 

Implementation of the VMBus to the Hyper-V API interface

Microsoft will be responsible for the testing of the Linux Integration Components for Hyper-V on Release 2 of Hyper-V.*

 

 

Test Plan

 

 

System Level Testing

 

 

Performance Testing

 

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* Interoperability lab staff from Novell will be available to assist in this testing as well. This staff is covered under current TCA funding.

 

2.4 PHASE 1 DELIVERY AND PAYMENT SCHEDULE

 

Milestone   Deliverable: Description/Payment
   

Phase 1 Beta Release (Code completed and deliver to Microsoft by March 20, 2010)

 

Phase 1 features completed at Beta quality and accepted by Microsoft as per the Exit criteria for Phase 1 (Attachment 1)

 

On acceptance of the code by Microsoft

payment to Novell: [***]

   

Phase 1 Final Release (Code completed and delivered to Microsoft by Jun 01, 2010)

 

Phase 1 features completed at RTM quality and accepted by Microsoft as per the Exit criteria for Phase 1 (attached as Attachment 1)

 

On acceptance of the code by Microsoft payment to Novell: [***]

   

Phase 1 maintenance of code (fixing of bugs as mutually agreed to by Microsoft and Novell)

 

At the commencement of Phase 1 maintenance period (Jul 01, 2010) payment to Novell: [***]

 

At the middle of the Phase 1 maintenance period (Dec 15, 2010) payment to Novell: [***]

 

At the end of Phase 1 maintenance period (Jun 30, 2011) payment to Novell: [***]

 

2.5 PHASE 1 LICENSING TERMS

All code developed by Novell will be distributed by Novell to Microsoft under the GPLv2 License.

 

3. PHASE 2

 

3.1 PARTIES’ OBLIGATIONS

Microsoft and Novell will modify the Linux Integration Components for Hyper-V to implement new customer features. All features will be developed for the mainline kernel version implemented by the LIC. In addition, features will be ported to and tested on various SLES and RHEL releases (with the latest service packs available) by Microsoft. Phase 2 features are:

 

 

Jumbo Frames

 

 

Hot Add/Remove Storage

 

 

Bidirectional communication between Host and Guest (KVP)

 

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Heartbeat

 

 

Memory Management

 

 

Mouse Integration Component

Microsoft and Novell to agree upon a “Technical Specification for Enhancing the Linux Integration Components for Hyper-V: Phase 2” which defines the technical requirements and high level design approach for the above features prior to the start of Phase 2 (June 2010).

Microsoft and Novell need to agree on the “Exit Criteria for Phase 2 of the Microsoft Novell Collaborative SOW for LIC Development” prior to the start of work on the Phase 2 work items.

The division of labor follows:

Novell:

Novell will be primarily responsible for development of the following features.

 

 

Bidirectional communication between Host and Guest (KVP)

 

 

Porting the Mouse IC to the Linux kernel mainline after Microsoft has restructured it (in Phase 1)

 

 

Heartbeat

 

 

Memory Management (Linux side)

 

 

If Novell did not deliver binary RPMs for L1C during Phase 1, Novell will modify the build process to deliver binary RPMs for LIC

 

 

Advise Microsoft, as necessary, in their effort to move the Linux IC drivers from the staging area to the kernel mainline if this was not completed during Phase1

 

 

Component Level Testing

 

 

Developer Documentation

Microsoft:

Microsoft will be primarily responsible for development of the following features

 

 

Jumbo Frames

 

 

Hot Add/Remove Storage

 

 

Share details with Novell around Memory Management support on Hyper-V for guests

 

 

VMBus handling for memory management

 

 

VMBus handling for heartbeat

 

 

Move the Linux IC drivers from the staging area to the kernel mainline

 

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Port all Phase 2 features from the kernel mainline to the appropriate SLES and RHEL

 

 

Component Level Testing

 

 

Developer Documentation

 

 

End User Documentation

In addition, Microsoft will provide technical support for understanding Hyper-V and their virtualization architecture as needed.

Microsoft will be responsible for the testing of the Linux Integration Components for Hyper-V on Release 2 of Hyper-V.*

 

 

Test Plan

 

 

System Level Testing

 

 

Performance Testing

 

* Interoperability lab staff from Novell will be available to assist in this testing as well. This staff is covered under current TCA finding.

 

3.3 PHASE 2 SUCCESS METRICS

Microsoft and Novell need to agree on the Technical Specification for Phase 2 features prior to the start of work on the Phase 2 work items.

Microsoft and Novell need to agree on the “Exit Criteria for Phase 2 of the Microsoft Novell Collaborative SOW for LIC Development” prior to the start of work on the Phase 2 work items.

Novell to deliver code for the mainline kernel which demonstrates the features listed above. Microsoft to run acceptance test on this code and delivery to be completed no later than December 15, 2010.

Microsoft will be responsible for porting Phase 2 LIC features as relevant to the appropriate SLES and RHEL distributions.

 

3.4 PHASE 2 DELIVERY AND PAYMENT SCHEDULE

 

Milestone   Deliverable: Description/Payment
   

Phase 2 development phase (delivery of all features and acceptance by Microsoft by Dec 15, 2010 and submission to the mainline Linux kernel)

 

Phase 2 features completed and accepted by Microsoft as per mutually accepted Exit criteria and submission of these features to the Linux mainline kernel no later than Dec 15, 2010.

 

On acceptance by Microsoft and submission into the Linux kernel payment to Novell: [***]

 

On acceptance of the submission into the mainline Linux kernel, payment to Novell: [***]

 

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Phase 2 maintenance of code (fixing of bugs as mutually agreed to by Microsoft and Novell)

 

At the commencement of Phase 2 maintenance period (Jan 01, 2011) payment to Novell: [***]

 

At the middle of the Phase 1 maintenance period (Jun 30, 2011) payment to Novell: [***]

 

At the end of Phase 2 maintenance period (Dec 30, 2011) payment to Novell: [***]

Phase 2 will begin at the end of Phase 1 development. Ideally, this work can begin in April, 2010. However, unforeseen Phase 1 complexities could delay the start of work on Phase 2 until June 2010 (at the latest).

 

3.5 PHASE 2 LICENSING TERMS

All code developed by Novell will be distributed by Novell to Microsoft under the GPLv2 License.

 

4. OTHER

Microsoft agrees to reimburse Novell for any of the costs identified in Sections 2 and 3 above that are incurred by Novell, up to the amounts identified in this SOW and in any case subject to Section 5 of the Agreement. Neither party will exceed the anticipated project costs attributed to such party in this SOW without the other party’s prior written agreement. Further, both parties acknowledge and agree that total accumulated actual project costs for this and any other SOWs shall not exceed the Total Expense Cap set forth in Section 5 of the Agreement without the parties’ express written agreement to such effect.

Notwithstanding anything to the contrary in this SOW, the total amount to be paid by Microsoft under this SOW shall not exceed [***].

Novell may contract with a Subcontractor on terms requiring the Subcontractor to comply with the applicable terms of this SOW and the TCA.

As between Microsoft and Novell, Novell shall own the entire right, title and interest in and to the work developed under this SOW, including any applicable intellectual property rights other than Microsoft patents; provided, however, that Novell remains subject to and must comply with the license terms accompanying or provided with any Microsoft materials provided under this SOW.

This SOW may be terminated by either party in the event that the other party has materially breached any term of this SOW upon receipt of written notice thereof if the nonperformance or breach is incapable of cure, or upon the expiration of ten (10) days (or such additional cure period as the non-defaulting party may authorize) after receipt of written notice thereof if the nonperformance or breach is capable of cure and has not been cured.

The term of this SOW shall commence on the Statement of Work Effective Date. Under no circumstance will termination or expiration of this SOW result in termination or expiration of the TCA.

 

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Notwithstanding anything to the contrary in this SOW, in no event shall Novell release, or otherwise distribute, contribute or submit the code developed under this SOW, to any third party with attribution to Microsoft or otherwise attribute (or cause any attribution of) this SOW or the initiation or funding of the work performed under this SOW, to Microsoft. Novell shall have no authority under this SOW to enter into any contract, or convey any intellectual property rights by license, implication, estoppel or otherwise, in the name of or on behalf of Microsoft.

Microsoft does not grant, under or pursuant to this SOW, to Novell or any third party to which Novell releases or otherwise distributes, submits or contributes the software developed under this SOW, any license under any patents or patent applications that Microsoft (or any of its affiliates) now or hereafter owns or has the right to license (the “Microsoft Patents”); provided, however, that nothing in this section shall limit Novell’s right to use the Microsoft materials in its performance of the work in accordance with this SOW.

Except for the limited license grants in this SOW, Microsoft does not grant Novell any license, covenant or other right under this SOW by implication, estoppel or otherwise, including, without limitation, (A) to any Microsoft intellectual property (including any Microsoft patents), (B) any distribution rights regarding any materials or software provided by Microsoft under this SOW, including any Microsoft software or materials provided in connection with the other Microsoft reference materials or Microsoft technical support, or any related documentation, or (C) in relation to the Linux operating system.

The parties consider this SOW and all discussions regarding it as confidential information subject to the NDA between the parties dated as of April 1, 2004, as amended on May 12, 2004.

Novell agrees that the following will be deemed confidential information under the NDA, (a) the existence, or the terms and conditions, of this SOW, or any of the discussions, negotiations, correspondence, or documentation related thereto (b) the relationship of parties with respect to the work or this SOW; and (c) Microsoft’s funding of or other relationship to the work or the development and release of the software developed under this SOW.

THIS STATEMENT of WORK is entered into by the parties as of date of the last signatory below.

 

Novell, Inc.     Microsoft Corporation
By:  

/s/ Jim Ebzery

    By:  

/s/ Mike Neil

Name:  

Jim Ebzery

    Name:  

Mike Neil

Title:  

SVP & General Manager

    Title:  

General Manager

Date Signed:  

3/16/2010

    Date Signed:  

3/24/2010

 

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Attachment 1

EXIT CRITERIA FOR PHASE 1

Objective:

The objectives of this document are

 

   

Determine a set of specific test criteria that will allow both Novell and Microsoft to determine whether the SMP and the Time Sync features being incorporated into the Linux Integration Components (LIC) in the context of phase 1 of this agreement, are ready to be shipped to the customer. This criteria includes a set of functional tests, separate from the Phase 1 enhancements, but critical to ensure readiness to ship the LIC.

 

   

Outline the timeline of an iterative process that will verify these aforementioned criteria on an ongoing basis specifically for phase 1 of the agreement. There will be a separate document (TBD) for phase 2 of this agreement

Exit Criteria

These are a set of qualifying tests that allow Microsoft and Novell to determine the maturity and suitability of the LIC phase 1 features for customer ship. Phase 1 Functional Exit Criteria

Symmetrical Multi Processing in the Linux IC will need to pass the following test cases

 

Area    Subarea    Description
Installation of Guest VM          
     
    

Install

from ISO Image

  

User should be able to read from ISO/PT CD, can boot from CD/PT CD, can install from CD/PT CD media

     
     Passthru CDROM   

User should be able to install Guest VM through physical CD-ROM

     
     PassThru DVD-ROM   

User should be able to install Guest VM through physical DVD-ROM

Boot/read/write

storages

         
     
     Floppy   

User should be able to read/write from/to floppy.

     
    

VHD

IDE

  

1. User should be able to add IDE hard drive to the guest VM through settings pane.

 

2. We need to make sure small disks and disks < and > 127 GB can both be used (Iba issues)

 

3. Verify that disk has been added successfully inside guest VM (Verify size).

     
    

VHD

SCSI

  

1. User should be able to add SCSI hard drive to the guest VM through settings pane.

 

2. We need to make sure small disks and disks < and >

 

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127 GB can both be used (Iba issues)

 

3. Verify that disk has been added successfully inside

guest VM (Verify size).

 

    

VHD

Dynamically

expanding

 

  

1. While adding IDE/SCSI disk to the guest VM choose dynamic expanding disk type.

 

2. Verify disk is added successfully.

 

3. Verify that its size of disk will expanding dynamically after adding more space in to.

 

    

VHD

Fixed size

 

  

1. While adding IDE/SCSI disk to the guest VM choose Fixed size disk type.

 

2. Verify disk is added successfully .

 

3. Verify that the disk size inside guest VM with what size you have given in step 1.

 

    

VHD

Differencing

 

  

1. While adding IDE/SCSI disk to the guest VM choose dynamic expanding disk type.

 

2. Verify disk is added successfully.

 

     Passthru HD   

1. Make sure passthru HD works

Networking          
    

Internal

network

  

1. Add a Internal NIC to guest VM.

 

2. Verify internal network added successfully to guest VM.

 

3. Verify guest VM can not access external network ..

     
    

External

Network

  

1. Add a external NIC to guest VM.

 

2. Verify external network added successfully to guest VM.

 

3. Verify quest VM can access external network .

     
    

Guest

only network

  

1. Add a guest only network to guest VM.

 

2. Verify guest only network added successfully to guest VM.

     
    

Boot

from network

(PXE)

  

1. Verify that a user can install a guest VM through pxe.

Video     
     
    

Screen

resolutions

  

1. Go in to the guest VM and change its resolution to available resolution.

 

2. Verify screen can change to available resolution.

keyboard     
     International Languages   

1. Go in to the guest VM and change it to available language.

 

2. Verify language can change to other available international language.

 

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IC’s          
     
    

IC Setup

test

   1. Installing the Linux IC
     
    

Heart

Beat/ Time

Sync tests

  

Not Implemented

     
    

KVP/

Shutdown IC

  

Not Implemented

     
    

Storage

VSC

  

1. Verify Scsi drivers are installed.

     
    

Network

VSC

  

1. Verify Network component are installed

     
    

InputVS

C

  

1. Verify Mouse integration is working inside guest VM.

   
Migration     
     
    

Live

Migration

  

1. Live Migration Succeeded

     

Core

devices

         
     

SMP

Scalability

         
     
         

Manual execution of the benchmarking tools

     
    

Kernbench

(CPU/memory)

  

See following section for Performance

    Characterization Expected Results

     
    

XDD

(disk I/O)

    
     
    

netperf

(network I/O)

    

 

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Expected Results For SMP Scalability Tests

These are the expected results for comparative performance of Linux guests on Hyper-v vs. Linux on metal with comparable resources. Reference Hardware used will be 2ii GB RAM, 3.2 GHz quadiii core with 50 GB Disk space. Host is a 32 GB RAM, 3.2 GHz quad core Xeon with 250 GB disk space. Virtual configuration has the same RAM and disk space (2 GB ram/50 GB disk space) as the reference hardware. During the course of these performance tests, we shall monitor VCPU utilization and memory consumption on the guests, as well as the physical CPU utilization and memory consumption on the host.

Kernbench on Single VM (CPU/Memory)

LOGO

We will measure the scalability of Kernbench when running on bare metal with 1,2 and 4 CPUs respectively. We will then repeat these tests running virtualized (with the LIC installed) with 1, 2 and 4 vCPUs. We will assure that the results scale in the virtualized test cases to the same degree as they scale on bare metal within a 10% tolerance.

Also no error messages or panic should be encountered as this test is repeatedly executed over 36 hours

 

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Netperf on single VM (For Network IO)

LOGO

Netperf Throughput for 1 CPU, 2 CPU’s, 4 CPU’s

LOGO

 

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Netperf Testing

We have measured the scalability of Netperf when running on bare metal with 1,2 and 4 CPUs respectively (see Figure 3). We have observed that 1 CPU can saturate the NIC, and therefore, adding additional CPUs to the test does not increase network performance. The observed result is that the network throughput when running with 1, 2 and 4 CPUs is relatively the same.

To assure sanity of SMP operation, we will run Netperf virtualized (with the LIC installed) with 1, 2 and 4 vCPUs (see Figure 2). We will assure that the network throughput when running with 1, 2 and 4 vCPUs are the also relatively the same.

The way we utilize more than one core is by using netperf’s CPU binding options

(-T$locCPUnum,$remoteCPUnum) and binding the NIC’s interrupt handler(s) to different cores than the netperf/netserver processes.

Here is the the global -T option:

-T N # bind netperf and netserver to CPU id N on their respective systems

-T N, # bind netperf only, let netserver run where it mayiv

-T ,M # bind netserver only, let netperf run where it may

-T N,M # bind netperf to CPU N and netserver to CPU M

Please note that this is a netperf option, not a netserver option. However, during the course of this research, we have determined that there is enough confusion out there over these options to at least warrant another characterization with an alternative benchmark. Towards this end, we are looking at iperf as wellv solely for the purpose of verifying what we see with netperf.

 

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XDD on single VM (Disk IO)

 

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LOGO

Figure 4: xdd disk IO operations per second bm vs. VM for different cpu/vcpu counts

LOGO

Figure 5: Total time required to finish the same test across different CPU/vcpu counts

 

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LOGO

Figure 6: Disk throughput across different cpu/vcpu counts

XDD Testing

We have measured the scalability of XDD when running on bare metal with 1,2 and 4 CPUs respectively (see Figures 4, 5 & 6). We have observed that XDD does not scale when additional CPUs are added to the test when running on bare metal. The observed result is that the XDD IOPS, Disk Throughput and test completion times, when running with 1, 2 and 4 CPUs are observed at the following:

 

   

IOPS measurements on 1,2 and 4 CPUs are within 12%

 

   

Disk Throughput measurements on 1,2 and 4 CPUs are within 12%

 

   

Test Completion times on 1,2 and 4 CPUs are within 11%

To assure sanity of SMP operation, we will run XDD virtualized (with the LIC installed) with 1, 2 and 4 vCPUs. We will assure that the XDD IOPS, Disk Throughput and test completion times when running with 1, 2 and 4 vCPUs are within the same ranges as when running on bare metal as above.On multi-processor systems it is possible to assign xdd threads to specific processors. This is accomplished with the –processor, –singleproc and the –roundrobin options.

The –processor option allows the explicit assignment of a processor to a specific xdd thread.

The –singleproc option will assign all xdd threads to a single processor specified as an argument to this option.

 

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The –roundrobin option will distribute the xdd threads across M processors where M is the number of processors. M should be less than or equal to the number of processors in the system. The processor-numbering scheme used is 0 to N-1 where N is the number of processors in the system. For example, if there are five xdd threads running on a computer with eight processors, then the round robin processor assignment will assign threads 0 thru 4 on processors 0 thru 4. However, if there were only two processors on the computer, then xdd threads 0, 2, and 4 will be assigned to processor 0 and threads 1 and 3 will be assigned to processor 1.

We shall be testing with all these xdd options during the course of this validation effort to be absolutely certain.

Scale Tests

For the purposes of scale testing, the aforementioned performance tests will be executed across six VM’s on a 32 GB, 3.2 GHz quad core Xeon with 500 GB of disk space. The following test scenariosvi will be executed;

 

   

One VM running xdd and netperf (2 and 4 vcpu’s)

 

   

All VM’s running xdd (disk i/o) with 1, 2 and 4 vcpu’s

 

   

All VM’s running netperf with 1, 2 and 4 vcpu’s

 

   

1 VM running kernbench (2 vcpu’s), 2 running xdd (4 vcpu’s) and 3 running netperf (2 vcpu’s)

 

   

1 VM running kernbench (2 vcpu’s), 2 running netperf (4 vcpu’s) and 3 running xdd (2 vcpu’s)

We will be monitoring host’s and guests’ processor and memory usage as well as determining the impact on performance vis-a-vis the single VM characterizations performed earlier. Typically, the anticipated gains in subsystem performance mentioned previously for single VM benchmarks should not degrade by more than 20% for each VMvii involved in these scale test scenarios. We intend on executing each scale scenario for 24 hours at least. However, when executing these scale tests for Time sync, we shall sustain these for 7 days (168 hours).

 

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Time Sync Exit Criteria

A single VM with the drift fix and SMP is going to be set up (idle) and observed for 7 days for clock drift. With the clock drift fix, it should be possible to effectively run NTP to keep the clock synchronized.

During the course of the SMP functional, performance and scale characterizations mentioned above, we are going to keep a track of any clock drift as well, since these VM’s will eventually have the correction for clock drift as well. However, specifically for verifying time sync, we’ll be executing the following additional tests as well;

1. Idle VM.

2. Busy VM (60-75% utilization)

3. Busy host (multiple virtual machines consuming resources, but VM near idle)

4. Busy VM + Host (combine 2 + 3 above)

The acceptance criteria for the time sync mechanism will be as follows;

 

   

At no time should a clock correction cause a VM kernel panic

 

   

Clock drifts should not be visible in the system logs

 

   

The monotonicity and continuity of the time value are maintained.

 

   

The time value should increase monotonically

 

   

The time value shouldn’t jump back and forth by a large amount (observable) except during rebooting or resuming from saved state.

 

   

No clock drift should be observed on repeated VM restarts

 

   

The VM should display correct time when it is started

TimeLine

Because of the amount of testing involved in this effort, no more than three of these test cycles are envisioned from now until the end of February 2010 (beta).

Test Cycle 1: SMP with the drift fix acceptance validation using Ky’s SMP fix and clock drift on SLES 10 SP3 modified kernel (January 27th to February 5th 2010)

Test Cycle 2: SMP only acceptance Criteria for SMP acceptance validation using Ky’s SMP fix on RHEL 5.4 (January 27th to February 15th 2010)

Test Cycle 3: Repeat test cycle 1 with SLES 11 (February 16th to the 26th 2010)

Caveats:

 

   

It may be that we may have to do Time Sync only on RHEL (since it is not clear who will make the drift fix in the kernel on RHEL 5.4).. If this is the case then we’ll make the time sync script available for RHEL users

 

   

It might be determined that the various criteria listed above are not entirely achievable because of factors that would require changes to the hypervisor design or other factors outside of the scope of this collaboration. In such a case, a best case mitigation will be affected and the criteria would be revised with mutual consultation between Novell and Microsoft

 

   

The focus will always be to verify the impact of the features that Novell is contributing to the Linux IC. Towards this end, Novell will help in troubleshooting and fixing issues that are clearly identified as related to SMP scale and time sync (subject to the caveats mentioned previously)

 

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i

We will have an ongoing dialog with our Novell partners around these acceptance criteria and changes could very well be made to these as new findings etc. come to light during the course of the development effort. However all changes will need to be made with mutual agreement between Novell and Microsoft

ii

Actually limited to this value by configuring Linux parameters

iii

Similarly, core counts will be controlled through OS configuration

iv

We use this option, except that we run netserver on a different machine altogether

v

Recommended by Novell as well

vi

Limiting a potential state explosion at every turn in this effort is essential

vii

Each VM is 50 GB disk space and 2 GB RAM as was the case for single VM functional tests

 

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EX-10.68 17 dex1068.htm STATEMENT OF WORK REGARDING OPEN XML Statement of Work Regarding Open XML

Exhibit 10.68

Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality requested. Omissions are designated as [***]. A complete version of this exhibit has been filed separately with the United States Securities and Exchange Commission.

Exhibit B

Statement of Work Regarding Open XML

This Statement of Work is entered into by and between Microsoft and Novell on April 1, 2010 (“Statement of Work Effective Date”) under that Second Amended and Restated Technical Collaboration Agreement between the parties with an Effective Date as of November 2, 2006 (“Agreement”).

 

  1. Project Title and Description

Title: Improving Microsoft-Novell Interoperability through Open XML

Description: The project has three primary goals:

 

  a) Increased interoperability between the Microsoft Office and Novell OpenOffice productivity suites through improved data portability as enabled via native support of the Open XML standard; (NOTE: all references in this SOW to “Novell OpenOffice” shall be references to “Novell OpenOffice Products” as defined in the Agreement);

 

  b) A stronger Open XML ecosystem as enabled by implementations from multiple software vendors; and,

 

  c) A higher quality Open XML standard as enabled by more active implementer participation in defect handling, enhancements and strategic direction setting. In this regard, the project goals include Novell being an active, participating implementer in the maintenance and evolution of the Open XML standard; Novell participating in the standard evolving in a manner that is consistent with the needs of modern productivity suites (appropriate backward compatibility behaviors, sufficient means for implementers to innovate based on customer needs, appropriate degree of stability of the standard, etc.); and Novell being a first-class implementer of the Open XML standard and actively sharing their experiences with the rest of the Open XML community.

 

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  2. Parties’ General Obligations

Novell:

(NOTE: As used in this section, the term “participate” refers only to those deliverables defined in Section 5):

 

  a) Develop, implement and release a native Open XML implementation as part of regular updates to Novell OpenOffice;

 

  b) Participate in the Ecma TC45 standards body;

 

  c) Participate in the JTC 1 SC34/WG4 standards body; and,

 

  d) Participate in DII (Document Interop Initiative), or similar, events.

Microsoft:

 

  a) Fund Novell’s efforts as directed by this Agreement.

 

  3. Project Costs

Total cost: [***]

Cost Breakdown Overview:

 

  a. [***]

 

  b. [***]

 

  c. [***]

 

  4. Success Metrics

Development Success:

Novell OpenOffice can save documents, spreadsheets and presentations using the ISO/IEC 29500 standard. Agreed Upon Content, as defined below, and further defined (as appropriate) in ISO/IEC 29500, and supported by the Novell authoring application, are persisted per the standard; some Agreed Upon Content which is not defined in ISO/IEC 29500 yet supported by the Novell authoring application is persisted using ISO/IEC 29500 extensibility mechanisms, including, but not limited to, ISO/IEC 29500-3 section 10. (NOTE: all references in this SOW to “ISO/IEC 29500” shall be references to “ISO/IEC 29500:2008”)

Novell OpenOffice can open Microsoft Office 2010 documents, spreadsheets and presentations. Agreed Upon Content that is defined in ISO/IEC 29500 and supported by the consuming Novell authoring application should be editable in said application; some Agreed Upon Content which is not defined in ISO/IEC 29500 and/or not supported by the Novell authoring application is persisted pursuant to ISO/IEC29500-2 section 9.

 

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“Agreed Upon Content” is defined as the details associated with Section 5 of this Statement of Work (except to the extent something is defined in ISO/IEC 29500). Both parties, at the beginning of each milestone, will identify which sub clauses of the milestone clauses will be considered Agreed Upon Content by a written agreement. Changes to Agreed Upon Content can be made if agreed to by both parties by a written agreement.

[Remainder of this page intentionally blank]

 

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  5. Novell Timeline and Project Deliverables

Development Deliverables: Milestones descriptions are cumulative.

MILESTONE #1

 

   

Novell OpenOffice can open Microsoft Office 2007-generated Open XML files without failures; unsupported features are lost on open.

 

   

Novell OpenOffice can open Microsoft Office 2010-generated Open XML files without failures; unsupported features are lost on open.

 

   

Novell OpenOffice can save files containing M1 features, scoped to those features supported in Novell OpenOffice, using the Open XML standard.

 

Timeframe    Feature Set for Milestone    Summary of Major Work Items    Novell Deliverables
Q2CY10   

 

Open Packaging Conventions

1.      Package Model ( 9 )

2.      Physical Model ( 10 )

3.      Core Properties ( 11 )

4.      Thumbnails ( 12 )

 

WordProcessingML

5.      Main Document Story (17.2)

6.      Paragraphs and Rich Formatting (17.3) - Part 1

7.      Styles (17.7)

 

SpreadsheetML

8.      Workbook (18.2)

9.      Worksheets (18.3)

10.    Shared String Table (18.4)

11.    Formulas (18.17) - Part 1

 

PresentationML

12.    Presentation (19.2)

13.    Slides (19.3) - Part 1

 

DrawingML

14.    Main (20.1, 21.1) - Part 1

15.    Picture (20.2) - Part 1

 

SharedML

16.    Office Document Relationships (22.8)

  

 

Opening Microsoft Office 2010 Files

1.      Novell OpenOffice updated to skip over unknown Microsoft Office 2010-specific content

 

Saving Novell OpenOffice Files

2.      Novell implements native OPC support

3.      Novell implements native Open XML save support for M1 feature set.

  

 

1.      Patch for Novell OpenOffice

2.      Test files for validation

 

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MILESTONE #2

 

 

Novell OpenOffice can open Microsoft Office 2007-generated Open XML files without failures; M1 features supported; unsupported features are lost on open.

 

 

Novell OpenOffice can open Microsoft Office 2010-generated Open XML files without failures; M1 features supported; unsupported features are lost on open.

 

 

Novell OpenOffice can save files containing M2 features, scoped to those features supported in Novell OpenOffice, using the Open XML standard.

 

Timeframe    Feature Set for Milestone    Summary of Major Work Items    Novell Deliverables
     
Q3CY10   

WordProcessingML

1.      Paragraphs and Rich Formatting (17.3) — Part 2

2.      Numbering (17.9)

 

  

Saving Novell OpenOffice Files

1.       Novell implements native Open XML save support for M2 feature set.

 

  

1.       Patch for Novell OpenOffice

2.       Test files for validation

Q4CY10   

 

SpreadsheetML

3.      Formulas (18.17) — Part 2

4.      Comments (18.7)

 

PresentationML

5.      Slides (19.3) — Part 2

 

DrawingML

6.      Main (20.1, 21.1) — Part 2

7.      Picture (20.2) — Part 2

 

SharedML

8.      Extended Properties (22.2)

9.      Custom Properties (22.3)

10.    Variant Types (22.4)

  

 

 

Opening Microsoft Office 2010 Files

2.       Novell OpenOffice updated to support M1 features and skip over unknown Microsoft Office 2010- specific content

 

Saving Novell OpenOffice Files

3.       Novell implements native Open XML save support for M2 feature set.

  

 

 

1.       Patch for Novell OpenOffice

2.      Test files for validation

 

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MILESTONE #3

 

 

Novell OpenOffice can open Microsoft Office 2007-generated Open XML files without failures; M2 features supported; unsupported features are lost on open.

 

 

Novell OpenOffice can open Microsoft Office 2010-generated Open XML files without failures; M2 features supported; unsupported features are lost on open.

 

 

Novell OpenOffice can save files containing M3 features, scoped to those features supported in Novell OpenOffice, using the Open XML standard.

 

 

Novell OpenOffice can save files containing Novell-specific features using the Open XML standard.

 

Timeframe    Feature Set for Milestone    Summary of Major Work Items    Novell Deliverables
       
Q1CY11   

WordProcessingML

  1.    Tables (17.4)

  2.    Headers and Footers
    (17.10)

  3.    Footnotes and Endnotes
     (17.11)

  4.    Fields and Hyperlinks
     (17.16)

 

SpreadsheetML

  5.    Tables (18.5)

  6.    Styles (18.8)

 

  

Opening Microsoft Office 2010 Files

  1.    Novell OpenOffice updated to 
     support M2 features and skip over
    unknown Microsoft Office 2010-
    specific content

 

 

Saving Novell OpenOffice Files

  2.    Novell implements native Open 
     XML save support for M3 feature set.

  

1.       Patch for Novell
OpenOffice

2.      Test files for
validation

Q2CY11   

PresentationML

  7.    Comments (19.4)

 

DrawingML

  8.    Charts (21.2)

  9.    Chart Drawing (21.3)

  10.  Diagrams (21.4)

  

 

Opening Microsoft Office 2010 Files

  3.    Novell OpenOffice updated to
     support M2 features and skip over
    unknown Microsoft Office 2010-
    specific content

 

Saving Novell OpenOffice Files

  4.    Novell implements native Open 
    XML save support for M3 feature set.

  5.    Novell implements Novell-specific
     extensions for its own
    unsupported features when used
    with Open XML

  

 

3.      Patch for Novell
OpenOffice

4.      Test files for validation

       
Q3CY11        

Saving Novell OpenOffice Files

  6.    Novell implements native Open
    XML save support for M3 feature set.

  7.    Novell implements Novell-specific
     extensions for its own
    unsupported features when used
    with Open XML

 

  

  5.    Patch for Novell
    OpenOffice

  6.    Test files for
     validation

 

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MILESTONE #4

 

 

Novell OpenOffice can save files containing M4 features, scoped to those features supported in Novell OpenOffice, using the Open XML standard.

 

Timeframe    Feature Set for Milestone    Summary of Major Work Items    Novell Deliverables
Q3CY11   

 

WordProcessingML

  1.    Sections (17.6)

  2.    Annotations (17.13)

 

DrawingML

  3.    WordProcessingML
    Drawing (20.4) — Part 1

SharedML

  4.    Math (22.1)

  

 

Opening Microsoft Office 2010 Files

  1.    Novell OpenOffice updated to support
     M3 features and skip over unknown
    Microsoft Office 2010-specific content

 

Saving Novell OpenOffice Files

  2.    Novell implements native
    Open XML save support for M4
    feature set.

 

  

 

  1.    Patch for Novell
    OpenOffice

  2.    Test files for
     validation

MILESTONE #5

 

 

Novell OpenOffice can open Microsoft Office 2007-generated Open XML files without failures; M3 & 4 features supported; unsupported features are lost on open.

 

 

Novell OpenOffice can open Microsoft Office 2010-generated Open XML files without failures; M3 & 4 features supported; unsupported features are lost on open.

 

 

Novell OpenOffice can save files containing M5 features, scoped to those features supported in Novell OpenOffice, using the Open XML standard.

 

 

Novell OpenOffice can save files containing-Novell-specific features using the Open XML standard.

 

Timeframe    Feature Set for Milestone    Summary of Major Work Items    Novell Deliverables
Q4CY11   

 

PresentationML

  1.    Animation (19.5)

 

DrawingML

  2.    WordProcessingML Drawing
    (20.4) — Part 2

  3.    SpreadsheetML Drawing (20.5)

  

 

Opening Microsoft Office 2010 Files

  1.    Novell OpenOffice updated to support
     M3 features and skip over unknown
    Microsoft Office 2010-specific content

  2.    Novell OpenOffice updated to support
    M4 features and skip over unknown
    Microsoft Office 2010-specific content

  3.    Novell OpenOffice updated to support
     M5 features and skip over unknown
    Microsoft Office 2010-specific content

 

Saving Novell OpenOffice Files

  4.    Novell implements native Open XML
     save support for M5 feature set.

  5.    Novell implements Novell-specific
     extensions for its own unsupported
    features when used with Open XML

 

  

 

  1.    Patch for Novell
    OpenOffice

  2.    Test files for
     validation

 

[*** Confidential Treatment Requested]    
 

 

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Participation Deliverables:

 

   

Novell will participate in at least three Ecma TC45 quarterly telephone conferences per year for a period of two years.

 

   

Novell will participate in at least four JTC 1 SC34 WG4 telephone conferences per quarter for a period of two years.

 

   

Novell will participate in at least three JTC 1 SC34 WG4 face-to-face meetings per year for a period of two years.

 

   

Novell will participate in at least three DII or similar events per year for a period of two years.

 

  6. Project Terms

Start Date: As of the Statement of Work Effective Date

End Date: November 30, 2011

In no event, however, will this Project continue past the expiration or termination of the Agreement. Under no circumstance will termination or expiration of this SOW result in termination or expiration of the TCA.

 

  7. Other

Microsoft agrees to reimburse Novell for any of the costs identified in Section 3 above that are incurred by Novell, up to the amounts identified in Section 3 of this Statement of Work and in any case subject to Section 5 of the Agreement. Neither party will exceed the anticipated project costs attributed to such party in Section 3 without the other party’s prior written agreement. Further, both parties acknowledge and agree that total accumulated actual project costs for this and any other Statements of Work shall not exceed the Total Expense Cap set forth in Section 5 of the Agreement without the parties’ express written agreement to such effect.

Notwithstanding the foregoing, the parties agree that the payments due Novell under this SOW shall be charged against the Total Expense Cap available under Section 5.5(d) of the Agreement. The parties further agree that such Total Expense Cap shall be [***].

 

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Novell may contract with a Subcontractor on terms requiring the Subcontractor to comply with the applicable terms of this SOW and the TCA.

This SOW does not change the ownership of anything created, developed, provided, delivered, published, made available, or demonstrated hereunder, and under no circumstances are the deliverables hereunder works made for hire.

This SOW may be terminated by either party in the event that the other party has materially breached any term of this SOW upon receipt of written notice thereof if the nonperformance or breach is incapable of cure, or upon the expiration of ten (10) days (or such additional cure period as the non-defaulting party may authorize) after receipt of written notice thereof if the nonperformance or breach is capable of cure and has not been cured.

The parties consider this SOW and all discussions regarding it as confidential information subject to the NDA between the parties dated as of April 1, 2004, as amended on May 12, 2004.

 

[*** Confidential Treatment Requested]    
 

 

Page 9 of 10

 


THIS STATEMENT of WORK is entered into by the parties as of date of the last signatory below.

 

Novell, Inc.       Microsoft Corporation
By:   

/s/ James P. Ebzery

      By:   

/s/ Mike Neil

Name:   

James P Ebzery

      Name:   

Mike Neil

Title:   

SVP General Manager

      Title:   

General Manager

Date Signed:   

3/24/2010

      Date Signed:   

3/29/2010

 

[*** Confidential Treatment Requested]    
 

 

Page 10 of 10

 
EX-10.69 18 dex1069.htm AMENDED AND RESTATED PATENT COOPERATION AGREEMENT Amended and Restated Patent Cooperation Agreement

Exhibit 10.69

Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality requested. Omissions are designated as [***]. A complete version of this exhibit has been filed separately with the United States Securities and Exchange Commission.

MICROSOFT — NOVELL

PATENT COOPERATION AGREEMENT

(Amended and Restated)

This patent cooperation agreement (“Agreement”) is effective as of November 2, 2006 (“Effective Date”) by and between Microsoft Corporation, a Washington corporation having a primary place of business at One Microsoft Way, Redmond, Washington, USA 98052, and Microsoft Corporation’s Subsidiary, Microsoft Licensing, GP, a Nevada general partnership having its primary place of business at 61000 Neil Road, Reno, Nevada, USA 89511 (“MLGP”) (collectively, “Microsoft”), and Novell, Inc., a Delaware corporation having a primary place of business at 404 Wyman, Waltham, Massachusetts, USA 02451 (“Novell”). Microsoft and Novell are herein referred to separately as “a party” or collectively as “the parties” and when capitalized as “Party” or “Parties” also include their respective Subsidiaries.

RECITALS

The Parties acknowledge the ownership or control of Patents and a desire to extend covenants to each other’s Customers and make certain accommodations to each other under certain such Patents.

The Parties expect to continue research and development that will result in ownership or control of additional Patents and therefore desire to extend covenants to each other’s Customers and make certain accommodations to the other Party under certain such additional Patents.

Microsoft Corporation is the owner of its Patents (as defined below), and has licensed rights with respect to its Patents to MLGP.

In consideration of the mutual covenants and conditions stated herein and for good and valuable consideration, the Parties agree as set forth herein.

AGREEMENT

1. DEFINITIONS

1.1 “Covered Products” of a Party means all products and services sold, licensed, supplied, distributed or otherwise made available by such Party except for Foundry Products, Clone Products and Other Excluded Products (collectively, “Excluded Products”).

 

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1.2 “Covered Patents” means Patents entitled, in whole or in part, to an effective filing date on or before the end of the Term (i) which a granting party or any of its Subsidiaries now or hereafter during the Term owns or controls, or (ii) under which (and to the extent to which) a granting party or any of its Subsidiaries now or hereafter during the Term has the ability or right to grant a release, covenant not to sue or other freedom from suit. Covered Patents do not include Extendible Third Party Patents.

1.3 “Captured Patents” means Covered Patents entitled, in whole or in part, to an effective filing date on or before January 1, 2001 (i) which a granting party or any of its Subsidiaries owns or controls as of the Effective Date, or (ii) under which (and to the extent to which) a granting party or any of its Subsidiaries has as of the Effective Date the ability or right to grant a release, covenant not to sue or other freedom from suit.

1.4 “Applications Programming Interfaces” means a set of one or more routines or interfaces provided by a software program (including an operating system, middleware or other software application) that are used to invoke or direct functions or services of such software program for use by other software programs. For avoidance of doubt, Applications Programming Interfaces does not include protocols used by software programs running on a computer system to communicate with another computer or software programs running on another computer.

1.5 “Patents” means any and all patents, utility models, patent registrations, and equivalent rights (including, without limitation, originals, divisionals, provisionals, results of reexamination, continuations, continuations-in-part, extensions or reissues), and applications for the foregoing, in all countries of the world, and any other procedure or formality with respect to the aforesaid that can result in an enforceable patent right anywhere worldwide. Patents do not include design patents, design registrations, or trade dress rights.

1.6 “Subsidiary” means any entity (a) more than fifty percent (50%) of whose outstanding shares or securities representing the right to vote for the election of directors or other managing authority are, now or hereafter, owned or controlled, directly or indirectly, by a party, but such entity shall be considered a Subsidiary only so long as such ownership or control exists; or (b) which does not have outstanding shares or securities, as may be the case in a partnership, joint venture or unincorporated association, but more than fifty percent (50%) of whose ownership interest representing the right to make the decisions for such entity is, now or hereafter, owned or controlled, directly or indirectly, by a party, but such entity shall be considered a Subsidiary only so long as such ownership or control exists.

1.7 “Clone Product” means a product (or major component thereof) of a Party that has the same or substantially the same features and functionality as a then-existing product (or major component thereof) of the other Party (“Prior Product”) and that (a) has the same or substantially the same user interface as the Prior Product, or (b) implements all or substantially all of the Applications Programming Interfaces of the Prior Product. Those portions of a product that are otherwise licensed to one Party from the other Party, or that are compliant with a specification of a standards organization as to which the other Party has consented to the use of its Patents therefor, shall not be considered in determining whether the product is a Clone Product.

 

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(i) The Parties agree that versions of products sold, licensed, supplied, distributed or otherwise made available by a Party for Revenue before the Effective Date (or major components thereof) (“Existing Products”) and new versions of such Existing Products to the extent they incorporate features and functionality of Existing Products (“Existing Product Functionality”) will not be deemed Clone Products. For purposes of clarification, the parties acknowledge that Existing Product Functionality may be considered in determining whether a new version of an Existing Product (or major component thereof) meets the requirements set forth in the first paragraph of this definition, provided that, even if the new version (or major component thereof) meets such requirements, (A) only the Clone Product Functionality will be deemed a Clone Product and (B) the Existing Product Functionality will not be deemed a Clone Product. For purposes of this subsection (i), “Clone Product Functionality” means features or functionality of such new version (other than Existing Product Functionality) that add to meeting the requirements set forth in the first paragraph of this definition.

(ii) Notwithstanding subsection (i) above, Wine, OpenXchange, StarOffice and OpenOffice are not subject to such subsection (i); however, the exclusion of such products from such subsection (i) is without implication as to (and shall not affect the determination of) whether such products (or any features or functionality thereof) are Clone Products. Further, the Parties agree that (A) no inference shall be drawn from the reference to the above products in this subsection as to whether such products are Clone Products and (B) this subsection and subsection (i) shall not be admitted or referred to in evidence in any dispute regarding whether any of the products referred to in this subsection is a Clone Product.

1.8 “Foundry Product” means a product which is either (a) designed by a third party (or designed for a third party other than by a Party) without substantial input from a Party (“Acting Party”) and made, reproduced, sold, licensed, or otherwise transferred by the Acting Party, on essentially an exclusive basis, (i) to that third party, or (ii) to that third party’s customers, or (iii) as directed by that third party; or (b) made, reproduced, sold, licensed or otherwise transferred through or by the Acting Party for the primary purpose of attempting to make such product subject to the covenants under the Covered Patents of the other Party so that a third party’s customers can receive the benefit of such covenants. For purposes of clarification of subsection (a) of this Section 1.8, the parties acknowledge that a product as to which a Party has contributed substantially to the development will have been designed with substantial input from the Party and, accordingly, shall not constitute a Foundry Product.

1.9 “Other Excluded Products means (a) office productivity applications (word processing, spreadsheets, presentation software, etc.) of the Parties that are hosted by or running on a computer acting as a server for a connected client device, and (b) new features and functions

 

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in the following categories of products of the Parties, but not to the extent the products embody operating system software or other enabling technologies: (i) video game consoles (e.g., Xbox video game consoles), console games, video game applications designed to run on a computer, and on-line video gaming services (e.g., Xbox live); (ii) business applications designed, marketed and used to meet the data processing requirements of particular business functions, such as accounting, payroll, human resources, project management, personnel performance management, sales management, financial forecasting, financial reporting, customer relationship management, and supply chain management; (iii) mail transfer agents (aka email servers); and (iv) unified communications.

1.10 “Customers” means an entity or individual that utilizes a specific copy of a Covered Product (or, for purposes of Sections 4.2 and 7.3, any product or service of a Party) for its intended purpose as authorized by a Party in consideration for Revenue (directly or indirectly) to such Party. Entities or individuals are not Customers when they (1) resell, license, supply, distribute or otherwise make available to third parties such specific copy or additional copies of the Covered Product (or, for purposes of Sections 4.2 and 7.3, any product or service of a Party) they otherwise utilize as a Customer; or (2) resell, license, supply, or distribute the output of SDKs or embedded developer kits they utilize as a Customer. For avoidance of doubt, an entity or individual cannot qualify both as a Customer and Distributor for use of the same copy of any given product or service.

1.11 “Distributors” means resellers and distributors to the extent they are authorized by a Party (directly or indirectly) to resell, license, supply, distribute or otherwise make available Covered Products (or, for purposes of Section 4.2, any product or service of a Party) of the Party (whether the resale or distribution is on a stand-alone basis, on an OEM basis as bundled with hardware or other software of the reseller or distributor, or otherwise).

1.12 “Revenue” means any consideration to a Party that is reasonably attributable to a Covered Product (or, for purposes of Sections 1.7(i) and 4.2, and the definition of “Customers” as used only in Sections 4.2 and 7.3, any product or service of a Party). Revenue includes without limitation (a) consideration for any (i) sale or license of Covered Products or the sale or license of the services of Covered Products, (ii) warranties, indemnification or updates for Covered Products, (iii) maintenance, upgrades, upgrade protection, service, premium service packages, subscription, consulting, installation and support contracts for Covered Products, (iv) user or device access rights to Covered Products, and (v) hosting by a Party of Covered Products for the benefit of third parties, and (b) for purposes of Sections 1.7(i) and 4.2, and the definition of “Customers” as used only in Sections 4.2 and 7.3, the consideration described in the foregoing subsection (a) with respect to any products or services of a Party.

1.13 “Extendible Third Party Patents” means any Patent entitled, in whole or in part, to an effective filing date on or before the end of the Term which is not owned or controlled during the Term by a granting party or any of its Subsidiaries but under which the granting party or any of its Subsidiaries now has or hereafter during the Term obtains the ability or right to grant a covenant not to sue or other freedom from suit to customers of the other Party, where the grant of the covenant or other freedom from suit to the customers of the other Party is contingent on the

 

[*** Confidential Treatment Requested]

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payment of consideration to a third party which (a) is not a Subsidiary of the granting Party or (b) at the time an invention claimed by the Patent was conceived, was not a Subsidiary of the granting Party or an employee or contractor of the granting Party or a Subsidiary of the granting Party.

1.14 “Term” means the period beginning on the Effective Date and ending on January 1, 2012, unless (and for so long as) extended pursuant to Section 7.6, provided that, notwithstanding the foregoing, the Term will end on the date of termination of this Agreement.

2. COVENANTS

2.1 Covenant to Customers. Subject to the Parties’ compliance with the terms of this Agreement, each party on behalf of itself and its Subsidiaries (“Covenanting Party”) shall, under the terms set forth in Exhibit A, covenant not to sue the other Party’s Customers (“Covenanted Customers”) for infringement of Covered Patents of the Covenanting Party on account of such Covenanted Customers’ use of Covered Products of the other Party. Each Covenanting Party shall effect the foregoing covenant by (i) jointly announcing this Agreement at the press conference described in Section 19, and (ii) promptly posting the terms of such covenant as set forth in Exhibit A to its website. Each Covenanting Party shall comply with such covenant.

2.2 Express and Implied Rights. No express or implied rights are granted under this Agreement for copyright, trademark, trade dress, service mark, trade secret, know-how, or other non-Patent intellectual property.

2.3 Extendible Third Party Patent Covenant. Each party agrees that upon written request it and its Subsidiaries will grant to the other Party’s Customers the covenant of Section 2.1 and Exhibit A under any Extendible Third Party Patents, to the broadest extent possible and under the most favorable terms and conditions (including most favorable payment terms) possible; however, such grant need not be granted to a greater extent than the terms, conditions and covenants granted in this Agreement. Covenants granted to such Customers under any Extendible Third Party Patents shall be memorialized in an agreement between the parties separate from this Agreement and subject to payment of any consideration to the granting Party in the same manner, and in an amount no greater than, the granting Party is obligated by an agreement to pay the third party on account of such grant. Each party shall confirm whether individual identified Patent(s) are Extendible Third Party Patents in response to any reasonable written requests by the other party.

2.4 New Subsidiary, Product Line Covenant. The parties acknowledge and agree that if a Subsidiary is acquired or formed by (or an entity otherwise becomes a Subsidiary of) a Party after the Effective Date, or a product line is acquired (whether through ownership, exclusive license or other transfer) by a Party after the Effective Date, the covenants granted under Section 2.1 and Exhibit A shall extend to Customers of such Subsidiary or product line, but effective only as of the date of the acquisition or formation (or the entity’s otherwise becoming a Subsidiary).

 

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2.5 Former Subsidiary Covenant. If a Subsidiary of a party ceases to be a Subsidiary after the Effective Date and such Subsidiary holds (at or before the time it ceases to be a Subsidiary) any Covered Patents under which the other Party’s Customers are provided covenants as set forth in Section 2.1 and Exhibit A, the covenants shall continue as to such Covered Patents for their normal duration under this Agreement as if the Subsidiary had continued to be a Subsidiary.

2.6 Duration of Covenants.

 

  2.6.1 For specific copies of Covered Products sold, licensed, supplied, distributed or otherwise made available by a Party for Revenue during the Term, the covenants set forth in Section 2.1 and Exhibit A shall apply as to all Covered Patents, and such covenants as to such Covered Products shall continue until six years after the last of such Covered Patents to expire. Except as set forth in Section 2.6.2 below, no covenants are granted for any products sold, licensed, supplied, distributed or otherwise made available after the Term.

 

  2.6.2 For specific copies of Covered Products sold, licensed, supplied, distributed or otherwise made available by a Party for Revenue after the end of the Term (but before termination of this Agreement), the covenants set forth in Section 2.1 and Exhibit A shall apply only as to Captured Patents, and such covenants as to such Covered Products shall continue until six years after the last of such Captured Patents expires, unless earlier terminated pursuant to Section 7 or 8 of this Agreement.

 

  2.6.3 For specific copies of Covered Products sold, licensed, supplied, distributed or otherwise made available after termination of this Agreement, the covenants set forth in Section 2.1 and Exhibit A shall not apply.

 

  2.7 Other Covenants. Microsoft shall make and perform under the pledges attached as Exhibits C and D.

3. WARRANTIES AND DISCLAIMERS

3.1 Proper Authority. Each party represents and warrants on behalf of itself and its Subsidiaries that it has full right, power, and authority to (a) enter into this Agreement, and (b) grant the covenants and releases herein under its Covered Patents. Each party further represents and warrants on behalf of itself and its Subsidiaries that the individuals signing this Agreement have full authority and are duly authorized and empowered to execute on behalf of the party and its Subsidiaries for which they are signing. Each party also covenants that it will obtain, maintain and exercise all rights necessary to bind any Subsidiary acquired or formed after the Effective Date to all applicable terms of this Agreement.

3.2 Warranty Disclaimers. Neither party makes any representation or warranty as to the scope, coverage, validity, or enforceability of any of its Covered Patents.

 

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3.3 Reservation of Rights. All covenants granted in this Agreement are non-extendible, non-exclusive, non-transferable, and personal to the Customers as specified in Section 2.1 and Exhibit A hereto, and without limitation of the generality of the foregoing, shall not apply to the Parties or their Distributors. No licenses are being granted by the limited, personal covenants provided under this Agreement. The Parties reserve all rights (and neither Party receives any rights) not expressly granted in this Agreement. No additional rights (including any implied patent licenses, covenants, releases or other rights) are granted by implication, estoppel or otherwise, including no rights under any additional Patents of a Party (e.g., non-Captured Patents) by virtue of having covenants with respect to Covered Products distributed or authorized under certain other Patents of such Party (e.g., Captured Patents). Without limitation of the generality of the foregoing, and notwithstanding anything to the contrary in this Agreement, (a) neither Party is bound by, or grants any covenant or other right or incurs any other obligations as a result of, the terms of any license or other agreement with a third party to which the other Party may be subject (it being acknowledged that the covenants and other rights granted by the Parties as a result of this Agreement are only those expressly set forth in this Agreement), and (b) subject to Section 4, neither Party grants any covenant or other right or incurs any other obligations with respect to Excluded Products.

3.4 No Acknowledgement of Infringement. Nothing in this Agreement shall imply, or be construed as an admission or acknowledgement by a Party, that any Patents of the other Party are infringed, valid or enforceable.

4. RELEASES

4.1 Parties and Subsidiaries. The parties, on behalf of themselves and their Subsidiaries, irrevocably release each other and their respective present Subsidiaries from any liability for Patent infringement (including any infringement by Excluded Products) arising prior to the Effective Date, provided the foregoing release does not apply to any other parties, including the parties’ respective Distributors and Customers.

4.2 Customers and Distributors. Each party, on behalf of itself and its Subsidiaries, irrevocably releases the direct and indirect Distributors of the other Party from any liability for Patent infringement arising on account of using, importing, offering for sale, selling, licensing, supplying, distributing, otherwise making available, or promoting the commercialization of the other Party’s products and services (including Excluded Products) prior to the Effective Date, provided the foregoing release does not apply to Wine or to any specific copy of a product for which such other Party did not receive Revenue directly or indirectly. Each party, on behalf of itself and its Subsidiaries, also irrevocably releases the respective direct and indirect Customers of the other Party from any liability for Patent infringement arising on account of using the other Party’s products and services (including Excluded Products) obtained prior to the Effective Date, provided the foregoing release does not apply to Wine or to any specific copy of a product for which such other Party did not receive Revenue directly or indirectly.

4.3 New Subsidiary or Asset. Any entity (e.g., an entity that becomes a Subsidiary) or asset (e.g., new product line) acquired by a party after the Effective Date is not released by the other party or its Subsidiaries from liability for patent infringement, including infringement that occurred prior to such acquisition date.

5. PAYMENT

5.1 Initial Payments. Within ten (10) business days of the Effective Date, Microsoft will make to Novell a balancing payment of One Hundred Eight Million US dollars ($108,000,000 US), [***].

 

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5.2 Other Payments. Novell shall pay to MLGP the Fees as described in Exhibit B hereto for successive reporting periods during the Term as set forth in Exhibit B.

5.3 Late Payments. If a Party fails to make any payment due hereunder by the applicable due date, then to the extent permitted by applicable law the other Party may, at its option and without prejudice to any other right or remedy available to it whether under the Agreement or otherwise, assess a recurring late charge on such past due amount at an annual rate equal to the lesser of [***] or the highest rate permitted under applicable law.

5.4 Payment Modifications. Notwithstanding the foregoing, if this Agreement is extended pursuant to Section 7.6, any payments for the period beyond January 1, 2012 must be mutually agreed to by the parties in writing.

6. TAXES

All payments under this Agreement will be made without any withholding, deduction or offset except to the extent such withholding, deduction or offset is required by law. The Parties are not liable for any Taxes of the other Party, including Taxes that are incurred or arise in connection with or related to this Agreement. All Taxes are the financial responsibility of the Party who is obligated by operation of law to pay such Taxes. However, unless a paying Party provides a valid exemption certificate, the paying Party will pay to the other Party any sales or use taxes that are (i) owed by the paying Party solely as a result of entering into this Agreement, and (ii) required to be collected from the paying Party by the other Party under applicable law. Each party agrees to make any payments due under this Agreement from a U.S. domestic source. Each Party agrees to indemnify and defend the other Party against any claims, causes of action, attorneys’ fees incurred, costs and any other liabilities related to such indemnifying Party’s Taxes. “Taxes” means all taxes of any kind, including but not limited to sales taxes, income taxes, value-added taxes, property taxes, franchise taxes and any taxes on gross receipts, end customer sales and patent purchases.

7. TERMINATION

7.1 Cause, Etc. Either party may terminate this Agreement if the other party or a Subsidiary materially breaches this Agreement and fails to cure the breach within thirty (30) days after written notice of such breach.

7.2 [***]. If a [***] (or [***]—e.g., an [***] or [***] that this Agreement or the [***] (including [***] or with respect thereto) of [***] under this Agreement are not [***] to which [***], and there is an [***] by a [***] with respect to such [***] that the [***] and there is no [***] (e.g., through amendment of this Agreement), then such [***] may, [***] of the [***] this Agreement by [***] to the [***].

 

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  7.3 Defensive Termination.

 

  7.3.1 If one Party (“Asserting Party”) files a lawsuit: (or similar proceeding—e.g., an arbitration or administrative proceeding) for Patent infringement against the other Party for Party Activities occurring during the Term (or against a Distributor of the other Party for Distributor Activities occurring during the Term or against a Customer of the other Party for use during the Term of a specific copy of a Covered Product or Excluded Product (other than a copy of an Excluded Product with respect to which the other Party did not receive Revenue)), then such other Party shall have the right immediately to terminate this Agreement by providing written notice to the Asserting Party.

 

  7.3.2 If one Party (“Asserting Party”) files a lawsuit (or similar proceeding—e.g., an arbitration or administrative proceeding) for Patent infringement against the other Party for Party Activities occurring within five (5) years following the Term (or against a Distributor of the other Party for Distributor Activities within five (5) years following the Term or against a Customer of the other Party for use of a Covered Product received within five (5) years following the Term), then such other Party shall have the right immediately to terminate this Agreement by providing written notice to the Asserting Party.

 

  7.3.3 Party Activities” means the (i) making, having made (exclusively for such other Party in accordance with such other Party’s design and solely for distribution under a brand or mark of such other Party), using, importing, offering for sale, selling, licensing, supplying, distributing, otherwise making available, or promoting the commercialization of Covered Products (or for activities occurring during the Term, Excluded Products) of such other Party, or (ii) using or practicing internally by such other Party apparatuses, methods, processes, formulas or other subject matter covered by Covered Patents of the Asserting Party (except to the extent such use or practice utilizes Excluded Products after the Term).

 

  7.3.4 Distributor Activities” means the sale, licensing, supply, distribution or otherwise making available of specific copies of the Covered Products of the other Party that are covenanted to Customers of the other Party pursuant to the terms of Section 2.1 and Exhibit A.

 

  7.3.5 This Section 7.3 only applies to Subsidiaries of the other Party if they are Subsidiaries at the time of the filing of the lawsuit (or similar proceeding—e.g., an arbitration or administrative proceeding) or if they were Subsidiaries at the time they performed the Party Activities. This Section 7.3 shall apply to all current and former Subsidiaries of the Asserting Party.

 

  7.3.6 This Section 7.3 (including the references in this Section 7.3 to arbitration) shall not imply any agreement between the Parties to arbitrate disputes between them.

 

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7.4 [***]. This Agreement will [***] terminate upon [***] or [***].

7.5 Effect of Termination. Upon any termination of this Agreement, the covenants and other rights and obligations of the Parties hereunder shall terminate, except that Sections 1, 2.6, 3.3, 3.4, 4, 5, 6, 7.5, 9-18, 20, 21 (to the extent applicable to other surviving sections) and 22 shall survive such termination. In addition, the covenants in Section 2.1 and Exhibit A shall continue in effect after termination until six years after the last of the Covered Patents expires with respect to copies of Covered Products that were sold, licensed, supplied, distributed, otherwise made available or authorized by the Parties (directly or indirectly through their Distributors) before termination.

7.6 Extension of Term. The Term of this Agreement shall be extended for [***] on January 1, 2012 and on [***] unless one party provides written notice to the other party prior to such date or anniversary, respectively, that such one party does not consent to the Term extension, provided that any such extension shall be subject to agreement of the parties in writing on the payment terms with respect thereto.

8. CHANGE OF CONTROL OF A PARTY; SPIN OFFS

8.1 Change of Control.Change of Control” for purposes of this Section 8 means (a) a merger of a party with another person or entity if, following the closing of the merger, shareholders of the party prior to the merger hold less than a majority of the outstanding voting shares of the merged entity; (b) the acquisition of more than fifty percent (50%) of the outstanding voting shares of a party by another person or entity; (c) the authorizing of a person or entity other than the board or directors or an officer (such as a trustee in bankruptcy) to direct the management and operations of such party; or (d) the sale or other transfer of all or substantially all of a party’s assets to another entity or person. Such person or entity is referred to as the “Acquiring Third Party”.

8.2 Excluded Acquirer.Excluded Acquirer” for purposes of this Section 8 means financial institutions, financial investors (e.g., private equity or buy-out firms) or any other person or entity that derives (a) less than ten percent (10%) of its revenue from the sale, license, supply, distribution, or other providing of software and hardware products, the service and support of software and hardware products, and/or the providing of software services or services related to hardware products, and (b) less than ten percent (10%) of its revenue from asserting or licensing patents.

8.3 Effect of Change of Control Not Involving Excluded Acquirer. If during the Term a party (the “Acquired Party”) is subject to a Change of Control and the Acquiring Third Party is not an Excluded Acquirer (as defined above), then each of the following subsections shall apply:

 

  8.3.1 The Acquired Party shall give written notice of such Change of Control to the other party (“Non-Acquired Party”) before or promptly after the effective date of such Change of Control (“Change of Control Date”);

 

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  8.3.2 Section 2.6.2 is hereby deleted and Captured Patents of a Party shall be treated the same as the other Covered Patents of such Party in this Agreement. For avoidance of doubt, this Section 8.3.2 means there are no covenants given to Covered Products distributed by a Party for Revenue after the end of the Term.

 

  8.3.3 If the Change of Control Date occurs after January 1, 2010, this Agreement shall terminate two (2) years following the Change of Control Date, if not terminated earlier pursuant the terms of this Agreement;

8.4 Change of Control Involving Excluded Acquirer. If during the Term a party is subject to a Change of Control, and the Acquiring Third Party is an Excluded Acquirer, the Acquired Party shall give written notice of such Change of Control to the Non-Acquired Party before, or promptly after, the Change of Control Date.

8.5 Change of Control Generally. In the event of a Change of Control (whether or not the Acquiring Third Party is an Excluded Acquirer):

 

  8.5.1 In no event will any Patents of the Acquiring Third Party (whether or not an Excluded Acquirer) or any Subsidiaries of the Acquiring Third Party be subject to the obligations of this Agreement. Notwithstanding the foregoing, if the Acquiring Third Party (whether or not an Excluded Acquirer) files a lawsuit for patent infringement against the Non-Acquired Party, then the Non-Acquired Party shall have the right immediately to terminate this Agreement by providing written notice to the Acquiring Third Party.

 

  8.5.2 Such Change of Control shall not affect any rights granted by the Acquired Party or its Subsidiaries to Customers of the Non-Acquired Party or its Subsidiaries in this Agreement except as specified in Section 8.3 and the preceding Section 8.5.1.

8.6 Spin-offs. If a party (the “Transferring Party”) (i) transfers a product line that includes Covered Products to a third party without transferring a Subsidiary to such third party; or (ii) spins off a Subsidiary (either by disposing of it or in some other manner reducing ownership or control so that the spun-off entity is no longer a Subsidiary), then after written request to the other party hereto by the Transferring Party and where such request is within sixty (60) days following the closing of the transaction or set of transactions implementing such transfer or spin off (the “Transfer Date”), the other party hereto shall agree to a covenant agreement with such third party or such ex-Subsidiary (“Recipient”) (with the same rights, obligations, and other terms as provided to the Transferring Party herein) under its Covered Patents for the field of such product line or ex-Subsidiary, provided that:

 

  8.6.1 such field shall not be defined more broadly than appropriate to cover the particular product line being transferred or ex-Subsidiary being spun off;

 

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  8.6.2 any covenants to the Recipient’s customers shall be limited in the twelve (12) months immediately following such Transfer Date to a volume of products and services having aggregate revenue equal to no more than the revenue from Covered Products of the product line or Subsidiary during the twelve (12) months before the Transfer Date plus fifteen percent (15%); and shall be limited in each of the successive twelve (12)-month periods following such transfer or spin off to a volume of products and services having aggregate revenue of no more than the limit for the immediately preceding twelve (12)-month period plus fifteen percent (15%);

 

  8.6.3 the Recipient shall extend to the Customers of such other Party a royalty-free covenant (under the same terms as the covenant granted to such other Party’s Customers herein) under all Recipient Patents obtained from the Transferring Party (or otherwise already subject to this Agreement before the transfer or spin-off) as of the Transfer Date for all Covered Products of such other party. “Recipient Patents” shall mean all Patents meeting the definition of Covered Patents or Captured Patents (as applicable) if Recipient were substituted for a granting party hereunder in Section 1.2 and Section 1.3, respectively;

 

  8.6.4 no payment shall be due from the other party to the Recipient as a result of the covenant agreement;

 

  8.6.5 this Section 8.6 shall be omitted from such covenant agreement; and

 

  8.6.6 the Transferring Party shall have the right to exercise the rights of this Section 8.6 no more than five times.

9. ASSIGNMENTS

Neither Party shall assign, grant, sell or otherwise transfer any right under any of its Patents, applications or inventions which are (at the time of the assignment, grant, sale or other transfer) subject to the other Party’s or its Customers’ rights under this Agreement, unless such assignment, grant, sale or other transfer is made subject to, and the transferee accepts, the covenants set forth in Section 2.1 and Exhibit A with respect to such Patents. Neither Party shall assign this Agreement or any covenants, releases or other rights received hereunder to any third party under action of law or otherwise, including in connection with the insolvency or bankruptcy of the party or a Subsidiary, except (a) with the written consent of the other party or (b) as part of a merger or a sale or other transfer of all or substantially all of its assets. Any attempted assignment in derogation of either of the foregoing shall be void.

 

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10. FREEDOM TO DO BUSINESS

The covenants and releases in this Agreement shall not be construed as limiting or otherwise affecting the rights which the Parties, or their Distributors or Customers, might otherwise have outside the scope of this Agreement, or as restricting or imposing any conditions on the right of either Party, or its Distributors or Customers, to make, have made, use, license, sell, or otherwise dispose of any particular product or service, including but not limited to Covered Products, whether or not subject to the releases or covenants not to sue set forth herein.

11. LIMITATIONS OF REMEDIES

The parties, on behalf of themselves and their Subsidiaries, agree that the remedies of each Party for Patent infringement by the Excluded Products of the other Party shall be limited to reasonable royalty damages. Without limiting the generality of the foregoing, each party, on behalf of itself and its Subsidiaries waives and agrees to waive any right to enhanced damages (including treble damages for willfulness), except that there shall be no limitations on rights to injunctions or filing of actions with the ITC or other administrative tribunal.

12. APPLICABLE LAW

The validity, construction, and performance of this Agreement shall be governed by and construed first in accordance with the federal laws of the United States to the extent federal subject matter jurisdiction exists, and second in accordance with the laws of the State of New York, exclusive of its choice of law rules. With respect to all civil actions or other legal or equitable proceedings directly arising between the parties or any of their Subsidiaries under this Agreement (including any claim of Patent infringement), the Parties consent to exclusive jurisdiction and venue in the United States District Court for the Southern District of New York (the “Forum”). Each party, on behalf of itself and its Subsidiaries, irrevocably consents to personal jurisdiction and waives the defense of forum non conveniens in the Forum with respect to itself and its Subsidiaries. Process may be served on either Party in the manner authorized by applicable law or court rule. The parties acknowledge and agree that the foregoing will not preclude the interposing of this Agreement as a defense to, or as a basis for limiting remedies with respect to, a claim of Patent infringement by, or based on Patents of, a Party in any forum (whether a court, administrative tribunal or otherwise) in which such claim is made or affect the determination in such forum as to the application of this Agreement to such claim.

13. CONFIDENTIALITY

13.1 Non-Confidential. Upon issuance of the press release described in Section 19, the existence of this Agreement and its named parties will not be confidential.

13.2 Confidential. Except as otherwise provided herein or otherwise agreed between the parties, all terms and conditions in this Agreement, including the terms of the covenants in Section 2 and the payment amounts required by Section 5, shall be kept in confidence by the

 

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Parties, and shall not be disclosed, except that a Party may disclose this Agreement or terms and conditions hereof (a) with prior written consent of the other party, (b) under confidentiality to any governmental body having jurisdiction to require disclosure, as and to the extent required by such governmental body, (c) under confidentiality as may be required by law or legal process, including to legal and financial advisors in their capacity of advising a party in such matters, (d) under confidentiality to accountants, banks, and financing sources and their advisors solely in connection and compliance with financial transactions and reporting, (e) under confidentiality and attorney client privilege while obtaining legal advice from legal counsel in the normal course of business, and (f) under confidentiality to a person or entity that has a bona fide intent to engage in a merger with a Party, a sale or other transfer of all or substantially all the assets of a Party, a Change of Control of a Party, a transaction of the type described in Section 8.6, or the assignment, grant, sale or other transfer of any Patents that (at the time of the assignment, grant, sale or other transfer) are subject to the covenants in this Agreement. In addition, a Party may, subject to a written confidentiality agreement, disclose relevant terms and conditions to bona-fide Distributors and Customers to the extent necessary in the normal course of business with such bona-fide Distributors and Customers, respectively.

13.3 Specially Designated Confidential Terms. The parties agree that the confidential terms set forth in Exhibits B and C hereto are particularly sensitive competitive information whose public disclosure would be harmful. In addition to the Parties’ general agreement to keep the terms of this Agreement confidential, the Parties agree to take additional measures to keep confidential the terms set forth in Exhibits B and C. The Parties agree that Novell will make a request for confidential treatment of the terms set forth in Exhibits B and C in connection with any filing of this Agreement as an exhibit to any registration statement or periodic report filed with the Securities and Exchange Commission. The request for confidential treatment shall be made in a manner consistent with the SEC’s Staff Legal Bulletin No. 1 “Confidential Treatment Requests” dated February 28, 1997 supplemented by an addendum dated July 11, 2001. The request will seek a confidentiality term until November 1, 2016. Any confidentiality request shall be submitted to and approved by Microsoft in advance of filing, provided that such approval will not be unreasonably withheld. Notwithstanding the foregoing, nothing in this provision shall prohibit the confidential disclosure of the confidential terms set forth in Exhibits B and C to the Parties’ attorneys and accountants or prohibit such disclosure as may be required by law or regulatory inquiry, judicial process, or order.

14. ENTIRE AGREEMENT

This Agreement, including all Exhibits hereto, reflects the complete understanding of the parties regarding the subject matter of the Agreement, and supersedes all prior or contemporaneous agreements relating to such subject matter. However, the parties are entering into a Business Collaboration Agreement and a Technical Collaboration Agreement contemporaneously with the execution of this Agreement. The parties acknowledge and agree that such Business Collaboration Agreement and Technical Collaboration Agreement are pre-requisites for the parties to enter into this Agreement and that this Agreement will take effect only upon the effectiveness of such Business Collaboration Agreement and Technical Collaboration Agreement.

 

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15. SEVERABILITY

To the extent any other terms or conditions of the Agreement are held invalid or unenforceable in a jurisdiction, those terms or conditions will be enforced to the maximum extent possible in that jurisdiction and the remaining terms and conditions shall retain full force and effect in that jurisdiction, so long as the remaining Agreement continues to express the intent of the parties.

16. NOTICES

Any notice under this Agreement shall be effective upon receipt when made in writing and delivered to the other party at the address stated below. Notice by facsimile is effective upon receipt if an original signature copy is mailed contemporaneously to the other party at the address stated below.

 

For Microsoft:

 

Microsoft Corporation

One Microsoft Way Redmond,

WA USA 98052 Attn:

Director of IP

Licensing Law and

Corporate Affairs

  

For MLGP:

 

Microsoft Licensing, GP 6100

Neil Road

Reno, Nevada, USA 89511

Attn: Managing Partner

   For Novell:

 

Novell, Inc.

404 Wyman

Waltham, MA USA 02451

Attn: General Counsel

Facsimile: 425.936.7329    Facsimile: 775.826.0506    Facsimile: 781.464.8062

17. MODIFICATIONS

This Agreement may not be modified after the Effective Date except by a written amendment that expressly references this Agreement and that is signed by an authorized officer of the respective parties.

18. DISPUTE ESCALATION PROCESS

In the event that a material dispute relating to this Agreement arises between the Parties (including any dispute that may result in a claim of Patent infringement), a joint review committee, consisting of a business, technical and legal representative of each party will engage in good faith negotiations to resolve the dispute for a period of thirty (30) days after written notice of the dispute is provided by one party to the other party. If the joint review committee cannot resolve the issue after reasonable efforts by both parties including at least one in-person meeting during such thirty (30) day period, then at the written request of one of the parties, the CEOs or their senior executive designees will meet (either in person or telephonically) at their mutual earliest convenience within a second thirty (30) day period to try to resolve the issue. Before the end of the two thirty (30) day periods, subject to Sections 11 and 12, the Parties may seek any applicable legal remedy only if the Parties believe in good faith that there will be irreparable harm by delay.

 

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19. PRESS CONFERENCE AND OUTREACH

Within five (5) days after the Effective Date (but no later than any required public disclosures), the parties will participate in a joint press conference that will (i) announce, using the mutually agreed-upon messaging, the existence of this Agreement, the relationship between the parties and the fact that the parties have granted each other’s Customers the covenants set forth in Section 2 of this Agreement and made accommodations to each other with respect to each other’s Patents, including the pledges substantially in the form attached as Exhibits C and D, (ii) include the Chief Executive Officers of both companies, (iii) include a representative of at least one (1) Fortune 1000 company, and (iv) have a corresponding joint press release that will include favorable quotations from both parties.

20. NO PARTNERSHIPS

The Parties hereunder are operating as independent entities, and nothing in this Agreement will be construed as creating a partnership, franchise, joint venture, employer-employee or agency relationship. Neither Party has the authority to make any statements, representations or commitments of any kind on behalf of the other Party.

21. SPECIFIC PERFORMANCE

The Parties acknowledge and agree that the covenants and obligations set forth in Section 2 and Exhibit A may be pleaded as a full and complete defense to, and may be used as the basis for an injunction against, any proceeding or other claim which may be instituted, prosecuted or attempted in breach of such Section 2 and Exhibit A. The Parties acknowledge that their express intent in entering into this Agreement is that the Parties and their Customers shall have the rights, including the benefits of the covenants and obligations, set forth in Section 2 and Exhibit A; that each Party and its Customers would be irreparably harmed, and would not obtain the benefits that are fundamental to the intent of the Parties, if the other Party brought a claim inconsistent with such other Party’s covenants and obligations under Section 2 and Exhibit A; and that, in any event, such rights are unique and that the Party and its Customers would be irreparably harmed by any such claim. Accordingly, the Parties agree, as an essential element of this Agreement, that the Parties shall have the right to specific performance of (including injunctive relief to enforce) the covenants and obligations set forth in Section 2 and Exhibit A, without the obligation to post a bond, demonstrate irreparable harm, or meet other conditions for equitable relief. Such remedies shall not be exclusive but shall be in addition to all other rights and remedies permitted under this Agreement or under applicable law.

 

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22. SIGNATURES

22.1 By Facsimile. This Agreement may be executed in counterparts, each of which shall be deemed an original, but together shall constitute one and the same instrument. For purposes hereof, a facsimile copy of this Agreement, including the signature pages hereto, shall be deemed to be an original. Notwithstanding the foregoing, the parties shall deliver original signature copies of this Agreement to the other party as soon as practicable following execution thereof

22.2 Agreement. The parties indicate their agreement to the terms herein by the signatures of their authorized representative below.

 

Microsoft Corporation      Novell, Inc.
By:  

/s/ Bradford L. Smith

     By:  

/s/ Joseph A. LaSala, Jr.

Name:  

Bradford L. Smith

     Name:  

Joseph A. LaSala, Jr.

Title:  

General Counsel

     Title:  

SVP, General Counsel

Date:  

6-21-07

     Date:  

6/28/07

 

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Microsoft Licensing, GP

By Microsoft Management, LLC,

as managing partner

 

By:

 

/s/ Joel Freedman

Name: Joel Freedman

Title: Vice President

 

Date:  

6/14/2007

 

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Exhibit A

Covenant to Customers

Covenanting Party, on behalf of itself and its Subsidiaries, hereby covenants not to sue Covenanted Customers for infringement under Covered Patents of Covenanting Party on account of a Covenanted Customer’s use of specific copies of a Covered Product as distributed by the other Party for which the other Party has received Revenue (directly or indirectly) for such specific copies; provided the foregoing covenant is limited to use by such Covenanted Customer (i) of such specific copies that are authorized by the other Party in consideration for such Revenue, and (ii) within the scope authorized by the other Party in consideration for such Revenue. For the avoidance of doubt, the “received Revenue” requirement above is deemed satisfied with respect to a Covenanted Customer receiving from the other Party a free update to a component of a specific copy of a Covered Product for which the other Party has previously received Revenue, but is not satisfied with respect to the Covenanted Customer receiving a free upgrade or a new version of such specific copy unless the other Party has received Revenue (directly or indirectly) for such upgrade or new version.

For specific copies of Covered Products distributed by the other Party for Revenue before the end of the Term, the foregoing covenant shall apply as to all Covered Patents, including Captured Patents. For specific copies of Covered Products distributed by the other Party for Revenue after the end of the Term, the foregoing covenant shall apply only as to Captured Patents.

Also, the foregoing covenant will apply to the other Party’s customers’ and its developers’ use of copies of Covered Products distributed by the other Party that are in development (including, without limitation, work in process; trial, alpha, beta and release candidate versions; and other versions of products intended for but not yet generally released for Revenue on a commercial basis), even if the other Party does not receive Revenue in connection therewith, provided that such copies are solely provided for development, testing or evaluation purposes and support thereof, if any, continues for no longer than one-hundred eighty (180) days from distribution. In any case, the covenant granted pursuant to this paragraph shall expire as to such customers and developers one-hundred eighty (180) days from distribution to those customers and developers.

Definitions of capitalized terms used above may be found at the following link: www.covenantingnarty.com/link.

Covenanting Party reserves the right to update (including discontinue) the foregoing covenant pursuant to the terms of the Patent Cooperation Agreement between Novell and Microsoft that was publicly announced on November 2, 2006; however, the covenant as set forth above will continue as to specific copies of Covered Products distributed by the other Party for Revenue before such update.

 

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Exhibit B

Payment

 

A. Definitions:

Selected Products” means all Covered Products as to which Novell publicly reports (on behalf of itself and its Subsidiaries) in its financial statements under the Securities Exchange Act of 1934, as amended (“Exchange Act”), as Open Platform Solutions revenue and Open Enterprise Server revenue of Novell and its Subsidiaries.

Open Platform Solutions” refers to the offerings of Novell (and its Subsidiaries) as defined or used in Novell’s most recent United States Securities and Exchange Commission Form 10-Q before the Effective Date, and includes SUSE Linux Enterprise Desktop (“SLED”) and SUSE Linux Enterprise Server (“SLES”) and new versions or successor products thereof. Open Enterprise SerNer is not included in Open Platform Solutions.

[***]

Site Agreement” means an agreement between Novell and an enterprise Customer that enables such Customer to obtain Support for multiple copies of a Covered Product throughout the Customer’s enterprise. The number of Client Subscriptions, Server Subscriptions and [***] attributable to any give Site Agreement shall equal the number of copies authorized to receive Support for such respective Subscriptions.

Fees” means the [***] set forth herein, provided that if this Agreement is extended pursuant to Section 7.6, then any Fees for the period beyond January 1, 2012 must be mutually agreed to by the parties in writing.

Client Subscriptions” means Subscriptions that Support copies of SLED or SLES used or authorized for use only on a client or desktop computer.

Server Subscriptions” means Subscriptions that Support copies of SLED or SLES used or authorized for use on a server (not including [***]).

[***] means Subscriptions that Support copies of SLED or SLES used on a [***].

Subscription” means, for any specific copy of a product of a Party, the right of a paying customer to receive support services (including support for patches and updates, upgrade protection, customer support and premium support) for a specified period (collectively “Support”) for such copy from such Party.

 

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B. Initial Payment: As provided in Section 5.1 of the Agreement, within ten (10) business days of the Effective Date, Microsoft will make to Novell a balancing payment of one hundred eight million US dollars ($108,000,000 US) [***].

C. [***] : As a [***] for the [***] payment [***] for the [***] Novell relating to Selected Products and for [***], Microsoft [***].

D. [***] : The [***] for each Year shall [***] in the [***] that [***] to the relevant reporting periods. Such [***] are based upon a [***] Subscriptions of [***] the Term. Nonetheless, if the [***] Client Subscriptions in [***] then the [***] shall instead [***] and if the [***] Client Subscriptions in [***] then the [***] shall instead [***]. The [***] will not otherwise [***] regardless of the [***] of Subscriptions, except as set forth in this Section D and Section G below. If this Agreement is extended pursuant to Section 7.6, then any [***] must be mutually agreed to by the parties in writing.

[***]

[***]

[***]

[***]

[***]

[***]

E. Reporting Periods. The Fees will be paid by Novell to Microsoft within [***] after[***], within [***] after each [***] period thereafter during the Term, and [***] after the Term, and will include payment for Fees owed to Microsoft for the [***] period (or the applicable [***] in the [***] of the [***]) (“reporting periods”). For avoidance of doubt, the Parties acknowledge that no payment of Fees will be required for any period after the Term, notwithstanding survival of the covenants with respect to the Captured Patents in accordance with Section 2.6, except that the foregoing will not affect Novell’s obligation to pay any Fees with respect to reporting periods within the Term. If a reporting period [***] as to which Novell [***], payments [***] on the [***]. Payments shall be calculated and reports shall be made [***].

F. Records and Accounting Treatment. For [***] following the end of each reporting period, Novell will maintain in good faith and keep at a readily accessible location all usual and proper records [***] for such reporting period (collectively “Records”). [***].

G. Effect of Certain Changes of Control. If during the Term there is a Change of Control [***] and the Acquiring Third Party is not an Excluded Acquirer, then (a) [***] and [***] shall [***] within [***] of the Change of Control Date [***]. For this [***] and within [***] of the [***] shall be entitled to [***] to be made of the [***]. The [***] may be [***]. In no event [***]; further, the [***] with the [***] with respect to [***] as to [***] of the Change of Control Date.

 

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H. [***]

 

I. Payment Method. The payments in Section 5 of the Agreement shall be made by wire transfer to the following respective accounts:

[***]

 

J. [***]

 

K. [***]

 

[*** Confidential Treatment Requested]

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Exhibit C

Microsoft’s Patent Pledge for Hobbyist Developers

Many software developers, often referred to as “hobbyists,” write code not with the expectation of making money, but because they enjoy solving technical challenges and participating in a community of enthusiasts who recognize and encourage one another’s talents. One such community of hobbyist developers participate in the development of open source software. To further encourage these efforts, this pledge provides non-compensated individual hobbyist developers royalty-free use of Microsoft patents as set forth below.

It is Microsoft’s intent that this pledge be legally binding and enforceable as to individual hobbyist developers according to the terms below.

Non-Assertion of Patents Pledge

Microsoft hereby covenants not to assert Microsoft Patents against each Non-Compensated Individual Hobbyist Developer (also referred to as “You”) for Your personal creation of an originally authored work (“Original Work”) and personal use of Your Original Work. This pledge is personal to You and does not apply to the use of Your Original Work by others or to the distribution of Your Original Work by You or others. A “Non-Compensated Individual Hobbyist Developer” is an individual software developer (i.e., a person and not any corporation, partnership or other legal entity), including a developer of open source software, who receives no monetary payment or any other forms of consideration that can be valued monetarily for their creation of their Original Works. The fact that You may be employed as a software developer by, and receive a salary from, a corporation, partnership or other legal entity, does not disqualify You from treatment as a “Non-Compensated Individual Hobbyist Developer” under this pledge, provided Your activities related to the creation of Your Original Work are performed during Your free time and outside the scope of Your employment. The Microsoft Patents subject to this pledge are all patents issued worldwide to the extent they are owned or controlled by Microsoft or its majority owned subsidiaries. For additional information on obtaining rights under Microsoft patents to contribute Your Original Work to an open source project, please see Microsoft’s Patent Pledge for Hobbyist Contributors.

Microsoft reserves the right to terminate and revoke this pledge to You, as of the date granted, if You or an entity that You control asserts a patent infringement claim against a Microsoft product, service or technology.

Reservation of Rights

Microsoft further reserves the right to prospectively update and revise the terms of this pledge, for example to accommodate applicable laws, rules, orders or regulations. The rights provided under this pledge are personal to You and are not for the benefit of others. All rights not expressly granted in this pledge are reserved by Microsoft.

 

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Exhibit D

Microsoft’s Patent Pledge for Individual Contributors to openSUSE.org

From time to time, individual developers wish to contribute their authored code to openSUSE.org projects. It is Microsoft’s intent that this pledge be legally binding and enforceable as to such individual contributors according to the terms below.

Non-Assertion of Patents Pledge

Microsoft hereby covenants not to assert Microsoft Patents against each Individual Contributor (also referred to as “You”) for Your distribution of Your personally authored original work (“Original Work”) directly to openSUSE.org, but only if, and to the extent, (i) Your Original Work becomes part of SUSE Linux, SUSE Linux Enterprise Desktop or SUSE Linux Enterprise Server, and (ii) You ensure that as a result of Your contribution, openSUSE.org, and all further recipients of Your Original Work, do not receive any licenses, covenants or any other rights under any Microsoft intellectual property. This pledge is personal to You and does not apply to any use or distribution of Your Original Work by others.

There are a variety of ways to satisfy the requirement under section (ii) above. For example, one way to satisfy the requirement under US law is for openSUSE.org to include the following provision as is in its binding contribution agreement with You:

openSUSE.org agrees that as a condition of receiving the attached contribution of Your Original Work, openSUSE.org does not receive from You the contributor any licenses, covenants or any other rights under any Microsoft intellectual property with respect to that Original Work, and openSUSE.org will ensure that ail further recipients of this Original Work will be subject to this same condition. “Original Work” has the meaning as set forth in Microsoft’s Patents Pledge for Individual Contributors to openSUSE.org.

An “Individual Contributor” is an individual open source software developer (and not any corporation, partnership or other legal entity). All Microsoft’s utility patents worldwide are subject to this pledge to the extent they are owned or controlled by Microsoft or its majority owned subsidiaries.

Reservation of Rights

Microsoft reserves the right to terminate and revoke this pledge to You, as of the date granted, if You or an entity that You control asserts a patent infringement claim against a Microsoft product, service or technology.

 

[*** Confidential Treatment Requested]

24 of 25


Microsoft further reserves the right to terminate this pledge and revoke this pledge to You upon the termination of that certain patent agreement entered into by and between Microsoft and Novell Inc., dated as of November 2, 2006.

In addition, Microsoft reserves the right to prospectively update and revise the terms of this pledge, for example to accommodate applicable laws, rules, orders or regulations. The rights provided under this pledge are personal to You and are not for the benefit of others. All rights not expressly granted in this pledge are reserved by Microsoft.

 

[*** Confidential Treatment Requested]

25 of 25

EX-21 19 dex21.htm SUBSIDIARIES OF THE REGISTRANT Subsidiaries of the Registrant

Exhibit 21

 

     State of Incorporation or
Wholly-Owned Entities    Country in Which Organized
Cambridge Technology CGP, Inc.    Delaware
Cambridge Technology Partners do Brasil s.c. Ltda    Brazil
Cambridge Technology Partners India Private Limited    India
Managed Objects Solutions, Inc.    Delaware
Novell (Schweiz) AG    Switzerland
Novell (Taiwan) Co., Ltd.    Taiwan
Novell Austria GmbH    Austria
Novell Belgium N.V.    Belgium
Novell (Cayman) IP CR Ltd.    Cayman
Novell (Cayman) IP NCR Ltd.    Cayman
Novell Canada, Ltd.    Ontario
Novell Corporation (Malaysia) Sdn Bhd    Malaysia
Novell Denmark A/S    Denmark
Novell do Brasil Software Ltda.    Brazil
Novell European Services Ltd. (UK)    United Kingdom
Novell Finance Limited    Cayman
Novell Finland Oy    Finland
Novell Germany GmbH    Germany
Novell Holding Deutschland GmbH    Germany
Novell Holdings, Inc.    Delaware
Novell Hong Kong Limited    Hong Kong
Novell India Pvt. Ltd.    India
Novell International Holdings, Inc.    Delaware
Novell Ireland Real Estate Limited    Ireland
Novell Ireland Software Limited    Ireland
Novell Israel Software Limited    Israel
Novell Italia s.r.l.    Italy
Novell Korea Co., Ltd    Korea
Novell Licensing International B.V.    The Netherlands
Novell Nederland B.V.    The Netherlands
Novell New Zealand Limited    New Zealand
Novell Norge AS    Norway
Novell Philippines, Incorporated    Philippines
Novell Portugal Informatica Lda.    Portugal
Novell Pty. Ltd.    Australia
Novell S.a.r.L.    France
Novell Singapore Pte. Ltd.    Singapore
Novell Software (Beijing) Ltd.    People’s Republic of China
Novell Software de Colombia S.A.    Columbia
Novell Software Development Pvt. Ltd.    India
Novell Software International Limited    Ireland
Novell Soluciones y Consultorya de Venezuela C.A.    Venezuela
Novell South Africa (Proprietary) Limited    South Africa
Novell Spain S.A.    Spain
Novell Svenska AB    Sweden
Novell Technology Capital Management, Inc.    Delaware
Novell UK Limited    United Kingdom
PlateSpin ULC    Alberta
PlateSpin Canadian LP    Ontario
PlateSpin LP    Ontario
SilverStream Software, LLC    Delaware
SuSE LINUX s.r.o.    Czech Republic
SuSE Linux GmbH    Germany
SuSE Linux Products GmbH    Germany
Novell Japan, Ltd.    Japan
Cambridge Technology Capital Fund I L.P.    Delaware
EX-23.1 20 dex231.htm CONSENT OF PRICEWATERHOUSECOOPERS LLP Consent of PricewaterhouseCoopers LLP

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (Nos. 333-109345, 333-109346, 333-38435, 333-02879, 33-48395, 33-54483, 333-04775, 333-04823, 333-62087, 333-62103, 333-95409, 333-41328, 333-71502, 333-97713 and 333-158454) of Novell, Inc. of our report dated December 13, 2010 relating to the financial statements, financial statement schedule and the effectiveness of internal control over financial reporting, which appears in this Form 10-K.

/s/ PRICEWATERHOUSECOOPERS LLP

Boston, Massachusetts

December 13, 2010

EX-31.1 21 dex311.htm RULE 13A-14(A) CERTIFICATION Rule 13a-14(a) Certification

Exhibit 31.1

CERTIFICATION

I, Ronald W. Hovsepian, certify that:

1. I have reviewed this annual report on Form 10-K of Novell, Inc;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: December 13, 2010

/s/ Ronald W. Hovsepian

Ronald W. Hovsepian
President and Chief Executive Officer
EX-31.2 22 dex312.htm RULE 13A-14(A) CERTIFICATION Rule 13a-14(a) Certification

Exhibit 31.2

CERTIFICATION

I, Dana C. Russell, certify that:

1. I have reviewed this annual report on Form 10-K of Novell, Inc;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: December 13, 2010

/s/ Dana C. Russell

Dana C. Russell
Senior Vice President and Chief Financial Officer
EX-32.1 23 dex321.htm 18 U.S.C. SECTION 1350 CERTIFICATION 18 U.S.C. Section 1350 Certification

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Novell, Inc., a Delaware corporation (the “Company”), on Form 10-K for the period ended October 31, 2010, as filed with the Securities and Exchange Commission (the “Report”), Ronald W. Hovsepian, President and Chief Executive Officer of the Company, does hereby certify, pursuant to § 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. § 1350), that to his knowledge:

 

  (1) The Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934, as amended; and

 

  (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

* * *

 

/s/ Ronald W. Hovsepian

Ronald W. Hovsepian
President and Chief Executive Officer

Date: December 13, 2010

EX-32.2 24 dex322.htm 18 U.S.C. SECTION 1350 CERTIFICATION 18 U.S.C. Section 1350 Certification

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Novell, Inc., a Delaware corporation (the “Company”), on Form 10-K for the period ended October 31, 2010, as filed with the Securities and Exchange Commission (the “Report”), Dana C. Russell, Senior Vice President and Chief Financial Officer of the Company, does hereby certify, pursuant to § 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. § 1350), that to his knowledge:

 

  (1) The Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934, as amended; and

 

  (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

* * *

 

/s/ Dana C. Russell

Dana C. Russell
Senior Vice President and Chief Financial Officer

Date: December 13, 2010

EX-101.INS 25 novl-20101031.xml XBRL INSTANCE DOCUMENT 0000758004 us-gaap:TreasuryStockMember 2009-11-01 2010-10-31 0000758004 us-gaap:TreasuryStockMember 2008-11-01 2009-10-31 0000758004 us-gaap:TreasuryStockMember 2007-11-01 2008-10-31 0000758004 us-gaap:CommonStockMember 2009-11-01 2010-10-31 0000758004 us-gaap:CommonStockMember 2008-11-01 2009-10-31 0000758004 us-gaap:CommonStockMember 2007-11-01 2008-10-31 0000758004 us-gaap:RetainedEarningsMember 2010-10-31 0000758004 us-gaap:AdditionalPaidInCapitalMember 2010-10-31 0000758004 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2010-10-31 0000758004 us-gaap:RetainedEarningsMember 2009-10-31 0000758004 us-gaap:AdditionalPaidInCapitalMember 2009-10-31 0000758004 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2009-10-31 0000758004 us-gaap:RetainedEarningsMember 2008-10-31 0000758004 us-gaap:AdditionalPaidInCapitalMember 2008-10-31 0000758004 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2008-10-31 0000758004 us-gaap:RetainedEarningsMember 2007-10-31 0000758004 us-gaap:AdditionalPaidInCapitalMember 2007-10-31 0000758004 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2007-10-31 0000758004 us-gaap:TreasuryStockMember 2010-10-31 0000758004 us-gaap:CommonStockMember 2010-10-31 0000758004 us-gaap:TreasuryStockMember 2009-10-31 0000758004 us-gaap:CommonStockMember 2009-10-31 0000758004 us-gaap:TreasuryStockMember 2008-10-31 0000758004 us-gaap:CommonStockMember 2008-10-31 0000758004 us-gaap:TreasuryStockMember 2007-10-31 0000758004 us-gaap:CommonStockMember 2007-10-31 0000758004 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2009-11-01 2010-10-31 0000758004 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2008-11-01 2009-10-31 0000758004 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2007-11-01 2008-10-31 0000758004 us-gaap:RetainedEarningsMember 2009-11-01 2010-10-31 0000758004 us-gaap:RetainedEarningsMember 2008-11-01 2009-10-31 0000758004 us-gaap:RetainedEarningsMember 2007-11-01 2008-10-31 0000758004 2008-10-31 0000758004 2007-10-31 0000758004 us-gaap:AdditionalPaidInCapitalMember 2009-11-01 2010-10-31 0000758004 us-gaap:AdditionalPaidInCapitalMember 2008-11-01 2009-10-31 0000758004 us-gaap:AdditionalPaidInCapitalMember 2007-11-01 2008-10-31 0000758004 2010-10-31 0000758004 2009-10-31 0000758004 2008-11-01 2009-10-31 0000758004 2007-11-01 2008-10-31 0000758004 2010-04-30 0000758004 2010-11-30 0000758004 2009-11-01 2010-10-31 iso4217:USD xbrli:shares iso4217:USD xbrli:shares false --10-31 FY 2010 2010-10-31 10-K 0000758004 351582564 Yes Large Accelerated Filer 1275250970 NOVELL INC No Yes NOVL -254000 444000 -1833000 -456500000 -125537000 1969000 300000 7413000 -4606000 -11000 1969000 300000 8227000 <div> <p style="margin-top: 18px; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2"><b>Q. Guarantees </b></font></p> <p style="margin-top: 6px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">Like most software vendors, we are party to a variety of agreements, primarily with customers, resellers, distributors, and independent hardware and software vendors (generally, "Customers"), pursuant to which we may be obligated to indemnify the Customer against third-party allegations of intellectual property infringement resulting from the Customer's use of our offerings or distribution of our software, either of which may include proprietary and/or open source materials. In such circumstances, the Customer must satisfy specified conditions to qualify for indemnification. Our obligations under these agreements may be limited in terms of time and/or amount, and in some instances we may have recourse against third parties. </font></p> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">It is not possible to predict the maximum potential amount of future payments under these guarantees and indemnifications or similar agreements due to the conditional nature of our obligations and the unique facts and circumstances involved in each particular agreement. To date, we have not been required to make any payment related to guarantees and indemnifications. We do not record a liability for potential litigation claims related to indemnification agreements with our Customers unless and until we conclude the likelihood of a material obligation is probable and estimable. </font></p> </div> 23514000 14736000 2851000 69671000 22420000 13088000 <div> <p style="margin-top: 18px; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2"><b>S. Legal Proceedings </b></font></p> <p style="margin-top: 6px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">SilverStream, which we acquired in July 2002, and several of its former officers and directors, as well as the underwriters who handled SilverStream's two public offerings, were named as defendants in several class action complaints that were filed in July 2001. The complaints were filed by former stockholders of SilverStream who purchased shares of SilverStream common stock between August&nbsp;16, 1999 and December&nbsp;6, 2000. The original complaints were closely related to similar complaints brought against 309 other issuers and underwriters, and allege violations of U.S. Securities laws, including that there was undisclosed compensation received by the underwriters and that false information prepared by the underwriters resulted in hundreds of millions of dollars in damages to stockholders. A Consolidated Amended Complaint with respect to all of these compl aints was filed in the U.S.&nbsp;District Court, Southern District of New York, on April&nbsp;19, 2002. While we believe that SilverStream and its former officers and directors have meritorious defenses to the claims, various parties, including the many underwriters, participated in settlement discussions and reached a proposed settlement agreement. After notice to the plaintiff class, the settlement agreement received final approval from the Court on September&nbsp;10, 2009. Certain parties have filed Notices of Appeal from the Court's decision. We believe it is probable that any settlement payment will be covered by our insurance carrier. Thus, we do not believe that resolution of this litigation will have a material adverse effect on our financial position, results of operations or cash flows. </font></p> <p style="margin-top: 12px; margin-bottom: 0px; font-size: 1px;">&nbsp;</p> <p style="margin-top: 0px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">On July&nbsp;12, 2002, Amer Jneid and other related plaintiffs filed a complaint in the Superior Court of California, Orange County, alleging claims for breach of contract, fraud in the inducement, misrepresentation, infliction of emotional distress, rescission, slander and other claims against us in connection with our purchase of so-called "DeFrame" technology from the plaintiffs and two affiliated corporations (TriPole Corporation and Novetrix), and employment agreements that we entered into with the plaintiffs in connection with the purchase. The complaint sought unspecified damages, including punitive damages. The dispute (resulting in these claims) arises out of the plaintiffs' assertion that we failed to properly account for license distributions which the plaintiffs claim would have entitled them to certain bonus payouts under the purchase and employment agr eements. After a lengthy jury trial, the jury returned a verdict in favor of the various plaintiffs on certain contract claims and in favor of us on various remaining claims. We then pursued an appeal of the judgment and the related orders to the California Court of Appeals. We accrued $27.0 million in prior fiscal periods for this matter. As part of the appeal process and during the first quarter of fiscal 2008, we posted a $51.5 million bond in conjunction with our appeal of this judgment. On December&nbsp;17, 2009, the California Court of Appeals reversed the judgment against us and remanded the case for a new trial. The Court of Appeals also awarded attorneys' fees and costs to the plaintiffs related to certain discovery and trial related fees. Since the reversal by the Court of Appeals, the bond plus interest has been released back to us. In addition, the new trial court has awarded the plaintiffs' certain fees and costs associated with the first trial in the total amount of $4.2 million. We anticip ate pursuing an appeal of such award. Notwithstanding any such appeal, we have utilized a portion of the accrued funds to satisfy amounts that have now been paid to the plaintiffs. These payments have reduced our original accrual to $24.7 million as of October&nbsp;31, 2010. Preparations for a new trial are now moving forward with the trial tentatively scheduled for January 2011. While there can be no assurance as to the ultimate disposition of the litigation, we do not believe that its resolution will have a material adverse effect on our financial position or results of operations. </font></p> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">On January&nbsp;20, 2004, the SCO Group, Inc. ("SCO") filed suit against us in the Third Judicial District Court of Salt Lake County, State of Utah. Upon our motion, the action was removed to the U.S.&nbsp;District Court, District of Utah. SCO's original complaint alleged that our public statements and filings regarding the ownership of the copyrights in UNIX and UnixWare harmed SCO's business reputation and affected its efforts to protect its ownership interest in UNIX and UnixWare. Our answer set forth numerous affirmative defenses and counterclaims alleging slander of title and breach of contract, and seeking declaratory actions and actual, special and punitive damages in an amount to be proven at trial. On February&nbsp;3, 2006, SCO filed a Second Amended Complaint alleging that we had violated supposed non-competition provisions of the agreement under which we sold certain UNIX-related assets to SCO, that we infringed SCO's copyrights, and that we are engaging in unfair competition by attempting to deprive SCO of the value of the UNIX technology. SCO sought to require us to assign all copyrights that we have registered in UNIX and UnixWare to SCO, to prevent us from representing that we have any ownership interest in the UNIX and UnixWare copyrights, to require us to withdraw all representations we have made regarding our ownership of the UNIX and UnixWare copyrights, and to cause us to pay actual, special and punitive damages in an amount to be proven at trial. As a result of SCO's Second Amended Complaint, our wholly-owned subsidiary, SUSE Linux AG ("SUSE"), filed a demand for arbitration before the International Court of Arbitration in Zurich, Switzerland, pursuant to a "UnitedLinux Agreement" in which SCO and SUSE were parties. On August&nbsp;10, 2007, the U.S.&nbsp;District Court Judge issued a Memorandum Decision and Order that granted us su mmary judgment against SCO on significant issues in the litigation. The District Court determined that we own the UNIX copyrights and dismissed certain of SCO's claims against us. On September&nbsp;14, 2007, SCO filed a petition for relief under Chapter&nbsp;11 of the U.S. Bankruptcy Code. On July&nbsp;16, 2008, the U.S. District Court issued Findings of Fact and Conclusions of Law wherein the Court determined that SCO did not have authority to enter into an agreement with Sun Microsystems, Inc. in 2003 (the "Sun Agreement") and owed us $2.5 million plus prejudgment interest, of which we have since received $0.6 million. The Sun Agreement included SCO's purported expansion of Sun's rights to Unix source code and resulted in Sun's distribution of Open Solaris. Based on the Court's ruling, we believe that the purported license of Unix code is invalid. The Court further concluded that SCO's licenses to Microsoft and other "SCOsource licensees" included an "incidental" license to Unix SVRX code and t herefore we were not entitled to any proceeds from such licenses. On November&nbsp;20, 2008, the U.S. District Court entered Final Judgment dismissing SCO's remaining claims against us and awarded us $3.5 million. On November&nbsp;25, 2008, SCO filed a Notice of Appeal from that decision to the U.S. Tenth Circuit Court of Appeals. On August&nbsp;24, 2009, a three Judge Panel from the U.S. Tenth Circuit Court of Appeals issued an opinion that reversed in part and affirmed in part the District Court's decision. The Circuit Court affirmed the award to us of $3.5 million but remanded the remainder of the case back to the District Court for trial on the issue of whether the UNIX copyrights had been or should be transferred to SCO. On August&nbsp;25, 2009, the U.S. Bankruptcy Court entered an Order appointing an independent Chapter 11 Trustee to manage the SCO bankruptcy estate. On March&nbsp;30, 2010, the U.S. District Court jury returned a verdict in our favor and determined that under the as set purchase agreement as amended, we retained the UNIX and UnixWare copyrights. SCO's subsequent request to set aside the jury verdict was rejected by the Court as was SCO's claims for immediate transfer of UNIX copyrights and a determination that we did not have authority to direct SCO to waive claims against certain SVRX licensees. On July&nbsp;7, 2010, SCO filed a Notice of Appeal to the U.S. Tenth Circuit Court of Appeals. While there can be no assurance as to the ultimate disposition of the litigation, we do not believe that its resolution will have a material adverse effect on our financial position, results of operations or cash flows. </font></p> <p style="margin-top: 12px; margin-bottom: 0px; font-size: 1px;">&nbsp;</p> <p style="margin-top: 0px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">On November&nbsp;12, 2004, we filed suit against Microsoft in the U.S.&nbsp;District Court, District of Utah. We are seeking treble and other damages under the Clayton Act, based on claims that Microsoft eliminated competition in the office productivity software market during the time that we owned the WordPerfect word-processing application and the Quattro Pro spreadsheet application. Among other claims, we allege that Microsoft withheld certain critical technical information about the Windows operating system ("Windows") from us, thereby impairing our ability to develop new versions of WordPerfect and other office productivity applications, and that Microsoft integrated certain technologies into Windows designed to exclude WordPerfect and other applications owned by us from relevant markets. In addition, we allege that Microsoft used its monopoly power to prev ent original equipment manufacturers from offering WordPerfect and other applications to customers. On June&nbsp;10, 2005, Microsoft's motion to dismiss the complaint was granted in part and denied in part. On October&nbsp;15, 2007, the U.S.&nbsp;Fourth Circuit Court of Appeals affirmed the District Court's ruling. On March&nbsp;18, 2008, the United States Supreme Court rejected Microsoft's Petition for a Writ of Certiorari seeking to appeal the Fourth Circuit's Decision. As a result of these rulings, we elected to proceed with the remaining claims against Microsoft. On March&nbsp;29, 2010, the Federal District Court ruled that our underlying claims against Microsoft had been assigned to Caldera, Inc., in connection with the transfer of the DR DOS business by us in approximately 1996. Accordingly, the court dismissed our complaint against Microsoft. We have filed a notice of appeal to the U.S. Fourth Circuit Court of Appeals and intend to seek review of the District Court's decision dismi ssing the complaint. </font></p> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">On October&nbsp;11, 2007, IP Innovations (a patent litigation company), filed a complaint in the U.S. District Court for the Eastern District of Texas alleging that the distribution of Linux-based products by both Red Hat (a co-defendant in the case) and us violates certain U.S. Patents. Specifically, the complaint alleged that certain functionality within Linux related to the "user interface with multiple workspaces for sharing display system objects" infringed the plaintiff's patents. The complaint sought unspecified damages and an injunction from further distribution of the alleged infringing technology. In prior periods, we accrued $1.3 million for this matter. On April&nbsp;30, 2010, a U.S. District Court jury returned a verdict in our favor ruling that we did not infringe the patents in suit and, in addition, concluding that the patents were invalid on mu ltiple grounds. As a result of this ruling, we released our accrual related to this matter during the second quarter of fiscal 2010. Plaintiff's post-trial motion seeking to set aside the jury verdict was rejected by the U.S. District Court on October&nbsp;13, 2010, and plaintiff did not pursue an appeal. Accordingly, we believe this matter is fully and finally resolved in our favor, and will, therefore, have no material adverse effect on our financial position, results of operations or cash flows. </font></p> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">In November and December 2010, individuals and/or entities claiming to be our stockholders filed putative class action lawsuits challenging our pending merger with Attachmate. As of December&nbsp;7, 2010, ten actions had been filed in the Delaware Court of Chancery, one action had been filed in the Superior Court of Massachusetts, and three actions had been filed in the United States District Court for the District of Massachusetts. All of the actions are brought against the members of our Board of Directors, and all but one of the actions also name us as a defendant. In addition: (i)&nbsp;all of the actions except for one name Attachmate as a defendant; (ii) all of the actions except for two name Merger Sub as a defendant; (iii)&nbsp;<b> </b>seven of the actions name CPTN as a defendant; (iv) three of the actions name Microsoft and Elliott Asso ciates, L.P. as defendants; (v) two of the actions name our Senior Vice President and Chief Financial Officer as a defendant; and (vi)&nbsp;one of the actions names "Golden Gate Private Equity," "Francisco Partners," and "Thoma Cressey Bravo," as defendants. </font></p> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">The plaintiffs allege, among other things, that our directors failed to fulfill their fiduciary duties with regard to our pending merger with Attachmate by failing to maximize our value to our public stockholders and that the entities named in the complaints aided and abetted those alleged breaches. Two of the actions also allege, among other things, that our directors failed to fulfill their fiduciary duties with regard to the pending patent sale to CPTN. The plaintiffs seek orders that, among other things, certify the cases as class actions, enjoin our merger with Attachmate, award plaintiffs and the putative class damages in the event that our merger with Attachmate is consummated, and award plaintiffs costs and expenses, including attorneys' fees. We believe that there are substantial legal and factual defenses to the claims and intend to pursue them vigorously. Wh ile there can be no assurance as to the ultimate disposition of the litigation, we do not believe that its resolution will have a material adverse effect on our financial position, results of operations or cash flows. </font></p> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">In addition to the matters discussed above, we are currently party to various legal proceedings and claims involving former employees, either asserted or unasserted, which arise in the ordinary course of business. While the outcome of these matters cannot be predicted with certainty, we do not believe that the outcome of any of these claims will have a material adverse effect, individually or in the aggregate, on our consolidated financial position, results of operations or cash flows. </font></p> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">We accrue for losses that we believe are probable and can be reasonably estimated. We evaluate the adequacy of our legal reserves based on our assessment of many factors, including our interpretations of the law and our assumptions about the future outcome of each case based on current information. It is reasonably possible that our legal reserves could be increased or decreased in the near term based on our assessment of these factors. </font></p> </div> <div> <p style="margin-top: 18px; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2"><b>G. Long-Term Investments </b></font></p> <p style="margin-top: 6px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">At October&nbsp;31, 2010, we do not have any investments classified as long-term. At October&nbsp;31, 2009, $10.3 million of our ARSs were classified as long-term investments in our consolidated balance sheets, and were our only long-term investments. At October&nbsp;31, 2010, we no longer hold any ARSs. </font></p> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">During fiscal 2010, ARSs with a book value of $5.6 million were sold for $12.2 million, resulting in a net gain on sale of $6.6 million. This net gain is a component of the line item "Gain on sale of previously impaired investments, net" in our consolidated statements of operations. We reversed $5.4 million in unrealized gains associated with these securities that were recorded in the "Accumulated other comprehensive income" line item in our consolidated balance sheets in prior periods. </font></p> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">During fiscal 2010, we also recognized a gain of $0.8 million related to the sales of direct investments that we had previously fully impaired. These gains are shown as a component of the line item "Gain on sale of previously impaired investments, net" in our consolidated statements of operations. </font></p> </div> 814000 616493000 640745000 618542000 -128137000 -62263000 -43221000 24757000 4209000 8847000 <div> <p style="margin-top: 18px; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2"><b>N. Restructuring Expenses and Merger Liabilities </b></font></p> <p style="margin-top: 6px; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2"><i>Fiscal 2010 </i></font></p> <p style="margin-top: 6px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">In the first quarter of fiscal 2010, we recorded net restructuring expenses of $2.8 million. This was comprised of $2.9 million primarily for termination benefits for five employees as part of our business unit segment structural and management reorganization, partially offset by $0.1 million in reductions to accruals for changes in estimates related to prior period restructuring activities. No other restructuring actions were undertaken throughout the remainder of fiscal 2010. The following table summarizes the activity related to this restructuring action: </font></p> <p style="margin-top: 0px; margin-bottom: 0px; font-size: 12px;">&nbsp;</p> <table border="0" cellspacing="0" cellpadding="0" width="100%" align="center"> <tr><td width="89%"> </td> <td valign="bottom" width="7%"> </td> <td> </td> <td> </td> <td> </td></tr> <tr><td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>(In thousands)</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>&nbsp;&nbsp;&nbsp;&nbsp;Severance&nbsp;&nbsp;&nbsp;&nbsp;</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>and</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Benefits</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Original reserve</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">2,876</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Cash payments</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(2,158</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Balance at October&nbsp;31, 2010</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">718</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td></tr></table> <p style="margin-top: 12px; margin-bottom: 0px; font-size: 1px;">&nbsp;</p> <p style="margin-top: 0px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">The remaining unpaid balance as of October&nbsp;31, 2010 is for severance and benefits, which we expect to pay over the first half of fiscal 2011. </font></p> <p style="margin-top: 18px; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2"><i>Fiscal 2009 </i></font></p> <p style="margin-top: 6px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">During fiscal 2009, we recorded net restructuring expenses of $25.2 million. This was comprised of $10.2 million in restructuring expenses under our restructuring plan that we implemented in the second half of fiscal 2009 in response to economic conditions, $13.9 million for restructuring actions incurred for the completion of the restructuring plan that we began during the fourth quarter of fiscal 2006 and completed during the second quarter of fiscal 2009, and $1.1 million in additions to accruals for changes in estimates related to prior period restructuring activities. As part of both restructuring actions, during fiscal 2009, we reduced our headcount by 341 employees. The following table summarizes the activity related to these restructuring actions: </font></p> <p style="margin-top: 0px; margin-bottom: 0px; font-size: 12px;">&nbsp;</p> <table border="0" cellspacing="0" cellpadding="0" width="100%" align="center"> <tr><td width="60%"> </td> <td valign="bottom" width="6%"> </td> <td> </td> <td> </td> <td> </td> <td valign="bottom" width="6%"> </td> <td> </td> <td> </td> <td> </td> <td valign="bottom" width="6%"> </td> <td> </td> <td> </td> <td> </td> <td valign="bottom" width="6%"> </td> <td> </td> <td> </td> <td> </td></tr> <tr><td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>(In thousands)</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>&nbsp;&nbsp;&nbsp;&nbsp;Severance&nbsp;&nbsp;&nbsp;&nbsp;</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>and</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Benefits</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Excess</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;Facilities&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Other</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Restructuring</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>&nbsp;&nbsp;&nbsp;&nbsp;Related&nbsp;Costs&nbsp;&nbsp;&nbsp;&nbsp;</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Original reserve</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">18,753</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">4,934</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">419</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">24,106</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Cash payments</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(12,147</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(1,484</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(419</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(14,050</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Balance at October&nbsp;31, 2009</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">6,606</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">3,450</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">&#8212;</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">10,056</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Cash payments</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(6,447</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(1,288</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">&#8212;</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(7,735</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Non-cash adjustments</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(133</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(262</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">&#8212;</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(395</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Balance at October&nbsp;31, 2010</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">26</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">1,900</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">&#8212;</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">1,926</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td></tr></table> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">The remaining unpaid balance as of October&nbsp;31, 2010 is primarily for lease costs for redundant facilities, which we expect to pay over the respective remaining contract terms, the longest of which extends to 2018. </font></p> <p style="margin-top: 18px; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2"><i>Fiscal 2008 </i></font></p> <p style="margin-top: 6px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">During fiscal 2008, we recorded net restructuring expenses of $28.6 million. This was comprised of $31.0 million in restructuring activities recognized during fiscal 2008 and $2.4 million in reductions of accruals for restructuring activities recorded in prior periods. </font></p> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">The restructuring actions undertaken during fiscal 2008 were a continuation of the restructuring plan that we began during the fourth quarter of fiscal 2006. The restructuring plan is related to our strategy to implement a comprehensive transformation of our business and to achieve competitive operating margins. Specific actions taken during fiscal 2008 included reducing our workforce by 364 employees. The following table summarizes the activity related to the fiscal 2008 restructuring: </font></p> <p style="margin-top: 0px; margin-bottom: 0px; font-size: 12px;">&nbsp;</p> <table border="0" cellspacing="0" cellpadding="0" width="100%" align="center"> <tr><td width="58%"> </td> <td valign="bottom" width="6%"> </td> <td> </td> <td> </td> <td> </td> <td valign="bottom" width="6%"> </td> <td> </td> <td> </td> <td> </td> <td valign="bottom" width="6%"> </td> <td> </td> <td> </td> <td> </td> <td valign="bottom" width="6%"> </td> <td> </td> <td> </td> <td> </td></tr> <tr><td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>(In thousands)</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>&nbsp;&nbsp;&nbsp;&nbsp;Severance&nbsp;&nbsp;&nbsp;&nbsp;</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>and</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Benefits</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Excess</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;Facilities&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Other</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Restructuring</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>&nbsp;&nbsp;&nbsp;&nbsp;Related&nbsp;Costs&nbsp;&nbsp;&nbsp;&nbsp;</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Original reserve</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">25,583</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">3,492</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">1,949</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">31,024</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Cash payments</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(10,893</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(2,213</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(1,576</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(14,682</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Non-cash adjustments</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">37</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(41</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(144</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(148</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Balance at October&nbsp;31, 2008</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">14,727</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">1,238</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">229</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">16,194</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Cash payments</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(15,006</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(734</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(217</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(15,957</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Non-cash adjustments</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">901</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">331</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(12</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">1,220</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Balance at October&nbsp;31, 2009</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">622</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">835</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">&#8212;</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">1,457</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Cash payments</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(194</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(663</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">&#8212;</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(857</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Non-cash adjustments</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">335</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">233</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">&#8212;</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">568</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Balance at October&nbsp;31, 2010</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">763</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">405</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">&#8212;</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">1,168</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td></tr></table> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">The remaining unpaid balance as of October&nbsp;31, 2010 is primarily for lease costs for redundant facilities, which we expect to pay over the respective remaining contract terms, the longest of which extends to 2013, and for severance, which is currently being contested in court and currently represents our best estimate of the amount that we may have to pay. While the outcome cannot be predicted with certainty, we do not believe that the outcome will have a material adverse effect, individually, or in the aggregate, on our consolidated financial position, results of operations or cash flows. </font></p> <p style="margin-top: 18px; margin-bottom: 0px; font-size: 1px;">&nbsp;</p> <p style="margin-top: 0px; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2"><i>Fiscal 2007 to Fiscal 2003 </i></font></p> <p style="margin-top: 6px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">During fiscal 2007, 2005, 2004, and 2003, we recorded net restructuring expenses of $43.1 million, $57.7 million, $19.1 million, and $37.8 million, respectively. The remaining balances of these actions, which relates to lease costs for redundant facilities, are not material to the consolidated financial statements presented in this Annual Report on Form 10-K. </font></p> <p style="margin-top: 18px; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2"><i>Merger Liabilities </i></font></p> <p style="margin-top: 6px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">The following table summarizes the merger liabilities balance as of October&nbsp;31, 2010 and activity during fiscal 2010: </font></p> <p style="margin-top: 0px; margin-bottom: 0px; font-size: 12px;">&nbsp;</p> <table border="0" cellspacing="0" cellpadding="0" width="100%" align="center"> <tr><td width="67%"> </td> <td valign="bottom" width="6%"> </td> <td> </td> <td> </td> <td> </td> <td valign="bottom" width="6%"> </td> <td> </td> <td> </td> <td> </td> <td valign="bottom" width="6%"> </td> <td> </td> <td> </td> <td> </td></tr> <tr><td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>(In thousands)</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Balance at</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>October&nbsp;31,&nbsp;2009</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Payments/</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>&nbsp;&nbsp;Adjustments&nbsp; &nbsp;</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Balance at</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>October&nbsp;31,&nbsp;2010</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Facilities related</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">9,971</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(4,223</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;&nbsp;&nbsp;5,748</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Other</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">127</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(127</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">&#8212;</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 2em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Total merger liabilities</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">10,098</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(4,350</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">5,748</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td></tr></table> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">During the second quarter of fiscal 2010, we assigned a facility lease to a subtenant, and as a result released $3.2 million of merger liabilities (See Note K, "Goodwill and Intangible Assets"). </font></p> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">As of October&nbsp;31, 2010, the remaining unpaid merger liabilities balance relates to lease costs for redundant facilities, which we expect to pay over the respective remaining contract terms, the longest of which extends to 2025. </font></p> </div> 5026000 2580000 37628000 26785000 177898000 171607000 20982000 8824000 441798000 476482000 33818000 33818000 25881000 25881000 29057000 29057000 18500000 18500000 -2775000 -2775000 2226000 2226000 4085000 2261000 1902908000 2225998000 1264372000 1397424000 <div> <p style="margin-top: 18px; margin-bottom: 0px; font-size: 1px;">&nbsp;</p> <p style="margin-top: 0px; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2"><b>C. Acquisitions </b></font></p> <p style="margin-top: 6px; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2"><i>Fortefi </i></font></p> <p style="margin-top: 6px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">On February&nbsp;10, 2009, we acquired certain assets of Fortefi Ltd., a United Kingdom-based company, and Fortefi Corporation, a Delaware corporation (collectively referred to as "Fortefi"). Fortefi is a supplier of an identity management solution that controls "super user" access rights. Fortefi was a small operation of which the revenues, net operating results, assets and liabilities were immaterial to us. The purchase price consisted of $3.0 million in cash, plus merger and transaction costs of $0.1 million. Of the $3.1 million purchase price, $2.2 million was allocated to goodwill, $0.7 million was allocated to developed technology and $0.2 million was allocated to customer relationships. </font></p> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">Goodwill from the acquisition resulted from our belief that the products developed by Fortefi that control "super user" access rights are a valuable addition to our Identity and Security Management offerings. We believe these products will help us remain competitive in the Identity and Security Management market and increase our Identity and Security Management revenue. The goodwill from the Fortefi acquisition was allocated to the Identity and Security Management component of our SMOP business unit segment and is tax-deductible. </font></p> <p style="margin-top: 18px; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2"><i>Managed Objects </i></font></p> <p style="margin-top: 6px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">On November&nbsp;13, 2008, we acquired 100% of the outstanding stock of Managed Object Solutions, Inc. ("Managed Objects"), a supplier of business service management solutions, through a merger of Managed Objects into a wholly-owned subsidiary. The purchase price, consisting of $46.3 million in cash, plus merger and transaction costs of $1.1 million, was allocated as follows: </font></p> <p style="margin-top: 0px; margin-bottom: 0px; font-size: 12px;">&nbsp;</p> <table border="0" cellspacing="0" cellpadding="0" width="100%" align="center"> <tr><td width="81%"> </td> <td valign="bottom" width="2%"> </td> <td> </td> <td> </td> <td> </td> <td valign="bottom" width="2%"> </td> <td> </td> <td> </td> <td> </td></tr> <tr><td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>(In thousands)</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" nowrap="nowrap" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Estimated</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Fair&nbsp; Value</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" nowrap="nowrap" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Estimated</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Useful Life</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Net tangible assets acquired</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" nowrap="nowrap" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">3,410</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" nowrap="nowrap" align="center"><font style="font-family: Times New Roman;" class="_mt" size="2">N/A</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Identifiable intangible assets:</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 2em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Developed technology</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" nowrap="nowrap" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">5,800</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" nowrap="nowrap" align="center"><font style="font-family: Times New Roman;" class="_mt" size="2">3 years</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 2em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Customer relationships</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" nowrap="nowrap" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">3,000</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" nowrap="nowrap" align="center"><font style="font-family: Times New Roman;" class="_mt" size="2">3 years</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Goodwill</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" nowrap="nowrap" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">35,176</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" nowrap="nowrap" align="center"><font style="font-family: Times New Roman;" class="_mt" size="2">Indefinite</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;&nbsp;</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 3em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Total net assets acquired</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" nowrap="nowrap" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;47,386</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;&nbsp;</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td></tr></table> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">The acquired net tangible assets of Managed Objects consisted primarily of cash and cash equivalents, accounts receivable, prepaid expenses and property, plant and equipment, partially offset by accounts payable, and other current liabilities that we assumed. </font></p> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">Developed technology relates to Managed Objects products that were commercially available and could be combined with our products and services. Discounted expected future cash flows attributable to the products were used to determine the fair value of developed technology. This resulted in a valuation of $5.8 million related to developed technology that had reached technological feasibility. </font></p> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">Customer relationships of $3.0 million relate primarily to customers under maintenance agreements. The fair value of these relationships was determined based on discounted future cash flows expected to be received as a result of the agreements and assumptions about their renewal rates. </font></p> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">Goodwill from the acquisition resulted from our belief that the business service management products developed by Managed Objects are a valuable addition to our Systems and Resource Management offerings. We believe they will help us remain competitive in the Systems and Resource Management market and increase our Systems and Resource Management revenue. The goodwill from the Managed Objects acquisition was allocated to the Systems and Resource Management component of our SMOP business unit segment and is not tax-deductible. </font></p> <p style="margin-top: 12px; margin-bottom: 0px; font-size: 1px;">&nbsp;</p> <p style="margin-top: 0px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">Managed Objects' revenue and income were immaterial in prior years and would not have had a material impact to our reported financial results. </font></p> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">We analyze our intangible assets periodically for indicators of impairment. During the fourth quarter of fiscal 2009, we determined that we had experienced an impairment trigger event. As a result, we incurred an impairment charge of $2.2 million and $1.2 million, related to Managed Objects' developed technology and customer relationship intangible assets, respectively. For more information on this charge, see Note K, "Goodwill and Intangible Assets." </font></p> <p style="margin-top: 18px; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2"><i>PlateSpin </i></font></p> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">On March&nbsp;26, 2008, we acquired 100% of the outstanding stock of PlateSpin, a leader in support solutions for complete workload life cycle management and optimization for Windows, UNIX and Linux operating systems in the physical and virtual data center. The purchase price, consisting of $204.1 million in cash, plus merger and transaction costs of $3.8 million, was allocated as follows: </font></p> <p style="margin-top: 0px; margin-bottom: 0px; font-size: 12px;">&nbsp;</p> <table border="0" cellspacing="0" cellpadding="0" width="100%" align="center"> <tr><td width="81%"> </td> <td valign="bottom" width="2%"> </td> <td> </td> <td> </td> <td> </td> <td valign="bottom" width="2%"> </td> <td> </td> <td> </td> <td> </td></tr> <tr><td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>(In thousands)</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" nowrap="nowrap" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Estimated</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Fair Value</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" nowrap="nowrap" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Estimated</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Useful Life</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Net tangible assets acquired</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" nowrap="nowrap" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">3,303</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" nowrap="nowrap" align="center"><font style="font-family: Times New Roman;" class="_mt" size="2">N/A</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Purchased in-process research and development</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" nowrap="nowrap" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">2,700</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" nowrap="nowrap" align="center"><font style="font-family: Times New Roman;" class="_mt" size="2">N/A</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Identifiable intangible assets:</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 2em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Developed technology</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" nowrap="nowrap" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">12,600</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" nowrap="nowrap" align="center"><font style="font-family: Times New Roman;" class="_mt" size="2">3 years</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 2em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Customer relationships</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" nowrap="nowrap" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">11,900</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" nowrap="nowrap" align="center"><font style="font-family: Times New Roman;" class="_mt" size="2">3 years</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 2em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Trade name</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" nowrap="nowrap" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">900</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" nowrap="nowrap" align="center"><font style="font-family: Times New Roman;" class="_mt" size="2">3 years</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Goodwill</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" nowrap="nowrap" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">176,480</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" nowrap="nowrap" align="center"><font style="font-family: Times New Roman;" class="_mt" size="2">Indefinite</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;&nbsp;</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 3em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Total net assets acquired</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" nowrap="nowrap" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;207,883</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;&nbsp;</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td></tr></table> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">The acquired net tangible assets of PlateSpin consisted primarily of cash and cash equivalents, accounts receivable, prepaid expenses and property, plant and equipment, partially offset by accounts payable, and other current liabilities that we assumed. </font></p> <p style="padding-bottom: 0px; margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">Purchased in-process research and development, valued at $2.7 million, pertained to technology that was not technologically feasible at the date of the acquisition, meaning it had not reached the working model stage, did not contain all of the major functions planned for the product, and was not ready for initial customer testing. At the acquisition date, PlateSpin was working on the next release of its three major products: PowerConvert<font style="font-family: Times New Roman;" class="_mt" size="1"><sup style="position: relative; bottom: 0.8ex; vertical-align: baseline;">&#174;</sup></font>, PowerRecon, and Forge, all of which were planned for release at various dates in the latter part of calendar year 2008. These releases had not yet reached technological feasibility at the time of the acquisition. The purchased in-p rocess research and development was valued based on discounting estimated future cash flows from the related products. The purchased in-process research and development does not have any alternative future use and did not otherwise qualify for capitalization. As a result, this amount was expensed upon acquisition. </font></p> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">Developed technology relates to PlateSpin products that were commercially available and could be combined with our products and services. Discounted expected future cash flows attributable to the products were used to determine the fair value of developed technology. This resulted in a valuation of $12.6 million related to developed technology that has reached technological feasibility. </font></p> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">Customer relationships of $11.9 million relate primarily to customers under maintenance agreements. The fair value of these relationships was determined based on discounted expected future cash flows to be received as a result of the agreements and assumptions about their renewal rates. </font></p> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">PlateSpin's trade name, with a fair value of $0.9 million, was determined using the relief-from-royalty method, which assigns a royalty rate to the revenue streams that were expected from the products using the trade name. The royalty rate was determined based on the history of PlateSpin's trade name, the expected life, and information from comparable market transactions, applied to the product revenue and discounted to a present value. </font></p> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">Goodwill from the acquisition resulted from our belief that the workload life cycle management products developed by PlateSpin are a valuable addition to the Systems and Resource Management component of our SMOP business unit segment. We believe they will help us remain competitive in the Systems and Resource Management market and increase our Systems and Resource Management revenue. The goodwill from the PlateSpin acquisition was allocated to the Systems and Resource Management component of our SMOP business unit segment and is tax deductible due to a tax election that treats the acquisition of a foreign company as an asset purchase. </font></p> <p style="margin-top: 12px; margin-bottom: 0px; font-size: 1px;">&nbsp;</p> <p style="margin-top: 0px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">We analyze our intangible assets periodically for indicators of impairment. During the fourth quarter of fiscal 2009, we determined that we had experienced an impairment trigger event. As a result, we incurred an impairment charge of $3.4 million and $2.3 million, related to PlateSpin's developed technology and customer relationship intangible assets, respectively. For more information on this charge, see Note K, "Goodwill and Intangible Assets." </font></p> <p style="margin-top: 18px; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2"><i>SiteScape </i></font></p> <p style="margin-top: 6px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">On February&nbsp;13, 2008, we acquired 100% of the outstanding stock of SiteScape, Inc. ("SiteScape"), a provider of open collaboration software, including Teaming + Conferencing products. The purchase price, consisting of $18.5 million in cash, plus merger and transaction costs of $0.4 million, was allocated as follows: </font></p> <p style="margin-top: 0px; margin-bottom: 0px; font-size: 12px;">&nbsp;</p> <table border="0" cellspacing="0" cellpadding="0" width="100%" align="center"> <tr><td width="80%"> </td> <td valign="bottom" width="2%"> </td> <td> </td> <td> </td> <td> </td> <td valign="bottom" width="2%"> </td> <td> </td> <td> </td> <td> </td></tr> <tr><td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>(In thousands)</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" nowrap="nowrap" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Estimated</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Fair&nbsp; Value</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" nowrap="nowrap" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Estimated</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Useful Life</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Net liabilities assumed</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(3,792</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" nowrap="nowrap" align="center"><font style="font-family: Times New Roman;" class="_mt" size="2">N/A</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Identifiable intangible assets:</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 2em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Developed technology</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">1,800</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" nowrap="nowrap" align="center"><font style="font-family: Times New Roman;" class="_mt" size="2">3 years</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 2em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Customer relationships</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">1,200</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" nowrap="nowrap" align="center"><font style="font-family: Times New Roman;" class="_mt" size="2">3 years</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Goodwill</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">19,723</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" nowrap="nowrap" align="center"><font style="font-family: Times New Roman;" class="_mt" size="2">Indefinite</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 3em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Total net assets acquired</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;18,931</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td></tr></table> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">The assumed net liabilities of SiteScape consisted primarily of accounts payable and other current liabilities, partially offset by acquired cash and cash equivalents and accounts receivable. </font></p> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">Developed technology relates to SiteScape products that were commercially available and could be combined with our products and services. Discounted expected future cash flows attributable to the products were used to determine the fair value of developed technology. This resulted in a valuation of $1.8 million related to developed technology that has reached technological feasibility. </font></p> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">Customer relationships of $1.2 million relate primarily to customers under maintenance agreements. The fair value of these relationships was determined based on discounted expected future cash flows to be received as a result of the agreements and assumptions about their renewal rates. </font></p> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">Goodwill from the acquisition resulted from our belief that the open collaboration products developed by SiteScape are a valuable addition to our CS product offerings. We believe they will help us remain competitive in the CS market and increase our CS business unit segment revenue. The goodwill from the SiteScape acquisition was allocated to our CS business unit segment and is not tax deductible. </font></p> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">If the PlateSpin and SiteScape acquisitions had occurred on November&nbsp;1, 2007 (fiscal 2008), our unaudited pro forma results of operations would have been as follows: </font></p> <p style="margin-top: 0px; margin-bottom: 0px; font-size: 12px;">&nbsp;</p> <table border="0" cellspacing="0" cellpadding="0" width="100%" align="center"> <tr><td width="87%"> </td> <td valign="bottom" width="5%"> </td> <td> </td> <td> </td> <td> </td></tr> <tr><td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>(Amounts in thousands, except per share amounts)</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Fiscal&nbsp;Year&nbsp;Ended</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>October&nbsp; 31,</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>2008</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Net revenue</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;967,767</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Net loss</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(19,835</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Net loss per share</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(0.06</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td></tr></table> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">Our pro forma net loss for fiscal 2008 includes $2.7 million of non-recurring purchased in-process research and development costs. </font></p> </div> 1079819000 680034000 591656000 685594000 <div> <p style="margin-top: 18px; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2"><b>E. Cash and Short-Term Investments </b></font></p> <p style="margin-top: 6px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">The following is a summary of our short-term available-for-sale investments at October&nbsp;31, 2010 and 2009: </font></p> <p style="margin-top: 0px; margin-bottom: 0px; font-size: 12px;">&nbsp;</p> <table border="0" cellspacing="0" cellpadding="0" width="100%" align="center"> <tr><td width="60%"> </td> <td valign="bottom" width="5%"> </td> <td> </td> <td> </td> <td> </td> <td valign="bottom" width="5%"> </td> <td> </td> <td> </td> <td> </td> <td valign="bottom" width="5%"> </td> <td> </td> <td> </td> <td> </td> <td valign="bottom" width="5%"> </td> <td> </td> <td> </td> <td> </td></tr> <tr><td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>(In thousands)</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Cost at</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>&nbsp;&nbsp;&nbsp;&nbsp;October&nbsp;31,&nbsp;&nbsp;&nbsp;&nbsp;</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>2010</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Gross</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>&nbsp;&nbsp; Unrealized</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Gains</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Gross</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>&nbsp;&nbsp; Unrealized</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Losses</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>&nbsp;&nbsp;&nbsp;&nbsp;Fair&nbsp;Market&nbsp;&nbsp;&nbsp;&nbsp;</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Value at</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>October&nbsp;31,</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>2010</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Short-term investments:</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 2em;"><font style="font-family: Times New Roman;" class="_mt" size="2">U.S. government, state and agency securities</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">189,328</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">3,621</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">&#8212;</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">192,949</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 2em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Corporate notes and bonds</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">203,210</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">4,793</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(9</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">207,994</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 2em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Asset-backed securities</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">31,418</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">285</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(26</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">31,677</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 2em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Equity securities</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">8,367</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">109</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">&#8212;</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">8,476</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 3em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Total short-term investments</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">432,323</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">8,808</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(35</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">441,096</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td></tr> <tr><td height="16"> </td> <td height="16" colspan="4"> </td> <td height="16" colspan="4"> </td> <td height="16" colspan="4"> </td> <td height="16" colspan="4"> </td></tr> <tr><td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>(In thousands)</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Cost at</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>October&nbsp;31,</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>2009</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Gross</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Unrealized</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Gains</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Gross</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Unrealized</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Losses</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Fair Market</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Value at</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>October&nbsp;31,</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>2009</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Short-term investments:</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 2em;"><font style="font-family: Times New Roman;" class="_mt" size="2">U.S. government, state and agency securities</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">183,062</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">2,633</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">&#8212;</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">185,695</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 2em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Corporate notes and bonds</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">169,685</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">4,269</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(12</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">173,942</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 2em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Asset-backed securities</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">24,828</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">439</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">&#8212;</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">25,267</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 2em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Equity securities</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">7,923</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">&#8212;</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(1,018</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">6,905</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 3em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Total short-term investments</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">385,498</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">7,341</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(1,030</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">391,809</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td></tr></table> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">At October&nbsp;31, 2010, the $8.5 million market value of our equity securities is designated for deferred compensation payments, which are paid out as requested by the participants of the plan upon termination. </font></p> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">At October&nbsp;31, 2010, contractual maturities of our short-term investments were: </font></p> <p style="margin-top: 0px; margin-bottom: 0px; font-size: 12px;">&nbsp;</p> <table border="0" cellspacing="0" cellpadding="0" width="100%" align="center"> <tr><td width="78%"> </td> <td valign="bottom" width="3%"> </td> <td> </td> <td> </td> <td> </td> <td valign="bottom" width="3%"> </td> <td> </td> <td> </td> <td> </td></tr> <tr><td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>(In thousands)</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Cost</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Fair&nbsp;Market</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Value</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Less than one year</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">48,914</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">49,463</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Due in one to two years</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">158,552</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">161,624</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Due in two to three years</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">155,437</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">158,401</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Due in more than three years</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">61,053</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">63,132</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">No contractual maturity</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">8,367</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">8,476</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 2em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Total short-term investments</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;432,323</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;441,096</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td></tr></table> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">We had net unrealized gains related to short-term investments of $8.8 million and $6.3 million at October&nbsp;31, 2010 and October&nbsp;31, 2009, respectively. At October&nbsp;31, 2010, no investments had been in a continuous unrealized loss position for more than 12 months. At October&nbsp;31, 2010, $14.6 million market value of investments with gross unrealized losses of less than $0.1 million had been in a continuous unrealized loss position for less than 12 months. We did not record any impairment losses on short-term investments during fiscal 2010 and 2009, as we considered the unrealized losses to be temporary. With respect to our debt securities that are in an unrealized loss position, we expect to recover the entire cost basis of these securities before we sell them, therefore they are not considered to be other-than-temporarily impaired. </ font></p> <p style="margin-top: 12px; margin-bottom: 0px; font-size: 1px;">&nbsp;</p> <p style="margin-top: 0px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">During fiscal 2008, as a result of Lehman Brother's bankruptcy announcement, we recorded a $1.3 million other-than temporary impairment charge on the $1.5 million of Lehman Brothers' securities that we held at that time. During fiscal 2009 we sold this security for a minimal gain. </font></p> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">Realized gains and losses related to our short-term investments were as follows: </font></p> <p style="margin-top: 0px; margin-bottom: 0px; font-size: 12px;">&nbsp;</p> <table border="0" cellspacing="0" cellpadding="0" width="100%" align="center"> <tr><td width="72%"> </td> <td valign="bottom" width="5%"> </td> <td> </td> <td> </td> <td> </td> <td valign="bottom" width="5%"> </td> <td> </td> <td> </td> <td> </td> <td valign="bottom" width="5%"> </td> <td> </td> <td> </td> <td> </td></tr> <tr><td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="10" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Fiscal Year Ended October&nbsp;31,</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td></tr> <tr><td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>(In thousands)</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2010&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2009&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2008&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Realized gains</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">5,165</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">4,835</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">10,614</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Realized losses</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">540</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">1,469</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">2,637</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr></table> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">During fiscal 2010 and 2008, the U.S. dollar value of our foreign-denominated cash and cash equivalent holdings decreased due to changes in foreign currency exchange rates by a net $3.2 million and $22.2 million, respectively. During fiscal 2009, the U.S. dollar value of our foreign-denominated cash and cash equivalent holdings increased due to changes in foreign currency exchange rates by a net $14.8 million. The decrease in fiscal 2010 resulted from the strengthening of the U.S. dollar against certain foreign currencies, primarily the Euro. As foreign currency exchange rates continue to fluctuate, especially the Euro, we may see further changes in the U.S. dollar value of our foreign-denominated cash and cash equivalent holdings. </font></p> </div> -399785000 -88378000 93938000 <div> <p style="margin-top: 18px; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2"><b>R. Commitments and Contingencies </b></font></p> <p style="margin-top: 6px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">As of October&nbsp;31, 2010, we have various operating leases related to our facilities. These leases have minimum annual lease commitments of $13.0 million in fiscal 2011, $10.8 million in fiscal 2012, $6.5 million in fiscal 2013, $4.3 million in fiscal 2014, $3.8 million in fiscal 2015, and $4.1 million thereafter. We also have $26.9 million of minimum rentals to be received in the future from subleases. </font></p> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">Rent expense, net of sublease rental income, for operating and month-to-month leases was $12.8 million, $14.9 million, and $17.5 million, in fiscal 2010, 2009, and 2008, respectively. </font></p> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">During fiscal 2008, we issued $4.8 million of debt to finance leasehold improvements for our Bangalore, India product development facility. During fiscal 2009, we repaid this obligation in full. Interest expense in fiscal 2009 related to this debt was $0.3 million. </font></p> </div> 0.10 0.10 600000000 600000000 362175921 366670140 347072762 351576048 36218000 36667000 -62972000 -174625000 365818000 <div> <p style="margin-top: 18px; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2"><b>X. Comprehensive Income </b></font></p> <p style="margin-top: 6px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">Our accumulated other comprehensive income is comprised of the following: </font></p> <p style="margin-top: 0px; margin-bottom: 0px; font-size: 12px;">&nbsp;</p> <table border="0" cellspacing="0" cellpadding="0" width="100%" align="center"> <tr><td width="66%"> </td> <td valign="bottom" width="2%"> </td> <td> </td> <td> </td> <td> </td> <td valign="bottom" width="2%"> </td> <td> </td> <td> </td> <td> </td> <td valign="bottom" width="2%"> </td> <td> </td> <td> </td> <td> </td></tr> <tr><td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom" colspan="2"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="6" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Fiscal Year Ended October&nbsp;31,</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td></tr> <tr><td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>(In thousands)</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom" colspan="2"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>2010</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>2009</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Net unrealized gain on investments</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="top"> </td> <td valign="top"> </td> <td valign="top"> </td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">8,773</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">11,018</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Pension actuarial (loss) gain</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="top"> </td> <td valign="top"> </td> <td valign="top"> </td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(26</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">4,929</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Pension transition obligation</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="top"> </td> <td valign="top"> </td> <td valign="top"> </td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(413</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(531</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Cumulative translation adjustment</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="top"> </td> <td valign="top"> </td> <td valign="top"> </td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">490</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">5,566</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 2em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Total accumulated other comprehensive income</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="top"> </td> <td valign="top"> </td> <td valign="top"> </td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8,824</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;20,982</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td></tr> <tr><td height="16" colspan="13"> </td></tr> <tr><td valign="top" colspan="12"><font style="font-family: Times New Roman;" class="_mt" size="2">Changes to accumulated other comprehensive income are as follows:</font></td> <td valign="top"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr><td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="10" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Fiscal Year Ended October&nbsp;31,</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td></tr> <tr><td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>(In thousands)</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>2010</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>2009</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>2008</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Total change in gross unrealized gain/loss on investments during the year</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(6,870</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">15,601</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(9,631</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Adjustment for net realized gains (losses) on investments included in net loss</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">4,625</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(1,799</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">6,029</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 3em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Net change in unrealized gain/loss on investments</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(2,245</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">13,802</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(3,602</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Pension adjustment</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(4,837</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">755</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">2,234</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Cumulative translation adjustments</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(5,076</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">23,554</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(52,859</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 3em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Total change to other comprehensive income</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(12,158</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;38,111</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(54,227</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td></tr></table> <p style="margin-top: 12px; margin-bottom: 0px; font-size: 1px;">&nbsp;</p> <p style="margin-top: 0px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">In fiscal 2010, we released a portion of the valuation allowance on the capital loss carryforward deferred tax assets such that there was no net tax impact on our unrealized gain/loss on investments. The other components of accumulated other comprehensive income were not tax affected due to the fact that the related deferred tax assets were fully reserved at October&nbsp;31, 2010, 2009, and 2008. We continue to maintain a valuation allowance on selected U.S. federal, state and international net deferred tax assets. </font></p> </div> 235239000 186831000 173605000 -1392000 -1392000 <div> <p style="margin-top: 18px; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2"><b>P. Senior Convertible Debentures </b></font></p> <p style="margin-top: 6px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">On July&nbsp;2, 2004, we issued and sold $600 million aggregate principal amount of 0.5% senior convertible debentures due 2024 ("Debentures"). The Debentures paid interest at 0.50%&nbsp;per annum, payable semi-annually on January&nbsp;15 and July&nbsp;15 of each year, commencing January&nbsp;15, 2005. Each $1,000 principal amount of Debentures was convertible, at the option of the holders, into approximately 86.79 shares of our common stock prior to July&nbsp;15, 2024 if (1)&nbsp;the price of our common stock traded above 130% of the conversion price for a specified duration, (2)&nbsp;the trading price of the Debentures was below a certain threshold, subject to specified exceptions, (3)&nbsp;the Debentures had been called for redemption, or (4)&nbsp;specified corporate transactions had occurred. None of the conversion triggers we re met. </font></p> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">During fiscal 2008, we received authorization from our Board of Directors to repurchase, from time to time, up to $600 million face value of the Debentures in such quantities, at such prices and in such manner as may be directed by our management. </font></p> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">During fiscal 2008, we purchased and retired $474.3 million face value of the Debentures for total cash consideration of $456.5 million, including $0.6 million of accrued interest. The portions of the unamortized debt issuance costs and prepaid interest related to the Debentures that were repurchased were written off, resulting in a $4.6 million gain during fiscal 2008. This gain is shown as a component of the line item "Interest expense and other, net" in our consolidated statements of operations. </font></p> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">During fiscal 2009, in accordance with the terms of the Debentures, we offered to repurchase our outstanding Debentures. As a result, we purchased and retired the remaining $125.7 million face value of the Debentures under this plan for total cash consideration of $125.5 million, including less than $0.1 million of accrued interest. </font></p> <p style="margin-top: 12px; margin-bottom: 0px; font-size: 1px;">&nbsp;</p> <p style="margin-top: 0px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">During fiscal 2009 and 2008, we incurred interest expense of $3.2 million and $18.8 million, respectively, including the amortization of deferred financing costs related to the Debentures. During fiscal 2009, we made cash payments for interest of $0.6 million. </font></p> </div> -19078000 8610000 -261878000 495245000 487590000 193526000 163394000 5521000 49169000 26717000 243583000 8403000 7622000 42892000 40675000 30298000 <div> <p style="margin-top: 18px; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2"><b>I. Derivative Instruments and Hedging Activities </b></font></p> <p style="margin-top: 6px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">The net notional amount of foreign currency exchange contracts hedging foreign currency transactions was $43.6 million and $27.0 million at October&nbsp;31, 2010 and October&nbsp;31, 2009, respectively. The fair value of these contracts was immaterial at both October&nbsp;31, 2010 and October&nbsp;31, 2009. </font></p> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">During fiscal 2010 and 2009, we recognized $0.5 million of gains and $7.3 million of losses on our foreign currency exchange contracts, respectively. These losses are shown as a component of the line item, "Interest expense and other, net" in our consolidated statements of operations. </font></p> </div> <div> <p style="margin-top: 18px; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2"><b>U. Stock-Based Compensation </b></font></p> <p style="margin-top: 6px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">Our consolidated statements of operations include the following amounts of stock-based compensation expense in the respective captions: </font></p> <p style="margin-top: 0px; margin-bottom: 0px; font-size: 12px;">&nbsp;</p> <table border="0" cellspacing="0" cellpadding="0" width="100%" align="center"> <tr><td width="70%"> </td> <td valign="bottom" width="5%"> </td> <td> </td> <td> </td> <td> </td> <td valign="bottom" width="5%"> </td> <td> </td> <td> </td> <td> </td> <td valign="bottom" width="5%"> </td> <td> </td> <td> </td> <td> </td></tr> <tr><td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="10" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Fiscal Year Ended October&nbsp;31,</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td></tr> <tr><td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>(In thousands)</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2010&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2009&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2008&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Cost of revenue</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">3,053</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">2,649</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">3,621</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td></tr> <tr><td height="8"> </td> <td height="8" colspan="4"> </td> <td height="8" colspan="4"> </td> <td height="8" colspan="4"> </td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Sales and marketing</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">8,038</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">7,015</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">10,134</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Product development</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">8,227</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">9,332</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">10,363</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">General and administrative</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">9,739</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">6,885</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">9,700</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 2em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Operating expenses</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">26,004</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">23,232</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">30,197</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 3em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Total stock-based compensation expense</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">29,057</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">25,881</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">33,818</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td></tr></table> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">Total unrecognized stock-based compensation expense expected to be recognized over an estimated weighted-average amortization period of 1.7 years was $38.1 million at October&nbsp;31, 2010. </font></p> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">The benefits of tax deductions in excess of recognized compensation cost are reported as a financing cash flow. In fiscal 2010 and 2008, this requirement decreased our net operating cash flows and increased our net financing cash flows by $2.2 million and $18.5 million, respectively. In fiscal 2009, this requirement increased our net operating cash flows and decreased our net financing cash flows by $2.8 million. </font></p> <p style="margin-top: 18px; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2"><i>Stock Plans </i></font></p> <p style="margin-top: 6px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">All stock-based compensation awards are administered under one of the stock award plans discussed in Note T, "Stockholders' Equity." When granting stock options, we grant nonstatutory options at fair market value on the date of grant (defined as the closing price on the day prior to the grant date). We also grant restricted stock and restricted stock units. </font></p> <p style="margin-top: 18px; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2"><i>Time-Based Stock Awards </i></font></p> <p style="margin-top: 6px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">Our weighted-average assumptions used in the Black-Scholes valuation model for equity awards with time-based vesting provisions granted during fiscal 2010, 2009, and 2008 are shown below: </font></p> <p style="margin-top: 0px; margin-bottom: 0px; font-size: 12px;">&nbsp;</p> <table border="0" cellspacing="0" cellpadding="0" width="100%" align="center"> <tr><td width="67%"> </td> <td valign="bottom" width="3%"> </td> <td> </td> <td> </td> <td> </td> <td valign="bottom" width="3%"> </td> <td> </td> <td> </td> <td> </td> <td valign="bottom" width="3%"> </td> <td> </td> <td> </td> <td> </td></tr> <tr><td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="10" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Fiscal Year Ended October&nbsp;31,</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td></tr> <tr><td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2010&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2009&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2008&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Expected volatility</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">42%</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">55%</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">37%</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Expected dividends</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">0%</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">0%</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">0%</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Expected term</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">4.9&nbsp;years</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">4.7&nbsp;years</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">4.0&nbsp;years</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Risk-free interest rate</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" nowrap="nowrap" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">1.1&nbsp;&ndash;&nbsp;2.6%</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" nowrap="nowrap" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">0.9&nbsp;&ndash;&nbsp;3.0%</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" nowrap="nowrap" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">2.9&nbsp;&ndash;&nbsp;4.7%</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr></table> <p style="margin-top: 12px; margin-bottom: 0px; font-size: 1px;">&nbsp;</p> <p style="margin-top: 0px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">The expected volatility rate was estimated based on equal weighting of the historical volatility of our common stock over a period coinciding with the expected term and the implied volatilities of our common stock. The expected term was estimated based on our historical experience of exercise, cancellation, and expiration patterns. The risk-free interest rates are based on U.S. Treasury STRIPS with maturities that approximate the expected term. </font></p> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">The estimated pre-vesting forfeiture rate used for fiscal 2010, 2009 and 2008 was 10%, which was based on historical rates and forward-looking factors. We adjust the estimated forfeiture rate to our actual experience upon vesting or as additional information about future forfeitures become available. </font></p> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">A summary of the time-based stock awards, which include stock options, restricted stock, and restricted stock units, as of October&nbsp;31, 2010, and changes during the fiscal year then ended, is as follows: </font></p> <p style="margin-top: 0px; margin-bottom: 0px; font-size: 12px;">&nbsp;</p> <table border="0" cellspacing="0" cellpadding="0" width="100%" align="center"> <tr><td width="62%"> </td> <td valign="bottom" width="5%"> </td> <td> </td> <td> </td> <td> </td> <td valign="bottom" width="5%"> </td> <td> </td> <td> </td> <td> </td> <td valign="bottom" width="5%"> </td> <td> </td> <td> </td> <td> </td> <td valign="bottom" width="5%"> </td> <td> </td> <td> </td> <td> </td></tr> <tr><td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>&nbsp;&nbsp;&nbsp;&nbsp;Shares&nbsp;&nbsp;&nbsp;&nbsp;</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Weighted-</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Average</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>&nbsp;&nbsp;&nbsp;&nbsp;Exercise&nbsp;&nbsp;&nbsp;&nbsp;</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Price</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Weighted-</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Average</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Remaining</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>&nbsp;&nbsp;Contractual&nbsp;&nbsp; </b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Term</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>&nbsp;&nbsp;&nbsp;&nbsp;Aggregate&nbsp;&nbsp;&nbsp;&nbsp;</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Intrinsic</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Value</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td></tr> <tr><td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>(In&nbsp;thousands)</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom" colspan="2"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>(Years)</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>(In thousands)</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2"><b>Stock Awards</b></font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Outstanding at November&nbsp;1, 2009</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">25,156</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">4.81</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 2em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Granted:</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 3em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Price equal to fair market value</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">5,330</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">4.36</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 3em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Price less than fair market value</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">4,677</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">&#8212;</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 2em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Exercised or released</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(4,243</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">2.08</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 2em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Forfeited or expired</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(4,524</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">6.74</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Outstanding at October&nbsp;31, 2010</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">26,396</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;&nbsp;&nbsp;3.97</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">3.32</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">64,629</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Exercisable at October&nbsp;31, 2010</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">11,929</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">6.27</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">2.63</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">8,482</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td></tr></table> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">The weighted-average grant-date fair value of time-based stock awards granted during fiscal 2010 was $3.27. The total intrinsic value of awards exercised or released during fiscal 2010 was $14.5 million. As of October&nbsp;31, 2010, there was $36.8 million of unrecognized stock-based compensation cost related to time-based stock awards. That cost is expected to be recognized over a weighted-average period of 1.8 years. </font></p> <p style="margin-top: 18px; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2"><i>Performance-Based and Market-Condition Awards </i></font></p> <p style="margin-top: 6px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">We have issued performance-based equity awards to certain senior executives. These awards have the potential to vest over one to four years upon the achievement of certain specific financial performance goals, specifically related to the achievement of budgeted revenue and operating income targets in each fiscal year. The performance-based options were granted at an exercise price equal to the fair market value of our common stock on the date the option was granted and have a contractual life of up to eight years. </font></p> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">The fair value of each performance-based option was estimated using the closing price of our stock on the day prior to grant utilizing the Black-Scholes option valuation model without consideration of the performance measures. The inputs for expected volatility, expected term, expected dividends, and risk-free interest rate used in estimating the fair value of performance-based awards in fiscal 2010 are the same as those noted above under time-based stock awards. </font></p> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">We have issued restricted stock units to executives that will vest based on the achievement of certain stock price targets. The stock-based compensation cost and derived service periods for these restricted stock units were estimated using the Monte Carlo simulation method, utilizing a volatility of 46.4% and a risk-free rate of 2.9%. The weighted-average fair value of these awards is $3.25 and the derived service periods range from approximately one year to approximately two and one-third years. During the second quarter of fiscal 2010, one-third of the market award vested due to the achievement of the target applicable to that portion of the award. This resulted in the recognition of $1.4 million in stock-based compensation during fiscal 2010 related to that portion of the award. If the remaining targets are not met, the restricted stock units will expire on the seve nth anniversary of the grant date and will not convert into shares of common stock. </font></p> <p style="margin-top: 12px; margin-bottom: 0px; font-size: 1px;">&nbsp;</p> <p style="margin-top: 0px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">A summary of the performance-based options, restricted stock units and market-condition restricted stock units as of October&nbsp;31, 2010, and changes during the fiscal year then ended, is as follows: </font></p> <p style="margin-top: 0px; margin-bottom: 0px; font-size: 12px;">&nbsp;</p> <table border="0" cellspacing="0" cellpadding="0" width="100%" align="center"> <tr><td width="62%"> </td> <td valign="bottom" width="4%"> </td> <td> </td> <td> </td> <td> </td> <td valign="bottom" width="4%"> </td> <td> </td> <td> </td> <td> </td> <td valign="bottom" width="4%"> </td> <td> </td> <td> </td> <td> </td> <td valign="bottom" width="4%"> </td> <td> </td> <td> </td> <td> </td></tr> <tr><td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Shares</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>&nbsp;&nbsp;Weighted-&nbsp;&nbsp; </b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Average</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Exercise</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Price</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Weighted-</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Average</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Remaining</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>&nbsp;&nbsp;Contractual&nbsp;&nbsp; </b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Term</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>&nbsp;&nbsp;Aggregate&nbsp;&nbsp; </b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Intrinsic</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Value</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td></tr> <tr><td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>(In&nbsp;thousands)</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom" colspan="2"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>(Years)</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>(In&nbsp;thousands)</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2"><b>Stock Awards</b></font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Outstanding at November&nbsp;1, 2009</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">3,393</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">4.24</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 2em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Fair value determined during year</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">865</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">4.88</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 2em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Granted:</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 3em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Price less than fair market value</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">1,230</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">&#8212;</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 2em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Exercised or released</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(1,045</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">&#8212;</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 2em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Forfeited or expired</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(942</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">5.93</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Outstanding at October&nbsp;31, 2010</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">3,501</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">3.72</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">4.88</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">10,626</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Exercisable at October&nbsp;31, 2010</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">606</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.91</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">3.76</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#8212;</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td></tr></table> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">The weighted-average grant-date fair value of market-based awards granted during fiscal 2010 was $3.25. No new performance awards were granted during fiscal 2010. The total intrinsic value of performance and market-based awards exercised or released during fiscal 2010 was $5.0 million. As of October&nbsp;31, 2010, there was $1.3 million of unrecognized compensation cost related to performance and market-based awards. That cost is expected to be recognized ratably over a one to two year period. </font></p> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">As of October&nbsp;31, 2010, there were 1.0&nbsp;million performance stock awards that have been granted and remain outstanding but have not yet been valued because all of the conditions necessary to establish the grant date for U.S. GAAP purposes have not yet occurred. The grant date of these stock awards will occur once budgets are approved by our Board of Directors for the respective years specified in the performance targets. </font></p> </div> -2653000 -1904000 -610000 2758000 1904000 610000 -836000 <div> <p style="margin-top: 0px; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2"><b>D. Divestitures </b></font></p> <p style="margin-top: 6px; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2"><i>Discontinued Operations </i></font></p> <p style="margin-top: 6px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">Our discontinued operations include the divestitures of our Cambridge Technology Partners (Switzerland) SA ("CTP Switzerland") subsidiary in fiscal 2008, our Salmon Ltd. ("Salmon") subsidiary in fiscal 2007 and Celerant consulting ("Celerant") in fiscal 2006. Detailed discussions of each of these divestitures follow: </font></p> <p style="margin-top: 18px; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2"><i><u>CTP Switzerland </u></i></font></p> <p style="margin-top: 6px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">On October&nbsp;31, 2007, we signed an agreement to sell our CTP Switzerland subsidiary to a management-led buyout group for $0.8 million. No further payments are due from the CTP Switzerland buyout group. As of January&nbsp;31, 2008, we ceased stockholder and operational relationships with CTP Switzerland. </font></p> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">When we signed the agreement, we began classifying CTP Switzerland's results as a discontinued operation in our consolidated statements of operations and reclassified our results of operations for the prior comparable period. In fiscal 2007, we recognized an estimated loss on disposal of $8.9 million resulting from the expected sale. During fiscal 2008, we recognized a gain on final liquidation of CTP Switzerland of $1.4 million, for a total net loss on the disposition of $7.4 million. </font></p> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">The net loss on the sale of CTP Switzerland was calculated as follows: </font></p> <p style="margin-top: 0px; margin-bottom: 0px; font-size: 12px;">&nbsp;</p> <table border="0" cellspacing="0" cellpadding="0" width="100%" align="center"> <tr><td width="87%"> </td> <td valign="bottom" width="3%"> </td> <td> </td> <td> </td> <td> </td></tr> <tr><td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>(In thousands)</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom" colspan="2"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Sales price</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">750</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Costs to sell</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(304</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td></tr> <tr bgcolor="#cceeff"><td valign="top"> </td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">446</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td></tr> <tr><td height="8"> </td> <td height="8" colspan="4"> </td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Net book value of CTP Switzerland:</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 2em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Cash</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">3,417</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 2em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Accounts receivable, net</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">3,508</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 2em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Other current assets</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">1,718</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 2em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Other long-term assets</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">315</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 2em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Current liabilities</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(3,322</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 2em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Realization of cumulative translation adjustment</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(1,668</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 2em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Impairment of goodwill</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">3,903</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td></tr> <tr><td valign="top"> </td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">7,871</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 3em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Net loss on sale of CTP Switzerland before income taxes</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(7,425</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td></tr> <tr><td height="8"> </td> <td height="8" colspan="4"> </td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Loss before income taxes recognized in fiscal 2007</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(8,855</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Gain before income taxes recognized in fiscal 2008</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">1,430</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr></table> <p style="margin-top: 18px; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2"><i><u>Salmon </u></i></font></p> <p style="margin-top: 6px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">On March&nbsp;12, 2007, we sold our shares in our wholly-owned Salmon subsidiary to Okam Limited, a U.K. Limited Holding Company, for $4.9 million, plus an additional contingent payment of &#163;2.0&nbsp;million (approximately $3.1 million) all of which has been received. With respect to the contingent payment amount, gains of $1.9 million and $1.2 million were recognized as this amount was earned in fiscal 2009 and 2008, respectively. </font></p> <p style="margin-top: 18px; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2"><i><u>Celerant </u></i></font></p> <p style="margin-top: 6px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">On May&nbsp;24, 2006, we sold our shares in Celerant to a group comprised of Celerant management and Caledonia Investments plc for $77.0 million in cash. As part of the Celerant divestiture agreement, Celerant was responsible for the administration and was legally liable for its two pension plans, but we agreed to fund any shortages to the respective plans. It was our intention that we would be able to negotiate "buy outs" of the plans. The completion of the buy outs has taken much longer than anticipated due to delays related to updating the actuarial valuations, reaching agreement with the insurance company and receiving proper approvals from the pensioners and the German government. In October 2010, we were able to reach a conclusion on this matter for $0.6 million less than the original estimate. This accrual release is shown in the line item "Income from discon tinued operations" in our consolidated statements of operations. </font></p> <p style="margin-top: 12px; margin-bottom: 0px; font-size: 1px;">&nbsp;</p> <p style="margin-top: 0px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">The results of discontinued operations (CTP Switzerland, Salmon and Celerant) for fiscal 2010, 2009 and 2008 are as follows: </font></p> <p style="margin-top: 0px; margin-bottom: 0px; font-size: 12px;">&nbsp;</p> <table border="0" cellspacing="0" cellpadding="0" width="100%" align="center"> <tr><td width="78%"> </td> <td valign="bottom" width="4%"> </td> <td> </td> <td> </td> <td> </td> <td valign="bottom" width="4%"> </td> <td> </td> <td> </td> <td> </td> <td valign="bottom" width="4%"> </td> <td> </td> <td> </td> <td> </td></tr> <tr><td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="10" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Fiscal&nbsp;Year&nbsp;Ended&nbsp;October&nbsp;31,</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td></tr> <tr><td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>(In thousands)</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2010&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2009&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2008&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">CTP Switzerland net revenue</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">&#8212;</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">&#8212;</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">6,566</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td></tr> <tr><td height="8"> </td> <td height="8" colspan="4"> </td> <td height="8" colspan="4"> </td> <td height="8" colspan="4"> </td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">CTP Switzerland income before taxes</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">&#8212;</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">&#8212;</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">105</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td></tr> <tr><td height="8"> </td> <td height="8" colspan="4"> </td> <td height="8" colspan="4"> </td> <td height="8" colspan="4"> </td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Salmon gain on sale</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">&#8212;</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">1,904</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">1,223</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">CTP Switzerland gain on sale</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">&#8212;</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">&#8212;</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">1,430</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Celerant gain on sale</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">610</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">&#8212;</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">&#8212;</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 2em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Gain on discontinued operations</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">610</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">1,904</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">2,653</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Income tax benefit on discontinued operations</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">&#8212;</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">&#8212;</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(836</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 3em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Income from discontinued operations</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">610</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">1,904</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">3,594</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td></tr></table> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">The net cash proceeds from the sale of our discontinued operations (CTP Switzerland and Salmon) are as follows: </font></p> <p style="margin-top: 0px; margin-bottom: 0px; font-size: 12px;">&nbsp;</p> <table border="0" cellspacing="0" cellpadding="0" width="100%" align="center"> <tr><td width="78%"> </td> <td valign="bottom" width="4%"> </td> <td> </td> <td> </td> <td> </td> <td valign="bottom" width="4%"> </td> <td> </td> <td> </td> <td> </td> <td valign="bottom" width="4%"> </td> <td> </td> <td> </td> <td> </td></tr> <tr><td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="10" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Fiscal&nbsp;Year&nbsp;Ended&nbsp;October&nbsp;31,</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td></tr> <tr><td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>(In thousands)</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2010&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2009&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2008&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">CTP Switzerland net cash distributions</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">&#8212;</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">&#8212;</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(2,667</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Salmon net cash proceeds</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">938</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">1,036</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">3,231</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 2em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Net cash proceeds from sale of discontinued operations</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">938</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">1,036</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">564</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td></tr></table> <p style="margin-top: 18px; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2"><i>Sales of Subsidiaries </i></font></p> <p style="margin-top: 6px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">Our sales of subsidiaries include the divestitures of our Chile subsidiary in fiscal 2009 and our Mexico and Argentina subsidiaries in fiscal 2008. We sold all three of these subsidiaries to one of our Latin America distribution partners. We will continue to sell products to customers in these countries through the distribution partner. Accordingly, we will have continuing cash flows from these businesses and have not presented them as discontinued operations in our consolidated statements of operations. Detailed discussions of each of these divestitures follow: </font></p> <p style="margin-top: 18px; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2"><i><u>Chile subsidiary </u></i></font></p> <p style="margin-top: 6px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">Our Chile subsidiary, which we sold during fiscal 2009 for an insubstantial amount, was a very small operation with an immaterial net book value. The loss recorded on this sale was $0.1 million and is shown as a component of the line item "(Gain) loss on sale of subsidiaries" on our consolidated statements of operations. </font></p> <p style="margin-top: 18px; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2"><i><u>Mexico and Argentina subsidiaries </u></i></font></p> <p style="margin-top: 6px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">During fiscal 2008, we sold our Mexico and our Argentina subsidiaries and recorded a total loss on the sale of both subsidiaries of $3.7 million. These subsidiaries were primarily sales operations and sold products from both our business unit segments. During fiscal 2009, we reached final settlement related to working capital adjustments on the sale of our Mexico and Argentina subsidiaries. This resulted in a non-cash gain of $0.2 million related to our Mexico subsidiary and a non-cash loss of $0.1 million related to our Argentina subsidiary. These gains and losses are shown as a component of the line item "(Gain) loss on sale of subsidiaries" on our consolidated statements of operations. </font></p> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">The cumulative recognized loss on the sale of our subsidiaries is as follows: </font></p> <p style="margin-top: 0px; margin-bottom: 0px; font-size: 12px;">&nbsp;</p> <table border="0" cellspacing="0" cellpadding="0" width="100%" align="center"> <tr><td width="66%"> </td> <td valign="bottom" width="5%"> </td> <td> </td> <td> </td> <td> </td> <td valign="bottom" width="5%"> </td> <td> </td> <td> </td> <td> </td> <td valign="bottom" width="5%"> </td> <td> </td> <td> </td> <td> </td> <td valign="bottom" width="5%"> </td> <td> </td> <td> </td> <td> </td></tr> <tr><td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>(In thousands)</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>&nbsp;&nbsp;&nbsp;&nbsp;Mexico&nbsp;&nbsp;&nbsp;&nbsp;</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>&nbsp;&nbsp;Argentina&nbsp;&nbsp;</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Chile&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Loss before income taxes recognized in fiscal 2008</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(3,065</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(629</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">&#8212;</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(3,694</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Gain (loss) before income taxes recognized in fiscal 2009</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">200</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(72</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(112</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">16</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 2em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Total loss before income taxes</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(2,865</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(701</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(112</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(3,678</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td></tr></table> <p style="margin-top: 12px; margin-bottom: 0px; font-size: 1px;">&nbsp;</p> <p style="margin-top: 0px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">The net cash distributions from the sale of our Mexico and Argentina subsidiaries are as follows (Chile had an insignificant net cash distribution): </font></p> <p style="margin-top: 0px; margin-bottom: 0px; font-size: 12px;">&nbsp;</p> <table border="0" cellspacing="0" cellpadding="0" width="100%" align="center"> <tr><td width="87%"> </td> <td valign="bottom" width="5%"> </td> <td> </td> <td> </td> <td> </td></tr> <tr><td valign="bottom"> <p style="margin-top: 0px; margin-bottom: 1px;"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>(In thousands)</b></font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Fiscal&nbsp;Year&nbsp;Ended</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>October&nbsp; 31,</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>2008</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Mexico net cash distributed</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(13</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Argentina net cash distributed</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(158</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 2em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Net cash distributions from sale of subsidiaries</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(171</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td></tr></table> <p style="margin-top: 18px; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2"><b> </b></font>&nbsp;</p> </div> -0.02 -0.62 1.08 -0.02 -0.62 1.07 <div> <p style="margin-top: 0px; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2"><b>W. Income (Loss) Per Share From Continuing Operations </b></font></p> <p style="margin-top: 6px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">The following table reconciles the numerators and denominators of the income (loss) per share calculation for fiscal 2010, 2009, and 2008: </font></p> <p style="margin-top: 0px; margin-bottom: 0px; font-size: 12px;">&nbsp;</p> <table border="0" cellspacing="0" cellpadding="0" width="100%" align="center"> <tr><td width="66%"> </td> <td valign="bottom" width="2%"> </td> <td> </td> <td> </td> <td> </td> <td valign="bottom" width="2%"> </td> <td> </td> <td> </td> <td> </td> <td valign="bottom" width="2%"> </td> <td> </td> <td> </td> <td> </td></tr> <tr><td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="10" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Fiscal Year Ended October&nbsp;31,</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td></tr> <tr><td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>(In thousands, except per share data)</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>2010</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>2009</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>2008</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td></tr> <tr><td height="8"> </td> <td height="8" colspan="4"> </td> <td height="8" colspan="4"> </td> <td height="8" colspan="4"> </td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2"><b>Basic income (loss) per share from continuing operations computation:</b></font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Income (loss) from continuing operations</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;377,366</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(214,640</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(12,339</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Weighted-average common shares outstanding, excluding unvested restricted stock</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">349,741</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">345,493</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">350,207</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td></tr> <tr><td height="8"> </td> <td height="8" colspan="4"> </td> <td height="8" colspan="4"> </td> <td height="8" colspan="4"> </td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Basic income (loss) per share from continuing operations</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">1.08</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(0.62</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(0.04</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td></tr> <tr><td height="8"> </td> <td height="8" colspan="4"> </td> <td height="8" colspan="4"> </td> <td height="8" colspan="4"> </td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2"><b>Diluted income (loss) per share from continuing operations computation:</b></font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Income (loss) from continuing operations</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">377,366</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(214,640</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(12,339</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Weighted-average common shares outstanding, excluding unvested restricted stock</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">349,741</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">345,493</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">350,207</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Incremental shares attributable to the assumed exercise of outstanding options, unvested restricted stock units, unvested restricted stock, and other share plans</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">3,706</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">&#8212;</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">&#8212;</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 2em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Total adjusted weighted-average common shares restricted stock</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">353,447</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">345,493</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">350,207</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td></tr> <tr><td height="8"> </td> <td height="8" colspan="4"> </td> <td height="8" colspan="4"> </td> <td height="8" colspan="4"> </td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Diluted income (loss) per share from continuing operations</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">1.07</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(0.62</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(0.04</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td></tr></table> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">Incremental shares of 2.3&nbsp;million and 1.5&nbsp;million attributable to the assumed exercise of outstanding awards with exercise prices that were below the average market price ("in-the-money") were not included in the calculation of diluted loss per share for fiscal 2009 and 2008, respectively, as their effect would have been anti-dilutive due to the loss in those periods. Incremental shares attributable to options with exercise prices that were at or greater than the average market price ("out-of-the-money") at October&nbsp;31, 2010, 2009, and 2008 were also excluded from the calculation of diluted earnings per share as their effect would have been anti-dilutive. At October&nbsp;31, 2010, 2009, and 2008, there were 15.1&nbsp;million, 22.0&nbsp;million, and 16.1&nbsp;million out-of-the-money options, respectively. </font></p> ; </div> -22237000 14826000 -3181000 87928000 83181000 18500000 -2775000 2226000 <div> <p style="margin-top: 18px; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2"><b>H. Fair Value Measurements </b></font></p> <p style="margin-top: 6px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">Our level 1 financial instruments are valued using quoted prices in active markets for identical instruments. We did not have any level 2 or level 3 financial instruments at October&nbsp;31, 2010. The composition of our level 1 financial instruments can be found in the table in Note E, "Cash and Short-Term Investments." </font></p> <p style="margin-top: 12px; margin-bottom: 0px; font-size: 1px;">&nbsp;</p> <p style="margin-top: 0px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">The following table summarized the composition and fair value hierarchy of our financial assets as of October&nbsp;31, 2009. We did not have any level 2 financial instruments at October&nbsp;31, 2009. Our ARSs were our only level 3 financial assets at October&nbsp;31, 2009 and were valued using unobservable inputs that were supported by little or no market activity and that were significant to the fair value of the investments. </font></p> <p style="margin-top: 0px; margin-bottom: 0px; font-size: 12px;">&nbsp;</p> <table border="0" cellspacing="0" cellpadding="0" width="100%" align="center"> <tr><td width="67%"> </td> <td valign="bottom" width="3%"> </td> <td> </td> <td> </td> <td> </td> <td valign="bottom" width="3%"> </td> <td> </td> <td> </td> <td> </td> <td valign="bottom" width="3%"> </td> <td> </td> <td> </td> <td> </td></tr> <tr><td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom" colspan="2"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="6" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Fair&nbsp;Value&nbsp;Measurements&nbsp;Using&nbsp;&nbsp;&nbsp;&nbsp; </b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td></tr> <tr><td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>(In thousands)</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Total as of</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>October&nbsp;31,</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>2009</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Quoted&nbsp;Prices in</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Active Markets</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>for Identical</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Assets</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>(Level 1)</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Significant</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Unobservable</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Inputs</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>(Level 3)</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Total short-term investments</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">391,809</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">391,809</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">&#8212;</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Long-term investments</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">10,303</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">&#8212;</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">10,303</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 2em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Total</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;402,112</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;391,809</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10,303</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td></tr></table> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">The following table summarizes the change in composition and fair value hierarchy of our level 3 financial assets, which were comprised entirely of our ARSs, during fiscal 2010 and fiscal 2009. </font></p> <p style="margin-top: 0px; margin-bottom: 0px; font-size: 12px;">&nbsp;</p> <table border="0" cellspacing="0" cellpadding="0" width="100%" align="center"> <tr><td width="80%"> </td> <td valign="bottom" width="3%"> </td> <td> </td> <td> </td> <td> </td> <td valign="bottom" width="3%"> </td> <td> </td> <td> </td> <td> </td></tr> <tr><td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom" colspan="6" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Fiscal&nbsp;Year&nbsp;Ended&nbsp;October&nbsp;31,</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td></tr> <tr><td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>(In thousands)</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>2010</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>2009</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Beginning balance</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10,303</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11,063</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Total gains or (losses):</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 2em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Impairment included in earnings</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">&#8212;</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(5,466</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 2em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Book value of assets sold</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(5,597</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">&#8212;</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 2em;"><font style="font-family: Times New Roman;" class="_mt" size="2">(Removed from) included in accumulated other comprehensive income</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(4,706</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">4,706</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 3em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Ending balance</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">&#8212;</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">10,303</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td></tr></table> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">See Note G, "Long-Term Investments" for more information on the sales of the $5.6 million book value of ARSs that occurred during fiscal 2010. </font></p> </div> 2199000 -3694000 16000 113529000 102345000 108465000 356033000 353415000 <div> <p style="margin-top: 18px; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2"><b>K. Goodwill and Intangible Assets </b></font></p> <p style="margin-top: 6px; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2"><i>Goodwill </i></font></p> <p style="margin-top: 6px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">During the first quarter of fiscal 2010, our former Open Platform Solutions, Identity and Security Management, and Systems and Resource Management business unit segments were consolidated to form the new SMOP business unit segment (See Note A, "Summary of Business Operations," for more information on our business unit segment structural and management reorganization). The three components of SMOP will continue to be considered reporting units for goodwill impairment testing purposes. As there were no changes to the reporting units, no interim goodwill impairment tests were required. Our CS business unit segment continues to be considered its own reporting unit for goodwill testing purposes. </font></p> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">Goodwill at carrying value allocated to our business unit segments as of October&nbsp;31, 2010 and 2009 is as follows: </font></p> <p style="margin-top: 0px; margin-bottom: 0px; font-size: 12px;">&nbsp;</p> <table border="0" cellspacing="0" cellpadding="0" width="100%" align="center"> <tr><td width="73%"> </td> <td valign="bottom" width="2%"> </td> <td> </td> <td> </td> <td> </td> <td valign="bottom" width="2%"> </td> <td> </td> <td> </td> <td> </td> <td valign="bottom" width="2%"> </td> <td> </td> <td> </td> <td> </td></tr> <tr><td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>(In thousands)</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>SMOP</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>CS</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Total</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Goodwill as of October&nbsp;31, 2008:</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;&nbsp;&nbsp;432,459</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;&nbsp;&nbsp;149,658</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;&nbsp;&nbsp;582,117</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Activity during fiscal 2009:</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 2em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Managed Objects acquisition</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">35,176</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">&#8212;</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">35,176</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 2em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Fortefi acquisition</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">2,222</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">&#8212;</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">2,222</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 2em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Impact of foreign currency exchange translation</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">9,222</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">&#8212;</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">9,222</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 2em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Adjustments</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(2,031</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(629</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(2,660</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 2em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Impairment</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(270,044</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">&#8212;</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(270,044</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Goodwill as of October&nbsp;31, 2009:</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">207,004</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">149,029</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">356,033</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Activity during fiscal 2010:</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 2em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Release of merger liability</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(1,811</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(1,435</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(3,246</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 2em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Impact of foreign currency exchange translation</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">628</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">&#8212;</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">628</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Goodwill as of October&nbsp;31, 2010:</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">205,821</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">147,594</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">353,415</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td></tr></table> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">As described in the "Goodwill impairment test as of September&nbsp;30, 2009" section below, we recorded a goodwill impairment of $270.0 million during fiscal 2009. This represents our accumulated goodwill impairment losses at October&nbsp;31, 2010 and 2009. </font></p> <p style="margin-top: 18px; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2"><i><u>Adjustments </u></i></font></p> <p style="margin-top: 6px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">During fiscal 2010, we assigned to a subtenant a facility lease related to our April 2005 acquisition of Tally Systems Corp. At the time of the acquisition, this lease had a nine-year term and therefore a merger liability was established as part of the acquisition purchase price allocation. Because the cost of exiting this lease was less than the estimated merger liability, we released this excess, reducing the cost of the acquired company. This adjustment to the purchase price resulted in a $3.2 million reduction to total goodwill, reducing SMOP and CS business unit segment goodwill by $1.8 million and $1.4 million, respectively. </font></p> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">Adjustments during fiscal 2009 decreased goodwill by $2.7 million and related primarily to the reversal of deferred tax asset valuation allowances for acquired net operating loss carryforwards that were utilized by income generated during fiscal 2009 for the Managed Objects, Senforce, SiteScape, Tally, e-Security, and SilverStream acquisitions. For information on our Managed Objects acquisition, see Note C, "Acquisitions." </font></p> <p style="margin-top: 12px; margin-bottom: 0px; font-size: 1px;">&nbsp;</p> <p style="margin-top: 0px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">In fiscal 2010 and 2009, goodwill increased $0.6 million and $9.2 million, respectively, due to the impact of foreign currency translation on the portion of goodwill related to PlateSpin that is denominated in Canadian dollars, and therefore, subject to foreign currency exchange rate fluctuations. </font></p> <p style="margin-top: 18px; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2"><i><u>Annual goodwill impairment test </u></i></font></p> <p style="margin-top: 6px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">Annually on August&nbsp;1, we perform our goodwill impairment test. The first step ("step one") in evaluating impairment is to determine if the estimated fair value of a reporting unit is less than its carrying value. If step one indicates that the fair value is less than the carrying value of the reporting unit, then impairment potentially exists, and the second step ("step two") is performed to measure the amount of impairment, if any. To estimate the fair value of each of our reporting units for step one, management made estimates and judgments about future cash flows based on assumptions that are consistent with both short-term plans and long-range forecasts used to manage the business. We also considered factors such as our market capitalization and current economic events in assessing the fair value of the reporting units. This process requires subjective judg ment at many points throughout the analysis. Changes to the estimates used in the analysis, including estimated future cash flows, could cause one or more of the reporting units or indefinite-lived intangibles to be valued differently in future periods. </font></p> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">Based on the results of our analysis, we determined that no goodwill impairment existed at August&nbsp;1, 2010, 2009 or 2008. For our fiscal 2010 test, the excess of the fair value over the carrying value of our reporting units was as follows: 428% for Open Platform Solutions, 268% for Systems and Resource Management, 244% for Identity and Security Management, and 279% for CS. The calculation of fair value was determined on a consistent basis with prior years. </font></p> <p style="margin-top: 18px; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2"><i><u>Events subsequent to annual goodwill impairment test as of August&nbsp;1, 2009 </u></i></font></p> <p style="margin-top: 6px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">In the week leading up to the September&nbsp;22, 2009 Board of Directors annual budget meeting, management updated its long-range forecast concurrent with the completion of the fiscal 2010 budgeting process. Management reduced its long-range revenue growth assumptions late in the annual planning process due to company trends, a revised market outlook and continued economic uncertainty. </font></p> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">Management's revised long-range forecast lowered the projected revenue and operating income utilized in the August&nbsp;1, 2009 discounted cash flow model valuation. We considered this lowered financial outlook to be an impairment trigger event for both goodwill and long-lived assets, requiring us to re-perform the step one test for potential impairment, which we did as of September&nbsp;30, 2009, our closest balance sheet date. Also, because long-term revenue projections were lowered in all four of our reporting units, each reporting unit had to be reviewed for potential impairment. </font></p> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">As discussed under "Goodwill impairment test as of September&nbsp;30, 2009" below, the lower long-term projections resulted in the failure of the step one test for our Systems and Resource Management reporting unit because the estimated fair value of this reporting unit was lower than its carrying value. All other reporting units passed the step one test. Because the Systems and Resource Management reporting unit failed the step one test, we were required to perform the step two test, which utilizes a notional purchase price allocation using the estimated fair value from step one as the purchase price to determine the implied value of the reporting unit's goodwill. The completion of the step two test resulted in the determination that $270.0 million of the Systems and Resource Management reporting unit's goodwill was impaired. The $270.0 million impairment charge i s shown in the line item "Impairment of goodwill" in our consolidated statements of operations. </font></p> <p style="margin-top: 18px; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2"><i><u>Goodwill impairment test as of September&nbsp;30, 2009 </u></i></font></p> <p style="margin-top: 6px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">In performing step one of the goodwill impairment test, it was necessary to determine the fair value of each of the four reporting unit segments. The fair values of all reporting units, except for CS, were estimated using a weighted average of a discounted cash flow methodology ("DCF") and a market analysis. The market analysis included looking at the valuations of comparable public companies, as well as recent acquisitions of comparable companies. For CS only, the DCF was utilized as it was felt that there was no comparable market information, due to the uniqueness of CS which is forecasted to have a long-term declining revenue stream, yet have high operating margins. With respect to the other three reporting units, a 10% weighting was given to the market analysis. As a result, a weighting of 90% was given to the DCF. </font></p> <p style="margin-top: 12px; margin-bottom: 0px; font-size: 1px;">&nbsp;</p> <p style="margin-top: 0px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">Two key inputs to the DCF analysis were our future cash flow projection and the discount rate. We used a ten-year future cash flow projection, based on management's long-range forecast, discounted to present value, and an estimate of terminal values, which was also discounted to present value. Terminal values represent the present value an investor would pay today for the rights to cash flows of the reporting unit for the years subsequent to the ten-year cash flow projection period. As noted above, the long-range forecast that was utilized for the impairment test after the September&nbsp;22, 2009 Board meeting was lower than what was utilized in both the August&nbsp;1, 2009 valuation and the fiscal 2008 valuation. The lower forecast was the primary reason for the lower fair values that resulted in the need to perform a step two impairment valuation for the Syste ms and Resource Management reporting unit. A driver of the lower forecast for the Systems and Resource Management reporting unit was the underperformance of our ZENworks products as well as our recent acquisitions. </font></p> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">The other major input into the DCF analysis was the discount rate, which was determined by estimating each reporting unit's weighted average cost of capital, reflecting the nature of the respective reporting unit and the perceived risk of the underlying cash flows. We used the following discount rates in our DCF methodology for each of our reporting units: 16.0% for Open Platform Solutions, 15.6% for Identity and Security Management, 14.6% for Systems and Resource Management and 13.0% for CS. If we had increased our discount rates by 1%, it would not have impacted the ultimate results of our step one test. The excess of the fair value over the carrying value of our reporting units was as follows: 68% for Open Platform Solutions, 139% for Identity and Security Management, and 379% for CS. </font></p> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">The step two test involves allocating the fair value of the Systems and Resource Management reporting unit to all of its assets and liabilities on a fair value basis, with the excess amount representing the implied value of goodwill. As part of this process the fair value of the Systems and Resource Management reporting unit's identifiable intangible assets, including in-process research and development, developed technology, customer relationships and trademarks/trade names were determined. The fair values of these assets were determined primarily through the use of the DCF method. The fair values of Systems and Resource Management's property, plant and equipment were determined primarily through the use of third party broker quotes. The fair value of Systems and Resource Management's deferred revenue was based upon the estimate of the amount that would be required to pay a third party to assume the obligation. After determining the fair value of all Systems and Resource Management reporting unit assets and liabilities, it was determined that the implied value of goodwill was $56.0 million. The September&nbsp;30, 2009 carrying value of the Systems and Resource Management reporting unit's goodwill was $326.0 million, which, when compared to the implied goodwill value of $56.0 million resulted in the impairment charge of $270.0 million. </font></p> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">The above described process requires subjective judgment at many points throughout the analysis. Changes to the estimates used in the analysis, including estimated future cash flows, could cause one or more of the reporting units or indefinite-lived intangibles to be valued differently in future periods. It is at least reasonably possible that future analyses could result in additional material non-cash goodwill impairment charges. </font></p> <p style="margin-top: 18px; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2"><i><u>Review of long-lived assets as of September&nbsp;30, 2009 </u></i></font></p> <p style="margin-top: 6px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">As noted above, we concurrently performed an assessment of long-lived assets for impairment at September&nbsp;30, 2009. These assets, which include tangible and intangible assets, need to be tested for impairment before the step two goodwill impairment analysis can be completed because any change in these assets would impact the carrying value of the Systems and Resource Management reporting unit. </font></p> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">To test the recoverability of our long-lived assets and liabilities, which for us is primarily long-lived assets, they were grouped with other assets at the lowest level for which identifiable cash flows were largely independent of the cash flows of other assets. With the exception of our Systems and Resource Management reporting unit, we determined that our asset groups were our reporting units, as that was the lowest level at which cash flows could be separated from other assets. For the Systems and Resource Management reporting unit, separate identifiable cash flows were available for PlateSpin and Managed Objects products, with all other cash flows belonging to our remaining Systems and Resource Management business (primarily ZENworks). Therefore, the Systems and Resource Management reporting unit had three asset groups. </font></p> <p style="margin-top: 12px; margin-bottom: 0px; font-size: 1px;">&nbsp;</p> <p style="margin-top: 0px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">The test for recoverability compares undiscounted future cash flows of the long-lived asset group to its carrying value. The future cash flow period was based on the future service life of the primary asset within the long-lived asset group. </font></p> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">If the future cash flows exceed the carrying values of the asset group, the asset group is not considered to be impaired. If the carrying values of the asset group exceed the future cash flows, the asset group is considered to be potentially impaired. It was determined that for all asset groups except for PlateSpin and Managed Objects, the future cash flows exceeded the carrying values of the respective asset groups. </font></p> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">As the PlateSpin and Managed Objects asset groups had carrying values in excess of their estimated undiscounted future cash flows, it was necessary to determine the fair value of the individual assets within the asset group. Because the aggregate fair values of the individual assets of the group were less than their carrying values, an impairment was recorded equal to the excess of the aggregated carrying value of the asset group over the aggregate fair value. This loss was allocated to each asset within the group that had a fair value less than its carrying value, based on their relative carrying values, with no asset reduced below its fair value. As a result of this test, it was determined that $5.7 million of PlateSpin's and $3.4 million of Managed Objects' developed technology and customer relationships were impaired. These impairment charges, totaling $9.1 million , are shown in the line item, "Impairment of intangible assets" in our consolidated statements of operations. </font></p> <p style="margin-top: 18px; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2"><i>Intangible Assets </i></font></p> <p style="margin-top: 6px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">The following is a summary of intangible assets: </font></p> <p style="margin-top: 0px; margin-bottom: 0px; font-size: 12px;">&nbsp;</p> <table border="0" cellspacing="0" cellpadding="0" width="100%" align="center"> <tr><td width="43%"> </td> <td valign="bottom" width="2%"> </td> <td> </td> <td> </td> <td> </td> <td valign="bottom" width="2%"> </td> <td> </td> <td> </td> <td> </td> <td valign="bottom" width="2%"> </td> <td> </td> <td> </td> <td> </td> <td valign="bottom" width="2%"> </td> <td> </td> <td> </td> <td> </td> <td valign="bottom" width="2%"> </td> <td> </td> <td> </td> <td> </td> <td valign="bottom" width="2%"> </td> <td> </td> <td> </td> <td> </td> <td valign="bottom" width="2%"> </td> <td> </td> <td> </td> <td> </td></tr> <tr><td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="10" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>October&nbsp;31, 2010</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="10" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>October&nbsp;31, 2009</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom" colspan="2"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td></tr> <tr><td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>(In thousands)</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Gross</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Amount</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Accumulated</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>&nbsp;&nbsp; Amortization&nbsp;&nbsp;</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Net Book</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Value</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Gross</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Amount</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Accumulated</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>&nbsp;&nbsp; Amortization&nbsp;&nbsp;</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Net Book</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Value</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Asset</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Lives</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Developed technology</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;30,765</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;(27,761</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">3,004</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">30,765</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(22,546</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">8,219</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="center"><font style="font-family: Times New Roman;" class="_mt" size="2">3-4 years</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr><td valign="bottom"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Trademarks/trade names</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">25,511</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(1,165</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">24,346</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">25,511</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(865</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">24,646</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;<br />&nbsp;</font></td> <td valign="bottom" align="center"><font style="font-family: Times New Roman;" class="_mt" size="2">3&nbsp;years&nbsp;or<br />Indefinite</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;<br />&nbsp;&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Customer relationships</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">15,701</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(14,305</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">1,396</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">15,701</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(11,945</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">3,756</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="center"><font style="font-family: Times New Roman;" class="_mt" size="2">3 years</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;&nbsp;</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 2em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Total intangible assets</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">71,977</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(43,231</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;28,746</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;71,977</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;(35,356</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;36,621</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;&nbsp;</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td></tr></table> <p style="margin-top: 18px; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2"><i><u>Acquisitions </u></i></font></p> <p style="margin-top: 6px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">During fiscal 2009, we acquired developed technology and customer relationships of $5.8 million and $3.0 million, respectively, related to the Managed Objects acquisition, which was integrated into our Systems and Resource Management reporting unit. Further discussion was presented above in the subsection entitled, "Review of long-lived assets as of September&nbsp;30, 2009," with regards to the fiscal 2009 impairment of a portion of these intangible assets. During fiscal 2009, we also acquired developed technology and customer relationships of $0.7 million and $0.2 million, respectively, related to our acquisition of Fortefi, which was integrated into our Identity and Security Management reporting unit. </font></p> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">Developed technology at October&nbsp;31, 2010 related primarily to the Systems and Resource Management reporting unit as a result of our acquisitions of Managed Objects, PlateSpin, and Senforce, and to our Identity and Security Management reporting unit primarily from our acquisition of developed technology from the Hewlett-Packard Co., and the acquisitions of e-Security and Fortefi. Trademarks and trade names at October&nbsp;31, 2010 related primarily to the SUSE and PlateSpin individual product names, which we continue to use, of which $24.2 million relates to SUSE, and has an indefinite life. Customer relationships at October&nbsp;31, 2010 related primarily to the customers we acquired as a part of our acquisitions of PlateSpin and Managed Objects in our Systems and Resource Management reporting unit. </font></p> <p style="margin-top: 18px; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2"><i><u>Amortization </u></i></font></p> <p style="margin-top: 6px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">Amortization expense on intangible assets was $7.9 million, $17.3 million, and $13.0 million in fiscal 2010, 2009, and 2008, respectively. Amortization of intangible assets is estimated to be $4.0 million in fiscal 2011 and $0.5 million in fiscal 2012 with nothing thereafter. The weighted average amortization period of our developed technology, customer relationships, trademarks/trade names, and in total is 0.8 years, 1.0 years, 0.4 years and 0.9 years, respectively. </font></p> <p style="margin-top: 18px; margin-bottom: 0px; font-size: 1px;">&nbsp;</p> <p style="margin-top: 0px; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2"><i><u>Impairment analysis </u></i></font></p> <p style="margin-top: 6px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">During fiscal 2010, there were no impairments of any intangible assets. As discussed above, it was determined in fiscal 2009 that $5.7 million of PlateSpin's and $3.4 million of Managed Objects' developed technology and customer relationships were impaired. </font></p> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">During the fourth quarter of fiscal 2008, we completed our detailed internal reviews of the $12.0 million of developed technology acquired in the third quarter of fiscal 2008 and determined that we would not utilize all of this developed technology as initially planned. These reviews determined that only a portion of the acquired developed technology would be utilized in our products. We used discounted cash flow models to estimate the fair value of this acquired developed technology based upon the updated plans, and determined that $7.7 million had become impaired. This intangible asset was written down and the related charge was recorded in the line item, "Impairment of intangible assets" in our consolidated statements of operations during fiscal 2008. The entire $7.7 million impairment charge related to the Identity and Security Management reporting unit. As part of this review, it was determined that the estimated useful life of the remaining asset would be four years. </font></p> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">In the intangible asset table above, the impairment charges recorded during fiscal 2009 were reflected in the column, "Gross Amount." </font></p> </div> 270044000 721274000 675354000 638266000 7664000 9091000 -12339000 -214640000 377366000 22878000 -203974000 102087000 -0.04 -0.62 1.08 -0.04 -0.62 1.07 3594000 1904000 610000 0.02 0.02 <div> <p style="margin-top: 18px; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2"><b>L. Income Taxes </b></font></p> <p style="margin-top: 6px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">The components of income tax expense attributable to continuing operations consist of the following: </font></p> <p style="margin-top: 0px; margin-bottom: 0px; font-size: 12px;">&nbsp;</p> <table border="0" cellspacing="0" cellpadding="0" width="100%" align="center"> <tr><td width="85%"> </td> <td valign="bottom" width="2%"> </td> <td> </td> <td> </td> <td> </td> <td valign="bottom" width="2%"> </td> <td> </td> <td> </td> <td> </td> <td valign="bottom" width="2%"> </td> <td> </td> <td> </td> <td> </td></tr> <tr><td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="10" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Fiscal Year Ended October&nbsp;31,</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td></tr> <tr><td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>(In thousands)</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2010&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2009&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2008&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Income tax expense</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 2em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Current:</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 3em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Federal</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(9,125</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(2,939</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">48,778</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 3em;"><font style="font-family: Times New Roman;" class="_mt" size="2">State</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">682</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">1,009</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">4,884</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 3em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Foreign</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(9,750</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">13,226</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(1,875</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 4em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Total current income tax (benefit) expense</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(18,193</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">11,296</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">51,787</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 2em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Deferred:</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 3em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Federal</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(258,982</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">1,847</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(23,961</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 3em;"><font style="font-family: Times New Roman;" class="_mt" size="2">State</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">1,675</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">&#8212;</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">&#8212;</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 3em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Foreign</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">221</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(2,477</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">7,391</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 4em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Total deferred income tax (benefit) expense</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(257,086</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(630</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(16,570</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 4em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Total income tax (benefit) expense from continuing operations</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(275,279</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">10,666</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">35,217</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td></tr></table> <p style="margin-top: 12px; margin-bottom: 0px; font-size: 1px;">&nbsp;</p> <p style="margin-top: 0px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">Differences between the U.S. statutory and effective tax rates computed as a percentage of income from continuing operations before income taxes are as follows: </font></p> <p style="margin-top: 0px; margin-bottom: 0px; font-size: 12px;">&nbsp;</p> <table border="0" cellspacing="0" cellpadding="0" width="100%" align="center"> <tr><td width="85%"> </td> <td valign="bottom" width="2%"> </td> <td> </td> <td> </td> <td> </td> <td valign="bottom" width="2%"> </td> <td> </td> <td> </td> <td> </td> <td valign="bottom" width="2%"> </td> <td> </td> <td> </td> <td> </td></tr> <tr><td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="10" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Fiscal&nbsp;Year&nbsp;Ended&nbsp;October&nbsp;31,</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td></tr> <tr><td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2010&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2009&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2008&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">U.S. statutory rate</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">35.0</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">%&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">35.0</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">%&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">35.0</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">%&nbsp;</font></td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">State income taxes, net of federal tax effect</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">1.0</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">0.9</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">1.5</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Research and development tax credits</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(0.3</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">1.1</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(9.9</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Foreign income taxed at different rates than U.S. statutory rate</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(12.6</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(2.4</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(6.1</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Goodwill impairment</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">&#8212;</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(19.5</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">&#8212;</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Valuation allowances</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(269.4</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(12.2</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">233.2</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Stock-based compensation</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">2.1</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(1.0</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">12.2</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Adjustments to prior year tax provisions</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(5.2</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(3.9</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(4.4</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Change in assertion for unremitted earnings</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">&#8212;</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">&#8212;</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(110.8</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Recognition of previously unrecognized tax benefits</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(21.3</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">&#8212;</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(1.3</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Other, net</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">1.0</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(3.2</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">4.5</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 2em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Effective tax rate on continuing operations</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(269.7</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)%&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(5.2</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)%&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">153.9</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">%&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td></tr> <tr><td height="16" colspan="13"> </td></tr> <tr><td valign="top" colspan="12"> <p align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">Domestic and foreign components of income (loss) from continuing operations before taxes are as follows:</font></p></td> <td valign="top"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr><td height="16"> </td> <td height="16" colspan="12"> </td></tr> <tr><td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="10" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Fiscal Year Ended October&nbsp;31,</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td></tr> <tr><td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>(In thousands)</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2010&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2009&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2008&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Domestic</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">55,399</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(123,823</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">280</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Foreign</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">46,688</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(80,151</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">22,598</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 2em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Total income (loss) from continuing operations before taxes</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">102,087</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(203,974</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">22,878</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td></tr> <tr><td height="8"> </td> <td height="8" colspan="4"> </td> <td height="8" colspan="4"> </td> <td height="8" colspan="4"> </td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Cash paid for income taxes</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">14,828</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">35,565</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">12,854</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td></tr></table> <p style="margin-top: 18px; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2"><i>Income Tax Expense </i></font></p> <p style="margin-top: 6px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">The effective tax rate for fiscal 2010 differs from the federal statutory rate of 35% primarily due to the $277.2 million release in valuation allowance on certain of our U.S. net deferred tax assets and the $22.0 million reduction in reserve for uncertain tax positions primarily resulting from expiration of the statute of limitations on a previously uncertain tax position. A quantitative reconciliation of our effective tax rate to the U.S. statutory rate is provided in the above tables. </font></p> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">The effective tax rate on continuing operations for fiscal 2010 was a benefit of (270%)&nbsp;compared to (5%)&nbsp;for fiscal 2009. This was primarily due to the release of the valuation allowance against certain U.S. deferred tax assets and the reduction in reserve for uncertain tax positions resulting from expiration of the statute of limitations on a previously uncertain tax position. </font></p> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">The effective tax rate on continuing operations for fiscal 2009 was a benefit of (5%)&nbsp;compared to a provision of 154% for fiscal 2008. The fiscal 2009 rate of (5%)&nbsp;is the result of recording tax expense on a pre-tax loss. This was primarily due to the $279.1 million of goodwill and intangible asset impairment charges recorded for financial reporting purposes in fiscal 2009 for which we received minimal tax benefit. In the U.S., these impairment charges are either non-deductible or deductible over 15 years with a valuation allowance on the deferred asset, and outside the U.S., these impairment charges are attributable to jurisdictions where we receive little or no tax benefit. </font></p> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">In fiscal 2008 we had significant financial reporting to tax basis differences that increased fiscal 2008 taxable income primarily as a result of a large one-time cash payment to us in fiscal 2007 that we deferred for tax purposes to fiscal 2008. Because of these differences between financial reporting and tax treatment, we recorded significantly higher tax expense in the U.S. in fiscal 2008 when compared to fiscal 2010 and 2009, resulting in the higher overall effective tax rate in fiscal 2008 compared to fiscal 2010 and 2009. Included in the fiscal 2008 effective tax rate are $3.3 million in adjustments related to settlements of prior period audits and tax filings. </font></p> <p style="margin-top: 18px; margin-bottom: 0px; font-size: 1px;">&nbsp;</p> <p style="margin-top: 0px; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2"><i>Deferred Tax Assets </i></font></p> <p style="margin-top: 6px; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2">The components of deferred tax assets at October&nbsp;31, 2010 and 2009 are as follows: </font></p> <p style="margin-top: 0px; margin-bottom: 0px; font-size: 12px;">&nbsp;</p> <table border="0" cellspacing="0" cellpadding="0" width="100%" align="center"> <tr><td width="77%"> </td> <td valign="bottom" width="3%"> </td> <td> </td> <td> </td> <td> </td> <td valign="bottom" width="3%"> </td> <td> </td> <td> </td> <td> </td></tr> <tr><td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>(In thousands)</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>&nbsp;&nbsp;&nbsp;&nbsp;October&nbsp;31,&nbsp;&nbsp;&nbsp;&nbsp;</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>2010</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>&nbsp;&nbsp;&nbsp;&nbsp;October&nbsp;31,&nbsp;&nbsp;&nbsp;&nbsp;</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>2009</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Deferred income taxes:</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 2em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Deferred tax assets:</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 3em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Accruals</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">71,516</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">86,706</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 3em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Capital loss carryforwards</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">49,611</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">32,457</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 3em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Credit carryforwards</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">149,017</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">138,894</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 3em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Net operating loss carryforwards</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">114,138</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">120,807</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 3em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Intangibles from acquisitions</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">36,515</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">41,967</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 3em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Investment impairments</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">9,891</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">33,222</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 3em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Receivable valuation accounts</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">628</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">1,238</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 3em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Stock-based compensation expense</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">10,093</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">16,809</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 3em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Other items</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">14,161</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">12,065</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 2em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Gross deferred tax assets</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">455,570</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">484,165</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 2em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Valuation allowance</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(170,362</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(459,795</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 4em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Total deferred tax assets</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">285,208</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">24,370</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 2em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Deferred tax liabilities:</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 3em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Depreciation</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(78</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(535</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td></tr> <tr><td height="8"> </td> <td height="8" colspan="4"> </td> <td height="8" colspan="4"> </td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 4em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Net deferred tax assets</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;285,130</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;23,835</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td></tr></table> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">We record deferred tax assets and liabilities based upon the future tax consequence of differences between the financial reporting and tax basis of assets and liabilities, and other tax attributes. We also assess our ability to realize deferred tax assets based upon a "more likely than not" standard; a valuation allowance is recorded for any deferred tax assets not deemed more likely than not realizable. </font></p> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">We follow tax ordering laws to determine the sequence in which deductions, net operating loss carryforwards, and tax credits are utilized. For fiscal years including 2005 through 2009, substantially all of the benefit received from our net operating loss carryforwards used to offset U.S. taxable income has been credited to additional paid-in capital or goodwill and not to income tax expense. In addition, the windfall tax benefits associated with stock-based compensation have been credited to additional paid-in capital. Beginning in fiscal 2010, as a result of new accounting rules for business combinations, the benefit from our remaining acquisition-related net operating loss carryforwards used, or expected to be used to offset U.S. taxable income was credited to income tax expense. </font></p> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">As of October&nbsp;31, 2010, we had $180.4 million in net operating loss carryforwards from acquired companies that will expire in years 2019 through 2028. These loss carryforwards from acquired companies can be utilized to offset future taxable income, but are subject to certain annual limitations. In addition, we have approximately $166.5 million of foreign loss carryforwards, of which $23.7 million, $3.1 million, and $9.4 million are subject to expiration in years 2011, 2012, and 2013 through 2028, respectively. The remaining losses do not expire. We have $129.7 million in capital loss carryforwards, which, if not utilized, will expire in fiscal years 2011 through 2015. We have foreign tax credit carryforwards of $31.7 million that expire between fiscal years 2011 and 2020, general business credit carryforwards of $94.4 million that expire between fiscal years 2 011 and 2030, and alternative minimum tax credit carryforwards of $8.3 million that do not expire. We also have various state net operating loss and credit carryforwards that expire in accordance with the respective state statutes. </font></p> <p style="margin-top: 18px; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2"><i>Valuation Allowance </i></font></p> <p style="margin-top: 6px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">At October&nbsp;31, 2010, we recorded a $277.2 million release to the valuation allowance on our U.S. net deferred tax assets due to changes in our expectations regarding our ability to realize certain deferred tax assets. This resulted from a determination that it was more likely than not that a portion of the net deferred tax assets would be realized. In reaching this determination, we have evaluated all significant available positive and negative evidence including, but not limited to, our three-year cumulative results, trends in our businesses, expected future results and the character and amount of the net deferred tax assets. The underlying assumptions we used in forecasting future income required significant judgment and took into account our recent performance. </font></p> <p style="margin-top: 12px; margin-bottom: 0px; font-size: 1px;">&nbsp;</p> <p style="margin-top: 0px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">We continue to maintain a valuation allowance on a portion of our U.S. and foreign net deferred tax assets. The U.S. net deferred tax assets on which a valuation allowance is maintained include capital losses, foreign tax credits, state net operating losses and credits, and $16.6 million in federal credits related to stock-based compensation deductions for which the benefit will be accounted for as a credit to additional paid-in capital. The valuation allowance on our foreign net deferred tax assets primarily involves net operating losses. The determination of the realization of these foreign benefits is made on a country-by-country basis. </font></p> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">As deferred tax assets or liabilities increase or decrease in the future, or if a portion or all of the valuation allowance is no longer deemed to be necessary, the adjustments to the valuation allowance will increase or decrease future income tax provisions or additional paid-in-capital. </font></p> <p style="margin-top: 18px; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2"><i>Foreign Earnings </i></font></p> <p style="margin-top: 6px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">As of October 31, 2010, we have not provided deferred taxes relative to undistributed earnings of foreign subsidiaries as such undistributed earnings are considered to be indefinitely reinvested. Prior to fiscal 2008, we had provided deferred taxes on the undistributed earnings of certain foreign subsidiaries, but such deferred taxes were reversed during fiscal 2008 based on our assertion to remain indefinitely reinvested in all foreign subsidiaries. We consider the earnings to be indefinitely reinvested based on management's overall business strategy, including anticipated future uses of global cash balances for operations. Total undistributed earnings of approximately $280.3 million at October&nbsp;31, 2010, may become taxable upon their remittance as dividends or upon the sale or liquidation of these foreign subsidiaries. It is not practicable to determine the am ounts of net additional income tax that may be payable if such earnings were repatriated. The Merger Agreement provides that, at Attachmate's request, we will use our reasonable best efforts to repatriate cash on hand held by our foreign subsidiaries prior to closing the merger. Accordingly, we expect to record deferred taxes corresponding to undistributed earnings of certain foreign subsidiaries in fiscal 2011. </font></p> <p style="margin-top: 18px; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2"><i>Income Tax Reserves </i></font></p> <p style="margin-top: 6px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">As of October&nbsp;31, 2010, we had reserves for unrecognized tax benefits totaling $21.4 million, excluding interest, of which $14.4 million would favorably impact our effective tax rate if recognized. As of October&nbsp;31, 2009, we had reserves for unrecognized tax benefits totaling $37.3 million, excluding interest. The $15.9 million decrease in reserves for unrecognized tax benefits, excluding interest, during fiscal 2010 relates primarily to benefits recognized as a result of the lapse of the statute of limitations on a previously uncertain tax position. </font></p> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">During fiscal 2010, we reduced our accrual for interest by $6.1 million related to unrecognized tax benefits. During fiscal 2009 and 2008, we increased our accrual for interest by $1.9 million and $0.3 million, respectively, related to unrecognized tax benefits. These accrual adjustments were recorded in our consolidated statements of operations for the respective fiscal years. We had $3.2 million, $9.3 million, and $7.4 million accrued for the payment of interest related to unrecognized tax benefits as of October&nbsp;31, 2010, 2009, and 2008, respectively. </font></p> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">As of October&nbsp;31, 2010, we have recorded a $17.6 million liability for unrecognized tax benefits and related interest in the line item "Other long-term liabilities" on our consolidated balance sheet. </font></p> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">The difference between the total unrecognized tax benefits and those affecting the effective tax rate is due to certain unrecognized tax benefits that would have a full valuation allowance if recognized. As of October&nbsp;31, 2010, we believe it is reasonably possible that $3.8 million of unrecognized tax benefits and accrued interest will decrease within the next 12 months as the result of statutes of limitations expiring in various jurisdictions. </font></p> <p style="margin-top: 18px; margin-bottom: 0px; font-size: 1px;">&nbsp;</p> <p style="margin-top: 0px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">The following is a reconciliation of our change in uncertain tax positions: </font></p> <p style="margin-top: 0px; margin-bottom: 0px; font-size: 12px;">&nbsp;</p> <table border="0" cellspacing="0" cellpadding="0" width="100%" align="center"> <tr><td width="88%"> </td> <td valign="bottom" width="7%"> </td> <td> </td> <td> </td> <td> </td></tr> <tr><td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>(In thousands)</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Total Gross</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Unrecognized</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>&nbsp;&nbsp;&nbsp;&nbsp;Tax&nbsp;Benefits&nbsp;&nbsp;&nbsp;&nbsp;</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Balance at November&nbsp;1, 2008</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">49,862</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Increases related to fiscal 2009 tax positions</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">1,091</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Increases related to prior fiscal year tax positions</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">4,496</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Decreases related to settlement of prior fiscal year tax positions</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(17,471</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Expiration of statute of limitations for assessment of taxes</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(670</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 2em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Balance at October&nbsp;31, 2009</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">37,308</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Increases related to fiscal 2010 tax positions</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">543</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Increases related to prior fiscal year tax positions</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">255</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Decreases related to settlement of prior fiscal year tax positions</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(1,352</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Expiration of statute of limitations for assessment of taxes</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(15,380</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 2em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Balance at October&nbsp;31, 2010</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">21,374</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td></tr></table> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">We conduct business globally. As a result, we file income tax returns and are subject to examination by taxing authorities in various jurisdictions throughout the world. In the U.S., we are currently in appeals with the Internal Revenue Service regarding two issues related to its examination of tax years 2005 and 2006. We do not anticipate that the settlement of the two outstanding issues will have a material impact on our financial position or results of operations. In addition, we are at various stages in examinations in some state and foreign jurisdictions. With few exceptions, we are no longer subject to U.S. federal, state and local income tax examinations for years prior to fiscal 2002 or non-U.S. income tax examinations for years prior to fiscal 2005. </font></p> </div> 35217000 10666000 -275279000 -7586000 -7420000 -4535000 -11782000 -23951000 -8866000 -6225000 -53939000 -33443000 -39013000 -48990000 -40686000 -402000 -6166000 20399000 -7997000 -3377000 -147000 52701000 332000 -53033000 36621000 28746000 968386000 890450000 1902908000 2225998000 717955000 683779000 15235000 9174000 8506000 188983000 116919000 105108000 10303000 87677000 92613000 88447000 <div> <p style="margin-top: 12px; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2"><b>A. Summary of Business Operations </b></font></p> <p style="margin-top: 6px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">We develop, sell and install enterprise-quality software that is positioned in the operating systems and infrastructure software layers of the information technology ("IT") industry. We develop and deliver Linux operating system software for a range of computers from desktops to servers. In addition, we provide a portfolio of integrated IT management software for systems, identity and security management for both Linux and mixed-platform environments. We serve a range of enterprise sizes, and combined with the quality and flexibility of our open-platform software technology, offer customers an IT infrastructure that is responsive to the cost pressures and the expanding IT initiatives that are characteristic of today's business environment. </font></p> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">We were incorporated in the State of Delaware on January&nbsp;25, 1983 and have established a reputation for innovation and industry leadership. We currently have approximately 3,400 employees in 54 offices worldwide. </font></p> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">On November&nbsp;21, 2010, we entered into an Agreement and Plan of Merger (the "Merger Agreement") with Attachmate Corporation, a Washington corporation ("Attachmate"), and Longview Software Acquisition Corp., a Delaware corporation and a wholly-owned subsidiary of Attachmate ("Merger Sub"). Also on November&nbsp;21, 2010, we entered into a Patent Purchase Agreement (the "Patent Purchase Agreement") with CPTN Holdings LLC, a Delaware limited liability company and consortium of technology companies organized by Microsoft Corporation ("CPTN"). The pendency of these transactions may impact our operations and continuation of historical trends in future periods. For more information on these agreements and the transactions contemplated by these agreements, see Note Z, "Subsequent Events." </font></p> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">In December 2009, we announced an evolution in our strategy &ndash; our intention to become an industry leader in the new market category of Intelligent Workload Management ("IWM"). IWM is a new model of computing that enables IT organizations to manage and optimize computing resources in a policy-driven, secure and compliant manner across physical, virtual and cloud computing environments. Our differentiated approach to delivering IWM, called Workload IQ, integrates identity and systems management capabilities into an application workload. As a result, enterprises are able to reduce the risks and challenges of computing across multiple environments while granting their users secure and compliant access to the computing services they need. </font></p> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">As part of this strategy evolution, during the first quarter of fiscal 2010, we reorganized our business unit segment structure and management. We consolidated our business unit segments from four to two. Our former Open Platform Solutions, Identity and Security Management and Systems and Resource Management business unit segments were consolidated to form the new Security, Management and Operating Platforms business unit segment ("SMOP"). Our former Workgroup business unit segment was renamed Collaboration Solutions ("CS"). Our business unit segments are described below in more detail. </font></p> <p style="margin-top: 18px; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2"><i>SMOP </i></font></p> <p style="margin-top: 6px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">SMOP was created to achieve our goal of becoming an industry leader in the IWM market. To accomplish this goal, we leveraged our competencies in Linux, identity and security management, and systems and resource management with the objective of providing the industry's leading IWM solutions. Our product strategy focuses on the four pillars of IWM: build, secure, manage and measure. We deliver these four pillars through our product groupings of Open Platform Solutions, Identity and Security Management, and Systems and Resource Management. These product groupings are described in more detail below. </font></p> <p style="margin-top: 18px; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2"><i><u>Open Platform Solutions</u></i></font></p> <p style="padding-bottom: 0px; margin-top: 6px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">We deliver Linux and related solutions for the enterprise. The SUSE<font style="font-family: Times New Roman;" class="_mt" size="1"><sup style="position: relative; bottom: 0.8ex; vertical-align: baseline;">&#174;</sup></font> Linux Enterprise platform underpins all of our products. SUSE Linux Enterprise is a leading distribution system that differentiates itself from other Linux distributions by focusing on interoperability, support for mission-critical computing requirements, and cross-platform virtualization support. We also offer the ability for users to customize their Linux installation, yet still receive full support for their SUSE Linux Enterprise distribution through our SUSE Appliance Program. </font></p> <p style="margin-top: 18px; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2"><i><u>Identity and Security Management </u></i></font></p> <p style="margin-top: 6px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">Our identity, security, and compliance management solutions are designed to help customers integrate, secure, and manage IT assets while reducing complexity and ensuring compliance with government and industry mandates. Adding this intelligence to every part of a customer's IT environment may make their systems more agile and secure. Our solutions leverage automated, centrally-managed policies to provide insight into events happening throughout the enterprise. </font></p> <p style="margin-top: 18px; margin-bottom: 0px; font-size: 1px;">&nbsp;</p> <p style="margin-top: 0px; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2"><i><u>Systems and Resource Management</u></i></font></p> <p style="margin-top: 6px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">With our systems and resource management solutions, customers can define business and IT policies to automate the management of multiple IT resources, including the emerging challenge of managing virtual environments, as well as both public and private cloud computing deployments. Our systems and resource management solutions are designed to enable our customers to reduce IT effort, control IT costs, and reduce IT skill requirements to manage and leverage their IT investment. </font></p> <p style="margin-top: 18px; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2"><i>CS </i></font></p> <p style="margin-top: 6px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">Within our CS business unit segment, we provide comprehensive and adaptable collaboration solutions that provide the infrastructure, services, and tools customers require to effectively and securely collaborate across a myriad of devices. We offer the security, reliability, and manageability that enable our customers' employees to efficiently share information and ideas to perform their jobs at lower cost. </font></p> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">In addition to our technology offerings, within our business unit segments we offer a worldwide network of service personnel to help our customers and third-party partners utilize our software. We also have partnerships with application providers, hardware and software vendors, consultants, and systems integrators. In this way, we can offer a full solution to our customers. </font></p> </div> -486728000 -129404000 11166000 53310000 -42570000 10406000 55870000 68770000 75547000 -8745000 -8745000 -212736000 -212736000 377976000 377976000 18102000 2518000 17650000 716498000 881846000 553829000 4776000 -206492000 84437000 97154000 86223000 30024000 5466000 26747000 33725000 38403000 46797000 2234000 2234000 755000 755000 -4837000 -4837000 -52859000 -52859000 23554000 23554000 -5076000 -5076000 -3602000 -3602000 13802000 13802000 -2245000 -2245000 <div> <p style="margin-top: 18px; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2"><b>M. Other Accrued Liabilities </b></font></p> <p style="margin-top: 6px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">Other accrued liabilities consist of the following: </font></p> <p style="margin-top: 0px; margin-bottom: 0px; font-size: 12px;">&nbsp;</p> <table border="0" cellspacing="0" cellpadding="0" width="100%" align="center"> <tr><td width="78%"> </td> <td valign="bottom" width="6%"> </td> <td> </td> <td> </td> <td> </td> <td valign="bottom" width="6%"> </td> <td> </td> <td> </td> <td> </td></tr> <tr><td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>(In thousands)</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>&nbsp;&nbsp;&nbsp;&nbsp;October&nbsp;31,&nbsp;&nbsp;&nbsp;&nbsp;</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>2010</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>&nbsp;&nbsp;&nbsp;&nbsp;October&nbsp;31,&nbsp;&nbsp;&nbsp;&nbsp;</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>2009</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Accrued property and other taxes</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">16,336</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">14,069</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Accrued royalties</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">12,662</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">10,735</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Accrued marketing expenses</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">9,223</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">7,279</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Merger liabilities</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">5,748</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">10,098</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Restructuring reserves</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">4,021</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">12,843</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Other accrued expenses</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">38,233</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">42,130</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 2em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Total other accrued liabilities</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">86,223</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">97,154</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td></tr></table> <p style="margin-top: 18px; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2"><b> </b></font>&nbsp;</p> </div> 48502000 35655000 5793000 -7228000 -7899000 66820000 219553000 48472000 12000000 37716000 22087000 17648000 427549000 341500000 328270000 <div> <p style="margin-top: 18px; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2"><b>V. Employee Savings and Retirement Plans </b></font></p> <p style="margin-top: 6px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">We adopted a 401(k) savings and retirement plan in December 1986. The plan covers all of our U.S. employees who are 21 years of age or older who are scheduled to complete 1,000 hours of service during any consecutive 12-month period. Our 401(k) savings and retirement plan allows us to contribute an amount equal to 100% of each employee's contribution up to the higher of 4% of the employee's compensation or the maximum contribution allowed by tax laws. We made matching contributions on our 401(k) savings and retirement plan and other retirement plans of $12.9 million, $15.7 million, and $15.3 million, in fiscal 2010, 2009, and 2008, respectively. Fiscal 2010 was lower than fiscal 2009 and 2008 in part due to a suspension of matching contributions during the first half of fiscal 2010 as part of a broader cost-saving plan. </font></p> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">The defined benefit pension plan sponsored by one of our German subsidiaries covers 74 current employees and 220 former employees or retirees as of October&nbsp;31, 2010. The plan was closed to new members as of November 2004. Actuarial gains or losses are being amortized over a 17.5 year period, and the amortization charges are included within the overall net periodic pension costs, which are charged to the statements of operations. </font></p> <p style="margin-top: 12px; margin-bottom: 0px; font-size: 1px;">&nbsp;</p> <p style="margin-top: 0px; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2">Other plan information is as follows: </font></p> <p style="margin-top: 0px; margin-bottom: 0px; font-size: 12px;">&nbsp;</p> <table border="0" cellspacing="0" cellpadding="0" width="100%" align="center"> <tr><td width="67%"> </td> <td valign="bottom" width="2%"> </td> <td> </td> <td> </td> <td> </td> <td valign="bottom" width="2%"> </td> <td> </td> <td> </td> <td> </td> <td valign="bottom" width="2%"> </td> <td> </td> <td> </td> <td> </td></tr> <tr><td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>(In thousands)</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Fiscal&nbsp;2010</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Fiscal&nbsp;2009</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Fiscal&nbsp;2008</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2"><b>Change in benefit obligation</b></font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Benefit obligation at beginning of fiscal year</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">13,103</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">10,534</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">13,204</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Service cost</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">428</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">464</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">610</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Interest cost</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">721</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">699</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">692</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Actuarial loss (gain)</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">4,371</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(180</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(2,617</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Benefits paid</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(38</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(39</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(29</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Foreign exchange</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(790</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">1,625</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(1,326</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 2em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Benefit obligation at end of fiscal year</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">17,795</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">13,103</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">10,534</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td></tr> <tr><td height="8"> </td> <td height="8" colspan="4"> </td> <td height="8" colspan="4"> </td> <td height="8" colspan="4"> </td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 2em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Accrued benefit cost</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(17,795</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(13,103</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(10,534</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td></tr> <tr><td height="8"> </td> <td height="8" colspan="4"> </td> <td height="8" colspan="4"> </td> <td height="8" colspan="4"> </td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2"><b>Components of accumulated other comprehensive income</b></font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Pension transition obligation</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(413</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(531</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(540</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Pension actuarial (loss) gain</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(26</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">4,929</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">4,183</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 2em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Total recognized in accumulated other comprehensive income</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(439</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">4,398</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">3,643</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td></tr> <tr><td height="16"> </td> <td height="16" colspan="4"> </td> <td height="16" colspan="8"> </td></tr> <tr><td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom" colspan="2"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="6" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Fiscal&nbsp;Year&nbsp;Ended&nbsp;October&nbsp;31,</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td></tr> <tr><td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>(Dollars in thousands)</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom" colspan="2"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>2010</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>2009</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2"><b>Weighted-average assumptions</b></font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="top"> </td> <td valign="top"> </td> <td valign="top"> </td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Discount rate</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="top"> </td> <td valign="top"> </td> <td valign="top"> </td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">4.6%</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">6.0%</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Rate of salary increase</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="top"> </td> <td valign="top"> </td> <td valign="top"> </td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">3.0%</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">3.0%</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Post-retirement pension increases</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="top"> </td> <td valign="top"> </td> <td valign="top"> </td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">2.0%</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">2.0%</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Net periodic pension cost</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="top"> </td> <td valign="top"> </td> <td valign="top"> </td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">1,492</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">1,146</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr></table> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">As the amount of amortization of the pension components of accumulated other comprehensive income is anticipated to be insignificant to the consolidated financial statements, there will be no amortization in fiscal 2011. Estimated benefit payments for fiscal 2011, 2012, 2013, 2014, 2015 and thereafter are $46 thousand, $50 thousand, $101 thousand, $133 thousand, $145 thousand, and $1.1 million, respectively. At October&nbsp;31, 2010, we had assets valued at $16.2 million designated to fund the German pension obligation, which do not qualify as plan assets. </font></p> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">We also have other retirement plans in certain foreign countries in which we employ personnel. Each plan is consistent with local laws and business practices. </font></p> </div> 0.10 0.10 500000 500000 0 0 17708000 16233000 564000 1036000 938000 -171000 13297000 3566000 8940000 4795000 -4658000 10748000 655335000 284337000 242386000 <div> <p style="margin-top: 18px; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2"><b>J. Property, Plant and Equipment </b></font></p> <p style="margin-top: 6px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">Property, plant and equipment consist of the following: </font></p> <p style="margin-top: 0px; margin-bottom: 0px; font-size: 12px;">&nbsp;</p> <table border="0" cellspacing="0" cellpadding="0" width="100%" align="center"> <tr><td width="78%"> </td> <td valign="bottom" width="3%"> </td> <td> </td> <td> </td> <td> </td> <td valign="bottom" width="3%"> </td> <td> </td> <td> </td> <td> </td></tr> <tr><td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>(In thousands)</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>October&nbsp;31,</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>2010</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>October&nbsp;31,</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>2009</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Buildings and land</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">183,219</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">181,949</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Furniture and equipment</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">130,152</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">164,789</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Leasehold improvements and other</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">37,133</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">45,773</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 2em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Property, plant and equipment, at cost</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">350,504</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">392,511</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Accumulated depreciation</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(194,471</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(222,052</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 3em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Property, plant and equipment, net</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;156,033</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;170,459</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td></tr></table> <p style="margin-top: 12px; margin-bottom: 0px; font-size: 1px;">&nbsp;</p> <p style="margin-top: 0px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">Depreciation and amortization expense related to property, plant and equipment totaled $22.4 million, $23.0 million, and $27.4 million, in fiscal 2010, 2009, and 2008, respectively. During fiscal 2010, we retired fixed assets, primarily computer equipment and software, with a cost basis of approximately $50 million and no net book value as these assets were no longer in use. These reductions are reflected in the above table. </font></p> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">During fiscal 2009, we sold certain corporate real estate assets and computer equipment for net proceeds of $10.7 million that had a net book value of $8.1 million. The sales also included other fees and expenses of $0.4 million and resulted in a $2.2 million gain. </font></p> </div> 170459000 156033000 191547000 181383000 160188000 2700000 53033000 28645000 25200000 2774000 559823000 937799000 956513000 862185000 811871000 <div> <p style="margin-top: 18px; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2"><b>O. Line of Credit </b></font></p> <p style="margin-top: 6px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">We have a $10.0 million bank line of credit available for letter of credit purposes. As of October&nbsp;31, 2010, there were standby letters of credit of $1.3 million outstanding under this line, all of which are collateralized by cash. The bank line of credit expires on July&nbsp;31, 2011. The bank line of credit is subject to the terms of a credit agreement containing financial covenants and restrictions, none of which are expected to affect our operations. As of October&nbsp;31, 2010, we are in compliance with the financial covenants and restrictions contained in this credit agreement. In addition, as of October&nbsp;31, 2010, we had outstanding letters of credit at several other banks that total $1.5 million. </font></p> </div> <div> <p style="margin-top: 18px; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2"><b>F. Restricted Cash </b></font></p> <p style="margin-top: 6px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">In relation to the appeal we filed in the Amer Jneid legal matter, we were required by the court to post a $51.5 million bond during fiscal 2008 (See Note S, "Legal Proceedings"). The amount of the bond was determined by statutory regulations and had no connection to the amount we may ultimately pay in this matter. The bond was held in an interest-bearing account in our name, but was restricted and classified as such on our consolidated balance sheet as of October&nbsp;31, 2009. During fiscal 2010, the bond amount plus interest, which totaled $53.0 million, was returned to us. </font></p> </div> <div> <p style="margin-top: 18px; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2"><b>Z. Subsequent Events </b></font></p> <p style="margin-top: 6px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">On November&nbsp;21, 2010, we entered into a Merger Agreement with Attachmate and Merger Sub. The Merger Agreement provides that, upon the terms and subject to the conditions set forth in the Merger Agreement, Merger Sub will be merged with and into us, with us continuing as the surviving corporation and a wholly-owned subsidiary of Attachmate. Pursuant to the terms of the Merger Agreement, at the time the merger is effective, each issued and outstanding share of our common stock, other than treasury shares, shares held by Attachmate, Merger Sub or any other direct or indirect wholly-owned subsidiary of Attachmate or us and shares held by stockholders who perfect their appraisal rights, will be converted into the right to receive $6.10 in cash, without interest and less any applicable withholding taxes. Consummation of the merger is subject to certain conditions to closing, including, among others, (i)&nbsp;the approval by our stockholders; (ii)&nbsp;the expiration or termination of the waiting period (and any extensions thereof) applicable to the consummation of the merger under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), and certain other antitrust laws; (iii)&nbsp;the absence of any law, order or other action enjoining or otherwise prohibiting consummation of the merger; (iv)&nbsp;the absence of a material adverse effect on us; (v)&nbsp;the closing of the transactions contemplated by the Patent Purchase Agreement; (vi)&nbsp;the accuracy of the parties' respective representations and warranties; (vii)&nbsp;the parties' respective compliance with agreements and covenants contained in the Merger Agreement; and (viii)&nbsp;the availability to us and our subsidiaries of cash and cash equivalents equal to approximately $1.03 billion. We are working towards completing the merger as quickly as possibl e and currently expect to consummate the merger in the first calendar quarter of 2011. </font></p> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">Also on November&nbsp;21, 2010, we entered into a Patent Purchase Agreement with CPTN. The Patent Purchase Agreement provides that, upon the terms and subject to the conditions set forth in the Patent Purchase Agreement, we will sell to CPTN all of our right, title and interest in 882 issued patents and patent applications for $450 million in cash. Consummation of the patent sale is subject to certain conditions to closing, including, among others, (i)&nbsp;the expiration or termination of the waiting period applicable to the consummation of the patent sale under the HSR Act and certain other antitrust laws; and (ii)&nbsp;the satisfaction or waiver of each of the conditions to the consummation of the merger (other than the closing of the patent sale), and the parties to the Merger Agreement shall be ready, willing and able to consummate the merger, immediat ely after the closing of the patent sale.</font></p> </div> <div> <p style="margin-top: 0px; margin-bottom: 0px;" align="center"><font style="font-family: Times New Roman;" class="_mt" size="2"><b>SCHEDULE II &#8212; VALUATION AND QUALIFYING ACCOUNTS </b></font></p> <p style="margin-top: 12px; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2"><b>Accounts Receivable Allowance </b></font></p> <p style="margin-top: 0px; margin-bottom: 0px; font-size: 12px;">&nbsp;</p> <table border="0" cellspacing="0" cellpadding="0" width="100%" align="center"> <tr><td width="41%"> </td> <td valign="bottom" width="5%"> </td> <td> </td> <td> </td> <td> </td> <td valign="bottom" width="5%"> </td> <td> </td> <td> </td> <td> </td> <td valign="bottom" width="5%"> </td> <td> </td> <td> </td> <td> </td> <td valign="bottom" width="5%"> </td> <td> </td> <td> </td> <td> </td> <td valign="bottom" width="5%"> </td> <td> </td> <td> </td> <td> </td> <td valign="bottom" width="5%"> </td> <td> </td> <td> </td> <td> </td> <td valign="bottom" width="5%"> </td> <td> </td> <td> </td> <td> </td></tr> <tr><td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>(In thousands)</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Balance&nbsp;at</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>&nbsp;&nbsp; Beginning&nbsp;&nbsp;</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>of Period</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Additions</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Charged&nbsp;to</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Return</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>&nbsp;Allowances&nbsp;</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Additions</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Charged&nbsp;to</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Bad Debt</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>&nbsp;Allowances&nbsp;</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Additions</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>from</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>&nbsp;Acquisition&nbsp;</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Deductions</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>from</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Return</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>&nbsp;Allowances&nbsp;</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Deductions</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>from&nbsp;Bad</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Debt</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>&nbsp;Allowances&nbsp;</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Balance</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>at End</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>&nbsp;&nbsp;of&nbsp;Period&nbsp;&nbsp;</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="1">Fiscal year ended</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="1">October&nbsp;31, 2008</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="1">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="1">3,897</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="1">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="1">1,920</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="1">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="1">266</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="1">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="1">43</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="1">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="1">1,760</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="1">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="1">687</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="1">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="1">3,679</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="1">&nbsp;&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="1">October&nbsp;31, 2009</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="1">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="1">3,679</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="1">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="1">1,783</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="1">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="1">593</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="1">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="1">&#8212;</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="1">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="1">1,948</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="1">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="1">22</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="1">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="1">4,085</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="1">&nbsp;&nbsp;</font></td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="1">October&nbsp;31, 2010</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="1">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="1">4,085</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="1">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="1">941</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="1">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="1">113</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="1">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="1">&#8212;</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="1">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="1">2,010</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="1">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="1">868</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="1">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="1">2,261</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="1">&nbsp;&nbsp;</font></td></tr></table> <p style="margin-top: 18px; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2"><b>Deferred Tax Valuation Allowance </b></font></p> <p style="margin-top: 0px; margin-bottom: 0px; font-size: 12px;">&nbsp;</p> <table border="0" cellspacing="0" cellpadding="0" width="100%" align="center"> <tr><td width="59%"> </td> <td valign="bottom" width="4%"> </td> <td> </td> <td> </td> <td> </td> <td valign="bottom" width="4%"> </td> <td> </td> <td> </td> <td> </td> <td valign="bottom" width="4%"> </td> <td> </td> <td> </td> <td> </td> <td valign="bottom" width="4%"> </td> <td> </td> <td> </td> <td> </td> <td valign="bottom" width="4%"> </td> <td> </td> <td> </td> <td> </td></tr> <tr><td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>(In thousands)</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Balance&nbsp;at</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>&nbsp;&nbsp; Beginning&nbsp;&nbsp;</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>of Period</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Additions</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Charged&nbsp;to</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Costs and</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>&nbsp;Expenses&nbsp;</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Additions</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Charged&nbsp;to</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Other </b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>&nbsp;Accounts&nbsp;</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Deductions</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Balance</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>at End</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>&nbsp;&nbsp;of&nbsp;Period&nbsp;&nbsp;</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="1">Fiscal year ended</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="1">October 31, 2008</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="1">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="1">408,422</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="1">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="1">165</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="1">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="1">22,303</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="1">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="1">21,671</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="1">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="1">409,219</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="1">&nbsp;&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="1">October 31, 2009</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="1">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="1">409,219</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="1">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="1">2,131</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="1">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="1">57,356</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="1">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="1">8,911</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="1">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="1">459,795</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="1">&nbsp;&nbsp;</font></td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="1">October 31, 2010</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="1">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="1">459,795</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="1">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="1">&#8212;</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="1">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="1">1,724</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="1">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="1">291,157</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="1">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="1">170,362</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="1">&nbsp;&nbsp;</font></td></tr></table> <p style="margin-top: 24px; margin-bottom: 0px; font-size: 1px;"><font style="font-family: Times New Roman;" class="_mt" size="2"><b> </b></font>&nbsp;</p> </div> <div> <p style="margin-top: 18px; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2"><b>Y. Segment Information </b></font></p> <p style="margin-top: 6px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">During the first quarter of fiscal 2010, our former Open Platform Solutions, Identity and Security Management, and Systems and Resource Management business unit segments were consolidated to form the new SMOP business unit segment (See Note A, "Summary of Business Operations," for more information on our business unit segment structural and management reorganization). </font></p> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">Our performance is evaluated by our chief executive officer and our other chief decision makers based on reviewing revenue and operating income (loss) information for each business unit segment. Our software and services are sold both directly by our business unit segments and indirectly through original equipment manufacturers, resellers, and distributors who sell to end users. </font></p> <p style="margin-top: 12px; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2">Operating results by segment are as follows: </font></p> <p style="margin-top: 0px; margin-bottom: 0px; font-size: 12px;">&nbsp;</p> <table border="0" cellspacing="0" cellpadding="0" width="100%" align="center"> <tr><td width="68%"> </td> <td valign="bottom" width="2%"> </td> <td> </td> <td> </td> <td> </td> <td valign="bottom" width="2%"> </td> <td> </td> <td> </td> <td> </td> <td valign="bottom" width="2%"> </td> <td> </td> <td> </td> <td> </td></tr> <tr><td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="10" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Fiscal 2010</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td></tr> <tr><td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>(In thousands)</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Net&nbsp;Revenue</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Gross&nbsp;Profit</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Operating</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Income&nbsp; (Loss)</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">SMOP</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">502,025</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">384,029</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(13,836</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">CS</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">309,846</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">262,185</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">145,326</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Common unallocated operating costs</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">&#8212;</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(7,948</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(47,053</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 2em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Total per statements of operations</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;811,871</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;638,266</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;84,437</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td></tr> <tr><td height="16"> </td> <td height="16" colspan="12"> </td></tr> <tr><td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="10" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Fiscal 2009</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td></tr> <tr><td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>(In thousands)</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Net Revenue</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Gross Profit</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Operating</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Income (Loss)</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">SMOP(a)</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">512,836</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">393,461</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(303,957</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">CS</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">349,349</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">294,526</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">163,784</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Common unallocated operating costs</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">&#8212;</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(12,633</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(66,319</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 2em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Total per statements of operations</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">862,185</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">675,354</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(206,492</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td></tr> <tr><td height="16"> </td> <td height="16" colspan="12"> </td></tr> <tr><td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="10" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Fiscal 2008</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td></tr> <tr><td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>(In thousands)</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Net Revenue</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Gross Profit</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Operating</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Income (Loss)</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">SMOP</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">542,068</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">387,886</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(90,028</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">CS</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">414,445</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">346,226</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">187,119</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Common unallocated operating costs</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">&#8212;</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(12,838</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(92,315</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 2em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Total per statements of operations</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">956,513</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">721,274</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">4,776</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td></tr></table> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">(a) Includes goodwill impairment of $270.0 million and intangible asset impairments of $9.1 million. </font></p> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">Segment operating income (loss) is comprised of business unit segment gross profit, less operating expenses attributable to each business unit segment. Beginning in fiscal 2010, operating expenses, including sales and marketing, product development, and general and administrative expenses, have been allocated to the business unit segments. All prior period amounts have been reclassified to conform to the current year's presentation. Common unallocated operating costs include items such as stock-based compensation, acquisition-related intangible asset amortization, restructuring, certain litigation related activity and other unusual items that are not considered part of our ongoing, ordinary business. </font></p> <p style="margin-top: 12px; margin-bottom: 0px; font-size: 1px;">&nbsp;</p> <p style="margin-top: 0px; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2">Below is a table detailing our revenue by our business unit segments: </font></p> <p style="margin-top: 0px; margin-bottom: 0px; font-size: 12px;">&nbsp;</p> <table border="0" cellspacing="0" cellpadding="0" width="100%" align="center"> <tr><td width="67%"> </td> <td valign="bottom" width="2%"> </td> <td> </td> <td> </td> <td> </td> <td valign="bottom" width="2%"> </td> <td> </td> <td> </td> <td> </td> <td valign="bottom" width="2%"> </td> <td> </td> <td> </td> <td> </td></tr> <tr><td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="10" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Fiscal Year Ended October&nbsp;31,</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td></tr> <tr><td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>(In thousands)</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>2010</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>2009</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>2008</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Net revenue:</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">SMOP:</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 2em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Linux platform products</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">144,411</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">149,162</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">123,386</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 2em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Other open platform products</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">8,197</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">7,717</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">9,740</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 2em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Identity, access and compliance management products</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">123,145</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">112,248</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">124,277</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 2em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Other identity and security management products</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">6,342</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">8,802</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">12,968</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 2em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Systems and resource management products</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">156,051</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">160,769</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">170,166</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 2em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Services</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">63,879</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">74,138</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">101,531</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 3em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Total SMOP</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">502,025</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">512,836</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">542,068</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td></tr> <tr><td height="8"> </td> <td height="8" colspan="4"> </td> <td height="8" colspan="4"> </td> <td height="8" colspan="4"> </td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">CS:</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 2em;"><font style="font-family: Times New Roman;" class="_mt" size="2">OES and NetWare-related products</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">165,625</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">177,756</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">205,875</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 2em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Collaboration products</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">86,837</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">99,945</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">113,782</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 2em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Other collaboration solutions products</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">33,042</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">41,265</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">45,282</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 2em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Services</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">24,342</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">30,383</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">49,506</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 3em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Total CS</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">309,846</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">349,349</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">414,445</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 4em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Total net revenue</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;811,871</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;862,185</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;956,513</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td></tr></table> <p style="margin-top: 18px; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2"><i>Geographic Information </i></font></p> <p style="margin-top: 6px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">Our revenue is generated from all parts of the world. In fiscal 2010 and 2009, revenue from customers residing in Germany accounted for 10% of our net revenue. No other country outside of the U.S. accounted for 10% or more of our net revenue in any period. For purposes of the table below we have grouped our revenue as follows: </font></p> <p style="margin-top: 0px; margin-bottom: 0px; font-size: 6px;">&nbsp;</p> <table style="border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr><td width="4%"><font class="_mt" size="1">&nbsp;</font></td> <td valign="top" width="1%" align="left"><font style="font-family: Times New Roman;" class="_mt" size="2">&bull;</font></td> <td valign="top" width="1%"><font class="_mt" size="1">&nbsp;</font></td> <td valign="top" align="left"> <p align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">U.S. </font></p></td></tr></table> <table style="border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr><td width="4%"><font class="_mt" size="1">&nbsp;</font></td> <td valign="top" width="1%" align="left"><font style="font-family: Times New Roman;" class="_mt" size="2">&bull;</font></td> <td valign="top" width="1%"><font class="_mt" size="1">&nbsp;</font></td> <td valign="top" align="left"> <p align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">Rest of Americas &ndash; includes Canada and South America </font></p></td></tr></table> <table style="border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr><td width="4%"><font class="_mt" size="1">&nbsp;</font></td> <td valign="top" width="1%" align="left"><font style="font-family: Times New Roman;" class="_mt" size="2">&bull;</font></td> <td valign="top" width="1%"><font class="_mt" size="1">&nbsp;</font></td> <td valign="top" align="left"> <p align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">EMEA &ndash; includes Europe, Middle East, and Africa </font></p></td></tr></table> <table style="border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr><td width="4%"><font class="_mt" size="1">&nbsp;</font></td> <td valign="top" width="1%" align="left"><font style="font-family: Times New Roman;" class="_mt" size="2">&bull;</font></td> <td valign="top" width="1%"><font class="_mt" size="1">&nbsp;</font></td> <td valign="top" align="left"> <p align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">Asia Pacific &ndash; includes China, Southeast Asia, Australia, New Zealand, Japan and India </font></p></td></tr></table> <p style="margin-top: 0px; margin-bottom: 0px; font-size: 12px;">&nbsp;</p> <table border="0" cellspacing="0" cellpadding="0" width="100%" align="center"> <tr><td width="67%"> </td> <td valign="bottom" width="2%"> </td> <td> </td> <td> </td> <td> </td> <td valign="bottom" width="2%"> </td> <td> </td> <td> </td> <td> </td> <td valign="bottom" width="2%"> </td> <td> </td> <td> </td> <td> </td></tr> <tr><td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="10" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Fiscal Year Ended October&nbsp;31,</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td></tr> <tr><td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>(In thousands)</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>2010</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>2009</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>2008</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Net revenue:</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 2em;"><font style="font-family: Times New Roman;" class="_mt" size="2">U.S.</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">387,192</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">424,606</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">461,400</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 2em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Rest of Americas</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">56,649</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">55,011</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">70,534</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 2em;"><font style="font-family: Times New Roman;" class="_mt" size="2">EMEA</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">290,589</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">300,883</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">343,255</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 2em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Asia Pacific</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">77,441</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">81,685</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">81,324</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 3em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Total foreign revenue</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">424,679</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">437,579</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">495,113</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 4em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Total net revenue</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">811,871</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">862,185</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">956,513</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td></tr> <tr><td height="8"> </td> <td height="8" colspan="4"> </td> <td height="8" colspan="4"> </td> <td height="8" colspan="4"> </td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Long-lived assets at fiscal year end (1):</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 2em;"><font style="font-family: Times New Roman;" class="_mt" size="2">U.S.</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;115,671</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;124,346</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;121,459</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 2em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Rest of Americas</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">7,999</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">9,901</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">10,811</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 2em;"><font style="font-family: Times New Roman;" class="_mt" size="2">EMEA</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">29,537</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">33,300</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">37,431</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 2em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Asia Pacific</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">2,826</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">2,912</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">5,277</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 3em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Total foreign long-lived assets at fiscal year end</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">40,362</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">46,113</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">53,519</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 4em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Total long-lived assets at fiscal year end</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">156,033</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">170,459</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">174,978</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td></tr></table> <p style="margin-top: 12px; margin-bottom: 0px; font-size: 1px;">&nbsp;</p> <p style="margin-top: 0px; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2">Reconciliation of long-lived assets to total assets is as follows: </font></p> <p style="margin-top: 0px; margin-bottom: 0px; font-size: 12px;">&nbsp;</p> <table border="0" cellspacing="0" cellpadding="0" width="100%" align="center"> <tr><td width="78%"> </td> <td valign="bottom" width="2%"> </td> <td> </td> <td> </td> <td> </td> <td valign="bottom" width="2%"> </td> <td> </td> <td> </td> <td> </td></tr> <tr><td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>(In thousands)</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>October&nbsp;31,</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>2010</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>October&nbsp;31,</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>2009</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Long-lived assets (1)</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">156,033</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">170,459</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Goodwill and intangible assets, net</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">382,161</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">392,654</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Deferred income taxes</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">243,583</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">26,717</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Other long-term assets</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">46,797</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">48,706</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Current assets</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">1,397,424</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">1,264,372</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 3em;"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;Total assets</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;&nbsp;&nbsp;2,225,998</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;&nbsp;&nbsp;1,902,908</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td></tr></table> <p style="margin-top: 0px; margin-bottom: 0px; font-size: 6px;">&nbsp;</p> <table style="border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr><td valign="top" width="3%" align="left"><font style="font-family: Times New Roman;" class="_mt" size="2">(1)</font></td> <td valign="top" align="left"> <p align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">Long-lived assets in this context is defined in the segment reporting accounting guidance as tangible long-lived assets and for us are comprised entirely of our property, plant and equipment, net. </font></p></td></tr></table> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">In fiscal 2010, 2009, and 2008, sales to international customers were $424.7 million, $437.6 million, and $495.1 million, respectively. In fiscal 2010, 2009, and 2008, revenue in EMEA accounted for 68%, 69%, and 69%, of our total international revenue, respectively. There were no customers who accounted for more than 10% of revenue in any period. The risks associated with operating a global business are discussed in Part I, Item&nbsp;1A. "Risk Factors," of this Form 10-K. </font></p> </div> 368719000 295998000 282402000 33818000 25881000 29057000 365739000 -15129000 358526000 -15118000 362176000 -15103000 366670000 -15094000 391809000 441096000 <div> <p style="margin-top: 18px; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2"><b>B. Summary of Significant Accounting Policies </b></font></p> <p style="margin-top: 6px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">The accompanying consolidated financial statements reflect the application of significant accounting policies as described in this note and elsewhere in the accompanying consolidated financial statements. </font></p> <p style="margin-top: 18px; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2"><i>Principles of Consolidation </i></font></p> <p style="margin-top: 6px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">The accompanying consolidated financial statements include the accounts of Novell, Inc., and its wholly-owned and majority-owned subsidiaries. All inter-company accounts and transactions have been eliminated in consolidation. </font></p> <p style="margin-top: 18px; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2"><i>Management's Estimates and Uncertainties </i></font></p> <p style="margin-top: 6px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">The preparation of financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the amounts reported and related disclosure of contingent assets and liabilities in the financial statements and accompanying notes. Actual results could differ materially from those estimates. </font></p> <p style="margin-top: 18px; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2"><i>Reclassifications </i></font></p> <p style="margin-top: 6px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">As more fully described above in Note A, "Summary of Business Operations," during the first quarter of fiscal 2010, we reorganized our business unit segment structure and management resulting in a change to our reportable business unit segments. In connection with this reorganization, we evaluated our internal cost structure to ensure the resulting business unit segment gross profit and operating income were reflective of our business unit segment management structure. As a result of this evaluation, we determined that the allocation and assignment of costs between maintenance and subscriptions and services within cost of revenue should be adjusted to be reflective of the new business unit segment management structure. For fiscal 2009 and 2008, in our consolidated statements of operations, $37.6 million and $36.6 million of costs, respectively, were moved from the servi ces cost of revenue line item to the maintenance and subscriptions cost of revenue line item. This change impacted only the components of cost of revenue and had no impact on revenue, total cost of revenue or total gross profit. </font></p> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">Certain other amounts reported in prior periods have been reclassified from what was previously reported to conform to the current year's presentation. These reclassifications did not have any impact on the statements of operations. </font></p> <p style="margin-top: 18px; margin-bottom: 0px; font-size: 1px;">&nbsp;</p> <p style="margin-top: 0px; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2"><i>Foreign Currency Translation </i></font></p> <p style="margin-top: 6px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">The functional currency of all of our international subsidiaries, except for our Irish subsidiaries and a German holding company, is the local currency. These subsidiaries generate and expend cash primarily in their respective local currencies. The assets and liabilities of these subsidiaries are translated at current month-end exchange rates. Revenue and expenses are translated monthly at the average monthly exchange rate. Translation adjustments are recorded in the "Accumulated other comprehensive income" line item in the consolidated balance sheets. With respect to our Irish subsidiaries and German holding company, the functional currency is the U.S. dollar for which translation gains and losses are included in the line item, "Interest expense and other, net" in the consolidated statements of operations. All transaction gains and losses are reported in the line item, "Interest expense and other, net," in the consolidated statements of operations. Foreign currency exchange rate fluctuations resulted in net foreign exchange gains of $0.2 million during fiscal 2010, and losses of $6.6 million and $5.6 million in fiscal 2009 and 2008, respectively. </font></p> <p style="margin-top: 18px; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2"><i>Cash, Cash Equivalents and Short-Term Investments </i></font></p> <p style="margin-top: 6px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">All investments with an initial term to maturity of three months or less at the date of purchase are classified as cash equivalents. Short-term investments are diversified and: 1) mature greater than 3 months but within the next 12 months; 2) have characteristics of short-term investments; or 3) are available to be used for current operations, even if some maturities may extend beyond one year. </font></p> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">All marketable debt and equity securities that are included in short-term investments are considered available-for-sale and are carried at fair value. We have only acquired investment grade securities. Temporary increases or decreases in fair value are recorded as unrealized gains or losses in the "Accumulated other comprehensive income" line item in our consolidated balance sheets. In April&nbsp;2009, the Financial Accounting Standards Board ("FASB")&nbsp;amended the existing guidance on determining whether an impairment for investments in debt securities is other-than-temporary. Effective in our third quarter of fiscal 2009, impairment is considered to be other-than-temporary if there is intent to sell the debt security or it is more likely than not that the debt security will be required to be sold before its anticipated recovery. If these conditions are not evident, the present value of cash flows expected to be collected from the debt security should be compared to the amortized cost basis of the security to determine the other-than-temporary impairment. These new accounting rules require the separation of the total other-than-temporary impairment to the portion due to credit loss and the portion related to all other factors, typically considered market risks. The portion related to credit loss is recognized in earnings in the "Impairment of investments" line item in the consolidated statements of operations, while the portion related to other factors is recognized in the "Accumulated other comprehensive income" line item in our consolidated balance sheets. </font></p> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">For our equity securities, impairment is considered to be other-than-temporary if we have the intent to sell the security or we do not have both the intent and the ability to hold the equity security until its anticipated recovery. Additionally, we consider an equity security to be other-than-temporarily impaired if events and circumstances indicate that a decline in the value of an equity security has occurred and is other than temporary. When an equity security is considered to be other-than-temporarily impaired, we record the loss in the "Impairment of investments" line item in the consolidated statements of operations, for the difference between fair value and cost at the balance sheet date. </font></p> <p style="margin-top: 18px; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2"><i>Long-Term Investments </i></font></p> <p style="margin-top: 6px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">As of October&nbsp;31, 2010, we do not have any investments classified as long-term. At October&nbsp;31, 2009, all of our Auction Rate Securities ("ARSs") were classified as long-term investments in our consolidated balance sheets, and were our only long-term investments. At October&nbsp;31, 2010, we no longer hold any ARSs. </font></p> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">We estimated the fair value of these ARSs using a discounted cash flow analysis that considered the following key inputs: (i)&nbsp;the underlying structure of each security; (ii)&nbsp;the present value of the future principal and interest payments discounted at rates considered to reflect current market conditions and the relevant risk associated with each security; and (iii)&nbsp;consideration of the time horizon that the market value of each security could return to its cost. When available, we also include market information and weigh this with our discounted cash flow analysis to estimate fair value. We estimated that the fair market value of these securities at October&nbsp;31, 2009 was $10.3 million. At October&nbsp;31, 2009, the original cost of the remaining ARSs was $29.8 million. </font></p> <p style="margin-top: 18px; margin-bottom: 0px; font-size: 1px;">&nbsp;</p> <p style="margin-top: 0px; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2"><i>Concentrations of Credit Risk/Significant Customers </i></font></p> <p style="margin-top: 6px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">Financial instruments that subject us to credit risk primarily consist of cash equivalents, short-term investments, accounts receivable, and amounts due under subleases. Our credit risk is managed by investing cash and cash equivalents primarily in high-quality money market instruments, securities of the U.S. government and its agencies, highly rated corporate debt, and highly rated asset-backed securities all of which are of short duration. </font></p> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">Accounts receivable include amounts owed by geographically dispersed end-users, distributors, resellers, original equipment manufacturers ("OEMs") and other customers. No collateral is required. Accounts receivable are not sold or factored. At October&nbsp;31, 2010 and 2009, there were no receivables greater than 10% of our total receivables outstanding with any one customer. We generally have not experienced any material losses related to receivables from individual customers or groups of customers. Due to these factors, no significant additional credit risk, beyond amounts provided for, is believed by management to be inherent in our accounts receivable. During fiscal 2010, 2009 and 2008, there were no customers who accounted for more than 10% of total net revenue. </font></p> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">Our subleases are with many different parties and thus no concentration of credit risk exists at October&nbsp;31, 2010. </font></p> <p style="margin-top: 18px; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2"><i>Equity Investments </i></font></p> <p style="margin-top: 6px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">We account for our equity investments where we hold more than 20 percent of the outstanding stock of the investee's stock or where we have the ability to significantly influence the operations or financial decisions of the investee under the equity method of accounting. We initially record the investment at cost and adjust the carrying amount each period to recognize our share of the earnings or losses of the investee based on our percentage of ownership. We review our equity investments periodically for indicators of impairment. </font></p> <p style="margin-top: 18px; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2"><i>Property, Plant and Equipment </i></font></p> <p style="margin-top: 6px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">Property, plant and equipment are carried at cost, less accumulated depreciation and amortization. Depreciation and amortization is computed on the straight-line method over the estimated useful lives of the assets, or lease term, if shorter. Such lives are as follows: </font></p> <p style="margin-top: 0px; margin-bottom: 0px; font-size: 12px;">&nbsp;</p> <table border="0" cellspacing="0" cellpadding="0" width="100%" align="center"> <tr><td width="90%"> </td> <td valign="bottom" width="1%"> </td> <td> </td> <td> </td> <td> </td></tr> <tr><td valign="bottom" nowrap="nowrap"> <p style="border-bottom: rgb(0,0,0) 1px solid; width: 66pt;"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Asset Classification</b></font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" nowrap="nowrap" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Useful Lives</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Buildings</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" nowrap="nowrap" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">30&nbsp;years</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Furniture and equipment</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" nowrap="nowrap" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">2&nbsp;&ndash;&nbsp;7&nbsp;years</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Leasehold improvements and other</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" nowrap="nowrap" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">3&nbsp;&ndash;&nbsp;10&nbsp;years</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr></table> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">We periodically review our net property, plant and equipment for impairment whenever events or changes in circumstances indicate that the carrying value of the asset may not be recoverable. Factors that could indicate an impairment include significant underperformance of the asset as compared to historical or projected future operating results, significant changes in the actual or intended use of the asset, or significant negative industry or economic trends. When we determine that the carrying value of an asset may not be recoverable, the related estimated future undiscounted cash flows expected to result from the use and eventual disposition of the asset are compared to the carrying value of the asset. If the sum of the estimated future undiscounted cash flows is less than the carrying amount, we record an impairment charge based on the difference between the carryin g value of the asset and its fair value, which we estimate based on discounted expected future cash flows. In determining whether an asset is impaired, we must make assumptions regarding recoverability of costs, estimated future cash flows from the asset, intended use of the asset and other related factors. If these estimates or their related assumptions change, we may be required to record impairment charges for these assets. For fiscal 2010, 2009, and 2008, we have not identified or recorded any impairment of our net property, plant and equipment. </font></p> <p style="margin-top: 18px; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2"><i>Goodwill and Intangible Assets </i></font></p> <p style="margin-top: 6px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">We evaluate the recoverability of goodwill and indefinite-lived intangible assets annually as of August&nbsp;1, or more frequently if events or changes in circumstances warrant, such as a material adverse change in the business. Goodwill is considered to be impaired when the carrying value of a reporting unit exceeds its estimated fair value. Fair values are estimated using the combination of a discounted cash flow methodology and a market analysis and weighting the results. Our reporting units are the three components of SMOP, which are: Open Platform Solutions, Identity and Security Management, and Systems and Resource Management; and our CS business unit segment. </font></p> <p style="margin-top: 12px; margin-bottom: 0px; font-size: 1px;">&nbsp;</p> <p style="margin-top: 0px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">We do not amortize goodwill or intangibles with indefinite lives resulting from acquisitions. We review these assets periodically for potential impairment issues. Separable intangible assets that are not deemed to have an indefinite life are amortized over their estimated useful lives. </font></p> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">We review our finite-lived intangible assets for indicators of impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. When we determine that the carrying value of an asset may not be recoverable, the related estimated future undiscounted cash flows expected to result from the use and eventual disposition of the asset are compared to the carrying value of the asset. If the sum of the estimated future undiscounted cash flows is less than the carrying amount, we record an impairment charge based on the difference between the carrying value of the asset and its fair value, which we estimate based on discounted expected future cash flows. </font></p> <p style="margin-top: 18px; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2"><i>Disclosure of Fair Value of Financial Instruments </i></font></p> <p style="margin-top: 6px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">Our financial instruments mainly consist of cash and cash equivalents, short-term investments, accounts receivable, accounts payable, accrued expenses, and at October&nbsp;31, 2009, long-term investments. The carrying amounts of our cash equivalents, accounts receivable, accounts payable, and accrued expenses approximate fair value due to the short-term nature of these instruments. Our long-term investments as of October&nbsp;31, 2009 approximated fair value and were comprised entirely of our ARSs. As of October&nbsp;31, 2010 and 2009, we did not hold any publicly-traded long-term equity investments (See Note G, "Long-Term Investments"). </font></p> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between willing market participants on the measurement date. Valuation techniques used to measure fair value should maximize the use of observable inputs and minimize the use of unobservable inputs. The fair value hierarchy is based on three levels of market inputs (Levels 1, 2 &amp; 3), of which the first two are considered observable and the last unobservable, that may be used to measure fair value. </font></p> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">Our level 1 financial instruments are valued using quoted prices in active markets for identical instruments. Level 2 financial instruments are valued using quoted prices for identical instruments in less active markets or using other observable market inputs for comparable instruments. Level 3 financial instruments are valued using unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. As of October&nbsp;31, 2010, we had no level 2 or 3 financial instruments. </font></p> <p style="margin-top: 18px; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2"><i>Revenue Recognition and Related Reserves </i></font></p> <p style="margin-top: 6px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">Our revenue is derived primarily from the sale of software licenses, software maintenance, subscriptions of SUSE Linux Enterprise Server ("SLES"), technical support, training, and professional services. Our customers include: distributors, who sell our products to resellers, and value added resellers ("VARs"); OEMs, who integrate our products with their products or solutions; VARs, who provide solutions across multiple vertical market segments which usually include services; and end-users, who may purchase our products and services directly from us or from other partners or resellers. Except for our SUSE Linux product, distributors do not order to stock and only order products when they have an end customer order. With respect to our SUSE Linux product, distributors place orders and the product is then sold to end customers principally through the retail channel. OEMs r eport the number of copies duplicated and sold via an activity or royalty report. Software maintenance, technical support, and subscriptions of SLES typically involve one- to three-year contract terms. Our standard practice is to provide customers with a 30-day general right of return. Such return provision allows for a refund and/or credit of any amount paid by our customers. </font></p> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">When an arrangement does not require significant production, modification, or customization of software or does not contain services considered to be essential to the functionality of the software, revenue is recognized when the following four criteria are met: </font></p> <p style="margin-top: 0px; margin-bottom: 0px; font-size: 6px;">&nbsp;</p> <table style="border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr><td width="4%"><font class="_mt" size="1">&nbsp;</font></td> <td valign="top" width="1%" align="left"><font style="font-family: Times New Roman;" class="_mt" size="2">&bull;</font></td> <td valign="top" width="1%"><font class="_mt" size="1">&nbsp;</font></td> <td valign="top" align="left"> <p align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">Persuasive evidence of an arrangement exists &#8212; We require evidence of an agreement with a customer specifying the terms and conditions of the products or services to be delivered typically in the form of a signed contract or statement of work accompanied by a purchase order. </font></p></td></tr></table> <table style="border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr><td width="4%"><font class="_mt" size="1">&nbsp;</font></td> <td valign="top" width="1%" align="left"><font style="font-family: Times New Roman;" class="_mt" size="2">&bull;</font></td> <td valign="top" width="1%"><font class="_mt" size="1">&nbsp;</font></td> <td valign="top" align="left"> <p align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">Delivery has occurred &#8212; For software licenses, delivery takes place when the customer is given access to the software programs via access to a website or shipped medium. For services, delivery takes place as the services are provided. </font></p></td></tr></table> <table style="border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr><td width="4%"><font class="_mt" size="1">&nbsp;</font></td> <td valign="top" width="1%" align="left"><font style="font-family: Times New Roman;" class="_mt" size="2">&bull;</font></td> <td valign="top" width="1%"><font class="_mt" size="1">&nbsp;</font></td> <td valign="top" align="left"> <p align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">The fee is fixed or determinable &#8212; Fees are fixed or determinable if they are not subject to cancellation or other payment terms that exceed our standard payment terms. </font></p></td></tr></table> <p style="margin-top: 6px; margin-bottom: 0px; font-size: 1px;">&nbsp;</p> <p style="margin-top: 0px; margin-bottom: 0px; font-size: 6px;">&nbsp;</p> <table style="border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr><td width="4%"><font class="_mt" size="1">&nbsp;</font></td> <td valign="top" width="1%" align="left"><font style="font-family: Times New Roman;" class="_mt" size="2">&bull;</font></td> <td valign="top" width="1%"><font class="_mt" size="1">&nbsp;</font></td> <td valign="top" align="left"> <p align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">Collection is probable &#8212; We perform a credit review of all customers with significant transactions to determine whether a customer is creditworthy and collection is probable. Prior credit history with us, credit reports, financial statements, and bank references are used to assess creditworthiness. </font></p></td></tr></table> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">In general, revenue for transactions that do not involve software customization or services considered essential to the functionality of the software is recognized as follows: </font></p> <p style="margin-top: 0px; margin-bottom: 0px; font-size: 6px;">&nbsp;</p> <table style="border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr><td width="4%"><font class="_mt" size="1">&nbsp;</font></td> <td valign="top" width="1%" align="left"><font style="font-family: Times New Roman;" class="_mt" size="2">&bull;</font></td> <td valign="top" width="1%"><font class="_mt" size="1">&nbsp;</font></td> <td valign="top" align="left"> <p align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">Software fees for our SUSE Linux product are recognized when the product is sold to an end customer; </font></p></td></tr></table> <table style="border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr><td width="4%"><font class="_mt" size="1">&nbsp;</font></td> <td valign="top" width="1%" align="left"><font style="font-family: Times New Roman;" class="_mt" size="2">&bull;</font></td> <td valign="top" width="1%"><font class="_mt" size="1">&nbsp;</font></td> <td valign="top" align="left"> <p align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">Software license fees for sales through OEMs are recognized upon receipt of license activity or royalty reports; </font></p></td></tr></table> <table style="border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr><td width="4%"><font class="_mt" size="1">&nbsp;</font></td> <td valign="top" width="1%" align="left"><font style="font-family: Times New Roman;" class="_mt" size="2">&bull;</font></td> <td valign="top" width="1%"><font class="_mt" size="1">&nbsp;</font></td> <td valign="top" align="left"> <p align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">All other software license fees are recognized upon delivery of the software; </font></p></td></tr></table> <table style="border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr><td width="4%"><font class="_mt" size="1">&nbsp;</font></td> <td valign="top" width="1%" align="left"><font style="font-family: Times New Roman;" class="_mt" size="2">&bull;</font></td> <td valign="top" width="1%"><font class="_mt" size="1">&nbsp;</font></td> <td valign="top" align="left"> <p align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">Software maintenance, technical support, and subscriptions of SLES are recognized ratably over the contract term; and </font></p></td></tr></table> <table style="border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr><td width="4%"><font class="_mt" size="1">&nbsp;</font></td> <td valign="top" width="1%" align="left"><font style="font-family: Times New Roman;" class="_mt" size="2">&bull;</font></td> <td valign="top" width="1%"><font class="_mt" size="1">&nbsp;</font></td> <td valign="top" align="left"> <p align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">Professional services, training and other similar services are recognized as the services are performed. </font></p></td></tr></table> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">If the fee due from the customer is not fixed or determinable, revenue is recognized as payments become due from the customer. If collection is not considered probable, revenue is recognized when the fee is collected. We record provisions against revenue for estimated sales returns and allowances on product and service-related sales in the same period as the related revenue is recorded. We also record a provision to operating expenses for bad debts resulting from customers' inability to pay for the products or services they have received. These estimates are based on historical sales returns and bad debt expense, analyses of credit memo data, and other known factors, such as bankruptcy. If the historical data we use to calculate these estimates does not accurately reflect future returns or bad debts, adjustments to these reserves may be required that would increase or decrease revenue or net income. </font></p> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">Many of our software arrangements include multiple elements. Such elements typically include any or all of the following: software licenses, rights to additional software products, software maintenance, technical support, training and professional services. For multiple-element arrangements that do not involve significant modification or customization of the software and do not involve services that are considered essential to the functionality of the software, we allocated value to each element based on its relative fair value for transactions prior to fiscal 2009. </font></p> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">Prior to the start of fiscal 2009, we sold software licenses individually as well as combined with other products (multi-element arrangements), allowing us to determine vendor-specific objective evidence ("VSOE") of fair value for substantially all software license products. Accordingly, when we sold multi-element arrangements we used the relative fair value, or proportional, revenue accounting method to allocate the value of multi-element arrangements proportionally to the software license and other components. </font></p> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">At the start of fiscal 2009, we made a sales program change requiring all customers to initially purchase maintenance with licenses, which is common industry practice. As a result of eliminating stand-alone software license sales, VSOE of fair value for software licenses no longer existed. Accordingly, beginning in the first quarter of fiscal 2009, the residual method as defined in current accounting standards is now used to allocate the value of multi-element arrangements to the various components, which is also common industry practice. Under the residual method, each undelivered element (typically maintenance) is allocated value based on Novell-specific objective evidence of fair value for that element and the remainder of the total arrangement fee is allocated to the delivered element, typically the software. This method results in discounts being allocated to the software license rather than spread proportionately over all elements. Therefore, when a discount exists, less revenue is recognized at the time of sale under the residual method than under the relative fair value method, which we used prior to fiscal 2009. We believe that the impact of the change to the residual method was not material to net revenue in fiscal 2009 or 2010. </font></p> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">If sufficient Novell-specific objective evidence of fair value does not exist for all undelivered elements and the arrangement involves rights to unspecified additional software products, all revenue is recognized ratably over the term of the arrangement. If the arrangement involves rights to unspecified additional software products, all revenue is initially deferred until the only remaining undelivered element is software maintenance or technical support, at which time the entire fee is recognized ratably over the remaining maintenance or support term. </font></p> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">In the case of multiple-element arrangements that involve significant modification or customization of the software or involve services that are considered essential to the functionality of the software, contract accounting is applied. When Novell-specific objective evidence of fair value exists for software maintenance or technical support in arrangements requiring contract accounting, the professional services and license fees are combined and revenue is recognized on the percentage of completion basis. The percentage of completion is generally calculated using hours incurred to date relative to the total expected hours for the entire project. The cumulative impact of any revision in estimates to complete or recognition of losses on contracts is reflected in the period in which the changes or losses become known. The maintenance or support fee is unbundled from the o ther elements and revenue is recognized ratably over the maintenance or support term. When Novell-specific objective evidence of fair value does not exist for software maintenance or support, then all revenue is deferred until completion of the professional services, at which time the entire fee is recognized ratably over the remaining maintenance or support period. </font></p> <p style="margin-top: 12px; margin-bottom: 0px; font-size: 1px;">&nbsp;</p> <p style="margin-top: 0px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">For consolidated statements of operations classification purposes only, we allocate the revenue first to those elements for which we have Novell-specific objective evidence of fair value, and any remaining recognized revenue is then allocated to those items for which we lack Novell-specific objective evidence of fair value. </font></p> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">Professional services contracts are either time-and-materials or fixed-price contracts. Revenue from time-and-materials contracts is recognized as the services are performed. Revenue from fixed-price contracts is recognized based on the proportional performance method, generally using estimated time to complete, to measure the completed effort. The cumulative impact of any revision in estimates to complete or recognition of losses on contracts is reflected in the period in which the changes or losses become known. Professional services revenue includes reimbursable expenses charged to our clients. </font></p> <p style="margin-top: 18px; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2"><i><u>Microsoft Agreements-related revenue </u></i></font></p> <p style="margin-top: 6px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">On November&nbsp;2, 2006, we entered into the Microsoft Agreements. Each of the agreements is scheduled to expire on January&nbsp;1, 2012. </font></p> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">Under the Business Collaboration Agreement, we are marketing a combined offering with Microsoft. The combined offering consists of a subscription for SLES support along with Microsoft Windows Server, Microsoft Virtual Server and Microsoft Hyper-V, and is offered to customers desiring to deploy Linux and Windows in a virtualized setting. Microsoft made an upfront payment to us of $240 million for SLES subscription "certificates," which Microsoft may use, resell or otherwise distribute over the term of the agreement, allowing the certificate holder to redeem single or multi-year subscriptions for SLES support from us (entitling the certificate holder to upgrades, updates and technical support). Microsoft agreed to spend $60 million over the term of the agreement for marketing Linux and Windows virtualization scenarios and also agreed to spend $34 million over the term of the agreement for a Microsoft sales force devoted primarily to marketing the combined offering. Microsoft agreed that for three years following the initial date of the agreement it will not enter into an agreement with any other Linux distributor to encourage adoption of other company's Linux/Windows Server virtualization through a program substantially similar to the SLES subscription "certificate" distribution program. </font></p> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">The Technical Collaboration Agreement focuses primarily on four areas: </font></p> <p style="margin-top: 0px; margin-bottom: 0px; font-size: 6px;">&nbsp;</p> <table style="border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr><td width="4%"><font class="_mt" size="1">&nbsp;</font></td> <td valign="top" width="1%" align="left"><font style="font-family: Times New Roman;" class="_mt" size="2">&bull;</font></td> <td valign="top" width="1%"><font class="_mt" size="1">&nbsp;</font></td> <td valign="top" align="left"> <p align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">Development of technologies to optimize SLES and Windows, each running as guests in a virtualized setting on the other operating system; </font></p></td></tr></table> <table style="border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr><td width="4%"><font class="_mt" size="1">&nbsp;</font></td> <td valign="top" width="1%" align="left"><font style="font-family: Times New Roman;" class="_mt" size="2">&bull;</font></td> <td valign="top" width="1%"><font class="_mt" size="1">&nbsp;</font></td> <td valign="top" align="left"> <p align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">Development of management tools for managing heterogeneous virtualization environments, to enable each party's management tools to command, control and configure the other party's operating system in a virtual machine environment; </font></p></td></tr></table> <table style="border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr><td width="4%"><font class="_mt" size="1">&nbsp;</font></td> <td valign="top" width="1%" align="left"><font style="font-family: Times New Roman;" class="_mt" size="2">&bull;</font></td> <td valign="top" width="1%"><font class="_mt" size="1">&nbsp;</font></td> <td valign="top" align="left"> <p align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">Development of translators to improve interoperability between Microsoft Office and OpenOffice.org document formats; and </font></p></td></tr></table> <table style="border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr><td width="4%"><font class="_mt" size="1">&nbsp;</font></td> <td valign="top" width="1%" align="left"><font style="font-family: Times New Roman;" class="_mt" size="2">&bull;</font></td> <td valign="top" width="1%"><font class="_mt" size="1">&nbsp;</font></td> <td valign="top" align="left"> <p align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">Collaboration on improving directory and identity interoperability and identity management between Microsoft Active Directory software and Novell eDirectory software. </font></p></td></tr></table> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">Under the Technical Collaboration Agreement, Microsoft agreed to provide funding to help accomplish these broad objectives, subject to certain limitations. </font></p> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">Under the Patent Cooperation Agreement, Microsoft agreed to covenant with our customers not to assert its patents against our customers for their use of our products and services for which we receive revenue directly or indirectly, with certain exceptions, while we agreed to covenant with Microsoft's customers not to assert our patents against Microsoft's customers for their use of Microsoft products and services for which Microsoft receives revenue directly or indirectly, with certain exceptions. In addition, we and Microsoft each irrevocably released the other party, and its customers, from any liability for patent infringement arising prior to November&nbsp;2, 2006, with certain exceptions. Both we and Microsoft have payment obligations under the Patent Cooperation Agreement. Microsoft made an upfront net balancing payment to us of $108 million, and we are makin g ongoing payments to Microsoft totaling a minimum of $40 million over the five-year term of the agreement based on a percentage of our Open Platform Solutions and Open Enterprise Server revenues. </font></p> <p style="margin-top: 12px; margin-bottom: 0px; font-size: 1px;">&nbsp;</p> <p style="margin-top: 0px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">As the three agreements are interrelated and were negotiated and executed simultaneously, for accounting purposes we considered all of the agreements to constitute one arrangement containing multiple elements. The SLES subscription purchases of $240 million are being accounted for based on VSOE of fair value. We recognize the revenue ratably over the respective subscription terms beginning upon customer activation, or for subscriptions which expire un-activated, if any, we recognize revenue upon subscription expiration. Objective evidence of the fair value of elements within the Patent Cooperation Agreement and Technical Collaboration Agreement did not exist. As such, we combined the $108 million for the Patent Cooperation Agreement payment and amounts we are receiving under the Technical Collaboration Agreement and are recognizing this revenue ratably over the contract ual term of the agreements of five years. Our periodic payments to Microsoft are recorded as a reduction of revenue. The contractual expenditures by Microsoft, including the dedicated sales force of $34 million and the marketing funds of $60 million, do not obligate us to perform, and, therefore, do not have an accounting consequence to us. </font></p> <p style="margin-top: 18px; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2"><i>Cost of Revenue </i></font></p> <p style="margin-top: 6px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">Cost of revenue includes the amortization of intangible assets related to products or services sold, royalty costs, and costs associated with personnel providing professional services and technical support services. </font></p> <p style="margin-top: 18px; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2"><i>Expenses </i></font></p> <p style="margin-top: 6px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">Product development costs are expensed as incurred. Costs incurred subsequent to the establishment of technological feasibility but prior to the general release of the product have not been significant and therefore have not been capitalized. </font></p> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">Advertising costs are expensed as incurred. Advertising expenses totaled $3.9 million, $4.9 million, and $5.9 million, in fiscal 2010, 2009, and 2008, respectively. </font></p> <p style="margin-top: 18px; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2"><i>Share-based Payments </i></font></p> <p style="margin-top: 6px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">Under the fair value recognition guidance of stock-based compensation accounting rules, stock-based compensation cost is estimated at the grant date based on the fair value of the award and is recognized as expense over the requisite service period of the award. The fair value of restricted stock awards, including units, is determined by reference to the fair market value of our common stock on the date of grant. We use the Black-Scholes model to value both service condition and performance condition option awards. For awards with only service conditions and graded-vesting features, we recognize compensation cost on a straight-line basis over the requisite service period. For awards with performance conditions, we recognize stock-based compensation expense based on the graded-vesting method. To value market-based awards we use the Monte Carlo simulation method. We recog nize compensation cost for market-based awards on a graded-vesting basis over the derived service period calculated by the Monte Carlo simulation. </font></p> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">Determining the appropriate fair value model and related assumptions requires judgment, including estimating stock price volatility, forfeiture rates, and expected terms. The expected volatility rates are estimated based on historical and implied volatilities of our common stock. The expected term represents the average time that options that vest are expected to be outstanding based on the vesting provisions and our historical exercise, cancellation and expiration patterns. We estimate pre-vesting forfeitures when recognizing stock-based compensation expense based on historical rates and forward-looking factors. We update these assumptions at least on an annual basis and on an interim basis if significant changes to the assumptions are warranted. </font></p> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">We issue performance-based equity awards, typically to senior executives, which vest upon the achievement of certain financial performance goals, including revenue and income targets. Determining the appropriate amount to expense based on the anticipated achievement of the stated goals requires judgment, including forecasting future financial results. The estimate of expense is revised periodically based on the probability of achieving the required performance targets and adjustments are made as appropriate. The cumulative impact of any revision is reflected in the period of change. If the financial performance goals are not met, the award does not vest, so no compensation cost is recognized and any previously recognized stock-based compensation expense is reversed. </font></p> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">We issue market-based equity awards, typically to senior executives, which vest upon the achievement of certain stock price targets. If the awards are forfeited prior to the completion of the derived service period, any recognized compensation is reversed. If the awards are forfeited after the completion of the derived service period, the compensation cost is not reversed, even if the awards never vest. </font></p> <p style="margin-top: 18px; margin-bottom: 0px; font-size: 1px;">&nbsp;</p> <p style="margin-top: 0px; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2"><i>Valuation of Deferred Tax Assets </i></font></p> <p style="margin-top: 6px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">We regularly assess our ability to realize our deferred tax assets. Assessments of the future realization of deferred tax assets require that management consider all available evidence, both positive and negative, and make significant judgments about many factors, including the amount and likelihood of future income. </font></p> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">As a result of this assessment, at October&nbsp;31, 2010, given that we now have three years of cumulative earnings in the U.S. and are forecasting continued profitability, we determined that it was appropriate to release the valuation allowance on certain of our U.S. federal deferred tax assets (See Note L, "Income Taxes"). This release resulted in a $277.2 million increase to net income. We continue to maintain a valuation allowance on selected U.S. federal, state and international net deferred tax assets. As deferred tax assets or liabilities increase or decrease in the future, adjustments to the remaining valuation allowance will increase or decrease future income tax provisions or additional paid-in capital. If realization of the deferred tax asset is assessed not to be "more likely than not" then a valuation allowance is recorded against the deferred tax asse t. </font></p> <p style="margin-top: 18px; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2"><i>Net Income (Loss) Per Share </i></font></p> <p style="margin-top: 6px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">Basic net income (loss) per share is computed by dividing net income (loss) by the actual weighted-average number of common shares outstanding during the period. Diluted net income per share for the period presented is based on the basic calculation and includes the dilutive effect of potential common shares under the treasury stock method. Diluted net loss for the periods presented is the same as the basic net loss per share calculation due to the anti-dilutive effect of potential common shares under the treasury stock method as a result of our net losses. Potential dilutive common shares include stock options, unvested restricted stock, and unvested restricted stock units. </font></p> <p style="margin-top: 18px; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2"><i>Derivative Instruments </i></font></p> <p style="margin-top: 6px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">A large portion of our revenue, expense, and capital purchasing activities are transacted in U.S. dollars. However, we enter into transactions in other currencies, primarily the Euro, the British Pound&nbsp;Sterling, and certain other European, Latin American and Asian currencies. To protect against reductions in value caused by changes in foreign currency exchange rates, we have established balance sheet and inter-company hedging programs. We hedge currency risks of some assets and liabilities denominated in foreign currencies through the use of one-month foreign currency forward contracts. We do not currently hedge currency risks related to revenue or expenses denominated in foreign currencies. </font></p> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">Under our hedging program, we utilize one-month foreign currency forward contracts. We enter into these contracts two business days before the end of each month and settle them two business days before the end of the following month. We do not account for any of our derivatives as hedging instruments; rather, we record the impact of any gains or losses on our hedging program in the consolidated statements of operations. Due to the short period of time between entering into the forward contracts and our fiscal year-end, the fair value of the derivatives as of October&nbsp;31, 2010 and 2009 is immaterial to our consolidated balance sheets. Gains and losses recognized during the year on these foreign currency contracts are recorded in the line item, "Interest expense and other, net," in the consolidated statements of operations and would generally be offset by corresp onding losses or gains on the related hedged items. </font></p> <p style="margin-top: 18px; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2"><i>Recent Pronouncements </i></font></p> <p style="margin-top: 6px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">In June 2009, the FASB issued new guidance to replace the quantitative-based risks and rewards calculation for initially determining which enterprise, if any, has a controlling financial interest in, and will be required to consolidate, a variable interest entity. A variable interest entity is defined as an entity that will need additional funding to operate. Companies are now required to follow a more qualitative approach, focused on identifying which enterprise has the power to direct the activities of the variable interest entity that most significantly impacts the variable interest entity's economic performance. Companies are also required to perform ongoing assessments of which enterprise, if any, will have to consolidate the variable interest entity. Additional disclosures are also required. This guidance is effective for fiscal years beginning after November& nbsp;15, 2009 (our fiscal 2011). Currently, the impact of this pronouncement on our financial position and results of operations is anticipated to be immaterial. </font></p> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">In January 2010, the FASB issued updated guidance to improve disclosures regarding fair value measurements. In addition to certain portions that were effective and implemented in prior periods, this update requires entities to present separately (i.e. on a gross basis rather than as a net amount), information about purchases, sales, issuances, and settlements in the roll forward of changes in level 3 fair value measurements. These new disclosure requirements are effective for fiscal years beginning after December&nbsp;15, 2010 (our fiscal 2012). As this is only disclosure-related, and we currently do not have any level 3 fair value measurements, it is presently anticipated that this guidance will not have an impact on our financial position and results of operations. </font></p> </div> 1158326000 37098000 413182000 36574000 795984000 -124512000 1087528000 -17129000 420669000 35853000 772559000 -124424000 934522000 20982000 441798000 36218000 559823000 -124299000 1335548000 8824000 476482000 36667000 937799000 -124224000 <div> <p style="margin-top: 0px; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2"><b>T. Stockholders' Equity </b></font></p> <p style="margin-top: 6px; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2"><i>Stock Repurchase </i></font></p> <p style="margin-top: 6px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">On May&nbsp;13, 2008, our Board of Directors authorized the repurchase of up to $100.0 million of our outstanding common stock. There is no fixed termination date for the repurchase program. There were no repurchases under the program during fiscal 2010 or 2009. As of October&nbsp;31, 2010, 11.6&nbsp;million shares of common stock have been repurchased and retired under this program at an average price of $5.75 per share. The total amount paid for the repurchase of our common stock was $66.8 million, leaving $33.2 million remaining to be repurchased under the current Board authorization. The Merger Agreement generally restricts, subject to certain limited exceptions, including, without limitation, Attachmate's prior written consent, our ability to repurchase our outstanding common stock during the interim period between the execution of the Merger Agreement and the consummation of the merger (or the date on which the Merger Agreement is earlier terminated) (See Note Z, "Subsequent Events"). </font></p> <p style="margin-top: 18px; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2"><i>Preferred Stock </i></font></p> <p style="margin-top: 6px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">We have 500,000 authorized shares of Preferred Stock with a par value of $0.10 per share, none of which were issued or outstanding at October&nbsp;31, 2010 or October&nbsp;31, 2009. </font></p> <p style="margin-top: 18px; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2"><i>The 2009 Plan </i></font></p> <p style="margin-top: 6px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">In fiscal 2009, our stockholders approved the Novell, Inc. 2009 Omnibus Incentive Plan ("2009 Plan"). No new awards can be granted under our prior plans; however, we continue to manage outstanding awards under those plans, which are discussed in more detail below. </font></p> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">When granting stock options, we typically grant nonstatutory options at fair market value on the grant date, defined in the stock award plans as the closing price of our stock on the day prior to grant. Our current practice is to grant nonstatutory options or restricted units to mid- and upper-management at the time of hire. We also maintain an ongoing grant program under which certain employees are eligible for consideration based on their past performance or future retention requirement. </font></p> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">The 2009 Plan provides for the grant of stock options, stock appreciation rights, restricted stock and restricted stock units, performance shares and performance units, and other cash-based and stock-based awards. It also provides for the issuance of common stock equivalents ("CSEs"). As of October&nbsp;31, 2010, a total of 11.5&nbsp;million potential shares from stock awards were outstanding. </font></p> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">As of October&nbsp;31, 2010, 51.6&nbsp;million shares are authorized under the 2009 Plan, of which 37.0&nbsp;million shares are available for grant. For purposes of determining future shares available for grant, shares granted as full value awards, including restricted stock units and restricted stock, reduce the shares available for grant by 1.5 shares. All other types of grants reduce the shares available for grant by one share. We currently expect that under the 2009 Plan we will continue substantially the same stock-based compensation practices followed under prior plans. Stock options are granted with prices at fair market value on the grant date, defined in the 2009 Plan as the closing price of our stock on the day prior to grant and generally expire eight years from the date of grant. Upon vesting, restricted stock units are automatically converted i nto shares of common stock on a one-for-one basis without the payment of any additional consideration. Restricted stock is deemed outstanding at grant, but subject to a repurchase right held by us until the restricted stock award vests. CSEs may be issued to non-employee members of our Board of Directors who elect to have all or a portion of their board retainer fees deferred through the purchase of CSEs. The purchase price for CSEs is equal to the fair market value (as defined in the 2009 Plan) of our common stock on the date of purchase. Participating board members who defer compensation into the award of CSEs specify the future date, within specified parameters, that such CSEs will be converted into shares of our common stock. </font></p> <p style="margin-top: 18px; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2"><i>Prior Stock Plans </i></font></p> <p style="margin-top: 6px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">The 1991 Stock Plan, 2000 Stock Plan, 2000 Nonqualified Stock Option Plan, Novell/SilverStream 1997 Stock Option Plan, and Novell/SilverStream 2001 Stock Option Plan were all suspended by the approval of the 2009 Plan. No new awards can be granted under these plans; however, we continue to manage outstanding awards under all of these plans. Shares granted from these plans include nonqualified stock options, incentive stock options, restricted stock units, restricted stock, and CSEs. As of October&nbsp;31, 2010, a total of 18.9&nbsp;million potential shares from stock awards were authorized and outstanding. Shares outstanding from these plans that are forfeited, cancelled, expire or are otherwise not converted into common shares are available for grant under the 2009 Plan. Shares that are converted into common stock through exercise or release and then surrendere d for payment of the exercise price or tax obligations are considered cancelled and are not available for grant. </font></p> <p style="margin-top: 18px; margin-bottom: 0px; font-size: 1px;">&nbsp;</p> <p style="margin-top: 0px; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2"><i>Expired Plans </i></font></p> <p style="margin-top: 6px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">The Stock Option Plan for Non-Employee Directors (the "Director Plan") expired in April 2008. As of October&nbsp;31, 2010, a total of 0.6&nbsp;million potential shares from stock awards remain authorized and outstanding. Options previously granted under this plan that have not yet expired or otherwise become unexercisable continue to be administered under the Director Plan, and any portions that expire or become unexercisable under this expired plan for any reason shall be cancelled and be unavailable for future issuance. </font></p> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">A summary of the status of our stock award plans as of October&nbsp;31, 2010, 2009 and 2008 is presented below. </font></p> <p style="margin-top: 0px; margin-bottom: 0px; font-size: 12px;">&nbsp;</p> <table border="0" cellspacing="0" cellpadding="0" width="100%" align="center"> <tr><td width="52%"> </td> <td valign="bottom" width="3%"> </td> <td> </td> <td> </td> <td> </td> <td valign="bottom" width="3%"> </td> <td> </td> <td> </td> <td> </td> <td valign="bottom" width="3%"> </td> <td> </td> <td> </td> <td> </td> <td valign="bottom" width="3%"> </td> <td> </td> <td> </td> <td> </td> <td valign="bottom" width="3%"> </td> <td> </td> <td> </td> <td> </td> <td valign="bottom" width="3%"> </td> <td> </td> <td> </td> <td> </td></tr> <tr><td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="6" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Fiscal 2010</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="6" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Fiscal 2009</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="6" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Fiscal 2008</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td></tr> <tr><td valign="bottom" nowrap="nowrap"> <p style="margin-top: 0px; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>(Number of awards in thousands)</b></font></p> <p style="margin-top: 0px; margin-bottom: 1px; font-size: 10px;">&nbsp;</p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>&nbsp;Number&nbsp;of&nbsp; </b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Awards</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Weighted-</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Average</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>&nbsp;&nbsp;&nbsp;&nbsp;Exercise&nbsp;&nbsp;&nbsp;&nbsp;</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Price</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>&nbsp;Number&nbsp;of&nbsp; </b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Awards</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Weighted-</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Average</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>&nbsp;&nbsp;&nbsp;&nbsp;Exercise&nbsp;&nbsp;&nbsp;&nbsp;</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Price</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>&nbsp;Number&nbsp;of&nbsp; </b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Awards</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Weighted-</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Average</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>&nbsp;&nbsp;&nbsp;&nbsp;Exercise&nbsp;&nbsp;&nbsp;&nbsp;</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Price</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td></tr> <tr><td height="8"> </td> <td height="8" colspan="4"> </td> <td height="8" colspan="4"> </td> <td height="8" colspan="4"> </td> <td height="8" colspan="4"> </td> <td height="8" colspan="4"> </td> <td height="8" colspan="4"> </td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Outstanding at beginning of year</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">30,451</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">4.73</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">32,921</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">4.84</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">39,070</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">5.71</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 2em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Granted:</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 3em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Price at fair value</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">5,330</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">4.36</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">4,153</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">3.70</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">3,902</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">6.62</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 3em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Price at less than fair value</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">5,907</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">0.00</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">3,007</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">0.00</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">5,050</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">0.00</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 2em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Exercised</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(5,288</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">1.67</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(4,548</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">0.41</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(4,982</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">2.29</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 2em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Cancelled:</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 3em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Forfeited</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(2,003</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">3.26</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(2,060</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">3.14</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(2,590</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">3.16</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 3em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Expired</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(3,464</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">8.53</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(3,022</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">7.42</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(7,529</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">)&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">9.30</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Outstanding at end of year</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">30,933</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">3.96</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">30,451</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">4.73</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">32,921</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">4.84</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Exercisable at end of year</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">12,535</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">6.30</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">15,892</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">6.70</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">16,724</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">6.71</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td></tr></table> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">The following table summarizes information about stock awards outstanding at October&nbsp;31, 2010: </font></p> <p style="margin-top: 0px; margin-bottom: 0px; font-size: 12px;">&nbsp;</p> <table border="0" cellspacing="0" cellpadding="0" width="100%" align="center"> <tr><td width="41%"> </td> <td valign="bottom" width="8%"> </td> <td> </td> <td> </td> <td> </td> <td valign="bottom" width="8%"> </td> <td> </td> <td> </td> <td> </td> <td valign="bottom" width="8%"> </td> <td> </td> <td> </td> <td> </td> <td valign="bottom" width="8%"> </td> <td> </td> <td> </td> <td> </td> <td valign="bottom" width="8%"> </td> <td> </td> <td> </td> <td> </td></tr> <tr><td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="10" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Awards Outstanding</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="6" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Awards Exercisable</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td></tr> <tr><td valign="bottom" nowrap="nowrap"> <p style="margin-top: 0px; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>(Number of awards in thousands)</b></font></p> <p style="margin-top: 0px; margin-bottom: 1px; font-size: 10px;">&nbsp;</p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom" colspan="2" align="center"> <p style="margin-top: 0px; margin-bottom: 0px;" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Number of</b></font></p> <p style="margin-top: 0px; margin-bottom: 1px;" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Awards</b></font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Weighted-<br />Average<br />Remaining</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom" colspan="2" align="center"> <p style="margin-top: 0px; margin-bottom: 0px;" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Weighted-</b></font></p> <p style="margin-top: 0px; margin-bottom: 1px;" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Average</b></font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom" colspan="2" align="center"> <p style="margin-top: 0px; margin-bottom: 0px;" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Number of</b></font></p> <p style="margin-top: 0px; margin-bottom: 1px;" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Awards</b></font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom" colspan="2" align="center"> <p style="margin-top: 0px; margin-bottom: 0px;" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Weighted-</b></font></p> <p style="margin-top: 0px; margin-bottom: 1px;" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>Average</b></font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td></tr> <tr><td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="1"><b><u>Range of Exercise Prices</u></b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>&nbsp;&nbsp;&nbsp;&nbsp;Outstanding&nbsp;&nbsp;&nbsp;&nbsp;</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>&nbsp;&nbsp;Contractual&nbsp;Life&nbsp;&nbsp;</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>&nbsp;&nbsp;&nbsp;Exercise&nbsp;Price&nbsp;&nbsp;&nbsp;</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>&nbsp;&nbsp;&nbsp;&nbsp;Exercisable&nbsp;&nbsp;&nbsp;&nbsp;</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>&nbsp;&nbsp;&nbsp;Exercise&nbsp;Price&nbsp;&nbsp;&nbsp;</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">$0.00 &ndash; $3.64</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">12,585</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">2.65</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">1.01</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">1,442</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">3.23</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">$3.64 &ndash; $3.99</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">3,788</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">5.78</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">3.95</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">973</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">3.85</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">$3.99 &ndash; $4.68</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">3,611</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">5.08</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">4.62</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">1,197</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">4.65</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">$4.68 &ndash; $5.55</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">2,354</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">2.36</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">5.49</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">2,310</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">5.50</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">$5.55 &ndash; $6.44</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">2,398</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">4.01</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">6.06</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">1,742</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">6.10</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">$6.44 &ndash; $6.71</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">2,347</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">4.89</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">6.70</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">1,176</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">6.69</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">$6.71 &ndash; $9.62</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">2,296</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">3.51</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">7.78</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">2,141</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">7.83</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">$9.62 &ndash; $11.26</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">1,554</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">1.18</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">10.97</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">1,554</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">10.97</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;&nbsp;</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;&nbsp;</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 2em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Total</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">30,933</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">3.56</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">3.96</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">12,535</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">6.30</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr style="font-size: 1px;"><td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;&nbsp;</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom">&nbsp;&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td style="border-top: rgb(0,0,0) 3px double;" valign="bottom">&nbsp;</td> <td>&nbsp;</td> <td valign="bottom">&nbsp;&nbsp;</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td></tr></table> <p style="margin-top: 12px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">The following table summarizes general information as of October&nbsp;31, 2010 and October&nbsp;31, 2009: </font></p> <p style="margin-top: 0px; margin-bottom: 0px; font-size: 12px;">&nbsp;</p> <table border="0" cellspacing="0" cellpadding="0" width="100%" align="center"> <tr><td width="78%"> </td> <td valign="bottom" width="5%"> </td> <td> </td> <td> </td> <td> </td> <td valign="bottom" width="5%"> </td> <td> </td> <td> </td> <td> </td></tr> <tr><td valign="top" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>(Number of shares and awards in thousands)</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>&nbsp;&nbsp;&nbsp;&nbsp;October&nbsp;31,&nbsp;&nbsp;&nbsp;&nbsp;</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>2010</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td style="border-bottom: rgb(0,0,0) 1px solid;" valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>&nbsp;&nbsp;&nbsp;&nbsp;October&nbsp;31,&nbsp;&nbsp;&nbsp;&nbsp;</b></font><br /><font style="font-family: Times New Roman;" class="_mt" size="1"><b>2009</b></font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Awards available for future grants</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">37,002</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">45,740</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Shares of common stock outstanding</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">351,576</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">347,073</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr> <tr bgcolor="#cceeff"><td valign="top"> <p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Awards granted during the year as a percentage of outstanding common stock</font></p></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">3.2%</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td> <td valign="bottom"><font class="_mt" size="1">&nbsp;&nbsp;</font></td> <td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;</font></td> <td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">2.1%</font></td> <td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">&nbsp;&nbsp;</font></td></tr></table> <p style="margin-top: 18px; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2"><i>Employee Stock Purchase Plan </i></font></p> <p style="margin-top: 6px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">Through July 2009, we had an Employee Stock Purchase Plan (the "Purchase Plan") under which we were authorized to issue up to 34.0&nbsp;million shares of our common stock to our employees who work at least 20 hours a week and more than five months a year. The maximum number of shares that could be purchased by employees during any fiscal year was 3.0&nbsp;million shares. Under the terms of the Purchase Plan, there were two six-month offer periods per year, and employees could choose to have up to 10% of their eligible compensation withheld to purchase our common stock at 95% of the fair market value of our common stock on the purchase date. The Purchase Plan was considered non-compensatory under U.S. GAAP and, accordingly, no stock-based compensation expense has been recorded for issuances under the Purchase Plan. The Purchase Plan expired in July 2009 and was n ot renewed. </font></p> <p style="margin-top: 12px; margin-bottom: 0px; font-size: 1px;">&nbsp;</p> <p style="margin-top: 0px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">Under the Purchase Plan, we issued 0.3&nbsp;million and 0.2&nbsp;million shares to employees in fiscal 2009 and 2008, respectively. </font></p> <p style="margin-top: 18px; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2"><i>Shares Reserved for Future Issuance </i></font></p> <p style="margin-top: 6px; margin-bottom: 0px;" align="justify"><font style="font-family: Times New Roman;" class="_mt" size="2">As of October&nbsp;31, 2010, there were 71.0&nbsp;million shares of common stock reserved for issuance under our stock award plans. Except for awards outstanding as of the date of the Merger Agreement, the Merger Agreement generally restricts, subject to certain limited exceptions, including, without limitation, Attachmate's prior written consent, our ability to issue shares of our common stock during the interim period between the execution of the Merger Agreement and the consummation of the merger (or the date on which the Merger Agreement is earlier terminated) (See Note Z, "Subsequent Events"). </font></p> </div> -802000 -1161000 -891000 5216000 11000 4811000 15000 5385000 9000 5198000 5118000 80000 4938000 4822000 116000 5001000 4912000 89000 13266000 12656000 522000 88000 3451000 2845000 481000 125000 8926000 8313000 538000 75000 -11627000 66820000 52369000 1163000 13288000 132327000 85044000 76652000 151037000 104521000 88221000 15103159 15094092 124299000 124224000 350207000 345493000 353447000 350207000 345493000 349741000 EX-101.SCH 26 novl-20101031.xsd XBRL TAXONOMY EXTENSION SCHEMA 00100 - Statement - CONSOLIDATED STATEMENTS OF OPERATIONS link:presentationLink link:calculationLink link:definitionLink 00200 - 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