<PAGE>


                                    UNITED STATES
                          SECURITIES AND EXCHANGE COMMISSION
                                Washington, D.C. 20549
                                           
                                      FORM 10-Q
                                           
(Mark One)
  X            QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE 
               SECURITIES EXCHANGE ACT OF 1934

               For the quarterly period ended SEPTEMBER 30, 1996

                                          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 0-19690
                                           
                                     BARRA, INC.
                (Exact name of registrant as specified in its charter)

           California                               94-2993326
(State or other jurisdiction of                  (I.R.S. Employer
 incorporation or organization)                  Identification No.)

                          1995 University Avenue, Suite 400
                           Berkeley, California 94704-1058
            (Address, including zip code, of principal executive offices)
                                           
                                    (510) 548-5442
                 (Registrant's telephone number, including area code)
                                           
               Indicate by check mark whether the registrant (1) has filed 
all reports required to be filed by Section 13 or 15(d) of the Securities 
Exchange Act of 1934 during the preceding 12 months (or for such shorter 
period that the registrant was required to file such reports), and (2) has 
been subject to such filing requirements for the past 90 days.  Yes [X]  No 
[ ]

               The number of shares of the registrant's Common Stock 
outstanding as of September 30, 1996 was 8,347,613.

               Exhibit Index is located on page 21.

<PAGE>

                                        INDEX

<TABLE>

<CAPTION>
                                                                                           PAGE
PART I         FINANCIAL INFORMATION                                                      NUMBER
<S>            <C>                                                                        <C>
Item 1         Financial Statements:    

               Unaudited Consolidated Balance Sheets as of September 30, 1996
                and as of March 31, 1996                                                      3
                    
               Unaudited Consolidated Statements of Income for the Three Months
                and Six Months Ended September 30, 1996 and September 30, 1995                4
                     
               Unaudited Consolidated Statements of Cash Flows for the Six
                Months Ended September 30, 1996 and September 30, 1995                        5
                    
               Notes to Consolidated Financial Statements                                     6

Item 2         Management's Discussion and Analysis of Financial
               Condition and Results of Operations                                           10


                                                                                           PAGE
PART II        OTHER INFORMATION                                                          NUMBER

Item 1         Legal Proceedings                                                             19

Item 6         Exhibits and Reports on Form 8-K                                              19

               Signatures                                                                    20
                    
               Exhibit Index                                                                 21

</TABLE>

                                           2

<PAGE>

                      PART I -- Financial Information

ITEM 1.        FINANCIAL STATEMENTS.  

BARRA INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
AS OF SEPTEMBER 30, 1996 AND MARCH 31, 1996
-------------------------------------------------------------------------------

<TABLE>
<CAPTION>

                                                                                  30-Sep-96       31-Mar-96
                                                                                  ---------       ---------
<S>                                                                               <C>             <C>

ASSETS

CURRENT ASSETS:

Cash and cash equivalents                                                         $17,589,862      $22,493,363

Accounts receivable:

      Trade (Less allowance for doubtful accounts of $143,000 and $129,237)        14,451,445       12,303,850
 
      Other                                                                           729,881          522,112

      Related parties                                                                  85,599           45,899

Short-term investments                                                              3,656,871        3,511,518

Investment in municipal debt securities -- available for sale                       6,350,000               --

Prepaid expenses                                                                      659,939          822,450
                                                                                  -----------      -----------

               Total current assets                                                43,523,597       39,699,192
                                                                                  -----------      -----------

NOTES RECEIVABLE                                                                    7,362,139        1,658,960

NON-MARKETABLE INVESTMENTS                                                            251,251        7,300,347

FURNITURE AND EQUIPMENT:

               Computer equipment                                                  10,758,842        8,716,136

               Office equipment                                                       798,677          729,248

               Furniture and fixtures                                               3,605,301        3,335,342
                                                                                  -----------      -----------

               Total furniture and equipment                                       15,162,820       12,780,726

               Less accumulated depreciation and amortization                      (8,740,910)      (7,742,149)
                                                                                  -----------      -----------

                                                                                    6,421,910        5,038,577

DEFERRED TAX ASSETS                                                                 1,584,431        1,584,431

COMPUTER SOFTWARE

                (Less accumulated amortization of $467,371 and $422,953)              617,334          971,077

INTANGIBLES AND OTHER ASSETS

                (Less accumulated amortization of $875,887 and $492,482)            9,204,684        7,796,401
                                                                                  -----------      -----------

TOTAL                                                                             $68,965,346      $64,048,985
                                                                                  ===========      ===========

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:

Accounts payable                                                                     $970,670       $1,368,466

Due to related party                                                                  631,098          567,201

Accrued expenses payable:

               Accrued compensation                                                 5,569,042        4,850,817

               Accrued corporate income taxes                                         857,046        2,250,098

               Other accrued expenses                                               5,103,039        4,035,904

Shareholder notes payable and line of credit                                          239,611        1,594,534

Unearned revenues                                                                  14,032,648       11,883,577
                                                                                  -----------      -----------

               Total current liabilities                                           27,403,154       26,550,597
                                                                                  ===========      ===========

OTHER LONG-TERM LIABILITIES:

Deferred tax liabilities                                                            1,424,472        1,217,817

Long-term debt                                                                        661,158        1,384,380
                                                                                  -----------      -----------

               Total other long-term liabilities                                    2,085,630        2,602,197
                                                                                  -----------      -----------

MINORITY INTEREST                                                                     334,414               --

SHAREHOLDERS' EQUITY:

Preferred stock, no par; 10,000,000 shares authorized; non issued and
outstanding

Common stock, no par; 40,000,000 shares authorized;  8,347,613  shares and
               8,300,484 shares issued and outstanding                              12,148,737      12,487,184

Retained earnings                                                                   27,097,721      22,393,261

Foreign currency translation adjustment                                               (104,310)         15,746
                                                                                   ===========     ===========

               Total shareholders' equity                                           39,142,148      34,896,191
                                                                                   ===========     ===========

TOTAL                                                                              $68,965,346     $64,048,985
                                                                                   ===========     ===========
</TABLE>

          See Accompanying Notes to the Consolidated Financial Statements.

                                           3

<PAGE>

BARRA, INC. AND SUBSIDIARIES  
CONSOLIDATED STATEMENTS OF INCOME  
FOR THE THREE MONTHS AND SIX MONTHS ENDED SEPTEMBER 30, 1996 AND 1995 
(UNAUDITED)
-------------------------------------------------------------------------------


<TABLE>

<CAPTION>


                                                                                                    Fiscal Year-to-Date
                                                                      Three Months Ended              Six Months Ended
                                                                        September 30,                  September 30,
                                                                     ------------------             -------------------
                                                                     1996          1995             1996           1995
                                                                     ----          ----             ----           ----

<S>                                                                  <C>           <C>              <C>            <C>
OPERATING REVENUES: 

         Subscription and consulting fees                            $18,327,292   $14,986,714     $36,333,031     $30,253,065

         Electronic brokerage and information                          2,572,007     1,689,679       4,706,487       2,954,278

         Asset management                                              3,574,541     1,594,641       6,361,071       3,073,721
                                                                     -----------   -----------     -----------     -----------

                    Total operating revenues                          24,473,840    18,271,034      47,400,589      36,281,064
                                                                     -----------   -----------     -----------     -----------

OPERATING EXPENSES: 

               Cost of subscription products                           1,669,055     1,273,892       3,559,844        2,779,548

               Compensation and benefits                              12,400,650     9,764,327      24,106,492       19,343,900

               Rent expense                                              980,624       971,108       1,969,238        1,926,044

               Other operating expenses                                4,632,146     3,412,270       8,878,063        6,690,099

               Merger costs and one-time charges                       1,756,189            --       1,756,189           --
                                                                     -----------   -----------     -----------      -----------

                    Total operating expenses                          21,438,664    15,421,597      40,269,826       30,739,591
                                                                     ===========   ===========     ===========      ===========

INTEREST AND OTHER                                                       324,021       506,114         965,365          907,554
                                                                     -----------   -----------     -----------      -----------

INCOME BEFORE EQUITY IN NET INCOME AND LOSS OF INVESTEES,   
               MINORITY INTEREST, AND INCOME TAXES                     3,359,197     3,355,551       8,096,128        6,449,027

EQUITY IN NET INCOME AND LOSS OF INVESTEES                              (103,009)     (208,918)       (109,117)        (598,761)

MINORITY INTEREST                                                        127,321       (72,817)        178,543         (179,503)
                                                                     -----------    ----------     -----------      -----------

INCOME BEFORE INCOME TAXES                                             3,383,509     3,073,816       8,165,554        5,670,763

INCOME TAXES                                                          (1,447,251)   (1,325,829)     (3,461,094)      (2,453,719)
                                                                     ===========    ==========     ===========      ===========

NET INCOME                                                            $1,936,258    $1,747,987      $4,704,460       $3,217,044
                                                                     ===========    ==========     ===========      ===========

NET INCOME PER SHARE:

               PRIMARY NET INCOME PER SHARE                                $0.21         $0.20           $0.51            $0.37
                                                                     ===========    ==========     ===========      ===========

               FULLY DILUTED NET INCOME PER SHARE                          $0.21         $0.20           $0.51            $0.37
                                                                     ===========    ==========     ===========      ===========

WEIGHTED AVERAGE COMMON AND COMMON EQUIVALENT SHARES:  
               PRIMARY                                                 9,226,311     8,670,916       9,286,769        8,594,314
                                                                     ===========    ==========     ===========      ===========

               FULLY DILUTED                                           9,325,915     8,685,832       9,312,843        8,704,524
                                                                     ===========    ==========     ===========      ===========

</TABLE>

        See Accompanying Notes to the Consolidated Financial Statements.

                                     4


<PAGE>


BARRA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(UNAUDITED)
-------------------------------------------------------------------------------

<TABLE>

<CAPTION>


                                                              Six  Months Ended
                                                                September 30,
                                                              -----------------
                                                              1996         1995
                                                              ----         ----
<S>                                                           <C>          <C>

CASH FLOWS FROM OPERATING ACTIVITIES:

Net Income                                                    $4,704,460   $3,217,044

Adjustments to reconcile net income to net cash provided
by operating activities:

               Equity in net income and loss of investees        109,117      598,761

               Minority interest                                (178,543)     179,503

               Depreciation and amortization                   1,555,477      734,663

               Amortization of computer software and 
                intangibles                                      105,345      107,647

               Dividends received from investee                 (226,583)    (207,920)

               Gains on marketable securities                    (86,000)    (212,500)

               One-time charges -- Capitalized software          448,426           --

               Other                                             275,338      105,661

Changes in:

               Trade accounts receivable                      (2,019,776)     656,838

               Other accounts receivable                        (421,812)     (15,777)

               Related parties receivable                        (39,700)     (66,665)

               Prepaid expenses                                  194,913      (33,234)

               Prepaid corporate income taxes                         --       92,862

               Other assets                                      178,394     (786,709)

               Accounts payable, due to related party 
                and accrued expenses                             (98,053)    (358,537)

               Unearned revenues                               2,054,486    1,359,190
                                                              ----------   ----------

Net cash provided by operating activities                      6,555,489    5,370,827
                                                              ----------   ----------

CASH FLOWS FROM INVESTING ACTIVITIES:

Capital expenditures                                          (2,131,370)    (950,356)

Short-term investments -- net                                    (59,353)    (551,733)

Investment in municipal debt securities - available for sale  (6,350,000)          --

Non-marketable investments:

               Investments in affiliates                        (875,000)    (231,484)
 
               Dividends received from investee                  226,583      207,920

Note receivable issued                                                --   (1,600,000)

Consolidation of Bond Express L.P. - cash acquired               146,742           --
                                                             -----------   ----------

Net cash used in investing activities                         (9,042,398)  (3,125,653)

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from notes payable and lines of credit                  445,140      503,319

Repayments on notes payable and lines of credit               (2,523,285)    (160,203)

Proceeds from sale of common stock                               263,526      558,617

Common stock repurchased                                        (601,973)  (1,639,348)
                                                             -----------   ----------

Net cash used in financing activities                         (2,416,592)    (737,615)
                                                             -----------   ----------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS          (4,903,501)   1,507,559

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD              22,493,363   16,083,444
                                                             -----------  -----------

CASH AND CASH EQUIVALENTS AT END OF PERIOD                   $17,589,862  $17,591,003
                                                             ===========  ===========

OTHER CASH FLOW INFORMATION:

Cash paid during the period for:

               Interest expense                                   $3,063       $2,922

               Income taxes                                   $2,938,615     $576,509

Non-cash investing transactions during the period for:

               Exchange of equity interest in LBIC for 
                debt (Note 5)                                 $7,219,458           --

               Consolidation of Bond Express (Note 3):

               Note receivable                               ($2,100,000)          --

               Net assets acquired                            $1,139,726           --

               Minority Interest                                $512,877           --

               Goodwill                                       $1,473,151           --

</TABLE>

        See Accompanying Notes to the Consolidated Financial Statements.

                                         5


<PAGE>

                             BARRA, INC. AND SUBSIDIARIES
                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION

The accompanying consolidated financial statements include BARRA, Inc. (the 
"Company" or "BARRA") and its subsidiaries, BARRA International, Ltd., BARRA 
International (U.K.), Ltd., BARRA International (Japan), Ltd., Berkeley 
Advisors Holding Company, BARRA (FSC), Inc., BARRA (U.S.A.), Inc., Symphony 
Asset Management, Inc. ("Symphony"), and Rogers, Casey & Associates, Inc. and 
Subsidiaries (collectively "RCA" - see Note 2). The financial position and 
results of operations for Bond Express L.P. have also been consolidated 
beginning June 1, 1996 (see Note 3).  All significant intercompany 
transactions and balances have been eliminated. Certain reclassifications 
have been made to prior year financial statements to conform to current year 
presentation.

In the opinion of management, the accompanying unaudited consolidated 
financial statements include all adjustments (consisting of normal recurring 
entries) necessary to present fairly the financial position of BARRA as of 
March 31 and September 30, 1996 and the results of its operations and cash 
flows for the periods presented in conformity with generally accepted 
accounting principles. The results of operations for such interim periods are 
not necessarily indicative of results of operations for a full year.  The 
March 31, 1996 consolidated balance sheet included herein is derived from the 
unaudited consolidated balance sheet of RCA (see Note 2) and the audited 
consolidated financial statements included in BARRA's Annual Report which was 
incorporated by reference in its Form 10-K for the fiscal year ended March 
31, 1996, filed with the Securities and Exchange Commission on June 20, 1996 
(the "Form 10-K"), but does not include all disclosures required by generally 
accepted accounting principles. It is suggested that these consolidated 
financial statements be read in conjunction with the audited consolidated 
financial statements and notes thereto incorporated by reference in the Form 
10-K and Management's Discussion and Analysis of Financial Condition and 
Results of Operations included elsewhere in this Form 10-Q.

2. BUSINESS COMBINATION

On July 24, 1996, BARRA merged with RCA, a firm specializing in investment 
consulting to money managers and pension plan sponsors. All of the common 
stock and outstanding options of RCA were exchanged for 481,364 shares of 
BARRA's common stock and 30,257 options on BARRA common stock.  This merger 
was 

                                     6


<PAGE>

accounted for as a pooling-of-interests.  The pooling-of-interests method of 
accounting is intended to present as a single interest two or more common 
shareholders' interests which were previously independent; accordingly, the 
unaudited financial information presented here reflects the combined results 
of BARRA and RCA for all periods presented.

All fees and expenses related to the merger have been expensed as required 
under the pooling-of-interests method of accounting.  These expenses have 
been reflected in the consolidated statement of income for the three and six 
months ended September 30, 1996.  These fees and expenses were $1,307,763 for 
both the three and six months ended September 30, 1996 and consisted 
primarily of fees for legal and accounting services, investment banking fees 
and costs associated with integrating the operations of the combined 
companies. The Company also recorded a one-time charge of $448,426 related to 
the write-off of capitalized software related to a product under development 
in which the costs were not recoverable based on present revenue estimates 
and whose value was therefor impaired.

The operating results of the separate companies prior to the merger were as 
follows:

               Three months ended September 30, 1995:

                                   Revenues       Net Income
                                   --------       ----------
                    BARRA          $14,652,171    $1,743,070
                    RCA             3,618,863          4,917
                                   ----------     ----------
                    Combined       $18,271,034    $1,747,987

               Six months ended September 30, 1995:

                                   Revenues       Net Income
                                   --------       ----------
                    BARRA          $28,666,276    $3,162,853
                    RCA              7,614,788        54,191
                                   -----------    ----------
                    Combined       $36,281,064    $3,217,044

3.             CONSOLIDATION OF BOND EXPRESS L.P.

In August, 1995 the Company committed to make a long-term loan of $2,100,000 
to Bond Express L.P. ("Bond Express").  Bond Express is a distributor, on a 
subscription basis, of software and databases of fixed income security 
offering information from bond dealers.  During the quarter ended June 30, 
1996, the Company fully disbursed  its remaining commitment on the loan which 
activated the Company's option to convert its interest in Bond Express from 
debt to a 55% controlling equity interest.  While this option has not been 
exercised, the 

                                  7

<PAGE>


Company believes that it has operational and financial control over Bond 
Express.  Accordingly, beginning  June 1, 1996,  the Company has consolidated 
the financial position and results of operations of Bond Express. The 
difference between the Company's investment (principally its note receivable) 
and the net assets of Bond Express at June 1, 1996 of approximately $1.5 
million has been recorded as goodwill and will be amortized over a period of 
10 years. Bond Express had operating revenues of $284,510 and $377,507 and 
operating expenses of $567,123 and $774,270 for the three and six month 
periods ended September 30, 1996, respectively, which have been combined with 
BARRA's consolidated results of operations for the same periods. The Company 
disbursed an additional $75,000 to Bond Express on terms similar to the 
existing note receivable during the quarter.  The minority interest's share 
(45%) of net assets and net losses has been shown separately in the 
consolidated financial statements. 

4.             INVESTMENT IN MUNICIPAL DEBT SECURITIES

Commencing in May, 1996, the Company, through an unaffiliated professional 
portfolio manager,  began investing a portion of its available cash resources 
in debt securities issued by various state and county municipalities. 
Interest on the securities is tax exempt and adjusts to market rates during 
designated interest reset periods which occur at least every month. While the 
securities have contractual maturity dates ranging from years 2004 to 2030, 
each security grants the investor the option to put the security back to the 
issuer at par during exercise periods which coincide with interest reset 
dates.  The Company has classified such securities as available for sale 
pursuant to the criteria established by SFAS 115 "Accounting for Certain 
Investments in Marketable Equity and Debt Securities".   Accordingly, the 
securities are reported at their fair value in the consolidated statement of 
financial position  with any unrealized net gains or losses reported as a 
separate component of stockholders' equity. At September 30, 1996, the 
Company had $6,350,000 in municipal debt securities -available for sale and 
no unrealized gains or losses.  

5.             INVESTMENT IN LIBERTY BROKERAGE INVESTMENT CORPORATION

As previously reported in the Company's Annual Report for the fiscal year 
ending March 31, 1996, the Company exchanged its investment in preferred 
stock of Liberty Brokerage Investment Corp. (LBIC) for a $7,219,474 
convertible secured 7.84% promissory note on April 16, 1996.  The principal 
amount of the note receivable issued by LBIC was equal to the Company's 
investment balance on the date of the exchange.  Prior to the 

                                   8


<PAGE>

exchange, the Company accounted for its investment in LBIC using the cost 
method.  Accordingly, the transaction resulted in a reclassification of the 
Company's investment from non-marketable investments to note receivable in 
the accompanying consolidated balance sheet. Principal payments on the note 
receivable are due in installments of $1,804,869 on March 31, 1997, and 
September 30, 1997, respectively, and the remaining balance is due on March 
31, 1998.

6.             REORGANIZATION OF SYMPHONY ASSET MANAGEMENT

As previously reported in the Company's June 30, 1996 10-Q, effective July 1, 
1996, the Company's wholly owned subsidiary, Symphony, contributed its 
assets, liabilities and business to Symphony Asset Management LLC ("SAMLLC"), 
a newly formed entity, in exchange for interests in SAMLLC pursuant to an 
Operating Agreement of Symphony Asset Management LLC (the "Agreement").  The 
capitalization of SAMLLC consists of four defined Interest Classes (Class 1, 
Class 2, Class 3 and Class 4).   Class 1, Class 2 and Class 4 interests 
belong to Symphony (which continues to be wholly owned by the Company) while 
Class 3 interests belong to a newly formed limited liability company, Maestro 
LLC ("Maestro"), whose owners are principals of SAMLLC.

The Agreement provides for the continuation of a bonus to be  paid to the 
principals of SAMLLC equal to 25% of SAMLLC profits (as defined).  This bonus 
is included in compensation and benefits expense in the accompanying 
financial statements.  This bonus is only in effect until the Class 2 
interests are redeemed at which time it converts to a profits interest.

The Company had previously consolidated Symphony and will consolidate the 
financial position and results of operations of SAMLLC and separately record 
the Class 3 interest share of net assets and net income as a minority 
interest.

7.             NET INCOME PER SHARE

Net income per share is computed using the primary and fully diluted weighted 
average number of common shares outstanding during the period as adjusted for 
the shares issued in the merger described in Note 2 and after including the 
effect on dilution, if any, of the exercise of common stock options using the 
treasury stock method. There was no material difference between the fully 
diluted and primary net income per share amounts for the three month and six 
month periods ended September 30, 1996 or September 30, 1995.

                                     9

<PAGE>

ITEM 2.        MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.  

The following discussion and analysis should be read in conjunction with the 
BARRA unaudited financial statements and related notes presented in this Form 
10-Q.  The discussion of results, causes or trends should not be construed to 
imply that such results, causes or trends will necessarily continue in the 
future.  Each statement made in this discussion and analysis and elsewhere in 
this report and related financial statements and notes thereto, containing 
any form of the words "anticipate", "expect," "believe," "future" or 
"forward" is a forward-looking statement that may involve a number of risk 
factors and uncertainties.  Among other factors that could cause actual 
results to differ materially are the following:  business conditions and 
other changes in the Company's industry; competitive factors such as rival 
products and price pressures both domestically and internationally; 
availability of adequate third-party data on reasonable terms and at 
reasonable prices; significant delays or excessive costs associated with 
product research, development and/or introduction; the loss of a large single 
revenue source; the investment performance of the Company's asset management 
subsidiary; significant changes in trading volumes on the POSIT trading 
system; and fluctuations in U.S. dollar exchange rates for non-U.S. 
currencies.  Further information and potential risk factors that could affect 
the Company's financial results are included in the Company's Form 10-K for 
the fiscal year ended March 31, 1996.
  
A.  GENERAL

Certain of the information required by this item has been previously reported 
under the heading "Management's Discussion and Analysis of Financial 
Condition and Results of Operations" in the Form 10-K.

On July 24, 1996, BARRA merged with RCA, a firm specializing in investment 
consulting to money managers and pension plan sponsors.  All of the common 
stock and outstanding options of RCA were exchanged for 481,364 shares of 
BARRA's common stock and 30,257 options on BARRA common stock.  This merger 
was accounted for as a pooling-of-interests.  The pooling-of-interests method 
of accounting is intended to present as a single interest two or more common 
shareholders' interests which were previously independent; accordingly, the 
unaudited financial information presented here reflects the combined results 
of BARRA and RCA for all periods presented.


                                     10

<PAGE>

As discussed in Note 3 to the financial statements provided in Part I, the 
Company consolidated Bond Express L.P. beginning June 1, 1996.  Accordingly, 
the following discussion of changes in financial position and results of 
operations for the three month and six month periods ending September 30, 
1996 includes related amounts from Bond Express for the period beginning June 
1, 1996.  Where changes in such amounts are significant and primarily 
reflective of the consolidation, separate disclosure of Bond Express amounts 
has been provided.

FOREIGN CURRENCY

BARRA, as an international corporation, generates revenues from clients 
throughout the world, maintains sales and representative offices world-wide 
and holds certain deposits and accounts in foreign currencies.  BARRA's 
revenues are generated from both United States and foreign currencies.  
BARRA's subscriptions in the United Kingdom and the European Community are 
priced in British pounds sterling ("pounds") and European Currency Units 
("ECUs"), respectively. Additionally, BARRA's consolidated subsidiary, BARRA 
International (Japan), Ltd. ("BARRA Japan", formerly N.B. Investment 
Technology Co., Ltd.), generates revenues, has expenses and has assets and 
liabilities in non-U.S. currencies. All other things being equal, weakening 
of the U.S. dollar has a positive impact on profits, and strengthening of the 
U.S. dollar has a negative impact.  The Company has considered its exposures 
to foreign currency fluctuations and to this point has decided not to engage 
in hedging or managing exposures to foreign currency fluctuations through 
contracts for the purchase, sale or swapping of currencies.

For the quarter ended September 30, 1996, when compared to the same quarter a 
year ago, the U.S. dollar strengthened significantly against the yen, and 
less significantly against the pound and the ECU - all of which had the 
effect of decreasing the dollar value of net revenues denominated in these 
non-U.S. currencies.  The Company estimates that the strengthening of the 
U.S. dollar accounted for approximately $300,000 in decreased consolidated 
operating revenues and approximately $35,000 in decreased consolidated net 
income for the quarter ended September 30, 1996 when compared to the same 
quarter a year ago.

Because the functional currency of BARRA Japan is the yen, the translation 
gains and losses associated with the consolidation of its balance sheets at 
points in time are reported as part of shareholders' equity.

                                   11

<PAGE>

Under current operating arrangements in the countries in which BARRA does 
business, there are no restrictions upon the flow of funds from its foreign 
subsidiary to the parent company.  There are currently no known commitments 
or requirements for material capital expenditures outside of the United 
States.

B.  FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
               
The dollar and percentage increases or decreases set forth below in this 
discussion and analysis of BARRA's consolidated financial condition result 
from a comparison of BARRA's balance sheet at September 30, 1996 to the 
balance sheet at March 31, 1996.  
 
FINANCIAL CONDITION 

Total assets increased $4,916,361 or 7.7%.

Total current assets increased $3,824,405 or 9.63%. This net increase consisted
primarily of increased cash and trade receivables resulting from business
growth.

Notes receivable increased $5,703,179 and Non-Marketable investments 
decreased $7,049,096 primarily as a result of the Company's exchange of its 
investment in preferred stock of LBIC into a note receivable of $7,219,458 
(see Note 5 to the financial statements provided in Part I) offset by the 
consolidation of Bond Express which resulted in a $1,600,000 reduction.

Intangibles and other assets increased by $1,408,283.  This increase was 
almost entirely due to the Company's consolidation of Bond Express resulting 
in additional goodwill of approximately $2,100,000; $600,000 of which related 
to a prior transaction recorded on the financial statements of Bond Express 
that was unrelated to the consolidation.  This increase was partially offset 
by the amortization of intangibles during the period totaling approximately 
$600,000.

Total current liabilities increased by $852,557 or 3.2% primarily due to 
increases in accruals and unearned revenues associated with the general 
growth of BARRA's business and the timing of advanced payments received on 
subscription contracts.  

Minority interest in equity of subsidiary represents the 45% interest in the 
net assets of Bond Express not owned by the Company.

Shareholders' equity in common stock decreased by $338,447 reflecting the net 
result of RCA contractually required share repurchases prior to the merger 
and the issuance of BARRA 

                                    12

<PAGE>



common stock during the quarter in connection with exercises of stock options 
under the Company's Employee Stock Option Plan and shares purchased under the 
Employee Stock Purchase Plan.

LIQUIDITY AND CAPITAL RESOURCES

Cash and cash equivalents, short-term investments and investment in municipal 
debt securities available-for-sale totaled $27,596,733 at September 30, 1996. 
In addition, the Company has a commitment from a bank for an unsecured 
short-term line of credit of up to $5 million - of which, no amounts have 
been, or are presently anticipated to be, drawn down.

BARRA believes that its cash flow from operations (including prepaid 
subscription fees), together with existing cash balances, will be sufficient 
to meet its cash requirements for capital expenditures and other cash needs 
for ongoing business operations.  Other than what has been described herein, 
the Company has no present binding understandings or commitments  with 
respect to any significant acquisitions.

PRINCIPAL FINANCIAL COMMITMENTS.  The Company's principal financial 
commitments consist of obligations under operating leases and contracts for 
the use of computer and office facilities.

C.  RESULTS OF OPERATIONS

References to the dollar and percentage increases or decreases set forth 
below in this discussion and analysis of BARRA's results of operations are 
derived from comparisons of BARRA's consolidated statements of income for the 
three months and six months ended September 30, 1996 and September 30, 1995.

NET INCOME

NET INCOME for the current quarter was $1,936,258 or $0.21 per share, 
compared to $1,747,987 or $0.20 per share for the same quarter a year ago, 
and $4,704,460 or $0.51 per share for the six months ended September 30, 1996 
compared to $3,217,044 or $0.37 per share for the same period a year ago.  
Net income for the current quarter and six months ended September 30, 1996 is 
after expenses for merger costs related to the acquisition of RCA and 
one-time charges of $1,756,189 or $0.11 per share.

OPERATING REVENUES. Total operating revenues increased $6,202,806 or 34% over 
the same quarter a year ago and $11,119,525 or 31% over the same six month 
period a year ago.

SUBSCRIPTION AND CONSULTING FEES consist of annual subscription fees for 
BARRA's software products and revenues 

                                       13


<PAGE>

from other sources related to the core institutional analytics business 
(which include timesharing revenues, seminar revenues and other recurring and 
one-time fees) and consulting services to pension plan sponsors and 
investment managers. Total subscription and consulting fees increased 
$3,340,578 or 22% over the same quarter a year ago and $6,079,966 or 20% over 
the same six month period a year ago.

SUBSCRIPTION AND RELATED FEES increased $2,185,468 or 18% over the same 
quarter a year ago and $3,910,913  or 16% over the same six month period a 
year ago. The following discusses changes in the primary sources of 
subscription and related fees for the three month and six month periods 
ending September 30, 1996 compared to the same periods a year ago:

ANNUAL SUBSCRIPTION FEES FOR BARRA'S SOFTWARE PRODUCTS increased 
approximately $2,326,000 or 22% compared to the same quarter a year ago and 
$4,026,000 or 19% compared to the same six month period a year ago.  The 
growth in annual subscription fees continues to be generated from a 
combination of both obtaining new clients through entry into new markets as 
well as increasing revenues from existing customers through the introduction 
of new products and services and an overall increased emphasis on marketing 
and sales.  For the three months ended September 30, 1996 compared to the 
same quarter a year ago, annual subscription fees revenue for the U.S and 
non-U.S. markets increased approximately 26% and 19%, respectively.  For the 
six months ended September 30, 1996 compared to the same period a year ago, 
annual subscription fees revenue for the U.S and non-U.S. markets increased 
approximately 26% and 16%, respectively.   For both markets, revenue growth 
primarily came from equity models and related data reflecting the continued 
success of the BARRA Aegis System-TM-.  Fixed Income product sales also 
contributed to the overall increase as a result of sales of the BARRA COSMOS 
System-TM-, which was introduced in April, 1996. Increases in subscription 
revenues continue to come most significantly from net increases in the number 
of subscriptions and less significantly from changes in the prices of 
subscriptions. With respect to the non-U.S. markets, the U.S. dollar 
strengthened significantly against the yen and less significantly against 
both the pound and the ECU - all of which had the effect of decreasing the 
dollar value of these revenues which are denominated in non-U.S. currencies. 
Disallowing for the affect of foreign currency fluctuations, revenue growth 
for the non-U.S. markets when comparing the current quarter to the same 
quarter a year ago would have been approximately 24%.

REVENUES FROM OTHER SOURCES RELATED TO THE CORE INSTITUTIONAL ANALYTICS 
BUSINESS - which include timesharing revenues, 

                                 14

<PAGE>


seminar revenues and other recurring and one-time fees - represent 
approximately 10% and 12% of total subscription and related fees for the 
three and six month periods ended September 30, 1996 compared to 14% and 15% 
for the same periods a year ago. The decline in the relative amounts and 
significance of this component of revenue continues to be from the conversion 
of clients from timesharing to in-house computers for running BARRA's 
products and declines in one-time fees associated with completion of various 
projects and the current lack of emphasis on such projects.

CONSULTING FEES

Consulting fee revenues from RCA increased $1,155,000 or 44% from the same 
quarter a year ago and $2,169,000 or 38% from the same six month period a 
year ago.  Consulting fees consist primarily of services to pension plan 
sponsors ("Sponsor Services") which are usually recurring retainer-based fee 
arrangements, and consulting to money managers ("Strategic Services"), which 
are usually non-recurring, project type engagements that are completed in 
phases. Also included in Strategic Services revenues are fees related to 
consulting work done in connection with strategic transactions involving 
clients. Accordingly, Strategic Services revenues are susceptible to a large 
degree of variability depending on the ability to source new projects and the 
unpredictable nature and significance of fees associated with strategic 
transactions. 

Sponsor Services consulting revenues increased $341,000 or 18% compared to 
the same quarter a year ago and $699,000 or 19% compared to the same six 
month period a year ago. These increases reflect growth in the number of plan 
sponsor clients.  Strategic Services revenues increased $814,000 or 118% 
compared to the same quarter a year ago and $1,470,000 or 71% compared to the 
same six month period a year ago. These increases include the impact of 
$900,000 in strategic transaction fees earned in the quarter ended June 30, 
1996. 

ELECTRONIC BROKERAGE AND INFORMATION 

ELECTRONIC BROKERAGE AND INFORMATION revenues increased $882,328 or 52% 
compared to the same quarter a year ago and $1,752,209 or 59% compared to 
same six month period a year ago.  This component of revenue consists almost 
entirely of license fees from Portfolio System for Institutional Trading 
("POSIT"), which in itself increased $617,818 or 37% compared to the same 
quarter a year ago and $1,374,702 or 47% compared to the same six month 
period a year ago.  BARRA's revenues from POSIT derive from commissions 
generated by the trading volume in the system.  POSIT's trading volumes and 
related revenues on 902 million shares traded for the current fiscal quarter 
marked the highest quarter in POSIT's history.  While 

                                  15

<PAGE>

some of the increase in trading volume can be attributed to overall higher 
market trading activity during the quarter, much of the increase is a result 
of greater usage of the  system by its major participants. The consolidation 
of Bond Express accounted for approximately $288,000 and $378,000 of the 
revenue increases from the three and six month periods ended September 30, 
1995, respectively.

ASSET MANAGEMENT

ASSET MANAGEMENT revenues increased $1,979,900 or 124% compared to the same 
quarter a year ago and $3,287,350  or 107% compared to the same six month 
period a year ago.  Asset management revenues consist of business from both 
Symphony and RCA asset management services, which include management of 
customized multi-manager programs and advisory services on private market 
investment programs.

Symphony's revenues consist primarily of asset management fees which are a 
fixed percentage of asset value and performance fees that are based on the 
performance over a benchmark for each account.  Symphony's total revenues 
were $2,352,000 for the current quarter and $4,058,000 for the six month 
period ended September 30, 1996 compared to $599,000 and $1,178,000 for the 
same periods a year ago. Performance fees included in total revenues were 
$1,366,000 and $2,147,000, for the current fiscal quarter and six month 
period compared to $200,000 for each of the same periods in the prior fiscal 
year. Performance fees are recognized only at the measurement date for 
determining performance of an account, which typically is at the end of the 
first year of the contract and at the end of each subsequent measurement 
period thereafter.  Accordingly, and by comparison, there were only a small 
number of investor accounts which had reached their initial measurement dates 
in the comparison periods from a year ago.  As of September 30, 1996, 
Symphony had approximately $670 million under direct management in a 
combination of private accounts, institutional and mutual funds management 
arrangements and another $205 million managed under sub-advisory 
arrangements. Symphony's future revenues will depend, in some cases to a 
great extent, on the performance of the funds it manages.  The timing of 
Symphony's future revenues will also depend on the timing of dates that 
trigger performance fees.

RCA's asset management revenues consist primarily of asset management fees 
which are a fixed percentage of asset value and advisory fees.  RCA receives 
no performance fees on its managed accounts. RCA asset management fees were 
$1,223,000 and $2,302,000 for the current quarter and six month period ended 
September 30, 1996 compared to $995,000 and $1,895,000 for the same periods a 
year ago. The increase in both periods is primarily reflective of base fee 
increases as a result of 

                                  16


<PAGE>

growth in assets under management. At September 30, 1996, RCA had 
approximately $133 million in assets under direct management and 
approximately $2 billion in assets it was managing under various 
multi-manager programs.
     
OPERATING EXPENSES.  Total operating expenses increased $6,017,067 or 39% 
compared to the same quarter a year ago and $9,530,235 or 31% from the same 
six month period a year ago.

COST OF SUBSCRIPTION PRODUCTS

COST OF SUBSCRIPTION PRODUCTS consists of computer access charges, data and 
software acquisition expenses, BARRA's computer leasing expenses, and seminar 
expenses.  This component of expense increased $395,163 or 31% compared to 
the same quarter a year ago and $780,296 or 28% from the same six month 
period a year ago primarily due to increased data and computer access costs 
associated with new and existing BARRA services.  The Company anticipates 
that data costs will continue to increase into the future as BARRA's demands 
for new and expanded data sources increase in order to meet product 
development and enhancement and market needs. 

COMPENSATION AND BENEFITS

COMPENSATION AND BENEFITS increased $2,636,323 or 27% compared to the same 
quarter a year ago and $4,762,592 or 25% from the same six month period a 
year ago.  Approximately 55% of the quarterly increase and 58% of the six 
month increase comes from growth in the Company's full-time personnel and the 
Company's annual salary administration and performance evaluation process 
which results in annual reviews and salary adjustments that are effective on 
July 1 of each year.  The total number of non-U.S. full-time employees grew 
by 25% and the number of employees in the U.S. grew by 14%, when comparing 
the current quarter to the same quarter a year ago.  The growth 
internationally was partially offset by decreases associated with the 
strengthening of the U.S. dollar overseas. The remainder of this increase - 
approximately 45% of the quarterly increase and 42% of the six month increase 
- came from increases in incentive-related expenses associated with increased 
profitability of the Company, the growth in the operations of Symphony, the 
use of contractors for special projects to speed product development, and the 
consolidation of Bond Express.
  
OTHER OPERATING EXPENSES

OTHER OPERATING EXPENSES increased $1,219,876 or 36% compared to the same 
quarter a year ago and $2,187,964 or 33% from the same six month period a 
year ago.  Other operating expenses include travel, office, maintenance, 
depreciation, amortization, data costs related to non-subscription services, 
marketing, advertising, outside legal and accounting services 

                                 17

<PAGE>

and other corporate expenses.  The increase was predominantly the result of 
higher external development costs associated with information systems 
upgrades and higher data costs at Symphony related to their increase in 
revenues. Other increases in travel, computer and office equipment and 
insurance related expenses were reflective of, and consistent with, the 
general growth of BARRA's business and the costs of supporting a larger 
client base. The consolidation of Bond Express  also contributed 
approximately $206,000 and $304,000 to the increases from the quarter and six 
month period ended September 30, 1995, respectively.

MERGER COSTS AND ONE-TIME CHARGES

In the quarter ended September 30, 1996, in connection with the RCA merger, 
the Company recorded related costs of approximately $1,308,000 consisting 
primarily of professional services and other costs associated with 
integrating the combined operations of the two firms.  The Company also 
recorded a one-time charge of approximately $448,000 for the write-off of 
capitalized software related to a product under development in which the 
costs were not recoverable based on present revenue estimates and whose value 
was therefor impaired.

INTEREST AND OTHER

INTEREST AND OTHER decreased $182,093 or 36% compared to the same quarter a 
year ago and increased $57,811 or 6% from the same six month period a year 
ago. Decrease from the same quarter a year ago reflects lower recorded gains 
on the Company's short-term investments. Increase from the same six month 
period a year ago reflects the recognition and receipt of dividends from LBIC 
totaling $226,583 in the previous quarter ended June 30, 1996 and increases 
in funds generated from operations that are available for investment.

EQUITY IN NET INCOME AND LOSS OF INVESTEES

Net losses from BARRA's joint ventures and other strategic relationships 
decreased $105,909 or 51% compared to the same quarter a year ago and 
decreased $489,644 or 82% from the same six month period a year ago.  The 
decreases in both periods  were primarily the result of non-recurring losses 
incurred by the Company in prior year periods in connection with  interests 
in Metaxis S.A. and Metaxis Placements S.A.

Minority interest represents the 45% share of Bond Express L.P.'s net loss.

                                 18


<PAGE>

                             PART II - OTHER INFORMATION

ITEM 1.        LEGAL PROCEEDINGS.

All information required by this item has been previously reported under the 
heading "Business-Litigation" in the Form 10-K.  There have been no other 
material developments in the legal proceedings of BARRA since the date of the 
Form 10-K.

ITEM 6.        EXHIBITS AND REPORTS ON FORM 8-K.

(a)            The following exhibits are required by Item 601 of Regulation 
               S-K:  None.

(b)            Reports on Form 8-K:  None.

                                  19


<PAGE>

                                      SIGNATURES
                                           
    Pursuant to the requirements of the Securities Exchange Act of 1934, 
BARRA has duly caused this report to be signed on its behalf by the 
undersigned thereunto duly authorized.

                                                       BARRA, Inc.
                                                       (Registrant)

Date:  November __, 1996                               Andrew Rudd
                                              ----------------------------
                                              Andrew Rudd, Chairman of the 
                                              Board of Directors and Chief 
                                              Executive Officer 

Date:  November __, 1996                             James D. Kirsner
                                              ----------------------------
                                              James D. Kirsner, Chief 

                                   20

<PAGE>


                                EXHIBIT INDEX


Exhibit                                                             Sequential
Number       Exhibit Description                                   Page Number
------       -------------------                                   -----------

             None.



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