<PAGE>   1

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                    FORM 10-K
                                    ---------

                        FOR ANNUAL AND TRANSITION REPORTS

                     PURSUANT TO SECTIONS 13 OR 15(d) OF THE

                         SECURITIES EXCHANGE ACT OF 1934

(Mark One)

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

         For the Fiscal Year Ended MARCH 31, 2000 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: 000-24193

                          ATLANTIC DATA SERVICES, INC.
             (Exact Name of Registrant as Specified in its Charter)

                MASSACHUSETTS                                 04-2696393
       (State or Other Jurisdiction of                     (I.R.S. Employer
       Incorporation or Organization)                   Identification Number)

               ONE BATTERYMARCH PARK, QUINCY, MASSACHUSETTS 02169
               (Address of Principal Executive Offices) (Zip Code)
                                (617) 770 - 3333
              (Registrant's Telephone Number, Including Area Code)

        Securities Registered Pursuant to Section 12(b) of the Act: NONE.

Securities Registered Pursuant to Section 12(g) of the Act: COMMON STOCK, $.01
PAR VALUE
                                (Title of Class)

Indicate by checkmark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [ X ]  No [   ]
                                        ---       ---

Indicate by checkmark 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 the registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ X ]
            ---

The aggregate market value of the voting stock held by non-affiliates of the
Company was approximately $16,487,417 on June 6, 2000 based on the last reported
sale price of the Company's Common Stock on the Nasdaq National Market on June
6, 2000 of $3.6250 per share. There were 12,985,599 shares of Common Stock
issued and outstanding as of June 6, 2000.

DOCUMENTS INCORPORATED BY REFERENCE - The Registrant intends to file a
definitive proxy statement pursuant to Regulation 14A within 120 days of the end
of the fiscal year ended March 31, 2000. Portions of such proxy statement are
incorporated by reference into Part III of this report.

<PAGE>   2
                          ATLANTIC DATA SERVICES, INC.

                           ANNUAL REPORT ON FORM 10-K
                    FOR THIS FISCAL YEAR ENDED MARCH 31, 2000

                           FORWARD LOOKING STATEMENTS

This Report includes forward-looking statements, which are made pursuant to the
safe-harbor provisions of the Private Securities Litigation Reform Act of 1995.
You can identify these forward-looking statements when you see us using words
such as "expect," "anticipate," "believe," "intend," "may," "predict," and other
similar expressions. These forward-looking statements cover, among other items:
events, conditions and financial trends that may effect the Company's future
plans of operation, business strategy, growth of operations and financial
position, including statements seeking to replace Year 2000 business revenue
with revenue from our other practice areas, intentions regarding potential
business partnerships, dependence upon a limited number of customers, potential
litigation, increased competition, the effects of deregulation and
consolidation, sales and marketing expenses, decreased utilization rates,
liquidity expectations, and effects of Year 2000. Any forward-looking statements
are not guarantees of future performance and are necessarily subject to a number
of risks and uncertainties, some of which are beyond our control. Actual results
could differ materially from those anticipated as a result of any of the factors
described under "Certain Factors That May Affect Future Operating Results"
included elsewhere in this Report. Because of these risks and uncertainties, the
forward-looking events discussed in this Report might not transpire.

                                     PART I

ITEM 1: BUSINESS

A.   GENERAL

Atlantic Data Services, Inc. ("We" or "ADS"), provides information technology
("IT") strategy consulting and systems integration services to customers
exclusively in the financial services industry, primarily banks. We offer IT
solutions to the business challenges faced by financial services companies
through our in-depth financial services experience, technological expertise and
project management skills. Our service offerings are organized around four
practice areas: e-Business, Customer Relationship Management ("CRM"), IT
Strategy and Consulting, and Conversions & Consolidations.

The business challenges created by deregulation and consolidation, coupled with
the need to maintain existing systems and incorporate new technologies, have
forced banks to turn to third party IT providers for assistance in developing IT
solutions to meet their changing needs. Because of the critical importance of
their IT systems, banks seek to engage IT service providers who have in-depth
knowledge of their systems and business processes and who can assume
responsibility for project management and delivery. IT service providers working
with banks must possess extensive experience in the financial services industry
and be fluent in both traditional legacy systems and newer technologies.
However, there is a shortage of professionals who have this combination of
skills. While many banks are concluding that using outside specialists enables
them to develop better IT solutions in less time and to reduce implementation
risks, most IT consulting firms do not have the specialized knowledge of the
financial services industry necessary to assist banks in rapidly and
cost-effectively meeting their business challenges.

We enable our customers to leverage their existing IT systems and personnel to
compete more effectively, to rapidly assimilate changing technologies and to
meet their evolving business needs in a timely and cost-effective manner. We
work closely with our customers' management and IT personnel from the diagnostic
and strategic planning stages through project completion. Our IT professionals
have extensive experience in the diverse technical environments, legacy hardware
platforms, programming



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languages, and software used by banks, as well as newer technologies, including
client/server applications and the Internet. In addition, we have developed
proprietary tools and methodologies designed to reduce the risks inherent in
complex systems implementations. We work closely with our customers to determine
the appropriate resources and staffing to assign to their projects and deploy
our staff from throughout the United States to meet a customer's needs.

We have recently launched a new branding and image campaign and are now
promoting the Company as A D S Financial Services Solutions. Our official
corporate name will remain Atlantic Data Services, Inc., and our Nasdaq ticker
symbol will remain ADSC. We believe this new identification, coupled with the
new tagline, "Potential realized," will more accurately convey the availability
of our expanded service offerings in e-Business and CRM, while expressing our
commitment to focus exclusively on the financial services sector. Our goal is to
identify ADS as the leader in providing IT solutions to the financial services
industry, making Financial Services Solutions synonymous with ADS.

Practice Areas

We offer and deliver our services through four practice areas that address the
major areas of interest and activity of our customers. These four practice areas
are:

e-Business. In today's electronic marketplace, the emergence of alternative
delivery channels poses ever-increasing competition for retaining customers and
attracting new ones. In addition, the emergence of new paradigms for supporting
business to customer, business to business and consumer to consumer financial
relationships represent both a threat and an opportunity for financial
institutions. At ADS, we create and implement the strategies that make our
partners' retail delivery services and electronic commerce objectives an
integral part of a cohesive CRM strategy. We assist our customers in developing
a cohesive and achievable e-Business vision. We provide insight and experience
to help design, develop and implement operational capabilities that both meet
the competitive landscape and are integrated and supportable within the
institutions' operation.

CRM. We understand that the key to success in the financial services industry is
predicated on the relationship between our customer institutions and their
customers. We help our customers become a customer-focused service provider. Our
approach to CRM understands that customer satisfaction in the electronic age
comes down to fast and accurate answers and interactions. By providing customers
with our CRM strategic consulting services, we are able to help develop the
vision and the strategy to implement a successful CRM initiative. We provide
insight to achieve a well-integrated solution. We focus on the establishment of
a customer contact center as the focal point of a well-established CRM strategy
and operational capability. Surrounded by contemporary technology components,
including analytical database capacity and fully integrated delivery systems
that present individual customer content across the institution, the strategic
vision and operational capability provided by ADS intends to provide our
customers with a customer relationship management solution.

IT Strategy and Consulting. To compete in the new economy, financial
institutions must both invest in new products and services as well as improve
their operational efficiencies. To do this, major operational changes such as
process reengineering, new systems integration and major system upgrades will be
undertaken. We provide both the major project discipline and operational insight
to undertake and complete these strategic initiatives successfully. We leverage
industry experience and major systems expertise to develop solutions that help
our customers adapt to and take advantage of the latest trends affecting their
business. Our IT Strategy and Consulting services assist customers in managing
the evolution of complex systems, involving multiple technologies, hardware,
software and network platforms. Not only are new capabilities implemented, but
operational performance efficiencies are also achieved.



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Conversions & Consolidations. The financial services industry has undergone
tremendous change, reorganization and growth. We have been a leading solution
provider in hundreds of conversions, consolidations and migrations, deploying
the financial services expertise necessary to contribute to our customers'
successes. As a core competency, we have provided the requisite project
management skills to help our customers tackle the business and technological
challenges before them, and in the end to meet or exceed the goals of their
original strategic objectives. The significant collective financial services
industry expertise of our consulting staff enables us to provide our customers
with both the business insight and operational expertise to provide business
integration solutions.

B.   CUSTOMERS

Our customers consist primarily of banks and other financial services companies
located in the United States and Canada. The following is a list of
representative customers during fiscal 2000:

Bank of America Technology and               FleetBoston Financial Corporation
  Operations, Inc.                           Hudson United Bank Corporation Inc.
Bank of Hawaii                               Old National Bancorp.
Citizens Banking Corporation                 S-2 Systems, Inc.
Corillian Corp.                              Sun Trust Services Corporation
First Security Information Technology, Inc.  UST Data Services, Inc.

We have derived and expect to continue to derive a significant portion of our
revenues from a relatively limited number of customers. For example, our five
largest customers in fiscal 2000, FleetBoston Financial Corporation, Citizens
Banking Corporation, First Security Information Technology, Inc., UST Data
Services, Inc. and Corillian Corp., accounted for approximately 25.5%, 11.3%,
8.5%, 5.7% and 5.5%, respectively, of revenues. In fiscal 1999, First Security
Information Technology, Inc., National City Corporation, Associated Banc-Corp.,
UST Data Services, Inc. and Susquehanna Bancshares Corp., accounted for
approximately 18.4%, 16.4%, 13.8%, 9.6% and 5.6%, respectively, of revenues.
Because a significant portion of our revenues are derived from services related
to deregulation and consolidation activities in the financial services industry,
changes in the regulatory environment or a reduction in consolidation activity
have in the past, and may in the future, have a material adverse effect on our
business, financial condition and results of operations. In addition, the loss
of a major customer or termination of a major project as a result of an
acquisition of a customer by an organization to which the Company does not
currently provide services could have a material adverse effect on our business,
financial condition and results of operations.

Although our largest customers have varied from period to period, we anticipate
that our results of operations will continue to significantly depend upon
revenues from a small number of customers. We cannot assure you that our major
customers will continue to purchase our services at current levels, if at all,
or that we will be able to replace revenues from such customers with revenues
from other customers. The loss of, or a significant reduction in revenues from,
any of our major customers could materially adversely affect our business,
financial condition and results of operations.

C.   SALES AND MARKETING

We market and sell our services directly through our professional sales and
marketing staff and senior management operating principally from our offices in
Quincy, Massachusetts. As of March 31, 2000, we had seventeen persons engaged in
sales and marketing activities.

Our senior business development representatives are assigned to a limited number
of customers to foster an in-depth understanding of each customer's individual
needs and build a long-term customer relationship. We attempt to develop
customer relationships through a carefully coordinated effort


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between our sales and professional services staff. Initial sales calls are made
at the customer's senior management level and followed up by detailed
presentations targeted to their specific needs.

We employ a variety of business development and marketing techniques to
communicate directly with current and prospective customers, including targeted
print and direct mail advertisements, participation in financial services
industry trade shows and conferences, and our web site. In addition, we maintain
relationships with key industry research groups such as Forrester Research,
Inc., Meridien Research, Inc., the American Bankers Association, and the
Information Technology Association of America.

As part of our sales and marketing strategy, we intend, from time to time, to
partner with other IT consulting firms, including in some instances our
competitors, and to explore relationships with certain third party software
providers to the financial services market. In October 1999, we entered into an
alliance with Brokat Financial Systems. As part of this alliance, Brokat will
focus on developing, marketing and supporting leading e-Business software
products and services, and we will provide solutions delivery and systems
integration for financial institutions utilizing Brokat solutions. In January
1999, we entered into a partnership with Corillian Corporation, which augments
our ability to provide our customers with full-service consulting and execution
of an electronic commerce strategy. We believe these relationships may result in
increased direct customer referrals and enhanced industry recognition. We also
believe these relationships will enable us to broaden our customer base,
increase our competitiveness and maintain our technological leadership through
access to the most current information and training on leading software and
information systems.

D.   EMPLOYEES

As of March 31, 2000, we had 219 full time employees, of which 171 were project
personnel, 31 employees were in finance and administration and 17 were in sales
and marketing. None of our employees are subject to a collective bargaining
agreement. We believe relations with our employees are good.

E.   INTELLECTUAL PROPERTY RIGHTS

Our success is dependent upon certain proprietary methodologies and software
tools, including our Engagement Management Methodology and Conversion
Productivity Tool that we use in providing services to customers. Our business
also includes developing custom software for various customers. Ownership of
such software is generally assigned to the customer, and we retain no right,
title or interest in it.

We rely on a combination of trade secret, nondisclosure and other contractual
arrangements and copyright and trademark laws to protect our proprietary rights.
We currently hold no patents or registered copyrights. We generally enter into
confidentiality agreements with our outside consultants, customers and potential
customers and limit access to and distribution of our proprietary information.
While we do not usually enter into confidentiality agreements with our
employees, such employees are generally required to sign confidentiality
agreements in connection with specific customer engagements. There is no
assurance that these steps will be adequate to deter misappropriation of our
proprietary information or of our customers or that we will be able to detect
unauthorized use of, and take appropriate steps to enforce, our intellectual
property rights.

In the future, litigation may be necessary to enforce and protect our trade
secrets, copyrights and other intellectual property or proprietary rights. We
may also be subject to litigation to defend against claimed infringement or to
determine the scope and validity of the intellectual property or proprietary
rights of others. Although we are not aware that our services, trademarks or
other proprietary rights infringe upon the proprietary rights of others, there
is no assurance that third parties will not assert infringement claims




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against us and that such claims will not result in a material adverse effect on
our business, financial condition and results of operations. Any litigation
concerning our use of technology could result in substantial cost to us in
defending such actions and divert our attention from operations, either of which
could have a material adverse effect on our business, financial condition or
results of operations.

F.   COMPETITION

The IT and systems integration market, especially in the financial services
industry, includes a large number of competitors and is subject to rapid
technological and market changes. We compete for customer projects and
experienced personnel with a number of companies having significantly greater
financial, technical and marketing resources and revenues. Many of these
competitors also have greater name recognition in the financial services
industry. Our competitors operate in a variety of market segments, including
systems consulting and integration, application software, professional services
(such as computer equipment companies like International Business Machines
Corporation), multinational accounting firms, and general management consulting
firms (such as Andersen Consulting, Computer Sciences Corporation and Electronic
Data Systems Corporation). In addition, the custom software development market
is highly fragmented with numerous firms, many of which focus on their
respective local markets. We also face competition from internal IT departments
of our customers.

We expect to experience increasing competition from companies offering
established integration services and new service offerings and technologies. In
addition, current and potential competitors may make strategic acquisitions or
establish cooperative relationships among themselves or with others thereby
increasing their ability to expand or increase their service offerings to
address the needs of our existing or prospective customers. Accordingly, it is
possible that new competitors or alliances among current and new competitors may
emerge and rapidly gain significant market share. Increased competition could
result in lower utilization rates, billing rate reductions, fewer customer
engagements, reduced gross margins, and loss of market share for us, any of
which could materially adversely affect our business, financial condition and
results of operations.

We believe the principal competitive factors in our market are knowledge of the
financial services industry, responsiveness to customer needs, quality of
service, project management capability, technical expertise and price. We
believe we compete favorably in most of these areas and excel in the depth of
industry knowledge and experience we bring to our financial services customers.
We believe our ability to compete also depends in part on factors outside of our
control, including the ability of our competitors to attract, motivate and
retain project managers and other personnel.

To be successful in the future, we must respond promptly and effectively to
customer demands, technological changes and competitors' innovations. Our
competitors may be able to respond more quickly to new and emerging technologies
and changes in service offerings to prospective customers. There is no assurance
that we will be able to compete successfully with existing or new competitors or
that competition will not have a material adverse effect on our business,
financial condition and results of operations.



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ITEM 2: PROPERTIES

Our headquarters and administrative, sales and marketing operations are in
Quincy, Massachusetts in a leased facility consisting of approximately 27,000
square feet. We have the right of first refusal to lease any additional space
becoming available in part of the premises. On November 23, 1999, we exercised
our option to extend our lease for an additional five-year term through March
31, 2005.

ITEM 3: LEGAL PROCEEDINGS

We are not a party to any litigation that we believe could have a material
adverse effect on our business, financial condition and results of operations.

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

No matters were submitted to a vote of our security holders during the fourth
quarter of the year ended March 31, 2000.



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                                     PART II

ITEM 5: MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
        MATTERS

We effected our initial public offering of our common stock on May 21, 1998 at a
price to the public of $13.00 per share. As of June 6, 2000, there were
approximately 146 stockholders of record. Our stock is currently included on The
Nasdaq Stock Market ("Nasdaq") under the symbol "ADSC."

The following table sets forth, on a per share basis for the periods shown, the
high and low sales price of our common stock as reported on Nasdaq.

                                                     High             Low
                                                   --------        --------

Fiscal Year 2000:
   First Quarter (April 1 - June 30, 1999)         $ 6.2500        $ 3.0000
   Second Quarter (July 1 - Sept. 30, 1999)          5.3125          3.4375
   Third Quarter (Oct. 1 - Dec. 31, 1999)            7.1250          3.5000
   Fourth Quarter (Jan. 1 - March 31, 2000)         12.0000          5.2500

Fiscal Year 1999:
   First Quarter (May 21 - June 30, 1998)          $20.0000        $12.3750
   Second Quarter (July 1 - Sept. 30, 1998)         19.6250          9.7500
   Third Quarter (Oct. 1 - Dec. 31, 1998)           25.0000          6.8750
   Fourth Quarter (Jan. 1 - March 31, 1999)         14.3750          3.4688

Dividend Policy

We do not intend to pay cash dividends in the foreseeable future. The payment of
any future dividends will be at the discretion of our Board of Directors and
will depend upon, among other things, future earnings, operations, capital
requirements of the Company, business conditions and contractual restrictions on
payment of dividends, if any.

Use of Proceeds

On May 22, 1998, we commenced an initial public offering of 2,500,000 shares of
common stock pursuant to our final prospectus dated May 22, 1998. The prospectus
was contained in our Registration Statement on Form S-1, which was declared
effective by the Securities and Exchange Commission (SEC File No. 333-48703) on
May 21, 1998. Of the 2,500,000 shares of common stock offered, 2,000,000 shares
were offered and sold by us and 500,000 shares were offered and sold by certain
stockholders of ADS. As part of the initial public offering, certain
stockholders of ADS granted the several underwriters, for whom BancAmerica
Robertson Stephens, BT Alex Brown and Adams, Harkness & Hill, Inc., acted as
representatives, an overallotment option to purchase up to an additional 375,000
shares of common stock. The initial public offering closed on May 28, 1998.

On June 22, 1998, the representatives, on behalf of the several underwriters,
purchased 375,000 shares of common stock from certain stockholders of ADS
pursuant to the exercise of the underwriters' overallotment option.

The aggregate offering price of the initial public offering to the public was
$32,500,000 (exclusive of the underwriters' overallotment option), with proceeds
to us and the selling stockholders, after deduction of underwriting discounts,
of $24,180,000 (before deducting offering expenses payable by us) and




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$6,045,000, respectively. The aggregate-offering price of the underwriters'
overallotment option exercised was $4,875,000, with proceeds to the selling
stockholders, after deduction of the underwriting discounts and commissions, of
$4,533,750.

The aggregate amount of expenses incurred by us through March 31, 2000 in
connection with the issuance and distribution of the shares of common stock
offered and sold in the initial public offering were approximately $3,084,000,
including $2,275,000 in underwriting discounts and approximately $809,000 in
other expenses. No further expenses have been incurred.

None of the expenses paid by us in connection with the initial public offering
or the exercise of the underwriters' overallotment option were paid, directly or
indirectly, to directors, officers, persons owning ten percent or more of the
our equity securities, or affiliates of ADS.

The net proceeds to us from the initial public offering, after deducting
underwriting discounts and commissions and other expenses, were approximately
$23,371,000.

From May 21, 1998 through March 31, 2000, we have applied approximately
$1,268,000 of the net proceeds from the initial public offering to working
capital. We invested the balance of such net proceeds primarily in money market
accounts.

ITEM 6: SELECTED FINANCIAL DATA

The selected financial data presented below as of and for the fiscal years ended
March 31, 2000 and 1999, audited by PricewaterhouseCoopers LLP, independent
accountants, and as of and for the fiscal years ended March 31, 1998, 1997 and
1996, audited by Ernst & Young LLP, independent auditors, have been derived from
our consolidated financial statements. This data should be read in conjunction
with "Management's Discussion and Analysis of Financial Condition and Results of
Operations," our Consolidated Financial Statements and related notes thereto,
and other financial information appearing elsewhere in this Form 10-K. All
amounts are in thousands except per share data.

<TABLE>
<CAPTION>
                                                             YEAR ENDED MARCH 31,
                                            -----------------------------------------------------
                                              2000      1999         1998       1997      1996
                                            -----------------------------------------------------
<S>                                         <C>        <C>         <C>         <C>        <C>
Consolidated Income Statement Data:
     Total revenue                          $35,186    $66,763     $42,830     $23,843    $20,052
     Income from operations                     128     12,362       8,303       3,185      2,627
     Net income                                  19      7,759       4,898       2,041      2,343
     Basic earnings per share                  0.00       0.62        0.49        0.20       0.24
     Diluted earnings per share                0.00       0.60        0.49        0.20       0.24
Shares used in computing earnings
  per share (basic)                          12,925     12,468       9,952       9,952      9,952
Shares used in computing earnings
  per share (diluted)                        13,254     12,855       9,952       9,952      9,952
                                            -----------------------------------------------------

                                                             YEAR ENDED MARCH 31,
                                            -----------------------------------------------------
                                              2000      1999         1998       1997      1996
                                            -----------------------------------------------------
Consolidated Balance Sheets Data:
     Cash and cash equivalents              $38,347    $37,326    $  3,401    $  2,653    $ 2,231
     Working capital                         39,670     39,077       7,480       5,069      4,641
     Total assets                            46,115     46,883      14,485       8,201      7,470
     Total stockholders' equity              40,976     40,745       8,683       5,816      5,275
     Cash dividends paid                         --         --       3,000       1,500      4,000
                                            -----------------------------------------------------
</TABLE>



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                           FORWARD LOOKING STATEMENTS

This Report includes forward-looking statements, which are made pursuant to the
safe-harbor provisions of the Private Securities Litigation Reform Act of 1995.
You can identify these forward-looking statements when you see us using words
such as "expect," "anticipate," "believe," "intend," "may," "predict," and other
similar expressions. These forward-looking statements cover, among other items:
events, conditions and financial trends that may effect the Company's future
plans of operation, business strategy, growth of operations and financial
position, including statements seeking to replace Year 2000 business revenue
with revenue from our other practice areas, intentions regarding potential
business partnerships, dependence upon a limited number of customers, potential
litigation, increased competition, the effects of deregulation and
consolidation, sales and marketing expenses, decreased utilization rates,
liquidity expectations, and effects of Year 2000. Any forward-looking statements
are not guarantees of future performance and are necessarily subject to a number
of risks and uncertainties, some of which are beyond our control. Actual results
could differ materially from those anticipated as a result of any of the factors
described under "Certain Factors That May Affect Future Operating Results"
included elsewhere in this Report. Because of these risks and uncertainties, the
forward-looking events discussed in this Report might not transpire.

ITEM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

Overview

We provide IT strategy consulting and systems integration services to customers
exclusively in the financial services industry, primarily banks. Our service
offerings are organized around four practice areas: e-Business, CRM, IT Strategy
and Consulting, and Conversions & Consolidations.

Our revenues are derived primarily from professional fees billed to customers on
a time and materials basis, or, in certain instances, on a fixed price basis.
Included in revenues are reimbursable contract-related travel and entertainment
expenses, which are separately billed to customers. Substantially all of our
contracts, other than fixed price contracts, are terminable by the customer
following limited notice and without significant penalty to the customer.
Revenues from fixed price contracts represented approximately 1.0% and 5.4% of
the Company's revenues for the fiscal years ended March 31, 2000 and 1999,
respectively.

Revenues from our five largest customers in fiscal 2000, 1999 and 1998 were
56.5%, 63.8% and 64.5%, respectively, as a percentage of revenues. In fiscal
2000, FleetBoston Financial Corporation, Citizens Banking Corporation, First
Security Information Technology, Inc., UST Data Services, Inc. and Corillian
Corp. accounted for approximately 25.5%, 11.3%, 8.5%, 5.7% and 5.5%,
respectively, of revenues. In fiscal 1999, First Security Information
Technology, Inc., National City Corporation, Associated Banc-Corp., UST Data
Services, Inc. and Susquehanna Bancshares Corp. accounted for approximately
18.4%, 16.4%, 13.8%, 9.6% and 5.6%, respectively, of revenues. In fiscal 1998,
Associated Banc-Corp., First Security Information Technology, Inc., National
City Corporation, Nations Bank Corp. and ABN-AMRO Information Technology
Services accounted for approximately 17.4%, 13.7, 13.3%, 10.1% and 10.0%,
respectively, of revenues. Because a significant portion of our revenues are
derived from services related to deregulation and consolidation activities in
the financial services industry, changes in the regulatory environment or a
reduction in consolidation activity have in the past, and could in the future,
have a material adverse effect on our business, financial condition and results
of operations. In addition, the loss of a major customer or termination of a
major project as a result of an acquisition of a customer by an organization to
which the Company does not currently provide services could have a material
adverse effect on our business, financial condition and results of operations.



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Cost of revenues consists primarily of salaries and employee benefits for
personnel dedicated to customer assignments, fees paid to subcontractors for
work performed in connection with customer assignments, and reimbursable
contract-related travel and entertainment expenses incurred in connection with
the delivery of our services. Customer project margins and personnel utilization
percentages are the most significant variables in determining our income from
continuing operations. We manage our personnel utilization rates by monitoring
personnel needs and generally adjust personnel levels based on specific project
requirements. The number of staff assigned to particular projects may vary
widely depending on the size, duration, and degree of completion and complexity
of each engagement. Delays in project completion and in implementation may
result in periods when personnel are not assigned to active projects and,
accordingly, result in lower average utilization rates during such periods,
which could have a materially adverse effect on our operating results. In
addition, we must maintain appropriate numbers of senior professionals both to
oversee existing engagements and for business development activities.

Sales and marketing expenses consist primarily of salaries, employee benefits,
travel expenses and promotional costs. General and administrative expenses
consist primarily of expenses associated with our management, finance and
administrative groups, including recruiting, training, depreciation and
amortization, and occupancy costs.

Results Of Operations

The following table sets forth, for the periods indicated, certain financial
data as a percentage of revenues:

                                                    YEAR ENDED MARCH 31,
                                                ----------------------------
                                                2000       1999       1998
                                                ----------------------------

Revenues                                        100.0%     100.0%     100.0%
Cost of revenues                                 74.5       61.5       56.6
                                                ----------------------------
Gross profit                                     25.5       38.5       43.4
Operating expenses:
    Sales and marketing                           9.2        6.7        8.7
    General and administrative                   21.1       13.3       15.3
                                                ----------------------------
       Total operating expenses                  30.3       20.0       24.0
                                                ----------------------------
Income (loss) from operations                    (4.8)      18.5       19.4
Interest income, net                              5.2        1.9        0.3
                                                ----------------------------
Income before provision for income taxes          0.4       20.4       19.7
Provision for income taxes                        0.3        8.8        8.3
                                                ----------------------------
Net income                                        0.1%      11.6%      11.4%
                                                ============================

Variability Of Operating Results

Variations in our revenues and operating results have occurred from quarter to
quarter and may continue to occur as a result of a number of factors. Quarterly
revenues and operating results can depend on:

-    the number, size and scope of customer projects commenced and completed
     during a quarter,
-    changes in employee utilization rates,
-    changes in average billing rates,
-    the number of working days in a quarter,
-    the timing of introduction of new service offerings, both by us and our
     competitors,
-    changes in pricing, both by us and our competitors,
-    loss of a significant customer,



                                       11
<PAGE>   12

-    loss of key personnel,
-    other factors that adversely impact the financial services industry, and
-    general economic conditions.

The timing of revenues is difficult to forecast because our sales cycle is
relatively long, ranging from one to six months for new projects with existing
customers and three to six months for new customers, and may depend on factors
such as the size and scope of projects or other factors that adversely impact
the financial services industry and general economic conditions. In addition,
the relatively long length of our sales cycle may negatively impact the
operating results for any particular quarter as a result of increased sales and
marketing expenses without associated increases in revenues in the particular
quarter. Furthermore, many of our projects are, and may be in the future,
terminable without customer penalty. An unanticipated termination of a major
project or loss of a major customer could require us to maintain or terminate
underutilized employees, resulting in a higher than expected number of
unassigned persons or higher than expected severance expenses.

Year Ended March 31, 2000 Compared To Year Ended March 31, 1999

Revenues

Revenues decreased 47.3% for the year ended March 31, 2000 compared to the year
ended March 31, 1999, to $35.2 million from $66.8 million. This decrease was
primarily due to a decrease in volume of services delivered to customers and a
decrease in our utilization rate. We continued to experience lower bookings and
our financial results have been affected by the slowdown in merger activity
within the banking sector. Further, many of our customers have completed their
use of external resources for their Year 2000 projects, which has also
negatively impacted revenue generation.

Cost Of Revenues

Cost of revenues decreased 36.2% to $26.2 million in fiscal 2000 compared to
$41.1 million in fiscal 1999, representing 74.5% and 61.5% of revenues,
respectively. The dollar decrease in cost of revenues was primarily due to a
decrease in the average number of billable personnel from 301 for fiscal 1999 to
189 for fiscal 2000. The increase in cost of revenues as a percentage of
revenues is due primarily to decreased utilization rates.

Sales And Marketing

Sales and marketing expenses decreased 27.7% to $3.2 million in fiscal 2000
compared to $4.5 million in fiscal 1999, representing 9.2% and 6.7% of revenues,
respectively. This decrease resulted primarily from a decrease in sales
commissions, as well as decreased investment in marketing initiatives. We expect
our sales and marketing expenses to increase in absolute dollars as we add sales
and marketing staff and undertake marketing initiatives, such as our branding
and imaging campaign, the production of new collateral materials and marketing
research for product segmentation.

General And Administrative

General and administrative expenses decreased 15.9% to $7.4 million in fiscal
2000 compared to $8.8 million in fiscal 1999, representing 21.1% and 13.3% of
revenues, respectively. The dollar decrease is primarily due to decreases in
recruiting efforts for new employees and a decrease in the provision for
doubtful accounts. The increase in general and administrative expenses as a
percentage of revenues reflects the significant decrease in revenues for fiscal
year 2000 compared to fiscal year 1999.



                                       12
<PAGE>   13

Interest Income, Net

Interest income, net increased $560,000 to $1.82 million in fiscal 2000 compared
to $1.26 million for fiscal 1999. This increase was primarily due to the
increase in the amount of cash and cash equivalents available for investment as
well as increases in interest rates.

Provision For Income Taxes

The provision for income taxes decreased $5.8 million to $109,000 in fiscal 2000
compared to $5.9 million in fiscal 1999, resulting in effective tax rates of 85%
and 43%, respectively. Our tax rate may vary from period to period based on our
expansion into areas with varying state and local statutory income tax rates.
The increase in the effective tax rate percentage is primarily due to permanent
differences relating to meals and entertainment expenses.

Year Ended March 31, 1999 Compared To Year Ended March 31, 1998

Revenues

Revenues increased 55.9% for the year ended March 31, 1999 compared to the year
ended March 31, 1998, to $66.8 million from $42.8 million. This increase was
primarily due to an increase in volume of services delivered to customers and an
increase in the average billing rate.

Cost Of Revenues

Cost of revenues increased 69.6% to $41.1 million in fiscal 1999 compared to
$24.2 million in fiscal 1998, representing 61.5% and 56.6% of revenues,
respectively. The dollar increase in cost of revenues was primarily due to an
increase in the average number of billable personnel from 219 for fiscal 1998 to
301 for fiscal 1999. The increase in cost of revenues as a percentage of
revenues was due primarily to decreased utilization rates.

Sales And Marketing

Sales and marketing expenses increased 19.6% to $4.5 million in fiscal 1999
compared to $3.7 million in fiscal 1998, representing 6.7% and 8.7% of revenues,
respectively. The overall dollar increase resulted primarily from an increase in
travel related expenses. The decrease in sales and marketing as a percentage of
revenues reflects the significant increase in revenue for fiscal 1999 compared
to fiscal 1998.

General And Administrative

General and administrative expenses increased 34.7% to $8.8 million in fiscal
1999 compared to $6.6 million in fiscal 1998, representing 13.3% and 15.3% of
revenues, respectively. The overall dollar increase is primarily due to
increases in recruiting, occupancy and equipment costs to support the Company's
expansion during the year, as well as costs associated with being a public
company. The decrease in general and administrative expenses as a percentage of
revenues reflects the significant increase in revenue for fiscal 1999 compared
to fiscal 1998.

Interest Income

Interest income increased $1.1 million to $1.3 million in fiscal 1999 compared
to $142,000 for fiscal 1998. This increase was primarily due to the increase in
the amount of cash and cash equivalents



                                       13
<PAGE>   14

available for investment through the net proceeds received from the our initial
public offering completed on May 28, 1998 of $23.4 million and cash generated
from operations of $10.8 million.

Provision For Income Taxes

The provision for income taxes increased $2.3 million to $5.9 million in fiscal
1999 compared to $3.5 million in fiscal 1998, resulting in effective tax rates
of 43% and 42%, respectively. Our tax rate may vary from period to period based
on our expansion into areas with varying state and local statutory income tax
rates. The increase in the effective tax rate is primarily due to differences in
applicable state income tax rates.

Liquidity And Capital Resources

During the first quarter of fiscal 1999, we completed our initial public
offering of 2,500,000 shares (plus an additional 375,000 shares offered under an
overallotment option) of which 2,000,000 shares were offered by the Company at a
price of $13 per share. Our net proceeds after deducting underwriting discounts,
commissions and offering expenses were approximately $23.4 million.

We have no long-term debt and continue to operate primarily debt-free. Working
capital increased to $39.7 million at March 31, 2000 compared to $39.1 million
at March 31, 1999. This increase was primarily due to a decrease in current
liabilities of $1.0 million. Our days sales in accounts receivable at March 31,
2000 was 49 compared to 51 days at March 31, 1999. The decrease in days sales
outstanding was the result of increased emphasis on collections. While we
believe that the risk with respect to collection of accounts receivable is
minimized by the creditworthiness of our customers, primarily banks and other
financial institutions, and our credit and collection policies, there can be no
assurance that we will not encounter collection problems in the future. We
attempt to further minimize this risk by performing ongoing credit valuations of
our customers and maintaining an allowance for potential credit losses. We
believe that our allowance for doubtful accounts and collection policies are
adequate.

Capital expenditures were approximately $249,000 and $1.0 million for fiscal
years 2000 and 1999, respectively, and were used principally for computer and
other equipment, software and, to a lesser extent, leasehold improvements. For
fiscal 2001, capital expenditures are expected to be approximately $900,000, and
will be used principally for computers and other equipment.

We expect that existing cash and cash equivalent balances, together with cash
provided from operations, will be sufficient to meet the Company's working
capital and capital expenditure requirements for at least the next twelve
months.

To date, inflation has not had a material impact on the Company's financial
results.

Impact Of Year 2000

To date, we have not experienced any significant problems with our service
offerings and products or internal information systems as it relates to the Year
2000 date change. We are not presently aware of any significant exposure arising
from potential third party failures. However, there can be no assurance that the
systems of other companies on which our systems or operations rely have been
successfully converted or that any failure of such parties to achieve Year 2000
compliance could not have an adverse effect on our results of operations.

To date, the total cost to address the Year 2000 date change was not material
and all costs incurred were budgeted expenditures and were funded as incurred or
capitalized in accordance with normal policy. We have not deferred any material
information technology projects as a result of the Year 2000 program.



                                       14
<PAGE>   15

The information concerning our Year 2000 compliance effort includes
"forward-looking statements." Such forward-looking statements involve known and
unknown risks, uncertainties, and other factors that may cause actual events or
costs to be materially different than indicated by such forward-looking
statements. These factors include, among others, unanticipated costs of
remediation and replacement of our Year 2000 compliance efforts, and the failure
of our material suppliers and other strategic relationships to ensure Year 2000
compliance. Any estimates and projections described have been developed by
management and are based on our best judgments together with the information
that is available to date. Due to the many uncertainties surrounding the Year
2000 issue, our stockholders are cautioned not to place undue reliance on such
forward-looking statements.

Certain Factors That May Affect Future Operating Results

The following important factors, among others, could cause actual results to
differ materially from those contained in forward-looking statements made in
this Annual Report on Form 10-K or presented elsewhere by management from time
to time.

Variability of Quarterly Operating Results - Variations in our revenues and
operating results have occurred from quarter to quarter and may continue to
occur as a result of a number of factors. Quarterly revenues and operating
results can depend on:

-    the number, size and scope of customer projects commenced and completed
     during a quarter,
-    changes in employee utilization rates,
-    changes in average billing rates,
-    the number of working days in a quarter,
-    the timing of introduction of new service offerings, both by us and our
     competitors,
-    changes in pricing, both by us and our competitors,
-    loss of a significant customer,
-    loss of key personnel,
-    other factors that adversely impact the financial services industry, and
-    general economic conditions.

Additionally, we have experienced difficulty forecasting the timing of revenues
because the length of our sales cycle ranges from one to six months for new
projects with existing customers and three to six months for new customers. In
addition, the relatively long length of our sales cycle may negatively impact
the operating results for any particular quarter as a result of increased sales
and marketing expenses without associated increases in revenues in that
particular quarter.

Because a high percentage of our expenses are relatively fixed, a variation in
the timing of the initiation or the completion of customer projects,
particularly at or near the end of a quarter, can cause us to have significant
variations in operating results from quarter to quarter and can result in
losses. We attempt to manage our personnel utilization rates by closely
monitoring project timetables and staffing requirements for new projects. While
we must adjust our professional staff to reflect active projects, we must
maintain a sufficient number of senior professionals to oversee existing
customer projects and participate with our sales force in securing new customer
projects. Furthermore, we may experience a significant time lag between the date
we hire professional staff and the date they become fully productive. The rate
at which new professional staff become productive could cause us to have
material fluctuations in quarterly results of operations. Additionally, to the
extent such increased operating expenses precede or are not subsequently
followed by increased revenues, our business, financial condition and results of
operations could be materially adversely affected. Many of our projects are, and
may be in the future, terminable without customer penalty. A customer's
unanticipated termination of a major project or the loss of a


                                       15
<PAGE>   16

major customer could require us to maintain or terminate underutilized
employees, causing us to have a higher than expected number of unassigned
persons or higher than expected severance expenses.

Due to all of the foregoing factors, our results of operations may at times be
below the expectations of public market analysts and investors. In such event
our stock price could be materially adversely affected.

Dependence on the Financial Services Industry - We derive substantially all of
our revenues from customers in the financial services industry, primarily banks.
Furthermore, we expect that we will continue to derive substantially all of our
revenues from such customers for the foreseeable future. Accordingly,
unfavorable economic conditions which adversely impact the financial services
industry could have a material adverse effect on our business, financial
condition and results of operations. For example, the financial services
industry has experienced, and may continue to experience, cyclical fluctuations
in profitability. These fluctuations have in the past, and may in the future,
affect our customers' willingness or ability to fund projects for which we may
be engaged. In addition, because we derive a significant portion of our revenues
from services related to the deregulation and consolidation of the financial
services industry, regulatory changes or a reduction in consolidation activity
have in the past, and may in the future, have a material adverse effect our
business, financial condition and results of operations.

Concentration of Revenues; Dependence on Major Customers - We have derived and
expect to continue to derive a significant portion of our revenues from a
relatively limited number of customers. For example, our five largest customers
in fiscal 2000, FleetBoston Financial Corporation, Citizens Banking Corporation,
First Security Information Technology, Inc., UST Data Services, Inc. and
Corillian Corp., accounted for approximately 25.5%, 11.3%, 8.5%, 5.7% and 5.5%,
respectively, of revenues. In fiscal 1999, First Security Information
Technology, Inc., National City Corporation, Associated Banc-Corp., UST Data
Services, Inc. and Susquehanna Bancshares Corp., accounted for approximately
18.4%, 16.4%, 13.8%, 9.6% and 5.6%, respectively, of revenues.

Additionally, we may be materially adversely affected by the loss of a major
customer or termination of a major project as a result of an acquisition of a
customer by an organization to which we do not currently provide services. For
example, in December 1998 we announced that National City Corporation, which
accounted for 16.4% and 13.3% of our revenues in fiscal 1999 and 1998,
respectively, decided not to extend its contract with us beyond December 31,
1998. Although our largest customers have varied from period to period, we
anticipate that our results of operations will continue to significantly depend
upon revenues of a small number of customers. We cannot assure you that our
major customers will continue to purchase our services at current levels, if at
all, or that we will be able to replace revenues from such customers with
revenues from other customers. The loss of, or a significant reduction in,
revenues from any of our major customers could materially adversely affect our
business, financial condition and results of operations.

Risk of Fixed Price Contracts - Revenues from fixed price contracts represented
approximately 1.0% and 5.4% of our revenues for fiscal 2000 and 1999,
respectively. In making proposals for fixed priced contracts, we rely on
estimated costs for completing the projects. These estimates reflect, among
other things, our calculations of the effectiveness of our technology and
services as applied to a particular project. Any unexpected costs or
unanticipated delays in connection with our performance of fixed price contracts
could materially adversely affect our business, financial condition and results
of operations.

Dependence on Key Personnel - Our success depends to a significant extent upon a
number of key management personnel including our Chairman and Chief Executive
Officer, Robert W. Howe, and our President and Chief Operating Officer, William
H. Gallagher. The loss of either executive could materially adversely affect our
business, financial condition and results of operations. We have




                                       16
<PAGE>   17

employment agreements with each of these individuals, and with certain other key
executives. These agreements include certain restrictive covenants relating to
non-disclosure of confidential business information and our right to inventions
and technical improvements made by the employee. Such covenants are beneficial
to us. The agreements also prohibit the employee from soliciting our employees
or customers for a period of two years after any termination of the employee's
employment, but otherwise do not contain non-competition provisions.
Additionally, we have purchased $3.5 million of key man life insurance policies
on the lives of both Mr. Howe and Mr. Gallagher.

Availability of Professional Staff - Our business involves the delivery of
professional services which is labor-intensive. Thus, our success depends in
large part on our ability to attract, train, motivate and retain highly skilled
employees. Many companies seek to hire qualified project managers causing them
to be in great demand and likely to remain a limited resource for the
foreseeable future. We cannot assure you that we will be able to attract
sufficient numbers of highly skilled employees and/or retain our existing
project managers and other senior personnel. The loss of some or all of our
senior staff could materially adversely affect our business, financial condition
and results of operations, including our ability to secure and complete customer
projects on a timely basis. During fiscal 2000, our staff decreased from 314
employees at April 1, 1999 to 219. If we are unable to manage retention
effectively, or if our new employees do not achieve anticipated performance
levels, our business, financial condition and results of operations could be
materially adversely affected.

Competition - Many companies compete against us in the information technology
and systems integration market, especially in the financial services industry.
Additionally, rapid technological and market changes occur frequently. We
compete for customer projects and experienced personnel against a number of
companies with significantly greater financial, technical and marketing
resources and revenues than us. Many of these competitors also have greater name
recognition in the financial services industry. Our competitors operate in a
variety of market segments including:

-    systems consulting and integration,
-    application software,
-    professional services (such as computer equipment companies like
     International Business Machines Corporation),
-    multinational accounting firms, and
-    general management consulting firms (such as Andersen Consulting, Computer
     Sciences Corporation and Electronic Data Systems Corporation).

In addition, numerous firms, many with focused local markets, have highly
fragmented the custom software development market. Additionally, we also face
competition from internal information technology departments of our customers.

In the future, we expect to experience increasing competition from companies
offering established integration services and new service offerings and
technologies. In addition, strategic acquisitions or cooperative relationships
among our current or potential competitors may increase their ability to expand
or increase their service offerings to address the needs of our existing or
prospective customers. Accordingly, new competitors or alliances among current
and new competitors may emerge and rapidly gain significant market share. Such
increased competition could result in:

-    lower utilization rates,
-    billing rate reductions,
-    fewer customer engagements, and
-    reduced gross margin and loss of market share for the Company.



                                       17
<PAGE>   18

Any of these factors could materially adversely affect our business, financial
condition and results of operations.

To be successful in the future we must respond promptly and effectively to
customer demands, technological changes and competitors' innovations. We may not
be able to respond as quickly as our competitors to new or emerging technologies
and changes in customer requirements. Furthermore, we may be unable to devote as
many resources as our competitors to the development, promotion and sale of new
service offerings to prospective customers. We cannot assure you that we will
successfully compete with existing or new competitors or that such competition
will not effect our business, financial condition and results of operations.

Rapid Technological Change - Our success depends in part on our ability to
develop information technology solutions that keep pace with rapid changes in
computer technology, evolving industry standards and changing customer needs and
preferences. In particular, our future success depends upon our ability to
develop and introduce new service offerings, improve existing service offerings
and develop and maintain the skills necessary to keep pace with changing
technologies. We cannot assure you that we will be successful in developing,
introducing and marketing such service offerings on a timely and cost-effective
basis, or that the market will accept such service offerings, if and when
developed. In addition, we cannot assure you that our products will not become
uncompetitive or obsolete as a result of products, technologies or service
offerings developed by others. Our failure to address these challenges could
materially adversely affect our business, financial condition and results of
operations.

Potential for Contract Liability; Project Risks - Our services involve key
aspects of our customers' businesses and computer systems. A customer could
assert a claim against us as a result of a system failure regardless of our
actual responsibility for such failure. We attempt to contractually limit our
liability for damages arising from negligent acts, errors, mistakes or omissions
in rendering our services. Despite this precaution, we cannot assure you that
the limitations of liability set forth in our contracts will be enforceable or
will protect us from liability for damages. Additionally, we maintain general
liability insurance coverage, including coverage for errors and omissions in
excess of the applicable deductible amount. However, we cannot assure you that
we will be able to obtain such coverage on acceptable terms, or in sufficient
amounts to cover one or more large claims, or that the insurer will not deny us
coverage on a future claim. The successful assertion of one or more large claims
against us that exceed available insurance coverage, or the occurrence of
changes in our insurance policies, including premium increases or the imposition
of large deductible or co-insurance requirements, could materially adversely
affect our business, financial condition and results of operations.

Furthermore, we would incur substantial costs and possibly suffer a diversion of
management's attention from operations if litigation, regardless of its outcome,
were to occur. Any contract liability claim or litigation against us could,
therefore, materially adversely affect our business, financial condition and
results of operations. Because many of our projects are mission-critical
projects for major financial institutions, our failure or inability to meet a
customer's expectations could seriously damage our reputation and affect our
ability to attract new business.

Control by Management - Our executive officers and directors (and their
affiliates) beneficially own approximately 68.5% of our outstanding common
stock. Thus, while the members of our management have not entered into any
agreement regarding the voting of their common stock, if they were to vote
together, they could effectively control the outcome of matters requiring a
stockholder vote, including the election of directors, adopting or amending
provisions of our articles of organization and by-laws, and approving mergers or
other similar transactions, such as sales of substantially all of our assets.
Because of this control possible acquirors may be discouraged from entering into
transactions involving an actual or potential change of control, including
transactions in which a possible acquiror might offer you a



                                       18
<PAGE>   19

premium for your shares over then current market prices. In addition, certain
investors may only be willing to pay a reduced price for shares of our common
stock because of such management control. Furthermore, our articles of
organization do not provide for cumulative voting in the election of directors.

Potential Acquisitions - In our normal course, we evaluate potential
acquisitions of businesses and technologies that could complement or expand our
business. The risks associated with acquisitions include:

-    the retention of personnel,
-    diversion of management's attention,
-    unexpected liabilities, and
-    tax and accounting issues.

If we were to complete an acquisition, we cannot assure you that we would be
able to successfully integrate the acquired business or technologies into our
existing business and operations. In addition, we cannot assure you that the
acquisition of any business or technology will cause us to successfully develop
new service offerings, or that any such service offerings, if developed, will
achieve market acceptance or profitability. If we consummate one or more
significant acquisitions in which the consideration consists of stock, or is
financed with the net proceeds of the issuance of stock, you may suffer a
significant dilution of your equity interest.

Additionally, if we were to complete an acquisition to expand internationally,
our business may be subject to a variety of risks affecting international
operations, including:

-    difficulties in collecting accounts receivable,
-    potentially longer payment cycles,
-    increased costs associated with maintaining international marketing
     efforts,
-    currency fluctuations,
-    exchange rates,
-    changes in regulatory requirements, and
-    difficulties in enforcement of contractual obligations and intellectual
     property rights.

Thus, we cannot assure you that our business, financial condition or results of
operations will not be materially adversely affected by a potential acquisition.

Volatility of Stock Price - The market price of the shares of common stock may
be volatile and subject to wide fluctuations in response to the following
factors:

-    variations in operating results,
-    announcements of technological innovations or new services by us or our
     competitors,
-    changes in financial estimates by securities analysts, or
-    other events or factors.

In addition, the financial markets have experienced significant price and volume
fluctuations that have especially affected the market prices of equity
securities of many information technology companies. Often these fluctuations
have been unrelated to the operating performance of such companies or have
resulted from the failure of such companies to meet market expectations in a
particular quarter. Broad market fluctuations, or any failure of our operating
results to meet market expectations in a particular quarter, may materially
adversely affect the market price of your shares of common stock. In the past,
following periods of volatility in the market price of a company's securities,
stockholders have sometimes instituted a securities class action suit against
such company. If such litigation were to arise



                                       19
<PAGE>   20

against us it could result in substantial costs and a diversion of management
attention and resources. This could materially adversely affect our business,
financial condition and results of operations.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The following discussion about our market risk disclosures involves
forward-looking statements. Actual results could differ materially from those
projected in the forward-looking statements. As of March 31, 2000, we did not
use derivative financial instruments for speculative or trading purposes.

Interest Rate Risk

We invest our cash in corporate money market accounts and collateralized
repurchase agreements. These securities are not subject to interest rate risk
and will not fall in value if market interest rates increase.

Foreign Currency Exchange Risk

The majority of our sales are denominated in U.S. dollars and take place in
North America. We do not believe foreign currency exchange rates or the
introduction of the Euro will have an impact on us.



                                       20
<PAGE>   21

ITEM 8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


<TABLE>
<CAPTION>
                                                                                       Page
                                                                                       ----
<S>                                                                                     <C>
Report of Independent Accountants - PricewaterhouseCoopers LLP.........................  22

Report of Independent Auditors - Ernst & Young LLP.....................................  23

Consolidated Balance Sheets as of March 31, 2000 and 1999..............................  24

Consolidated Statements of Income for the Years Ended March 31, 2000, 1999 and 1998....  25

Consolidated Statements of Stockholders' Equity for the Years Ended March  31, 2000,
   1999 and 1998.......................................................................  26

Consolidated Statements of Cash Flows for the Years Ended March 31, 2000, 1999 and
  1998.................................................................................  27

Notes to Consolidated Financial Statements.............................................  28

Schedules:

     Schedule II - Valuation and Qualifying Accounts...................................  37
</TABLE>


                                       21
<PAGE>   22


                        REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders of
Atlantic Data Services, Inc:

In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of income, shareholders' equity and cash flows present
fairly, in all material respects, the financial position of Atlantic Data
Services, Inc and its subsidiary (the "Company") at March 31, 2000 and 1999, and
the results of their operations and their cash flows for each of the two years
in the period ended March 31, 2000 in conformity with accounting principles
generally accepted in the United States. These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with auditing standards generally
accepted in the United States, which require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes 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. We believe that our
audits provide a reasonable basis for the opinion expressed above.


/s/ PricewaterhouseCoopers LLP

Boston, Massachusetts
April 20, 2000



                                       22
<PAGE>   23

                         REPORT OF INDEPENDENT AUDITORS

Board Directors
Atlantic Data Services, Inc.


We have audited the accompanying consolidated balance sheet of Atlantic Data
Services, Inc. as of March 31, 1998 and the related consolidated statements of
income, stockholders' equity, and cash flows for the year then ended. Our audit
also included the financial statement schedule listed in the index at Item 14.
These financial statements and schedule are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements and schedule based on our audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Atlantic Data Services, Inc. at March 31, 1998, and the consolidated results of
its operations and its cash flows for the year then ended in conformity with
generally accepted accounting principles. Also, in our opinion, the related
financial statement schedule, when considered in relation to the basic financial
statements taken as a whole, presents fairly in all material respects the
information set forth therein.


                                                        /s/ Ernst & Young LLP

Boston, Massachusetts
April 13, 1998



                                       23
<PAGE>   24

                          ATLANTIC DATA SERVICES, INC.

                           Consolidated Balance Sheets
                        (in thousands, except share data)

<TABLE>
<CAPTION>
                                                                         MARCH 31,       MARCH 31,
                                                                           2000            1999
--------------------------------------------------------------------------------------------------

                                     ASSETS
<S>                                                                       <C>             <C>
Current assets:
     Cash and cash equivalents                                            $38,347         $37,326
     Accounts receivable, net of allowances for doubtful accounts
      of $650 and $725 at March 31, 2000 and 1999, respectively             5,514           7,037
     Prepaid expenses                                                         103             100
     Deferred taxes                                                           845             739
--------------------------------------------------------------------------------------------------
         Total current assets                                              44,809          45,202
Property and equipment, net                                                   919           1,346
Other assets                                                                  387             335
--------------------------------------------------------------------------------------------------
Total assets                                                              $46,115         $46,883
==================================================================================================

                      LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
     Accounts payable                                                     $   757         $ 1,193
     Accrued expenses and other liabilities                                 3,997           4,515
     Billings in excess of costs and estimated earnings                        42              --
     Income taxes payable                                                     343             417
--------------------------------------------------------------------------------------------------
         Total current liabilities                                          5,139           6,125
--------------------------------------------------------------------------------------------------
Long-term liabilities                                                          --              13
--------------------------------------------------------------------------------------------------

Commitments

Stockholders' equity:
     Preferred stock, $.01 par value, 1,000,000 authorized, no shares
       issued or outstanding                                                   --              --
     Common stock, $.01 par value, 60,000,000 shares authorized,
       13,087,599 shares issued and 12,975,599 outstanding at
       March 31, 2000 and 13,018,391 shares issued and 12,906,391
       outstanding at March 31, 1999                                          131             130
     Additional paid-in capital                                            26,737          26,526
     Retained earnings                                                     14,133          14,114
     Treasury stock (112,000 shares carried at cost)                          (25)            (25)
--------------------------------------------------------------------------------------------------
         Total stockholders' equity                                        40,976          40,745
--------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity                                $46,115         $46,883
==================================================================================================
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.



                                       24
<PAGE>   25

                          ATLANTIC DATA SERVICES, INC.

                        Consolidated Statements of Income
                      (in thousands, except per share data)


                                             YEAR ENDED   YEAR ENDED  YEAR ENDED
                                             MARCH 31,    MARCH 31,    MARCH 31,
                                                2000        1999         1998
--------------------------------------------------------------------------------

Revenues                                      $35,186      $66,763     $42,830
Cost of revenues                               26,207       41,083      24,223
--------------------------------------------------------------------------------
Gross profit                                    8,979       25,680      18,607
--------------------------------------------------------------------------------
Operating expenses:
    Sales and marketing                         3,232        4,469       3,737
    General and administrative                  7,441        8,849       6,567
--------------------------------------------------------------------------------
        Total operating expenses               10,673       13,318      10,304
--------------------------------------------------------------------------------
Income (loss) from operations                  (1,694)      12,362       8,303
Interest income, net                            1,822        1,261         142
--------------------------------------------------------------------------------
Income before provision for income taxes          128       13,623       8,445
Provision for income taxes                        109        5,864       3,547
--------------------------------------------------------------------------------
        Net income                            $    19      $ 7,759     $ 4,898
================================================================================

Basic earnings per share                      $  0.00      $  0.62     $  0.49
================================================================================

Diluted earnings per share                    $  0.00      $  0.60     $  0.49
================================================================================

Shares used in computing earnings per
  share (basic)                                12,925       12,468       9,952
================================================================================

Shares used in computing earnings per
  share (diluted)                              13,254       12,855       9,952
================================================================================


The accompanying notes are an integral part of these consolidated financial
statements.



                                       25
<PAGE>   26

                          ATLANTIC DATA SERVICES, INC.

                 Consolidated Statements of Stockholders' Equity

                       (in thousands, except share data)


<TABLE>
<CAPTION>
                                                     CLASS A           SPECIAL
                                   COMMON STOCK    COMMON STOCK     COMMON STOCK    ADDITIONAL          TREASURY STOCK
                                  --------------- --------------   ----------------  PAID-IN  RETAINED  --------------
                                  SHARES   AMOUNT SHARES  AMOUNT   SHARES    AMOUNT  CAPITAL  EARNINGS  SHARES   AMOUNT     TOTAL
----------------------------------------------------------------------------------------------------------------------------------

<S>                             <C>        <C>    <C>      <C>    <C>        <C>      <C>     <C>       <C>       <C>     <C>
BALANCE AT MARCH 31, 1997       6,847,960    68   394,800    4    3,104,080    31     1,281     4,457   112,000   (25)     5,816
  Dividends paid                       --    --        --   --           --    --        --    (3,000)       --    --     (3,000)
  Shares issued under stock
    option plans                       --    --   533,990    5           --    --       581        --        --    --        586
  Income tax benefit from
    exercise of stock options          --    --        --   --           --    --       383        --        --    --        383
  Net income                           --    --        --   --           --    --        --     4,898        --    --      4,898
----------------------------------------------------------------------------------------------------------------------------------

BALANCE AT MARCH 31, 1998       6,847,960    68   928,790    9    3,104,080    31     2,245     6,355   112,000   (25)     8,683
  Conversion of Class A
    common stock and
    special common stock
    to common stock             4,032,870    40  (928,790)  (9)  (3,104,080)  (31)       --        --        --    --         --
  Issuance of common
    stock, net of issuance
    costs                       2,000,000    20        --   --           --    --    23,351        --        --    --     23,371
  Shares issued under stock
    option plans                  137,561     2        --   --           --    --       839        --        --    --        841
  Income tax benefit from
    exercise of stock options          --    --        --   --           --    --        91        --        --    --         91
  Net income                           --    --        --   --           --    --        --     7,759        --    --      7,759
----------------------------------------------------------------------------------------------------------------------------------

BALANCE AT MARCH 31, 1999      13,018,391  $130        --   --           --    --   $26,526   $14,114   112,000  $(25)   $40,745
  Shares issued under stock
   option plans                    69,208     1        --   --           --    --       210        --        --    --        211
  Income tax benefit from
    exercise of stock options          --    --        --   --           --    --         1        --        --    --          1
  Net income                           --    --        --   --           --    --        --        19        --    --         19
----------------------------------------------------------------------------------------------------------------------------------

BALANCE AT MARCH 31, 2000      13,087,599  $131        --   --           --    --   $26,737   $14,133   112,000  $(25)   $40,976
==================================================================================================================================
</TABLE>


The accompanying notes are an integral part of these consolidated financial
statements.



                                       26
<PAGE>   27

                          ATLANTIC DATA SERVICES, INC.

                      Consolidated Statements of Cash Flows
                                 (in thousands)


<TABLE>
<CAPTION>
                                                                       YEAR ENDED   YEAR ENDED  YEAR ENDED
                                                                        MARCH 31,    MARCH 31,  MARCH 31,
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                          2000         1999       1998
----------------------------------------------------------------------------------------------------------

<S>                                                                      <C>         <C>        <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                                               $    19     $ 7,759    $ 4,898
Adjustments to reconcile net income to net cash provided by
 operating activities:
   Depreciation and amortization                                             676         668        262
   Deferred taxes                                                           (106)       (455)      (119)
   Provision for bad debts                                                   (75)        350        144
   Tax benefit from exercise of stock options                                  1          91        383
   Change in assets and liabilities:
      Accounts receivable                                                  1,598       1,713     (4,830)
      Prepaid expenses and other assets                                      (55)        270       (385)
      Accounts payable                                                      (436)        132        660
      Accrued expenses and other liabilities                                (518)      1,279      1,523
      Billings in excess of costs and estimated earnings on contracts         42        (640)       472
      Federal and state income taxes                                         (74)       (413)       781
--------------------------------------------------------------------------------------------------------
Net cash provided by operating activities                                  1,072      10,754      3,789
--------------------------------------------------------------------------------------------------------

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment                                          (249)     (1,019)      (608)
--------------------------------------------------------------------------------------------------------
Net cash used in investing activities                                       (249)     (1,019)      (608)
--------------------------------------------------------------------------------------------------------

CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments under capital lease obligation                            (13)        (22)       (19)
Proceeds from exercise of stock options under stock option plans             211         841        586
Net proceeds from initial public offering                                     --      23,371         --
Dividends paid                                                                --          --     (3,000)
--------------------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities                          198      24,190     (2,433)
--------------------------------------------------------------------------------------------------------

Net increase in cash and cash equivalents                                  1,021      33,925        748
Cash and cash equivalents, beginning of year                              37,326       3,401      2,653
--------------------------------------------------------------------------------------------------------

Cash and cash equivalents, end of year                                   $38,347     $37,326    $ 3,401
========================================================================================================

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for:
   Taxes                                                                 $   853    $  6,689    $ 2,566
========================================================================================================
</TABLE>


The accompanying notes are an integral part of these consolidated financial
statements.



                                       27
<PAGE>   28

                          ATLANTIC DATA SERVICES, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2000

1.   DESCRIPTION OF BUSINESS

Atlantic Data Services, Inc. ("ADS" or the "Company"), provides information
technology ("IT") strategy consulting and systems integration services to
customers exclusively in the financial services industry, primarily banks. The
Company offers IT solutions to the business challenges faced by financial
services companies through our in-depth financial services experience,
technological expertise and project management skills. Our service offerings are
organized around four practice areas: e-Business, Customer Relationship
Management ("CRM"), IT Strategy and Consulting, and Conversions &
Consolidations.

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The consolidated financial statements include the accounts of Atlantic Data
Services, Inc. and its wholly-owned subsidiary, ADS Securities Corp.
(collectively "the Company"). All intercompany accounts and transactions have
been eliminated in consolidation.

Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with an original
maturity date of three months or less to be cash equivalents. Cash equivalents
consist of money market accounts and repurchase agreements which are
collateralized by U.S. Treasury Securities and controlled by major financial
institutions. These investments are subject to minimal credit and market risk.

At March 31, 2000 and 1999, cash equivalents were comprised of money market
funds totaling approximately $31,586,000 and $25,188,000, respectively, and
repurchase agreements totaling approximately $6,627,000 and $11,857,000,
respectively. At March 31, 2000 and 1999, cash equivalents are classified as
available-for-sale and recorded at cost, which approximates fair value.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to credit risk
consist primarily of cash equivalents and accounts receivable. The risk with
respect to cash equivalents is minimized by the Company's policies in which
investments have relatively short maturities and are only placed with highly
rated issuers. A significant portion of the Company's revenues and accounts
receivable are derived from services provided to banks and other financial
institutions. The risk with respect to accounts receivable is minimized by
creditworthiness of the Company's customers and the Company's credit and
collection policies. The Company performs ongoing credit evaluations of its
customers, generally does not require collateral, and maintains allowances for
potential credit losses which, when realized, have been within the range of
management's expectations.

Revenue Recognition

The Company primarily derives its revenue from consulting services under time
and material billing arrangements. Under these arrangements, revenue is
recognized as the services are provided. Deferred revenue pertains to time and
material billing arrangements and represents cash collected in advance of the
performance of services.



                                       28
<PAGE>   29

Revenue on fixed price contracts is recognized using the percentage of
completion method of accounting and is adjusted monthly for the cumulative
impact of any revision in estimates. The Company determines the percentage of
completion of its contracts by comparing costs incurred to date to total
estimated costs. Contract costs include all direct labor and expenses related to
the contract performance. Losses, if any, are provided for in the period in
which the loss is determined. "Billings in excess of costs and estimated
earnings," represents billings in excess of revenues recognized.

Included in revenues for the years ended March 31, 2000, 1999 and 1998 are
reimbursable contract-related travel and entertainment expenses of $5,517,000,
$9,413,000 and $5,662,000, respectively, which are separately billed to
customers.

Property and Equipment

Property and equipment are stated at cost, less depreciation. Depreciation
expense is recognized using the straight-line method over the estimated useful
lives of the related assets. When assets are sold or retired, the related costs
and accumulated depreciation are removed from the accounts and any resulting
gain or loss is reflected in operations.

Leases

Leases are recorded as capital or operating leases. Any lease where
substantially all of the benefits and risks related to the ownership of the
leased asset are transferred to the lessee, as defined by Statement of Financial
Accounting Standards ("SFAS") No. 13, "Accounting for Leases," is accounted for
as if the asset were acquired and as if the obligation were assumed as of the
date of the lease. All other leases are recorded as operating leases, whereby
the related costs are charged to income on a straight-line basis over the lesser
of the lease term or the useful life of the lease.

Stock-Based Compensation

The Company grants stock options for a fixed number of shares to employees with
an exercise price equal to the fair value of the shares at the date of the
grant. The Company accounts for stock options granted to employees in accordance
with Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees" and related interpretations, and applies the disclosure only
provisions of SFAS No. 123, "Accounting for Stock-Based Compensation" (see Note
7).

Segment Information

The Company adopted SFAS No. 131, "Disclosure about Segments of an Enterprise
and Related Information." SFAS No. 131 prescribes the use of the "management"
approach whereby the Company's reportable segments are established based on the
internal reporting that is used by management for making operating decisions and
assessing performance. Also required by SFAS No. 131 are disclosures about
products and services, geographic areas and major customers. The adoption of
SFAS No. 131 did not affect the results of operations or the financial position
of the Company (see Note 11).

Earnings per Common Share

The Company follows SFAS No. 128, "Earnings per Share." SFAS No. 128 requires
the presentation of two amounts, basic earnings per share and diluted earnings
per share. During fiscal 1998, the two class method of computing earnings per
share was used because common stock and special common stock share ratably in
dividends when declared, while Class A common stock is not entitled to receive
dividends. Accordingly, earnings per share are equal for common stock and
special common stock. No earnings have been allocated to Class A common stock.
Basic earnings per share is calculated by dividing net income by the weighted
average



                                       29
<PAGE>   30

number of shares of common stock and special common stock outstanding during the
period. Diluted earnings per share is computed using the weighted average number
of common stock and special common stock outstanding during the period, plus the
dilutive effect of common stock equivalents.

Use of Estimates

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosures of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reported period. Actual
results could differ from those estimates.

Reclassifications

Certain reclassifications have been made to the prior period financial
statements to conform to current presentation. These reclassifications did not
affect the Company's results of operations or financial position.

3.   PROPERTY AND EQUIPMENT

Property and equipment consists of the following:

                                              USEFUL LIFE  MARCH 31   MARCH 31,
                                               IN YEARS       2000      1999
                                              -----------  --------------------
                                                              (in thousands)

Computer equipment and software                   3-5      $ 2,020    $ 1,811
Office furniture and equipment                    5-7          623        609
Leasehold improvements                        Lease Term       509        506
Building                                         31.5          183        183
                                                           ------------------
                                                             3,335      3,109
Accumulated depreciation and amortization                   (2,416)    (1,763)
                                                           ------------------
                                                           $   919    $ 1,346
                                                           ==================

Depreciation and amortization expense relating to fixed assets was $676 and $668
for the years ended March 31, 2000 and 1999, respectively, of which $13 and $37,
respectively, related to amortization of furniture and equipment held under
capital leases. Accumulated amortization of furniture and equipment held under
capital leases was approximately $100 and $87 at March 31, 2000 and 1999,
respectively.

4.   ACCRUED EXPENSES AND OTHER LIABILITIES

Accrued expenses and other liabilities consist of the following:


                                    MARCH 31,          MARCH 31,
                                     2000                1999
                                   -----------------------------
                                          (in thousands)

      Accrued payroll                 $2,054             $2,216
      Accrued medical                    391                578
      Compensated absences               219                257
      Other                            1,333              1,464
                                   -----------------------------
                                      $3,997             $4,515
                                   =============================


                                       30
<PAGE>   31

5.   INCOME TAXES

Significant components of the provision for income taxes are presented below:

                     MARCH 31,           MARCH 31,          MARCH 31,
                       2000                1999                1998
                     ------------------------------------------------
                                      (in thousands)
      Current:
          Federal        $112              $5,193          $2,880
          State            24               1,172             786
      Deferred:
          Federal         (22)               (404)            (94)
          State            (5)                (97)            (25)
                     ------------------------------------------------
                         $109              $5,864          $3,547
                     ================================================

The reconciliation of the consolidated effective tax rate of the Company for the
years ended March 31, 2000, 1999 and 1998 is as follows:

                                              2000         1999          1998
                                              --------------------------------
                                                     (in thousands)

      Pretax income                           $128        $13,623       $8,445
                                              ================================
      Statutory income tax rate               $ 44        $ 4,768       $2,871
      State taxes, net of federal benefit       12            699          502
      Permanent differences                    151            256          153
      Other                                    (98)           141           21
                                              --------------------------------
             Total provision                  $109        $ 5,864       $3,547
                                              ================================

The effect of temporary differences and carryforwards that give rise to deferred
tax assets are as follows:

                                        MARCH 31,    MARCH 31,
                                          2000          1999
                                        ----------------------
                                            (in thousands)

      Allowance for doubtful accounts   $  261          $291
      Compensated absence accrual           88           103
      Depreciation                         198           113
      Other accruals                       496           345
                                        --------------------
                                        $1,043          $852
                                        ====================
The Company continually reviews the recoverability of its deferred tax assets
and would, if necessary, establish a valuation allowance if it is more likely
than not that such deferred tax assets will not be realized. At March 31, 2000
and 1999, management believes that it is more likely than not that the tax
benefit will be realized for its deferred tax assets.

6.   STOCKHOLDERS' EQUITY

On May 21, 1998, the Company commenced an initial public offering of 2,500,000
shares of common stock, generating proceeds of $23,371,000, net of underwriting
commissions and other expenses incurred in connection with the offering. Of the
2,500,000 shares of common stock offered, 2,000,000 shares were offered and sold
by the Company and 500,000 shares were offered and sold by certain selling
stockholders. In addition, certain



                                       31
<PAGE>   32

underwriters exercised an overallotment option to purchase an additional 375,000
shares of common stock from selling stockholders in June 1998.

In connection with the initial public offering all issued and outstanding shares
of Class A common stock and special common stock converted into 4,032,870 shares
of common stock on a share-for-share basis.

Holders of the common stock are entitled to one vote per share and to receive
dividends, when and if declared by the Company's Board of Directors.

Prior to the conversion, holders of the special common stock were entitled to
one vote per share and to receive dividends, when and if declared by the
Company's Board of Directors. In addition, holders of the special common stock
were entitled to a liquidation preference of $0.91 per share.

Holders of the Class A common stock were not entitled to vote or to receive
dividends.

In October 1997, the Company's Board of Directors voted to increase the number
of authorized shares of common stock, Class A common stock and special common
stock to 11,746,840, 1,694,800 and 3,104,080, respectively, and approved a
28-for-1 stock split of the common stock, Class A common stock and special
common stock in the form of a stock dividend. The accompanying consolidated
financial statements have been restated to give effect to the stock split for
all years presented.

During the years ended March 31, 1998 and 1997, the Company paid dividends of
$0.30 and $0.15, respectively, per share, to the holders of the special common
stock and common stock.

7.   STOCK OPTION PLANS

Key Person Stock Plan

In March 1985, the Board of Directors approved the Company's Key Person Stock
Plan (the "Key Person Plan") and authorized that 560,000 shares of Class A
common stock be reserved for issuance under such plan. Under the terms of the
Key Person Plan, the Company is authorized to sell shares at the then fair
market value of Class A common stock to officers and other key employees of and
consultants to the Company. To date, 394,800 have been issued under the Key
Person Plan, of which an aggregate 112,000 shares were repurchased by the
Company and are held in treasury at March 31, 2000, 1999 and 1998. No Class A
common stock was issued pursuant to this plan during the years ended March 31,
2000, 1999 and 1998. At March 31, 2000, 165,200 shares of common stock were
available for future issuance; however, the Company does not intend to issue
additional shares under the Key Person Plan.

Incentive Stock Option Plan

On January 26, 1993, the Board of Directors approved the Company's 1992
Incentive Stock Option Plan (the "1992 Plan"). Under the terms of the 1992 Plan,
the Company is authorized to grant incentive stock options to purchase shares of
Class A common stock to officers and other employees of and consultants to the
Company. The aggregate number of shares of Class A common stock which may be
issued pursuant to the Plan is 812,000. Vesting is determined by the Board of
Directors. All options issued in 1997 were to employees and vested immediately
upon issuance. In connection with the conversion of Class A common stock to
common stock as part of the initial public offering, all options granted under
the 1992 Plan were converted to options to purchase common stock on May 28,
1998. At March 31, 2000, no options were available for future grant under the
1992 Plan.



                                       32
<PAGE>   33

1997 Stock Plan

In October 1997, the Board of Directors approved the Company's 1997 Stock Plan
(the "Plan"), and authorized that 500,000 shares of Class A common stock be
reserved for issuance under such plan. Under the terms of the Plan, the Company
is authorized to grant incentive stock options and non-qualified stock options,
as well as awards and direct purchases of Class A common stock to employees,
consultants, directors and officers of the Company. In March 1998, the Board of
Directors voted to amend the Stock Plan to provide, among other things, that the
number of shares reserved for issuance under the Stock Plan be increased from
500,000 shares of Class A common stock to 1,500,000 shares of Class A common
stock. In connection with the Conversion of Class A common stock to common stock
as part of the initial public offering, all options granted and available for
grant under the Plan were converted to options to purchase common stock on May
28, 1998. In March 1999, the Board of Directors voted to increase the authorized
number of shares for issuance under the Plan to 3,000,000, which vote was
ratified and approved by the Company's shareholders at the July 28, 1999 Annual
Meeting of Stockholders.

1998 Employee Stock Purchase Plan

The 1998 Employee Stock Purchase Plan (the "1998 Plan"), provides for the grant
of rights to eligible employees on a semi-annual basis to purchase shares of the
Company's common stock. The 1998 Plan allows eligible employees to purchase up
to 500 shares at the lessor of (1) 85% of the average market price of the common
stock on the first business day of the Payment Period or (2) 85% of the average
market price of the common stock on the last business day of the Payment Period.
The participant can contribute up to 10% of total compensation to the 1998 Plan.

The option activity for the years ended March 31, 2000, 1999 and 1998 was as
follows:

<TABLE>
<CAPTION>
                                            2000                     1999                    1998
                                   ----------------------------------------------------------------------
                                                WEIGHTED                 WEIGHTED                WEIGHTED
                                    NUMBER       AVERAGE     NUMBER      AVERAGE      NUMBER     AVERAGE
                                      OF        EXERCISE       OF        EXERCISE       OF       EXERCISE
                                    SHARES        PRICE      SHARES       PRICE       SHARES      PRICE
                                   ----------------------------------------------------------------------

<S>                                <C>            <C>         <C>         <C>          <C>         <C>
Outstanding options at
  beginning of year:               1,908,125      $6.23       649,510     $ 6.41       812,000     $0.91
     Granted                         590,000       4.34     1,502,500       7.70       371,500      7.91
     Exercised                            --         --       (63,260)      6.01      (533,990)     1.11
     Cancelled                      (507,500)      6.34      (180,625)     12.98            --       --
                                   ---------------------------------------------------------------------
Outstanding options at
  end of year                      1,990,625       5.64     1,908,125     $ 6.23       649,510     $6.41
                                   =====================================================================
Exercisable at end of year           846,377       5.43       542,000     $ 4.98       503,760     $4.05
                                   =====================================================================
Available for future grant
  at end of year                   1,043,500        --      1,306,625        --        128,500        --
                                   =====================================================================
Weighted average fair
  value of options granted
  during the year                      $3.19                    $4.29                    $1.07
                                   =====================================================================
</TABLE>




                                       33
<PAGE>   34

The following table summarizes stock options outstanding at March 31, 2000:

<TABLE>
<CAPTION>
                            OPTIONS OUTSTANDING               OPTIONS EXERCISABLE
                -----------------------------------------------------------------
                                  WEIGHTED
                                  AVERAGE      WEIGHTED                    WEIGHTED
                                 REMAINING     AVERAGE                     AVERAGE
    RANGE OF         NUMBER     CONTRACTUAL    EXERCISE     NUMBER         EXERCISE
 EXERCISE PRICE   OUTSTANDING      LIFE         PRICE     EXERCISABLE       PRICE
------------------------------------------------------------------------------------

<C>               <C>              <C>         <C>          <C>              <C>
$    0.91         277,000          5.44        $ 0.91       277,000          $ 0.91
     3.81         120,000          9.40          3.81        30,000            3.81
     3.88          78,000          9.67          3.88            --              --
     4.06           4,000          9.21          4.06         1,000            4.06
     4.13         229,000          9.50          4.13            --              --
     4.25          60,000          7.78          4.25        60,000            4.25
     5.06         774,000          8.94          5.06       208,002            5.06
     7.13           8,000          9.91          7.13            --              --
     8.25          30,000          9.82          8.25            --              --
     9.00         175,500          5.85          9.00       163,750            9.00
    13.00         109,125          8.14         13.00        50,125           13.00
    13.44          44,000          8.16         13.44        11,000           13.44
    14.13          60,000          8.53         14.13        40,000           14.13
    15.00          22,000          8.48         15.00         5,500           15.00
                ---------                                   -------
$0.91-$15.00    1,990,625          8.21        $ 5.64       846,377          $ 5.43
                =========                                   =======
</TABLE>


Pro forma information regarding net income and earnings per share is required by
SFAS No. 123, and has been determined as if the Company had accounted for its
employee share options under the fair value method of that Statement. The fair
value for employee options granted during this year was estimated at the date of
grant using a Black-Scholes option pricing model with the following assumptions:

                                        FOR THE YEAR ENDED
                          ---------------------------------------------
                          MARCH 31,        MARCH 31,         MARCH 31,
                             2000             1999              1998
                          ---------------------------------------------

Risk free interest rate      5.6%          4.2 - 6.7%        5.3 - 6.6%
Volatility                   80%              80%                --
Dividend yield                --               --                --
Expected life in years     4 years         4 years            3 years


For purposes of pro forma disclosures, the estimated fair value of the options
is amortized to expense over the options' vesting period, which includes actual
accelerated vesting entitlements during the year.

The Company's pro forma information follows (in thousands except for earnings
per share information):

                                                     FOR THE YEAR ENDED
                                          --------------------------------------
                                           MARCH 31,      MARCH 31,   MARCH 31,
                                             2000           1999         1998
                                          --------------------------------------

Pro forma net income                      $(2,032,000)    $6,267,000  $4,726,000
                                          ======================================
Pro forma earnings per share (basic)      $     (0.16)    $     0.50  $     0.47
                                          ======================================
Pro forma earnings per share (diluted)    $     (0.15)    $     0.49  $     0.47
                                          ======================================



                                       34
<PAGE>   35

The effect on net income and earnings per share may not be indicative of the
effects in future years as options vest over several years and the Company
continues to grant stock options to new employees.

8.   EARNINGS PER SHARE

The following table sets forth per share earnings for the year ended March 31,
2000 and 1999:

<TABLE>
<CAPTION>
                                                                               FOR THE YEAR ENDED
                                                                            --------------------------
                                                                            MARCH 31,        MARCH 31,
                                                                             2000             1999
                                                                            --------------------------
<S>                                                                           <C>          <C>
Numerator:
    Net income (numerator for earnings per common share and
     earnings per common share assuming dilution)                             $19,197      $7,759,472
                                                                           ---------------------------
Denominator:
    Denominator for basic earnings per share - weighted average
     shares                                                                12,925,059      12,467,620
    Effect of dilutive securities:
       Employee stock options                                                 328,867         387,006
                                                                           ---------------------------
    Denominator for diluted earnings per share - adjusted weighted
     average shares and assumed conversions                                13,253,926      12,854,626
                                                                           ==========================
Basic earnings per share                                                        $0.00           $0.62
Diluted earnings per share                                                      $0.00           $0.60
                                                                           ==========================
</TABLE>

In addition, as of March 31, 2000 and 1999, there were options outstanding to
purchase 235,125 shares and 1,631,125 shares, respectively, that are potentially
dilutive.

The following table sets forth the computation of earnings per share of common
stock and special common stock from continuing operations for the year ended
March 31, 1998:

<TABLE>
<CAPTION>
                                                                                     1998
                                                                                  -----------

<S>                                                                               <C>
Numerator:
    Income from continuing operations (numerator for earnings per
     common share)                                                                $ 4,898,000
                                                                                  -----------
Dividends declared:
    Common stock                                                                   (2,064,288)
    Special common stock                                                             (935,712)
                                                                                  -----------
                                                                                   (3,000,000)
                                                                                  -----------
Undistributed earnings                                                            $ 1,898,000
                                                                                  ===========
    Denominator for earnings per common share - weighted average shares             9,952,040
Undistributed earnings per common share - common stock and special
    common stock                                                                  $      0.19
Assumed distribution of earnings - common stock and special common
    stock                                                                                0.30
                                                                                  -----------
Earnings per common share from continuing operations - common stock
    and special common stock                                                      $      0.49
                                                                                  ===========
</TABLE>

Earnings per common share from continuing operations has been calculated under
the two-class method for common stock and special common stock. Class A common
stock does not share in dividends with common stock and special common stock,
and therefore does not share in earnings. There were no dilutive securities
outstanding at March 31, 1998.



                                       35
<PAGE>   36

9.   MAJOR CUSTOMERS

The nature of the Company's services results in the Company deriving significant
amounts of revenue from certain customers in a particular year. For the year
ended March 31, 2000, two customers accounted for 25.5% and 11.3% of the
Company's revenues. At March 31, 2000, these customers accounted for 24.0% and
10.5% of accounts receivable. For the year ended March 31, 1999, three customers
accounted for 18.4%, 16.4% and 13.8% of the Company's revenues. At March 31,
1999, these customers represented 29.7%, 1.1% and 6.4% of accounts receivable.
For the year ended March 31, 1998, five customers accounted for 17.4%, 13.7%,
13.3%, 10.1% and 10.0% of the Company's revenues. At March 31, 1998, these
customers represented 13.6%, 19.8%, 22.3%, 2.6% and 12.3% of accounts
receivable.

10.  EMPLOYEE RETIREMENT PLAN

The Company maintains a defined contribution retirement plan under Section
401(k) of the Internal Revenue Code for eligible employees (the "401(k) Plan").
The 401(k) Plan is funded by employee contributions of up to 15% of gross
compensation and by discretionary Company contributions. In accordance with the
provisions of the 401(k) Plan, employees may make tax-deferred contributions and
the Company, at its discretion, may match 50% of employee contributions up to 5%
of their earnings. The Company may also elect to make additional contributions
to the plan. Company contributions vest over five years of employment. Company
contributions amounted to $391,067, $477,365 and $301,300 for the years ended
March 31, 2000, 1999 and 1998, respectively.

11.  SEGMENT INFORMATION

The Company operates in a single business segment, which offers similar products
and services. The Company's products are similar in nature, providing
information technology strategy consulting and systems integration services to
customers primarily in the financial services industry, with a primary focus on
banks.

12.  COMMITMENTS

The Company leases its facilities and other equipment under operating leases.
Rent expense recognized under these leases during the fiscal years ended March
31, 2000, 1999 and 1998 totaled approximately $546,000, $519,000 and $500,000,
respectively. Future minimum lease payments due under noncancelable operating
and capital leases are as follows:

                                                     OPERATING        CAPITAL
                                                     ---------        -------
                                                           (in thousands)
Year ending March 31:
     2001                                             $  669           $  13
     2002                                                669
     2003                                                695
     2004                                                710
     2005                                                738              --
                                                      ------           -----
Total minimum lease payments                          $3,481              13
                                                      ======
Amount representing interest                                              --
                                                                       ------
                                                                          13
Current portion of capital lease (included in
 accrued expenses)                                                       (13)
                                                                       ------
Long-term portion of capital lease                                     $  --
                                                                       ======




                                       36
<PAGE>   37

13.  SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

The following table presents unaudited quarterly financial information for the
years ended March 31, 2000 and 1999 (in thousands, expect per share data):

<TABLE>
<CAPTION>

                                                    FOR THE QUARTERS ENDED
                                  ------------------------------------------------------
                                  JUNE 30,     SEPTEMBER 30,    DECEMBER 31,   MARCH 31,
                                   1999           1999             1999          2000
                                  ------------------------------------------------------
<S>                               <C>            <C>              <C>           <C>
Revenue                           $10,251        $ 6,789          $8,111        $10,036
Income (loss) from operations         (46)        (1,781)           (467)           600
Net income (loss)                     204           (805)             (9)           629
Basis earnings per share          $  0.02        $ (0.06)         $ 0.00        $  0.05
Diluted earnings per share        $  0.02        $ (0.06)         $ 0.00        $  0.05


                                                   FOR THE QUARTERS ENDED
                                 -------------------------------------------------------
                                 JUNE 30,     SEPTEMBER 30,     DECEMBER 31,   MARCH 31,
                                  1998           1998              1998          1999
                                 -------------------------------------------------------

Revenue                           $17,446        $18,186          $18,731       $12,400
Income from operations              3,608          4,157            4,319           278
Net income                          2,162          2,565            2,653           379
Basis earnings per share          $  0.19        $  0.20          $  0.21       $  0.03
Diluted earnings per share        $  0.18        $  0.19          $  0.20       $  0.03
</TABLE>


SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

The following schedule depicts the allowance for doubtful accounts for the years
ended March 31, 1998, 1999 and 2000 (in thousands):
                                                     CHARGED TO
                            BALANCE AT   CHARGED TO    OTHER
        ALLOWANCE           BEGINNING     COST AND    ACCOUNTS -     BALANCE AT
  FOR DOUBTFUL ACCOUNTS     OF PERIOD     EXPENSES    WRITE-OFFS   END OF PERIOD
--------------------------------------------------------------------------------

Year Ended March 31, 1998     $231          $144       $ --             $375
Year Ended March 31, 1999      375           352          2              725
Year Ended March 31, 2000      725           (75)        --              650


ITEM 9: CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
        DISCLOSURES

On September 3, 1998, the Company engaged PricewaterhouseCoopers LLP as
independent auditors for the fiscal year ending March 31, 1999 and dismissed
Ernst & Young LLP ("E&Y") effective immediately. This action was taken upon the
unanimous approval of the Audit Committee of the Board of Directors.

During the fiscal year ended March 31, 1998, and subsequent interim period,
there were no disagreements between the Company and E&Y on any matters of
accounting principles or practices, financial statement



                                       37
<PAGE>   38

disclosure or auditing scope or procedure which, if not resolved to the
satisfaction of E&Y, would have caused E&Y to make reference to the matter in
their report. During the fiscal year ended March 31, 1998, and the subsequent
interim period, there were no "reportable events" as that term is described in
Item 304(a)(1)(v) of Regulation S-K. The reports of E&Y on the Company's
financial statements for the fiscal year 1998 did not contain an adverse opinion
or a disclaimer of opinion and were not qualified or modified as to uncertainty,
audit scope or accounting principles.

The Company has not consulted PricewaterhouseCoopers LLP regarding the
application of accounting principles to any specified transactions or the type
of audit opinion that might be rendered on the Company's financial statements
during the Company's fiscal year ended March 31, 1998.



                                       38
<PAGE>   39

                                    PART III

ITEM 10: DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The information under the Sections "Election of Directors," "Occupations of
Directors and Executive Officers," and "16(a) Beneficial Ownership Reporting
Compliance," of the Registrant's Proxy Statement for the Annual Meeting of
Stockholders to be held on July 27, 2000, to be filed with the Commission not
later than 120 days after the close of the Company's fiscal year ended March 31,
2000, is hereby incorporated by reference.

ITEM 11: EXECUTIVE COMPENSATION

The information under the Sections "Compensation and Other Information
Concerning Directors and Officers" and "Stock Performance Graph" of the
Registrant's Proxy Statement for the Annual Meeting of Stockholders to be held
on July 27, 2000, to be filed with the Commission not later than 120 days after
the close of the Company's fiscal year ended March 31, 2000, is hereby
incorporated by reference.

ITEM 12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The information under the Section "Securities Ownership of Certain Beneficial
Owners and Management" of the Registrant's Proxy Statement for the Annual
Meeting of Stockholders to be held on July 27, 2000, to be filed with the
Commission not later than 120 days after the close of the Company's fiscal year
ended March 31, 2000, is hereby incorporated by reference.

ITEM 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information under the Sections "Compensation and Other Information
Concerning Directors and Officers" and "Certain Relationships and Related
Transactions" of the Registrant's Proxy Statement for the Annual Meeting of
Stockholders to be held on July 27, 2000, to be filed with the Commission not
later than 120 days after the close of the Company's fiscal year ended March 31,
2000, is hereby incorporated by reference.

                                     PART IV

ITEM 14: EXHIBITS, FINANCIAL STATEMENT SCHEDULE AND REPORTS ON FORM 8-K

The following documents are filed as part of this Form 10-K:

1.   Financial Statements - See "Index to Consolidated Financial Statements" at
     Item 8 and incorporated herein by reference.

2.   Financial Statement Schedules - Schedule II - Valuation and Qualifying
     Accounts is listed in the Index to Consolidated Financial Statements, is
     included on page 37 and is filed as part of this report. All other
     schedules to the consolidated financial statements are omitted, as the
     required information is either inapplicable or presented in the financial
     statements or related notes.

3.   Exhibits - The Exhibits which are filed with this Report or which are
     incorporated by reference herein are set forth in the Exhibit Index, which
     appears on page 41 hereof.

4.   Reports on Form 8-K - None.



                                       39
<PAGE>   40

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.

ATLANTIC DATA SERVICES, INC.                             DATE

By:  /s/ Robert W. Howe                                  June 16, 2000
     -------------------------------
     Chairman of the Board and
       Chief Executive Officer

We, the undersigned officers and directors of Atlantic Data Services, Inc.,
hereby severally constitute and appoint Robert W. Howe and Paul K. McGrath, and
each of them singly, our true and lawful attorneys, with full power to them and
each of them singly, to sign for us in our names in the capacities to do all
things in our names and on our behalf in such capacities to enable Atlantic Data
Services, Inc. to comply with the provisions of the Securities Exchange Act of
1934 and all requirements of the Securities Exchange Commission.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed by the following persons on behalf of the Registrant and in the
capacities and on the dates indicated.

<TABLE>
<CAPTION>

SIGNATURE                             TITLE                                            DATE

<S>                                   <C>                                              <C>
/s/ Robert W. Howe                    Chairman of the Board and Chief                  June 16, 2000
-------------------------------         Executive Officer (Principal Executive
(Robert W. Howe)                        Officer)


/s/ William H. Gallagher              President, Chief Operating Officer               June 16, 2000
-------------------------------         and Director
(William H. Gallagher)

/s/ Paul K. McGrath                   Senior Vice President and Chief                  June 16, 2000
-------------------------------         Financial Officer (Principal Financial
(Paul K. McGrath)                       and Accounting Officer)


/s/ Richard D. Driscoll               Director                                         June 16, 2000
-------------------------------
(Richard D. Driscoll)

/s/ David C. Hodgson                  Director                                         June 16, 2000
-------------------------------
(David C. Hodgson)

/s/ Lee M. Kennedy                    Director                                         June 16, 2000
-------------------------------
(Lee M. Kennedy)

/s/ George F. Raymond                 Director                                         June 16, 2000
-------------------------------
(George F. Raymond)

</TABLE>

                                       40
<PAGE>   41

                                  EXHIBIT INDEX

 No.                            Description
--------------------------------------------------------------------------------

3.01     Second Amended and Restated Articles of Organization of the Company
         (Incorporated by reference to the Company's Registration Statement on
         Form S-1 filed March 26, 1998 (File No. 333-48703))

3.02     Second Amended and Restated By-Laws of the Company (Incorporated by
         reference to the Company's Registration Statement on Form S-1 filed
         March 26, 1998 (File No. 333-48703))

4.01     Specimen Certificate for Shares of the Company's Common Stock
         (Incorporated by reference to the Company's Registration Statement on
         Form S-1 filed March 26, 1998 (File No. 333-48703))

10.01+   Key Person Stock Plan (Incorporated by reference to the Company's
         Registration Statement on Form S-1 filed March 26, 1998 (File No.
         333-48703))

10.02+   Amended and Restated 1992 Incentive Stock Option Plan (Incorporated by
         reference to the Company's Registration Statement on Form S-1 filed
         March 26, 1998 (File No. 333-48703))

10.03+   Form of Incentive Stock Option Agreement for Shares Issued Under the
         Amended and Restated 1992 Incentive Stock Option Plan (Incorporated by
         reference to the Company's Registration Statement on Form S-1 filed
         March 26, 1998 (File No. 333-48703))

10.04+   Amended and Restated 1997 Stock Plan (Incorporated by reference to the
         Company's Registration Statement on Form S-1 filed March 26, 1998 (File
         No. 333-48703))

10.05+   Amended and Restated 1997 Stock Plan, as amended (Incorporated by
         reference to the Company's Registration Statement on Form S-8 field
         September 13, 1999 (File No. 333-86997))

10.06+   Form of Incentive Stock Option Agreement under the Amended and Restated
         1997 Stock Plan (Incorporated by reference to the Company's
         Registration Statement on Form S-1 filed March 26, 1998 (File No.
         333-48703))

10.07+   Form of Non-Qualified Stock Option Agreement under the Amended and
         Restated 1997 Stock Plan (Incorporated by reference to the Company's
         Registration Statement on Form S-1 filed March 26, 1998 (File No.
         333-48703))

10.08+   1998 Employee Stock Purchase Plan (Incorporated by reference to the
         Company's Registration Statement on Form S-1 filed March 26, 1998 (File
         No. 333-48703))

10.09+   Employment Agreement between the Company and Robert W. Howe dated March
         25, 1998 (Incorporated by reference to the Company's Registration
         Statement on Form S-1 filed March 26, 1998 (File No. 333-48703))

10.10+   Employment Agreement between the Company and William H. Gallagher dated
         March 25, 1998 (Incorporated by reference to the Company's Registration
         Statement on Form S-1 filed March 26, 1998 (File No. 333-48703))

10.11+   Employment Agreement between the Company and Paul K. McGrath dated
         March 25, 1998 (Incorporated by reference to the Company's Registration
         Statement on Form S-1 filed March 26, 1998 (File No. 333-48703))

10.12+   Employment Agreement between the Company and Peter A. Cahill dated
         March 25, 1998 (Incorporated by reference to the Company's Registration
         Statement on Form S-1 filed March 26, 1998 (File No. 333-48703))

10.13+   Employment Agreement between the Company and Paul James Lynch dated
         October 12, 1998 (Incorporated by reference the Company's Annual Report
         on Form 10-K filed June 25, 1999 (File No. 000-24193))

10.14+*  Employment Agreement between the Company and Francis A. Ruggieri dated
         April 5, 2000

10.15+*  Employment Agreement between the Company and Lucy A. Flynn dated April
         17, 2000

10.16    Registration Rights Agreement dated March 25, 1998 by and among the
         Company and Certain Stockholders (Incorporated by reference to the
         Company's Registration Statement on Form S-1 filed March 26, 1998 (File
         No. 333-48703))




                                       41
<PAGE>   42





 No.                              Description
--------------------------------------------------------------------------------

10.17    Lease Agreement between the Company and National Fire Protection
         Association dated April 1, 1995, as amended July 31, 1998 and January
         15, 1997 (Incorporated by reference to the Company's Registration
         Statement on Form S-1 filed March 26, 1998 (File No. 333-48703))

10.18    Third Amendment - Lease Agreement between the Company and National Fire
         Protection Association dated October 15, 1998 (Incorporated by
         reference the Company's Annual Report on Form 10-K filed June 25, 1999
         (File No. 000-24193))

10.19    Fourth Amendment - Lease Agreement between the Company and National
         Fire Protection Association dated May 1, 1999 (Incorporated by
         reference the Company's Annual Report on Form 10-K filed June 25, 1999
         (File No. 000-24193))

10.20*   Agreement for Exercise of Option between the Company and National Fire
         Protection Association dated November 23, 1999

10.21*   Alliance Agreement between the Company and Brokat Financial Systems,
         Inc. dated October 27, 1999

10.22*   Alliance Agreement between the Company and Corillian Corporation dated
         January 7, 1999

21.01*   Subsidiaries of the Company

23.01*   Consent of PricewaterhouseCoopers LLP

23.02*   Consent of Ernst & Young LLP

24.01*   Power of Attorney (included on Signature Page hereto)

27.01*   Financial Data Schedule

---------------

* Filed herewith
+ Indicates management contract or a compensatory plan, contract or arrangement.


                                       42