<PAGE>

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

                                   FORM 10-Q


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

               For the quarterly period ended September 30, 1999

                                      OR

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

                        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                             (I.R.S. Employer
of incorporation or organization)                       Identification Number)



                  303 Second Street, San Francisco, CA  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 such report) and (2) has been subject to such filing
requirements for the past 90 days.

                           Yes    X    No ______
                                -----


 There were 14,078,019 Shares of $.001 Par Value Common Stock outstanding as of
                               November 8, 1999.
<PAGE>

                        WALKER INTERACTIVE SYSTEMS, INC.
                                    FORM 10-Q
                                      INDEX



<TABLE>
<CAPTION>
                                  PART I.  FINANCIAL INFORMATION                                    Page
                                                                                                    ----
<S>                                                                                                 <C>
Item 1.       Consolidated Financial Statements

              Consolidated Balance Sheets as of September 30,
                1999 and December 31, 1998.............................................................3

              Consolidated Statements of Operations for the
                three and nine months ended September 30, 1999
                and 1998...............................................................................4

              Consolidated Statements of Cash Flows for the
                three and nine months ended September 30, 1999
                and 1998...............................................................................5

              Notes to Consolidated Financial Statements...............................................6

Item 2.       Management's Discussion and Analysis of Financial Condition
              and Results of Operations................................................................9

Item 3.       Quantitative and Qualitative Disclosures About Market Risk..............................18


                                                    PART II.
                                               OTHER INFORMATION

Item 1.       Legal Proceedings.......................................................................20

Item 6.       Exhibits and Reports on Form 8-K........................................................20

Signatures    ........................................................................................21
</TABLE>

                                       2
<PAGE>

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

                       WALKER INTERACTIVE SYSTEMS, INC.
                          CONSOLIDATED BALANCE SHEETS
                     (in thousands, except share amounts)

<TABLE>
<CAPTION>
                                                                     SEPTEMBER          DECEMBER
                                   ASSETS                             30, 1999          30, 1999
                                                                     ----------        ---------
                                                                     (unaudited)
<S>                                                                  <C>               <C>
Current assets:
   Cash and cash equivalents                                         $   10,880        $  15,556
   Short-term investments                                                 7,702            5,135
   Accounts receivable, net                                              23,410           30,457
   Prepaid expenses                                                       4,636            2,347
                                                                     ----------        ---------
       Total current assets                                              46,628           53,495


Long-term investments                                                     5,431            1,906
Property and equipment, net                                               4,308            4,962
Capitalized software, net                                                12,863           18,186
Deferred tax assets, net                                                      -           12,501
Other assets                                                                543            4,047
                                                                     ----------        ---------

TOTAL ASSETS                                                         $   69,773        $  95,097
                                                                     ==========        =========

                     LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
   Accounts payable and accrued liabilities                          $   20,326        $  18,496
   Deferred revenue                                                      16,149           14,819
                                                                     ----------        ---------
       Total current liabilities                                         36,475           33,315

Deferred revenue                                                          3,525            1,600
Accrued rent                                                              1,021              954
Other long-term obligations                                               2,489            2,177
                                                                     ----------        ---------
       Total liabilities                                                 43,510           38,046
                                                                     ----------        ---------

Commitments and Contingencies                                                 -                -

Stockholders' equity
   Common stock, $.001 par value: 50,000,000 shares
       authorized; issued 14,184,865 shares - September 30,
       1999; 14,184,685 shares - December 31, 1998                           14               14
   Additional paid-in capital                                            74,116           74,719
   Accumulated other comprehensive income                                   130              232
   Accumulated deficit                                                  (47,703)         (17,662)
   Treasury stock at cost (106,666 shares - September 30, 1999;
       49,207 shares - December 31, 1998)                                  (294)            (252)
                                                                     ----------        ---------
       Total stockholders' equity                                        26,263           57,051
                                                                     ----------        ---------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                           $   69,773        $  95,097
                                                                     ==========        =========
</TABLE>

See notes to consolidated financial statements

                                      3
<PAGE>

                       WALKER INTERACTIVE SYSTEMS, INC.
               CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
                   (in thousands, except per share amounts)

<TABLE>
<CAPTION>
                                                                          THREE MONTHS           NINE MONTHS
                                                                       ENDED SEPTEMBER 30,     ENDED SEPTEMBER 30,
                                                                         1999       1998          1999      1998
                                                                       -------    -------      --------   --------
<S>                                                                    <C>        <C>          <C>        <C>
REVENUES

  License                                                              $ 3,073    $ 3,116      $ 11,241   $ 15,083
  Maintenance                                                            7,613      7,857        23,560     23,184
  Consulting                                                            10,002     13,739        35,138     35,547
                                                                       -------    -------      --------   --------
     Total revenues                                                     20,688     24,712        69,939     73,814

OPERATING EXPENSES:

  Costs of revenues:
     Costs of licenses, maintenance and consulting                       9,997     10,711        32,961     30,969
     Amortization of capitalized software                                1,297      1,474         3,926      3,544
  Sales and marketing                                                    5,129      5,760        16,772     17,097
  Product development                                                    3,410      3,033        10,872      9,425
  General and administrative                                             3,501      3,496        10,798      9,392
  Write-down of capitalized research and
     development and associated goodwill                                     -          -         9,003          -
  Restructuring charges                                                    559          -         3,693          -
                                                                       -------    -------      --------   --------
     Total operating expenses                                           23,893     24,474        88,025     70,427

Operating income (loss)                                                 (3,205)       238       (18,086)     3,387
     Interest income, net                                                  273        250           746        834
                                                                       -------    -------      --------   --------
Income (loss) before income taxes                                       (2,932)       488       (17,340)     4,221
     Income tax expense                                                    200        173        12,701      1,517
                                                                       -------    -------      --------   --------

NET INCOME (LOSS)                                                      $(3,132)   $   315      $(30,041)  $  2,704
                                                                       =======    =======      ========   ========
BASIC NET INCOME (LOSS) PER SHARE                                      $ (0.22)   $  0.02      $  (2,14)  $   0.19
                                                                       =======    =======      ========   ========
Shares used in computing
     basic net income (loss) per share                                  14,126     14,042        14,057     13,998
                                                                       =======    =======      ========   ========

DILUTED NET INCOME (LOSS) PER SHARE                                    $ (0.22)   $  0.02      $  (2,14)  $   0.18
                                                                       =======    =======      ========   ========
Shares used in computing
     diluted net income (loss) per share                                14,126     14,973        14,057     14,881
                                                                       =======    =======      ========   ========
</TABLE>

See notes to consolidated financial statements

                                       4

<PAGE>

                       WALKER INTERACTIVE SYSTEMS, INC.
               CONSOLIDATED STATEMENTS OF CASH FLOWS(UNAUDITED)
                                (in thousands)

<TABLE>
<CAPTION>
                                                                                  NINE MONTHS
                                                                              ENDED SEPTEMBER 30,
                                                                                1999           1998
                                                                              --------      --------
<S>                                                                           <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES:

     Net Income (loss)                                                        $(30,134)       $2,704
     Adjustments to reconcile net income (loss) to net cash
         provided by operating activities:
         Depreciation and amortization                                           6,008         5,351
         Tax benefit of nonqualified stock options                                   -           218
         Write-down of capitalized research and
             development and associated goodwill                                 9,003             -
     Changes in operating assets and liabilities:
         Accounts receivable, net                                                7,047        (5,518)
         Prepaids & other assets                                                (2,289)         (295)
         Accounts payable & accrued liabilities                                  2,308        (2,175)
         Deferred tax asset                                                     12,501         1,517
         Deferred revenue                                                        3,255        (1,365)
         Other                                                                      65           558
                                                                              --------      --------
             Net cash provided by operations                                     7,764           995
                                                                              --------      --------
CASH FLOWS FROM FINANCING ACTIVITIES:

     Proceeds from employee stock purchase plan
         issuances and stock options exercised                                     381         1,997
     Treasury stock acquired                                                    (1,026)       (2,114)
     Capital lease and loan payments                                              (109)          (59)
     Repayment of borrowings                                                         -        (1,422)
                                                                              --------      --------
             Net cash used by financing activities                                (754)       (1,598)
                                                                              --------      --------
CASH FLOWS FROM INVESTING ACTIVITIES:

     Purchases of short- and long-term investments                             (12,042)       (3,706)
     Maturities of short-term investments                                        4,375        10,200
     Sales of short-term investments                                             1,507         5,510
     Purchases of property                                                      (1,148)       (1,962)
     Additions to capitalized software                                          (4,377)       (5,659)
     Other                                                                          (1)           10
                                                                              --------      --------
             Net cash provided (used) by investing activities                  (11,686)        4,393
                                                                              --------      --------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                            (4,676)        3,790

CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD                                 15,556         7,646
                                                                              --------      --------
CASH AND CASH EQUIVALENTS - END OF PERIOD                                     $ 10,880      $ 11,436
                                                                              ========      ========
</TABLE>

See notes to consolidated financial statements

                                       5
<PAGE>

                       WALKER INTERACTIVE SYSTEMS, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


1.  SIGNIFICANT ACCOUNTING POLICIES
    -------------------------------

          BASIS OF PRESENTATION

          The accompanying unaudited consolidated financial statements have been
          prepared in accordance with generally accepted accounting principles
          for interim financial statements 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, 1998.

2.  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
          incremental shares that are to be added to the weighted average number
          of shares outstanding.

          The following is a summary of the calculation of the number of shares
          used in calculating basic and diluted EPS (in thousands):


<TABLE>
<CAPTION>
                                                          THREE MONTHS                    NINE MONTHS
                                                      ENDED SEPTEMBER 30,             ENDED SEPTEMBER 30,
                                                     1999            1998            1999            1998
                                                     ----            ----            ----            ----
<S>                                                <C>               <C>           <C>               <C>
Shares used to compute basic EPS                   14,126            14,042        14,057            13,998
Add: effect of dilutive securities                      -               931             -               883
                                                   ------            ------        ------            ------
Shares used to compute diluted EPS                 14,126            14,973        14,057            14,881
                                                   ======            ======        ======            ======
</TABLE>

                                       6
<PAGE>

3.  COMPREHENSIVE INCOME
    --------------------

          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 and nine months ended September 30, 1999 and 1998 is as
          follows (in thousands):

<TABLE>
<CAPTION>
                                                         THREE MONTHS                      NINE MONTHS
                                                       ENDED SEPTEMBER 30,              ENDED SEPTEMBER 30,
                                                     1999             1998            1999             1998
                                                     ----             ----            ----             ----
<S>                                                <C>                <C>          <C>                <C>
Net income (loss)                                  $(3,132)           $ 315        $(30,041)          $2,704
Other comprehensive income (loss)                      128              160            (102)             150
                                                   -------            -----        --------           ------
Total comprehensive income (loss)                  $(3,004)           $ 475        $(30,143)          $2,854
                                                   =======            =====        ========           ======
</TABLE>



4.  RESTRUCTURING CHARGES
    ---------------------

          During the quarter ended June 30, 1999, the Board of Directors
          approved a plan to realign Walker's focus on its core financial and
          analytic applications. Associated with this change in strategy, the
          Board of Directors approved steps to restructure its operations to
          increase operating efficiencies. The Company will focus on the Tamaris
          and Horizon product lines, specifically investing in Web-enabled
          functionality. The Company will continue to support its Aptos and
          IMMPOWER customers, focusing sales and marketing on certain geographic
          regions, but will limit its investment in these applications. During
          the quarter ended June 30, 1999, the Company recorded a pretax charge
          of $12.1 million in connection with the change in strategic direction
          and the related cost restructuring.

          The Company evaluates capitalized research and development carrying
          amounts, and associated goodwill, against related estimated
          undiscounted cashflows. During the second quarter of 1999 the
          evaluation, based on the change of strategic direction, indicated that
          the future undiscounted cashflows were not sufficient to recover the
          carrying values of some assets. These assets were adjusted to net
          realizable value resulting in a second quarter charge of $5.3 million
          associated with IMMPOWER and Aptos capitalized research and
          development costs and $3.2 million related to goodwill. The Company
          additionally wrote-off $0.5 million in capitalized research and
          development costs which had no future value in the same period.

          Costs associated with office consolidations in Europe and North
          America resulted in a second quarter pretax charge of $3.1 million
          which was required to cover costs of reducing certain areas of the
          workforce and facilities to levels more appropriate to current and
          expected business requirements. A charge of $2.0 million was
          recognized to cover costs associated with excess facilities. The
          Company intends to continue to search for tenants to sublet any vacant
          excess facilities. The Company also recognized a charge of $1.1
          million due to the reduction in workforce; 40 employees were
          terminated in the quarter ended June 30, 1999 or will be terminated as
          a result of the Company's realignment strategy. Of the total, 14 were
          in product development, 13 were in administrative and finance
          positions, nine were engaged in sales and marketing, and four were in
          customer support. All terminated employees were informed of their
          terminations by June 30, 1999. During the quarter ended September 30,
          1999, the Company recorded an additional charge of $0.6 million
          associated with an additional five percent reduction in its workforce
          and further consolidation of its facilities.

                                       7
<PAGE>

     Restructuring charges taken during the second and third quarter of 1999 and
     related charges against respective liabilities as of September 30, 1999 are
     as follows (in thousands):

<TABLE>
<CAPTION>
                                                                                                       Remaining expected
                                       Restructuring                                 Balance at        charges to liability
                                          Charges        Charges to liability    September 30, 1999          in 1999
                                       -------------     --------------------    ------------------    --------------------
<S>                                    <C>               <C>                     <C>                   <C>
Termination payments
 to employees                            $ 1,547          $   (919)                  $  628                  $ (236)
Facility closures                          2,146              (357)                   1,789                    (277)
Write-down of capitalized
 research and development                  5,788            (5,788)                       -                       -
Goodwill impairment                        3,215            (3,215)                       -                       -
                                       ------------------------------------------------------------------------------------
                                         $12,696          $(10,279)                  $2,417                  $ (513)
                                       ------------------------------------------------------------------------------------

<CAPTION>
                                         Expected
                                        balance at
                                       Dec. 31, 1999
                                       -------------
<S>                                    <C>
Termination payments
 to employees                             $   392
Facility closures                           1,512
Write-down of capitalized
 research and development                       -
Goodwill impairment                             -
                                      --------------
                                          $ 1,904
                                      --------------
</TABLE>

     Subsequent to December 31, 1999, the remaining expected charges against
     liabilities will be attributable to remaining termination payments to
     employees and future lease payments on excess facilities.

                                       8
<PAGE>

                       WALKER INTERACTIVE SYSTEMS, INC.


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

The report on this Form 10-Q contains forward-looking statements, including
statements related to prospects associated with certain product lines, working
capital requirements and Year 2000 related issues.  Discussions containing such
forward-looking statements may be found in the material set forth in this
section, generally and specifically herein under the captions "Restructuring
Charges", "Liquidity and Capital Resources", "Year 2000 Readiness" 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 13 through 18, among others, should be considered in evaluating the
Company's prospects and future financial performance.

Walker Interactive Systems, Inc. (hereinafter "Walker" or the "Company") was
incorporated in California in 1973 and reincorporated in Delaware in March 1992.
Walker designs, develops, markets and supports, on an international basis, a
family of network computing and client server based enterprise wide financial,
operational and analytic application software products and related services.
These products and services enable organizations to improve profitability
through the availability of timely and accurate information, reflect new
business processes as a result of organizational change and exploit the latest
technological advances in order to reduce costs.

Walker designs its software products specifically for the network computing and
client/server models and believes that its architecture is among the most
scalable and adaptable available for enterprise-level financial and analytical
applications software.  The Company's strategy is to offer enterprise wide
financial, operational and analytical application software solutions, and
related services, to a variety of industries with best-of-breed software
products utilized in a wide variety of cross-industry solutions.  The Walker
applications support and enhance enterprise-wide financial, operational and
analytic processes, including planning, budgeting, forecasting, consolidation,
financial management, performance measurement,  revenue and procurement
management.  The Company's software products utilize the Microsoft Windows
operating systems on the desktop, NT, UNIX and OS/390 operating systems on the
server and industry-leading On Line Analytical Processing ("OLAP"), Relational
Database Management Systems ("RDBMS") including Hyperion Solutions Essbase,
IBM's DB2, Oracle Express and Microsoft SQL/Server.

The Tamaris product line represents the Company's core suite of business and
financial solutions utilizing the power of the enterprise server, while the
Aptos suite of financial applications runs on UNIX and Windows NT servers.  The
Company also develops and markets Horizon best-of-breed analytic applications
which provide financial reporting, budgeting and financial consolidation
solutions.  The Horizon analytic applications products integrate with Tamaris
and also work standalone with leading Enterprise Resource Planning ("ERP")
applications.

The Company's software products include productivity tools that allow the
Company's applications to be customized to fit the customer's particular
requirements.  The Company complements its software products by providing
specialized professional consulting services to assist customers with
customization and implementation of financial, analytical and operational
solutions to fuel business advantage.

The Company derives its revenues primarily from software licenses, software
maintenance and professional consulting services.

RESTRUCTURING CHARGES
---------------------

During the quarter ended June 30, 1999, the Board of Directors approved a plan
to realign Walker's focus on its core financial and analytic applications.
Associated with this change in strategy, the Board of Directors approved steps
to restructure its operations to increase operating efficiencies.  The Company
will focus on the Tamaris and Horizon product lines, specifically investing in
Web-enabled functionality.  The Company will continue to support its Aptos and
IMMPOWER customers, focusing sales and marketing on certain geographic regions,
but will limit its investment in these applications.  During the quarter ended
June 30, 1999, the Company recorded a pretax charge of $12.1 million in
connection with the change in strategic direction and the related cost
restructuring.

                                       9
<PAGE>

The Company evaluates capitalized research and development carrying amounts, and
associated goodwill, against related estimated undiscounted cashflows. During
the second quarter of 1999, the evaluation, based on the change of strategic
direction, indicated that the future undiscounted cashflows were not sufficient
to recover the carrying values of some assets. These assets were adjusted to net
realizable value resulting in a second quarter charge of $5.3 million associated
with IMMPOWER and Aptos capitalized research and development costs and $3.2
million related to goodwill. The Company additionally wrote-off $0.5 million in
capitalized research and development costs which had no future value in the same
period.

Costs associated with office consolidations in Europe and North America resulted
in a second quarter pretax charge of $3.1 million which was required to cover
costs of reducing certain areas of the workforce and facilities to levels more
appropriate to current and expected business requirements. A charge of $2.0
million was recognized to cover costs associated with excess facilities.  The
Company intends to continue to search for tenants to sublet any vacant excess
facilities. The Company also recognized a charge of $1.1 million due to the
reduction in workforce; 40 employees were terminated in the quarter ended June
30, 1999 or will be terminated as a result of the Company's realignment
strategy.  Of the total, 14 were in product development, 13 were in
administrative and finance positions, nine were engaged in sales and marketing,
and four were in customer support.  All terminated employees were informed of
their terminations by June 30, 1999. During the quarter ended September 30,
1999, the Company recorded an additional charge of $0.6 million associated with
an additional five percent reduction in its workforce and further consolidation
of its facilities.

Restructuring charges taken during the second and third quarter of 1999 and
related charges against respective liabilities as of September 30, 1999 are as
follows (in thousands):

<TABLE>
<CAPTION>
                                                                                                           Remaining expected
                                           Restructuring                                 Balance at        charges to liability
                                              Charges        Charges to liability    September 30, 1999          in 1999
                                           -------------     --------------------    ------------------    --------------------
<S>                                        <C>               <C>                     <C>                   <C>
Termination payments
 to employees                                $ 1,547          $   (919)                 $   628                  $ (236)
Facility closures                              2,146              (357)                   1,789                    (277)
Write-down of capitalized
 research and development                      5,788            (5,788)                       -                       -
Goodwill impairment                            3,215            (3,215)                       -                       -
                                           ------------------------------------------------------------------------------------
                                             $12,696          $(10,279)                 $ 2,417                  $ (513)
                                           ------------------------------------------------------------------------------------

<CAPTION>
                                         Expected
                                        balance at
                                       Dec. 31, 1999
                                       -------------
<S>                                    <C>
Termination payments
 to employees                             $   392
Facility closures                           1,512
Write-down of capitalized
 research and development                       -
Goodwill impairment                             -
                                      --------------
                                          $ 1,904
                                      --------------
</TABLE>

Subsequent to December 31, 1999, the remaining expected charges against
liabilities will be attributable to remaining termination payments to employees
and future lease payments on excess facilities.

The following paragraph contains forward-looking statements.  Walker will
continue to evaluate its reserves in the future which may result in additional
charges associated with the Company's change in strategy or ongoing cost
reduction program.  There can be no assurance that Walker will or will not
dispose of or sell assets, liabilities and/or intellectual property associated
with the IMMPOWER or Aptos product lines.

RESULTS OF OPERATIONS
---------------------

REVENUES.  The Company recorded total revenues of $20.7 million and $24.7
million for the three months ended September 30, 1999 and 1998, respectively.
The 16 percent decrease is primarily attributable to a decrease in consulting
revenues.  For the first nine months of 1999, total revenues for the Company
were $69.9 million compared to $73.8 million for the same period last year.  The
five percent decrease in year-to-date total revenues is primarily a result of
lower license revenues in 1999 when compared to the prior year.

License revenues for the current quarter remained flat from the prior year at
$3.1 million.  License revenues generated from North American operations
increased over the prior year but were offset by declines in revenues generated
in Europe and in the Asia Pacific region.  For the first nine months of 1999,
license revenues decreased $3.9 million or 25 percent from $15.1 million in 1998
to $11.2 million in 1999.  The Company's license revenue decrease is primarily
attributable to a decrease in year-to-date license revenues in the European
region. The Company believes the decrease in license revenues in 1999 is
primarily attributable to a continued softness in the enterprise financial

                                       10
<PAGE>

application software industry.  The Company believes that potential customers
are utilizing resources to ensure that current software applications are Year
2000 compatible instead of purchasing and implementing new software
applications.  Additionally, continued pressure from the Year 2000 transition
and a lengthening of the sales cycle relative to all product lines negatively
impacted year-to-date license revenues.  The ongoing downturn in the Asia
Pacific economy continues to restrict license revenue growth in that region.

Consulting revenues are generated from new and existing customers for services
related to training, implementation, customization, migration, enhancement, Year
2000 readiness engagements, best practice consulting engagements and other
special projects.  The Company generates a majority of its consulting revenues
from implementation-related projects.  Consulting revenues for the third quarter
were $10.0 million, a decrease of $3.7 million or 27 percent from $13.7 million
in the same period of the prior year.  Consulting revenues were negatively
impacted during the quarter as decreases in license revenues eroded the
Company's consulting service revenue base.  Further affecting consulting
revenues was the completion of several large engagements during the quarter
which were not replaced by engagements with similar revenue streams.  For the
nine months ended September 30, 1999, consulting revenues of $35.1million
decreased $0.4 million or one percent from $35.5 million for the same period in
1998.

COSTS OF LICENSES, MAINTENANCE AND CONSULTING.  Although the cost of licenses,
maintenance and consulting, in absolute dollars, decreased seven percent, the
costs represented 48 percent and 43 percent of total revenues for the three
months ended September 30, 1999 and 1998, respectively.  The increase in the
ratio of costs of licenses, maintenance and consulting over total revenues for
the third quarter of 1999 is primarily attributable to lower revenues associated
with the Company's consulting services.  Consulting revenues for the third
quarter decreased 27 percent from third quarter of 1998, while the related cost
structure decreased slightly.  For the nine months ended September 30, 1999,
costs of licenses, maintenance and consulting represented 47 percent of total
revenues compared to 42 percent for the same period in 1998.  The decrease in
total license revenues, which generally have a higher profit margin compared to
consulting revenue, has negatively impacted cost of licenses, maintenance and
consulting as a percent of total revenues.

AMORTIZATION OF CAPITALIZED SOFTWARE. Amortization of capitalized software
decreased $0.2 million or 12 percent in the third quarter of 1999 compared to
the same period in 1998.  The decrease is primarily attributable to a decrease
in amortization associated with products that have been written off as part of
the Company's restructuring actions in the second quarter of 1999.  For the nine
months ended September 30, 1999, amortization of capitalized software increased
11 percent to $3.9 million compared to $3.5 million for the same period in 1998.
The increase is primarily due to the first half impact of additional
amortization associated with the Company's ongoing practice of evaluating the
lives of capitalized software products and additional amortization resulting
from recent product releases.  Offsetting the increase in amortization is the
decrease in amortization associated with products which have been written off as
part of the Company's restructuring actions in the second quarter of 1999.

SALES AND MARKETING.  Sales and marketing expenses decreased $0.6 million or 11
percent to $5.1 million for the three months ended September 30, 1999 compared
to $5.8 million for the same period in 1998.  For the first nine months of 1999,
sales and marketing expenses decreased $0.3 million or two percent to $16.8
million compared to $17.1 million for the same prior year period.  Cost savings
associated with the reductions in North America headcount and marketing
promotions in 1999 were partially offset by additional expenses associated with
sales offices opened during the first quarter of 1999 and increased sales
expenses in Europe and Asia Pacific over the prior year.

                                       11
<PAGE>

PRODUCT DEVELOPMENT.  Product development-related expenses, excluding
amortization of capitalized software, are detailed as follows (in thousands):

<TABLE>
<CAPTION>
                                                               THREE MONTHS                      NINE MONTHS
                                                           ENDED SEPTEMBER 30,               ENDED SEPTEMBER 30,
                                                         1999             1998             1999             1998
                                                         ----             ----             ----             ----
<S>                                                   <C>                <C>            <C>                <C>
Product development costs, including additions
 to capitalized software  (gross)                     $ 4,415            $ 4,984        $15,011            $15,095
Less: additions to capitalized software                (1,005)            (1,951)        (4,139)            (5,670)
                                                      -------            -------        -------            -------
Product development expenses                          $ 3,410            $ 3,033        $10,872            $ 9,425
                                                      =======            =======        =======            =======
</TABLE>

During the first quarter of 1999, the Company acquired $0.2 million in software
technology which complemented internally developed products and related
technology. Excluding the acquired software, gross product development expenses
decreased due to headcount reductions resulting from the second quarter of 1999
realignment of strategic direction and restructuring.  Additions to capitalized
software, in absolute dollars, decreased as a result of lower gross product
development expenses.  Capitalized software additions in absolute dollars and as
a percentage of gross product development costs decreased from the prior year as
more product development resources were allocated to non-capitalizable projects.
Historical additions to capitalized software, in absolute dollars and as a
percentage of gross product development costs, are not a reliable indicator of
additions to capitalized software that will be incurred in the future.

GENERAL AND ADMINISTRATIVE.  General and administrative expenses were flat at
$3.5 million for the three months ended September 30, 1999 and 1998,
respectively.   For the first nine months of 1999, general and administrative
expenses increased $1.4 million to $10.9 million compared to $9.4 million for
the same period in 1998.  The 15 percent increase for the first nine months of
1999 is attributable to increased usage of outside contractors and increased
labor expenses during the first half of 1999.

INCOME TAX EXPENSE.   During the quarter ended September 30, 1999, the Company
recorded an income tax expense of $0.2 million associated with foreign
withholding taxes and foreign tax accruals.

LIQUIDITY AND CAPITAL RESOURCES
-------------------------------

The Company's operating activities provided cash of $7.8 million in the first
nine months of 1999 and $1.0 million during the comparable 1998 period.
Increased collections of outstanding receivables and the change in deferred
revenue were the primary factor contributing to cash provided from operations.
These impacts were offset by the Company's net loss of $30.1 million for the
nine months ended September 30, 1999.

Financing activities used $0.7 million in cash during the first nine months of
1999 and $1.6 million during the same period in 1998.  There were proceeds of
$0.4 million from the employee stock purchase plan issuances during the first
nine months of 1999 compared to $2.0 million from employee stock purchase plan
issuances and stock option exercises in the comparable 1998 period.    The
Company used $1.0 million in cash in the first nine months of 1999 and $2.1
million in cash in the comparable 1998 period for the acquisition of common
stock from the open market.  All stock repurchases were made pursuant to
resolutions of the Company's Board of Directors authorizing the repurchase of
the Company's outstanding shares of common stock, which in aggregate is not to
exceed a total cost of $17.5 million.  As of September 30, 1999, the Company had
acquired 1,049,500 shares of its common stock at a cost of $11.1 million.  As of
September 30, 1999, the Company had reissued 974,000 of the repurchased shares
in connection with the Company's employee stock purchase plan, one of its
employee stock option plans and the December 1997 acquisition of Revere, Inc.
("Revere").

In connection with the acquisition of Revere, the Company assumed a line of
credit with an outstanding balance of $1.5 million.  The outstanding balance on
the assumed line of credit was subsequently paid in full in January 1998.

The Company has a line of credit in the amount of $6.0 million, secured by
marketable securities.  The line of credit expires on December 31, 1999.  The
Company has never borrowed against this line of credit.

                                       12
<PAGE>

Investing activities used cash of $11.7 million in the first nine months of 1999
compared to providing cash of $4.3 million for the same period in 1998.  The
increase in cash used is primarily attributable to an increase of investment
purchases in 1999.

As of September 30, 1999, the Company's principal sources of liquidity included
cash, cash equivalents and short- and long-term investments aggregating $24.0
million. The following sentence is a forward looking statement.  The Company
believes that its principal sources of liquidity, together with funds expected
to be generated from operations, will satisfy the Company's currently
anticipated working capital and capital expenditure requirements for at least
the next twelve months.

YEAR 2000 READINESS
-------------------

The Year 2000 issue is the result of computer programs being written using two
digits rather than four to define the applicable year.  The Company's computer
equipment and software and devices with imbedded technology that are time-
sensitive may recognize a date using "00" as the year 1900 rather than the year
2000.  This could result in a system failure or miscalculations causing
disruptions of operations, including, among other things, a temporary inability
to process transactions, send invoices or engage in normal business activities.

The Company has completed an assessment to determine the effect that the Year
2000 issue will have on it.  The Company believes that its current commercial
application software products generally offered for license by the Company to
end-user customers are Year 2000 ready.  However, certain versions of these
products currently installed at customers' sites will require upgrading or other
modifications to become Year 2000 ready.  The Company has identified those
affected customers who are on the Company's warranty maintenance program, has
contacted those customers and is assisting those customers to assess their
readiness.  The Company is making available to those customers a Year 2000 ready
release of its software and will assist such customers to become Year 2000
ready.  The following sentence is a forward-looking statement.  The Company
believes that the costs associated with making certain versions of the Company's
products Year 2000 ready will not be material to the Company's business, results
of operations or financial condition.

The Company has completed an assessment of its computer equipment and software,
including information technology systems, such as accounting, data processing
and telephone/PBX systems, and non-information technology systems, such as fax
machines and alarm systems, to determine if they are Year 2000 ready.  The
following three sentences are forward-looking statements.  The Company believes
that certain of its non-critical computer equipment and software will require
replacement or modification, at a total cost which is not material to the
Company's results of operations or financial condition.  The Company believes
that even if such replacements or modifications were not completed, the Year
2000 issue would not have a material adverse effect on the Company's business,
results of operations or financial condition.  In addition, even if the
Company's vendors or suppliers fail to become Year 2000 ready in a timely
manner, the Company believes that such failure would not have a material adverse
effect on the Company's business, results of operations or financial condition.

The costs and impact of the Year 2000 issue are based upon management's best
estimates, which were derived using numerous assumptions regarding future
events, including the continued availability of certain resources, the
functioning of its products in accordance with specifications and other factors.
There can be no assurance that these estimates will prove to be accurate and
actual results could differ from those currently anticipated.  Specific factors
that could cause such material differences include, but are not limited to, the
availability and cost of personnel trained in Year 2000 issues and the
functioning of the Company's products in accordance with specifications.  In
addition, variability of definitions of "Year 2000 ready" and the number of
products that the Company has sold, may lead to claims for which the impact on
the Company is not currently estimable.  No assurance can be given that the
aggregate cost of defending and resolving such claims, if any, would not
materially adversely affect the Company's business, results of operations or
financial condition.

OTHER MATTERS
-------------

                                       13
<PAGE>

On September 30, 1999, the Company announced the appointment of Frank M.
Richardson as its Chief Executive Officer ("CEO").  Leonard Y. Liu, the former
CEO, will continue as Chairman of the Board.

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.

LIQUIDITY AND CAPITAL RESOURCES.

There can be no assurance that the Company will not need to raise substantial
additional capital to fund its operations in the future. There can be no
assurance that additional financing will be available on acceptable terms or
will be available at all.

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.  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 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 amount related to each booking may vary significantly due to the
            need for different solutions for different customers;
     (iv)   procurement procedures may vary from customer to customer, which may
            affect the timing of the bookings;
     (v)    customers may continue to forego or delay software purchases due to
            increased attention and spending on Year 2000 related projects;

                                       14
<PAGE>

     (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.

The Company believes that Year 2000 pressures have caused customers to forego or
delay the licensing of new software as they utilize resources to ensure that
their existing software products are Year 2000 ready.  Continuation of this
trend will have an adverse impact on Company revenues and results of operations.
There can be no assurance that revenues will return to historical levels or
obtain historical growth rates in the Year 2000 or beyond.

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 or cash is secured.

The Company has entered 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 negotiate fixed-price agreements on terms that will
allow the Company to retain its historical operating margins.

The Company has historically generated a majority of its consulting revenue from
pre- and post-implementation services.  Recently, 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 assurance 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 assurance 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, net income is likely to be adversely affected.  There can be
no assurance that the Company will be profitable 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."

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 assurance that
the third parties will renew existing agreements with the Company or will not
require financial conditions which are unfavorable to the Company.  In addition,
there can be no assurance that existing third party agreements will not be
terminated.

INDUSTRY.

                                       15
<PAGE>

Certain software companies, including the Company, have experienced significant
economic downturns as a result of technological shifts, competitive pressures
and uncertainties caused by the Year 2000 transition.  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 plans to increase its presence in international markets by marketing
its Tamaris, Horizon and consulting and services products.  The Aptos and
IMMPOWER product lines will be focused in the geographic areas that have
traditionally proven successful.  Risks associated with such pursuits include,
but are not limited to, the following:

     (i)   changing market demands,
     (ii)  economic and political conditions in foreign markets,
     (iii) foreign exchange fluctuations,
     (iv)  longer collections cycles,
     (v)   difficulty in managing a geographically dispersed organization and
     (vi)  changes in international tax laws.

The downturn in the Asia Pacific business climate had and continues to have an
adverse effect on some market opportunities. Operating results are likely to be
adversely affected if the Company's expansion into international markets is not
successful.

COMPETITION.
The business and financial applications software market for complex
organizations is intensely competitive.  The Company's principal competitors
with Tamaris solutions are SAP AG, Oracle Corporation and PeopleSoft, Inc. With
the Horizon suite of products, the Company principally competes with Hyperion
Solutions Corporation, and Comshare, Inc. With Aptos solutions, the Company
principally competes with Oracle Corporation, Lawson Software, Inc., Platinum
Software, Inc.,  and Systems Union Group Ltd.  With the IMMPOWER suite of
products, the Company principally competes with Datastream/SQL, Indus
International, Marcam, Mincom, PSDI and SAP AG.

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 Andersen Consulting,
IBM Global Services and the consulting divisions of the major accounting firms.
These competitors possess greater resources than the Company.  Niche consulting
firms that specialize in the Company's products also compete with the Company
primarily on the basis of price.

The principal competitive factors in the market for business and financial
applications software and services include:

     (i)     product functionality,
     (ii)    flexibility,
     (iii)   portability,
     (iv)    integration,
     (v)     reliability,
     (vi)    performance,
     (vii)   product availability,

                                       16
<PAGE>

     (viii)  speed of implementation,
     (ix)    quality of customer support and user documentation,
     (x)     vendor reputation,
     (xi)    experience,
     (xii)   financial stability,
     (xiii)  cost effectiveness, and
     (xiv)   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
which 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 assurance 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 such ability 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, 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 thex Company in the future
with respect

                                       17
<PAGE>

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 a 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.

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.

VOLATILITY OF STOCK PRICE.
High 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 high 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.

Item 3.     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company has U.S. dollar interest-bearing investments that are subject to
interest rate risk.  The Company analyzed its investments at year-end to
determine the sensitivity to interest rate changes.  The fair values of these
instruments were determined by net present values.   The Company's sensitivity
analysis used  the same change in interest rates for all maturities.  All other
factors were held constant.  If interest rates increased by 10 percent the
expected effect on net income related to the Company's investments would be
immaterial.

The majority of the Company's revenues are denominated in the U.S. dollar.  The
Company does not engage in interest rate swaps or enter into foreign currency
forward contracts.

                                       18
<PAGE>

No material changes have occurred since December 31, 1998.

                                       19
<PAGE>

PART II.  OTHER INFORMATION
---------------------------


Item 1.  LEGAL PROCEEDINGS

         In September 1999, Commercial Data Servers, Inc., a California
corporation, dba Xbridge systems, inc. ("CDS"), filed a civil action against the
Company and International Business Machines Corp., a New York corporation
("IBM"), in the Superior Court of the State of California, County of San
Francisco. The action alleges that the Company and IBM acted to injure
competition in alleged violation of California's antitrust statute, prohibiting
group boycotts, exclusive dealing arrangements and attempts to monopolize, and
California's unfair competition statute, prohibiting unfair, unlawful and/or
fraudulent business practices. CDS requested that the court grant CDS
declaratory relief and monetary relief in an unspecified amount, including
restitution and disgorgement of certain amounts, treble damages, attorneys' fees
and costs and interest. The Company filed its answer to CDS' complaint in
October 1999. IBM removed the action to the United States District Court, San
Jose Division, for the Northern District of California in October 1999, and
subsequently filed a motion to dismiss. The following sentence contains forward-
looking statements. Although no assurance can be given, the Company believes
that CDS' claims against the Company are without merit and that the final
resolution of this matter will not have a material adverse effect on the
Company's business, financial condition or results of operations.

Item 6.  EXHIBITS AND REPORTS ON FORM 8-K

     (a)  Exhibits

          10.20  Form of Executive Severance Benefits Agreement entered into
                 between the registrant and certain of its employees.
          27.1   Financial Data Schedule (electronic filing only)

     (b)  Reports on Form 8-K

          The Company filed no reports on Form 8-K during the quarter ended
          September 30, 1999.

                                       20
<PAGE>

                        WALKER INTERACTIVE SYSTEMS, INC.
                                   FORM 10-Q
                                   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)




Date:  November 12, 1999              By:  /s/ Michael B. Shahbazian
       -----------------                   -------------------------
                                           Michael B. Shahbazian
                                           Senior Vice President and
                                           Chief Financial Officer
                                           (Principal Financial Officer)

                                       21
<PAGE>

                        WALKER INTERACTIVE SYSTEMS, INC.
                                   FORM 10-Q
                               INDEX TO EXHIBITS

10.20           Form of Executive Severance Benefits Agreement entered into
                between the registrant and certain of its employees.
27.1            Financial Data Schedule (electronic filing only)

                                       22