================================================================================

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                            ------------------------
                                    FORM 10-K
(Mark One)

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

                     For the fiscal year ended June 30, 2002

                                       OR

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

                         Commission File Number 0-19092
                            ------------------------
                               ROSS SYSTEMS, INC.

Incorporated in Delaware             IRS Employer Identification No. 94-2170198


                        Two Concourse Parkway, Suite 800
                             Atlanta, Georgia 30328
                                 (770) 351-9600
                            ------------------------
           Securities registered pursuant to Section 12(b) of the Act:

                                                        Name of each exchange
Title of each class                                      on which registered
-------------------                                     ---------------------
None......................................................      None

           Securities registered pursuant to Section 12(g) of the Act:
        Common Stock, $0.001 par value; Preferred Shares Purchase Rights

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

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

         Indicate by check mark if disclosure of delinquent  filers  pursuant to
Item 405 of Regulation S-K is not contained  herein,  and will not be contained,
to the best of  registrant's  knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in Part  III of this  Form  10-K or any
amendment to this Form 10-K. |_|

         The  aggregate  market value of the  Registrant's  voting stock held by
non-affiliates  of the  Registrant,  based  upon the  closing  sale price of the
Common Stock on September  24, 2002 as reported by the NASDAQ  National  Market,
was approximately  $19,207,970.  Shares of voting stock held by each officer and
director and by each person who owns 5% or more of the outstanding  Common Stock
have been  excluded in that such  persons may be deemed to be  affiliates.  This
determination of affiliate status is not necessarily a conclusive  determination
for other purposes.

         As of August 31, 2002, the Registrant had outstanding  2,645,726 shares
of Common Stock, and 500,000 Series A 7.5%, convertible preference shares.

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



                       DOCUMENTS INCORPORATED BY REFERENCE

         Certain items in Part III of this form 10-K Report are  incorporated by
reference to the Registrant's  Proxy Statement for the Registrant's  2002 Annual
Meeting of Stockholders to be held November 14, 2002


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<PAGE>


 ROSS SYSTEMS, INC AND SUBSIDIARIES



                               ROSS SYSTEMS, INC.
                           ANNUAL REPORT ON FORM 10-K
                            YEAR ENDED JUNE 30, 2002
                                TABLE OF CONTENTS

<TABLE>
<CAPTION>

                                                                                                           Page No.
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PART I
<S>        <C>                                                                                                <C>
Item 1.    Business......................................................................................     1
Item 2.    Properties....................................................................................     5
Item 3.    Legal Proceedings.............................................................................     6
Item 4.    Submission of Matters to a Vote of Security Holders...........................................     6
PART II
Item 5.    Market for Registrant's Common Equity and Related Stockholder Matters.........................     7
Item 6.    Selected Financial Data.......................................................................     8
Item 7.    Management's Discussion and Analysis of Financial Condition and Results of Operations.........     9
Item 7.A.  Quantitative and Qualitative Disclosures about Market Risk....................................    19
Item 8.    Financial Statements and Supplementary Data...................................................    19
Item 9.    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure..........    19
PART III
Item 10.   Directors and Executive Officers of the Registrant............................................    21
Item 11.   Executive Compensation........................................................................    22
Item 12.   Security Ownership of Certain Beneficial Owners and Management................................    22
Item 13.   Certain Relationships and Related Transactions................................................    22
PART IV
Item 14.   Exhibits, Financial Statement Schedules, and Reports on Form 8-K..............................    23
SIGNATURES...............................................................................................    24

</TABLE>


<PAGE>


                       ROSS SYSTEMS, INC AND SUBSIDIARIES

                                     PART I

ITEM 1. BUSINESS

         THIS  REPORT ON FORM  10-K  (THE  "REPORT")  CONTAINS  FORWARD  LOOKING
STATEMENTS  REGARDING  FUTURE EVENTS WITH RESPECT TO ROSS SYSTEMS,  INC.  ACTUAL
EVENTS OR RESULTS COULD DIFFER MATERIALLY DUE TO A NUMBER OF FACTORS,  INCLUDING
THOSE DESCRIBED HEREIN AND IN DOCUMENTS  INCORPORATED  HEREIN BY REFERENCE,  AND
THOSE FACTORS DESCRIBED UNDER "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITIONS AND RESULTS OF OPERATIONS".


General

         The following  description of business is qualified in its entirety by,
and  should  be read in  conjunction  with the  more  detailed  information  and
financial data, including the financial statements and notes thereto,  appearing
elsewhere in this Report.  Unless otherwise stated in this document,  references
to (a) the  "Company"  or (b) "Ross" shall mean Ross  Systems,  Inc., a Delaware
corporation, and its subsidiaries.

         Ross  Systems  Inc.  (NASDAQ:ROSS)  founded in 1972,  supplies  leading
enterprise  solutions  software  designed  for process  manufacturing  companies
primarily in the food and beverage, life sciences, chemicals, metals and natural
products  industries.  The  Company  offers the  award-winning  iRenaissance(TM)
family of software solutions which is an integrated suite of enterprise resource
planning  (ERP  II),  financials,   materials   management,   manufacturing  and
distribution,  supply chain management (SCM),  advanced planning and scheduling,
customer   relationship   management  (CRM),   electronic   commerce,   business
intelligence and analytics applications.

         iRenaissance   applications  are  renowned  for  their  deep  and  rich
functional  fit  to  process  industry  requirements  as  well  as  their  short
implementation times and cost-effective returns on investment.

         More than 1,000 companies  around the world use Ross Systems  solutions
on a wide range of popular databases, including Oracle and Microsoft, as well as
operating  systems  including NT and UNIX. Ross Systems has more than 10 offices
globally, to serve its customers. Customers are primarily medium-sized companies
(with annual sales of $50 million to $1 billion)  upgrading  internal systems to
improve   profitability   through  the   availability  of  timely  and  accurate
information,  ensure  compliance  with  regulatory  requirements  such as  those
imposed by the FDA and USDA,  and  collaborate  effectively  with  customer  and
suppliers.

         The Company  licenses its products to customers  through a direct sales
force in North America and Western Europe as well as independent distributors in
dozens of other markets worldwide.


Products

         The   Company   markets  a  broad  range  of   sophisticated   business
applications  that  address  B2B  electronic  commerce  including   procurement,
collaborative planning,  financial,  manufacturing,  distribution,  supply chain
management,  and human  resource needs of process  manufacturers.  Specifically,
these   applications  are  designed  to  address  the  unique   requirements  of
manufacturers  in the food and beverage,  life sciences,  chemicals,  metals and
natural products industries. In addition, the Company supports a large installed
base of companies,  which utilize the Company's financial products  exclusively.
The Company's  software  product license fees are based on the modules  licensed
and the  number of  concurrent  users  supported  by the  hardware  on which the
modules operate.


Technology

The Company leverages  contemporary  Internet technologies to enable significant
benefits for its customers.  Many Ross customers have benefited from  technology
obsolescence  protection  as they have moved from older  computing  platforms to
current  platforms without  reinstallation  of the iRenaissance  applications or
re-writes  of  custom-developed   applications.   Built  on  a  highly  flexible
technology platform, iRenaissance applications cost-effectively support mid-size
companies and scale  effectively to support  large,  global  organizations  with
thousands of users processing  hundreds of thousands of transactions daily. Ross
customers  also  benefit  from  the  low  cost  of  deployment  and  centralized
maintenance afforded by browser-based PC clients that provide secure access from
any PC with Internet access,  to the system  infrastructure at central locations
where the software  resides and the data is


                                        1
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                    ROSS SYSTEMS, INC AND SUBSIDIARIES

managed.  End-user  satisfaction is enhanced by highly  configurable  and easily
personalized  applications  that  provide  follow-me  profiles  for  each  user,
regardless of physical location.  Utilizing  contemporary standards such as XML,
SOAP,  Microsoft .NET and others,  iRenaissance  applications can be effectively
connected to any other applications or devices via the Internet. Robust security
features that leverage  Internet  standards  protect  applications and data with
both  user-based and  application  function  profiles.  The security  facilities
further  enable  companies in their effort to achieve  regulatory  compliance by
providing detailed audit trails for every action taken by every user.

         The  Company  offers its  comprehensive  Enterprise  Resource  Planning
("ERP") solution with functionality  specifically tailored to the unique formula
and  specifications-based  requirements of process manufacturers,  including the
food and  beverage,  life  sciences,  chemicals,  metals  and  natural  products
companies.  The Company  believes that this native  functionality is superior to
the alternative offered by most of the Company's competitors. The product may be
deployed in a thin client mode and  accessed  directly  through a web browser to
permit  the  greatest  performance  advantage  and  streamlined  deployment  for
companies using remote communications over the Internet.

         The iRenaissance(TM) applications run on Microsoft's Windows NT; Compaq
Corporation's   ("Compaq")  Alpha,   UNIX,  and  Open  VMS  operating   systems;
International Business Machines  Corporation's ("IBM") RS/6000;  Hewlett-Packard
Company's  ("HP") HP-UX;  Sun's Solaris  operating  system,  and Fujitsu's DS-90
UNIX. The company's  products  currently  support multiple  database  management
systems,  including: Oracle Systems Corporation's Oracle 8i, and Microsoft's SQL
Server 7.

         The Company's  Renaissance  classic line of general business accounting
applications is feature rich and well  integrated.  The Company has continued to
enhance  these  applications  to serve  existing  customers.  The  Company  will
continue to support the  Renaissance  classic  products to its installed base of
customers. To provide a long-term growth path for Renaissance classic customers,
the Company offers them the ability to upgrade to its new products at attractive
pricing.

Product Line Expansion

     In fiscal  2002,  the Company  continued  to expand its product line in the
collaborative business to business (B2B) applications.  With connectivity to the
ERP  backbone  systems  over the  Internet to  customers  and  suppliers,  these
products  enable  customers  to tightly link trading  partner  supply  chains to
achieve sustainable  competitive advantage.  These applications enable companies
to leverage the Internet to automate business  processes and effectively  manage
business resources. This includes:

          iRenaissance  ERP -  Designed  specifically  to  address  the needs of
     process  manufacturing  companies,  with  applications for  Manufacturing &
     Distribution,  Financials and Human Resources management. The Manufacturing
     & Distribution  application provides  process-specific  inventory,  quality
     management, regulatory compliance management and risk mitigation solutions.
     It is tightly  integrated with the Financials  applications,  providing the
     benefit  of  comprehensive   management  of  order-to-cash,   manufacturing
     planning and procure-to-pay processes.

          The  Financials   applications   are  tightly   integrated   with  the
     Manufacturing   &  Distribution   applications   to  enable  the  efficient
     management and  optimization  of business  operations.  Deep  functionality
     provides  the  support  necessary  for  multi-company,  multi-language  and
     multi-currency requirements.

          The  Human   Resources   application  is  also   integrated  with  the
     applications,  and  enables  management  of  employee  resources  including
     payments, benefits administration, 401K and performance management.

          iRenaissance  SCM - Designed with many unique  capabilities  needed by
     process  manufacturing  companies,  this  comprehensive  solution  provides
     tightly integrated Supply Chain Management applications that help companies
     maximize and strengthen  collaborative  commerce,  planning and forecasting
     activities across the supply chain.

          Demand Management applications enable companies to accurately forecast
     demand,  down to the customer  location level, and  simultaneously  improve
     customer service while reducing  inventory.  It is especially suited to the
     needs of process manufacturers whose ingredient demand patterns vary widely
     based on seasonality, availability, and potency.


                                        2
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                       ROSS SYSTEMS, INC AND SUBSIDIARIES

          The  Supply   Management   applications   bring   together  the  best,
     unconstrained  demand plan with  available  supply,  allowing  companies to
     tightly  link and track  business  plans and  departmental  operations.  It
     includes Replenishment  Planning,  Optimized Orders,  Advanced Planning and
     Advanced Scheduling modules.

          The Sales and Operations  Planning  application  combines  information
     from outside and inside the enterprise,  and effectively  applies it to the
     decision  support  system for a company's  supply chain.  This  application
     dynamically   extracts  data  and   information   from   iRenaissance   SCM
     applications  and  other  iRenaissance   solutions  in  order  to  generate
     sophisticated  analyses and plans that provide a management tool to measure
     performance and judge the impact of proposed corrective actions.

     iRenaissance  CRM - This  sophisticated  Customer  Relationship  Management
     solution provides customers with Web-based selling,  customer self-service,
     specialized order entry,  integrated sales and marketing  programs,  broker
     and  distributor  portals,   client  tracking  and  performance  management
     applications.

          In addition to  providing  robust  support for sales force  automation
     requirements,  this  application  also addresses the complex  challenges of
     multi-tier  distribution  and revenue  channels often faced by companies in
     the process manufacturing industries.

     iRenaissance  Commerce  -  enables  companies  to  cost-effectively  extend
     internal  applications  to the web to  improve  collaboration  and  service
     levels  provided to  customers  and channel  partners.  Companies  leverage
     iRenaissance  Commerce to offer their customers and prospects value before,
     during  and after  the  sale,  and take  full  advantage  of  cross-selling
     opportunities.   Additionally,   using  iRenaissance   Commerce,   existing
     iRenaissance  applications  can be  leveraged  to publish  dynamic  product
     catalogs,  support 24x7 customer self-service and order status inquiry, and
     take orders via the web.


Third-Party Products

          The Company  resells  complementary  software  products  licensed from
     third parties,  including  applications for custom reporting of information
     maintained by the Company's programs such as Business Objects for executive
     information,  and FRx for  financial  reporting and  budgeting,  as well as
     certain middle-ware  products.  The Company resells other privately labeled
     software products  licensed from third parties including  Prescient Systems
     (rebranded as  iRenaissance  SCM) and Selligent  (rebranded as iRenaissance
     CRM). Additionally, the Company has entered into agreements which enable it
     to resell database  products and other products that are sublicensed to end
     users in conjunction  with certain of the Company's open systems  products.
     License revenues from the products  described in this paragraph  constitute
     approximately 18% of total software product license revenue in fiscal 2002

Services

          The Company's worldwide consulting services operation  complements its
     e-business and enterprise software sales organizations.  The Company offers
     a broad  selection  of  services  to install and  optimize  each  available
     software  product.  Services  provided by the  Company  fall into two broad
     categories, Professional Services and Client Support.

Professional Services

          The Company's  Professional  Services  organization  provides business
     application  experience,  technical  expertise  and  product  knowledge  to
     complement  the  Company's  products  and to provide  solutions to clients'
     business  requirements.  The major types of services  provided  include the
     following:

          Application  Consulting  involves  in-depth  analysis of the  client's
     specific needs and the preparation of detailed plans that list step-by-step
     actions  and  procedures  necessary  to  achieve  a timely  and  successful
     implementation  of the  Company's  software  products.  These  services are
     generally offered on a time and expense reimbursement basis.

          Technical  Consulting  involves  evaluating  and managing the client's
     needs by supplying custom  application  systems,  custom  interfaces,  data
     conversions,  and system  conversions.  Consultants  participate  in a wide
     range  of


                                        3
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                       ROSS SYSTEMS, INC AND SUBSIDIARIES

     activities,   including  requirements  definition,   and  software  design,
     development  and   implementation.   The  Company  also  provides  advanced
     technology  services  focused on networking,  database  administration  and
     tuning.  These  services  are  generally  offered  on a  time  and  expense
     reimbursement  basis. The Company also provides remote systems  management,
     and remote applications management.

          Education  Services  are  offered to clients  either at the  Company's
     education  facilities or at the client's  location,  as either  standard or
     customized classes.

          Established  relationships  with third party  consulting  partners are
     utilized in specific instances,  to take advantage of specialized  industry
     expertise and to support the implementation  demands of the Company and its
     customers.

     Client Support

          The Company's  Client Support  functions  include  web-based  support,
     telephone support, technical publications and product support guides, which
     are provided  under the  Company's  standard  maintenance  agreements.  The
     annual  maintenance  fee for these  services is 20% price for the  licensed
     software.  The standard  maintenance  agreement  also  entitles  clients to
     certain new product releases and product enhancements.


     Marketing and Sales

          The  Company  sells its  products  and  services in the US and Western
     Europe  primarily  through its direct  sales force.  At June 30, 2002,  the
     Company had 46 sales and marketing employees.  In other areas of the world,
     the Company  sells its  products  through  distributors.  In support of its
     sales force and distributors,  the Company conducts comprehensive marketing
     programs  which  include  telemarketing,   direct  mailings,   advertising,
     promotional material,  seminars, trade shows, public relations and on-going
     customer communication.

          The Company is based in Atlanta, Georgia, with a regional direct sales
     force   covering  all  major  US  business   locations.   The  Company  has
     subsidiaries in Antwerp, Belgium; Ottawa, Canada; Berlin, Germany; Utrecht,
     the Netherlands;  Barcelona, Spain; Northampton,  United Kingdom as well as
     Hong Kong and Singapore.

          The Company has  distribution  arrangements  with  distributors in the
     following countries:  Argentina, Australia, Brazil, Chile, China, Colombia,
     Czech Republic,  Denmark,  Finland,  Germany,  Greece,  Hong Kong, Hungary,
     Indonesia,  Ireland,  Italy,  Japan,  Jordan,  Lebanon,  Malaysia,  Mexico,
     Morocco, New Zealand, Norway,  Pakistan,  Peru, Poland, Portugal,  Rumania,
     Russia, Saudi Arabia, Singapore, Slovak Republic, Sweden, Taiwan, Thailand,
     Uruguay and Venezuela.  These distributors pay the Company royalties on the
     sales of the Company's products and maintenance services.

          International  revenues  (from  foreign  operations  and export sales)
     represented  approximately  45%, 33%, and 32%, of the Company's revenues in
     fiscal 2002, 2001, and 2000,  respectively.  The Company intends to broaden
     its  presence  in   international   markets  by  entering  into  additional
     distribution agreements.


     Product Development and Acquisitions

          To meet the  increasingly  sophisticated  needs of its  customers  and
     address potential new markets,  the Company  continually strives to enhance
     its existing  product  functionality.  The Company surveys the needs of its
     customers   annually  through  ballots  and  at  its  user  conference  and
     incorporates many of their  recommendations into its products.  The Company
     also conducts a variety of forms of market  research with industry  analyst
     groups and targeted industries to determine strategies for new features and
     functions.  The Company is committed  to  achieving  advances in the use of
     computer  systems  technology  and to expanding  the breadth of its product
     line.

          The Company intends to expand its potential  markets by developing new
     products  which  address  the needs of  additional  prospective  customers,
     including  those in key  international  markets  related to both  language,
     currency and local accounting  custom and procedure.  iRenaissance  version
     5.7 was released in the fourth quarter of fiscal 2002.  During fiscal 2002,
     the Company changed some aspects of its technology direction.  The internet
     related  functionality of the iRenaissance product was re-directed from the
     "java" based development to the Microsoft ".net" technology. This strategic
     re-direction  was based on the  Company's  belief that the .net  technology
     will serve the  Company  and its  customers  better in the  future,  due to
     fuller market penetration, better standards of compatibility,  and superior
     technical   adaptability.   The  Company's  internet  based  offerings  are
     currently  being  converted to the new technology and the first releases of
     the changed  products  should occur  before the end of the  calendar  year.
     Development  of version 6.0 of the product  has  commenced  and the Company
     plans to release  this


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                       ROSS SYSTEMS, INC AND SUBSIDIARIES

     version  in  the  second  quarter  of  fiscal  2004.  The  majority  of the
     capitalized  software cost of $14,036,000  consists of previously completed
     projects  and is  currently  being  amortized.  In fiscal  2002 the Company
     introduced iRenaissance SCM, iRenaissance CRM, and iRenaissance Commerce to
     its product suite.


     Competition

          The business  applications  software market is intensely  competitive.
     The Company competes with a broad range of applications software companies.
     The  Company's   competitors   include  the  following:   general  business
     application software providers,  such as J.D. Edwards,  Oracle Corporation,
     and SAP AG; as well as business applications software providers in specific
     vertical  markets  that offer  products  that  compete  with the  Company's
     process  manufacturing  products.  The principal competitive factors in the
     market  for  business  application  software  include  product  reputation,
     product  functionality,  performance,  quality of customer support, size of
     installed  base,  financial  stability,  hardware  and  software  platforms
     supported,  price, and timeliness of installation.  The Company believes it
     competes effectively with respect to these factors.


     Proprietary Rights and Licenses

          The  Company  provides  its  products  to end  users  generally  under
     nonexclusive,  nontransferable  licenses,  which  generally  have perpetual
     terms.  Under the general terms and  conditions  of the Company's  standard
     license  agreements,  the licensed software may be used solely for internal
     operations on  designated  computers at specific  sites.  The Company makes
     source code available for certain portions of its products.

          The Company has registered "iRENAISSANCE", "RENAISSANCE", "RENAISSANCE
     CS", "STRATEGIC  APPLICATION MODELER (SAM) and "ROSS SYSTEMS" as trademarks
     in the United States. The Company has applied for a provisional patent with
     respect to systems and associated methods for determining  availability and
     pricing of goods based on attributes.  The Company has secured registration
     of its copyrights in the United States for 19 of its products.  The Company
     has service mark  applications  pending for, "THE BUSINESS OF  E-COMMERCE".
     Although  the Company  takes steps to protect  its  intellectual  property,
     misappropriation  may  nevertheless  occur and  copyright  and trade secret
     protection may not be available in certain countries.

          Except as noted above,  the Company  relies on a combination  of trade
     secret, copyright and trademark laws, and license agreements to protect its
     proprietary  rights in its  products.  The Company  believes its  products,
     trademarks,  copyrights  and other  proprietary  rights do not infringe the
     rights of third parties. If it is determined that the Company infringes the
     proprietary  rights  of  third  parties,  such  determination  may harm the
     Company's business and operating results.


     Employees

          As of June 30,  2002,  the  Company  employed a total of 256 full time
     employees,  including 46 in sales and marketing, 42 in product development,
     127 in  professional  services  and  client  support,  and  41 in  finance,
     administration and operations.  The Company's employees are not represented
     by a labor union, and the Company believes that its employee  relations are
     good.



ITEM 2. PROPERTIES

          The Company's corporate headquarters, research and development, sales,
     marketing,  consulting  and  support  facilities  are  located in  Atlanta,
     Georgia,  where the Company occupies  approximately 22,000 square feet. The
     Company also  maintains a facility for product  development  in  Escondido,
     California, which occupies 3,200 square feet.

          International offices are maintained in Belgium (Antwerp); China (Hong
     Kong); England (Northampton);  Germany (Berlin); Netherlands (Utrecht); New
     Zealand (Auckland); and Spain (Barcelona).

          At June 30, 2002, all facilities are leased with periods  remaining to
     renewal  varying from nine months to thirteen years.  The Company  believes
     its  facilities are adequate for its current needs and that the Company can
     obtain suitable additional space as required.


                                        5
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                       ROSS SYSTEMS, INC AND SUBSIDIARIES

ITEM 3. LEGAL PROCEEDINGS

          As of and for the fiscal year ended June 30, 2002,  the Company is not
     a party to any pending  litigation other than ordinary  routine  litigation
     that is incidental to the operations of the business and the Company is not
     aware of any  threatened  litigation.  The Company  believes  that  routine
     litigation  currently  in process is  unlikely  to have a material  adverse
     effect on its financial results.


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

          Not applicable


                                        6
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                       ROSS SYSTEMS, INC AND SUBSIDIARIES

                                     PART II

ITEM 5.  MARKET  FOR THE  REGISTRANT'S  COMMON  EQUITY AND  RELATED  SHAREHOLDER
     MATTERS

          The  following  table  sets forth the range of high and low bid prices
     for the Company's  Common Stock on the NASDAQ  National  Market for each of
     the  quarters of fiscal 2002 and 2001.  The  Company's  Common Stock trades
     under the NASDAQ symbol ROSS.

Fiscal 2002                                High               Low
----------                                 ----              ----

First quarter......................       $4.08             $2.94
Second quarter.....................       $6.31             $2.38
Third quarter......................      $11.56             $5.82
Fourth quarter.....................      $11.65             $7.80

Fiscal 2001                                High               Low
----------                                 ----              ----

First quarter......................      $15.62             $6.56
Second quarter.....................       $6.87             $1.87
Third quarter......................       $7.81             $2.18
Fourth quarter.....................       $4.45             $1.87


          The Company has never  declared or paid cash  dividends  on its Common
     Stock,  and the Company  does not plan to declare or pay  dividends  in the
     future. The Company intends to use earnings to finance the expansion of its
     business. In addition,  the Company's line of credit agreement with Silicon
     Valley Bank dated  September 24, 2002,  contains  certain  covenants  which
     limit the Company's ability to pay cash dividends. This does not affect the
     dividends payable on the Convertible Preference Shares in issue.

          As of September 24, 2002, the number of Common Stock,  stockholders in
     street name and of record exceeded 6,500.

          On June 29, 2001, the Company issued mandatorily convertible preferred
     stock to a  qualified  investor  in a  private  placement  transaction.  In
     summary,  the investor  purchased  500,000 preferred shares at $4 per share
     yielding  $2,000,000 for the Company.  This price  represented a premium to
     the market for the  Company's  common  stock at the time of  issuance.  The
     preferred  shares  cannot be  converted  for one year but must be converted
     within five years from the issue date.  The shares  earn  dividends  at the
     rate of 7.5%. At September 20, 2002 none of the preference  shares had been
     converted to common stock.  The shares are  convertible,  one for one, at a
     price of $4.00 per share.

          On April 27, 2001 the Company executed a 1 for 10 reverse stock split.
     All  share  data  for  the  year  ended  June  30,  2002  contained  in the
     "Management's Discussion and Analysis of Financial Condition and Results of
     Operations", and the "Consolidated Financial Statements" reflects the split
     and all comparative  numbers of shares for prior periods have been restated
     to conform.


                                        7
<PAGE>


                       ROSS SYSTEMS, INC AND SUBSIDIARIES

ITEM 6. SELECTED FINANCIAL DATA

     The selected consolidated  financial data set forth below should be read in
     conjunction  with  "Management's   Discussion  and  Analysis  of  Financial
     Condition and Results of Operations," the Consolidated Financial Statements
     of Ross  Systems,  and  Notes  thereto,  and  other  financial  information
     included   elsewhere  in  this  Form  10-K.   Historical  results  are  not
     necessarily  indicative  of  results  that may be  expected  in for  future
     periods.

<TABLE>
<CAPTION>

                                                 CONSOLIDATED FINANCIAL DATA
                                            (In thousands, except earnings per share)

                                                                                      Years Ended June 30,
                                                                       ------------------------------------------------------------
                                                                          2002        2001          2000        1999         1998
                                                                          ----        ----          ----        ----         ----


<S>                                                                   <C>        <C>            <C>         <C>          <C>
Statements of Operations Data:
Total revenues (1)..................................................   $  46,053   $  50,805     $  83,399   $ 106,024    $  94,716
Operating earnings (loss) (2) (3)...................................   $  (8,667)  $  (2,024)    $  (8,143)  $  (3,936)   $   4,140
Net earnings (loss) ................................................   $  (9,424)  $    (842)    $  (9,662)  $  (5,626)   $   2,595
Net earnings (loss) available to common stockholders
                                                                       $  (9,574)  $    (842)    $  (9,662)  $  (5,626)   $   2,595
Diluted net earnings (loss) per share ..............................   $   (3.65)  $   (0.33)    $   (4.15)  $   (2.53)   $    1.27
      Shares used in computing diluted net earnings (loss) per share
                                                                           2,625       2,566         2,330       2,223        2,039
Balance Sheet Data:
Working capital (deficits)..........................................   $  (3,786)  $  (9,640)    $ (15,340)  $  (3,745)   $   5,544
Total assets .......................................................   $  37,618   $  50,462     $  64,295   $  83,185    $  78,189
Long-term debt, less current portion ...............................          --          --     $   2,627       3,705        8,918

Preferred stock, no par value 5,000,000 shares authorized;
 500,000 shares issued and outstanding .............................   $   2,000   $   2,000            --          --           --
Total shareholders' equity .........................................   $  13,943   $  23,104     $  20,890   $  29,257    $  30,774

</TABLE>

(1)  Revenues  and  operating  costs  have  been  increased  in all years by the
     reclassification  of Reimbursable  Expenses to comply with EITF 01-14.  See
     note 1(h) in the notes to the  Consolidated  Financial  Statements  on page
     F-8.


(2)  In  accordance  with the  adoption  on SFAS No.  142,  the  Company  ceased
     amortization  of  Goodwill  beginning  July 1,  2001.  See note 1(p) to the
     Consolidated Financial Statements on page F-10.


(3)  In  accordance  with SFAS No. 86, the  Company  recorded an  impairment  of
     Capitalized  Software  Costs during the year ended June 30, 2002.  See note
     1(r) to the Consolidated Financial Statements on page F-12


                                       8
<PAGE>


                       ROSS SYSTEMS, INC AND SUBSIDIARIES

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

          STATEMENTS IN THE  MANAGEMENT'S  DISCUSSION  AND ANALYSIS OF FINANCIAL
     CONDITION  AND  RESULTS  OF  OPERATIONS  WHICH  EXPRESS  THAT  THE  COMPANY
     "BELIEVES",  "ANTICIPATES", OR "PLANS TO" AS WELL AS OTHER STATEMENTS WHICH
     ARE NOT HISTORICAL FACT, ARE FORWARD LOOKING  STATEMENTS WITHIN THE MEANING
     OF THE PRIVATE  SECURITIES  LITIGATION REFORM ACT OF 1995. ACTUAL EVENTS OR
     RESULTS MAY DIFFER  MATERIALLY  AS A RESULT OF THE RISKS AND  UNCERTAINTIES
     DESCRIBED  HEREIN AND  ELSEWHERE  INCLUDING,  IN  PARTICULAR  THOSE FACTORS
     DESCRIBED UNDER "BUSINESS" SET FORTH IN PART I OF THIS REPORT AS WELL AS IN
     OTHER  RISKS AND  UNCERTAINTIES  IN THE  DOCUMENTS  INCORPORATED  HEREIN BY
     REFERENCE.



     Critical Accounting Policies

          Basis  of  Presentation.   The  accompanying   consolidated  financial
     statements  include  the  accounts  of the  Company  and its  wholly  owned
     subsidiaries.  All significant inter-company balances and transactions have
     been eliminated in consolidation.

          Revenue  Recognition In accordance with SEC Staff Accounting  Bulletin
     No.  101  "Revenue  Recognition  in  Financial  Statements",   the  Company
     recognizes  revenues from licenses of computer software "up-front" provided
     that a non-cancelable  license agreement has been signed,  the software and
     related   documentation   have  been   shipped,   there  are  no   material
     uncertainties  regarding customer  acceptance,  collection of the resulting
     receivable is deemed probable,  and no significant other vendor obligations
     exist.  The  revenue  associated  with any  license  agreements  containing
     cancellation or refund  provisions is deferred until such provisions lapse.
     Where  the  Company  has  future  obligations,   if  such  obligations  are
     insignificant,  related costs are accrued immediately. When the obligations
     are significant, the software product license revenues are deferred. Future
     contractual obligations can include software customization, requirements to
     provide  additional  products  in the future and  porting  products  to new
     platforms.  Contracts which require significant software  customization are
     accounted for on the  percentage-of-completion  basis.  Revenues related to
     significant  obligations  to provide  future  products or to port  existing
     products are deferred until the new products or ports are completed.

          Service revenues  generated from professional  consulting and training
     services  are  recognized  as  the  services  are  performed.   Maintenance
     revenues, including revenues bundled with original software product license
     revenues,  are deferred and recognized  over the related  contract  period,
     generally  12  months.  The  Company's  revenue  recognition  policies  are
     designed to comply with American  Institute of Certified Public Accountants
     Statement of Position 97-2, "Software Revenue Recognition" (SOP 97-2).

          Computer  Software Costs. The Company  capitalizes  computer  software
     product   development   costs   incurred  in   developing  a  product  once
     technological  feasibility  has been  established  and until the product is
     available for general  release to customers.  Technological  feasibility is
     established  when the Company  either (i) completes a detail program design
     that encompasses product function,  feature and technical  requirements and
     is ready for coding and confirms that the product design is complete,  that
     the necessary  skills,  hardware and software  technology  are available to
     produce the product,  that the completeness of the detail program design is
     consistent  with the product design by  documenting  and tracing the detail
     program design to the product  specifications,  and that the detail program
     design has been reviewed for high-risk  development  issues and any related
     uncertainties  have  been  resolved  through  coding  and  testing  or (ii)
     completes a product design and working model of the software  product,  and
     the  completeness of the working model and its consistency with the product
     design have been confirmed by testing. The Company evaluates  realizability
     of the capitalized amounts based on expected revenues from the product over
     the remaining  product life.  Where future revenue streams are not expected
     to cover remaining amounts to be amortized,  the Company either accelerates
     amortization or expenses  remaining  capitalized  amounts.  Amortization of
     such costs is computed as the greater of (1) the ratio of current  revenues
     to expected  revenues from the related product sales or (2) a straight-line
     basis over the  expected  economic  life of the product (not to exceed five
     years.  Software costs related to the development of new products  incurred
     prior to  establishing  technological  feasibility or after general release
     are expensed as incurred.


                                       9
<PAGE>


                       ROSS SYSTEMS, INC AND SUBSIDIARIES

     Results of Operations

     Fiscal Years Ended June 30, 2002, 2001, and 2000

          The  following  table  sets  forth  certain  items  reflected  in  the
     Company's  consolidated  statements  of operations as a percentage of total
     revenues for the periods indicated,  and a comparison of such statements is
     shown as a percentage increase or decrease from the prior year's results:

<TABLE>
<CAPTION>
                                                                         Percentage of Revenue
                                                                             Year Ended                            Percentage
                                                                             June 30,                        Increase (Decrease)
                                                                         ---------------------------------   -----------------------
                                                                              2002        2001       2000     2002/2001   2001/2000
                                                                              ----        ----       ----     ---------   ---------

<S>                                                                          <C>           <C>         <C>         <C>         <C>
Revenues:
Software product licenses ..............................................        28%         19%         23%         35%        (49%)
Consulting and other services ..........................................        26          29          40         (20)        (54)
Maintenance ............................................................        44          49          33         (19)        (11)
Reimbursable expenses ..................................................         2           3           4         (36)        (62)
                                                                              ----        ----        ----        ----        ----
                 Total revenues ........................................       100%        100%        100%         (9%)       (38%)
                                                                              ----        ----        ----        ----        ----
                                                                              ----        ----        ----        ----        ----
Operating expenses:
Costs of software product licenses .....................................         4%          2%          3%         91%        (54%)
Costs of consulting, maintenance and other services ....................        23          35          53         (40)        (60)
Software product license sales and marketing ...........................        31          30          25          (5)        (27)
Product development ....................................................        25          23          12          --          15
General and administrative .............................................        10           9           9          (1)        (38)
Provision for uncollectible accounts ...................................         3           3           6          (5)        (67)
Amortization of goodwill ...............................................        --           1           1          --         (31)
Non-recurring (benefit) costs ..........................................        (1)          2           1          --         (31)

Non-cash charge for impairment of capitalized software costs ...........       (24)         --          --          --          --
                                                                              ----        ----        ----        ----        ----
                 Total operating expenses ..............................       119         104         110          (5)        (42)
                                                                              ----        ----        ----        ----        ----
                 Operating profit (loss) ...............................       (19)         (4)        (10)         --         (75)
Other expense, net .....................................................        (1)         (2)         (1)        (34)          1
Gain on sale of product line ...........................................         5          --          --          --
                                                                              ----        ----        ----        ----        ----
                 Loss before income taxes ..............................       (21)         (2)        (11)       1033         (91)
Income tax benefit (expense) ...........................................        (0)         (0)         (0)       1366         (97)
                                                                              ----        ----        ----        ----        ----
                 Net loss ..............................................       (21%)        (2%)       (12)%      1037%        (91%)
                                                                              ----        ----        ----        ----        ----

</TABLE>

          Revenues.  Revenues were affected by the sale in February 2001, of the
     Human Resource product line. Fiscal 2001 therefore reflects mix of full and
     partial years of product line activity.  For comparison purposes,  revenues
     for fiscal 2001,  and 2000 have been adjusted to exclude the Human Resource
     product line activity. This revenue is referred to as "adjusted revenue".


                                       10
<PAGE>

                       ROSS SYSTEMS, INC AND SUBSIDIARIES

     Comparisons  of both adjusted  revenue and total  revenue  follow below (in
     thousands):

<TABLE>
<CAPTION>
                                                        Estimated Adjusted Revenues                      Actual Revenues
                                                               Year Ended                                  Year Ended
Revenue comparison                                              June 30,                                     June 30,
                                                    -------------------------------            -------------------------------------
                                                    2002         2001          2000             2001          2001             2000
                                                    ----         ----          ----             ----          ----             ----

<S>                                              <C>            <C>           <C>            <C>             <C>             <C>
Revenues:
Software product licenses ................        $13,026        $ 9,130        $17,774        $13,026        $ 9,607        $18,943
Consulting and other services ............         12,179         13,845         30,700         12,179         15,213         33,339
Maintenance ..............................         20,014         21,717         23,478         20,014         24,678         27,722
Reimbursable expenses ....................            834          1,307          3,395            834          1,307          3,395

                 Total revenues ..........        $46,053        $45,769        $75,347        $46,053        $50,805        $83,399
                                                  -------        -------        -------        -------        -------        -------

</TABLE>

          Adjusted  revenues,  as defined  above,  were  slightly  increased  at
     $46,053,000  in fiscal  2002 from  $45,769,000  in  fiscal  2001.  Adjusted
     revenues  decreased 38% to $45,769,000  in fiscal 2001 from  $75,347,000 in
     2000.  Adjusted  software  product license  revenues  increased by 43% from
     fiscal 2001 to fiscal  2002,  and  decreased  49% from fiscal 2000 to 2001.
     Adjusted consulting revenues decreased 12% from fiscal 2001 to fiscal 2002,
     and decreased 55% from fiscal 2000 to 2001. Adjusted  maintenance  revenues
     from  first  year and  renewed  maintenance  agreements,  both of which are
     recognized  ratably over the maintenance  period,  decreased 8% from fiscal
     2001 to fiscal 2002, and 8% from fiscal 2000 to 2001.


          Total actual revenues decreased 9% to $46,053,000, in fiscal 2002 from
     $50,805,000 in 2001.  Fiscal 2001 revenues  represented a 39% decrease from
     revenues  of  $83,399,000  in  2000.   Software  product  license  revenues
     increased  36% from  fiscal 2001 to fiscal  2002,  and  decreased  49% from
     fiscal 2000 to 2001.  Consulting revenues decreased 20% from fiscal 2001 to
     fiscal  2002,  and  decreased  54% from  fiscal  2000 to 2001.  Maintenance
     revenues from first year and renewed maintenance agreements,  both of which
     are  recognized  ratably over the  maintenance  period,  decreased 19% from
     fiscal  2001 to fiscal  2002 and  decreased  11% from  fiscal 2000 to 2001.
     Maintenance  agreements  are  renewed  annually  by most  of the  Company's
     maintenance customers.  This decrease primarily reflects the absence of the
     maintenance revenue attributable the HR/Payroll product line in the current
     fiscal  year as compared  to the prior year which  includes  nine months of
     HR/Payroll  maintenance.  In addition,  some maintenance  contracts expired
     without renewal.  Reimbursable expenses decreased 36% to $834,000 in fiscal
     2002, from $1,307,000 in fiscal 2001, and decreased 62% from fiscal 2000 to
     2001.

          Software  product  license  revenues  in  the  North  American  market
     decreased by 18% in fiscal 2002. The Company believes that this decrease is
     a  continuation  of the  industry-wide  slow-down in ERP software  sales in
     North  America  over  the last  two  years.  In the  European  market,  the
     Company's  software  license  sales have grown by 74% over the prior  year.
     This  was due to a  combination  of  improved  marketing  of the  Company's
     products  in  some  regions,  and a  perceived  slight  improvement  in the
     software  sales  environment  in Europe  when  compared  to the prior year.
     Software  license sales in the Asia/Pacific Rim region increased by 148% to
     $2,853,000 in fiscal 2002,  from  $1,150,000 in fiscal 2001,  which was due
     primarily  to an increase in sales  through the  Company's  distributor  in
     Japan.  Within Europe,  most of the increases in software  product  license
     revenues were  experienced in Spain and the Benelux,  while sales in the UK
     were slightly down.

          Revenues from  consulting and other services  (which are recognized as
     performed)  correlate with software  product  license  revenues  (which are
     recognized upon delivery),  so that when software  product license revenues
     decrease,  future period services revenues  generally decrease as a result.
     In fiscal 2002,  consulting and other services revenues decreased 20%, from
     fiscal 2001  results.  Services  revenues in North America were affected by
     the absence of revenue  associated  with the  HR/Payroll  product line, and
     hampered by fewer new customers,  due to lower new license revenues. In the
     European  market,  services  revenues  were flat in comparison to the prior
     year,  bolstered in part by some  additional  activity  related to the Euro
     conversion.  Fiscal 2001 consulting and other services  revenues  decreased
     54%, or $18,126,000, over fiscal 2000 results.

          As  a  percentage  of  total  revenues,  the  Company's  international
     operations grew to 45% in fiscal 2002 and remained relatively consistent at
     33% and 32% in fiscal years 2001 and 2000 respectively.  The revenue growth
     in 2002  reflects  the  increases in the  Company's  share of the Spain and
     Japanese markets.


                                       11
<PAGE>


                       ROSS SYSTEMS, INC AND SUBSIDIARIES

          The Company's  largest  Pacific Rim contract  represents a distributor
     agreement  with a  Japanese  distributor  whereby  the  distributor  has an
     exclusive  license to  reproduce  and sell  certain  Ross  products  in the
     Pacific Rim.  The Company  negotiated  agreements  whereby  annual  minimum
     royalties of $1.9  million,  $755,000  and $1.9 million were earned  during
     fiscal  2002,  2001 and 2000,  respectively.  The changes in this source of
     revenue  reflect an  improving  market in fiscal  2002,  and a weakening of
     demand in fiscal year 2001.

          Revenues  have  been  derived  from  a  relatively   large  number  of
     customers.  No single  customer  accounted  for more  than 10% of  revenues
     during fiscal 2002, 2001 or 2000. The Company's customers are evenly spread
     among the industry verticals within the process manufacturing market .

          Reimbursable Expenses.  Prior to January 1, 2002, the Company recorded
     reimbursement by its customers for out-of-pocket  expenses as a decrease to
     cost of services.  The Company's results of operations for the fiscal years
     June 30,  2002,  2001,  and 2000  have  been  reclassified  for  comparable
     purposes in accordance  with the Emerging  Issues Task Force release 01-14,
     "Income Statement  Characterization  of Reimbursements  Received for Out of
     Pocket  Expenses  Incurred".  The  effect of this  reclassification  was to
     increase  both  revenues and cost of services by $834,000,  $1,307,000  and
     $3,395,000 for fiscal years 2002, 2001, and 2000 respectively.

          Costs of software product licenses. Costs of software product licenses
     include  expenses  related to royalties  paid to third  parties and product
     documentation  and packaging.  Third party royalty  expenses will vary from
     quarter to quarter  based on the mix of  third-party  products  being sold.
     Costs of software  product  licenses  for fiscal 2002  increased  by 91% to
     $1,870,000 from fiscal 2001. This increase was due to increased third party
     royalties  associated  with the larger volume of software  license sales in
     the 2002, and a higher third party content in software  license  sales.  In
     fiscal  2001,  costs  of  software  product  licenses  decreased  by 54% to
     $980,000 from  $2,137,000  in the prior year.  This decrease was due to the
     overall reduced software volumes.  As a percent of software revenue,  third
     party  royalties  comprised 14% in fiscal 2002,  compared to 10% for fiscal
     2001, and 11% for fiscal 2000.

          Costs  of  consulting,   maintenance  and  other  services.  Costs  of
     consulting,  maintenance  and other services  include  expenses  related to
     consulting and training  personnel,  personnel  providing  customer support
     pursuant to maintenance agreements,  and other costs of sales. From time to
     time the  Company  also uses  outside  consultants  to  supplement  Company
     personnel in meeting peak customer consulting demands. Costs of consulting,
     maintenanceand other services, net of reimbursable expenses,  decreased 40%
     to  $9,763,000  from  $16,288,000,  and  decreased  60% in fiscal 2001 from
     $41,016,000  in fiscal 2000. The lower levels of expenditure in fiscal 2002
     reflect  the  savings  in  employee  costs as a result  of the  significant
     headcount reduction in 2001 affecting 2002, and the absence of services and
     customer support costs relating to the HR/Payroll  product line sold in the
     prior  year.  The  decline  in  fiscal  2001  is  composed  primarily  of a
     $4,183,000  decrease  in third  party  service  costs,  and a decrease of $
     8,502,000  in employee  expenses.  The fiscal 2002 levels of  personnel  in
     services and customer support have produced  improved  productivity for the
     year, resulting in improving margins.

          Gross Profit  Margins.  The Company's  gross profit margins  resulting
     from consulting,  maintenance and other services  revenues for fiscal 2002,
     2001,  and 2000 were 70%, 59%, and 33%,  respectively.  The  improvement in
     gross profit  margins from fiscal 2001 to 2002,  and fiscal 2000 to 2001 is
     due primarily to the greater proportion of maintenance revenue. Maintenance
     revenues comprised 61% of services revenues in fiscal 2002, compared to 60%
     in fiscal  2001,  and 43% in fiscal  2000.  Maintenance  revenues  are less
     affected by cyclical economic factors, whilst consulting revenues will vary
     according   to  current   market  and  economic   conditions.   Consulting,
     maintenance and other service revenues represented 71% of total revenues in
     fiscal  2002,  81% of  total  revenues  in  fiscal  2001,  and 77% of total
     revenues in fiscal 2000.  This was due to the decrease in  maintenance  and
     consulting  revenues  in 2002  associated  with the sale of the  HR/Payroll
     product  line in the third  quarter  of 2001,  and an  increase  in license
     revenues in fiscal 2002 over fiscal 2001.

          Software  Product  License  Sales  and  Marketing  Expenses.  Software
     product license sales and marketing expenses decreased by 5% to $14,318,000
     in fiscal 2002 from $15,026,000 in fiscal 2001, and decreased by $5,559,000
     or 27% in fiscal 2001 as compared to fiscal 2000.  The decreases for fiscal
     2002, and 2001 are a result of the decreased headcount of approximately 50%
     less  marketing  and sales  personnel  in fiscal  years  2002 and 2001 over
     fiscal 2000, and lower  marketing  expenditure.  Marketing  expenditure was
     increased  towards  the end of fiscal  2002 as the  Company's  planned  new
     initiatives in this area started to take effect.  However this increase did
     not materially impact the year's overall expenditure.


                                       12
<PAGE>


                       ROSS SYSTEMS, INC AND SUBSIDIARIES

          Product Development Expenses. Product development expenditures for the
     past three years were as follows (in thousands):

<TABLE>
<CAPTION>
                                                                                                    Year Ended June 30,
                                                                                              --------------------------------------
                                                                                               2002          2001           2000
                                                                                               ----          ----           ----

<S>                                                                                           <C>          <C>            <C>
Product development ...................................................................       11,520       $ 11,496       $ 10,003
        Amortization of previously capitalized software development costs .............       (7,184)        (7,369)        (6,875)
                                                                                              ------         ------         ------

        Expenses, excluding  amortization .............................................        4,336          4,127          3,128
        Capitalized software development costs incurred during year ...................        4,181          6,878         12,127
                                                                                              ------         ------         ------
Total  expenditures ...................................................................     $  8,517       $ 11,005       $ 15,255
                                                                                              ------         ------         ------
Total expenditures as a percent of total revenues .....................................           19%            22%            19%
                                                                                              ------         ------         ------
Capitalized software, net of amortization, as a percentage of total expenditures ......          (35%)           (4%)           34%
                                                                                              ------         ------         ------
</TABLE>

          Product development expense was virtually unchanged in fiscal 2002, as
     compared  to fiscal  2001.  In fiscal  2001,  product  development  expense
     increased 15% from fiscal 2000.  This increase in expense was primarily due
     to a decrease in capitalized  development  costs in fiscal 2002 of 39% from
     $6,878,000  in fiscal  2001,  and a  decrease  in  fiscal  2001 of 43% from
     $12,127,000 in fiscal 2000. As a percentage of total revenues,  fiscal 2002
     total development expense decreased slightly to 19% in fiscal 2002 from 22%
     in fiscal 2001 and 19% in fiscal 2000.

          During fiscal 2002, product  development  expenditures were focused on
     expanding integrated internet/ERP functionality while incorporating some of
     the latest  technologies  available.  Not included in the above expenditure
     was a  fourth  quarter,  non-cash  charge  of  $10,938,000  for  previously
     capitalized  software  costs  written  off due to  technology  changes  and
     changes  in  product  direction.  (See  Note  1(r)  in  the  notes  to  the
     Consolidated Financial Statements below). Product development  expenditures
     during fiscal 2001 and 2000 were primarily  focused on new internet enabled
     modules and continued enhancements to the underlying technology of released
     products and developing new web enabled products.

          General  and  Administrative  Expenses.   General  and  administrative
     expenses  decreased 1% to $4,683,000  in fiscal 2002 over fiscal 2001,  and
     decreased 38% to $4,737,000 in fiscal 2001 over 2000.  The savings in costs
     achieved in 2002 and 2001 are primarily due to the closure or consolidation
     of several regional  offices,  and a reduction in employee costs associated
     with a lower headcount.

          Provision for Doubtful  Accounts.  In fiscal 2002, 2001, and 2000, the
     Company  recorded  provisions of $1,444,000,  $1,514,000,  and  $4,645,000,
     respectively.  These provisions represent management's best estimate of the
     doubtful accounts for each period.  The  significantly  higher provision in
     fiscal year 2000 reflects the higher accounts  receivable  balances in that
     year, commensurate with revenues exceeding $80 million for fiscal 2000. The
     lower  provision  in fiscal  2002 was made  possible  by tighter and better
     controls over accounts  receivable  collections coupled with lower accounts
     receivable  balances in line with revenues exceeding $45 million for fiscal
     2002.

          Amortization of Other Assets. Amortization of other assets was zero in
     fiscal 2002  compared to $691,000 in the prior fiscal year.  This  reflects
     the  change  in  accounting  treatment  due  to  compliance  with  the  new
     accounting  pronouncement,  SFAS No. 142, on Goodwill and Other  Intangible
     Assets.  See  Note  (1)(f)  in  the  Notes  to the  Consolidated  Financial
     Statements on page F-8.

          Assets  reviewed for diminution in value in accordance  with Statement
     of Financial Accounting Standards No. 142, include goodwill relating to the
     acquisition  of HiPoint  Systems Inc. in fiscal 1999,  the  acquisition  of
     Bizware,  Inc.  in  1998,  and the  acquisition  of the  Company's  Spanish
     distributor in 1997. There was no impairment of these assets.

          Non-Recurring  Items. In October of 2000, the Company  reorganized its
     European  presence  and  adopted  an  indirect  sales  model in  France  by
     terminating  its ownership and control of the French  subsidiary due to the
     chronic and sustained losses and negative cash flows suffered by the French
     subsidiary.  At that  time,  management  recorded  what  they  deemed to be
     adequate  reserves  related to the possible  future costs for the change of
     presence in France by deferring  the gain  associated  with  divesting  net
     liabilities  in this  liquidating  transaction.  In the  fourth


                                       13
<PAGE>


                       ROSS SYSTEMS, INC AND SUBSIDIARIES

     quarter of fiscal 2002,  it became clear that some of the risk  relating to
     the France  office  closure  had been  resolved.  As a result  the  Company
     recorded a non-recurring gain of $650,000 arising from the reduction of the
     reserve described above.

          At the end of the first quarter of fiscal 2001,  the Company  recorded
     an  expense of  $790,000  to cover  separation  costs  associated  with 125
     employees employed in sales,  marketing,  services, and product development
     in North America and Europe.


          During Q3 fiscal 2000 the  Company  recorded a  $1,145,000  expense to
     cover the  liability  arising  from  separation  costs  associated  with 19
     employees employed in sales, marketing, services and product development in
     North America and Europe.

          Non-cash  Capitalized  Software  Impairment Charge.  During the fourth
     quarter of fiscal  2002,  the  Company  made a major  change in  technology
     direction.  The internet related  functionality of the iRenaissance product
     was  re-directed  from the "java"  based  initial  development  used in the
     Resynt  product line to the  Microsoft  ".net"  technology.  A new,  formal
     development  relationship  with  Microsoft  was  launched  to  support  the
     requirements of the new technology direction.  This strategic  re-direction
     was based on the Company's  belief that the .net  technology will serve the
     Company  and its  customers  better in the  future,  due to  fuller  market
     penetration,  better  standards of  compatibility,  and superior  technical
     adaptability.  The result of this change was that prior  development in the
     former java  environment  became  obsolete.  Effective  April 1, 2002,  the
     amount  of  $5,488,000,   representing  all  unamortized   software-project
     balances relating to this, was expensed.

          On April 23, 2002, the Company  announced the General  Availability of
     Gembase Version 6.0. This version of Gembase, the 4GL language used for the
     development of the  iRenaissance  products,  contained major  functionality
     differences to prior versions,  rendering all prior versions obsolete. As a
     result,  development  and  maintenance  of all  versions  prior to 6.0 were
     discontinued   and  no  further  sales  using  these   versions   would  be
     contemplated. In addition, customers using these versions would be strongly
     encouraged to upgrade to version 6.0 because the Company no longer supports
     development of any Gembase release lower than version 6.0.  Upgrades to the
     6.0 version would be strongly  supported  and to encourage  and  facilitate
     customers'  upgrading,  the  product was  designed  to make the  transition
     straight-forward.   Since  Gembase   versions  lower  than  6.0  would  not
     contribute any further revenue to the Company, even in the short-term,  the
     related  unamortized  software-project  balances amounting to $943,000 were
     expensed.

          On May 22, 2002 the  Company  announced  the  release of  iRenaissance
     version  5.7.  This  version  was  significantly  changed  from  the  prior
     versions. Previous to this release, upgrades from any version less than 4.4
     to  the  latest  version  were  technically  challenging  resulting  in  an
     environment  not  conducive  to  customer  upgrades.  Version 5.7 offered a
     straight-forward  upgrade capability to customers on previous versions.  In
     addition,  version  5.7  contained  a  new  "engine"  at  its  core,  which
     significantly changed the way the software operated internally and resulted
     in improved operating efficiencies.  Since customers on versions lower than
     4.4  could  now  upgrade  without  difficulty,  the  Company  was  able  to
     discontinue  the  development  and support of all versions prior to 4.4. No
     further  sales using these  versions  would be  contemplated.  This had the
     effect of rendering all releases of iRenaissance  which were lower than 4.4
     obsolete.  Since iRenaissance  versions lower than 4.4 would not contribute
     any  further  license  revenue  to the  Company,  the  related  unamortized
     software-project balances amounting to $3,333,000 were expensed.

          During  May 2002,  the  Company  terminated  further  work on  general
     enhancements of the COBOL technology based Renaissance Classic product line
     and a  twofold  decision  was  made;  to  continue  working  with  specific
     customers on custom product  development,  and to introduce a general sales
     program of free software  license  upgrade from the Classic  product to the
     latest release of the iRenaissance product line for customers who remain on
     maintenance.  The company  will  continue to support  those  customers  who
     remain  active  users  until they  schedule  their  upgrade  conversion  to
     iRenaissance.  Since no  future  revenues  are  expected  from the  general
     enhancements    capitalized   to   date,    the   aggregate,    unamortized
     software-project balances amounting to $1,174,000 were expensed.

          The aggregate value of unamortized software written down in the fourth
     quarter of fiscal  2002 was  $10,938,000.  This action has no effect on the
     Company's cash position or cashflows.


                                       14
<PAGE>


                       ROSS SYSTEMS, INC AND SUBSIDIARIES

          Other  Income and Expense.  Interest  income has  diminished  over the
     fiscal years 2000 through 2002 due to lower invested cash. Interest expense
     decreased in fiscal 2002 as compared to fiscal  2001,  and 2001 as compared
     to fiscal 2000, due to lower utilization of the Company's  revolving credit
     facilities.  Foreign  exchange  benefit  and expense  arises on  converting
     foreign  currency  transactions  or short-term  balances to local  currency
     throughout the year. The foreign exchange loss in fiscal 2002 is due to net
     adverse   movements  in  currency   exchange  rates  during  the  year  and
     particularly  relating  to  the  conversion  of the  Company's  continental
     subsidiaries to the Euro in the third quarter.


          Income Taxes.  The Company recorded net income tax expense of $132,000
     during fiscal 2002.  This expense is made up of foreign  withholding  taxes
     and income tax expense  totaling  $432,000  offset by tax refunds  totaling
     $300,000.  The Company  recorded income tax expense of $9,000 during fiscal
     2001.  This amount consists of tax accruals and payments of $244,000 offset
     by tax refunds totaling  $235,000.  The Company recorded income tax expense
     of $349,000 during fiscal 2000. This expense relates to foreign withholding
     taxes expensed during the period in certain foreign jurisdictions.

          At June 30,  2002,  2001 and 2000,  the Company  had net income  taxes
     payable  of  $15,000,   $75,000,  and  $248,000  respectively.   These  tax
     liabilities  primarily  relate to  various  taxing  jurisdictions  in North
     America.  The Company anticipates  recording future foreign withholding tax
     expenses  related  to its  Japanese  distributorship,  representing  10% of
     future annual  royalty  payments from this  distributor . At June 30, 2002,
     the  Company  had  net  operating  loss   carryforwards   of  approximately
     $33,829,000, $14,473,000 and $8,449,000 for federal, California and foreign
     tax purposes, respectively.


     Liquidity and Capital Resources

          During  fiscal  2002,  net  cash  provided  by  operating   activities
     decreased by $8,983,000 from $14,058,000 in the prior year to $5,075,000 in
     the current  year.  An  aggregate  net  increase  in  non-cash  charges for
     depreciation,  amortization,  capitalized  software  cost  impairment,  and
     provisions  for  uncollectible  accounts  of  $9,384,,000  is  offset by an
     increase in the Company's loss of $8,582,000.  This reflects  primarily the
     non-cash charge of $10,938,000 for software assets impaired which decreased
     the  Company's  earnings but did not affect the  Company's  cash  position.
     Before  inclusion  of changes in  operating  assets  and  liabilities,  the
     Company's cash provided by operating  activities increased by $742,000 from
     $10,384,000  in fiscal 2001 to  $11,126,000  in fiscal  2002.  An aggregate
     decrease  in the changes in  operating  assets and  liabilities,  including
     accounts receivable, deferred revenues, pre-paid expenses, accounts payable
     and accrued expenses of $9,725,000 during fiscal 2002, was due primarily to
     the  decrease  in cash  provided  from  accounts  receivable  and  deferred
     revenues of $10,632,000, from $6,920,000 in fiscal 2001, to ($3,712,000) in
     fiscal 2002. This change in accounts  receivable and deferred  revenues was
     attributable  mainly to the non-recurring  effect of the disposition of the
     HR/Payroll  product line in fiscal 2001,  which included  certain  accounts
     receivable and deferred revenue  balances.  An accounts payable and accrued
     expenses reduction of $3,099,000 in fiscal 2002, was in line with a similar
     reduction of $3,189,000 in fiscal 2001.


          The net cash used for  investing  purposes  has  decreased by $256,000
     from  $5,159,000  in  fiscal  2001  to  $4,903,000  in  fiscal  2002.  This
     represents a decrease in net computer software costs capitalized in 2002 of
     $2,571,000 and an increase in property and equipment purchases of $463,000.
     The reduction in capitalized  computer  software costs reflects the absence
     of development  relating to the  HR/Payroll  product line which was sold in
     fiscal 2001. In conjunction  with the product line  disposition the Company
     transferred  net  assets and  liabilities  realizing  from the  transaction
     $1,567,000 of net cash flow in fiscal 2001.

          Cash flows from financing  activities  decreased  $4,455,000  from net
     repayments in the prior year of $5,059,000 to net repayments in the current
     year of  $604,000.  In fiscal 2002,  repayments  under the credit line were
     less by $4,798,000  than in fiscal 2001.  This reflects the $555,000 repaid
     in fiscal 2002 compared to the $5,353,000  repaid in fiscal 2001. In fiscal
     2002 there were no significant  capital  receipts or repayments.  In fiscal
     2001, net repayments of capital leases and long term debt were  $1,723,000,
     and the Company  received  $2,000,000 in a preferred  stock  issuance.  The
     Company financed its continuing  operations during fiscal 2002 through cash
     generated from operations and available credit facilities.

          At June  30,  2002,  the  Company  had  $5,438,000  of cash  and  cash
     equivalents.  The Company  also had a  revolving  credit  facility  with an
     asset-based  lender with a maximum  credit line of  $5,000,000,  a maturity
     date of 30  September,  2002,  and an interest rate equaling the Prime Rate
     plus 2%.  Subsequent to year end, the Company  secured a new line of credit
     replacing  the  former  line.  The new line of credit  with an  asset-based
     lender has a


                                       15
<PAGE>


                       ROSS SYSTEMS, INC AND SUBSIDIARIES

          maximum of  $5,000,000,  the same as the expiring line, and a maturity
     date of  September  23,  2004  Borrowings  under the  credit  facility  are
     collateralized  by  substantially  all  assets  of the  Company  and  bears
     interest at prime plus 2%  (approximately  6.75% at September 24, 2002). At
     June  30,  2002,  the  Company  had  $3,365,000   outstanding  against  the
     $5,000,000  revolving credit facility,  and based on the eligible  accounts
     receivable  at June 30, 2002,  the Company's  cash and remaining  borrowing
     capacity  under  the  revolving   credit   facility   total   approximately
     $5,533,000.  This  represents a decrease in total  availability  of cash of
     $461,000  from June 30, 2001.  The Company  expects to be cash positive for
     the year ending June 30, 2003.

          On February 6, 1998, the Company  closed a private  placement of up to
     $10,000,000 of convertible subordinated debentures to certain institutional
     investors (the "Investors")  pursuant to Regulation D promulgated under the
     Securities Act of 1933, as amended.  The Investors  invested  $6,000,000 on
     February 6, 1998 and $4,000,000 on June 11, 1998.  The material  agreements
     between the Company  and each  Investor  have been filed as exhibits to the
     Current  Report  on  Form  8-K  filed  with  the  Securities  and  Exchange
     Commission by the Company on February 12, 1998.  $3,033,000  and $1,933,000
     of these  debentures  remained  outstanding  at June 30,  1999 and June 30,
     2000,  respectively.  With the exception of the redemption described below,
     the  difference  between the  original  $10,000,000  borrowing  and amounts
     outstanding at the above mentioned dates represents  conversion of the debt
     into shares of the Company's Common Stock at various  conversion  prices as
     determined in accordance  with the  convertible  debenture  agreement.  The
     Company  notified  the  Investors  that it would redeem  $4,000,000  of the
     convertible  subordinated  debentures  on October 7, 1998 (the  "Redemption
     Date") at a redemption  price of $4,320,000  (108 percent of the face value
     of the redeemed  debentures)  plus interest  accrued through the redemption
     date. On the Redemption Date, the Company actually  redeemed  $2,667,000 of
     the  convertible   subordinated   debentures  at  a  redemption   price  of
     $2,880,000.  The difference between the face amount of debentures  redeemed
     and the total redemption price paid represents the conversion premium which
     has been reported as an extraordinary  item during fiscal 1999. The Company
     and the Investor  holding the convertible  subordinated  debenture that was
     not redeemed  negotiated certain changes to the conversion  features of the
     debenture that, among other things,  precludes  conversion prior to October
     7, 1999.

          In December of 2000, it was determined  that the investor's  aggregate
     conversions  had reached the Nasdaq  exchange  imposed  limit of 20% of the
     total  outstanding  shares of the  Company,  calculated  as of the date the
     debentures were originally  issued.  Pursuant to the terms of the debenture
     agreement, the Company requested the Nasdaq to waive the 20% dilution limit
     to allow the remainder of the debentures to be converted. The Nasdaq denied
     this request.  Next, as required by the  debenture  agreement,  the Company
     placed the additional  dilution request to a vote of the shareholders.  The
     shareholders denied the debenture holders' request for additional dilution.
     Therefore,  in  accordance  with the  debenture  agreement,  the  remaining
     debentures  were redeemed for cash on June 29, 2001. A contractual  payment
     of $120,000 for the conversion was paid and recorded as additional interest
     expense  during  the  quarter  ended  June 30,  2001.  Per the terms of the
     agreement,  total  payments to the  debentures  holders were  approximately
     $919,000,  including the  contractual  payment of $114,000.  As of June 30,
     2001 no debentures remained outstanding.

          On June 29, 2001, the Company issued convertible  preferred stock to a
     qualified  investor in a private  placement  transaction.  In summary,  the
     investor  purchased  500,000  preferred  shares  at $4 per  share  yielding
     $2,000,000 for the Company.  The shares are  convertible,  one for one at a
     price of $4.00 each, after June 29, 2002, and must be converted by June 29,
     2006.  The shares earn  interest at the rate of 7.5%.

          The Company has certain fixed, monthly, payment commitments for leased
     facilities  and  equipment.  The facility  leases and  equipment  operating
     leases expire at various dates through fiscal 2016.  Certain leases include
     renewal options and rental  escalation  clauses to reflect changes in price
     indices,  real estate  taxes,  and  maintenance  costs


                                       16
<PAGE>


                       ROSS SYSTEMS, INC AND SUBSIDIARIES

     As of June 30, 2002,  future minimum lease  payments  under  non-cancelable
     operating leases were as follows (in thousands):

Fiscal Year
----------
2003                                     $944
2004                                      803
2005                                      304
2006                                      298
Thereafter.................             2,013
                                        ------
Total future minimum lease             $4,362

          Rent expense approximated $1,236,000,  $2,267,000, and $3,612,000, for
     fiscal 2002, 2001, and 2000, respectively.

     New accounting pronouncements

          In  June  2001,  the  Financial   Accounting  Standards  Board  issued
     Statements   of   Financial   Accounting   Standards   No.  141,   Business
     Combinations,  and No. 142, Goodwill and Other Intangible Assets, effective
     for fiscal years  beginning  after December 15, 2001.  Under the new rules,
     goodwill  will no  longer  be  amortized  but  will be  subject  to  annual
     impairment tests in accordance with the Statements. Other intangible assets
     will  continue  to  be  amortized   over  their  useful   lives.   Goodwill
     attributable  to each of the  Companies  reporting  units  was  tested  for
     impairment by comparing the fair value of each of the reporting  units with
     its  carrying  value.  The  fair  values  of  these  reporting  units  were
     determined  using a combination of discounted cash flow analysis and market
     multiples  based on historical  and projected  financial  information.  The
     initial phase of the impairment  tests were performed  within six months of
     adoption  of SFAS 142 or  December  31,  2001,  and are  required  at least
     annually  thereafter.  On  an  ongoing  basis  (absent  of  any  impairment
     indicators),  we expect to perform  our  impairment  tests  during the June
     quarter, in connection with our annual planning process.

          Accumulated  amortization of goodwill was $2,233,000 and $7,706,000 at
     June 30,  2001 and  2000,  respectively.  Net loss and loss per  share  for
     fiscal 2001, adding back goodwill amortization of $691,000 ($0.27 per basic
     and  diluted  share)  would  have been  $(151,000),  $(0.06)  per basic and
     diluted  share.  Net loss and loss per share for fiscal  2000,  adding back
     goodwill  amortization  of $1,004,000  ($0.43 per basic and diluted  share)
     would have been  $(8,658,000),  $3.72 per basic and diluted share. Prior to
     July 1, 2001,  goodwill was being  amortized over periods ranging from 7 to
     10 years.

     In June  2001,  the  Financial  Accounting  Standards  Board  approved  the
     issuance  of  Statements  of  Financial   Accounting   Standards  No.  143,
     "Accounting  for  Asset  Retirement   Obligations."  SFAS  143  establishes
     accounting   standards  for  the   recognition  and  measurement  of  legal
     obligations  associated with the retirement of tangible  long-lived  assets
     and requires recognition of a liability for an asset retirement  obligation
     in the period in which it is incurred. The provisions of this statement are
     effective for financial  statements issued for fiscal years beginning after
     June 15, 2002.  The adoption of SFAS 143 will not have a current  impact on
     the Company's consolidated financial statements.

     In October 2001, the Financial Accounting Standards Board issued Statements
     of Financial  Accounting  Standards No. 144, "Accounting for the Impairment
     or Disposal of Long-Lived Assets." SFAS 144 addresses financial  accounting
     for the impairment or disposal of long-lived assets. The provisions of this
     statement are effective  for financial  statements  issued for fiscal years
     beginning after December 15, 2001. The adoption of SFAS 144 will not have a
     current impact on the Company's consolidated financial statements.

     In April 2002, the Financial  Accounting  Standards Board issued Statements
     of Financial  Accounting  Standards No. 145, "Rescission of SFAS No. 4, 44,
     64, Amendment of SFAS No. 13, and Technical Corrections." SFAS 4, which was
     amended by SFAS 64,  required all gains and losses from the  extinguishment
     of debt to be aggregated and, if


                                       17
<PAGE>


                       ROSS SYSTEMS, INC AND SUBSIDIARIES

     material,  classified as an  extraordinary  item, net of related income tax
     effect.  As a  result,  the  criteria  in  Opinion  30 will  now be used to
     classify  those  gains and  losses.  SFAS 13 was  amended to  eliminate  an
     inconsistency   between  the   required   accounting   for   sale-leaseback
     transactions  and the required  accounting for certain lease  modifications
     that have economic effects that are similar to sale-leaseback transactions.
     The  adoption of SFAS 145 will not have a current  impact on the  Company's
     consolidated financial statements.

     In July 2002, the Financial Accounting Standards Board issued Statements of
     Financial  Accounting  Standards No. 146,  "Accounting for Costs Associated
     with  Exit or  Disposal  Activities."  Generally,  SFAS 146  provides  that
     defined exit costs (including restructuring and employee termination costs)
     are to be recorded on an incurred  basis rather than on a commitment  basis
     as is  presently  required.  SFAS 146 is  effective  for  exit or  disposal
     activities initiated after December 31, 2002. The adoption of SFAS 145 will
     not  have  a  current  impact  on  the  Company's   consolidated  financial
     statements.

     Other Matters

     Risk Factors

          The  risks  described  below  are  not the  only  ones  that we  face.
     Additional  risks  and  uncertainties  not  presently  known to us may also
     impair  our  business  operations.  Our  business,   operating  results  or
     financial  condition  could be  materially  adversely  affected by, and the
     trading  price of our common stock could decline due to any of these risks.
     You should  also refer to the other  information  included  in this  Annual
     Report on Form 10-K and the other information, our financial statements and
     the related notes incorporated by reference into this Annual Report on Form
     10-K.

          The  Company's   software   product  license  revenues  can  fluctuate
     depending  upon such  factors  as overall  trends in the United  States and
     International economies, new product introductions by the Company, hardware
     vendors and other  software  vendors as well as customer  buying  patterns.
     Because the Company typically ships software products within a short period
     after orders are  received,  and  therefore  maintains a  relatively  small
     backlog,  any  weakening  in customer  demand can have an almost  immediate
     adverse impact on revenues and operating results.  Moreover,  a substantial
     portion  of the  revenues  for each  quarter is  attributable  to a limited
     number of sales and tends to be realized in the latter part of the quarter.
     Thus, even short delays or deferrals of sales near the end of a quarter can
     cause substantial fluctuations in quarterly revenues and operating results.
     Finally,  certain  agreements  signed  during  a  quarter  may not meet the
     Company's  revenue  recognition  criteria  resulting  in  deferral  of such
     revenue to future  periods.  Because the Company's  operating  expenses are
     based on anticipated  revenue levels and a high percentage of the Company's
     expenses  are  relatively  fixed,  a small  variation  in the timing of the
     recognition  of  specific  revenues  can  cause  significant  variation  in
     operating results from quarter to quarter.

          Our  business  maybe  adversely  impacted  by the  worldwide  economic
     slowdown and related uncertainties. Weak economic conditions worldwide have
     contributed to the current technology industry  slow-down.  This may impact
     our business  resulting in reduced demand and increased price  competition,
     which may result in higher  overhead  costs,  as a percentage  of revenues.
     Additionally,  this  uncertainty may make it difficult for our customers to
     forecast future business  activities.  This could create  challenges to our
     ability  to  grow  our  business  profitably.  If the  economic  or  market
     conditions further  deteriorate,  this could have a material adverse impact
     on our results of operations and cash flow.

          We may face increased  competition  and our financial  performance and
     future growth depend upon  sustaining a leadership  position in our product
     functionality.  Competitive  challenges  faced by Ross are  likely to arise
     from a number of factors,  including:  industry  volatility  resulting from
     rapid  development and maturation of technologies;  industry  consolidation
     and  increasing  price  competition  in  the  face  of  worsening  economic
     conditions. Although there are fewer competitors in our target markets than
     previously,  our failure to compete  successfully  against those  remaining
     could harm our business operating results and financial condition.

          Our  stock  price is  volatile.  Our stock  price,  like that of other
     technology  companies,  is subject to volatility because of factors such as
     the announcement of new products,  services or technological innovations by
     us or our competitors,  quarterly  variations in our operating results, and
     speculation in the press or investment  community.  In addition,  our stock
     price is  affected by general  economic  and market  conditions  and may be
     negatively affected by unfavorable global economic conditions.


                                       18
<PAGE>


                       ROSS SYSTEMS, INC AND SUBSIDIARIES

          Our  business  may  suffer  if  we  cannot  protect  our  intellectual
     property.  We generally  rely upon patent,  copyright,  trademark and trade
     secret laws and contract rights in the United States and in other countries
     to establish  and maintain our  proprietary  rights in our  technology  and
     products.  However,  there can be no assurance that any of our  proprietary
     rights will not be challenged,  invalidated or  circumvented.  In addition,
     the laws of certain countries do not protect our proprietary  rights to the
     same extent as do the laws of the United States. Therefore, there can be no
     assurance  that  we will be able  to  adequately  protect  our  proprietary
     technology  against  unauthorized  third-party  copying or use, which could
     adversely  affect  our  competitive  position.  Further,  there  can  be no
     assurance that we will be able to obtain licenses to any technology that we
     may require to conduct our business or that, if obtainable, such technology
     can be licensed at a reasonable cost.

          We may become  involved in litigation  that may  materially  adversely
     affect us. In the ordinary  course of business,  we may become  involved in
     litigation   and   administrative   proceedings.   Such   matters   can  be
     time-consuming, divert management's attention and resources and cause us to
     incur significant expenses. Furthermore, there can be no assurance that the
     results of any of these actions will not have a material  adverse effect on
     our business, results of operations or financial condition.

          Retaining  key  management  and employees are critical to our success.
     Our  success  depends  upon  retaining  and  recruiting   highly  qualified
     employees and management personnel.  However, we may face severe challenges
     in  attracting  and  retaining  such  employees.  Although  our turnover is
     historically  low,  if our  ability  to  maintain  a  stable  workforce  is
     significantly  handicapped,   our  ability  to  compete  may  be  adversely
     affected.

ITEM 7.A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

          Foreign  Exchange:  The Company has a worldwide  presence  and as such
     maintains  offices and derives revenues from sources  overseas.  For fiscal
     2002,   international   revenue  as  a  percentage  of  total  revenue  was
     approximately  45%.  The  Company's  international  business  is subject to
     typical risks of an international business,  including, but not limited to:
     differing economic conditions, changes in political climates, differing tax
     structures,  other regulations and restrictions,  and foreign exchange rate
     volatility.  Accordingly,  the Company's future results could be materially
     adversely  impacted  by  changes in these or other  factors.  The effect of
     foreign  exchange rate  fluctuations  on the Company in fiscal 2002 was not
     material.

          Interest  Rates:  The  Company's  exposure to interest  rates  relates
     primarily to the Company's cash  equivalents and certain debt  obligations.
     The Company  invests in financial  instruments  with original  maturates of
     three months or less. Any interest earned on these  investments is recorded
     as interest income on the Company's statement of operations. Because of the
     short maturity of the Company's investments, a near-term change in interest
     rates would not materially affect the Company's financial position, results
     of operations,  or cash flows.  Certain of the Company's  debt  obligations
     include a variable rate of interest.  A  significant,  near-term  change in
     interest rates could materially  affect the Company's  financial  position,
     results of operations or cash flows.

          The Company did not engage in any derivative/hedging transactions.

 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

          The  information  required by this Item is  incorporated  by reference
     herein from Part IV Item 14(a) (1) and (2) of this Form 10-K Report.

     ITEM 9. CHANGES IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON ACCOUNTING AND
     FINANCIAL DISCLOSURE

(a)  Previous independent accountants.

     (i)  On  July  10,  2002,  the  Company   dismissed   Arthur  Andersen  LLP
          ("Andersen")  as the Company's  independent  public  accountants.  The
          Company  also  engaged  BDO  Seidman,  LLP to serve  as the  Company's
          independent  public  accountants for the year ended June 30, 2002. The
          audit committee of our board of directors participated in and approved
          the decision to change independent accountants.

     (ii) Andersen's reports on the Company's financial  statements for the year
          ended June 30, 2000 did not contain an adverse  opinion or  disclaimer
          of opinion, nor was it qualified or modified as to uncertainty,  audit
          scope  or   accounting


                                       19
<PAGE>


                       ROSS SYSTEMS, INC AND SUBSIDIARIES

     principles, except for a going concern qualification. Andersen's report for
     the fiscal  year ended June 30,  2001 was not  qualified  or modified as to
     uncertainty, audit scope or accounting principles.

     (iii)In  connection  with its audits for the  fiscal  years  ended June 30,
          2000  and  2001,   and   through   dismissal  ,  there  have  been  no
          disagreements with Andersen on any matter of accounting  principles or
          practices,  financial  statement  disclosure,  or  auditing  scope  or
          procedure  which,  if not resolved to Andersen's  satisfaction,  would
          have caused them to make reference to the subject matter in connection
          with their report on the Company's financial  statements.  Also, there
          were  no  reportable  events,  as  defined  in  Item  304(a)(1)(v)  of
          Regulation S-K.

     (iv) On July 10, 2002,  the Company  provided  Andersen  with a copy of the
          foregoing disclosures.

     (v)  Subsequently,  Andersen verbally informed the Company that,  effective
          June 30, 2002,  Andersen has stopped  responding to notices of changes
          in  certifying  accountants  due  to  lack  of  personnel.  Therefore,
          Andersen  will not supply a letter  which  states  whether or not they
          agree with the Company's disclosures contained in this filing.

(b)  New independent accountants.

     (i)  Effective  July 11, 2002,  the Company  retained BDO Seidman,  LLP, to
          perform the annual audit of our  financial  statements  for the fiscal
          year ended June 30, 2002.  During the two most recent fiscal years and
          through July 10, 2002,  we have not  consulted  with BDO Seidman,  LLP
          regarding  the  application  of  accounting  principles  to a specific
          transaction,  either  completed  or  proposed;  or the  type of  audit
          opinion that might be rendered on our financial  statements.  Further,
          the Company did not  consult BDO  Seidman,  LLP on any matter that was
          either the subject of a disagreement  or reportable  event with Arthur
          Andersen LLP as described in Regulation S-K, item 304(a)(2).


                                       20
<PAGE>


                       ROSS SYSTEMS, INC AND SUBSIDIARIES

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

          The  information  required  by Item 10 of Form  10-K with  respect  to
     identification   of  directors  is   incorporated  by  reference  from  the
     information  contained in the section captioned  "Election of Directors" in
     the  Company's  definitive  Proxy  Statement  for  the  Annual  Meeting  of
     Stockholders to be held November 14, 2002 (the Proxy Statement),  a copy of
     which will be filed with the Securities and Exchange  Commission before the
     meeting date.

          The following additional information pertains to executive officers of
     the  Company.  There are no family  relationships  between any  director or
     executive  officer  and any other  director  or  executive  officer  of the
     Company.  Executive  officers  serve  at the  discretion  of the  Board  of
     Directors.

<TABLE>
<CAPTION>

                  Executive Officers of Ross Systems
                  ----------------------------------

         <S>                                                        <C>       <C>
         Name                                                       Age                              Position
         J. Patrick Tinley.......................................    54        Chairman  and CEO, and Director
         Robert B. Webster.......................................    54        Executive Vice President and Secretary
         Verome M. Johnston......................................    37        Vice President and Chief Financial Officer

         Eric W. Musser..........................................    37        Vice President and Chief Technology Officer
         Rick Marquardt..........................................    49        Senior Vice President Marketing and Sales

</TABLE>

          Mr. Tinley was promoted to Chairman & CEO in December  2000. He served
     as  President  and  Chief  Operating  Officer  from  1995 to June  2000 and
     President and CEO from July through  December  2000. He has been a director
     of the Company  since 1993.  Mr. Tinley joined the Company in November 1988
     as  Executive  Vice  President,  Business  Development  and has  served  as
     Executive Vice President, Product Development and Executive Vice President,
     Product  Development  & Client  Services.  Prior to 1988,  Mr.  Tinley held
     management  positions with  Management  Science of America,  Inc. and Royal
     Crown  Companies.  Mr. Tinley received a Bachelors in Science from Columbus
     University.

          Mr.  Webster,  EVP  Operations and Secretary is also a director of the
     Company.  Mr.  Webster  joined  the  Company  in June  1998 as  VP/CFO  and
     Secretary  and was later  promoted to EVP  Operations  in December 2000 and
     elected  director  in  August  2001.  Mr.  Webster  is a  Certified  Public
     Accountant  in the  State  of  Georgia.  Mr.  Webster  received  both BS in
     Accounting and Computer Science,  as well as an MBA in Information  Systems
     degrees from St. Peter's College.

          Prior to joining the Company, Mr. Webster served, since February 1995,
     as EVP/CFO of Americomm  Holdings,  Inc. and prior to that in a progression
     of more senior financial  management  positions at both Wang  Laboratories,
     Inc. and Unisys Corporation over a twenty year period.

          Mr. Johnston,  Vice President and Chief Financial Officer,  joined the
     Company  in July 1998 as  Corporate  Controller.  He was  promoted  to Vice
     President in August 1999, and to Chief Financial  Officer in December 2000.
     Immediately  prior to joining  the  Company,  Mr.  Johnston  served as Vice
     President  and Chief  Financial  Officer of Market  Area North  America for
     Sunds  Defibrator,  where he had been employed since June of 1991. Prior to
     that,  Mr.  Johnston  was employed  with  Deloitte & Touche.  Mr.  Johnston
     maintains  a CPA  certificate  in Georgia  and earned  Bachelor of Business
     Administration  degrees in  Accounting  and  Finance  from  Valdosta  State
     University.

          Mr.  Musser  joined the Company in 1993 and was promoted to CTO in May
     of 2000.  He has  served in  development  for over 5 years and has held the
     position of Vice President,  Development  for the past 2 years.  Mr. Musser
     has also  held  senior  positions  in  Marketing  and has  been a  critical
     influence in changing the Company from


                                       21
<PAGE>


                       ROSS SYSTEMS, INC AND SUBSIDIARIES

     client/server solutions to Internet based solutions.  From 1989 to 1993 Mr.
     Musser held IT management positions in the steel industry.

          Mr.  Marquardt  joined  the  company in  October  2001 as Senior  Vice
     President of Worldwide  Sales and Marketing.  Prior to joining Ross Systems
     he was  Vice  President  and  General  Manager  -  Products  at  Eftia  OSS
     Solutions,  a provider of operational  support system (OSS)  solutions.  In
     2000,  Mr.  Marquardt was a Vice  President at NSE Inc.,  an  international
     distribution and investment firm. From 1997 to 2000 Mr. Marquardt served as
     COO  of  Distinction   Software  a  provider  of   enterprise-wide   supply
     chain-planning  solutions.  From  1994  to 1997 he was  Vice  President  of
     Corporate Marketing and Business  Development for Datalogix  International.
     From 1989 to 1994, Mr. Marquardt held various  positions at Ross Systems in
     Sales and Marketing  including  Vice  President of  Manufacturing  Systems.
     Prior to  1989,  Mr.  Marquardt  held  various  management  positions  with
     Management  Science  America,  Inc. Mr. Marquardt has a Bachelor of Science
     Degree from the University of Wisconsin - Stevens Point.

     ITEM 11. EXECUTIVE COMPENSATION

          The information  required by this Item is incorporated by reference to
          the Company's Proxy Statement.

     ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

          The information  required by this Item is incorporated by reference to
          the Company's Proxy Statement.

     ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

          The information  required by this Item is incorporated by reference to
          the Company's Proxy Statement.


                                       22
<PAGE>


                       ROSS SYSTEMS, INC AND SUBSIDIARIES

                                     PART IV

     ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

          (a)  The following documents are filed as a part of this Report:

          1.   Consolidated  Financial  Statements.  The following  Consolidated
               Financial  Statements of Ross Systems,  Inc. are filed as part of
               this report:

<TABLE>
<CAPTION>
                                                                                                  Page
                                                                                                  ----

<S>                                                                                               <C>
Fiscal 2002 Report of BDO Seidman , LLP, Independent Certified Public Accountants...............   F-1


Fiscal 2001, 2000 and  1999 Report of Arthur Andersen LLP, Independent Public Accountants ......   F-2


Consolidated Balance Sheets at June 30, 2002 and 2001...........................................   F-3
Consolidated Statements of Operations--Years Ended June 30, 2002, 2001, and 2000................   F-4
Consolidated Statements of Cash Flows--Years Ended June 30, 2002, 2001, and 2000................   F-5


Consolidated Statements of Shareholders' Equity--Years Ended June 30, 2002, 2001, and 2000......   F-6


Notes to Consolidated Financial Statements......................................................   F-7

</TABLE>

          2.   Financial Statement  Schedule.  The following financial statement
               schedule of Ross Systems, Inc. for the Years Ended June 30, 2002,
               2001, and 2000 is filed as part of this Report and should be read
               in conjunction with the Consolidated Financial Statements of Ross
               Systems, Inc.

<TABLE>
<CAPTION>

Schedule
                                                                                                  Page
                                                                                                  ----

<S>                                                                                               <C>
Page  Report of  Independent  Certified  Public  Accountants  on  Valuation  and
Qualifying Accounts.............................................................................   S-1

II   Valuation   and   Qualifying
     Accounts...................................................................................   S-2

</TABLE>

          Schedules  not listed  above have been  omitted  because  they are not
     applicable or are not required, or the information required to be set forth
     therein is  included  in the  Consolidated  Financial  Statements  or Notes
     thereto.

     3.   Exhibits.  The Exhibits listed on the  accompanying  Index to Exhibits
          immediately  following the financial  statement schedules are filed as
          part of, or incorporated by reference into, this Report.

     (b)  Reports on Form 8-K.

          None


                                       23
<PAGE>


                       ROSS SYSTEMS, INC AND SUBSIDIARIES

          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, in the
     City of Atlanta, State of Georgia, on the 26 th day of September, 2002.

                                       ROSS SYSTEMS, INC.


                                                By:  /s/ J. Patrick Tinley
                                                   ----------------------------
                                                         J. Patrick Tinley
                                                          Chairman and
                                                       Chief Executive Officer


                                POWER OF ATTORNEY

          KNOW ALL MEN BY THESE  PRESENTS,  that  each  person  whose  signature
     appears   below   constitutes   and   appoints   J.   Patrick   Tinley  his
     attorney-in-fact,  with the power of  substitution,  for him in any and all
     capacities, to sign any amendments to this Report on Form 10-K, and to file
     the  same,  with  exhibits   thereto  and  other  documents  in  connection
     therewith,  with the Securities and Exchange  Commission,  hereby ratifying
     and  confirming  all that the said  attorney-in-fact,  or his substitute or
     substitutes, may do or cause to be done by virtue hereof.

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

<TABLE>
<CAPTION>

            Signature                                              Title                                                    Date
            ---------                                              -----                                                    ----


<S>                                                      <C>                                                    <C>
      /s/ J. Patrick Tinley                               Chairman and Chief Executive Officer                   September 26, 2002
       ----------------------------------------          (Principal Executive Officer)
        J. Patrick Tinley

      /s/ Robert B. Webster                               Executive Vice President and Company Secretary         September 26, 2002
       ----------------------------------------
        Robert B. Webster

      /s/ Verome M. Johnston                              Vice President and Chief Financial Officer             September 26, 2002
       ----------------------------------------          (Principal Financial and Accounting Officer)
        Verome M. Johnston

      /s/ J. William Goodhew  III                         Director                                               September 26, 2002
       ----------------------------------------
        J. William Goodhew

      /s/ Frank M. Dickerson                              Director                                               September 26, 2002
       ----------------------------------------
        Frank M. Dickerson

        /s/ Bruce J. Ryan                                 Director                                               September 26, 2002
       ----------------------------------------
          Bruce J. Ryan

</TABLE>


                                       24
<PAGE>


                    ROSS SYSTEMS, INC AND SUBSIDIARIES

                               ROSS SYSTEMS, INC.
                           ANNUAL REPORT ON FORM 10-K
                            YEAR ENDED JUNE 30, 2002
                               ROSS SYSTEMS, INC.
                               INDEX TO EXHIBITS


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


     2.1  Asset Sale  Agreement  between  Registrant and Now Solutions LLC dated
          March 5, 2001 (1)
     3.1  Certificate of the Registrant, as amended (2)
     3.2  Bylaws of the Registrant, as amended (2)
     3.3  Amendment to the Certificate of Incorporation of the Registrant, dated
          April 26, 2001, for the 1 for 10 Reverse Stock Split.
     4.1  Certificate of Designation  of Rights,  Preferences  and Privileges of
          Series B Preferred Stock of the Registrant (3)
     4.2  Form of the  subordinated  debenture  agreement  due  February 6, 2003
          issued by the Registrant to each investor (5)
     4.3  Registration Rights Agreement between the Registrant and each Investor
          (5)
     10.1 Preferred Share Rights Agreement,  dated September 4, 1999 between the
          Registrant and Registrar and Transfer Company (4)
     10.2 Extension  Agreement and Amendment to Loan  Documents  dated March 21,
          1997  between  Registrant  and Coast  Business  Credit,  a division of
          Southern Pacific Thrift and Loan Association (6)
     10.3 Extension  Agreement and Amendment to Loan Documents  dated August 18,
          1995 between  Registrant  and  CoastFed  Business  Credit  Corporation
          ("Coast") (6)
     10.4 First  Amendment  to Loan and Security  Agreement  dated June 30, 1995
          between Registrant and Coast (6)
     10.5 Loan and Security  Agreement dated October 11, 1994 between Registrant
          and Coast (6)
     10.6 Employment Agreement dated January 7, 1999, between Mr. Patrick Tinley
          and the Registrant (7)
     10.7 Employment  Agreement dated September 13, 1999,  between Mr. Robert B.
          Webster and the Registrant (8)
     10.8 Convertible  Preferred  Stock Purchase  Agreement  dated June 29, 2001
          between Registrant and Benjamin W. Griffith, III (9)
     10.9 Loan  and  Security   Agreement  dated  September   24, 2002  between
          Registrant and Silicon Valley Bank
     21.1 Listing of Subsidiaries of Registrant
     23.1 Consent of BDO Seidman, LLP
     24.1 Power of Attorney (included on signature page)
     99.1 Certification of Chief Executive  Officer and Chief Financial  Officer
          pursuant to 18 U.S.C.  1350, as adopted pursuant to Section 906 of the
          Sarbanes-Oxley Act of 2002

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

     (1)  Incorporated  by reference to the exhibit filed with the  Registrant's
          current Report on Form 8-K/A filed May 15, 2001.
     (2)  Incorporated  by reference to the exhibit filed with the  Registrant's
          current Report on Form 8-K filed July 24, 1998.
     (3)  Incorporated  by reference to the exhibit filed with the  Registrant's
          Quarterly Report on Form 10-Q filed May 6, 1996.
     (4)  Incorporated  by reference to the exhibit filed with the  Registrant's
          Registration Statement on Form 8-A filed September 4, 1998.
     (5)  Incorporated  by reference to the exhibit filed with the  Registrant's
          current report on Form 8-K filed February 12, 1998.


                                       25
<PAGE>


                       ROSS SYSTEMS, INC AND SUBSIDIARIES

     (6)  Incorporated  by reference to the exhibit filed with the  Registrant's
          Registration Statement on Form 10-K/A filed April 30, 1998.

     (7)  Incorporated  by reference to the exhibit filed with the  Registrant's
          Quarterly  Report on Form 10-Q for the  quarter  ended  March 31, 1999
          filed May 17, 1999.

     (8)  Incorporated  by reference to the exhibit filed with the  Registrant's
          Quarterly Report on Form 10-K filed September 28, 1999.

     (9)  Incorporated  by reference to the exhibit filed with the  Registrant's
          Quarterly Report on Form 10K filed September 27, 2001.


                                       26
<PAGE>
<PAGE>


Report of Independent Certified Public Accountants


To the Board of Directors and Shareholders
of Ross Systems, Inc.

We have audited the accompanying consolidated balance sheet of Ross Systems,
Inc. and subsidiaries as of June 30, 2002 and the related consolidated
statements of operations, shareholders  equity and cash flows for the year then
ended. We have also audited the financial statements schedule for the year ended
June 30, 2002 listed in the accompanying index. 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. The Company's Consolidated financial statements and financial statement
schedule as of June 30, 2001, and for each of the two years in the period ended
June 30, 2001, prior to the adjustments discussed in the summary of significant
accounting policies, were audited by auditors who have ceased operations. Those
auditors expressed an unqualified opinion on those consolidated financial
statements and schedule in their report dated August 17, 2001.

We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements and schedule are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and schedule. 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 financial position of Ross Systems, Inc.
and subsidiaries as of June 30, 2002 and the results of their operations and
their cash flows for the year then ended in conformity with accounting
principles generally accepted in the United States of America.

Also,  in our  opinion,  the 2002  schedule  presents  fairly,  in all  material
respects, the information set forth therein.

As discussed in Note 1, during the year ended June 30, 2002 the company changed
the manner in which it records reimbursement of out-of- pocket expenses upon the
adoption of the accounting standards in Emerging Issues Task Force Issue 01-14.

As discussed in Note 1, the Company changed the manner in which it accounts for
goodwill and other intangible assets upon adoption of the accounting standards
in Statement of Financial Accounting Standards No. 142 on July 1, 2001.

As discussed above, the financial statements of Ross Systems Inc. and
subsidiaries as of June 30, 2001, and for each of the two years in the period
ended June 30, 2001, were audited by other auditors who have ceased operations.
As described in Note 1(h), these financial statements have been restated to
reflect the adoption of Emerging Issues Task Force 01-14 and revised to include
the transitional disclosures required by SFAS No. 142. We audited the
adjustments described in Note 1(h) that were applied to restate the 2001 and
2000 financial statements to reflect the adoption of Emerging Issues Task Force
Issue 01-14. We also audited the adjustments reflected in the transitional
disclosures required by SFAS No. 142. In our opinion, all such adjustments are
appropriate and have been properly applied. However, we were not engaged to
audit, review or apply any procedures to the 2001 or 2000 financial statements
of the company, other than with respect to such adjustments and, accordingly, we
do not express an opinion or any other form of assurance on the 2001 or 2000
financial statements taken as a whole.


                              /s/ BDO Seidman, LLP
                              --------------------
                              BDO Seidman, LLP

Atlanta, Georgia
September 13, 2002 (Except for Note 6
as to which the date is September 24, 2002)


                                       F-1
<PAGE>


THE FOLLOWING REPORT IS A COPY OF A PREVIOUSLY ISSUED REPORT BY ARTHUR ANDERSEN
LLP AND IT HAS NOT BEEN REISSUED BY ARTHUR ANDERSEN LLP. ARTHUR ANDERSEN LLP HAS
NOT CONSENTED TO ITS INCORPORATION BY REFERENCE INTO ROSS SYSTEMS INC'S,
PREVIOUSLY FILED REGISTRATION STATEMENTS FILE NOS: 333-65660, 333-39348,
33-42036, 33-48226, 33-56584, 33-72168, 33-89128, 333-36745, 333-44665,
333-71005, 33-89504, 333-19619, 333-06053, 333-44363, 333-47877, 333-58639, and
333-65065; THEREFORE, AN INVESTOR'S ABILITY TO RECOVER ANY POTENTIAL DAMAGE MAY
BE LIMITED.

                REPORT OF PREVIOUS INDEPENDENT PUBLIC ACCOUNTANTS



To Ross Systems, Inc.:


We have audited the accompanying consolidated balance sheets of Ross Systems,
Inc. (a Delaware corporation) AND SUBSIDIARIES as of June 30, 2001 AND 2000 *and
the related consolidated statements of operations, shareholders' equity, and
cash flows for each of the three years ended June 30, 2001. 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 in accordance with auditing standards generally accepted
in the United States. 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 audits provide a reasonable basis for our
opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Ross Systems, Inc. and
subsidiaries as of June 30, 2001 and 2000*, and the results of their operations
and their cash flows for each of the three years ended June 30, 2001 in
conformity with accounting principles generally accepted in the United States.

Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule listed in the index of
financial statements included in Item 14 is presented for purposes of complying
with the Securities and Exchange Commission's rules and is not part of the basic
financial statements. This schedule has been subjected to the auditing
procedures applied in the audits of the basic financial statements and, in our
opinion, fairly states in all material respects the financial data required to
be set forth therein in relation to the basic 2001 and 2000 financial statements
taken as a whole.


ARTHUR ANDERSEN LLP



Atlanta, Georgia
August 17, 2001

*The 2000 Consolidated Balance Sheet and 1999 Consolidated Statement of
 Operations, Shareholder's Equity, and Cash Flows are not required to be
 present in the 2002 Annual Report

                                      F-2
<PAGE>


                       ROSS SYSTEMS, INC AND SUBSIDIARIES

<TABLE>
<CAPTION>
                                    June 30,
                           CONSOLIDATED BALANCE SHEETS
                        (In thousands, except share data)
                                                                                                                  June 30,
                                                                                                          -------------------------
                                                                                                          2002                2001
                                                                                                          ----                ----

<S>                                                                                                     <C>               <C>
        ASSETS
Current assets:
      Cash and cash equivalents ................................................................         $  5,438          $  5,716
      Accounts receivable, less allowance for doubtful accounts
           of $ 3,379, and $2,930, in 2002, and 2001 respectively ..............................           12,319            10,128
      Prepaid and other current assets .........................................................            1,282             1,124
      Note receivable from related party .......................................................              850               750
                                                                                                         --------          --------
           Total current assets ................................................................           19,889            17,718
Property and equipment, net ....................................................................            1,450             1,694
Computer software costs, net ...................................................................           14,036            27,918
Other assets ...................................................................................            2,243             3,132
                                                                                                         --------          --------
           Total assets ........................................................................         $ 37,618          $ 50,462
                                                                                                         ========          ========



        LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
      Short term debt ..........................................................................         $  3,967          $  4,522
      Accounts payable .........................................................................            2,682             4,920
      Accrued expenses .........................................................................            4,476             5,130
      Income taxes payable .....................................................................               15                75
      Deferred revenues ........................................................................           12,535            12,711
                                                                                                         --------          --------
           Total liabilities ...................................................................           23,675            27,358
                                                                                                         --------          --------
Commitments and Contingencies

Shareholders' equity:
    Convertible Preferred stock, no par value 5,000,000 shares authorized; 500,000
    shares issued and outstanding at June 30, 2002 and 2001 ....................................            2,000             2,000
      Common stock, $0.001 par value; 35,000,000 shares authorized; 2,625,378 and
           2,565,989 shares issued and outstanding .............................................               26                26
      Additional paid-in capital ...............................................................           87,133            87,032
      Accumulated deficit ......................................................................          (73,450)          (63,876)
      Accumulated other comprehensive deficit ..................................................           (1,766)           (2,078)
                                                                                                         --------          --------
           Total shareholders' equity ..........................................................           13,943            23,104
                                                                                                         --------          --------
Total liabilities and shareholders' equity .....................................................         $ 37,618          $ 50,462
                                                                                                         ========          ========

</TABLE>

           See accompanying Notes to Consolidated Financial Statements


                                      F-3
<PAGE>


<TABLE>
<CAPTION>

                       ROSS SYSTEMS, INC AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                        (In thousands, except share data)

                                                                                                        Years ended June 30,
                                                                                              --------------------------------------
                                                                                               2002           2001           2000
                                                                                               ----           ----           ----

<S>                                                                                        <C>             <C>           <C>
Revenues:
      Software product licenses.............................................................$   13,026      $  9,607      $ 18,943
      Consulting and other services .........................................................   12,179        15,213        33,339
      Maintenance ...........................................................................   20,014        24,678        27,722
      Reimbursable expenses .................................................................      834         1,307         3,395
                                                                                              --------      --------      --------
           Total revenues ...................................................................   46,053        50,805        83,399
                                                                                              --------      --------      --------


Operating expenses:
      Costs of software product licenses ....................................................    1,870           980         2,137
      Costs of consulting, maintenance and other services (inclusive of reimbursable
      expenses of $834, $1,307, and $3,395 for 2002, 2001, and 2000 respectively, and
      exclusive of non recurring
           expense of $353 and $208 for 2001 and 2000 respectively) .........................   10,597        17,595        44,411
      Software product license sales and marketing (exclusive of non recurring
      expense of $136 and  $687 for 2001 and 2000 respectively) .............................   14,318        15,026        20,585
      Product development, net of capitalized computer software costs and amortized
      computer software costs (exclusive of non recurring expense of $301 and $250
      for 2001 and 2000
           respectively) ....................................................................   11,520        11,496        10,003
      General and administrative ............................................................    4,683         4,737         7,612
      Provision for uncollectible accounts ..................................................    1,444         1,514         4,645
      Amortization of goodwill ..............................................................       --           691         1,004
      Non-recurring costs (benefit) .........................................................     (650)          790         1,145
      Non-cash charge for impairment of capitalized software costs ..........................   10,938            --            --
                                                                                              --------      --------      --------
           Total operating expenses .........................................................   54,720        52,829        91,542
                                                                                              --------      --------      --------
           Operating profit (loss) ..........................................................   (8,667)       (2,024)       (8,143)
Other income (expense):
      Gain on sale of product line ..........................................................       --         2,372            --
      Other financial, net ..................................................................     (625)       (1,181)       (1,170)
                                                                                              --------      --------      --------
           Net loss before income taxes .....................................................   (9,292)         (833)       (9,313)
    Income tax expense ......................................................................      132             9           349
Net loss .................................................................................... $ (9,424)     $   (842)     $ (9,662)
     Preferred stock dividend ...............................................................     (150)           --            --
                                                                                              --------      --------      --------
           Net loss available to common shareholders........................................  $ (9,574)     $   (842)     $ (9,662)
                                                                                             ==========      ========    ========

Net loss per common share--basic ............................................................ $  (3.65)     $  (0.33)     $  (4.15)
                                                                                             ==========      ========      ========
Net loss per common share--diluted .......................................................... $  (3.65)     $  (0.33)     $  (4.15)
                                                                                             ==========      ========     ========
Shares used in per share computation--basic .................................................    2,625         2,566         2,330
                                                                                             ==========      ========     ========
Shares used in per share computation--diluted ...............................................    2,625         2,566         2,330
                                                                                             ==========      ========     ========

</TABLE>

           See accompanying Notes to Consolidated Financial Statements


                                      F-4
<PAGE>


                       ROSS SYSTEMS, INC AND SUBSIDIARIES

<TABLE>
<CAPTION>

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)
                                                                                                          Years ended June 30,
                                                                                               -------------------------------------
                                                                                                 2002           2001         2000
                                                                                                 ----           ----         ----

<S>                                                                                           <C>           <C>           <C>
Cash flows from operating activities:
      Net loss ...........................................................................     $ (9,424)     $   (842)     $ (9,662)
      Adjustments to reconcile net loss to net cash provided by operating activities:
           Non cash financing costs ......................................................           --            60            --
           Non-cash stock compensation costs .............................................           --            --            50
           Impairment of  capitalized  software costs ....................................       10,938            --            --
           Depreciation and amortization of property and equipment .......................          984         1,592         2,272
           Amortization of computer software costs .......................................        7,184         7,369         6,875
           Amortization of goodwill ......................................................           --           691         1,004
           Provision for uncollectible accounts ..........................................        1,444         1,514         4,645
           Changes in operating assets and liabilities, net of sale of product line:
                 Accounts receivable .....................................................       (3,646)        9,911        10,961
                 Prepaid and other current assets ........................................          575          (149)        1,074
                 Income taxes recoverable/payable ........................................          185            92           104
                 Accounts payable ........................................................       (2,218)       (2,178)       (3,367)
                 Accrued expenses ........................................................         (881)       (1,011)       (3,113)
                 Deferred revenues .......................................................          (66)       (2,991)         (612)
                                                                                               --------      --------      --------
                      Net cash provided by operating activities ..........................        5,075        14,058        10,231
                                                                                               --------      --------      --------
Cash flows from investing activities:
      Purchases of property and equipment, net ...........................................         (740)         (277)         (308)
      Computer software costs capitalized ................................................       (4,307)       (6,878)      (12,121)
      Sale of product line, net of assets disposed .......................................           --         1,567            --
      Other ..............................................................................          144           429           126
                                                                                               --------      --------      --------
                      Net cash used in investing activities ..............................       (4,903)       (5,159)      (12,303)
                                                                                               --------      --------      --------
Cash flows from financing activities:
      Net cash paid on line of credit activity ...........................................         (555)       (5,353)       (2,090)
      Debt and capital lease payments ....................................................           --        (1,723)         (276)
      Proceeds from issuance of preferred stock ..........................................           --         2,000            --
      Proceeds from issuance of common stock .............................................          101            17           222
      Preference dividend paid ...........................................................         (150)           --            --
                                                                                               --------      --------      --------
                      Net cash (used in) provided by financing activities ................         (604)       (5,059)       (2,144)
                                                                                               --------      --------      --------
Effect of exchange rate changes on cash ..................................................          154          (134)          (68)
                                                                                               --------      --------      --------
Net increase (decrease) in cash and cash equivalents .....................................         (278)        3,706        (4,284)
                                                                                               --------      --------      --------
Cash and cash equivalents at beginning of fiscal year ....................................        5,716         2,010         6,294
                                                                                               --------      --------      --------
Cash and cash equivalents at end of fiscal year ..........................................     $  5,438      $  5,716      $  2,010
                                                                                               --------      --------      --------

</TABLE>

           See accompanying Notes to Consolidated Financial Statements


                                      F-5
<PAGE>



                       ROSS SYSTEMS, INC AND SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                                 (In thousands)

(Comparative  numbers of shares  have been  restated  to reflect the one for ten
reverse  stock  split.  See  accompanying  Notes to the  Consolidated  Financial
Statements)

<TABLE>
<CAPTION>

                                                                                            Accumulated
                                     Preferred  Stock  Common Stock                            Other        Total
                                     ---------------- --------------  Paid in  Accumulated Comprehensive Shareholders' Comprehensive
                                     Shares   Amount  Shares  Amount  Capital    Deficit      Deficit       Equity          Loss
                                     ------   ------  ------  ------  -------    -------      -------       ------          ----


<S>                                      <C>     <C>  <C>    <C>    <C>         <C>         <C>            <C>           <C>
Balances as of June 30, 1999 ........     --      --   2,290  $ 23   $84,261     $(53,372)   $(1,655)       $29,257
Exercise of stock options ...........     --      --       1    --        --
Issuance of stock for hiring
  bonus .............................     --      --       2              50                                    50
Conversion of debentures ............     --      --      73     1     1,247                                  1,248
Issuance of stock pursuant to
  employee stock purchase plan ......     --      --      14             222                                    222
Effect of foreign currency
  translation .......................                                                           (225)          (225)
Net loss ............................                                              (9,662)                   (9,662)
                                                                                                                             -------
Comprehensive Loss ..................                                                                                       $(9,887)
                                                                                                                            =======
                                        ----   -----   -----  ----   -------     --------    -------        -------
Balances as of June 30, 2000 ........     --      --   2,380   $24   $85,780     $(63,034)   $(1,880)       $20,890
                                        ----   -----   -----  ----   -------     --------    -------        -------

Conversion of debentures ............     --      --     173     2     1,175                                  1,177
Issuance of stock pursuant to
  employee stock purchase plan ......     --      --      13              17                                    17
Effect of foreign currency
   translation ..............                                                                   (198)          (198)           (198)

Issuance of preference shares .......    500   2,000                                                          2,000
Issuance of warrants pursuant to
    cost of financing ...............                                     60                                     60
Net loss ............................                                                (842)                     (842)           (842)
                                        ----   -----   -----  ----   -------     --------     -------       -------         -------

Comprehensive Loss ..................                                                                                       $(1,040)
                                                                                                                            =======
                                        ----   -----   -----  ----   -------     --------      -------      -------
Balances as of June 30, 2001 ........    500   2,000   2,566    26   $87,032     $(63,876)     $(2,078)     $23,104
                                        ====   =====   =====  ====   =======     ========      =======      =======

Issuance of stock pursuant to
  employee stock purchase
  and option plans ..................     --      --      59             101                                    101
Effect of foreign currency
  translation .......................                                                 312                       312             312
Net loss ............................                                              (9,424)                   (9,424)         (9,424)
                                                                                                                            -------
Dividends on preferred stock.........                                                (150)                     (150)
Comprehensive Loss ..................                                                                                       $(9,112)
                                                                                                                            =======
                                        ----   -----   -----  ----   -------     --------    -------        -------
Balances as of June 30, 2002 ........    500   2,000   2,625   $26  $ 87,133     $(73,450)   $(1,766)       $13,943
                                        ====   =====   =====  ====   =======     ========    =======        =======

</TABLE>

           See accompanying Notes to Consolidated Financial Statements


                                      F-6
<PAGE>


                       ROSS SYSTEMS, INC AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     (1)  Description of Business and Summary of Significant Accounting Policies

          (a)  Business of the Company

          Ross  Systems Inc.  (NASDAQ:ROSS)  founded in 1972,  supplies  leading
     enterprise solutions software designed for process manufacturing  companies
     primarily in the food and beverage,  life sciences,  chemicals,  metals and
     natural  products   industries.   The  Company  offers  the   award-winning
     iRenaissance(TM)  family of software solutions which is an integrated suite
     of enterprise resource planning (ERP II), financials, materials management,
     manufacturing  and distribution,  supply chain management  (SCM),  advanced
     planning and scheduling, customer relationship management (CRM), electronic
     commerce, business intelligence and analytics applications.  In addition to
     the aforementioned  software suites, the Company also provides professional
     consulting services for implementation,  custom application development and
     education.  It offers  ongoing  maintenance  and support  services  via the
     internet and telephone help desks.

          The  Company  operates  in one  business  segment  and  no  individual
     customer accounts for more than 10% of total revenues. The Company does not
     have a  concentration  of credit  risk in any one  industry  or  geographic
     region.

          (b)  Basis of Presentation

          The  accompanying   consolidated   financial  statements  include  the
     accounts of the Company and its wholly owned subsidiaries.  All significant
     inter-company   balances  and   transactions   have  been   eliminated   in
     consolidation.

          (c)  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.


          (d)  Property and Equipment

          Property and equipment are stated at cost. Depreciation is accumulated
     using the  straight-line  and declining  balance methods over the estimated
     useful  lives of the  respective  assets,  generally  three to seven years.
     Leasehold  improvements  and equipment  under capital  leases are amortized
     using the straight-line method over the shorter of the terms of the related
     leases or the respective useful lives of the assets.


          (e)  Net Earnings (Loss) Per Common and Common Equivalent Share

          Basic loss per common  share are  computed by dividing net earnings or
     net loss by the weighted average number of common shares outstanding during
     the period. Diluted loss per common and common equivalent share is computed
     by dividing  net  earnings  by the  weighted  average  number of common and
     common  equivalent  shares  outstanding  during the  period.  Common  stock
     equivalents  are not  considered in the  calculation  of net loss per share
     when  their  effect  would be  antidilutive.  As a result of the net losses
     incurred in the years ended June 30, 2002,  2001,  and 2000,  the following
     common share equivalents were antidilutive (in thousands) :

                                                         Year ended June 30,
                                                   -----------------------------

                                                    2002      2001      2000
                                                    ----      ----      ----

Stock options ...................................    41        39         --
Warrants ........................................    47        --         --
Convertible Debentures ..........................    --        --         11
Convertible Preferred shares ....................   500         1         --
                                                   -----     ------     ------
 Total ..........................................   588        40         11
                                                   -----     ------     ------



          When the  Company  is  profitable,  the only  difference  between  the
     denominator  for basic and diluted net  earnings per share is the effect of
     common stock  equivalents.  In years of a loss, the denominator is the same
     for basic and diluted loss per share.


                                      F-7
<PAGE>


                       ROSS SYSTEMS, INC AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


          (f)  Amortization of Other Assets

          The  other  assets  described  in  Note  4  are  amortized  using  the
     straight-line  method over their estimated useful lives.  Other assets have
     generally  resulted from business  combinations  accounted for as purchases
     and are  recorded  at the  lower of  unamortized  cost or fair  value.  The
     Company   annually  reviews  the  carrying  amounts  of  these  assets  for
     indications  of  impairment,  based on expected  non-discounted  cash flows
     related to the acquired entities or products.  Impairment of value, if any,
     is  recognized  in the period it is  determined.  The  Company  reviews the
     carrying  value  of  goodwill  in  accordance  with  Financial   Accounting
     Standards No. 142, Goodwill and Other Tangible Assets. (See (p) below).


          (g)  Revenue Recognition

          In  accordance  with SEC Staff  Accounting  Bulletin  No. 101 "Revenue
     Recognition in Financial Statements",  the Company recognizes revenues from
     licenses of computer  software  "up-front"  provided that a  non-cancelable
     license agreement has been signed,  the software and related  documentation
     have been shipped, there are no material  uncertainties  regarding customer
     acceptance,  collection of the resulting receivable is deemed probable, and
     no significant other vendor  obligations exist. The revenue associated with
     any license  agreements  containing  cancellation  or refund  provisions is
     deferred  until  such  provisions  lapse.  Where  the  Company  has  future
     obligations,  if such  obligations  are  insignificant,  related  costs are
     accrued  immediately.  When the obligations are  significant,  the software
     product license revenues are deferred.  Future contractual  obligations can
     include software customization, requirements to provide additional products
     in the  future and  porting  products  to new  platforms.  Contracts  which
     require  significant  software  customization  are  accounted  for  on  the
     percentage-of-completion basis. Revenues related to significant obligations
     to provide future products or to port existing  products are deferred until
     the new products or ports are completed.

          Service revenues  generated from professional  consulting and training
     services  are  recognized  as  the  services  are  performed.   Maintenance
     revenues, including revenues bundled with original software product license
     revenues,  and future unspecified  enhancements to the Company's  products,
     are deferred and recognized over the related contract period,  generally 12
     months. The Company's revenue  recognition  policies are designed to comply
     with  American  Institute  of  Certified  Public  Accountants  Statement of
     Position 97-2, "Software Revenue Recognition" (SOP 97-2).

     (h) Reimbursable Expenses

          Prior to January 1, 2002, the Company  recorded  reimbursement  by its
     customers for out-of-pocket expenses as a decrease to cost of services. The
     Company's  results of operations for the fiscal years June 30, 2002,  2001,
     and 2000 have been reclassified for comparable  purposes in accordance with
     the  Emerging   Issues  Task  Force  release   01-14,   "Income   Statement
     Characterization  of  Reimbursements  Received  for Out of Pocket  Expenses
     Incurred".  The  effect  of  this  reclassification  was to  increase  both
     services  revenues  and  cost  of  services  by  $834,000,  $1,307,000  and
     $3,395,000 for fiscal years 2002, 2001, and 2000 respectively.


     (i) Computer Software Costs

          The Company  capitalizes  computer software product  development costs
     incurred in developing a product once  technological  feasibility  has been
     established  and until the  product is  available  for  general  release to
     customers. Technological feasibility is established when the Company either
     (i) completes a detail program design that  encompasses  product  function,
     feature and  technical  requirements  and is ready for coding and  confirms
     that the product design is complete,  that the necessary  skills,  hardware
     and software  technology  are  available  to produce the product,  that the
     completeness  of the detail program  design is consistent  with the product
     design by documenting  and tracing the detail program design to the product
     specifications,  and that the detail  program  design has been reviewed for
     high-risk  development  issues  and any  related  uncertainties  have  been
     resolved  through coding and testing or (ii) completes a product design and
     working model of the software product,  and the completeness of the working
     model and its  consistency  with the product  design have been confirmed by
     testing.  The Company  evaluates  realizability of the capitalized  amounts
     based on expected  revenues  from the product  over the  remaining  product
     life.  Where future  revenue  streams are not  expected to cover  remaining
     amounts to be amortized,  the Company either  accelerates  amortization  or
     expenses  remaining  capitalized  amounts.  Amortization  of such  costs is
     computed


                                      F-8
<PAGE>


                       ROSS SYSTEMS, INC AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


     as the greater of (1) the ratio of current  revenues  to expected  revenues
     from the  related  product  sales  or (2) a  straight-line  basis  over the
     expected  economic  life of the product (not to exceed five  years).  As of
     June 30, 2002 and 2001,  capitalized  computer software costs  approximated
     $61,587,000  and   $79,347,000   respectively,   and  related   accumulated
     amortization  totaled $ 47,551,000 and $51,429,000  respectively.  Software
     costs  related  to  the  development  of new  products  incurred  prior  to
     establishing   technological  feasibility  or  after  general  release  are
     expensed as incurred



     (j) Income Taxes

          In accordance  with  Statement of Financial  Accounting  Standards No.
     109,  "Accounting for Income Taxes" ("Statement 109"), the Company utilizes
     the asset and liability  method of accounting  for income taxes.  Under the
     asset and  liability  method of  Statement  109,  deferred  tax  assets and
     liabilities  are  established  to  recognize  the future  tax  consequences
     attributable  to  differences  between  the  financial  statement  carrying
     amounts of existing assets and liabilities and their respective tax bases.


     (k) Foreign Operations and Currency Translation

          The local  currencies of the Company's  foreign  subsidiaries  are the
     functional  currencies.  Assets and liabilities of foreign subsidiaries are
     translated into U.S.  dollars at current  exchange rates, and the resulting
     translation gains and losses are included as an adjustment to shareholders'
     equity as a component of comprehensive income. Transaction gains and losses
     that relate to U.S. dollar denominated  intercompany short-term receivables
     recorded in the financial  statements of the Company's foreign subsidiaries
     and are reflected in income. Where related intercompany  balances have been
     designated as long-term,  gains and losses are included as an adjustment to
     shareholders' equity as a component of comprehensive income.


     (l) Reclassifications

          It is the Company's policy to reclassify prior year amounts to conform
     with current year financial statement presentation when necessary.


     (m) 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
     disclosure  of  contingent  assets  and  liabilities  at the  dates  of the
     financial  statements  and the  reported  amounts of revenues  and expenses
     during the  reporting  periods.  Actual  results  could  differ  from these
     estimates.


     (n) Advertising Costs

          The  Company  generally  expenses  advertising  costs  at the time the
     advertisement  is  published,  or in the case of direct mail,  when mailed.
     Advertising  costs for the fiscal years ended June 30, 2002, 2001, and 2000
     were approximately $437,000, $607,000, and $1,517,000, respectively.


     (o) Segment Information

          The Company  markets its  products and related  services  primarily in
     North  America,  Europe  and  Asia  and  primarily  measures  its  business
     performance  based upon certain  geographic  results of operations.  During
     fiscal  2001,  the Company  divested its French  subsidiary  and adopted an
     indirect  sales approach in the French  market.  See further  discussion of
     this matter under "Acquisitions and Divestitures" below.

     The Company has no customers  that  represent ten percent or more of annual
     revenues.

          For  management  purposes,  the  results of the Asian  operations  are
     included in the North  American  results  since the costs  associated  with
     managing  the Asian  marketplace  are born by the North  American  entities
     within the Group.  Selected balance sheet and income statement  information
     pertaining to the various significant  geographic areas of operation are as
     follows:

                                      F-9

<PAGE>
                      ROSS SYSTEMS, INC AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)



           As of and for the year ended June 30, 2002 (in thousands) :

<TABLE>
<CAPTION>

                                                                                 Net Income          Depreciation       Capital
                                         Gross Assets         Revenue              (Loss)          and Amortization   Expenditures
                                         ------------         --------           ----------        ----------------   ------------
<S>                                       <C>                 <C>                 <C>                   <C>              <C>
Belgium ............................      $   915             $ 1,233             $    208              $ 13             $ 98
Netherlands ........................        1,439               3,766                  413                42               59
Germany ............................          164                 580                   55                 5                2
Spain ..............................        4,723               6,431                1,622               247               96
United Kingdom .....................        2,969               5,127                  134                62               21
North America ......................       27,408              28,916              (11,856)              615              464
                                          -------             -------             --------              ----             ----
Total ..............................      $37,618             $46,053             $ (9,424)             $984             $740
                                          -------             -------             --------              ----             ----
</TABLE>



           As of and for the year ended June 30, 2001 (in thousands):

<TABLE>
<CAPTION>

                                                                                 Net Income          Depreciation       Capital
                                         Gross Assets         Revenue              (Loss)          and Amortization   Expenditures
                                         ------------         --------           ----------        ----------------   ------------
<S>                                       <C>                <C>                <C>                 <C>                <C>
Belgium ............................      $   260            $ 1,113            $     1             $    22            $    --
Netherlands ........................        1,174              2,511                184                  43                 35
France .............................           --                362               (497)                 13                 --
Germany ............................          149                961                102                   2                 --
Spain ..............................        2,248              4,218                (56)                182                 38
United Kingdom .....................        2,985              5,162             (1,014)                126                  4
North America ......................       43,646             36,478                438               1,895                200
                                          -------            -------            -------             -------            -------
Total ..............................      $50,462            $50,805            $  (842)            $ 2,283            $   277
                                          -------            -------            -------             -------            -------
</TABLE>


           As of and for the year ended June 30, 2000 (in thousands):

<TABLE>
<CAPTION>
                                                                                 Net Income          Depreciation       Capital
                                         Gross Assets         Revenue              (Loss)          and Amortization   Expenditures
                                         ------------         --------           ----------        ----------------   ------------
<S>                                       <C>                <C>                <C>                 <C>                <C>
Belgium ............................      $   416            $ 1,138            $  (620)            $    42            $    13
Netherlands ........................          658              2,963                (74)                 68                 29
France .............................        2,261              3,782             (3,107)                 63                  8
Germany ............................          360              1,626                179                   2                 --
Spain ..............................        4,185              5,411               (582)                177                 45
United Kingdom .....................        4,809              7,968               (785)                177                 58
North America ......................       51,606             60,511             (4,673)              2,747                155
                                          -------            -------            -------             -------            -------
Total ..............................      $64,295            $83,399            $(9,662)            $ 3,276            $   308
                                          -------            -------            -------             -------            -------
</TABLE>

(p) New Accounting Pronouncements

         In  June  2001,  the  Financial   Accounting   Standards  Board  issued
Statements of Financial Accounting Standards No. 141, Business Combinations, and
No. 142,  Goodwill  and Other  Intangible  Assets,  effective  for fiscal  years
beginning after December 15, 2001. Under the new rules,  goodwill will no longer
be amortized but will be subject to annual  impairment  tests in accordance with
the Statements. Other intangible assets will continue to be amortized over their
useful lives.  The Company  applied the new rules on accounting for goodwill and
other intangible assets beginning in the first quarter of fiscal 2002.  Goodwill
attributable  to each of our  reporting  units  was  tested  for  impairment  by
comparing the fair value of each of the reporting units with its carrying value.
The fair values of these reporting units were determined  using a combination of
discounted  cash flow  analysis and market  multiples  based on  historical  and
projected financial information.  The initial phase of the impairment tests were
performed  within six months of adoption of SFAS 142 or December 31,  2001,  and
are required at least  annually  thereafter.  On an ongoing basis (absent of any
impairment  indicators),  we expect to perform our  impairment  tests during the
June quarter, in connection with our annual planning process.

         Accumulated amortization of goodwill was $2,233,000 and $7,706,000 at
June 30, 2001 and 2000, respectively.


                                      F-10

<PAGE>

                      ROSS SYSTEMS, INC AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


Net loss and loss per share for fiscal 2001,  adding back goodwill  amortization
of $691,000  ($0.27 per basic and  diluted  share)  would have been  $(151,000),
$(0.06)  per basic and  diluted  share.  Net loss and loss per share for  fiscal
2000,  adding back  goodwill  amortization  of  $1,004,000  ($0.43 per basic and
diluted share) would have been $(8,658,000),  $3.72 per basic and diluted share.
No tax effect has been provided in either year due to the valuation allowance on
deferred tax assets.  Prior to July 1, 2001,  goodwill was being  amortized over
periods ranging from 7 to 10 years.

         In June 2001,  the Financial  Accounting  Standards  Board approved the
issuance of Statements of Financial  Accounting  Standards No. 143,  "Accounting
for Asset Retirement Obligations." SFAS 143 establishes accounting standards for
the  recognition  and  measurement  of  legal  obligations  associated  with the
retirement of tangible long-lived assets and requires recognition of a liability
for an asset  retirement  obligation in the period in which it is incurred.  The
provisions of this statement are effective for financial  statements  issued for
fiscal years  beginning  after June 15, 2002.  The adoption of SFAS 143 will not
have a current impact on the Company's consolidated financial statements.

         In October  2001,  the  Financial  Accounting  Standards  Board  issued
Statements  of  Financial  Accounting  Standards  No. 144,  "Accounting  for the
Impairment  or Disposal of  Long-Lived  Assets."  SFAS 144  addresses  financial
accounting for the impairment or disposal of long-lived  assets.  The provisions
of this statement are effective for financial statements issued for fiscal years
beginning  after  December  15,  2001.  The adoption of SFAS 144 will not have a
current impact on the Company's consolidated financial statements.

         In  April  2002,  the  Financial   Accounting  Standards  Board  issued
Statements of Financial Accounting Standards No. 145, "Rescission of SFAS No. 4,
44, 64, Amendment of SFAS No. 13, and Technical  Corrections." SFAS 4, which was
amended by SFAS 64,  required  all gains and losses from the  extinguishment  of
debt to be aggregated and, if material, classified as an extraordinary item, net
of related income tax effect.  As a result,  the criteria in Opinion 30 will now
be used to classify those gains and losses.  SFAS 13 was amended to eliminate an
inconsistency  between the required  accounting for sale-leaseback  transactions
and the required  accounting for certain lease  modifications that have economic
effects that are similar to  sale-leaseback  transactions.  The adoption of SFAS
145 will not have a  current  impact  on the  Company's  consolidated  financial
statements.

         In  July  2002,  the  Financial   Accounting   Standards  Board  issued
Statements  of Financial  Accounting  Standards No. 146,  "Accounting  for Costs
Associated with Exit or Disposal Activities." Generally,  SFAS 146 provides that
defined exit costs (including  restructuring and employee termination costs) are
to be recorded  on an incurred  basis  rather than on a  commitment  basis as is
presently  required.  SFAS  146 is  effective  for exit or  disposal  activities
initiated  after  December  31,  2002.  The adoption of SFAS 145 will not have a
current impact on the Company's consolidated financial statements.

         (q) Non-recurring items

         In October of 2000, the Company  reorganized its European  presence and
adopted an  indirect  sales model in France by  terminating  its  ownership  and
control of the French  subsidiary  due to the chronic and  sustained  losses and
negative cash flows suffered by the French subsidiary.  At that time, management
recorded what they deemed to be adequate reserves related to the possible future
costs for the change of presence in France by deferring the gain associated with
divesting net liabilities in this liquidating transaction. In the fourth quarter
of fiscal 2002,  the Company  experienced  a favorable  outcome  relating to the
French  subsidiary  liquidation  transaction  which rendered most of the reserve
unnecessary.  As a result the Company recorded a non-recurring  gain of $650,000
arising from the reduction of the reserve described above.

         On September  12, 2000,  the Company  announced  restructuring  efforts
aimed at reducing costs and improving efficiencies. Under the restructuring, the
Company reduced 125 positions across the company as well as accelerated  efforts
to eliminate  unneeded  office space,  improve  productivity  through the use of
technology and focus on increased revenues through the use of distributors. As a
result of these  actions,  during  the first  quarter of fiscal  year 2001,  the
Company  recorded  a  $790,000  expense  to cover  the  liability  arising  from
associated  employee separation costs. The costs were accrued in accordance with
EITF Issue  94-3,  "Liability  Recognition  for Certain  Employee  Terminations,
Benefits and Other Costs to Exit an  Activity".  By March 31,  2001,  all of the
costs accrued in conjunction with both actions had been paid.

                                      F-11
<PAGE>

                      ROSS SYSTEMS, INC AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


         (r) Non-cash Impairment of Capitalized Software Cost

         In the fourth  quarter of fiscal 2002,  the Company made a major change
in technology direction.  The internet related functionality of the iRenaissance
product was re-directed  from the "java" based initial  development  used in the
Resynt  product  line  to  the  Microsoft  ".net"  technology.   A  new,  formal
development relationship with Microsoft was launched to support the requirements
of the new technology  direction.  This strategic  re-direction was based on the
Company's  belief  that the .net  technology  will  serve  the  Company  and its
customers  better  in the  future,  due to  fuller  market  penetration,  better
standards of compatibility,  and superior technical adaptability.  The result of
this change was that prior  development  in the former java  environment  became
obsolete.  Effective April 1, 2002, the amount of $5,488,000,  representing  all
unamortized software-project balances relating to this, was expensed.

         On April 23, 2002, the Company  announced the General  Availability  of
Gembase  Version  6.0.  This version of Gembase,  the 4GL language  used for the
development  of  the  iRenaissance   products,   contained  major  functionality
differences  to prior  versions,  rendering all prior  versions  obsolete.  As a
result,   development  and  maintenance  of  all  versions  prior  to  6.0  were
discontinued and no further sales using these versions would be contemplated. In
addition, customers using these versions would be strongly encouraged to upgrade
to version 6.0 because the Company no longer supports development of any Gembase
release  lower than version 6.0.  Upgrades to the 6.0 version  would be strongly
supported and to encourage and facilitate customers' upgrading,  the product was
designed to make the transition  straight-forward.  Since Gembase versions lower
than 6.0 would not  contribute any further  revenue to the Company,  even in the
short-term,  the related  unamortized  software-project  balances  amounting  to
$943,000 were expensed.

         On May 22,  2002 the  Company  announced  the  release of  iRenaissance
version 5.7.  This version was  significantly  changed from the prior  versions.
Previous to this release,  upgrades from any version less than 4.4 to the latest
version were technically  challenging  resulting in an environment not conducive
to customer upgrades.  Version 5.7 offered a straight-forward upgrade capability
to customers on previous  versions.  In  addition,  version 5.7  contained a new
"engine" at its core, which significantly  changed the way the software operated
internally, and resulted in improved operating efficiencies.  Since customers on
versions lower than 4.4 could now upgrade  without  difficulty,  the Company was
able to discontinue the development and support of all versions prior to 4.4. No
further sales using these versions would be contemplated. This had the effect of
rendering all releases of iRenaissance which were lower than 4.4 obsolete. Since
iRenaissance  versions lower than 4.4 would not  contribute any further  license
revenue to the  Company,  and  renewable  maintenance  revenue  would soon be in
respect  of the newly  released  version  of the  product  rather  than an older
version,  the  related  unamortized   software-project   balances  amounting  to
$3,333,000 were expensed.

         During  May  2002,  the  Company  terminated  further  work on  general
enhancements of the COBOL  technology  based  Renaissance  Classic product line.
Following  prolonged,  unfruitful  attempts to garner  interest in the  proposed
enhancements  from the customer  base, a twofold  decision was made; to continue
working with specific customers on custom product development,  and to introduce
a general  sales  program of free  software  license  upgrade  from the  Classic
product to the latest release of the iRenaissance product line for customers who
remain on maintenance.  The company will continue to support those customers who
remain   active  users  until  they  schedule   their   upgrade   conversion  to
iRenaissance.  Since no future  revenue  benefits are expected  from the general
enhancements  capitalized to date, the aggregate,  unamortized  software-project
balances amounting to $1,174,000 were expensed.

         The aggregate value of unamortized  impaired  software  expensed in the
fourth quarter of fiscal 2002 was $10,938,000.  This action will have the effect
of reducing  software cost  amortization in future years. If the Company had not
recorded this expense, amortization expense of approximately $2,734,000 would be
recorded during 2003.


         (2)  Acquisitions, Divestitures and Note Receivable from Related Party

         In October of 2000, the Company  reorganized its European  presence and
adopted an  indirect  sales model in France by  terminating  its  ownership  and
control of the French  subsidiary  due to the chronic and  sustained  losses and

                                      F-12

<PAGE>

                      ROSS SYSTEMS, INC AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


negative  cash flows  suffered  by the French  subsidiary.  Management  has also
effectively  recorded  what they deem to be  adequate  reserves  related  to the
possible future costs for the change of presence in France by deferring the gain
associated with divesting net liabilities in this liquidating  transaction.  New
and  existing  customers  in France  receive  maintenance  services  from French
speaking employees of the Company in Belgium or via the internet.

         On December 30, 1996, the Company acquired a 100% ownership interest in
Ross Iberica, its distributor in Spain and Portugal for the previous five years,
in exchange for shares of the Company's common stock valued at approximately
$1,400,000. The acquisition was accounted for as a purchase, and accordingly,
the results of operations of the acquired business have been included in the
Company's results of operations since the date of acquisition. The purchase
agreement mandates a guaranteed purchase price at a measurement date which has
been mutually extended by the parties in conjunction with the extension of the
maturity to July 8, 2003 of a non interest bearing, recourse note payable, due
by the former majority shareholder of Ross Systems Iberica to the Company. The
former majority shareholder is currently an employee of the Company. The
Company, in its sole discretion, may make up any difference between the value of
the shares originally tendered and the guaranteed purchase price of Ross Iberica
either by issuing additional shares or paying cash. The note receivable
described herein totaled $850,000 at June 30, 2002 and $750,000 at June 30,
2001.


          (3) Property and Equipment

          A summary of property and equipment follows (in thousands):

                                                              June 30,
                                                    ---------------------------
                                                          (In thousands)
                                                     2002              2001
                                                   --------           --------
Computer equipment ..............................  $  5,691           $  9,101
Furniture and fixtures ..........................     1,143              1,782
Leasehold improvements ..........................     1,508              1,546
                                                   --------           --------
                                                      8,342             12,429
Less accumulated depreciation and amortization ..    (6,892)           (10,735)
                                                   --------           --------
                                                   $  1,450           $  1,694
                                                   ========           ========




          (4) Other Assets

                A summary of other assets follows (in thousands):

                                                            June 30,
                                                    ---------------------------
                                                          (In thousands)
                                                       2002                2001
                                                    -------             -------
Goodwill ........................................   $ 4,414             $ 4,414
Note receivable .................................        --                 750
Other ...........................................        62                 201
                                                    -------             -------
                                                      4,476               5,365
Less accumulated amortization ...................    (2,233)             (2,233)
                                                    -------             -------
                                                    $ 2,243             $ 3,132
                                                    =======             =======

                                      F-13

<PAGE>


                     ROSS SYSTEMS, INC AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


         (5) Accrued Expenses

              A summary of accrued expenses follows (in thousands):

                                                                June 30,
                                                          --------------------
                                                             (In thousands)
                                                           2002          2001
                                                          ------        ------
Accrued vacation, salary and social costs ............... $1,502        $1,201
Sales, Use, VAT and GST taxes payable ...................  1,159         1,121
Interest payable ........................................     63            32
Professional fees .......................................    281            69
Royalties ...............................................    806           791
Other ...................................................    665         1,916
                                                          ------        ------
                                                          $4,476        $5,130
                                                          ------        ------
          (6) Debt and Subsequent Event

         As of June 30, 2002, the Company had a revolving credit facility with a
lender for up to $5,000,000 which was collateralized by substantially all assets
of the Company, The facility had an expiration date of September 30, 2002.
During the years ended June 30, 2002, 2001, and 2000, the interest rate remained
unchanged at 9%. At June 30, 2002, approximately $3,370,000 was outstanding
under the Company's revolving credit facility. At June 30, 2001, approximately
$4,013,000 was outstanding under the Company's then existing $5,000,000
revolving credit facility.

         Subsequent  to year end,  the  Company  replaced  its  existing  credit
arrangements,  entering into a new revolving  credit  facility  agreement with a
bank.  This  facility  has a maturity  date of September  23,  2004.  The credit
facility  bears  interest  at the  prime  rate plus 2%  (approximately  6.75% at
September 13, 2002) and is  collateralized  by  substantially  all assets of the
Company. The revolving credit facility may be withdrawn if, amongst other things
(a) the Company fails to pay any  principal or interest  amount due or (b) there
is a material  impairment  of the  Company's  business  which would prevent loan
repayment  and (c) any of these  events are not  remedied by the Company  within
allowable periods.

         The Company  maintains  other credit  facilities in Spain.  Interest on
these facilities  ranges from 6% to 8% and the facilities are  collateralized by
various  assets of the  Spanish  subsidiary.  Balances  outstanding  under these
agreements  were  approximately  $597,000 and $244,000 at June 30, 2002 and 2001
respectively.

         As of June 30, 2002 and 2001, the Company had outstanding capital lease
obligations  aggregating  $0 and  $265,000  respectively.  As of  June  30,  the
Company's future obligations under capital leases are as follows (in thousands):

                                                        2002              2001
                                                        ----              ----
Fiscal Year:
 2002............................................       $ --              $299
 2003............................................         --
                                                        ----              ----
Total future capital lease payments .............         --               299
Less amounts representing interest ..............         --                34
                                                        ----              ----
                                                        $ --              $265
                                                        ----              ----


                                      F-14

<PAGE>

                     ROSS SYSTEMS, INC AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)



         (7) Commitments and Contingencies

         The Company leases  facilities and certain  equipment  under  operating
leases which expire at various dates through fiscal 2016. Certain leases include
renewal  options  and rental  escalation  clauses  to  reflect  changes in price
indices,  real estate taxes, and maintenance  costs. As of June 30, 2002, future
minimum lease payments under non-cancelable operating leases were as follows (in
thousands):


Fiscal Year
-----------
2003.....................................         $944
2004.....................................          803
2005.....................................          304
2006.....................................          298
Thereafter...............................        2,013
                                                ------
Total future minimum lease payments......       $4,362
                                                ------

         Rent expense approximated $1,236,000,  $2,267,000,  and $3,612,000, for
fiscal 2002, 2001, and 2000, respectively.


         (8) Capital Stock


         Mandatorily Convertible Preferred Stock and Private Placement

         In fiscal  1991,  the  Company  authorized  a new class of no par value
preferred  stock  consisting  of  5,000,000  shares.  The Board of  Directors is
authorized  to issue the  preferred  stock in one or more  series and to fix the
rights,  preferences,  privileges  and  restrictions  of such  stock,  including
dividend rights,  dividend rates,  conversion  rights,  voting rights,  terms of
redemption,  redemption prices, liquidation preferences and the number of shares
constituting any series or the designation of such series,  without further vote
or action by the  shareholders.  All preferred stock was issued with a mandatory
conversion factor.

         On June 29, 2001, the Company issued mandatorily  convertible preferred
stock to a qualified  investor in a private placement  transaction.  In summary,
the  investor  purchased  500,000  preferred  shares  at $4 per  share  yielding
$2,000,000 for the Company.  This price  represented a premium to the market for
the Company's  common stock at the time of issuance.  The average  closing share
price of the Company's common stock for the 30 trading days prior to the private
placement was  approximately  $2.22.  The  preferred  shares can be converted at
$4.00 per share after June 29, 2002 but before June 29,  2006,  on a one for one
basis.  The shares earn dividends at the rate of 7.5%. In conjunction  with this
transaction,  the Company issued warrants to the broker who assisted in securing
the  investor.  These  warrants  were  fairly  valued at  $60,000 on the date of
issuance and the expense has been  recorded in the  statement of operations as a
component of other expense (net) in the quarter ended June 30, 2001.

         On April 27,  2001 the  Company  executed a reverse  stock split on the
basis of 1 share for 10 shares.


            (9) Employee Stock Plans

         At June 30, 2002, the Company had three stock-based compensation plans,
which are described  below.  The Company  applies  Accounting  Principles  Board
Opinion No. 25 and Emerging  Issues Task Force release  96-18,  "Accounting  for
Equity  Instruments  that are issued to Other Than Employees for Acquiring or in
Conjunction  with Selling Goods or Services",  and related  Interpretations,  as
applicable,  in  accounting  for  its  plans.  No  compensation  cost  has  been
recognized  for  its  Stock  Option  Plan  and  its  Stock  Purchase  Plan.  Had
compensation  cost for the Company's  Stock Option and Stock Purchase Plans been
determined  based on the fair value at the grant  dates for awards  under  those
plans  consistent  with the method of Statement  123, the Company's net loss and
net loss per share  would have been the pro forma  amounts  indicated  below (in
thousands, except per share data):


                                      F-15

<PAGE>


                     ROSS SYSTEMS, INC AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

<TABLE>
<CAPTION>
                                                                           Year ended June 30,
                                                              ----------------------------------------------
                                                                2002               2001               2000
                                                              --------           --------           --------
<S>                                                           <C>                <C>                <C>
Net loss available to common shareholders:
  As reported .........................................       $ (9,574)          $   (842)          $ (9,662)
  Pro forma ...........................................         (9,980)            (1,302)           (10,657)
Net loss per share:
  As reported basic ...................................       $  (3.65)          $  (0.33)          $  (0.41)
  As reported diluted .................................          (3.65)             (0.33)             (0.41)
  Pro forma basic .....................................          (3.80)             (0.52)             (0.46)
  Pro forma diluted ...................................          (3.80)             (0.52)             (0.46)
</TABLE>


         The above  numbers have been restated to reflect the Company's 1 for 10
stock split on April 27, 2001.  For purposes of computing  the pro forma amounts
above, the Black-Scholes  option pricing model was used. The assumptions used in
this model are disclosed for the individual plans below.


         (a) Stock Option Plan

         The Company has  reserved  210,000  shares of common stock for issuance
under its 1988  Incentive  Stock  Plan and  510,000  shares of common  stock for
issuance under its 1998 Incentive  Stock Plan  (collectively  the "Plans").  The
1988  Incentive  Stock Plan is closed and may not be used for further  issues of
options.  Under the Plans,  the Company may issue options to purchase  shares of
the  Company's  common  stock  to  eligible  employees,   officers,   directors,
independent  contractors and  consultants.  The term of the options issued under
the Plans  cannot  exceed ten years from the date of grant.  Options  granted to
date generally become exercisable over four to five years based on the grantees'
continued service with the Company.

         A summary of the status of the Company's Plan as of June 30, 2002, 2001
and 2000 and activity for the fiscal years then ended is presented below:

<TABLE>
<CAPTION>

                                                  Number of     Weighted Average
                                                   Shares        Exercise Price        Exercisable
                                                  ----------    ----------------       ----------
<S>                                               <C>             <C>                      <C>
Balance as of June 30, 1999 ....................  178,600         $   29.70                86,000
Granted (at market value) ......................   61,100         $   25.80
Exercised ......................................   (1,000)        $   25.90
Canceled .......................................  (35,100)        $   28.80
                                                 --------
Balance as of June 30, 2000 ....................  203,600         $   28.70               102,800
Granted (at market value) ......................  165,219         $    4.90
Canceled .......................................  (77,148)        $   21.80
                                                 --------
Balance as of June 30, 2001 ....................  291,671         $   16.91               112,255
Granted (at market value) ......................  137,333         $    4.91
Exercised ......................................  (10,243)        $    2.32
Canceled .......................................  (91,966)        $   20.34
                                                 --------
Balance as of June 30, 2002 ....................  326,795         $   10.78               113,494
                                                 --------
</TABLE>


                                      F-16
<PAGE>

                     ROSS SYSTEMS, INC AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)



         The weighted average estimated grant date fair value of options granted
during fiscal 2002, 2001, and 2000 was $3.73, $4.49, and $25.80, respectively.

         The  following  table  summarizes  information  about the stock options
outstanding at June 30, 2002:


<TABLE>
<CAPTION>

                                                          Options Outstanding
                                            -----------------------------------------------------
                                                            Weighted Average                            Options Exercisable
                                                                Remaining                          ------------------------------
                                               Shares          Contractual       Weighted Average    Shares      Weighted Average
      Range of Exercise Prices              Outstanding           Life            Exercise Price   Exercisable    Exercise Price
      ------------------------              -----------     ----------------     ----------------  -----------   ----------------
<C>                                           <C>               <C>                <C>                <C>                 <C>
$1.88-$1.88 .........................         67,383            8.5 years          $    1.88          11,342              1.88
$3.25-$3.25 .........................          6,394            9.1 years               3.25               0              0
$3.50-$3.50 .........................         76,489            9.1 years               3.50               0              0
$3.75-$5.40 .........................         40,831            9.0 years               4.62          29,450              4.65
$8.00-$11.88 ........................         48,550            9.1 years               9.74           1,700             11.88
$13.75-$25.00 .......................         23,500            7.4 years              21.32          11,800             21.99
$25.94-$25.94 .......................         39,450            5.1 years              25.94          38,788             25.94
$26.56-$55.00 .......................         21,080            5.1 years              34.00          17,296             34.67
$65.00-$65.00 .......................          2,413            4.4 years              65.00           2,413             65.00
$67.50-$67.50 .......................            705            3.5 years              67.50             705             67.50
Totals ..............................        326,795            8.1 years          $   10.78         113,494         $   19.81
                                             -------            ---------          ---------         -------         ---------
</TABLE>

         The following  weighted  average  assumptions  for the Company's  Stock
Option Plan were used to determine the pro forma amounts noted above:

                                                Year ended June 30,
                                        -------------------------------
                                        2002       2001           2000
                                        ----       ----           ----

Expected life .....................       5          5              5
Expected volatility ...............     80.4%     121.6%         104.76%
Risk-free interest rate ...........      5.0%       5.3%           6.5%
Expected dividend yield ...........       *          *              *
* Not applicable


(b) Employee Stock Purchase Plan

         The  Company  initially  reserved  80,000  shares of  common  stock for
issuance under its 1991 Employee  Stock Purchase Plan ("ESPP").  In fiscal 1999,
the stockholders  approved an amendment to the plan whereby the number of shares
reserved  for  issuance  was  increased  to 95,000.  An amendment in fiscal 2002
provided  that  beginning  in fiscal 2001 and each year  thereafter,  the amount
reserved for issuance is increased by the lesser of 20,000 shares or 1% of total
outstanding common stock.

         Under the ESPP, the Company's  employees may purchase,  through payroll
deductions of 1% to 10% of  compensation,  shares of common stock at a price per
share that is the lesser of 85% of its fair market value as of the  beginning or
end of the offering  period.  Under the ESPP,  the Company  sold 29,146  shares,
11,409 shares,  and 13,955 shares,  to employees in fiscal 2002,  2001, and 2000
respectively.  The weighted  average fair value of those purchase rights granted
in fiscal  2002,  and 2001,  was $0.83 and $1.12,  respectively.  As of June 30,
2002, 128,314 shares had been issued under the ESPP.



                                      F-17
<PAGE>

                     ROSS SYSTEMS, INC AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


(10) Income Taxes

         Gains and losses  before  income  taxes  include  foreign  gains before
income taxes of  $2,425,000  for fiscal 2002 and foreign  losses  before  income
taxes  of  $(1,280,000)  and  $(4,640,000)  for  fiscal  years  2001,  and  2000
respectively.  Income tax expense for the years  ended June 30,  2002,  2001 and
2000 consists of the following (in thousands):

                                      2002           2001           2000
                                     -----          -----           -----
Current:
  Federal .........................  $  --          $(140)          $  --
  Foreign .........................    112            123             349
  State ...........................     20             26              --
                                     -----          -----           -----
                                       132              9             349
                                     -----          -----           -----
Deferred:
  Federal .........................     --             --              --
  Foreign .........................     --             --              --
  State ...........................     --             --              --
                                     -----          -----           -----
                                     $ 132          $   9           $ 349
                                     =====          =====           =====

         For the years ended June 30, 2002,  2001, and 2000, the  reconciliation
between the amounts computed by applying the United States federal statutory tax
rate of 34% to loss before  income taxes and the actual tax expense  follows (in
thousands):

<TABLE>
<CAPTION>
                                                                               2002         2001         2000
                                                                             -------      -------      -------
<S>                                                                           <C>            <C>        <C>
Income tax benefit at statutory rate ...................................      (3,159)        (283)      (3,166)
State income tax benefit, net of federal income tax benefit ............         (13)         (37)        (422)
Change in beginning of year valuation allowance ........................       3,028        3,063        1,526
Losses for which no benefit is recognized (foreign loss and rate) ......          --          435        1,630

Rate differential related to foreign income and foreign tax withholdings         843          485          349
Amortization of other assets and other permanent differences ...........        (567)      (3,654)         432
                                                                             -------      -------      -------
                                                                             $   132      $     9      $   349
                                                                             =======      =======      =======
</TABLE>


     The tax  effects of  temporary  differences  that give rise to  significant
portions of deferred tax assets and deferred  tax  liabilities  at June 30, 2002
and 2001 were as follows (in thousands):

                                                    2002          2001
                                                  --------      --------
Accruals and reserves .......................     $    670      $    654
Net operating loss carryforward (federal) ...       11,502        13,728
Net operating loss carryforward (state) .....        2,386         2,525
Net operating loss carryforward (foreign) ...        2,748         2,615
Foreign tax and research credit carryforwards        3,802         3,802
Fixed assets depreciation differences .......          399           446
                                                  --------      --------
           Total gross deferred tax assets ..       21,507        23,770
           Less valuation allowance .........      (15,893)      (12,865)
                                                  --------      --------
           Net deferred tax assets ..........        5,614        10,905
                                                  --------      --------
Capitalized computer software costs .........       (8,616)      (10,905)
                                                  --------      --------
           Total gross deferred liabilities .       (5,614)      (10,905)
                                                  --------      --------
Net deferred taxes ......................         $     --      $     --
                                                  ========      ========


                                      F-18
<PAGE>

                     ROSS SYSTEMS, INC AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


         The net change in total valuation allowance for the year ended June 30,
2002,  was  an  increase  of  $3,028,000.   The  valuation  allowance  has  been
established to recognize the uncertainty of utilizing loss and credit carryovers
and certain deferred assets.

         At June 30, 2002, the Company had net operating loss  carry-forwards of
approximately  $33,827,000,  $14,473,000 and $8,449,000 for federal,  California
and foreign tax purposes,  respectively.  At June 30, 2002, the Company also had
unused research and other credit carry-forwards of approximately  $3,248,000 and
$554,000 for federal and  California  tax purposes,  respectively.  The loss and
research credit carry-forwards, if not utilized, will expire between fiscal 2003
and 2014.


(11) Supplemental Cash Flow Information

         Supplemental  cash flow  information for the years ended June 30, 2002,
2001, and 2000 follows (in thousands):

<TABLE>
<CAPTION>
                                                                                   2002             2001             2000
                                                                                 --------         --------         --------
<S>                                                                               <C>             <C>              <C>
Cash payments:
  Interest......................................................................  $  642          $  1,228         $  1,455
  Income taxes..................................................................  $  319          $     75         $    245
Non-cash investing and financing activities:
  Conversion of convertible debentures into stock (non-cash transaction)........  $    -          $  1,177         $  1,248
</TABLE>


(12) Selected Unaudited Quarterly Information
(In thousands, except per share data)

<TABLE>
<CAPTION>

                                                                June 30          March 31         Dec. 31        Sept. 30
Fiscal year 2002                                                  2002             2002            2001             2001
                                                                --------         --------        --------        --------
<S>                                                             <C>              <C>             <C>             <C>
Total net revenues                                              $ 11,173         $ 11,456        $ 11,425        $ 11,165
Cost of sales                                                        761              403             311             396
Net income (loss)                                                (10,857)             381             488             414
Charge for impairment of capitalized software                    (10,288)              --              --              --
Earnings (loss) per share                                          (4.14)            0.13            0.17            0.13
Number of shares used in per share computation - diluted           2,625            3,209           3,152           3,144
</TABLE>


<TABLE>
<CAPTION>
                                                                June 30          March 31         Dec. 31         Sept. 30
Fiscal year 2001                                                  2001             2001            2000             2000
                                                                --------         --------        --------        --------
<S>                                                             <C>              <C>              <C>              <C>
Total net revenues                                              $ 11,254         $ 11,494         $ 12,598         $ 14,152
Cost of sales                                                        433              352              325              483
Net income (loss)                                                    399             2787              167           (4,195)
Non-recurring costs                                                   --               --               --              790
Earnings (loss) per share                                           0.15             1.09             0.07            (1.74)
Number of shares used in per share computation-diluted             2,662            2,566            2,569            2,412
</TABLE>



                                       F-19
<PAGE>



REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Board of Directors and Shareholders
of Ross Systems, Inc and subsidiaries.

         The audit referred to in our report dated September 13, 2002,  relating
to the consolidated  financial statements of Ross Systems, Inc and subsidiaries,
which is  contained  in Item 8 of this  Form  10-K,  included  the  audit of the
financial  statement  schedule as of June 30,  2002  listed in the  accompanying
index. The financial  statement  schedule is the responsibility of the Company's
management.  Our  responsibility  is to  express  an  opinion  on the  financial
statement schedule based on our audit.

         In our opinion,  such financial  statement schedule as of June 30, 2002
presents fairly, in all material respects, the information set forth therein.


                                                            /s/ BDO Seidman, LLP
                                                            --------------------
                                                            BDO Seidman, LLP
Atlanta, Georgia
September 13, 2002



<PAGE>


                                                                     SCHEDULE II
<TABLE>
<CAPTION>

                                      ROSS SYSTEMS, INC. AND SUBSIDIARIES
                                       VALUATION AND QUALIFYING ACCOUNTS
                                                (in thousands)




                                                                      Additions
                                                               ------------------------
                                               Balance at     Charged to     Charged
                                               Beginning      costs and      to other                       Balance at
Description                                    of period      expenses       accounts     Deductions(1)   End of period
----------                                     ---------      ---------      --------     ------------    -------------
<S>                                              <C>            <C>             <C>          <C>             <C>
Year ended June 30, 2002 allowance for
  doubtful accounts and returns                  $2,930         $1,444          $--          $  995          $3,379
                                                 ------         ------          ---          ------          ------
Year ended June 30, 2001 allowance for
  doubtful accounts and returns                  $3,571         $1,514          $--          $2,155          $2,930
                                                 ------         ------          ---          ------          ------
Year ended June 30, 2000 allowance for
  doubtful accounts and returns                  $2,884         $4,645          $--          $3,958          $3,571
                                                 ------         ------          ---          ------          ------
</TABLE>

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

(1)  Represents net charge-off of specific receivables.