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Autonomy reported its financial results for the first quarter of 2009. According to the company, these (unaudited) numbers represent the highest Q1 revenues and profits in Autonomy's history.

One of Q1 2009 highlights is, of course, the completed acquisition of Interwoven, Inc. with “integration ahead of plan” and cash flowing in as well as out.

Interwoven as a Revenue Stream

Dr. Mike Lynch, Group CEO of Autonomy said he was “pleased to report that the integration of Interwoven is progressing ahead of our plans and exceeding our expectations." Ahead or according to plans, but we’ve seen the IDOL-ized TeamSite already, and we know there’s more to come down the road.

While Interwoven can and, probably, will be one of Autonomy’s important revenue drivers in web content management and enterprise content management with compliance, eDiscovery and conceptual search (SPV module), cloud-based offerings, DAM with MediaBin, meaning-based marketing and a myriad of other solutions, what impact did this acquisition have on Autonomy’s balance sheet?

Autonomy’s Balance Sheet Taking a Hit

According to the Q1 2009 results, Autonomy’s cash balances were US$132.3 million, which is a decrease of US$ 66.9 million from the prior quarter. This is a direct result of the Interwoven acquisition. Interwoven purchase price was reported at approximately US$ 790 million (including exercised options).

This investment was funded through a placing of shares, raising net proceeds of US$ 308.5 million, a loan of US$ 200 million and the two companies' existing cash balances.

Interwoven shareholders took approximately US$ 600 million in cash flowing out. At the end of Q1 2009, the company had net debt of US$ 101.2 million.

The purchase price allocation for the Interwoven acquisition has not yet been finalized. A preliminary allocation of approximately $550 million has been attributed to goodwill and approximately $175 million to other intangible assets.

During 2009 the formal valuation exercise will be completed and hence these balances remain subject to change.

Minimizing the Hit

Interwoven was not all expense. Q1 2009 receivables were slightly up at US$164.3 million, and deferred revenues were at US$163.7 million compared to US$ 99.2 million the previous quarter.
Also, as announced earlier this year, Autonomy Interwoven had a round of layoffs in Q1 2009, which may be continued over the rest of the year. The resulting cost savings are estimated at US$ 8.0 million to US$ 10.0 million annually.

Safe in Your Arms

With all these movements on Autonomy’s balance sheet, there’s nothing alarming per se. Business as usual. As far as Autonomy Interwoven goes, it seems that this business unit is safely tucked under the bigger Autonomy umbrella. Will that also result in a better product?