**UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549**

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**FORM 10-Q**

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(Mark One)

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

**For the Quarterly Period Ended June 30, 2001**

**OR**

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

**For the transition period from ________to _________**

**Commission file number 0-19872**

**WALKER INTERACTIVE SYSTEMS, INC.**
(Exact name of Registrant as specified in its Charter)



|**Delaware**                                                   | **95-2862954**                         
|-------------------------------------------------------------- | ---------------------------------------
|(State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification Number)

**303 Second StreetSan Francisco, California     94107**(Address of Principal Executive Offices including Zip Code)

**(415) 495-8811**(Registrant's Telephone Number, Including Area Code)







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

There were 14,987,487 Shares of $.001 Par Value Common Stock outstanding as of
                               August 7, 2001.







**WALKER INTERACTIVE SYSTEMS, INC.
      QUARTERLY REPORT ON FORM 10-Q FOR THE PERIOD ENDED JUNE 30, 2001
                                TABLE OF CONTENTS**



|**PART I.   FINANCIAL INFORMATION**                                                                                   | **Page No.**
|--------------------------------------------------------------------------------------------------------------------- | ------------
|                                                                                                                      |             
|Item 1.   Interim Consolidated Financial Statements
                  (unaudited):                                    |             
|                                                                                                                      |             
|Consolidated Balance Sheets at June 30, 2001 and
     December 31, 2000                                               | 3           
|                                                                                                                      |             
|Consolidated Statements of Operations for the
          
    three months ended June 30, 2001 and 2000                | 4           
|                                                                                                                      |             
|Consolidated Statements of Cash Flows for the
          
    three months ended June 30, 2001 and 2000                | 5           
|                                                                                                                      |             
|Notes to Financial Statements                                                                                         | 6           
|                                                                                                                      |             
|Item 2.   Management's Discussion and Analysis of Financial
                      Condition and Results of Operations | 8           
|                                                                                                                      |             
|Item 3.   Quantitative and Qualitative Disclosures About Market Risk                                                  | 18          
|                                                                                                                      |             
|**PART II.  OTHER INFORMATION**                                                                                       |             
|                                                                                                                      |             
|Item 4.   Submission of Matters to a Vote of Security Holders                                                         | 22          
|                                                                                                                      |             
|Item 6.   Exhibits and Reports on Form 8-K                                                                            | 23          
|                                                                                                                      |             
|**Signatures**                                                                                                        | 24          

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**PART I -- FINANCIAL INFORMATION**

Item 1. Financial Statements

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**WALKER INTERACTIVE SYSTEMS, INC.

                          CONSOLIDATED BALANCE SHEETS**
(in thousands, except share amounts)

`June 30,    December 31,
                                                             2001         2000
                                                        ------------  ------------
                                                         (unaudited)
ASSETS                                                                            
Current assets:
   Cash and cash equivalents...........................      $4,156        $4,219
   Short-term investments..............................       3,841         5,400
   Accounts receivable, net of allowance for doubtful
     accounts of $983 - June 30, 2001 and $1,528 -
     December 31, 2000.................................       8,488         8,816
   Prepaid expenses....................................         903           854
   Other receivables...................................         321           370
                                                        ------------  ------------
       Total current assets............................      17,709        19,659
Property and equipment, net                                   1,810         2,121
Capitalized software, net of accumulated amortization
  of $49,409 - June 30, 2001 and $56,932 -
  December 31, 2000....................................       3,726         4,541
Long-term accounts receivable..........................       1,015         1,144
Other assets...........................................         443            95
                                                        ------------  ------------
Total assets...........................................     $24,703       $27,560
                                                        ============  ============

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)                                    
Current liabilities:
   Accounts payable....................................      $2,583        $2,625
   Accrued liabilities.................................       9,065        11,614
   Deferred revenue....................................      11,899        12,706
                                                        ------------  ------------
       Total current liabilities.......................      23,547        26,945
Deferred revenue.......................................       2,439         2,551
Other long-term obligations............................       3,128         3,287
                                                        ------------  ------------
       Total liabilities...............................      29,114        32,783
                                                        ------------  ------------

Commitments and contingencies

Stockholders' equity (deficit)
   Common stock, $.001 par value: 50,000 shares
    authorized; issued 14,849 shares - June 30,
    2001; 14,661 shares - December 31, 2000............          15            15
   Additional paid-in capital..........................      76,672        76,458
   Accumulated other comprehensive income..............         656           501
   Accumulated deficit.................................     (81,754)      (82,197)
                                                        ------------  ------------
       Total stockholders' equity(deficit).............      (4,411)       (5,223)
                                                        ------------  ------------
Total liabilities and stockholders' equity (deficit)...     $24,703       $27,560
                                                        ============  ============`

See notes to consolidated financial statements

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**WALKER INTERACTIVE SYSTEMS, INC.

               CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)**
(in thousands, except per share amounts)

`Three Months Ended    Six Months Ended
                                          June 30,              June 30,
                                      --------------------- ---------------------
                                         2001       2000       2001       2000
                                      ---------- ---------- ---------- ----------
REVENUES:                                                                                 
  License............................    $1,857     $1,468     $5,680     $2,294
  Maintenance........................     5,652      6,783     11,406     14,395
  Consulting.........................     4,988      5,964      8,045     11,976
                                      ---------- ---------- ---------- ----------
     Total revenues..................    12,497     14,215     25,131     28,665

OPERATING EXPENSES:                                                                       
  Costs of revenues:
     Costs of licenses,
      maintenance and consulting.....     4,601      6,314      8,652     14,172
     Amortization of
      capitalized software...........       763      1,720      1,526      3,047
  Sales and marketing................     2,950      4,994      6,124      9,567
  Product development................     2,612      2,665      5,200      5,688
  General and administrative.........     1,328      2,467      3,357      5,792
                                      ---------- ---------- ---------- ----------
     Total operating expenses........    12,254     18,160     24,859     38,266
                                      ---------- ---------- ---------- ----------
Operating income (loss)..............       243     (3,945)       272     (9,601)
     Interest income, net............        97        181        228        478
                                      ---------- ---------- ---------- ----------
Income (loss) before income taxes....       340     (3,764)       500     (9,123)
     Provision for income taxes......        25         50         50         98
                                      ---------- ---------- ---------- ----------

NET INCOME (LOSS)....................       315     (3,814)       450     (9,221)         
                                      ========== ========== ========== ==========

BASIC NET INCOME (LOSS) PER SHARE....     $0.02     ($0.26)     $0.03     ($0.64)         
                                      ========== ========== ========== ==========
Shares used to compute basic
     net income(loss) per share......    14,848     14,478     14,846     14,421
                                      ========== ========== ========== ==========

DILUTED NET INCOME (LOSS) PER SHARE..     $0.02     ($0.26)     $0.03     ($0.64)         
                                      ========== ========== ========== ==========
Shares used to compute diluted
     net income (loss) per share.....    14,849     14,478     14,846     14,421
                                      ========== ========== ========== ==========`

See notes to consolidated financial statements

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**WALKER INTERACTIVE SYSTEMS, INC.

               CONSOLIDATED STATEMENTS OF CASH FLOWS(UNAUDITED)**
(in thousands)

`Six Months Ended
                                                                 March 31,
                                                         ------------------------
                                                             2001          2000
                                                         -----------  -----------
CASH FLOWS FROM OPERATING ACTIVITIES:                                            
     Net income(loss)...................................       $450      ($9,221)
     Adjustments to reconcile net income (loss) to
       net cash used by operating activities:
       Depreciation and amortization....................      2,167        4,085
       Change in allowance for doubtful accounts........       (545)      (3,132)
       Loss on property retirements......................        39           --
     Changes in operating assets and liabilities:
       Accounts receivable..............................        922        8,705
       Prepaids and other assets........................        (49)        (497)
       Accounts payable & accrued liabilities...........     (2,682)      (2,716)
       Deferred revenue.................................       (919)      (4,523)
       Other............................................        (69)         920
                                                         -----------  -----------
           Net cash used by operations..................       (686)      (6,379)
                                                         -----------  -----------

CASH FLOWS FROM FINANCING ACTIVITIES:                                            
     Proceeds from employee stock purchase plan
       issuances and stock options exercised............        213        1,383
     Capital lease payments.............................        (75)          --
                                                         -----------  -----------
           Net cash provided by financing activities....        138        1,383
                                                         -----------  -----------

CASH FLOWS FROM INVESTING ACTIVITIES:                                            
     Purchases of short- and long-term investments......     (3,344)      (2,335)
     Maturities of short-term investments...............      4,899        2,500
     Sales of short-term investments....................         --        5,441
     Purchases of property and equipment................       (368)        (373)
     Additions to capitalized software..................       (711)      (2,661)
     Other..............................................          9           18
                                                         -----------  -----------
           Net cash provided by investing activities....        485        2,590
                                                         -----------  -----------

NET (DECREASE)  IN CASH AND CASH EQUIVALENTS............        (63)      (2,406)
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD.........      4,219        9,187
                                                         -----------  -----------
CASH AND CASH EQUIVALENTS - END OF PERIOD...............     $4,156       $6,781 
                                                         ===========  ===========
Supplemental disclosure:
    Cash paid for income taxes..........................        $77         $118`

See notes to consolidated financial statements

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**WALKER INTERACTIVE SYSTEMS, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

1. SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles and include
all adjustments (consisting only of normal recurring adjustments) which the
Company considers necessary for a fair presentation of the financial position,
operating results and cash flows for those periods.  Results for the interim
periods are not necessarily indicative of the results for the entire year.
These consolidated financial statements and any notes thereto should be read in
conjunction with the audited consolidated financial statements included in the
Walker Interactive Systems, Inc. Annual Report on Form 10-K for the year ended
December 31, 2000.

1. EARNINGS PER SHARE

The Company calculates basic earnings per share ("EPS") and diluted
EPS in accordance with Statement of Financial Accounting Standards
("SFAS") No. 128, "Earnings per Share." Basic EPS is
computed by dividing net income (loss) by the weighted average number of common
shares outstanding for that period. Diluted EPS takes into account the effect of
dilutive instruments, such as stock options, and uses the average share price
for the period in determining the number of common stock equivalents that are to
be added to the weighted average number of shares outstanding.  Common stock
equivalents are excluded from the diluted loss per share calculation if the
effect would be antidilutive.

1. COMPREHENSIVE INCOME/(LOSS)

SFAS No. 130 requires disclosure of total non-stockholder changes in equity,
which include unrealized gains and losses on securities classified as available-
for-sale under SFAS No. 115, foreign currency translation adjustments accounted
for under SFAS No. 52, and minimum pension liability adjustments made pursuant
to SFAS No. 87.

The reconciliation of net income (loss) to comprehensive income (loss) for
the three-month and six-month periods ended June 30, 2001 and 2000 is as
follows:

`Three Months Ended  Six Months Ended
                                          June 30,            June 30,
                                      ------------------- -------------------
                                         2001      2000      2001      2000
                                      --------- --------- --------- ---------
Net income(loss).....................     $315   ($3,814)     $450   ($9,221)
Other comprehensive income(loss).....       30       (37)      155       (73)
                                      --------- --------- --------- ---------
Total comprehensive income(loss).....     $345   ($3,851)     $605   ($9,294)
                                      ========= ========= ========= =========`

1. DIVESTITURES

In April 2000, the Company announced that it had sold the stock of Revere
Inc. to Gores Technology Group ("GTG").  Revere Inc.'s main product
comprised the IMMPOWER Asset Management Application. The terms of the purchase
agreement provided that GTG would pay $500 to the Company at closing with a
final settlement based upon the December 31, 2000 determination of Revere's net
assets, as defined in the agreement.  The final settlement, when determined, may
result in the Company receiving payments from or making payments to GTG.
However, the amount of such payments, if any, is not currently determinable. No
gain or loss has been recorded in the financial statements.  The Company is
still negotiating the final settlement and anticipates resolution later in
2001.

In October 2000, the Company sold the net assets of its Aptos product line to
B-Plan Information Systems Limited ("B-Plan"). The Aptos product line
is an integrated suite of client/server financial applications for medium sized
companies and was marketed primarily in Western Europe. The purchase agreement
provides that the total consideration of approximately $2.3 million is evidenced
by a non-interest bearing note denominated in British pounds sterling and is
secured by a secondary interest in the Aptos software and certain shareholdings
of a B-Plan executive. The note provides for the right of offset under certain
circumstances, as defined in the agreement, and by its terms is payable as
follows: $425-December 31, 2000; $425-March 31, 2001; $575-June 30 and December
31, 2001; and $300 on June 30, 2002. The installment due on March 31, 2001 was
placed in escrow and B-Plan has withheld the installment due June 30, 2001 pending
resolution of certain issues between the Company and B-Plan. Through June 30, 2001,
no gain or loss has been recorded in the financial statements and the Company will
recognize income as proceeds are received.





1. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In June 1998 and June 1999, the Financial Accounting Standards Board issued
Statement of Financial Standards ("SFAS") No. 133, "Accounting
for Derivative Instruments and Hedging Activities," and SFAS No. 137,
"Accounting for Derivative Instruments and Hedging Activities - Deferral of
the Effective Date of FASB Statement No. 133". These statements define
derivatives, require that all derivatives be carried at fair value and provide
for hedge accounting when certain conditions are met. SFAS No. 133, as amended,
is effective for the Company for its year ending December 31, 2001. Under SFAS
No. 133, certain contracts that were not formerly considered derivatives may now
meet the definition of a derivative. The Company evaluated the requirements of
SFAS No. 133 and concluded that adoption of this statement, effective January 1,
2001, had no material impact on the Company's financial position or results of
operations.







WALKER INTERACTIVE SYSTEMS, INC.





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



The following discussion of results of operations and financial
condition of the Company should be read in conjunction with the Company's
unaudited financial statements and notes thereto included elsewhere in this Form
10-Q.  The report on this Form 10-Q contains forward-looking statements,
including statements related to industry trends and demand for mainframe
products, cash commitments and working capital requirements. Discussions
containing such forward-looking statements may be found in the material set
forth under "Management's Discussion and Analysis of Financial Condition
and Results of Operations," generally and specifically therein under the
captions "Recent Developments," "Liquidity and Capital
Resources," and "Additional Risk Factors." Actual events or
results may differ materially from those discussed herein.  The Company
disclaims any obligation to update these forward-looking statements as a result
of subsequent events.  The risk factors on pages 12 through 18, among others,
should be considered in evaluating the Company's prospects and future financial
performance.

Walker designs its software products specifically for the Internet
architecture and business to business ("B2B") e-business models.  The
Company believes that its architecture is among the most scalable and adaptable
for the enterprise-level business software.  The Company's strategy is to offer
enterprise financial, operational and analytical e-business solutions to a
variety of industries.  Walker's e-business solutions support and enhance
enterprise-wide financial, operational and analytic processes, including
procurement, revenue management, financial management and insight, business
planning, budgeting, forecasting and financial consolidation.  The Company's
software products utilize the Microsoft Windows operating systems on the
desktop, NT, UNIX and S/390 operating systems on the server and industry-leading
On Line Analytical Processing ("OLAP"), Relational Database Management
Systems ("RDBMS") including IBM's DB2 and DB2 OLAP server, Hyperion
Solutions' Essbase and Microsoft  SQL/Server.  Walker e-business solutions
utilize the latest-generation IBM eServer zSeries Web Application Server.  In
addition, Walker utilizes iSeries, pSeries and xSeries as an integral part of
its e-business strategy for Walker's analytic solutions.

RECENT DEVELOPMENTS

The Company divested its IMMPOWER product line in April 2000 and its Aptos
product line in October 2000.  For the second quarter of 2000, revenues and
operating expenses from these divested product lines were $1.0 million and $1.6
million, respectively. For the first six months of 2000, revenues and operating
expenses from these divested product lines were $3.1 million and $4.4 million,
respectively.

During the quarter ended September 30, 2000, the Board of Directors approved
a strategic restructuring plan designed to reduce costs and strengthen the
Company's position to successfully execute its e-business strategy.  The Company
recorded pretax restructuring charges totaling $1.9 million, primarily severance
costs related to involuntary employee terminations, and an impairment charge of
$4.8 million, primarily related to its legacy Tamaris software product. As of
June 30, 2001, approximately $400,000 of the restructuring charges has not yet
been paid out, the majority of which relates to long-term lease obligations.

The product line divestitures and the on-going effect of the strategic
restructuring have reduced both total revenues and operating costs when
comparing both the three month and the six month periods ending June 30, 2001
and 2000.

On March 5, 2001, the Company announced that its common stock was removed
from the Nasdaq National Market and became eligible for trading on the OTC
Bulletin Board under the symbol "WALK.OB". Nasdaq's decision to delist
the Company's common stock from the Nasdaq National Market was based primarily
on the Company's net tangible assets, as defined by Nasdaq, falling below the
minimum requirement.

RESULTS OF OPERATIONS

Quarters ended June 30, 2001 and June 30, 2000

REVENUES

Total revenues for the three months ended June 30, 2001 were $12.5 million, a
decrease of $1.7 million, or 12.1%, as compared to the three months ended June
30, 2000.  The decrease in total revenues relates primarily to divested product
lines.

License revenues for the three months ended June 30, 2001 were $1.9 million,
an increase of $0.4 million, or 26.5%, as compared to the three months ended
June 30, 2000. The Company's e-business enterprise solutions have a long sales
cycle as collaborative commerce involves coordination with multiple vendors,
which generally increases the value of each transaction and adds time and
complexity to the process.  The Company was in the early stage of its transition
to e-business solutions during the quarter ended June 30, 2000, and executed
more significant license agreements during the quarter ended June 30, 2001.
The Company's e2 product was launched in June 2000.

Maintenance revenues for the three months ended June 30, 2001 were
$5.7 million, a decrease of $1.1 million, or 16.7%, as compared to the three
months ended June 30, 2000.  Approximately $500,000 of the decrease relates to
divested product lines.  The remainder of the decrease is attributable to lower
license revenue from the legacy product lines during 2000 resulting in the lapse
of related maintenance contracts in excess of new contracts and renewals during
2001.

Consulting revenues for the three months ended June 30, 2001 were $5.0
million, a decrease of $1.0 million, or 16.4%, as compared to the three months
ended June 30, 2000. Approximately $600,000 of the decrease relates to divested
product lines. Higher utilization rates for the three months ended June 30, 2001
were offset by headcount reductions made as part of the Company's restructuring
actions in the third quarter of 2000, which reduced total consulting
revenue.

COSTS OF LICENSES, MAINTENANCE AND CONSULTING.

Costs of licenses, maintenance and consulting were $4.6 million for the three
months ended June 30, 2001, representing 36.8% of total revenues, and $6.3
million for the three months ended June 30, 2000, representing 44.4% of total
revenues.

The costs of licenses as a percentage of license revenues decreased in
the three months ended June 30, 2001 as compared to the three months ended June
30, 2000. The decrease results from the Company selling a higher proportion of
products that utilize the Company's own technology rather than technology
licensed from third parties.

The cost of maintenance, as a percentage of related revenue, increased in
the three months ended June 30, 2001 as compared to the three months ended June
30, 2000. Although costs remained the same in absolute dollar terms,  they
increased as a percentage due to the lower revenue base in three months ended
June 30, 2001.

The costs of consulting, as a percentage of related revenue, decreased in
the three months ended June 30, 2001 as compared to the three months ended June
30, 2000.The decrease reflects the effect of the restructuring actions
taken in the third quarter of 2000, together with a relative reduction in the
use of outside contractors in 2001.

SALES AND MARKETING.

Sales and marketing costs for the three months ended June 30, 2001 were $2.9
million, a decrease of $2.0 million, or 40.9%, as compared to the three months
ended June 30, 2000. As a percentage of total revenues, sales and marketing
expenses were 23.6% and 35.1% in the three months ended June 30, 2001 and 2000,
respectively. The decrease is attributable to reduced discretionary spending and
reduced sales and marketing employee related costs.

PRODUCT DEVELOPMENT.

Product development related expenses, excluding amortization of capitalized
software, were as follows:

`Three Months Ended
                                          June 30,
                                      -------------------
                                         2001      2000
                                      --------- ---------
Product development expenditures.....   $3,005    $4,220
Less:
   Additions to capitalized software.     (393)   (1,555)
                                      --------- ---------
Product development expense..........   $2,612    $2,665
                                      ========= =========`

Net product development expense decreased $53,000, or 2.0%, in the three
months ended June 30, 2001 as compared to the three months ended June 30, 2000
and was 20.9% and 18.7% of total revenues, respectively.  For the three months
ended June 30, 2001, total product development expenditures decreased $1.2
million reflecting the effect of product line divestitures and restructuring
actions.  RareVision costs were approximately $1.3 million for the quarter ended
June 30, 2001, compared to approximately $800,000 for the quarter ended June 30,
2000.  Additions to capitalized software decreased $1.2 million, or 74.7%, in
the second quarter of fiscal 2001 as compared to the second quarter of fiscal
2000 and were 13.1% and 36.8% of product development expenditures, respectively.
The decrease in software costs capitalized in the three months ended June 30,
2001 is primarily attributable to a larger portion of product development
resources being allocated to projects that do not meet the Company's
capitalization criteria. During the quarter ended June 30, 2000, significant
research and development resources were allocated to the Company's e2 product
that was launched in that quarter.

AMORTIZATION OF CAPITALIZED SOFTWARE.

Capitalized software amortization in the three months ended June 30, 2001 was
$763,000, a decrease of $957,000, or 55.6%, as compared to the three months
ended June 30, 2000. Amortization has decreased since the third quarter of
fiscal 2000 due to the impairment of $4.8 million of capitalized software during
that quarter as part of the Company's restructuring actions.

GENERAL AND ADMINISTRATIVE.

General and administrative expenses in the three months ended June 30, 2001
were $1.3 million, a decrease of $1.1 million, or 46.2%, as compared to the
three months ended June 30, 2000. As a percentage of total revenues, general and
administrative expenses were 10.6% and 17.4% in the three months ended June 30,
2001 and 2000, respectively.  The decrease in the three months ended June 30,
2001 is primarily due to the effect of the product line divestitures, lower
employee and facilities costs resulting from the Company's restructuring actions
during the third quarter of 2000, and a $450,000 benefit from termination of a
lease.

PROVISION FOR INCOME TAXES.

In the three months ended June 30, 2001, the Company provided $25,000 for
state and foreign income taxes that could not be offset against net operating
loss carryforwards. In the three months ended June 30, 2000, the Company
recorded an income tax expense of $50,000 associated with state and foreign
taxes.

Six months ended June 30, 2001 and June 30, 2000

REVENUES

Total revenues for the six months ended June 30, 2001 were $25.1 million, a
decrease of $3.5 million, or 12.3%, as compared to the six months ended June 30,
2000.  The decrease in total revenues relates primarily to divested product
lines.

License revenues for the six months ended June 30, 2001 were $5.7 million, an
increase of $3.4 million, or 147.6%, as compared to the six months ended June
30, 2000. The Company's e-business enterprise solutions have a long sales cycle
as collaborative commerce involves coordination with multiple vendors, which
generally increases the value of each transaction and adds time and complexity
to the process.  The Company was in the early stage of its transition to e-
business solutions during the six months ended June 30, 2000 whereas the Company
executed several significant license agreements during the six months ended June
30, 2001.

Maintenance revenues for the six months ended June 30, 2001 were $11.4
million, a decrease of $3.0 million, or 20.8%, as compared to the six months
ended June 30, 2000.  Approximately $1.3 million of the decrease relates to
divested product lines. The remainder of the decrease is attributable to lower
license revenue from the legacy product lines during 2000 resulting in the lapse
of related maintenance contracts in excess of new contracts and renewals.

Consulting revenues for the six months ended June 30, 2001 were $8.0 million,
a decrease of $3.9 million, or 32.8%, as compared to the six months ended June
30, 2000. Approximately $1.7 million of the decrease relates to divested product
lines. Higher utilization rates for the six months ended June 30, 2001 were
offset by headcount reductions made as part of the Company's restructuring
actions in the third quarter of 2000, which reduced total consulting
revenue.

COSTS OF LICENSES, MAINTENANCE AND CONSULTING.

Costs of licenses, maintenance and consulting were $8.7 million for the six
months ended June 30, 2001, representing 34.4% of total revenues, and $14.2
million for the six months ended June 30, 2000, representing 49.4% of total
revenues.

The costs of licenses as a percentage of license revenues decreased in
the six months ended June 30, 2001 as compared to the six months ended June 30,
2000. The decrease results from the Company selling a higher proportion of
products that utilize the Company's own technology rather than technology
licensed from third parties.

The cost of maintenance, as a percentage of related revenue, increased in
the six months ended June 30, 2001 as compared to the six months ended June 30,
2000. Although costs remained the same in absolute dollar terms,  they increased
as a percentage due to the lower revenue base in six months ended June 30,
2001.

The costs of consulting, as a percentage of related revenue, decreased in
the six months ended June 30, 2001 as compared to the six months ended June 30,
2000.The decrease reflects the effect of the restructuring actions taken
in the third quarter of 2000, together with a relative reduction in the use of
outside contractors in 2001.

SALES AND MARKETING.

Sales and marketing costs for the six months ended June 30, 2001 were $6.1
million, a decrease of $3.4 million, or 36.0%, as compared to the six months
ended June 30, 2000. As a percentage of total revenues, sales and marketing
expenses were 24.4% and 33.4% in the six months ended June 30, 2001 and 2000,
respectively. The decrease is attributable to reduced discretionary spending and
reduced sales and marketing employee related costs.

PRODUCT DEVELOPMENT.

Product development related expenses, excluding amortization of capitalized
software, were as follows:

`Six Months Ended
                                          June 30,
                                      -------------------
                                         2001      2000
                                      --------- ---------
Product development expenditures.....   $5,910    $8,349
Less:
   Additions to capitalized software.     (710)   (2,661)
                                      --------- ---------
Product development expense..........   $5,200    $5,688
                                      ========= =========`

Net product development expense decreased $488,000, or 8.6%, in the six
months ended June 30, 2001 as compared to the six months ended June 30, 2000 and
was 20.7% and 19.8% of total revenues, respectively.  For the six months ended
June 30, 2001, total product development expenditures decreased $2.4 million
reflecting the effect of product line divestitures and restructuring actions.
RareVision costs were approximately $2.4 million for the six months ended June
30, 2001, compared with $1.0 million for the six months ended June 30, 2000.
Additions to capitalized software decreased $2.0 million, or 73.3%, in the six months
ended June 30, 2001 as compared to the six months ended June 30, 2000 and were
12.0% and 31.9% of product development expenditures, respectively. The decrease
in software costs capitalized in the six months ended June 30, 2001 is primarily
attributable to a larger portion of product development resources being
allocated to projects that do not meet the Company's capitalization criteria.
During the six months ended June 30, 2000, significant research and development
resources were allocated to the Company's e2 product that was launched in the
second quarter of fiscal 2000.

AMORTIZATION OF CAPITALIZED SOFTWARE.

Capitalized software amortization in the six months ended June 30, 2001 was
$1.5 million, a decrease of $1.5 million, or 49.9%, as compared to the six
months ended June 30, 2000. Amortization has decreased since the third quarter
of fiscal 2000 due to the impairment of $4.8 million of capitalized software
during that quarter as part of the Company's restructuring actions.

GENERAL AND ADMINISTRATIVE.

General and administrative expenses in the six months ended June 30, 2001
were $3.4 million, a decrease of $2.4 million, or 42.0%, as compared to the six
months ended June 30, 2000. As a percentage of total revenues, general and
administrative expenses were 13.4% and 20.2% in the six months ended June 30,
2001 and 2000, respectively.  The decrease in the six months ended June 30, 2001
is primarily due to the effect of the product line divestitures, lower employee
and facilities costs resulting from the Company's restructuring actions during
the third quarter of 2000, and a $450,000 benefit from termination of a lease.

PROVISION FOR INCOME TAXES.

In the six months ended June 30, 2001, the Company provided $50,000 for state
and foreign income taxes that could not be offset against net operating loss
carryforwards. In the six months ended June 30, 2000, the Company recorded an
income tax expense of $98,000 associated with state and foreign taxes

LIQUIDITY AND CAPITAL RESOURCES

As of June 30, 2001, the Company's principal sources of liquidity included
cash, cash equivalents and short-term investments aggregating $8.0 million. In
addition, in March 2001 the Company replaced its $6.0 million line of credit,
secured by marketable securities, with a new credit facility. Under the terms of
the new credit facility, which is renewable annually, the Company may borrow up
to $6.0 million, dependent upon the amount of eligible accounts receivable, as
defined in the agreement. No borrowings were outstanding as of June 30, 2001.

The Company's operating activities used cash of $686,000 and $6.4 million in
the six months ended June 30, 2001 and June 30, 2000, respectively. Cash flows
from operating activities for the six months ended June 30, 2001 primarily
reflected net income of $450,000; a decrease in accounts receivable, net of
reserves, of $377,000; a decrease in accounts payable and accrued expenses of
$2.7 million; a decrease in deferred revenue of $919,000, and depreciation and
amortization of $2.2 million. Cash flows from operating activities for the six
months ended June 30, 2000 primarily reflected a net loss of $9.2 million;
depreciation and amortization of $4.1 million; a decrease in accounts
receivable, net of reserves, of $5.6 million; a decrease in deferred revenue of
$4.5 million, and decreases in accounts payable and accrued expenses of $2.7
million.

Financing activities provided $138,000 and $1.4 million in cash during the
six months ended June 30, 2001 and June 30, 2000, respectively, substantially
all of which comprised proceeds from the issuance of stock under the Company's
employee stock purchase plan and proceeds from stock options exercised.

Investing activities provided $485,000 in cash during the six months
ended June 30, 2001 and $2.6 million in cash during the six months ended June
30, 2000.  The major cash flows in the six months ended June 30, 2001 comprised
net investment activity totaling $1.6 million, offset by additions to
capitalized software of $711,000 and fixed asset purchases of $368,000. The
major cash flows in the six months ended June 30, 2000 comprised net investment
activity totaling $5.6 million, offset by additions to capitalized software of
$2.7 million and fixed asset purchases of $373,000.

The Company believes that its principal sources of liquidity, which include
cash and cash equivalents of $8.0 million as of June 30, 2001 and funds expected
from operations will satisfy the Company's currently anticipated working capital
and capital expenditure requirements for at least the next twelve months. In
addition, the Company has a credit facility that provides for up to $6.0 million
of borrowings, dependent upon the amount of eligible accounts receivable, as
defined in the agreement. However, there can be no assurance that the Company
will not need to raise additional capital to fund operations within this period.
There can be no assurance that additional financing can be obtained on
acceptable terms, or at all.  If additional funds are raised by issuing equity
securities, dilution to stockholders may result.  If adequate funds are not
available, the Company may be harmed.

ADDITIONAL RISK FACTORS

The Company operates in a rapidly changing
environment that involves numerous risks and uncertainties which could have a
material adverse effect on the Company. The following discussion details some,
but not all, of these risks and uncertainties.

FLUCTUATION IN OPERATING RESULTS

The Company's operating results fluctuate as a result of a variety
of factors including:

(i) the execution of new license agreements;

(ii) the shipment of software products;

(iii) customer acceptance criteria for services performed;

(iv) completion of milestone or other significant development
requirements pursuant to the Company's license agreements;

(v) the financial terms of consulting agreements and the inclusion
of fixed as opposed to variable pricing;

(vi) third-party royalty payments for licensed software;

(vii) the demand for the Company's products and services;

(viii) changes in the Company's product mix;

(ix) the development and launch of new products, and the life cycles
of the Company's existing products;

(x) research and development expenditures required to update and
expand the Company's product portfolio and related third-party consulting costs;

(xi) sales and marketing expenses generally related to the entry
into new markets with new or existing products and maintenance of market share
in existing markets;

(xii) acquisitions and the integration and development of acquired
entities or products;

(xiii) competitive conditions in the industry; and

(xiv) general economic conditions.

As a result, the Company believes that period-to-period comparisons of its
operating results are not necessarily meaningful and should not be relied upon
as indications of future performance.

The Company's quarterly operating results are particularly dependent on the
number of license agreement bookings executed in each quarter. In addition, the
Company's consulting and maintenance revenue is dependent on the license
agreements booked in recent quarters. The amount of quarterly bookings has
varied substantially from quarter to quarter due to a variety of reasons
including:

(i) a high proportion of license agreements are negotiated during the latter
part of each quarter and these negotiations may not be completed before the
quarter end;

(ii) the sales cycles for some of the Company's products are
relatively long due to the Company's focus on "enterprise solutions"
as opposed to individual products, which adds complexity to the customer's
selection, negotiation and approval process;

(iii) the Company's longer sales cycle resulting from its transition
to e-business, as the transition to collaborative commerce involves coordination
with multiple vendors that can delay the sales process;

(iv) the amount related to each booking may vary significantly due
to the need for different solutions for different customers;

(v) procurement procedures may vary from customer to customer, which
may affect the timing of the bookings;

(vi) the period for a customer to complete product evaluations and
to complete any subsequent purchase approval may be delayed due to resource
limitations; and

(vii) economic, political and industrial conditions can adversely
affect business opportunities without notice.

In addition, bookings that are executed during a
particular quarter may not be recognized as revenue during such quarter because
such bookings may not have met the Company's revenue recognition criteria. No
assurance can be given that the Company will be able to effect new bookings in
accordance with historical results or management's expectations, and the
inability of the Company to do so could have a material adverse effect on the
Company's operating results.

While the Company typically sells its software under
a standard license agreement, license agreements associated with large
enterprise solutions often require the negotiation of terms and conditions that
differ substantially from the Company's standard license agreement terms. The
negotiation of these agreements may extend the sales cycle. The Company may not
always obtain terms and conditions that permit the recognition of revenue upon
shipment of the licensed product or under the percentage of completion method of
contract accounting rules. Accordingly, revenue may not be recognized after
shipment of a product because specified milestones have not been met or because
applicable services have not been completed.

The Company has and expects to enter into fixed-price
consulting agreements, particularly in response to increased competition in the
industry. The Company has recognized lower profit margins on certain fixed-price
service agreements when compared to variable agreements. No assurance can be
given that the Company will be able to conclude fixed-price agreements on terms
that will allow the Company to achieve acceptable operating margins.

The Company has historically generated a majority of
its consulting revenue from pre- and post-implementation services. The Company
has provided services that include, but are not limited to, Year 2000 readiness
engagements, best practice solution engagements and other hardware and software
solutions. The Company intends to continue its pursuit of consulting engagements
for which the Company believes it is qualified. There can be no assurances that
these engagements will result in profit margins equal to or greater than those
engagements that are specific to a customer's product implementation. Also,
there can be no assurances that consulting revenue generated from non-
implementation related projects will continue in the future.

Employee and facility related expenditures comprise a
significant portion of the Company's operating costs and expenses, and are
therefore relatively fixed over the short term. In addition, the Company's
expense levels are based, in significant part, on the Company's forecasted
revenue. If revenue levels fall below expectations, operating results are likely
to be adversely affected. There can be no assurance that the Company will be
able to achieve profitability on a quarterly or annual basis in the future. Any
of the foregoing factors could cause the Company's future operating results to
fall below the expectations of public securities market analysts, which could
have an adverse effect on the trading price of the Company's common stock. See
"Volatility of Stock Price."

NASDAQ DELISTING

The Company received a Nasdaq Staff Determination indicating that
the Company failed to comply with the listing requirements of the Nasdaq
National Market. A determination was made by the Panel on March 5, 2001 to
delist the Company's securities from the Nasdaq Stock Market effective with the
open of business March 6, 2001. As of March 6, 2001 the Company's stock has
traded on the Over the Counter ("OTC") Bulletin Board. This is
generally considered a less efficient market, and the Company's stock price, as
well as the liquidity of its common stock, may be adversely affected as a
result.

VOLATILITY OF STOCK PRICE

Technology companies, including the Company,
frequently experience volatility in their common stock prices. Factors such as
quarterly fluctuations in results of operations, announcements of technological
innovations by the Company or its competitors or the introduction of new
products by the Company or its competitors and macroeconomic conditions in the
computer hardware and software industries generally may have a significant
adverse impact on the market price of the Company's stock. If revenues or
earnings in any quarter fail to meet the expectations of the investment
community, there could be an immediate impact on the Company's stock price. In
addition, the Company has issued shares and stock options, which, if sold
directly or exercised and sold on the open market in large concentrations, could
cause the Company's stock price to decline in the short term. Furthermore, the
stock market has from time to time experienced extreme price and volume
fluctuations which have particularly affected the market price for many
technology companies, in some cases unrelated to the operating performance of
those companies. These broad market fluctuations may materially adversely affect
the market price of the stock of the Company.

RELIANCE ON THIRD PARTY TECHNOLOGY

The Company generates revenue from
internally developed software products, some of which utilize technology
licensed from third parties. The Company expects to continue utilizing third
party technology and may enter into agreements with additional business
partners. If sales of software utilizing third party technology increase
disproportionately, gross margins may be below historical levels due to third
party royalty obligations. There can be no assurances that the third parties
will renew existing agreements with the Company or will not require financial
conditions that are unfavorable to the Company. In addition, there can be no
assurances that existing third party agreements will not be terminated.

INDUSTRY

Certain software companies, including the
Company, have experienced significant economic downturns as a result of
technological shifts and competitive pressures. These downturns are
characterized by decreased product demand, price erosion, work slowdowns and
layoffs. The Company's operations may, in the future, experience substantial
fluctuations from period to period because of such industry patterns and general
economic and political conditions which could affect the timing of orders from
customers. There can be no assurance that such factors will not have a
materially adverse effect on the Company's business, operating results or
financial condition.

INTERNATIONAL

The Company will continue its presence in
international markets by marketing its B2B e-business solutions for the
enterprise to Global 2000 organizations. Risks associated with such pursuits
include, but are not limited to, the following: changing market demands,
economic and political conditions in foreign markets, foreign exchange
fluctuations, longer collections cycles, difficulty in managing a geographically
dispersed organization and changes in international tax laws. Operating results
are likely to be adversely affected if the Company's operations in international
markets are not successful.

COMPETITION

The business and financial applications
software market for large, complex organizations is intensely competitive. The
Company's principal competitors with e-business solutions are SAP AG, Oracle
Corporation and PeopleSoft, Inc. With the Horizon suite of analytic
applications, the Company principally competes with Hyperion Solutions
Corporation and Comshare, Inc.

The Company also competes to a lesser extent with
other independent software application vendors. Some of the Company's current
and potential competitors have substantially greater financial, technical,
marketing and sales resources than the Company. Some of these competitors also
offer business application products not offered by the Company, primarily in the
areas of human resources and manufacturing. However, Walker remains one of the
few companies committed to providing and enhancing applications for the
mainframe environment. Most of the competitors listed above compete with Walker
by offering UNIX-based applications.

The Company encounters competition from a broader
range of firms in the market for professional services. Principal competitors
include Accenture (formerly Andersen Consulting) and IBM Global Services, the
consulting divisions of the major accounting firms, all of which possess greater
resources than the Company, and niche-consulting firms that specialize in the
Company's products and compete primarily on the basis of price of services
provided.

The principal competitive factors in the market for
business and financial applications software and services include product
functionality, flexibility, portability, integration, reliability, performance,
product availability, speed of implementation, quality of customer support and
user documentation, vendor reputation, experience, financial stability, cost
effectiveness and price. The Company believes that it competes favorably with
respect to these factors. There can be no assurance, however, that the Company
will be able to compete successfully in the future.

RAPID TECHNOLOGICAL CHANGE

The software industry is characterized by
rapid technological change. The pace of change has accelerated due to advances
in mainframe and client/server technology and the growth in Internet, Intranet
and extranet utilization. The Company expects to evaluate potential
opportunities and may invest in those that are compatible with the Company's
strategic direction. However, there can be no assurance that any such
investments will be profitable. The Company's products are also designed
primarily for use with certain mainframe and client/server systems. The
introduction of products embodying new technologies and the emergence of new
industry standards can render existing products obsolete. Accordingly, the
Company's future success depends in part upon its ability to continue to enhance
its current products and to develop and introduce new products that respond to
evolving customer requirements and keep pace with technological development and
emerging industry standards, such as new operating systems, hardware platforms,
interfaces and third party applications software.

There can be no assurances that:

> (i) the Company will be successful in developing and marketing
> product enhancements or new products that respond to technological change,
> changes in customer requirements or emerging industry standards;

> (ii) the Company will not experience difficulties that could delay
> or prevent the successful development, introduction and marketing of such
> products and enhancements; or

> (iii) any new products or enhancements that it may introduce will
> achieve market acceptance.

PRODUCT DEVELOPMENT

The Company's continued success is dependent
on its continued ability to introduce, develop and market new and enhanced
versions of its software products, although there can be no assurance that this
process can be maintained. The Company plans to continue its investment in
product development in future periods. However, there can be no assurance that
revenues will be sufficient to support the future product development that is
required for the Company to be competitive. Although the Company may be able to
release new products in addition to enhancements to existing products, there can
be no assurance that the Company's new or upgraded products will be accepted,
will not be delayed or canceled, or will not contain errors or "bugs"
that could affect the performance of the product or cause damage to users' data.

PROPRIETARY RIGHTS

The Company regards its products as
proprietary. Through its license agreements with customers and its internal
security systems, confidentiality procedures and employee agreements, the
Company has taken steps to maintain the trade secrecy of its products. However,
there can be no assurances that misappropriation will not occur. In addition,
the laws of some countries do not protect the Company's proprietary rights to
the same extent as do the laws of the United States. There can be no assurance
that the confidentiality of any proprietary information will provide any
meaningful competitive advantage. The Company has no patents relating to its
products. The Company believes that, because of the rapid pace of technological
change in the computer software industry, that patents and copyrights are less
significant than factors such as the knowledge, ability and experience of the
Company's employees, frequent product enhancements and the timeliness and
quality of support services. There can be no assurance that the Company's
current efforts to retain its products as proprietary will be adequate.

Although the Company believes that its products do
not infringe upon the proprietary rights of third parties, there can be no
assurance that third parties will not assert infringement claims against the
Company in the future with respect to current or future products or that any
such assertions will not require the Company to enter into royalty arrangements
or result in costly litigation.

PRODUCT LIABILITY

The Company's license agreements with its
customers contain provisions designed to limit the Company's exposure to
potential product liability claims. It is possible, however, that the limitation
of liability provisions contained in such license agreements may not be enforced
as a result of international, federal, state and local laws or ordinances or
unfavorable judicial decisions. The license and support of the Company's
software for use in mission critical applications creates the risk of product
liability claims against the Company. Damage liability or injunctive relief
resulting from such a claim could cause a materially adverse impact on the
Company's business, operating results and financial condition.

EMPLOYEES

The Company believes that its continued
success will depend in large part upon its ability to attract, train and retain
highly skilled technical, sales, marketing and managerial personnel. Because of
the high level of demand, competition for such personnel is intense and the
Company sometimes experiences difficulty in locating candidates with appropriate
qualifications or within desired geographic locations. Revenue growth is
dependent on the Company's ability to attract, train, retain and productively
manage such personnel.

FACILITIES

The Company has its headquarters in San Francisco, California under a lease
that expires in 2007. Although commercial building vacancy rates have
historically been low in San Francisco, recent changes in the technology sector
have resulted in a significant increase in available office space. The Company's
San Francisco headquarters office space exceeds its current needs, and the
Company is seeking to reduce this excess office space. Failure to do so on
commercially acceptable terms may adversely affect the Company's operations and
financial results.

ACQUISITION-RELATED RISKS

The Company has acquired and may continue to acquire complimentary
businesses, products or technology. The process of integrating an acquired
company's business into the Company's operations may result in unforeseen
operating difficulties and expenditures and may require significant management
attention that would otherwise be available for the ongoing development of the
Company's business. There can be no assurance that any anticipated benefits of
an acquisition will be realized. Future acquisitions by the Company could result
in potentially dilutive issuances of equity securities, the incurrence of debt
and contingent liabilities and amortization related to goodwill and other
intangible assets, which could materially affect the Company's operating results
and financial condition. Acquisitions involve numerous risks, including
difficulties in the assimilation of operations, technologies and products of the
acquired company, risks associated with entering markets in which the Company
has no or limited direct prior experience and the potential loss of key
employees of the acquired company.

Item 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There were no material changes in the reported market risks since
December 31, 2000.

**PART II. -- OTHER INFORMATION**

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

1. The Annual Meeting of Stockholders of Walker Interactive Systems, Inc. was
held on May 17, 2001.
2. The matters voted upon at the meeting and the voting of the stockholders
with the respect thereto are as follows:

1. The election of Richard A. Alberding as a Director to hold office until the
2004 Annual Meeting of Shareholders:
2. The election of Frank M. Richardson as a Director to hold office until the
2004 annual Meeting of Shareholders:
3. To approve the Company's 1992 Employee Stock Purchase Plan, as amended, to
increase the aggregate number of shares of Common Stock authorized for issuance
under such plan from 1,500,000 to 2,250,000 shares , and increase of 750,000
shares
4. To ratify the selection of Deloitte and Touche LLP as independent public
accountants of the Company for its fiscal year ending December 31,
2001.

Item 6. EXHIBITS AND REPORTS ON FORM 8-K

a. Exhibits

None

b. Reports on Form 8-K

None

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WALKER INTERACTIVE SYSTEMS, INC.

SIGNATURES

Pursuant to the requirements 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.



| |                                 
| | --------------------------------
| | WALKER INTERACTIVE SYSTEMS, INC.

| |             
| | ------------
| | (Registrant)



| |     |                      
| | --- | ---------------------
| | By: | /s/ Stanley V. Vogler

| |                                             
| | --------------------------------------------
| |                                             
| | Stanley V. Vogler                           
| | Chief Financial Officer                     
| | (Principal Financial and Accounting Officer)

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