The software business is an evolving industry categorized by new technologies, changing demands, different sources of competition and shifting business models. With the increased affordability and standardization of desktop computers, publishers of desktop productivity software have benefited greatly from an expanded universe of users. The presence of a personal computer at nearly every office desk, regardless of industry and job function, has also been supported by networking, security and management products related to this computing infrastructure.

The indirect channel provides a cost-effective means for software publishers to market and sell software to a broader set of customers. According to the International Data Corporation, or IDC, in 2003, more than 70% of system software, as well as consumer and content applications, was sold through indirect sales channels. In 2003, other software categories with more than 40% of sales through indirect sales channels included collaborative applications, application development management, security software and information and data management software.

According to IDC, worldwide software end user spending is expected to increase from $214 billion in 2005 to $263 billion in 2008, representing a CAGR of 7.2%. Software end user spending in North America is expected to increase from $109 billion in 2005 to $132 billion in 2008, representing a CAGR of 6.8%. According to IDC, software end user spending through the indirect channel is expected to increase at a faster rate than spending through direct channels. In 2005, software end user spending through indirect channels is expected to be $90 billion worldwide and $44 billion in North America. From 2005 to 2008, this is expected to increase to $116 billion worldwide and $56 billion in North America, representing a CAGR of 8.8% and 8.2%, respectively. From 2005 to 2008, the increase in software end user spending through direct channels is expected to equal a CAGR of only 6.0% worldwide and a CAGR of 5.9% in North America. These growth rates represent a recovery in software end user spending after the time period from 2001 to 2003. From 2001 to 2003, worldwide software end user spending increased at a CAGR of 0.6% and North America software end user spending declined at a CAGR of 0.7%.

The Company’s customers can acquire software applications either through licensing agreements or by purchasing boxed products. Licensing agreements, or right-to-copy agreements, allow a customer to either purchase a license for each of its users in a single transaction or periodically report its software usage, paying a license fee for each user.

In January 2005, the Company launched sales of Media Plane™, an integrated software asset management platform that is designed to enable information technology organizations to gain better control of their software assets, thereby saving money and helping to ensure software compliance.

The Company’s IT infrastructure management services manage some or all of the customers’ centralized and departmental computing hardware and supporting infrastructure and software. The major computing platforms for which the Company provides service include mainframes, Windows servers and Unix servers. The components included in each comprehensive services contract vary for the customer’s specific needs.

The Company currently provides the following discrete services to some of its customers on a subscription basis and pursuant to multi-year service offerings: hosted email messaging, network management and security services, VOIP, and disaster recovery services.

Both the Company comprehensive and discrete IT infrastructure management services are provided through the following key service delivery processes: transition services, change control and system administration, service management, monitoring, and continuous performance tuning.

Cost of revenue decreased 4.3% to $1,757.9 million for the year ended December 31, 2004 from $1,836.4 million for the year ended December 31, 2003.

Gross profit increased 9.6% to $178.7 million for the year ended December 31, 2004 from $163.0 million for the year ended December 31, 2003.

Depreciation expense decreased 29.2% to $15.0 million for the year ended December 31, 2004 from $21.2 million for the year ended December 31, 2003.

Operating income increased to $21.9 million for the year ended December 31, 2004 from operating loss of $16.3 million for the year ended December 31, 2003.