SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                    FORM 10-K

(Mark one):

 X    Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange
---   Act of 1934.

                  For the fiscal year ended September 30, 1998

      Transition Report pursuant to Section 13 or 15(d) of the Securities
---   Exchange Act of 1934.

                        Commission File number 000-22841
                                               ---------

                             MARCAM SOLUTIONS, INC.
                             ----------------------
             (Exact name of registrant as specified in its charter)

Delaware                                                  04-3371621
--------                                                  ----------
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
incorporation or  organization)

95 Wells Avenue
Newton, Massachusetts                                       02459
---------------------                                       -----
(Address of principal executive offices)                  (Zip code)

       Registrant's telephone number, including area code: (617) 965-0220
                                                           --------------
        Securities registered pursuant to Section 12(b) of the Act: None
                                                                    ----
           Securities registered pursuant to Section 12(g) of the Act:

                          Common Stock, $.01 Par Value
                          ----------------------------
  Series A Junior Participating Preferred Stock Purchase Rights, $.01 Par Value
  -----------------------------------------------------------------------------
                                (Title of Class)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

                                     YES  X  NO
                                         ---    ---

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

The aggregate market value of the Common Stock, $.01 Par Value, of the
registrant held by non-affiliates of the registrant as of December 16, 1998
(computed based on the closing price of such stock on the Nasdaq National
Market) was $44,544,888.

<PAGE>

The number of shares outstanding of the registrant's Common Stock, $.01 Par
Value, as of December 16, 1998 was 7,746,937 shares.

                       DOCUMENTS INCORPORATED BY REFERENCE

     The following documents, or indicated portions thereof, have been
incorporated herein by reference:

     Specifically identified information in the Registrant's definitive proxy
materials for its Annual Meeting of Stockholders to be held on February 24, 1999
is incorporated by reference into Part III hereof.


                                       2

<PAGE>

                                     PART I

     Except for the historical information contained herein, the matters
discussed in this Annual Report on Form 10-K may include forward-looking
statements that involve risks and uncertainties. Marcam Solutions makes such
forward-looking statements under the provisions of the "Safe Harbor" section of
the Private Securities Litigation Reform Act of 1995. Any forward-looking
statements should be considered in light of the factors described below in Item
7 under "Factors Affecting Future Performance." Actual results may vary
materially from those projected, anticipated or indicated in any forward-looking
statements. In this Annual Report on Form 10-K, the words "anticipates,"
"believes," "could," "expects," "future," "intends," "may," and similar words or
expressions (as well as other words or expressions referencing future events,
conditions or circumstances) identify forward-looking statements.

ITEM I.  BUSINESS

GENERAL

     Marcam Solutions, Inc. was incorporated in 1997. Unless the context
otherwise requires, the terms "Company," "Marcam Solutions" and "Marcam" refer
to Marcam Solutions, Inc. and its subsidiaries. The Company's principal offices
are located at 95 Wells Avenue, Newton, Massachusetts 02459, and its telephone
number is (617) 965-0220. The Company's World Wide Web address is
www.marcam.com.

     Fiscal 1998 marked the first full year of operations for Marcam Solutions
since its spin-off from Marcam Corporation. On July 29, 1997, Marcam Corporation
spun off, in a tax-free distribution, the portion of its business relating to
its PRISM(R), Protean(R) and Avantis(TM) product lines. Prior to the spin-off,
Marcam Corporation transferred to Marcam Solutions, at that time a wholly-owned
subsidiary of Marcam Corporation, substantially all of the business, assets and
liabilities relating to Marcam Corporation's PRISM, Protean and Avantis product
lines and an aggregate of $39.0 million in cash in exchange for (i) the
assumption by Marcam Solutions of certain liabilities and obligations relating
to the business to be conducted by Marcam Solutions, (ii) a number of shares of
common stock of Marcam Solutions sufficient for Marcam Corporation to make the
Distribution (as defined below) and (iii) warrants to purchase an aggregate of
500,000 shares of common stock of Marcam Solutions. Marcam Corporation
distributed all of its ownership interest in Marcam Solutions by means of a
distribution on July 29, 1997 to its stockholders of record on July 23, 1997
(the "Distribution"). In connection with the Distribution, Marcam Corporation
changed its name from "Marcam Corporation" to "MAPICS, Inc." ("MAPICS").

     Marcam Solutions develops, globally markets, implements, and supports
enterprise resource planning (ERP) software applications designed exclusively
for process manufacturers and enterprise asset management (EAM) software for all
capital-intensive industries. The Company's mission is to provide process
manufacturing companies with specialized, agile business solutions that enable
them to achieve process operational excellence while realizing low total cost of
ownership, and to provide best-of-breed asset management solutions to industries
that must protect and optimize their capital investments. Effective October 1,
1998, the Company now manages its business through two separate industry
business groups -- the PRISM and Protean business group and the Avantis business
group -- to better focus its resources to address the specific needs of the
process manufacturing and the stand-alone EAM market segments, respectively.
Each industry business group oversees all worldwide activities associated with
its respective products, including sales and marketing, service, implementation,
development, and support.

     Specialized features designed to support a process manufacturer's unique
characteristics are integral to the base design of all Marcam products. As a
result, more meaningful inventory, planning, production, costing, and financial
information enable Marcam's process manufacturing customers to streamline their
processes and better monitor and constantly improve the performance of their
operations. Additionally, Marcam's Protean ERP component products integrate with
existing applications from other ERP, Manufacturing Execution Systems (MES) and
Supply Chain Planning vendors. The process industry expertise of Marcam's
employees and the excellent functional fit, agility, and ease of integration of
Marcam's solutions results in faster deployment of software applications and the
ability to support changing business requirements at a lower total cost of
ownership for process manufacturing companies.

                                       3

<PAGE>

     PRISM is Marcam Solutions' ERP software applications product line for
process companies using IBM's AS/400 computers. Protean is the Company's product
line that provides industry-leading ERP software applications for process
manufacturers requiring an open client/server environment. Avantis.XA is the
Company's EAM solution for capital-intensive industries running on IBM's AS/400
platform. Avantis.Pro is Marcam Solutions' object-oriented EAM solution for
capital-intensive industries needing an open client/server environment. All of
Marcam Solutions' independently developed applications are Year 2000 compliant,
and contain Euro functionality enabling companies to process multiple currencies
and address the requirements of Euro compliance.

INDUSTRY BACKGROUND

     Industrial manufacturing companies can be characterized by the type of
manufacturing conducted: process or discrete. Process companies, such as food,
chemical, steel, pulp and paper, consumer product goods, pharmaceutical, rubber,
glass/plastics and building materials companies, produce products by controlling
chemical reactions, including mixing, separating, heating, forming and refining.
Discrete companies, such as automotive, appliance, electronics and aerospace
companies, produce products by assembling and/or machining.

     Process manufacturing has unique characteristics with respect to four
fundamental areas:

o  Existence of by-products, co-products, recyclables and waste
   materials--By-products, co-products, recyclables and waste materials may be
   produced at various stages of the manufacturing process, and the cost,
   further use and disposal of these by-products, co-products, recyclables and
   waste materials is important to the overall efficiency of a process
   manufacturing organization;

o  Material and production variability and predictability--Process manufacturers
   may use different manufacturing processes for any given product. The
   processes depend upon the inherent variability of the input (often
   agricultural products or chemicals as opposed to manufactured components) and
   on the price, quality and availability of raw materials and equipment
   creating unique challenges for process manufacturers;

o  Product cost characteristics--Process manufacturers have a relatively large
   portion of their investment in plant and capital equipment and rely upon
   inputs that are normally part of overhead, such as utilities, equipment
   maintenance and waste disposal. Accordingly, costs other than direct labor
   and material represent a relatively large portion of total costs for process
   companies; and

o  Inventory management--Process manufacturers have a small portion of their
   assets in inventory because they purposefully limit on-hand inventories due
   to storage costs of bulk liquids and gases and do not keep substantial
   work-in-progress inventories because production flows through the plant.
   Inventory management is further complicated because of multiple units of
   measures, a requirement for lot control to separate materials of differing
   quality attributes, and the challenges of fluctuating costs of commodities.

     The manufacturing resource planning ("MRP") systems of the 1980's centered
around streamlining processes within a single manufacturing plant. The success
of these applications led to the integration of other operations, such as
forecasting, costing, quality management and transportation, into the more
streamlined manufacturing systems. Additionally, the reach of MRP systems began
to extend beyond the plant floor. As competition increased, manufacturers
responded by looking for ways to further reduce costs and improve customer
service across their enterprises. MRP systems, with their plant-oriented
features, could not address the needs of increasingly multi-regional or global
enterprises.

     MRP systems have now evolved into an enterprise resource planning ("ERP")
model, encompassing features to support an enterprise's complete supply chain
(production, customer service, logistics, and asset management) and financial
business requirements across multiple sites. Today, the majority of process
manufacturers require an ERP system that can support their enterprise-wide
functions and activities. An ERP system may consist of an integrated solution
from a single vendor or may be assembled through a combination of core
applications from one supplier and specialized ERP components from other
suppliers.

                                       4

<PAGE>

     Although current-generation client/server solutions enable companies to be
platform independent, they generally do not allow easy, inexpensive
interoperability of software applications obtained from different vendors.
Object technology allows enterprises to implement business processes more
rapidly. This ability to more rapidly respond to change is increasingly
important as companies are forced to change in response to pressures from
competition, customer expectations, growth and regulation. Applications based on
object technology allow greater on-going flexibility at a lower cost than
applications built with alternative technologies.

     According to industry sources, the total worldwide market for ERP systems
was approximately $15 billion in 1998. Approximately 32% of this market is
comprised of software and software-related services for process manufacturers.

     Process manufacturing companies typically manage significant investments in
physical assets, such as plant equipment, fleets of vehicles and facilities.
Other capital-intensive industries that have similarly significant investments
in physical assets (such as mining, education and municipalities, and wastewater
treatment facilities) consider an EAM solution to be the primary
mission-critical application in their operations.

     According to industry sources, the total worldwide market for software and
services for the EAM systems is estimated to be over $850 million in 1998.

STRATEGY SUMMARY

     The Company's approach to addressing the ERP and EAM markets includes
providing:

o  Specialized ERP and/or EAM applications designed exclusively for process and
   capital-intensive industries;

o  A comprehensive set of integrated, horizontal applications, including
   financials, asset management and customer order management, for mid-sized
   manufacturers seeking a full ERP solution from a single vendor;

o  Platform alternatives, including open client/server and AS/400 environments;

o  Attractive migration paths between open client/server and AS/400 computing
   environments;

o  Applications based on object-oriented technology that have benefits of
   advanced fit, agility and low total cost of ownership; and

o  High quality service and support through its employee staff and services
   partners.

PRODUCTS FOR PROCESS MANUFACTURING COMPANIES

     Marcam Solutions offers two product lines that provide ERP solutions for
process manufacturers: Protean and PRISM. PRISM was first introduced in 1987.
Protean was introduced in 1994. PRISM is available exclusively on the IBM AS/400
and is noted for its process application depth and its strong integration.
Protean is an open client/server product line developed in an object-oriented
environment. Marcam Solutions believes Protean is the first ERP process plant
operation solution using this technology. Protean is available on leading UNIX
and Microsoft Windows 95 and NT platforms.

Unique Design Features
----------------------

     Marcam Solutions believes that the distinct management challenges faced by
process manufacturers necessitate software applications designed specifically to
address these unique requirements. Marcam Solutions' PRISM and Protean product
lines incorporate design features which differentiate them from traditional
manufacturing application software. Marcam Solutions believes that these design
features provide its customers with business benefits that they would not
typically receive from applications not designed specifically for the process
business environment. The design features are:

                                       5

<PAGE>

     Resource Management--permits users to easily model and control all of the
different inputs and outputs of their production process, including materials,
utilities, equipment, facilities, labor and overhead, and multiple outputs,
including multiple finished products, recycled materials, by-products, waste and
grades of material. The inclusion of all of these resources provides for a more
accurate assignment of costs, which in turn leads to a more accurate product
cost picture, better visibility into production requirements during planning
cycles and enhanced performance measurements.

     Production Model (U.S. Patent #4,864,507)--permits users to develop
detailed models of (i) processes with multiple outputs, (ii) multiple processes
for the same produced products, (iii) recycled products, (iv) processes where an
accurate definition of time dependencies is necessary and (v) flow and batch
process steps. The alternative modeling method (bill of materials and routing)
was designed to model the products produced in discrete industries and is
utilized in traditional manufacturing software.

     Integrated Quality Management--provides users with the ability to integrate
quality control management information within inventory control, sales to
customers and production control. Since the quality of raw materials in process
goods and finished products can fluctuate for process manufacturers from one
time to the next, quality management and the tracking of quality results is a
fundamental requirement. This feature provides customers with strict quality
control overview and access to information that is fundamental to their
business.

     Formula Management and Regulatory Compliance--provides reformulation
capabilities to address product quality, variability and seasonality. For the
chemical processing industry in particular, the requirement for Material Safety
Data Sheets must be tied to this reformulation, so that any changes to the
formula will be reflected in updated information about the handling,
transportation and storage of such products.

     Enterprise Management (U.S. Patent #5,493,671)--permits users to address
their business requirements, including supply chain management, multi-regional
or global management models and multiple production sites. Enterprise-enabled
means that applications contain the logic needed to assess whether information
must be processed locally or be communicated to other production locations.
Marcam Solutions' software is able to supervise such communications
automatically, ensuring that all data is communicated accurately and resending
communications as needed.

     Activity Based Costing--provides more accurate cost information for process
manufacturers than traditional accounting methods. Overhead items are charged on
the basis of another directly measured activity which varies with the overhead
item, allowing the measurement and control of all resources and permitting the
establishment of many different relationships between direct and indirect costs.
This is particularly important for process companies because of their high
investment in plant and equipment and their use of other inputs that are
normally part of overhead.

PRISM

     First released in 1987, PRISM is a comprehensive ERP product line
consisting of numerous integrated production, logistics, financial and asset
management applications. Marcam Solutions believes that while the breadth of the
PRISM offering is similar to competitive product lines, there are significant
differences in the depth of the offering, including PRISM's patented production
model. All Marcam independently-developed PRISM applications are Year 2000
enabled.

PRISM Enhancements and New Applications
---------------------------------------

     In 1998, enhancements to two existing applications of the PRISM product
line were made available -- Visual WorkPlace and Info WorkPlace -- that
significantly improve user productivity. The new Visual WorkPlace capabilities
provide tighter desktop integration and ease-of-use. Info WorkPlace, PRISM's
reporting tool, extends its use across the entire PRISM product line, offering
users easier access to the rich PRISM database for improved monitoring of
business trends and decision making.

     PRISM 5.10, released in 1998, includes full Euro functionality permitting
companies to address the requirements of Euro compliance.

                                       6

<PAGE>

     In 1998 Protean Financials was integrated to PRISM Production, Logistics
and Maintenance applications enabling continuous measurement of financial
performance throughout an enterprise's profit and cost centers.

     Marcam Solutions' strategy is to enable co-existence of PRISM and Protean
applications for its PRISM customers, allowing PRISM customers to leverage the
business benefits of Protean's object-oriented technology while protecting their
PRISM investment.

     In support of Marcam Solutions' sales to companies that have selected SAP
for a financials backbone, the Company delivered integration of PRISM to SAP
financial applications in June 1998.

PROTEAN

     The first Protean components were released in 1994. Protean offers numerous
integrated ERP components including comprehensive inventory, production,
planning, costing, order management, financial and asset management
applications. The available Protean components deliver robust capabilities that
differ from competitive product lines in the depth of the Protean offering, with
capabilities designed to meet the special characteristics of process plant
operations. This includes, but is not limited to, Marcam's patented Production
Model concept that enables superior capabilities for the management of complex
production and costing processes.

     Protean products are designed to provide manufacturing, logistics,
financial and asset management capabilities necessary to manage a company's
supply chain from raw material procurement, through processing and distribution
to the customer. Marcam Solutions believes that its Protean product line is the
first fully object-oriented, mission-critical set of application components for
the ERP market. Protean's object-oriented, component-based architecture and
design allow Protean to be offered to the market in multiple ways. Protean
applications are designed to meet a user's current business needs by providing
superior fit for process companies, while providing the ability to rapidly adapt
enterprise applications to fit new and evolving requirements without the
time-consuming and costly process of rewriting software code. The strength and
depth of the Protean applications also allow customers to address particular
needs within their existing business and plant applications from other ERP
vendors by integrating specific component solutions from Marcam Solutions. All
Marcam independently developed Protean applications are Year 2000 enabled.

Protean Enhancements and New Applications
-----------------------------------------

     In June 1998, the Company delivered Protean Release 3.0, which included a
comprehensive version of the Customer Order Management (COM) application. The
COM application helps process manufacturers reduce their total cost of ownership
and improve responsiveness to their customers' needs. The Protean COM
application contains features such as Trading Partners, Market Profiles, Order
Automation and an Order Entry interface, which process manufacturers can adapt
to their specific needs.

     The Protean Financial applications, previously delivered in December 1997,
were enhanced by the delivery of full Euro functionality, which enables 
companies to process multiple currencies and address the requirements of Euro
compliance.

     With the delivery of standard integrations to both the SAP and PeopleSoft
financial applications in 1998, customers now have the opportunity to integrate
Protean applications with their existing applications.

PRODUCTS FOR ENTERPRISE ASSET MANAGEMENT

     In addition to marketing its enterprise asset management applications as
part of an integrated PRISM or Protean solution, the Company delivers a
stand-alone EAM solution under the brand name Avantis. Marcam Solutions believes
that the high level of functionality in the Avantis applications makes them an
appropriate choice for large companies that demand industry-leading solutions to
protect their substantial capital investment.

                                       7

<PAGE>

AVANTIS.XA

     Avantis.XA, a comprehensive enterprise asset management product line,
originally introduced in 1981, remains available exclusively on the IBM AS/400
and is noted for its application depth and its large base of satisfied
customers. All Marcam independently-developed Avantis.XA applications are Year
2000 enabled.

Avantis.XA Enhancements and New Applications
--------------------------------------------

     During 1998, the Company delivered Avantis.XA Release 11.0 EC 12. This
extensive release included several significant enhancements resulting from
customer requests, enhancements to support the Euro currency functionality, and
to integrate with SAP Financials.

     An enhanced Visual WorkPlace that provided a graphical user interface for
the entire Avantis.XA solution was delivered in December 1998. The new Visual
WorkPlace capabilities allow increased user productivity through tighter desktop
integration and improved ease-of-use.

AVANTIS.Pro

     Avantis.Pro is an enterprise asset management solution that enables
customers to more quickly and easily reflect business changes within the
software. Avantis.Pro is an open, client/server application developed with an
object-oriented design. Objects within the solution integrate with
industry-leading solutions for work flow, document management and imaging. This
object-oriented design offers many advantages to customers that see technology
as a key element of their corporate strategy. Avantis.Pro is available on
leading UNIX platforms and runs Microsoft Windows 95 and Windows NT as its PC
client operating systems. All Marcam independently-developed Avantis.Pro
applications are year 2000 enabled.

Avantis.Pro Enhancements and New Applications
---------------------------------------------

     The Company delivered Avantis.Pro Release 2.3 in March 1998 and Avantis.Pro
3.0 in December 1998. Release 2.3 provides enhancements across the product,
including multi-line transactions, cycle count, and middle tier technology for
true NT environments, while Release 3.0 focused on Euro Currency support.

LICENSE FEES

     Marcam Solutions generally licenses its PRISM, Protean and Avantis products
for a one-time fee. The list prices for Marcam Solutions' applications vary
depending on the number of concurrent users and local pricing variations in
international markets. A typical initial license fee is between $150,000 and
$750,000, depending upon the number of concurrent users licensed. Marcam
Solutions typically receives an additional license fee when a customer increases
the number of users.

BUSINESS PARTNERS

     Marcam Solutions is working with business partners to provide more complete
solutions to our customers, promote revenue growth and leverage the potential of
our specialized technology products. The Company has a working relationship with
NEC Corporation ("NEC") designed to complement the business goals of each party.
As a result of this relationship, the parties have focused additional resources
on Protean product development, accelerated delivery of Protean products and
expanded the use of Protean products worldwide. Marcam Solutions and NEC are
parties to a distribution agreement under which NEC has the right to distribute
Marcam Solutions' Protean products, including Avantis.Pro, generally to
customers in Japan and to Japanese companies located outside Japan. As part of
this agreement, NEC has the right to use Protean to build software for its
customers in non-manufacturing markets. NEC also uses Protean in its system
integration and services business. Additionally, Marcam Solutions and NEC are
parties to a technology transfer agreement under which NEC was granted the right
to use certain Protean technology within NEC. In return, NEC has committed
significant financial resources for continued investment in Protean technology.
During 1998, Marcam divested its interest in a company jointly

                                       8

<PAGE>

formed by Marcam and NEC, Obtech LLC, but continues to maintain a services
partnership with the company under which Obtech LLC provides certain
implementation and customization services for Marcam's products.

     Marcam Solutions has joined together with industry-leading vendors
including Microsoft Corporation, PeopleSoft Inc., Compaq Computer Corporation,
Hewlett-Packard Company, International Business Machine Corporation, Oracle
Corporation, MCI Systemhouse, Inc., and Informix Software, Inc., in order to
provide more complete solutions to its customers and to address the specialized
business requirements of process manufacturers. The Company is in the process of
formalizing and expanding its business partner program with applications,
technology and services partners.

CUSTOMER SUPPORT AND SERVICE

     Marcam Solutions provides a high level of customer support and consulting
services to assist customers in the use of its applications. Marcam Solutions'
customer support services include telephone access to application experts and
assistance in issue resolution as well as remote diagnostics and program
corrections. Customers can also access on-line information about products and
known solutions via the Company's support web site.

     The Company presently maintains three support centers located in Newton,
Massachusetts, United States; Burlington, Ontario, Canada; and Eindhoven,
Netherlands.

     The Company also offers its customers implementation consulting, education
services, customization services and technical consulting on a project
consulting basis. The implementation consulting personnel provide on-site
consulting to assist customers in the implementation and use of the Company's
application products. Marcam Solutions has a methodology for implementing its
applications, including supplemental materials, plans and programs, which guide
the customer through the implementation process. The Company's customization
services generally involve the connection of modules with the customer's
existing applications or the creation of new application functions that
complement Marcam Solutions' products. The Company also provides technical
consulting assistance for installation and performance management. While Marcam
Solutions is committed to providing services directly, it is also taking steps
to increase its capacity by partnering with other service providers.

MARKETING AND SALES

     Marcam Solutions markets its products through direct sales and support
offices and affiliates in North America, Europe, Africa, the Middle East, the
Asia Pacific region and Latin America. Marcam Solutions' marketing and sales
organization allows Marcam Solutions to offer a coordinated, standardized,
worldwide approach to multi-site, multinational companies, while providing for
local support of individual sites.

     The headquarters for the PRISM and Protean business group is at Marcam
Solutions' offices in Newton, Massachusetts. Headquarters for the Avantis
business group is located at Marcam Solutions' offices in Burlington, Ontario,
Canada.

     Marcam Solutions' headquarters for its Europe, Middle East and Africa
(EMEA) operations is located in Paris, France. Asia Pacific operations are
currently conducted from locations in Singapore, Tokyo, Japan and Sydney,
Australia. Latin American operations are conducted from locations in Atlanta,
Georgia and Buenos Aires, Argentina.

     Information concerning the results of foreign and domestic operations is
located in Note 11 in the Notes to Consolidated Financial Statements.

                                       9

<PAGE>

CUSTOMERS

     Marcam Solutions' target customers range from multi-site, multinational
manufacturers to small and medium-size companies with one or two sites. Marcam
Solutions believes that by creating specialized, agile applications that best
fit the business requirements of specific markets and by offering technology
choices and comprehensive services, the Company will deliver solutions that
create significant value for customers. Marcam Solutions believes that its
products and services help customers create value by enabling them to
continuously improve their operations while realizing the lowest total cost of
ownership.

     None of Marcam Solutions' customers accounted for more than 10% of total
revenues in fiscal 1998, 1997, or 1996. Marcam Solutions generally ships its
products upon the execution of license agreements. Accordingly, Marcam Solutions
does not believe that its backlog at any particular point in time is indicative
of future sales.

     Marcam Solutions' customers include divisions, sites and subsidiaries of
the following enterprises:


<TABLE>
<S>                                                             <C>
ACE Hardware Corporation                                        Impala Platinum, Ltd.                 
African Rainbow Minerals & Exploration                          Ingwe Coal Corporation Limited        
Alberto-Culver USA, Inc.                                        Jeyes Limited                         
American Foods Group                                            JR Simplot                            
Baxter Healthcare Corporation                                   Kraft Jacob Suchard Strasbourg France 
Bernard Matthews PLC                                            LaPorte Group PLC                     
BF Goodrich Specialty Chemical                                  McCormick & Co., Inc.                 
Biolandes Technologies                                          MedImmune, Inc.                       
Canarail Consultants, Inc.                                      Norsk Hydro Canada                    
City of Toronto (Municipality of Metropolitan Toronto)          Novo Nordisk A/S                      
Cuddy International Corporation                                 Philip Morris International, Inc.     
D.F. Stauffer Biscuit Company, Inc.                             PPG Industries, Inc.                  
Edwards Baking Company                                          Ralcorp Holdings, Inc.                
Fonderies Aluminum Cleon (Renault)                              Sauder Woodworking Company            
Frigidaire Company                                              Schick (Division of Warner Lambert)   
HB Fuller Company                                               The School District of Philadelphia   
Heineken Nederland B.V.                                         Tolka Manitoba, Inc.                  
Henkel KG and A                                                 Vitarich Corporation                  
Holco B.V.                                                      Weldwood of Canada                    
                                                                Zamek Handelsgesellschaft GmbH        
                                                                
</TABLE>

PRODUCT DEVELOPMENT

     During 1998, Marcam continued its significant investments in PRISM,
Protean, Avantis.XA and Avantis.Pro products. Marcam continued to deliver
subsequent versions of its Protean and Avantis.Pro products for production,
inventory, financial, order management and asset management applications. Marcam
Solutions believes that it is the first provider to deliver mission-critical,
object-oriented applications for the ERP and EAM markets. Object technology
enables Marcam Solutions to deliver applications that are flexible, open and
easy-to-use and, therefore, Marcam Solutions believes its use of object
technology will enable it to offer agility to its customers through customized
applications made from standard reusable objects. The benefits of this approach
to customers include a high level of fit and function with support costs
comparable with those of standard applications.

     When appropriate, Marcam Solutions may also enter into development
agreements with current and prospective customers and others as part of its
product development efforts. Often, periodic enhancements to products for
subscribers to Marcam Solutions' customer support program are provided. Further,
custom programming services are made available for a fee to customers. During
fiscal years 1998, 1997 and 1996, Marcam's gross research and product
development expenditures (including expenditures in 1997 and 1996 related to the
product line retained by MAPICS) were $32.1 million, $41.9 million and $39.9
million, respectively.

                                       10

<PAGE>

PROPRIETARY RIGHTS AND LICENSES

     Marcam Solutions usually provides its products to end users under
non-exclusive, non-transferable licenses that have perpetual terms. Under Marcam
Solutions' current form of license agreement, the licensed software may be
installed on customers' computers and used solely for internal operations by an
agreed-upon number of named or concurrent users. Marcam Solutions protects many
of its software modules as trade secrets and unpublished copyrighted works, as
well as by patents. Because of the size and complexity of its products, Marcam
Solutions typically makes the source code for many of its AS/400-based modules
available to its customers. Although Marcam Solutions takes steps to protect its
trade secrets, misappropriation could occur. In addition, copyright and trade
secret protection may not be available in certain countries for the source code
or object code versions of Marcam Solutions' products.

     Marcam Solutions currently relies on a combination of patent, trade secret,
copyright and trademark laws and license and non-disclosure agreements to
protect its proprietary rights in its products. Marcam Solutions has obtained a
patent on a method for modeling production processes, which is embodied in
certain PRISM and Protean products. Marcam Solutions has also obtained a patent
on a method for managing how computer programs communicate with each other
across dispersed systems and different release levels of software throughout an
enterprise, which is also embodied in the PRISM and Protean databases. An
additional patent, issued in April 1998, covers certain testing methods for
object-oriented programs and is utilized in the development of Protean. Marcam
Solutions is also seeking U.S. and foreign patent protection on key aspects of
its Protean product line. Marcam Solutions believes that, because of the rapid
pace of technological change in the computer software industry, patent, trade
secret and copyright protection are less significant than factors such as the
knowledge, ability and experience of Marcam Solutions' employees, frequent
product enhancements and the timeliness and quality of support services.

     Despite the measures taken by Marcam Solutions to protect its proprietary
rights, unauthorized parties may attempt to reverse engineer or copy aspects of
Marcam Solutions' products or to obtain and use information that Marcam
Solutions regards as proprietary. Policing unauthorized use of Marcam Solutions'
products is difficult. Litigation may be necessary in the future to enforce
Marcam Solutions' intellectual property rights, to protect Marcam Solutions'
trade secrets, to determine the validity and scope of the proprietary rights of
others, or to defend against claims of infringement or invalidity. Such
litigation could result in substantial costs and diversion of resources and
could have a material adverse effect on Marcam Solutions' business, operating
results and financial condition. In addition, to the extent Marcam Solutions
desires or is required to obtain licenses to proprietary rights of others, such
licenses may not be made available on terms acceptable to Marcam Solutions, if
at all. Any litigation or dispute regarding proprietary technology which results
in a ruling or settlement that is adverse to Marcam Solutions, could have a
material adverse effect on Marcam Solutions' business, operating results and
financial condition. Claims against Marcam Solutions, with or without merit, as
well as claims initiated by Marcam Solutions against third parties, can be time
consuming and expensive to defend, prosecute or resolve.

COMPETITION

     Marcam Solutions' ERP products are targeted for process manufacturing, and
the EAM products and targeted for capital-intensive companies. The market for
ERP software is highly competitive, changes rapidly and is, to a significant
degree, affected by new product introductions and other market activities of
industry participants. Vendors typically address the market requirements either
by offering a complete ERP core application solution or by offering specialized
ERP applications targeted for specific types of companies and functions within
companies. Marcam Solutions competes in both of these categories. Marcam
Solutions' primary competition comes from ERP core application providers such as
Baan, N. V., Oracle Corporation, SAP AG and PeopleSoft, Inc. In addition, Marcam
Solutions faces competition from suppliers of specialized ERP applications such
as J. D. Edwards and Company, QAD Inc., Ross Systems, Inc., and SCT Adage.

     The market for EAM software is also highly competitive with over 200
vendors offering computerized maintenance management systems (CMMS)/EAM
software. Marcam Solutions' primary competitors for Avantis include Project
Software and Development, Inc. and Indus International, Inc. In addition, some
asset management competition comes from ERP vendors, such as J. D. Edwards and
Company and SAP AG, with asset management components within their application
offerings.

                                       11

<PAGE>

     In the future, Marcam Solutions' competitors could introduce products with
more features, lower prices or both than Marcam Solutions' PRISM, Protean and
Avantis products, and could also seek competitive advantage by bundling existing
or new products and services with other, more established products and services.

     The principal competitive factors in the market for ERP and EAM software
and services include product functionality, technology, quality, performance,
reliability, ease-of-use, size of installed base, service, vendor reputation and
financial stability. Marcam Solutions believes that its products currently
compete favorably on the foregoing bases, although in certain instances, it may
be at a competitive disadvantage against companies with greater financial,
marketing, service, support and technological resources, and better name
recognition. Marcam Solutions believes its competitive strengths include its
process and asset management industry expertise, its proven functional
leadership, ability to easily integrate with core ERP and EAM business and plant
applications from other providers, customer implementation results, and its
long-term vision and early leadership position with object technology.

     In order to be successful in the future, Marcam Solutions must continue to
respond promptly and effectively to the challenges of technological change and
its competitors' innovations by continually enhancing its own product offerings.
There can be no assurance, however, that Marcam Solutions' products will
continue to compete favorably or that Marcam Solutions will be successful in the
face of increasing competition from new products and enhancements introduced by
existing competitors or by new companies entering this market. In addition,
because Marcam Solutions relies in part on a network of distribution affiliates
for implementation and other support of its products, there can be no assurance
that these affiliates will maintain high quality standards sufficient to
maintain the reputation and competitive position of Marcam Solutions. Marcam
Solutions must continue to respond effectively to customer needs and properly
select and incorporate those technologies and application functionalities that
will meet the challenges posed by competitors' innovations. To accomplish these
critical objectives, Marcam Solutions must continue enhancing its current
products and introduce new products to remain competitive.

EMPLOYEES

     As of September 30, 1998, the Company employed a total of 805 employees.
None of the Company's employees are represented by a labor union. The Company
has experienced no work stoppages and believes that its employee relations are
good.

                                       12

<PAGE>

ITEM 2.  PROPERTIES

     The Company's principal administrative, marketing and product development
and support facilities are located in Newton, Massachusetts, where the Company
currently leases a total of 102,494 square feet under an agreement that expires
in 1999. The Company has recently entered into a new lease for its Newton,
Massachusetts facility which will commence in May 1999 and expire in April 2005
and will cover a total of 102,494 square feet. The Company also leases office
space for its other North American, Latin American, European and Asian sales,
development, and service offices.

     The Company believes that its facilities are adequate for its current
needs. See Note 9 of Notes to Consolidated Financial Statements for information
regarding the Company's obligations under its facilities leases.

ITEM 3.  LEGAL PROCEEDINGS

     The Company is subject to legal proceedings and claims that arise in the
normal course of business. While the outcome of these matters cannot be
predicted with certainty, management does not believe the outcome of any of
these legal matters will have a material adverse effect on the Company's
financial position or results of operations.

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

     No matter was submitted to a vote of security holders during the fourth
quarter of the fiscal year covered by this report.

                                       13

<PAGE>

EXECUTIVE OFFICERS OF THE REGISTRANT

     The executive officers of the Company as of December 18, 1998, who are
elected on an annual basis and serve at the discretion of the Board of
Directors, are as follows:

<TABLE>
<CAPTION>
Name                          Age                           Position and Offices         Served
----                          ---                           --------------------         ------

<S>                           <C>                           <C>                          <C>
Jonathan C. Crane             49                            Chairman of the Board,       November  1997 -
                                                            President, Chief Executive   Present
                                                            Officer and Director

Denis E. Liptak               45                            Chief Financial Officer      August  1997 -
                                                            and Vice President of        Present
                                                            Finance

Stephen R. Quehl              45                            Executive Vice President,    November 1998 -
                                                            Worldwide Field Operations   Present

Thomas D. Ebling              43                            Executive Vice President,    September  1998 -
                                                            Customer Operations          Present
</TABLE>


     Mr. Crane has served as Chairman of the Board of Directors, President and
Chief Executive Officer since November 1997. From October 1995 until July 31,
1997, Mr. Crane was Chief Operating Officer of Geotek Communications, Inc., a
wireless voice and data communications company. From February 1995 to October
1995, Mr. Crane was a consultant in the telecommunications industry. From
January 1994 to January 1995, Mr. Crane was President and Chief Executive
Officer of Lightstream Corporation, a majority owned subsidiary of Bolt, Beranek
& Newman, which developed and marketed ATM switching network products. Prior to
1994, Mr. Crane held a number of management positions with MCI Corporation,
including Executive Vice President, Multi-National Accounts.

     Mr. Liptak has served the Company as its Chief Financial Officer since
August 1997. From July 1997 to August 1997, he was Vice President, Treasurer and
Controller of the Company. From December 1996 to July 1997, he was Vice
President, Treasurer and Controller of Marcam Corporation. From December 1994 to
November 1996, Mr. Liptak was Director of Finance of Marcam Corporation. Prior
to joining Marcam Corporation in 1994, Mr. Liptak held a number of financial
management positions at Digital Equipment Corporation.

     Mr. Quehl has served as Executive Vice President, Worldwide Field
Operations since November 1998. From October 1997 to November 1998, Mr. Quehl
was the Senior Vice President, Worldwide Field Operations for Gensym
Corporation, an expert systems software and services company. From September
1994 to August 1997, he was Senior Vice President, Americas Field Operations at
Wang Software, Wang Laboratories, Inc., which later became Eastman Software,
Inc., a subsidiary of Eastman Kodak. From 1989 to 1994, Mr. Quehl held several
executive positions at ViewStar Corporation, a work management software and
services company.

     Mr. Ebling has served as the Company's Executive Vice President, Customer
Operations since September 1998. From December 1997 to September 1998, he was
Senior Vice President, Customer Operations. Mr. Ebling was the Company's Senior
Vice President, Support and Development from July 1997 to December 1997. Mr.
Ebling was Senior Vice President, Protean Development of Marcam Corporation from
September 1996 through August 1997. Mr. Ebling joined Marcam Corporation in
1981, and served as its Vice President, Product Development and Support from
1981 to 1988, Senior Vice President, Product Development and Support from 1988
to 1994 and Senior Vice President, Development from 1994 to August 1996.

                                       14

<PAGE>

                                     PART II

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

     The Company's common stock is traded on the Nasdaq National Market under
the symbol "MRCM." The following table sets forth the range of quarterly high
and low sales prices for the Common Stock since July 30, 1997, the first day of
trading of the Company's common stock:

<TABLE>
<CAPTION>
                                                                 Low               High
                                                                 ---               ----
   Fiscal 1998
   -----------
<S>                                                            <C>                <C>
     Fourth Quarter                                            $  7-1/2           $    19
     Third Quarter                                             $7-15/16           $19-1/2
     Second Quarter                                            $ 5-5/16           $ 8-3/4
     First Quarter                                             $  6-1/2           $11-1/4
   Fiscal 1997
   -----------
     Fourth Quarter                                            $      5           $11-3/8
</TABLE>

     The Company believes that, as of December 17, 1998, there were over 5,000
beneficial holders of the Company's common stock. The Company did not declare or
pay any cash dividends to stockholders in 1998 and does not anticipate any
payment of cash dividends in the foreseeable future.

ITEM 6.  SELECTED CONSOLIDATED FINANCIAL DATA
                      (In Thousands, Except Per Share Data)
<TABLE>
<CAPTION>
Statement of Operations Data:
Year Ended September 30,             1998        1997(F)       1996(F)      1995(F)        1994(F)
---------------------------------------------------------------------------------------------------
<S>                                <C>          <C>           <C>          <C>            <C>
Total revenues                     $124,520     $163,880      $201,424     $202,332       $172,876
Loss before income tax expense
   and extraordinary item            (4,425)(A)  (38,674)(B)   (21,740)(C)  (31,723)(D)     (1,756)
Net loss                             (5,525)(A)  (46,883)(B)   (26,326)(C)  (34,357)(D)     (1,018)
Net loss per share (E)                (0.73)(A)    (7.77)(B)     (4.63)(C)    (6.10)(D)      (0.18)
Weighted average number of basic
   and diluted shares
   outstanding (E)                    7,580        6,035         5,692        5,634          5,514

Balance Sheet Data:
September 30,                        1998        1997          1996(F)      1995(F)        1994(F)
---------------------------------------------------------------------------------------------------
Total assets                       $ 69,502     $ 77,869      $132,202     $146,852       $128,948
Total long-term obligations             218        1,012        26,525       26,359         35,483
Total stockholders' equity           17,202       20,862        11,674       26,646         38,126
</TABLE>

(A) Fiscal 1998 results include a restructuring charge reversal of $1,896, or
    $0.25 per diluted share.

(B) Fiscal 1997 results include restructuring charges of $19,175, or $3.18 per
    diluted share, and an extraordinary loss from early extinguishment of debt
    of $3,009, or $.50 per diluted share.

(C) Fiscal 1996 results include restructuring charges of $10,600, or $1.86 per
    diluted share, and a litigation settlement of $3,250, or $.57 per diluted
    share.

(D) Fiscal 1995 results include a restructuring charge of $28,756, or $5.10 per
    diluted share.

(E) Historical weighted average shares outstanding and net loss per share have
    been restated for the Distribution, which has been presented in part as a
    2-for-1 reverse stock split occurring on July 29, 1997.

(F) See Note 2 of Notes to Consolidated Financial Statements and Management's
    Discussion and Analysis of Financial Condition and Results of Operations
    "Distribution" for discussion of the Distribution which occurred on July 29,
    1997, which is presented in part as a disposal of the business, assets and
    liabilities of the Company's MAPICS product line. Consequently, the
    Statement of Operations Data for the years ended, and the Balance Sheet Data
    as of, September 30, 1996, 1995 and 1994 includes results related to the
    MAPICS business, and the Statement of Operations for the year ended
    September 30, 1997 includes ten months of results related to the MAPICS
    business.

                                       15

<PAGE>


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

     The following discussion contains forward-looking statements that involve
risks and uncertainties. Marcam Solutions makes such forward-looking statements
under the provisions of the "Safe Harbor" section of the Private Securities
Litigation Reform Act of 1995. Any forward-looking statements should be
considered in light of the factors described below in this Item 7 under "Factors
Affecting Future Performance." Actual results may vary materially from those
projected, anticipated or indicated in any forward-looking statements. In this
Item 7, the words "anticipates," "believes," "could," "expects," "future,"
"intends," "may," and similar words or expressions (as well as other words or
expressions referencing future events, conditions or circumstances) identify
forward-looking statements.

Distribution
------------

     On July 29, 1997, Marcam Corporation spun off in a tax-free distribution
the portion of its business relating to its PRISM, Protean and Avantis product
lines. In connection with the distribution, Marcam Corporation transferred to
Marcam Solutions, Inc. ("Marcam Solutions"), at that time a wholly owned
subsidiary of Marcam Corporation, substantially all of the business, assets and
liabilities relating to its PRISM, Protean and Avantis product lines and an
aggregate of $39.0 million in cash in exchange for (i) the assumption by Marcam
Solutions of certain liabilities and obligations relating to the business to be
conducted by Marcam Solutions, (ii) a number of shares of common stock of Marcam
Solutions sufficient for Marcam Corporation to make the Distribution (as defined
below) and (iii) warrants to purchase an aggregate of 500,000 shares of common
stock of Marcam Solutions. Marcam Corporation distributed all of its ownership
interest in Marcam Solutions by means of a distribution on July 29, 1997 to its
stockholders (the "Distribution"). In connection with the Distribution, Marcam
Corporation changed its name from "Marcam Corporation" to "MAPICS, Inc."
("MAPICS").

     Although the common stock of Marcam Solutions was distributed to Marcam
Corporation's shareholders, the Distribution was recorded for accounting
purposes as a disposal of the business conducted by MAPICS, due to the relative
significance of the business conducted by Marcam Solutions. The financial
statements of Marcam Solutions for reporting periods after the Distribution
reflect the Distribution as a disposal of the business conducted by MAPICS and
were not restated to remove the effects of the prior operating results of the
MAPICS business. The financial statements of Marcam Solutions for periods prior
to the Distribution correspond to the historical consolidated financial
statements of Marcam Corporation.

     Except for the information provided under the caption "Selected Pro Forma
Results of Operations" which gives effect to the Distribution, the following
discussion and analysis includes data relating to the MAPICS product line
through July 1997. Only the pro forma information reflects Marcam Solutions as
if it had been operated as a separate entity.

Overview
--------

     For the year ended September 30, 1998, the Company recorded a net loss of
$5.5 million. The net loss included an operating loss, excluding the reversal of
restructuring and other charges, of $8.1 million. The Company's revenues for the
year ended September 30, 1998 were less than the Company expected. The revenue
shortfall, combined with the relatively fixed nature of expenses over the short
term, resulted in the loss.

     The Company's revenues have historically been derived from licensing its
Protean, PRISM, Avantis and MAPICS product lines. As described above, the
disposal of the business related to the MAPICS product line was effective as of
July 29, 1997. For the first three quarters of fiscal 1996, the Company also
derived revenues from its subsidiary, Foresight Software, Inc. ("Foresight") and
its MXP product line, which was divested effective as of June 30, 1996. Each of
the Company's current product lines support different customers' technology
strategies. The Protean product line, which utilizes advanced object technology,
tools and databases, is platform independent. The PRISM and MAPICS product lines
provide customer solutions on the IBM AS/400 platform. The Avantis product line
provides customer solutions on both the IBM AS/400 platform and open systems,
utilizing object technology. During fiscal 1998, license revenues from each of
the Company's current product lines (excluding the Company's

                                       16

<PAGE>

MAPICS product line, which was disposed of effective July 29, 1997) increased
compared to license revenues in fiscal 1997. The increase represented the
increased market acceptance of the Company's products, the competitiveness of
which have been improved by several new releases, including enhanced versions of
the Company's Protean and Avantis.Pro products. Prior to fiscal 1998, a majority
of the Company's license revenues were derived from products operating on the
IBM AS/400 platform. In fiscal 1998, however, a majority of the Company's
license revenues were derived from licensing the Protean and Avantis.Pro product
lines. The Company expects the percentage of total license revenues derived from
Protean and Avantis.Pro products to continue to increase in the future.

     Marcam Solutions also derives revenues from providing customer support and
consulting services. Customer support is offered to license customers generally
based on agreements that are billed annually, with revenues recognized on a
ratable basis during the contract period. Consulting services include assisting
with customer implementation of licensed software, providing custom programming
and system integration services, and providing educational material and
instruction in the use of licensed software.

     The Company distributes its products and services primarily through a
direct sales channel in North America and major European markets, and through
affiliates in other parts of the world. On a pro forma basis, excluding revenues
from the MAPICS product line, total revenues increased within each of the
Company's three main geographic segments, the United States, Europe, and All
Other, from fiscal 1997 to fiscal 1998. While revenues in Asia grew during the
fiscal year, growth within the region did not meet the Company's expectations.
The Company believes that revenues within Asia were negatively impacted by the
recent economic conditions within the Asian marketplace. Although the Company
does not anticipate that the Asian economic conditions will materially affect
the Company's total business, there can be no assurance that the conditions in
Asia will not worsen, and that the conditions in Asia will not have a more
significant negative impact on economies outside of Asia or on the Company. It
should be noted that, historically, the Company has recognized only a small
percentage of its revenues and operating income from the Asian market, and the
Company does not expect that revenues or operating margin from this market will
increase in the foreseeable future.

     During the final quarter of 1998, the Company increased its investment in
its distribution channel, as evidenced by increased selling and marketing
expenses, compared to the final quarter of 1997 on a pro forma basis. The
Company believes that such expenditures, primarily those related to expanding
the direct sales capacity, are critical to generating future revenue growth. In
addition, the Company continues to undertake a number of actions designed to
increase revenues, including introducing enhanced versions of its Protean and
Avantis.Pro products which are designed to make the products more competitive.
The Company continues to invest not only in the translation of its software into
additional foreign languages, but also in the integration of its products with a
number of third-party software packages.

     The Company believes continued increases in license revenues are required
to offset the costs of growing the distribution channel and funding development,
translation and integration activities related to the Protean product line. In
the event that license revenues are not increased in both the short and long
term, the Company may be required to take additional cost saving measures in
order to reduce the costs of operating the business. There can be no assurances
that the continued development of the distribution channel will result in
increased revenues or, when combined with potential cost control measures, that
these actions will result in operating profitability or positive cash flows from
operations. Failure to achieve operating profitability or to generate positive
cash flows from operations would materially and adversely affect Marcam
Solutions' business, results of operations and financial condition.

                                       17

<PAGE>


Results of Operations
---------------------

     The following table sets forth the percentage of total revenues represented
by items reflected in the Company's consolidated statements of operations.

<TABLE>
<CAPTION>
                                                                   1998           1997         1996
                                                                   ----           ----         ----
<S>                                                               <C>            <C>          <C>
Revenues:
   License                                                         43.3%          40.5%        46.2%
   Services                                                        56.7           59.5         53.8
                                                                  -----          -----        -----

     Total revenues                                               100.0          100.0        100.0
                                                                  -----          -----        -----

Operating expenses:
   Cost of license revenues                                         3.4            8.9          8.3
   Cost of services revenues                                       39.7           34.3         34.5
   Selling and marketing                                           32.5           40.7         41.1
   Product development                                             25.8           20.9         13.7
   General and administrative                                       5.1            5.8          4.9
   Restructuring and other charges                                 (1.5)          11.7          5.3
                                                                  -----          -----        -----

     Total operating expenses                                     105.0          122.3        107.8
                                                                  -----          -----        -----

Operating loss                                                     (5.0)         (22.3)        (7.8)
Litigation settlement                                                --             --         (1.6)
Interest and other income (expense), net                            1.4           (1.3)        (1.3)
                                                                  -----          -----        -----

Loss before income tax expense and extraordinary item              (3.6)         (23.6)       (10.7)
Income tax expense                                                 (0.8)          (3.2)        (2.3)
                                                                  -----          -----        -----

Loss before extraordinary item                                     (4.4)         (26.8)       (13.0)
Extraordinary loss                                                   --           (1.8)          --
                                                                  -----          -----        -----

Net loss                                                           (4.4)%        (28.6)%      (13.0)%
                                                                  =====          =====        =====
</TABLE>

1998 Compared to 1997
---------------------

     Due to the timing of the Distribution, results during 1997 include 10
months of results related to the MAPICS business. MAPICS' revenues historically
occurred predominantly in the third month of each quarter. Results during 1998
do not include any results related to the MAPICS business. See "Selected Pro
Forma Results of Operations" for additional discussion of the stand-alone
results of Marcam Solutions.

Revenues
--------

     Total revenues decreased 24.0% to $124.5 million in 1998 from $163.9
million in 1997.

     License revenues decreased 18.8% to $53.9 million in 1998 from $66.4
million in 1997. The decrease in license revenues resulted from the lack of
MAPICS license revenues during 1998, compared to MAPICS license revenues of
$38.9 million in 1997. This decrease was partially offset by a $26.4 million
increase in license revenues from the PRISM, Protean and Avantis product lines.

                                       18

<PAGE>

     Services revenues decreased 27.5% to $70.7 million in 1998 from $97.5
million in 1997. Service revenues include two distinct components: customer
support, including annual software maintenance and support, and consulting,
which includes customization, implementation and integration of Marcam Solutions
products to meet customer requirements. The decrease in services revenues was
primarily due to the lack of MAPICS service revenues in 1998, as compared to
MAPICS service revenues of $32.0 million in 1997. Total customer support
revenues and consulting revenues for all non-MAPICS product lines for the year
ended September 30, 1998 increased by $5.2 million compared to the same period
in 1997.

Cost of License Revenues
------------------------

     Cost of license revenues represented 7.9% and 22.0% of license revenues in
1998 and 1997, respectively. The decrease in cost of license revenues, both in
dollar terms and as a percentage of license revenues, for the year ended
September 30, 1998 as compared to the same period in 1997 was primarily due to
decreased amortization of capitalized software translation and software
development costs related to the MAPICS and Protean products. In the third
quarter of fiscal 1997, capitalized software assets related to the Protean and
Avantis.Pro product lines were written-off as a result of an assessment of net
realizable value. See "Restructuring and Other Charges." In addition to the
decrease in amortization costs, a portion of the percentage decrease in cost of
license revenues was attributable to a decrease in product royalties as a result
of the absence of MAPICS revenues following the Distribution.

Cost of Services Revenues
-------------------------

     Cost of services revenues represented 70.0% and 57.7% of services revenues
in 1998 and 1997, respectively. The increase in cost of services revenues as a
percentage of services revenues in 1998 was the result of a decrease in the
proportion of support revenues as a percentage of total services revenues, which
resulted from the absence of MAPICS service revenues. Support revenues typically
provide better margins than the Company's other services.

Selling and Marketing
---------------------

     Selling and marketing expenses decreased $26.1 million, or 39.1%, in 1998
from 1997. The decrease in selling and marketing expenses in 1998 was primarily
related to the lack of MAPICS related expenses during 1998 and, to a lesser
extent, a reduction in headcount in both the marketing and sales staff as part
of the 1997 restructuring actions.

Product Development
-------------------

     Gross research and product development expenditures in 1998 and 1997 were
$32.1 million and $41.9 million, respectively. The $9.8 million decrease was
primarily due to the lack of expenditures related to the MAPICS product line and
a decrease in spending on the PRISM product line. These decreases in gross
research and product development spending were partially offset by an increase
in development costs for the Protean product line and additional costs incurred
to integrate the Company's products with various third-party software products.

     No computer software development costs were capitalized during the year
ended September 30, 1998. Computer software costs capitalized during the year
ended September 30, 1997 totaled $7.6 million, representing 18.1% of gross
research and development expenditures. Capitalization of Protean and Avantis.Pro
development and translation costs ceased during the third quarter of fiscal
1997. See "Restructuring and Other Charges."

     As a result, product development expenses were $32.1 million and $34.3
million, representing 25.8% and 20.9% of total revenues in 1998 and 1997,
respectively. The decrease in the amount of product development expenses was
primarily related to having no MAPICS related expenditures during 1998, which
was offset somewhat by having no costs qualifying for capitalization in 1998.
The increase in product development expenses as a percentage of revenues was
attributable to the decrease in total revenues during 1998.

General and Administrative
--------------------------

     General and administrative expenses, which include the Company's finance,
accounting and corporate administrative functions, decreased by $3.2 million in
1998 from 1997. The decrease was primarily due to the absence of expenses
related to the MAPICS business during 1998 and, to a lesser extent, decreases in
non-income taxes and employee compensation charges related to the separation of
the MAPICS business.

                                       19

<PAGE>



Restructuring and Other Charges
-------------------------------

     During the third quarter of fiscal 1998, as a result of the substantial
completion of the planned restructuring actions and the Company's assessment of
future payments required, the Company reversed $1.9 million of restructuring and
other charges accrued in previous periods. This amount represented the cost
savings achieved in relation to the amounts forecast at the time of the
restructurings. Savings from the original forecast were a result of lower than
expected severance payments to employees, lower than expected expenses
associated with the termination of leases, and the sale of fixed assets
associated with several facilities that were closed.

     During the third and fourth quarters of fiscal 1997, the Company recorded
restructuring and other charges totaling $19.2 million. Of this amount,
approximately $1.7 million related principally to reductions in number of
employees, $1.5 million related to the closure of certain European facilities,
and $1.0 million related to other restructuring actions. An additional $11.1
million of this charge related to the write-off of the capitalized software
costs relating to the Protean and Avantis.Pro product lines. This write-off
resulted from lower than expected revenue from these product lines during fiscal
1997 and the continuing uncertainty regarding market acceptance of, and
significant revenue generation from, the product lines in the near future. The
charge also included costs of $3.9 million associated with the spin-off of
Marcam Solutions, Inc. in connection with the Distribution.

Interest and Other Income (Expense), net
----------------------------------------

     The net income of interest and other income (expense) increased from a net
expense of $2.1 million in 1997 to a net income of $1.8 million in 1998. The
increase was primarily related to interest earned on significantly higher
average cash and short-term investment balances during 1998 as compared to 1997;
lower interest expense as the result of the repayment of all of Marcam
Corporation's long-term debt during the fourth quarter of fiscal 1997; and, to a
lesser extent, gains resulting from favorable changes in foreign currency rates.

Income Tax Expense
------------------

     The income tax expense for 1998 of $1.1 million and 1997 of $5.2 million
were primarily due to foreign withholding taxes and taxes on income generated in
foreign jurisdictions for which U.S. tax credit utilization is currently
uncertain. The 1997 provision included foreign tax charges of $1.1 million
incurred in connection with the Distribution. There was no tax benefit recorded
in 1998 or 1997 for losses generated in the U.S. during either period or for
other taxes paid in connection with the Distribution due to the uncertainty of
realizing such benefits.

Extraordinary Loss from Early Extinguishment of Debt
----------------------------------------------------

     During the fourth quarter of 1997, the Company's outstanding $25.0 million
9.82% unsecured Subordinated Notes due April 30, 2001 (the "Subordinated Notes")
were repaid. In connection with the repayment, the Company recorded charges of
$3.0 million associated with prepayment penalties and the write-off of deferred
financing costs. No extraordinary costs were incurred during 1998.

1997 Compared to 1996
---------------------

     Results during 1996 include twelve months of results related to the MAPICS
business. Due to the timing of the Distribution, 1997 results include only 10
months of results related to the MAPICS business. MAPICS' revenues historically
occurred predominantly in the third month of each quarter. See "Selected Pro
Forma Results of Operations" for additional discussion of the stand-alone
results of Marcam Solutions. The 1996 results include the results of Marcam
Corporation's Foresight subsidiary through June 30, 1996, the date of
divestiture. This divestiture resulted in reductions in revenues and expenses in
the subsequent quarters.

Revenues
--------

     Total revenues decreased 18.6% to $163.9 million in 1997 from $201.4
million in 1996.

     License revenues decreased 28.7% to $66.4 million in 1997 from $93.1
million in 1996. The decrease in license revenues resulted from a decline of
approximately $13.8 million, or 33.5%, in license revenue for PRISM, Protean and
Avantis products; a decline of approximately $6.4 million, or 14.2%, in MAPICS
license revenue comparing 10 months in 1997 to 12 months in 1996, reflecting
growth over the corresponding ten-month period in 1996 resulting primarily from
an increase in MAPICS license sales to new customers; and a decline of
approximately $6.5 million due to the divestment of the Foresight subsidiary in
June 1996.



                                       20

<PAGE>

     Services revenues decreased 10.0% to $97.5 million in 1997 from $108.3
million in 1996. The services revenues decrease, which occurred in all
geographies, was due to decreased implementation consulting and customization
revenues for the PRISM products and a decrease of approximately $4.7 million due
to the divestment of the Foresight subsidiary in June 1996. MAPICS services
revenues were unchanged comparing 10 months in 1997 to 12 months in 1996,
reflecting growth over the corresponding ten-month period in 1996 principally as
a result of an increase in the MAPICS installed base of customers.

Cost of License Revenues
------------------------

     Cost of license revenues represented 22.0% and 17.9% of license revenues in
1997 and 1996, respectively. The margin decrease in 1997 primarily related to
the fixed nature of amortization costs of capitalized software and translation
assets included in cost of license revenues. Such costs were consistent on a
year-to-year basis, and since license revenue decreased, these costs represented
a larger percentage of license revenue. As discussed in "Restructuring and Other
Charges," during the third quarter of 1997, the Company wrote-off the
capitalized software assets related to the Protean and Avantis.Pro product
lines.

Cost of Services Revenues
-------------------------

     Cost of services revenues represented 57.7% and 64.2% of services revenues
in 1997 and 1996, respectively. The decrease in cost of services revenues as a
percentage of services revenues in 1997 was primarily the result of higher
margins realized in the Company's implementation consulting and customization
businesses. This is attributable to the fact that a higher percentage of total
services revenues was being derived from support revenues in 1997 than in 1996.
Support revenues typically have better margins than other types of service
revenues. The Company also realized slightly higher margins on its support
business due to decreased headcount in the support area as a result of the 1996
and 1997 restructuring actions. In addition, the decreased use of external
resources as compared to the prior year has also helped to reduce the cost of
services revenues. External resources, although flexible, are generally more
costly than internal resources. Finally, a portion of the decrease was due to
the services revenues of the Foresight product line having lower gross margins
in 1996 than other product lines.

Selling and Marketing
---------------------

     Selling and marketing expenses decreased $16.2 million, or 19.6%, in 1997
from 1996. The decrease in selling and marketing expenses in 1997 was due to
reduced headcount and the decline in license revenues that led to lower
commission expenses. Additionally, the 1996 amounts included costs associated
with the Foresight product line. The decreases were partially offset by
increased marketing program expenditures in 1997 related to the PRISM, Protean
and Avantis product lines. As a percentage of revenues, selling and marketing
expenses decreased to 40.7% in 1997 from 41.1% in 1996.

Product Development
-------------------

     Gross research and product development expenditures in 1997 and 1996 were
$41.9 million and $39.9 million, respectively. The $2.0 million increase was
primarily due to the increased investment in the development of the Protean and
MAPICS product lines, partially offset by lower spending to translate and
localize software products for international sale.

     The amounts of computer software costs capitalized were $7.6 million and
$12.2 million for 1997 and 1996, respectively, representing 18.1% and 30.6% of
gross research and development expenditures. The decrease in capitalization
overall and as a percentage of gross expenditures was due primarily to lower
amounts of software development and translation expenditures qualifying for
capitalization in 1997, including the cessation during the third fiscal quarter
of 1997 of capitalization of Protean and Avantis.Pro development and translation
costs.

     Therefore, product development expenses were $34.3 million and $27.7
million, representing 20.9% and 13.7% of total revenues in 1997 and 1996,
respectively. The increase of $6.6 million in 1997 was primarily due to
increased development spending as well as lower amounts of capitalization. The
increase as a percentage of revenues is also attributable to the decrease in
total revenues in 1997 as compared to 1996.

                                       21

<PAGE>

General and Administrative
--------------------------

     General and administrative expenses, which include the Company's finance,
accounting and corporate administrative functions, decreased by $482,000 in 1997
from 1996. The decrease was due primarily to a $1.0 million special provision in
1996 for additional contract claims and legal costs, partially offset by
provisions for employee compensation charges related to the Distribution and an
increase in non-income taxes incurred in 1997.

Restructuring and Other Charges
-------------------------------

     During the third and fourth quarters of fiscal 1997 the Company recorded
restructuring and other charges totaling $19.2 million. Of this amount,
approximately $1.7 million related principally to reductions in number of
employees, $1.5 million related to the closure of certain European facilities,
and $1.0 million related to other restructuring actions. An additional $11.1
million of this charge related to the write-off of the capitalized software
costs relating to the Protean and Avantis.Pro product lines. This write-off
resulted from lower than expected revenue from these product lines during fiscal
1997 and the continuing uncertainty regarding market acceptance of, and
significant revenue generation from, the product lines in the near future. The
charge also included costs of $3.9 million associated with the spin-off of
Marcam Solutions, Inc. in connection with the Distribution. Approximately $7.8
million of the restructuring charges was expected to result in cash
expenditures. At September 30, 1997, $2.4 million related to these charges
remained in accrued liabilities.

     During fiscal 1996, the Company recorded restructuring charges of $10.6
million related to a restructuring of the Company's global operations and the
divestiture of Foresight. At September 30, 1997, the Company had accrued $1.2
million related to the 1996 restructuring costs.

Litigation Settlement
---------------------

     During the second quarter of 1996, the Company reached an agreement to
settle the shareholder class action litigation which was brought against the
Company in August 1994. Of the $5.8 million settlement, the Company contributed
$2.8 million from its own funds, with the remainder provided by insurance. The
Company recorded a charge of $3.3 million to cover this settlement and other
related expenses.

Interest and Other Income (Expense), Net
----------------------------------------

     The net expense of interest and other income (expense) decreased $588,000
in 1997 from 1996. The decrease was primarily due to lower interest expense
resulting from the July 25, 1997 repayment of the $25 million Subordinated
Notes. See "Extraordinary Loss from Early Extinguishment of Debt."

Income Tax Expense
------------------

     The income tax expense for 1997 of $5.2 million and 1996 of $4.6 million
were primarily due to foreign withholding taxes and taxes on income generated in
foreign jurisdictions for which U.S. tax credit utilization is currently
uncertain. The 1997 provision included foreign tax charges of $1.1 million
incurred in connection with the Distribution. There was no tax benefit recorded
in 1997 or 1996 for losses generated in the U.S. during the periods or for other
taxes paid in connection with the Distribution due to the uncertainty of
realizing such benefits.

Extraordinary Loss from Early Extinguishment of Debt
----------------------------------------------------

     During the fourth quarter of 1997, the Company's outstanding Subordinated
Notes were repaid. In connection with the repayment, the Company recorded
charges of $3.0 million associated with prepayment penalties and the write-off
of deferred financing costs.

Liquidity and Capital Resources
-------------------------------

     Prior to the Distribution, the Company funded its activities with cash
generated from operations, from borrowings and from equity financings. Since the
time of the Distribution, the Company has funded its activities with the capital
contribution from MAPICS made in connection with the Distribution.

                                       22

<PAGE>


     Current assets decreased by $6.9 million to $62.0 million at September 30,
1998, compared to $68.9 million at September 30, 1997. This decrease was
primarily due to lower cash and short-term investment balances. Total cash and
short-term investments of $28.1 million as of September 30, 1998 had decreased
by $9.9 million from $38.0 million as of September 30, 1997. Cash was used
during the fiscal year to fund operating losses and pay restructuring related
items; to make investments in fixed assets; and to fund increases in accounts
receivable balances. Accounts receivable as of September 30, 1998 of $29.6
million had increased by $5.3 million from $24.3 million as of September 30,
1997, due principally to higher revenues in the last quarter of fiscal 1998,
compared to the same quarter in fiscal 1997.

     Current liabilities decreased by $3.9 million during fiscal 1998 to $52.1
million as of September 30, 1998, compared to $56.0 million at September 30,
1997. This decrease was due to decreases in accrued expenses and other current
liabilities and deferred revenue, and was partially offset by an increase in
accounts payable. As of September 30, 1998, the Company had no material
commitments for capital expenditures. As a result of the changes in current
assets and current liabilities, working capital decreased by $3.0 million from
$12.9 million as of September 30, 1997 to $9.9 million as of September 30, 1998.

     During 1998, operating activities used approximately $8.0 million of cash.
Investing activities provided approximately $4.3 million of cash, resulting from
$8.4 million of net proceeds from the sale of short-term investments, offset
partially by $4.1 million used for the purchase of fixed assets. Financing
activities provided $1.6 million of cash, primarily related to the exercise of
stock options and common stock sold through the Company's employee stock
purchase plan.

     The Company used cash during fiscal 1998, 1997 and 1996 to fund strategic
investments, in particular, substantial expenditures for marketing and selling
activities and for product development, and operating losses. During fiscal
years 1998, 1997 and 1996, the Company's selling and marketing expenditures were
$40.5 million, $66.6 million and $82.8 million, respectively. During fiscal
years 1998, 1997 and 1996, the Company's product development expenditures were
$32.1 million, $41.9 million, and $39.9 million, respectively. During 1999, the
Company intends to continue to make investments in selling and marketing
activities and product development. The Company's objective is to fund these
investments primarily with cash from improved operations and existing cash
resources. The Company's timely ability to generate cash from operations depends
upon, among other things, revenue growth, completion and market acceptance of
new products, success in selling its current family of products, improvements in
operating productivity, and payment terms and collection of accounts receivable.

     There can be no assurance that the Company's operations will generate
sufficient cash to finance these activities. Until operations improve to meet
its cash requirements, the Company will need to rely on existing cash resources.
The Company currently anticipates that cash from operations and its available
cash will be sufficient to fund operations through at least fiscal year 1999.
If, however, such sources prove insufficient in 1999, or over the longer term,
the Company will be required to make changes in operations or seek additional
debt or equity financing. Marcam Solutions currently believes that its potential
borrowing capacity is limited to revolving lines of credit with borrowing
availability based on qualifying accounts receivable. There can be no assurances
that such a revolving line of credit or any other additional debt or equity
financing will be available or available on terms acceptable to Marcam
Solutions. The continued incurrence of operating losses by Marcam Solutions
would have a material adverse affect on Marcam Solutions' business, financial
condition and results of operations.

Selected Pro Forma Results of Operations

     The following discussion and analysis relates to Marcam Solutions on a pro
forma basis, giving effect to the Distribution. The unaudited pro forma
financial information for the fiscal years ended September 30, 1997 and 1996 is
presented as if Marcam Solutions had been operated as a separate entity,
principally by deducting the operating results of MAPICS from the historical
consolidated operating results of Marcam Corporation. The pro forma data is for
informational purposes only and may not necessarily reflect future results of
operations or what the actual results of operations would have been had Marcam
Solutions been operating as a separate entity. See Note 2 of Notes to
Consolidated Financial Statements.

                                       23

<PAGE>


1998 Compared to 1997
---------------------

Revenues
--------

     Total revenues increased 33.9% to $124.5 million in 1998 from $93.0 million
in 1997. Total revenues increased within each geography from fiscal 1997 to
fiscal 1998. The increase represented the increased market acceptance of the
Company's products, the competitiveness of which have been improved by several
new releases, including enhanced versions of the Company's Protean and
Avantis.Pro products.

     License revenues increased 96.0% to $53.9 million in 1998 from $27.5
million in 1997. The increase in license revenues resulted from increases in
license revenues from each of the Company's product lines. Prior to fiscal 1998,
a majority of the Company's license revenues were derived from products
operating on the IBM AS/400 platform. In fiscal 1998, however, a majority of the
Company's license revenues were derived from the Protean and Avantis.Pro product
lines.

     Services revenues increased 7.9% to $70.7 million in 1998 from $65.5
million in 1997. The services revenues increase was primarily due to increased
implementation consulting and support revenues, and was partially offset by a
decrease in customization revenues.

Cost of License Revenues
------------------------

     Cost of license revenues represented 7.9% and 27.8% of license revenues in
1998 and 1997, respectively. The decrease in cost of license revenues as a
percentage of license revenues for the year ended September 30, 1998, as
compared to the same period in 1997, was due to decreased amortization of
capitalized software translation and software development costs related to the
Protean products. In the third quarter of fiscal 1997, capitalized software
assets related to the Protean and Avantis.Pro product lines were written-off as
a result of an assessment of net realizable value. In addition, the royalty fees
associated with third-party software decreased as a percent of license revenue,
due to an increase in the proportion of Protean license revenues (which generate
lower royalty fees) to overall license revenues.

Cost of Services Revenues
-------------------------

     Cost of services revenues represented 69.9% and 68.5% of services revenues
in 1998 and 1997, respectively. This increase was primarily related to increased
investments in the Company's service delivery capabilities, primarily related to
the Protean and Avantis.Pro product lines.

Selling and Marketing
---------------------

     Selling and marketing expenses increased $235,000, or 0.6%, in 1998 from
1997. The increase in selling and marketing expenses in 1998 was primarily
related to actions taken to develop the Company's distribution channels, which
was partially offset by a reduction in headcount in both the marketing and sales
staff as part of the 1997 restructuring actions.

Product Development
-------------------

     Gross research and product development expenditures in 1998 and 1997 were
$32.1 million and $29.2 million, respectively. The $2.9 million increase was
primarily due to an increase in development costs for the Protean product line
and costs incurred to integrate the Company's products with various third-party
software products.

     No computer software development costs were capitalized during the year
ended September 30, 1998. Computer software costs capitalized during the year
ended September 30, 1997 totaled $3.4 million, representing 11.6% of gross
research and development expenditures. Capitalization of Protean and Avantis.Pro
development and translation costs ceased during the third fiscal quarter of
1997.

     Therefore, product development expenses were $32.1 million and $25.8
million, representing 25.8% and 27.7% of total revenues in 1998 and 1997,
respectively. This increase in product development expenses was primarily
related to the continuing investment in the Company's Protean product line and
having no costs qualifying for capitalization. The percentage decrease in
product development expenses as a percentage of revenues was attributable to the
increase in total revenues during 1998.

                                       24

<PAGE>

General and Administrative
--------------------------

     General and administrative expenses, which include the Company's finance,
accounting and corporate administrative functions, decreased by $940,000 in 1998
from 1997. The decrease was due primarily to decreases in non-income taxes and
employee compensation charges related to the separation of the MAPICS business.

Restructuring and Other Charges
-------------------------------

     During the third quarter of fiscal 1998, as a result of the substantial
completion of the planned restructuring actions and the Company's assessment of
future payments required, the Company reversed $1.9 million of restructuring and
other charges accrued in previous periods. This amount represented the cost
savings achieved in relation to the amounts forecast at the time of the
restructurings. Savings from the original forecast were a result of lower than
expected severance payments to employees, lower than expected expenses
associated with the termination of leases, and the sale of fixed assets
associated with several facilities that were closed.

     During the third and fourth quarters of fiscal 1997, the Company recorded
restructuring and other charges totaling $19.2 million. Of this amount,
approximately $1.7 million related principally to reductions in number of
employees, $1.5 million related to the closure of certain European facilities,
and $1.0 million related to other restructuring actions. An additional $11.1
million of this charge related to the write-off of the capitalized software
costs relating to the Protean and Avantis.Pro product lines. This write-off
resulted from lower than expected revenue from these product lines during fiscal
1997 and the continuing uncertainty regarding market acceptance of, and
significant revenue generation from, the product lines in the near future. The
charge also included costs of $3.9 million associated with the spin-off of
Marcam Solutions, Inc. in connection with the Distribution. Approximately $7.8
million of the restructuring and other charges was expected to result in cash
expenditures.

Interest and Other Income (Expense), net
----------------------------------------

     The net income of interest and other income (expense) increased from a net
expense of $2.1 million in 1997 to a net income of $1.8 million in 1998. The
increase was primarily related to interest earned on significantly higher cash
and short-term investment balances during 1998 as compared to 1997; lower
interest expense as the result of the repayment of all of Marcam Corporation's
long-term debt during the fourth quarter of fiscal 1997; and, to a lesser
extent, gains resulting from favorable changes in foreign currency rates.

Income Tax Expense
------------------

     The income tax expense for 1998 of $1.1 million and 1997 of $3.9 million
were primarily due to foreign withholding taxes and taxes on income generated in
foreign jurisdictions for which U.S. tax credit utilization is currently
uncertain. There was no tax benefit for losses generated in the U.S. during
either period due to the uncertainty of realizing such benefits.

Extraordinary Loss from Early Extinguishment of Debt
----------------------------------------------------

     During the fourth quarter of 1997, the Company's outstanding $25.0 million
9.82% unsecured Subordinated Notes due April 30, 2001 were repaid. In connection
with the repayment, the Company recorded charges of $3.0 million associated with
prepayment penalties and the write-off of deferred financing costs. No
extraordinary costs were incurred during 1998.

1997 Compared to 1996
---------------------

Revenues
--------

     Total revenues decreased 24.9% to $93.0 million in 1997 from $123.8 million
in 1996. Excluding revenues from the Foresight product line, which was divested
effective as of June 30, 1996, total revenues decreased 17.5% in 1997 from
$112.6 million in 1996.

     License revenues decreased 42.5% to $27.5 million in 1997 from $47.8
million in 1996. Excluding revenues from the Foresight product line, license
revenues decreased 33.5% from $41.3 million in 1996. The decrease in license
revenues in 1997 was primarily due to lower license revenue from the PRISM and
Avantis product lines. Protean license revenue in 1997 decreased slightly as
compared to 1996.

                                       25

<PAGE>

     Services revenues decreased 13.9% to $65.5 million in 1997 from $76.0
million in 1996. Excluding revenues from the Foresight product line, services
revenues decreased 8.2% in 1997 from $71.3 million in 1996. The decrease in
services revenues in 1997 was primarily due to decreased implementation
consulting and customization revenues for the PRISM products.

Cost of License Revenues
------------------------

     Cost of license revenues represented 27.8% and 20.4% of license revenues in
1997 and 1996, respectively. The decrease in license revenue margins was
primarily due to the less than proportional decrease in the amortization of
capitalized software costs relative to the decline in license revenue. As
discussed above, during the third fiscal quarter of 1997, the Company wrote off
the capitalized software assets related to the Protean and Avantis.Pro product
lines and ceased further capitalization.

Cost of Services Revenues
-------------------------

     Cost of services revenues represented 68.5% and 76.7% of services in 1997
and 1996, respectively. The improvement in cost of services revenues as a
percentage of services revenues in 1997 was primarily due to a higher percentage
of the total service revenues being derived from support revenues in 1997 than
in 1996. Support revenues typically have better margins than other types of
service revenues. The Company also realized higher margins on its support
business due to decreased headcount in the support area as a result of the 1996
and 1997 restructuring actions. In addition, the decreased use of external
resources as compared to the prior year has also helped to reduce the cost of
service revenues. External resources, although flexible, are generally more
costly than internal resources.

Selling and Marketing
---------------------

     Selling and marketing expense decreased $12.4 million, or 23.5%, in 1997
from 1996. The decrease in selling and marketing expenses in 1997 was due to
reduced headcount and the decline in license revenues which led to lower
commission expenses. Additionally, the 1996 amounts included costs associated
with the Foresight product line. The decreases were partially offset by
increased marketing expenditures in 1997 related to the PRISM, Protean and
Avantis product lines.

Product Development
-------------------

     Gross research and product development expenditures in 1997 and 1996 were
$29.2 million and $27.1 million, respectively. The $2.1 million increase in
gross research and product development expenses in 1997 was primarily due to
increased development costs for the Protean product line which were partially
offset by lower spending to translate and localize software products for
international sale and no development costs in 1997 related to the divested
Foresight product line.

     The amounts of computer software costs capitalized were $3.4 million and
$5.8 million for 1997 and 1996, respectively, representing 11.6% and 21.4% of
gross research and development expenditures. The decrease in capitalization
overall and as a percentage of gross expenditures in 1997 was due primarily to
lower translation efforts and a lower amount of software development expenditure
qualifying for capitalization. Additionally, capitalization of Protean and
Avantis.Pro development and translation costs ceased during the third fiscal
quarter of 1997.

     Therefore, product development expenses were $25.8 million in 1997,
representing 27.7% of total revenues. In 1996, product development expenses were
$21.3 million, representing 17.2% of total revenues. The increase of $4.5
million in 1997 was primarily due to the continuing investment in all of the
Company's products and lower amounts of capitalization, as described above. The
increase as a percentage of revenues is also attributable to the decrease in
total revenues in 1997 as compared to 1996.

General and Administrative
--------------------------

     General and administrative expenses, which include the Company's finance,
accounting and corporate administrative functions, decreased by $675,000 in 1997
from 1996. The decrease was due primarily to a $1.0 million special provision in
1996 for additional contract claims and legal costs, partially offset by
provisions for employee compensation charges related to the Distribution and an
increase in non-income taxes incurred in 1997.

                                       26

<PAGE>

Restructuring and Other Charges
-------------------------------

     During the third and fourth quarters of fiscal 1997, the Company recorded
restructuring and other charges totaling $19.2 million. Of this amount,
approximately $1.7 million related principally to reductions in staffing, $1.5
million related to the closure of certain European facilities, and $1.0 million
related to other restructuring actions. An additional $11.1 million of this
charge related to the write-off of the capitalized software costs relating to
the Protean and Avantis.Pro product lines. This write-off resulted from lower
than expected revenue from these product lines during fiscal 1997 and the
continuing uncertainty regarding market acceptance of, and significant revenue
generation from, the product lines in the near future. The charge also included
costs of $3.9 million associated with the spin-off of Marcam Solutions, Inc. in
connection with the Distribution. Approximately $7.8 million of the
restructuring and other charges was expected to result in cash expenditures. At
September 30, 1997, $2.4 million related to these charges remained in accrued
liabilities.

     During fiscal 1996, the Company recorded restructuring charges of $10.6
million related to a restructuring of the Company's global operations and the
divestiture of Foresight at June 30, 1996. At September 30, 1997, the Company
had accrued $1.2 million related to the 1996 restructuring costs.

Interest and Other Income (Expense), Net
----------------------------------------

     The net expense of interest and other income (expense) decreased $3.8
million in 1997 from 1996. In fiscal 1996, the Company reached an agreement in
principle to settle the shareholder class action litigation that was brought
against the Company in August 1994. Of the $5.8 million settlement, the Company
contributed $2.8 million from its own funds, with the remainder provided by
insurance. The Company recorded a charge in 1996 of $3.3 million to cover the
settlement and other related expenses. In addition, the decrease resulted from
lower interest expense caused by the July 25, 1997 repayment of the $25.0
million Subordinated Notes (see above).

Income Tax Expense
------------------

     The income tax expense for the year ended September 30, 1997 was $3.9
million. The income tax expense for the year ended September 30, 1996 was $4.2
million. The expense in each period was primarily due to foreign withholding
taxes and taxes on income generated in foreign jurisdictions for which U.S. tax
credit utilization is currently uncertain. There was no tax benefit recorded for
losses generated in the U.S. during these periods due to the uncertainty of
realizing such benefits.

Extraordinary Loss from Early Extinguishment of Debt
----------------------------------------------------

     During the fourth quarter of 1997, the Company's outstanding $25.0 million
9.82% unsecured Subordinated Notes due April 30, 2001 were repaid. In connection
with the repayment, the Company recorded charges of $3.0 million associated with
prepayment penalties and the write-off of deferred financing costs.

                                       27

<PAGE>

Other Matters
-------------

     To date, management believes inflation has not had a material impact on the
Company's operations.

     In June 1997, Statement of Financial Accounting Standards No. 130,
"Reporting Comprehensive Income" ("SFAS 130"), was issued, which requires
businesses to disclose comprehensive income and its components in general
purpose financial statements, with reclassification of prior period financial
statements. SFAS 130 is effective for fiscal periods beginning after December
15, 1997; its adoption is not expected to have a material impact on the
Company's disclosures.

     In June 1997, Statement of Financial Accounting Standards No. 131,
"Disclosures about Segments of an Enterprise and Related Information" ("SFAS
131"), was issued, which redefines how operating segments are determined and
requires disclosures of certain financial and descriptive information about a
company's operating segments. SFAS 131 is effective for fiscal periods beginning
after December 15, 1997; its adoption may require additional disclosure of the
Company's historical financial data.

     In October 1997, Statement of Position 97-2, "Software Revenue Recognition"
("SOP 97-2"), was issued, which provides guidance on applying generally accepted
accounting principles in recognizing revenue on software transactions and
replaces Statement of Position 91-1. SOP 97-2 is effective for transactions
entered into in fiscal periods beginning after December 15, 1997. The Company
will adopt the guidelines of SOP 97-2 as of October 1, 1998; its adoption is not
expected to have a material impact on the Company's financial position and
results of operations.

     In March 1998, Statement of Position 98-1, "Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use" ("SOP 98-1"), was
issued, which provides guidance on applying generally accepted accounting
principles in accounting for the costs of computer software developed or
obtained for internal use. SOP 98-1 is effective for financial statements for
fiscal years beginning after December 15, 1998 (although earlier application is
encouraged), and will result in the capitalization of certain qualifying costs
incurred in the development of software for internal use. The Company will adopt
the guidelines of SOP 98-1 as of October 1, 1998; its adoption is not expected
to have a material impact on the Company's financial position and results of
operations.

     In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities" ("SFAS 133"). SFAS 133 is effective for all fiscal
quarters of all fiscal years beginning after June 15, 1999 (October 1, 1999 for
the Company). SFAS 133 requires that all derivative instruments be recorded on
the balance sheet at their fair value. Changes in the fair value of derivatives
are recorded each period in current earnings or other comprehensive income,
depending on whether a derivative is designated as part of a hedge transaction
and, if it is, the type of hedge transaction. Management anticipates that, due
to the Company's limited use of derivative instruments, the adoption of FAS 133
will not have a material impact on the Company's financial position and results
of operations.

                                       28

<PAGE>


Factors Affecting Future Performance
------------------------------------

     This Annual Report on Form 10-K contains forward-looking statements that
involve risks and uncertainties. The Company's actual results could differ
materially from those anticipated in these forward-looking statements as a
result of certain factors, including, without limitation, those set forth in the
following risk factors and elsewhere in this Annual Report on Form 10-K. In
addition to the other information included or incorporated by reference in this
Annual Report on Form 10-K, the following risk factors should be considered
carefully in evaluating the Company and its business.

Recent Operating Losses; Lack of Liquidity
------------------------------------------

     The Company has incurred operating losses of $6.2 million, $36.6 million
and $15.8 million for the fiscal years ended September 30, 1998, 1997 and 1996,
respectively. On a pro forma basis giving effect to the Distribution, Marcam
Solutions incurred operating losses of $52.1 million and $36.8 million for the
fiscal years ended September 30, 1997 and 1996, respectively. At September 30,
1998, Marcam Solutions' accumulated deficit was $126.6 million. It is currently
expected that quarterly net losses will continue for at least the next few
quarters. There can be no assurance that Marcam Solutions will be profitable
thereafter or that profitability, if achieved, will be sustained. In order to
support the anticipated growth of its business, Marcam Solutions expects to
continue to invest in its marketing and sales and product development
activities. Marcam Solutions' expenses for these and other activities are based
in significant part on its expectations regarding future revenues and to a large
extent are fixed in the short term. Marcam Solutions may be unable to adjust
spending in a timely manner to compensate for any unexpected revenue shortfalls.

     Marcam Solutions believes that achievement of profitability and positive
cash flow from operations as soon as possible is essential. The Company
currently believes that a combination of cost reductions and increased revenues
is necessary to achieve this result. Marcam Solutions' business and operating
expense structures are being reviewed to identify opportunities for cost
reductions, and actions may be initiated to further reduce operating expenses.

     In addition, Marcam Solutions has undertaken a number of actions designed
to increase revenues, including introducing enhanced versions of its Protean and
Avantis.Pro products designed to make them more competitive and refocusing its
sales and marketing efforts on the PRISM product line. The Company currently
believes that significant increases in Protean license revenues are required to
offset the costs of its sales and marketing initiatives, including the expansion
of its distribution channels, and development activities relating to the Protean
product line. There can be no assurance, however, that such actions will result
in increased revenues or that, when combined with any cost reductions, will
result in Marcam Solutions achieving profitability or positive cash flow from
operations. Failure to achieve profitability or positive cash flows from
operations would materially and adversely affect Marcam Solutions' business and
financial condition.

     Marcam Solutions has used cash during fiscal years 1998, 1997 and 1996 to
fund strategic investments, in particular substantial expenditures for marketing
and selling activities and product development, and operating losses. During
1999, Marcam Solutions currently intends to continue to make investments in
selling and marketing activities and product development. Marcam Solutions'
objective is to fund these investments and any losses primarily with cash from
improved operations and existing cash resources. Marcam Solutions' ability to
generate cash from operations depends upon, among other things, revenue growth,
market acceptance of its Protean and Avantis.Pro products, success in enhancing
and selling its current family of products, improvements in operating
productivity, and payment terms and collection of accounts receivable. There can
be no assurance that Marcam Solutions' operations will generate sufficient cash
to finance its activities. Until operations improve to meet its cash
requirements, Marcam Solutions will need to rely on existing cash resources.

     Marcam Solutions currently anticipates that cash from operations and its
available cash will be sufficient to fund its operations and other cash needs
through at least fiscal year 1999. If, however, such sources prove insufficient,
Marcam Solutions will be required to make changes in operations or seek
additional debt or equity financing. Marcam Solutions currently believes that
its potential borrowing capacity is limited to revolving lines of credit with
borrowing availability based on qualifying accounts receivable. There can be no
assurances that such a revolving line of credit or any other additional debt or
equity financing will be available or available on terms acceptable to Marcam
Solutions. The continued incurrence of operating losses by Marcam Solutions
would have a material adverse affect on Marcam Solutions' business, financial
condition and results of operations.

                                       29

<PAGE>

Variability of Quarterly Results
--------------------------------

     Marcam Solutions has experienced fluctuations in its quarterly operating
results and anticipates that such fluctuations will continue. Marcam Solutions'
quarterly operating results are affected by a number of factors that could
materially and adversely affect revenues and profitability, including the
relatively long sales cycles for Marcam Solutions' products; the size and timing
of license transactions; the timing of the Company's recognition of revenue from
certain contracts that involve delivery of products in the future, acceptance
criteria, extended payment terms and certain other conditions; the demand for
Marcam Solutions' products; the proportion of revenues attributable to licenses,
customer support and consulting services; changes in the level of operating
expenses; the potential for delay or deferral of customer purchases of Marcam
Solutions' products and services; the timing of the introduction or market
acceptance of new or enhanced products offered by Marcam Solutions or its
competitors; changes in customer budgets; and the general economic and political
conditions and other factors affecting capital expenditures by customers. Marcam
Solutions' sales cycle typically ranges from three to twelve months, and the
cost of acquiring its software and associated computer hardware and of training
system users represents a significant expenditure for customers. The purchase of
Marcam Solutions' products and services may involve a significant commitment of
capital and other resources by its customers with the attendant delays
frequently associated with large capital expenditures and authorization
procedures within an organization. Accordingly, the sales cycles for Marcam
Solutions' products and services are subject to a number of significant risks
over which Marcam Solutions has little or no control, including customers'
budgetary constraints and internal authorization procedures.

     Marcam Solutions' revenues occur predominantly in the third month of each
quarter and tend to be concentrated in the latter half of that third month.
Accordingly, Marcam Solutions' quarterly operating results are difficult to
predict and delays in product delivery or in closings of sales near the end of a
quarter could cause quarterly revenues and, to a greater degree, net income to
fall substantially short of anticipated levels. Although Marcam Solutions has no
customer that comprised greater than 10% of the Company's total revenues in any
of the three years ended September 30, 1998, seven customers accounted for 40%
of total license revenues during the year ended September 30, 1998. The
contracts entered into with these seven customers are larger than is typical for
Marcam Solutions. Marcam Solutions' relatively long sales cycle and variable
average revenue per transaction, together with fixed short-term expenses, such
as marketing, sales and product development expenditures, can cause significant
variations in operating results from quarter to quarter, if projected revenues
are not realized in the expected period.

     There can be no assurance that Marcam Solutions will be able to achieve or
maintain profitability in the future or that its levels of profitability will
not vary significantly between quarterly periods. Further, it is possible that
Marcam Solutions' operating results could fail to meet the expectations of
securities analysts or investors. In such event, or in the event that adverse
conditions in the manufacturing, enterprise resource planning ("ERP") or
enterprise asset management ("EAM") marketplaces prevail or are perceived to
prevail, the price of Marcam Solutions Common Stock and Marcam Solutions'
business, financial condition and results of operations would likely be
materially adversely affected.

New Products and Technological Change
-------------------------------------

     The market for Marcam Solutions' ERP and EAM software products is
characterized by rapid technological advances, evolving industry standards in
computer hardware and software technology, changes in customer requirements, and
frequent new product line introductions and enhancements. Marcam Solutions'
future success will depend on its ability to continue to enhance its current
product lines and to develop and introduce new products that keep pace with
technological developments, satisfy increasingly sophisticated customer
requirements, and achieve and sustain market acceptance. Marcam Solutions must
continue to anticipate and respond adequately to advances in standard business
applications software and client/server solutions, as well as object-oriented
technology. There can be no assurance that Marcam Solutions will be successful
in developing and marketing, on a timely and cost-effective basis, functioning
product enhancements or new products that respond to technological advances by
its competitors, or that its new products will achieve or sustain market
acceptance.

     Marcam Solutions is currently facing the challenges of a product and
technology transition. In particular, many of Marcam Solutions' software
products (such as PRISM and Avantis.XA products) are designed to operate on
International Business Machines Corporation's ("IBM") proprietary hardware,
including IBM's AS/400 computer systems. Marcam Solutions must continue to
invest in enhancements and support for these products in a cost-effective
manner. Marcam Solutions' newest products (such as Protean and Avantis.Pro) are
designed to be platform independent

                                       30

<PAGE>

and utilize object technology. Products embodying this technology are beginning
to be introduced into the existing ERP and EAM marketplaces. There can be no
assurance that such products will be accepted by users to a significant degree
or at all. As a result of the complexities inherent in the functionality and
performance demanded by ERP and EAM software customers, major new product
enhancements and new products can require long development and testing periods
to achieve market acceptance. In addition, despite testing by Marcam Solutions,
ERP and EAM software programs as complex as those offered by Marcam Solutions
may contain errors which are discovered only after a product has been installed
and used by customers. There can be no assurance that undetected errors will not
impair the market acceptance of these products or adversely affect Marcam
Solutions' business and operating results. Marcam Solutions has from time to
time experienced problems with customers not being able to install or implement
certain of its new product releases and with product performance, including
problems related to product functionality, scalability, product response time
and program errors. Currently, Marcam Solutions is not aware of any product
implementation issues which have not been addressed, or are not currently being
addressed by it. There can be no assurance that the problems encountered by
customers installing and implementing new releases or with the performance of
Marcam Solutions' products will not arise in the future, and if such problems
arise, that such problems will not have a material adverse effect on Marcam
Solutions' business, financial condition and results of operations.

Challenge of Expanding Distribution Channels
--------------------------------------------

     The Company believes that its' future success is dependent upon the
Company's ability to expand and strengthen, and increase revenues derived from,
both direct and indirect sales channels. Marcam Solutions has recently hired a
senior executive responsible for the world-wide development of the direct and
indirect channels, including the recruitment and hiring of experienced,
top-level salespeople and sales support personnel. There can be no assurance
that sufficient qualified salespeople will be available, or that the Company
will be able to attract and retain them. In addition, the Company plans to
develop indirect channels to distribute the Company's products in those emerging
markets where the Company does not have existing distribution affiliates. There
can be no assurance that the Company will be able to locate partners interested
in distributing the Company's products in emerging markets, or if located, to
engage them on terms acceptable to the Company. Failure to expand and strengthen
its distribution channels or to increase revenues derived from them will have a
material adverse effect on the Company's business, results of operations and
financial condition.

Dependence on IBM's AS/400
--------------------------

     Historically, a significant portion of Marcam Solutions' revenues have been
derived from products designed to operate primarily on IBM's AS/400 series of
computers. While license revenues from the Company's Protean and Avantis.Pro
product lines exceeded license revenues from its PRISM and Avantis.XA product
lines in 1998, PRISM and Avantis.XA revenues still account for a significant
portion of the Company's total revenues. Therefore, until Marcam Solutions'
Protean and Avantis.Pro products, which are designed to be platform independent,
achieve sustained market acceptance, Marcam Solutions' future revenues will be
dependent upon the continued widespread use of the AS/400 and the continued
support of the AS/400 by IBM. While Marcam Solutions believes that customers
will continue to use, and IBM will continue to support, the AS/400, there can be
no assurance of such continued use or support and the loss of either would have
a material adverse effect on Marcam Solutions' business and operating results.
Marcam Solutions will be required and intends to continue to devote resources to
supporting its installed base of AS/400 customers. In addition, in order to
retain its AS/400 customers, Marcam Solutions may be required to adapt its
products to any changes made in the AS/400 operating system in the future.
Marcam Solutions' inability to adapt to future changes in the AS/400 operating
system, or delays in doing so, could have a material adverse effect on Marcam
Solutions' business, financial condition and results of operations.

Limited Relevance of Certain Historical Financial Information
-------------------------------------------------------------

     Although the Marcam Solutions Common Stock was distributed to the Marcam
Corporation stockholders, because of the relative significance of Marcam
Corporation's business relating to the PRISM, Protean and Avantis product lines,
the Distribution was recorded for accounting purposes as a disposal of the
business relating to the MAPICS product line. Accordingly, the consolidated
financial statements of Marcam Corporation have become the historical
consolidated financial statements of Marcam Solutions. Marcam Solutions'
financial statements reflect the Distribution as a disposal of the MAPICS
product line as of the Distribution Date and have not been restated to remove
the effects of the prior operating results of the MAPICS business. The
historical financial statements of Marcam Solutions do not reflect what the
financial position, results of operations or cash flows would have been had
Marcam Solutions been a separate, stand-alone entity during the fiscal years
ended September 30, 1997 and 1996, because they include financial

                                       31

<PAGE>

information relating to the MAPICS product line. In addition, the unaudited pro
forma financial information of Marcam Solutions included elsewhere in this
Annual Report on Form 10-K is for informational purposes only and may not
necessarily reflect future results of operations and financial position or what
the results of operations or financial position would have been had Marcam
Solutions been operating as a separate entity. See Note 2 to the Consolidated
Financial Statements.

Competition
-----------

     Marcam Solutions' ERP products are targeted for process manufacturing, and
the EAM products and targeted for capital-intensive companies. The market for
ERP software is highly competitive, changes rapidly and is, to a significant
degree, affected by new product introductions and other market activities of
industry participants. Vendors typically address the market requirements either
by offering a complete ERP core application solution or by offering specialized
ERP applications targeted for specific types of companies and functions within
companies. Marcam Solutions competes in both of these categories. Marcam
Solutions' primary competition comes from ERP core application providers such as
Baan, N. V., Oracle Corporation, SAP AG and PeopleSoft, Inc. In addition, Marcam
Solutions faces competition from suppliers of specialized ERP applications such
as J. D. Edwards and Company, QAD Inc., Ross Systems, Inc., and SCT Adage.

     The market for EAM software is also highly competitive with over 200
vendors offering computerized maintenance management systems (CMMS)/EAM
software. Marcam Solutions' primary competitors for Avantis include Project
Software and Development, Inc. and Indus International, Inc. In addition, some
asset management competition comes from ERP vendors, such as J. D. Edwards and
Company and SAP AG, with asset management components within their application
offerings.

     The principal competitive factors in the market for ERP and EAM software
and services include product functionality, technology, quality, performance,
reliability, ease-of-use, size of installed base, service, vendor reputation and
financial stability. Marcam Solutions believes that its products currently
compete favorably on the foregoing bases, although in certain instances, it may
be at a competitive disadvantage against companies with greater financial,
marketing, service, support and technological resources, and greater name
recognition. Marcam Solutions believes its competitive strengths include its
process and asset management industry expertise, its proven functional
leadership, ability to easily integrate with core ERP and EAM business and plant
applications from other providers, customer implementation results, and its
long-term vision and early leadership position with object technology.

     Certain of Marcam Solutions' competitors have a full ERP suite and
significantly greater financial, marketing, service, support and technical
resources, and greater name recognition than Marcam Solutions. In order to be
successful in the future, Marcam Solutions must continue to respond promptly and
effectively to the challenges of technological change and its competitors'
innovations. Marcam Solutions' competitors may be able to respond more quickly
to new or emerging technologies or changes in customer requirements or devote
greater resources to the development, promotion and sale of their products than
Marcam Solutions. Marcam Solutions also expects to face additional competition
as other established and emerging companies enter the market for business
software and new technologies are introduced for alternative platforms. In
addition, current and potential competitors may make acquisitions or establish
alliances among themselves or with third parties, thereby increasing the ability
of their products to address the needs of Marcam Solutions' prospective
customers. Accordingly, it is possible that new competitors or alliances among
current and new competitors may emerge and rapidly gain significant market
share, resulting in price or fee rate reductions, fewer customer orders and
reduced gross margin, any one of which could have a material adverse effect on
Marcam Solutions' business, financial condition and results of operations. There
can be no assurance that Marcam Solutions will be able to compete successfully
with existing or new competitors or that competition will not have a material
adverse effect on Marcam Solutions' business, financial condition and results of
operations. In addition, because Marcam Solutions relies in part on a network of
distribution affiliates for implementation and other support of its products,
there can be no assurance that these affiliates will maintain sufficiently high
quality standards so that Marcam Solutions' reputation and competitive position
will not be adversely affected.

                                       32

<PAGE>



Dependence on Key Personnel; Ability to Attract and Retain Skilled Personnel
----------------------------------------------------------------------------

     Marcam Solutions' future performance depends to a significant extent upon
the continued service of a number of senior management and key technical
personnel. The loss of the services of one or more key employees could have a
material adverse effect on Marcam Solutions. Marcam Solutions' future financial
results also will depend in large part upon its ability to attract on a timely
basis and retain highly skilled technical, managerial and marketing personnel,
and the ability of its officers and key employees to manage growth successfully
and to continue successful development of new products and enhancements to
existing products. Competition for such personnel is intense and is likely to
intensify further as companies compete to hire personnel. Marcam Solutions
competes in the market for such personnel against numerous companies, including
larger, more established companies with significantly greater financial
resources than Marcam Solutions. There can be no assurance that Marcam Solutions
will be successful in attracting and retaining the personnel it requires to
successfully develop new and enhanced products. The inability of Marcam
Solutions to attract or retain key personnel could have a material adverse
effect on Marcam Solutions' business, financial condition and results of
operations.

Dependence on Worldwide Manufacturing Industry
----------------------------------------------

     Marcam Solutions' business depends substantially upon the capital
expenditures of manufacturers, which expenditures depend in part upon the demand
for such manufacturers' products. A recession or other adverse events affecting
the worldwide manufacturing industry served by Marcam Solutions could affect
such demand, forcing manufacturers in Marcam Solutions' target market to curtail
or postpone capital expenditures on business information systems. Any such
change in the amount or timing of capital expenditures in its target market
could have a material adverse effect on Marcam Solutions' business, financial
condition and results of operations.

Uncertain Protection of Proprietary Technology
----------------------------------------------

     Marcam Solutions' success is heavily dependent upon protection of its
proprietary software. Marcam Solutions relies on a combination of patent,
copyright, trademark and trade secret laws and license and non-disclosure
agreements to establish and protect its proprietary rights in its products.
Marcam Solutions has obtained a patent on a method for modeling production
processes, which is embodied in certain of the PRISM and Protean products.
Marcam Solutions has also obtained a patent on a method for managing how
computer programs communicate with each other across dispersed systems and
different release levels of software throughout an enterprise, which is also
embodied in the PRISM and Protean databases. An additional patent, issued in
April 1998, covers certain testing methods for object-oriented programs and is
utilized in the development of Protean. Marcam Solutions is also seeking U.S.
and foreign patent protection on key aspects of its Protean product line. Marcam
Solutions protects many of its software modules as trade secrets and unpublished
copyrighted works. Marcam Solutions enters into confidentiality and/or license
agreements with its employees, distributors, customers and potential customers,
and limits access to and distribution of its software, documentation and other
proprietary information. There can be no assurance, however, that despite these
precautions, an unauthorized third party will not copy or reverse-engineer
certain portions of Marcam Solutions' products or obtain and use information
that Marcam Solutions regards as proprietary. Marcam Solutions typically makes
the source code for many of its AS/400-based modules available to its customers.
In addition, the laws of some foreign countries do not protect Marcam Solutions'
proprietary rights to the same extent as do the laws of the U.S. There can be no
assurance that the mechanisms used by Marcam Solutions to protect its software
will be adequate or that Marcam Solutions' competitors will not independently
develop software products that are substantially equivalent or superior to
Marcam Solutions' software products.

     In the future, Marcam Solutions may receive notices claiming that it is
infringing the proprietary rights of third parties and there can be no assurance
that Marcam Solutions will not become the subject of infringement claims or
legal proceedings by third parties with respect to current or future products.
In addition, Marcam Solutions may initiate claims or litigation against third
parties for infringement of Marcam Solutions' proprietary rights or to establish
the validity of Marcam Solutions' proprietary rights. Any such claim could be
time consuming, result in costly litigation, cause product shipment delays or
force Marcam Solutions to enter into royalty or license agreements rather than
dispute the merits of such claims. Moreover, an adverse outcome in litigation or
similar adversarial proceedings could subject Marcam Solutions to significant
liabilities to third parties, require the expenditure of significant resources
to develop non-infringing technology, require disputed rights to be licensed
from others or require Marcam Solutions to cease the marketing or use of certain
products, any of which could have a material adverse effect on Marcam Solutions'
business, financial condition and results of operations. To the extent Marcam
Solutions desires or is required to obtain licenses to proprietary rights of
others, there can be no assurance that any such licenses will be made available
on terms acceptable



                                       33

<PAGE>

to Marcam Solutions, if at all. Claims against Marcam Solutions, with or without
merit, as well as claims initiated by Marcam Solutions against third parties,
can be time consuming and expensive to defend, prosecute or resolve. The
inability to effectively protect its proprietary technology or the necessity of
prosecuting or defending infringement claims could have a material adverse
affect on the business, financial condition or results of operations of Marcam
Solutions.

Risks Associated with International Operations and Currency Fluctuations.
-------------------------------------------------------------------------

     A material portion of Marcam Solutions' business comes from outside the
U.S. Marcam Solutions derived approximately 61%, 59% and 50% of its total
revenues from customers located outside of the U.S. in fiscal years 1998, 1997
and 1996, respectively. As a result of the continued expansion of Marcam
Solutions' international operations, the fluctuations in the value of foreign
currencies in which Marcam Solutions conducts its business may cause currency
transaction gains and losses. International sales are typically denominated in
the local currency of the Company's subsidiary or affiliate involved in the
transaction. In addition, the expenses of the Company's international
subsidiaries are typically denominated in its local currency. Due to the number
of foreign currencies involved, the constantly changing currency exposures and
volatility of currency exchange rates, Marcam Solutions cannot predict the
effect of exchange rate fluctuations upon future operating results. Marcam
Solutions' business, financial condition and results of operations could be
materially adversely affected by any of these factors. However, due to recent
fluctuations in currency exchange rates, and an increase in both intercompany
balances and international revenues, the Company is currently investigating
various alternatives, such as hedging, designed to help reduce the risk of
foreign exchange rate fluctuations.

     Marcam Solutions believes that its growth and profitability will require
continued expansion of its sales in international markets. To successfully
expand international sales, Marcam Solutions has utilized, and will continue to
utilize, substantial resources to enlarge existing foreign operations, establish
additional foreign operations and hire additional personnel. International
expansion of Marcam Solutions' operations has required, and will continue to
require, Marcam Solutions to translate and localize its software products. To
the extent Marcam Solutions is unable to expand its international operations or
translate and localize its software products in a timely manner, it may
adversely impact Marcam Solutions' operating results. In addition, even if
international operations are successfully expanded, there can be no assurance
that Marcam Solutions will be able to maintain or increase international market
presence or demand for its products.

     Risks inherent in Marcam Solutions' international business activities
include imposition of government controls, restrictions on the export of
critical technology, political and economic instability (including fluctuations
in foreign currency exchange rates), trade restrictions, difficulties in
staffing international offices, longer accounts receivable collection cycles in
certain countries, burdens of complying with a wide variety of foreign laws and
regulations, management of an organization spread over various countries,
unexpected changes in regulatory requirements and overlap of different tax
structures. In addition, effective copyright, trademark and trade secret
protection may not be available in every foreign country in which Marcam
Solutions sells its products. Marcam Solutions' business, financial condition
and results of operations could be materially adversely affected by any of these
factors.

Risks of Product Liability
--------------------------

     Marcam Solutions' products are generally used to manage data critical to
large organizations. As a result, the sale and support of products by Marcam
Solutions may entail the risk of product liability claims. While Marcam
Solutions' license agreements with its customers typically contain provisions
designed to limit Marcam Solutions' exposure to potential product liability
claims, it is possible that such limitations of liability provisions may not be
effective under the laws of all jurisdictions. In addition, Marcam Solutions is
insured for product liability protection against claims for personal injury or
damage to property, as well as for customer losses for which Marcam Solutions is
liable, although such insurance may not be sufficient to cover all claims in the
event the limitation of liability provisions contained in Marcam Solutions'
license agreements are not effective. Although Marcam Solutions has not
experienced any significant product liability claims to date, there can be no
assurance that Marcam Solutions will not be subject to such claims in the
future. A successful product liability claim brought against Marcam Solutions
could have a material adverse effect on Marcam Solutions' business, financial
condition and results of operations. Moreover, defending such a suit, regardless
of its merits, could entail substantial expense and require the time and
attention of key management personnel, either of which could have a material
adverse effect on Marcam Solutions' business, financial condition and results of
operations.

                                       34

<PAGE>

Contract Terms and Revenue Recognition
--------------------------------------

     Contract structure, terms and customer expectations may affect the
Company's ability to recognize revenue under certain contracts based upon
accounting criteria for revenue recognition. Under the following circumstances,
the Company may be required to defer revenue for extended periods: (i) a
contract is entered into for which none of the products are currently
deliverable; (ii) a contract provides a customer with the right to currently
available software products, as well as additional products that are not
currently available (in order to recognize revenue on the delivered products,
the Company must have established separate values for all elements included in
the license agreement, and the terms and arrangements contained within the
contract and supporting documentation must meet the strict requirements
established by generally accepted accounting principles); (iii) the license
agreement may include acceptance criteria allowing the customer to return the
software and receive a refund of payment; (iv) the license agreement may include
extended payment terms that are unusual to the Company's normal business terms;
or (v) the license agreement may require, or the customer may expect, the
Company to perform additional services that would be considered significant
modifications or adjustments to the Company's standard software products. These
examples, among others, could preclude the Company from recognizing revenue
under generally accepted accounting standards for software revenue recognition.
Contract negotiations often require the Company to revise the terms and
conditions contained in its master license agreement. Such negotiations may
result in contract terms that extend the sales cycle, and could possibly result
in the deferral of revenues for an extended period. The Company's inability to
recognize revenue, or significant deferral in recognizing revenue, would have a
material adverse effect on the Company's results of operations and could have a
material adverse effect on its business and financial condition.

     As of September 30, 1998, as a normal course of business, the Company has
not entered into service arrangements whereby the Company is obligated to
perform services for a fixed price. There can be no assurances, however, that
due to competitive pressures or normal contract negotiations, the Company will
not enter into such arrangements in the future. If the Company were to enter
into such an arrangement, the Company would be required to develop and budget
for the cost to complete such a project, and revenues related to the project
would be recognized on a percentage-of-completion basis, as project costs are
incurred. If it became apparent that the project would result in costs exceeding
revenues, such a loss would be recorded immediately.

Year 2000 Readiness Disclosure Statement and Related Information
----------------------------------------------------------------

     Until recently, many computer programs were written using two digits rather
than four digits to define the applicable year in the twentieth century. Such
software may recognize a date using "00" as the year 1900 rather than the year
2000. The consequences of this issue may include systems failures and business
process interruption to the extent companies fail to upgrade, replace or
otherwise address so-called year 2000 problems. Year 2000 problems may also
result in additional business and competitive differentiation. Aside from the
well-known calculation problems with the use of two-digit date formats as the
year changes from 1999 to 2000, the year 2000 is a special case in that it is a
leap year. Significant uncertainty exists in the software industry concerning
the potential impact of the year 2000 problem.

     Marcam believes that all of its independently-developed software programs
(including the PRISM Release 4.3 and higher, Avantis.XA Release 11 EC-9 and
higher, Protean and Avantis.Pro computer software programs and all upgrades,
enhancements and newly issued versions) as delivered by Marcam, unmodified by
anyone, are "Year 2000 Enabled." "Year 2000 Enabled" means that the Programs,
when used in accordance with the applicable documentation, will (a) accurately
process date data (including, but not limited to, calculating, comparing, and
sequencing) from, into, and between the twentieth and twenty-first centuries,
including the years 1999 and 2000, and (b) operate without error or interruption
relating to date data which represents or references different centuries or more
than one century; provided that (i) a customer's license to the Program(s)
remains in effect and that customer remains current with support services from
Marcam and adopts and implements all upgrades, enhancements and new versions of
the Programs that Marcam may ship from time to time, and (ii) all products
(e.g., hardware, software and firmware) used in combination with the Programs
properly exchange date data with the Programs. Customers can obtain current
information about the year 2000 compliance of the Company's products from the
Company's web site. Information on the Company's Web site is provided to
customers for the sole purpose of assisting in planning for the transition to
the year 2000. Such information is the most currently available concerning the
behavior of the Company's products in the next century and is provided "as is"
without warranty of any kind.


                                       35


<PAGE>


     There can be no assurance that the Company's software products that are
designed to be Year 2000 Enabled are entirely Year 2000 Enabled. Further, there
can be no assurance that the Company's products will not be integrated by the
Company or its customers with, or otherwise interact with, software of other
products which is not Year 2000 Enabled and which may malfunction and expose the
Company to claims from its customers or other third parties. Additionally, there
can be no assurance that software products developed by others and distributed
by the Company either as part of, or together with, its software products are
Year 2000 enabled. If any of the Company's licensees experience year 2000
problems, such licensees could assert claims for damages against the Company. In
addition, the emergence of year 2000 problems with the Company's software
products or claims to that effect could result in the loss or delay in market
acceptance of the Company's products and services, potentially resulting in
decreased sales and the refusal by customers to pay for software already
purchased; increased service costs to the Company; or payment by the Company of
compensatory or other damages. While it is uncertain as to whether the Company
is exposed to potential litigation, or if the market acceptance of the Company's
products will be impacted by year 2000 problems, litigation or decreased product
acceptance could have an adverse affect on the Company's business, results of
operations and financial condition.

     In addition to software products licensed by the Company, there is
additional risk to the Company due to the potential failure of applications and
products used internally by the Company and those used by significant
third-parties who transact business with the Company (such as important vendors,
customers, etc.). The Company has formed a Year 2000 group in order to assess
the Company's Year 2000 exposures related to software and hardware applications
and processes used internally by the Company, and to determine risks that may
exist due to Year 2000 non-compliance of third-parties. This group is also
assessing Year 2000 exposures related to third-party software products provided
with, or as part of, the Company's software products.

     In its assessment of products and applications used internally, the group
is responsible for reviewing all microprocessor applications used by the
Company, including both information technology applications and non-information
technology applications (such as telephone and voice mail systems, etc.). The
group's assessment of information technology applications is underway. With
respect to third-party information technology applications and products utilized
by the Company, the group is currently completing its review of these systems,
but does not anticipate a material Year 2000 risk associated with such
applications and services. For its internal-use software programs, the Company
typically utilizes the most recent versions of third-party products. Therefore,
the Company believes the risks and associated costs related to non-compliant
third-party products will not be material. With respect to non-information
technology applications, the group has started its initial review of the
Company's processes and applications. The Company expects the group to have
completed its assessment of non-information technology applications within the
next six months. While the Company is unable to estimate the future costs that
may be incurred in making these systems Year 2000 compliant, it does not
anticipate such costs will be material.

     The Year 2000 assessment group is currently working with third-parties to
determine if their systems are Year 2000 compliant. The Company is developing
contingency plans to ensure continuity of operations in the event that a
significant third-party is not Year 2000 compliant. Failure of third-party
applications could result in non-payment of customer invoices or the inability
of suppliers to produce and deliver mission critical products, among other
things.

     To date, the Company has not incurred any material expenditure in
connection with identifying or evaluating year 2000 compliance issues. The
Company estimates it will not incur any material levels of expenditure on this
issue during 1998 and 1999 to support its compliance initiatives. Most of these
expenses have been, and in the future are expected to be, related to the
opportunity costs of employees evaluating the Company's financial and accounting
software, the current versions of the Company's products, and year 2000
compliance matters generally. The Company believes that it is unlikely to
experience a material adverse impact on its financial condition or results of
operations due to year 2000 compliance issues. However, since the assessment
process is ongoing, year 2000 complications are not fully known, and potential
liability issues are not clear, the full potential impact of the year 2000 on
the Company is not known at this time.

     The Company's expectations as to the extent and timeliness of modifications
required in order to achieve year 2000 compliance constitute forward-looking
statements which are subject to risks and uncertainties. Actual results may vary
materially as a result of a number of factors, including, among others, those
described under the heading 
                                       36


<PAGE>


"Year 2000 Readiness Disclosure Statement and Related Information." There can be
no assurance, however, that the Company will be able to successfully modify on a
timely basis such products and systems to comply with year 2000 requirements,
which failure could have a material adverse effect on the Company's operating
results. Further, while the Company believes that its year 2000 compliance
efforts will be completed on a timely basis, and in advance of the year 2000
date transition, there can be no assurance that unexpected delays or problems,
including the failure to ensure year 2000 compliance by systems or products
supplied to the Company by third parties, will not have an adverse effect on the
Company, its business, results of operations or financial condition, or the
competitiveness or customer acceptance of its products. Further, the Company's
current understanding of expected costs is subject to change as the project
progresses and does not include potential costs related to actual customer
claims, or the cost of internal software and hardware replaced in the normal
course of business unless such installation has been accelerated to provide
solutions to year 2000 compliance issues.



Impact of the Euro Currency
---------------------------

     On January 1, 1999, eleven of the fifteen member countries of the European
Union are scheduled to establish fixed conversion rates between their existing
currencies ("legacy currencies") and one common currency, the "euro". At that
time the euro will trade on currency exchanges and may be used for business
transactions utilizing electronic fund transfer. Conversion to the euro will
eliminate exchange rate risk between member countries, as exchange ranges will
be permanent. Beginning in January 2002, new euro-denominated currency will be
issued, and legacy currency will be removed from circulation during the first
six months of that year. The Company's subsidiaries affected by the euro
conversion have established plans to address issues raised by the euro currency
conversion. These issues include, among other things, the need to adapt
computer, financial and business systems to accommodate euro denominated
transactions, and the impact that a fixed exchange rate may have on contract
pricing, such as the amount that may be charged in different countries for the
same product. The Company does not expect the euro conversion will have a
material impact on the Company's business or results of operations, and believes
that the Company's currency risk in participating countries may be reduced as
the legacy currencies are converted to the euro.

Possible Volatility of Stock Price
----------------------------------

     The stock market from time to time experiences extreme price and volume
fluctuations, particularly in the high technology sector. In addition, factors
such as announcements of technological innovations or new products by Marcam
Solutions or its competitors, quarterly financial releases, as well as market
conditions in the computer software or hardware industries, may have a
significant impact on the market price of Marcam Solutions' Common Stock. Marcam
Solutions' Common Stock has experienced, and may in the future exhibit, price
volatility because of factors related, as well as unrelated, to the Company's
operating performance.

Anti-Takeover Provisions; Rights Plan; Issuance of Preferred Stock
------------------------------------------------------------------

     Marcam Solutions' certificate of incorporation and by-laws contain
provisions that may make it more difficult for a third party to acquire, or
discourage acquisition bids for, or discourage changes in management of, Marcam
Solutions. These provisions could limit the price that certain investors might
be willing to pay in the future for shares of Marcam Solutions Common Stock.
Also, Marcam Solutions has adopted a Shareholder Rights Plan, pursuant to which
Marcam Solutions has distributed to its stockholders rights to purchase shares
of junior participating preferred stock (the "Rights Plan"). Upon certain
triggering events, such rights become exercisable to purchase Marcam Solutions
Common Stock at a price substantially discounted from the then applicable market
price of Marcam Solutions Common Stock. The Rights Plan could generally
discourage a merger or tender offer involving the securities of Marcam Solutions
that is not approved by the Marcam Solutions Board by increasing the cost of
effecting any such transaction and, accordingly, could have an adverse impact on
stockholders who might want to vote in favor of such merger or participate in
such tender offer. The issuance of Preferred Stock, while providing desirable
flexibility in connection with possible acquisitions and other corporate
purposes, could have the effect of making it more difficult for a third party to
acquire, or of discouraging a third party from acquiring, a majority of the
outstanding voting stock of Marcam Solutions.

Marcam Solutions has no present plans to issue any shares of Preferred Stock.
The Marcam Solutions Board is divided into three classes, each of which serves
for a staggered three-year term. Such staggered Board may make it more difficult
for a third party to gain control of the Marcam Solutions Board. The by-laws
impose various procedural and other requirements that could make it more
difficult for stockholders to effect certain corporate actions.


                                       37

<PAGE>



<PAGE>


ITEM 7A.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK







                                       38


<PAGE>

ITEM 8.    FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA

The following is a list of the Consolidated Financial Statements and
Supplemental Data appearing herein:

<TABLE>
                                                                                                Page
                                                                                                ----
<S>                                                                                             <C>
        Report of Independent Accountants........................................................40

        Consolidated Balance Sheets as of September 30, 1998 and 1997............................41

        Consolidated Statements of Operations for each of the three years in the period
          ended September 30, 1998...............................................................42

        Consolidated Statements of Stockholders' Equity for each of the three years in
         the period ended September 30, 1998.....................................................43

        Consolidated Statements of Cash Flows for each of the three years in
         the period ended September 30, 1998.....................................................44

        Notes to Consolidated Financial Statements...............................................45

        Supplemental Financial Information.......................................................64
</TABLE>

                                       39

<PAGE>

                        REPORT OF INDEPENDENT ACCOUNTANTS


To the Board of Directors and Stockholders of Marcam Solutions, Inc.:

In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of operations, of stockholders' equity and of cash
flows present fairly, in all material respects, the financial position of Marcam
Solutions, Inc. and its subsidiaries at September 30, 1998 and 1997, and the
results of their operations and their cash flows for each of the three years in
the period ended September 30, 1998, in conformity with generally accepted
accounting principles. These financial statements are the responsibility of the
Company's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.




PricewaterhouseCoopers LLP
Boston, Massachusetts
October 23, 1998

                                       40

<PAGE>




                             MARCAM SOLUTIONS, INC.
                           Consolidated Balance Sheets
                      (In thousands, except per share data)

<TABLE>
<CAPTION>
                                                                                       September 30,
                                                                                  ------------------------
                                                                                    1998          1997
                                                                                  ---------     ----------
<S>                                                                               <C>            <C>
Assets
Current assets:
   Cash and cash equivalents (Note 3)                                             $  24,929      $  26,474
   Short-term investments (Note 3)                                                    3,131         11,503
   Accounts receivable, net of allowances of $2,235 in 1998
      and $2,037 in 1997 (Note 4)                                                    29,623         24,273
   Prepaid expenses and other current assets                                          4,335          6,639
                                                                                  ---------      ---------
          Total current assets                                                       62,018         68,889
                                                                                  ---------      ---------
Property and equipment, net (Notes 3 and 5)                                           6,372          6,224
Computer software costs, net (Note 3)                                                   917          2,475
Other assets                                                                            195            281
                                                                                  ---------      ---------

          Total assets                                                            $  69,502      $  77,869
                                                                                  =========      =========

Liabilities and Stockholders' Equity
Current liabilities:
   Accounts payable                                                               $   7,379      $   4,142
   Accrued expenses and other current liabilities (Note 6)                           28,652         29,457
   Deferred revenue                                                                  16,051         22,396
                                                                                  ---------      ---------
          Total current liabilities                                                  52,082         55,995
                                                                                  ---------      ---------
Capital lease obligations (Note 7)                                                      119            318
Deferred income taxes (Note 8)                                                           99            694
                                                                                  ---------      ---------
          Total liabilities                                                          52,300         57,007
                                                                                  ---------      ---------

Commitments and contingencies (Note 9) 
Stockholders' equity (Notes 7 and 10):
  Preferred stock, $.01 par value; 5,000 shares authorized                               --             --
    at September 30, 1998 and 1997
  Common stock, $.01 par value; 30,000 shares                                            77             75
    authorized at September 30, 1998 and 1997; 7,740 and  7,457 shares
    issued and outstanding at September 30, 1998 and 1997, respectively
  Additional paid-in capital                                                        144,604        142,766
  Accumulated deficit                                                              (126,597)      (121,072)
  Cumulative translation adjustment                                                    (882)          (907)
                                                                                  ---------      ---------
          Total stockholders' equity                                                 17,202         20,862
                                                                                  ---------      ---------

          Total liabilities and stockholders' equity                              $  69,502      $  77,869
                                                                                  =========      =========

        The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>

                                       41

<PAGE>


                             MARCAM SOLUTIONS, INC.
                      Consolidated Statements of Operations
                      (In thousands, except per share data)


<TABLE>
<CAPTION>
                                                                        Year Ended September 30,
                                                                  ---------------------------------
                                                                     1998       1997        1996
                                                                  ----------   --------    --------
<S>                                                                <C>         <C>         <C>
Revenues:
    License                                                        $ 53,861    $ 66,390    $ 93,137
    Services                                                         70,659      97,490     108,287
                                                                   --------    --------    --------
       Total revenues                                               124,520     163,880     201,424
                                                                   --------    --------    --------

Operating expenses:
    Cost of license revenues                                          4,275      14,636      16,669
    Cost of services revenues                                        49,411      56,234      69,493
    Selling and marketing (Note 4)                                   40,533      66,596      82,790
    Product development                                              32,085      34,301      27,680
    General and administrative                                        6,350       9,505       9,987
    Restructuring and other charges (Note 6)                         (1,896)     19,175      10,600
                                                                   --------    --------    --------
       Total operating expenses                                     130,758     200,447     217,219
                                                                   --------    --------    --------

Operating loss                                                       (6,238)    (36,567)    (15,795)
Litigation settlement (Note 9)                                           --         --       (3,250)
Interest and other income                                             3,152       1,411       1,443
Interest and other expense                                           (1,339)     (3,518)     (4,138)
                                                                   --------    --------    --------

Loss before income tax expense and extraordinary item                (4,425)    (38,674)    (21,740)
Income tax expense (Note 8)                                          (1,100)     (5,200)     (4,586)
                                                                   --------    --------    --------

Loss before extraordinary item                                       (5,525)    (43,874)    (26,326)
Extraordinary loss from early extinguishment
      of debt, net of $0 of income taxes (Note 7)                        --      (3,009)         --
                                                                   --------    --------    --------

Net loss                                                           $ (5,525)   $(46,883)   $(26,326)
                                                                   ========    ========    ========

Basic and diluted loss per share before extraordinary item         $  (0.73)   $  (7.27)   $  (4.63)
Basic and diluted extraordinary loss per share                           --       (0.50)         --
                                                                   --------    --------    --------
Basic and diluted net loss per share                               $  (0.73)   $  (7.77)   $  (4.63)
                                                                   ========    ========    ========

Weighted average number of basic and diluted
    shares outstanding (Note 3)                                       7,580       6,035       5,692
                                                                   ========    ========    ========

        The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>

                                       42

<PAGE>

                             MARCAM SOLUTIONS, INC.
                 Consolidated Statements of Stockholders' Equity
                                 (In thousands)

<TABLE>
<CAPTION>
                        Series D and E
                          Convertible                           Additional                 Unamortized    Cumulative      Total
                        Preferred Stock       Common Stock       Paid-in    Accumulated      Deferred    Translation  Stockholders'
                       Shares   Par Value  Shares   Par Value     Capital      Deficit     Compensation   Adjustment     Equity
                       ------   ---------  ------   ---------     -------      -------     ------------   ----------     ------
<S>                      <C>      <C>     <C>         <C>        <C>         <C>             <C>           <C>         <C>
Balance at September 30, 
  1995                   225      $ 225   11,271      $ 113      $ 65,672    $ (36,469)      $(1,100)      $(1,795)    $ 26,646

Sale of convertible
  preferred stock          
  (Note 10)              100        100       --         --         9,400           --            --            --        9,500

Issuance of warrants
  with preferred          
  stock (Note 10)         --         --       --         --           500           --            --            --          500

Exercise of stock         
  options                 --         --      113          1           566           --            --            --          567

Sale of common stock
  under the
  Employee Stock          
  Purchase Plan           --         --       86         --           791           --            --            --          791

Stock grants canceled and
  compensation            
  expense (Note 10)       --         --      (39)        --          (327)          --           515            --          188

Effect of foreign         
  currency translation    --         --       --         --            --           --            --          (192)        (192)

Net loss                  --         --       --         --            --      (26,326)           --            --      (26,326)
                         ---      -----   ------      -----      --------    ---------       -------       -------     --------

Balance at September 30, 
  1996                   325        325   11,431        114        76,602      (62,795)         (585)       (1,987)      11,674
                         ---      -----   ------      -----      --------    ---------       -------       -------     --------

Exercise of stock         
  options                 --         --      102          1           704           --            --            --          705

Sale of common stock
  under the
  Employee Stock          
  Purchase Plan           --         --       81          1           822           --            --            --          823

Stock grants canceled
  and compensation        
  expense (Note 10)       --         --      (10)        --          (106)          --           585            --          479

Compensation related
  to unexercised            
  stock options           --         --       --         --           378           --            --            --          378

The Distribution (Notes 2 and 7):
  Effect of the
    Distribution on      
    shares outstanding  (325)      (325)  (4,147)       (41)          366           --            --            --           --

  Disposal of MAPICS,     
    Inc.                  --         --       --         --            --      (11,394)           --            --      (11,394)

  Capital contributed
    and Subordinated       
    Notes assumed by
    MAPICS, Inc.          --         --       --         --        64,000           --            --            --       64,000

Effect of foreign         
  currency translation    --         --       --         --            --           --            --         1,080        1,080

Net loss                  --         --       --         --            --      (46,883)           --            --      (46,883)
                         ---      -----   ------      -----      --------    ---------       -------       -------     --------

Balance at September 30,  
  1997                    --         --    7,457         75       142,766     (121,072)           --          (907)      20,862
                         ---      -----   ------      -----      --------    ---------       -------       -------     --------

Exercise of stock         
  options                 --         --      198          2         1,376           --            --            --        1,378

Sale of common stock
  under the
  Employee Stock          
  Purchase Plan           --         --       85         --           462           --            --            --          462

Effect of foreign         
  currency translation    --         --                                             --            --            25           25

Net loss                  --         --       --         --            --       (5,525)           --            --       (5,525)
                         ---      -----   ------      -----      --------    ---------       -------       -------     --------

Balance at September 30,  
  1998                    --      $  --    7,740      $  77      $144,604    $(126,597)      $    --       $  (882)    $ 17,202
                         ===      =====   ======      =====      ========    =========       =======       =======     ========

        The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>

                                       43




<PAGE>


                                              MARCAM SOLUTIONS, INC.
                                       Consolidated Statements of Cash Flows
                                                  (In thousands)

<TABLE>
<CAPTION>
                                                                                 Year Ended September 30,
                                                                     --------------------------------------------------
                                                                          1998             1997              1996
                                                                     ---------------  ---------------   ---------------
<S>                                                                    <C>              <C>                <C>
Cash flows from operating activities:
   Net loss                                                           $ (5,525)        $  (46,883)        $(26,326)
   Adjustments to reconcile net loss to net cash provided by (used
     for) operating activities:                                              
     Depreciation and amortization                                       5,444             15,093           15,877
     Provision for (reversal of) restructuring and other charges,       
       non-cash portion                                                 (1,896)            11,743            3,730
     Extraordinary loss from extinguishment of debt, non-cash portion       --              1,259               --
     Provision for bad debts                                             1,676              3,820            3,828
     Deferred income taxes                                                  (3)                49             (459)
     Changes in operating assets and liabilities, net of effects
         of acquisitions and divestitures:
       Accounts receivable                                              (7,263)             2,984            1,779
       Prepaid expenses and other assets                                 1,564             (1,446)          (2,648)
       Accounts payable                                                  3,063             (3,324)           2,748
       Accrued expenses and other current liabilities                      335              2,944             (148)
       Deferred revenue                                                 (5,369)             4,272            2,220
                                                                       -------          ---------          -------
         Net cash provided by (used for) operating activities           (7,974)            (9,489)             601
                                                                       -------          ---------          -------

Cash flows from investing activities:
   Purchases of property and equipment                                  (4,073)            (3,510)          (6,114)
   Additions to computer software costs                                     --             (7,563)         (12,233)
   Purchases of short-term investments                                  (3,131)           (11,503)          (6,909)
   Proceeds from the sale of short-term investments                     11,503                 --            8,928
   Net cash divested in disposal of subsidiaries                            --             (3,632)            (461)
                                                                       -------          ---------          -------
         Net cash provided by (used for) investing activities            4,299            (26,208)         (16,789)
                                                                       -------          ---------          -------

Cash flows from financing activities:
   Proceeds from issuance of convertible preferred stock                    --                 --            9,500
   Proceeds from issuance of warrants                                       --                 --              500
   Principal payments on debt and capital lease obligations               (250)              (436)            (379)
   Capital contributed by MAPICS, Inc.                                      --             39,000               --
   Common stock issued under Employee Stock Purchase Plan                  462                823              791
   Proceeds from stock option exercises                                  1,378                705              567
                                                                       -------          ---------          -------
         Net cash provided by financing activities                       1,590             40,092           10,979
                                                                       -------          ---------          -------

Effect of exchange rate changes on cash and cash equivalents               540                262             (286)
                                                                       -------          ---------          -------

Net increase (decrease) in cash and cash equivalents                    (1,545)             4,657           (5,495)
Cash and cash equivalents at beginning of year                          26,474             21,817           27,312
                                                                       -------          ---------          -------

Cash and cash equivalents at end of year                               $24,929          $  26,474          $21,817
                                                                       =======          =========          =======

See supplemental disclosure of cash flow information in Note 12.


        The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>

                                       44
<PAGE>

                             MARCAM SOLUTIONS, INC.
                   Notes to Consolidated Financial Statements


1.    NATURE OF BUSINESS

     Marcam Solutions, Inc. and subsidiaries ("Marcam Solutions" or the
"Company") develops, globally markets, implements, and supports enterprise
resource planning software applications components designed exclusively for
process plant manufacturers and enterprise asset management software for all
capital-intensive industries. The Company's mission is to provide process
manufacturing companies with specialized, agile, business solutions that enable
them to achieve process operational excellence while realizing low total cost of
ownership and to provide best-of-breed asset management solutions to industries
that must protect and optimize their capital investments. The Company also
provides customer support, consulting services, education, and programming
services to its customers. The Company's primary geographic markets include
North America, Europe, Latin America, Asia Pacific, Africa and the Middle East.


2.    THE DISTRIBUTION

     On July 29, 1997, Marcam Corporation spun off in a tax-free distribution
the portion of its business relating to its PRISM, Protean and Avantis product
lines. In connection with the distribution, Marcam Corporation transferred to
Marcam Solutions, Inc., at that time a new wholly-owned subsidiary of Marcam
Corporation, substantially all of the business, assets and liabilities relating
to its PRISM, Protean and Avantis product lines and an aggregate of $39.0
million in cash in exchange for (i) the assumption by Marcam Solutions of
certain liabilities and obligations relating to the business to be conducted by
Marcam Solutions, (ii) a number of shares of common stock of Marcam Solutions
sufficient for Marcam Corporation to make the distribution and (iii) warrants to
purchase an aggregate of 500,000 shares of common stock of Marcam Solutions.
Marcam Corporation distributed all of its ownership interest in Marcam Solutions
by means of a distribution on July 29, 1997 to its stockholders of record on
July 23, 1997 (the "Distribution"). In the Distribution, each stockholder of
Marcam Corporation received one share of Marcam Solutions common stock for each
two shares of Marcam Corporation common stock held and five shares of Marcam
Solutions common stock for each share of Marcam Corporation preferred stock
held. In connection with the Distribution, Marcam Corporation changed its name
from "Marcam Corporation" to "MAPICS, Inc." ("MAPICS").

     Although the common stock of Marcam Solutions was distributed to Marcam
Corporation's shareholders, the Distribution was recorded for accounting
purposes as a disposal of the business conducted by MAPICS, due to the relative
significance of the business conducted by Marcam Solutions. The financial
statements of Marcam Solutions for reporting periods after the Distribution
reflect the Distribution as a disposal of the business conducted by MAPICS and
have not been restated to remove the effects of the prior operating results of
the MAPICS business. The financial statements of Marcam Solutions for periods
prior to the Distribution correspond to the historical consolidated financial
statements of Marcam Corporation.

     For accounting purposes, in connection with the Distribution, MAPICS
assumed and repaid Marcam Corporation's outstanding $25,000,000 9.82% unsecured
Subordinated Notes. The repayment resulted in an extraordinary loss to Marcam
Solutions of $3,009,000 related to the early extinguishment of this debt. The
extraordinary loss included prepayment penalties of $1,750,000 and the write-off
of deferred financing costs approximating $1,259,000. No tax benefit was
recognized for the extraordinary loss due to the uncertainty of realizing that
benefit. At September 30, 1998 and 1997, the Company had no debt other than
capitalized leases (See Note 7).

     Marcam Corporation and Marcam Solutions entered into various agreements
providing for the separation of the product lines and governing various ongoing
relationships between MAPICS and Marcam Solutions after the Distribution,
including a distribution agreement, a general services agreement and a tax
sharing agreement.

                                       45

<PAGE>

                             MARCAM SOLUTIONS, INC.
             Notes to Consolidated Financial Statements (Continued)

     The following unaudited pro forma financial information for the years ended
September 30, 1997 and 1996 reflects how the disposition of the MAPICS business
might have affected the statements of operations of Marcam Solutions if the
disposition had occurred on October 1, 1995. The pro forma financial information
is presented as if Marcam Solutions had been operated as a separate entity,
principally by deducting the operating results of MAPICS from the historical
consolidated operating results of Marcam Corporation. The pro forma data is for
informational purposes only and may not necessarily reflect future results of
operations or what the results of operations would have been had Marcam
Solutions been operating as a separate entity. Actual results for the year ended
September 30, 1998 have been presented for comparative purposes.

Pro Forma Results of Operations
(In Thousands, Except Per Share Data)

<TABLE>
<CAPTION>
                                                                                Year Ended September 30,
                                                                  ------------------------------------------------------
                                                                       1998               1997               1996
                                                                  ----------------   ---------------    ---------------
                                                                      Actual            Pro Forma         Pro Forma
                                                                  ----------------   ---------------    ---------------
<S>                                                               <C>                    <C>               <C>
Revenues:
    License                                                       $ 53,861               $ 27,466          $ 47,796
    Services                                                        70,659                 65,485            76,026
                                                                  --------               --------          --------
       Total revenues                                              124,520                 92,951           123,822
                                                                  --------               --------          --------

Operating expenses:
    Cost of license revenues                                         4,275                  7,628             9,756
    Cost of services revenues                                       49,411                 44,857            58,341
    Selling and marketing                                           40,533                 40,298            52,649
    Product development                                             32,085                 25,790            21,282
    General and administrative                                       6,350                  7,290             7,965
    Restructuring and other charges                                 (1,896)                19,175            10,600
                                                                  --------               --------          --------
       Total operating expenses                                    130,758                145,038           160,593
                                                                  --------               --------          --------

Operating loss                                                      (6,238)               (52,087)          (36,771)
Other income (expense), net                                          1,813                 (2,107)           (5,945)
Income tax expense                                                  (1,100)                (3,936)           (4,160)
                                                                  --------               --------          --------

Loss before extraordinary item                                      (5,525)               (58,130)          (46,876)
Extraordinary item                                                      --                 (3,009)               --
                                                                  --------               --------          --------

Net loss                                                          $ (5,525)              $(61,139)         $(46,876)
                                                                  ========               ========          ========

Basic and diluted net loss per share before extraordinary item    $  (0.73)              $  (9.63)         $  (8.24)
Basic and diluted extraordinary loss per share                          --                  (0.50)               --
                                                                  --------               --------          --------
Basic and diluted net loss per share                              $  (0.73)              $ (10.13)         $  (8.24)
                                                                  ========               ========          ========

Weighted average number of basic and diluted
     shares outstanding                                              7,580                  6,035             5,692
                                                                  ========               ========          ========
</TABLE>

                                       46

<PAGE>

                             MARCAM SOLUTIONS, INC.
             Notes to Consolidated Financial Statements (Continued)

3.    SIGNIFICANT ACCOUNTING POLICIES

     (a) Basis of Presentation
         ---------------------

     The consolidated financial statements include the accounts of Marcam
Solutions, Inc. and its subsidiaries. All significant intercompany balances and
transactions have been eliminated in consolidation. See Note 2 for basis of
presentation of the Distribution.

     (b) Use of Estimates by Management
         ------------------------------

     The preparation of consolidated financial statements in conformity with
generally accepted accounting principles requires management to make certain
estimates and assumptions. These estimates and assumptions affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting periods. The most significant
estimates included in these financial statements are the valuation of accounts
receivable, deferred tax assets, capitalized software development costs and
intangible assets. Actual results may differ from estimates.

     (c) Revenue Recognition
         -------------------

         The Company recognizes revenues from the sale of its software licenses
upon the signing of license agreements, delivery of the software and
determination that collection of the related receivable is probable. Under the
terms of the Company's license agreements, the customer is responsible for
installation and training. At the time the Company recognizes revenues from the
sale of software licenses, no significant vendor obligations remain, and the
costs of insignificant support obligations are accrued. Fees from licenses sold
together with consulting services are recognized as above, provided that payment
of the license fee is not contingent upon the performance of the consulting
services.

     Revenues from exclusive marketing agreements with resellers are included in
license revenues and recognized when no additional obligations remain under the
agreement and collection is probable.

     The Company recognizes revenues from license renewals (which typically
include some customer support obligations) and post-contract customer support
agreements as services revenues ratably over the terms of the agreements.
Revenues from consulting and custom programming services are recognized as
services are performed. Related expenses are included in cost of services
revenues.

     Generally, revenues from sales through third-party representatives are
included in revenues, and related commissions are included in selling and
marketing expenses. In certain situations, revenues from affiliates are recorded
as royalties in license revenues (See Note 15).

     (d) Cash Equivalents and Short-Term Investments
         -------------------------------------------

     Cash equivalents consist of highly liquid investments with original
maturities of three months or less from the date of purchase. Investments with
maturities greater than three months and less than twelve months are considered
to be short-term investments. Cash equivalents and short-term investments
consist primarily of commercial paper, corporate bonds, time deposits and money
market investments.

     The Company classifies all securities that mature in less than one year as
"held to maturity" securities. At September 30, 1998, held to maturity
securities consisted of corporate bonds of $202,000 and commercial paper of
$2,929,000. At September 30, 1997, held to maturity securities consisted of
corporate bonds of $7,556,000, government and agency obligations of $2,000,000,
and commercial paper of $1,947,000. Held to maturity securities are recorded at
amortized cost, which approximated fair value at September 30, 1998 and 1997. No
unrealized gains or losses have been recognized on these investments.

                                       47

<PAGE>

                             MARCAM SOLUTIONS, INC.
             Notes to Consolidated Financial Statements (Continued)

     (e) Concentrations of Credit Risk
         -----------------------------

     Financial instruments which potentially expose the Company to
concentrations of credit risk consist primarily of trade accounts receivable.
The Company provides credit, in the normal course of business, to various types
and sizes of manufacturers located throughout the world, and typically does not
require collateral from customers. Management does not believe significant
credit risk exists at September 30, 1998, or existed at September 30, 1997.

     (f) Property and Equipment
         ----------------------

     Property and equipment is stated at cost. Depreciation is calculated using
the straight-line method based upon the following estimated useful lives:

<TABLE>
<S>                                                           <C>
                  Furniture and fixtures                      5 to 7 years
                  Computer equipment and software             3 to 5 years
                  Leasehold improvements                      Shorter of lease term or useful life of asset
</TABLE>

     (g) Computer Software Costs
         -----------------------

     The Company charges all costs of establishing technological feasibility of
computer software products to product development expense as they are incurred.
Thereafter, computer software costs are capitalized and reported at the lower of
unamortized cost or net realizable value. Computer software costs include
in-house software development costs and the costs incurred to translate software
into various foreign languages. Amortization of computer software costs
commences upon general release of the product to customers and is computed on a
product-by-product basis using the greater of the amount determined using (a)
the ratio that current period gross revenues bear to the total of current and
anticipated future gross revenues or (b) the straight-line method over the
estimated economic life of the product (generally five years). Amortization of
capitalized software costs is generally charged to cost of license revenues.

     No computer software costs were capitalized during 1998. Computer software
costs capitalized during 1997 and 1996 amounted to approximately $7,563,000 and
$12,233,000, respectively. Amortization of computer software costs during the
years ended September 30, 1998, 1997 and 1996 was approximately $1,523,000,
$8,991,000 and $9,034,000, respectively. In fiscal 1997, capitalized software
and translation costs related to the Protean and Avantis.Pro product lines with
a net book value of $11,125,000 were written off as a result of management's
assessment of net realizable value (See Note 6). Additionally in fiscal 1997,
capitalized software and translation costs with a net book value of $15,863,000
were transferred to MAPICS, Inc. in connection with the Distribution described
in Note 2. In fiscal 1996, capitalized software and translation costs with a net
book value of $2,090,000 were written off as part of the 1996 restructuring
charges described in Note 6. Accumulated amortization at September 30, 1998 and
1997 totaled $17,201,000 and $21,491,000, respectively.

     (h) Goodwill
         --------

     The excess of the cost of businesses acquired over the fair market value of
net assets acquired is being amortized to expense on a straight-line basis over
eight years.

     (i) Intangible Assets
         -----------------

     The Company evaluates the net realizable value of capitalized software and
other intangibles on a quarterly basis using undiscounted cash flows. The
Company's review of intangible assets includes an analysis of past operating
results, business plans and budgets related to recoverability of the specific
assets.

                                       48

<PAGE>

                             MARCAM SOLUTIONS, INC.
             Notes to Consolidated Financial Statements (Continued)

     (j) Foreign Currency Translation
         ----------------------------

     The functional currency for each of the Company's foreign operations is
generally its local currency. Assets and liabilities of foreign subsidiaries are
translated into U.S. dollars at year-end rates of exchange. Revenues and
expenses are translated into U.S. dollars at the average rates for the periods.
The resultant translation adjustments are reflected as a separate component of
stockholders' equity on the consolidated balance sheets. Foreign currency
transaction gains and losses are included in results of operations.

     (k) Income Taxes
         ------------

     The Company accounts for income taxes using the asset and liability method,
pursuant to which deferred income taxes are recognized for the tax consequences
of differences between the financial statement carrying amounts and the tax
bases of existing assets and liabilities. The effect on deferred income taxes of
a change in tax rates is recognized in the period that includes the enactment
date. Valuation allowances are provided if, based upon the weight of available
evidence, it is more likely than not that some or all of the deferred tax assets
will not be realized.

     The Company does not provide for U.S. income taxes on the undistributed
earnings of foreign subsidiaries, which the Company considers to be permanent
investments.

     (l) Basic and Diluted Earnings Per Share
         ------------------------------------

     Basic earnings per share is based upon the weighted average number of
common shares outstanding during the period. Diluted earnings per share is based
upon the weighted average number of common shares outstanding during the period
plus additional weighted average common equivalent shares outstanding during the
period. Common equivalent shares have been excluded from the computation of
diluted loss per share in each period, as their effect would have been
anti-dilutive. The following table reconciles the numerator and denominator of
the basic and diluted earnings per share computations shown on the Consolidated
Statements of Operations:

<TABLE>
<CAPTION>
                                                                            Year Ended September 30,
                                                              -----------------------------------------------------
                                                                   1998               1997              1996
                                                              ---------------    ---------------   ----------------
                                                                     (In thousands, except per share data)
<S>                                                              <C>                <C>                <C>
BASIC AND DILUTED LOSS PER SHARE
Numerator:
     Loss before extraordinary item                              $(5,525)          $(43,874)           $(26,326)
                                                                 -------           --------            --------

Denominator:
     Common shares outstanding                                     7,580              6,035               5,692
                                                                 -------           --------            --------

Basic and diluted loss per share before extraordinary item       $ (0.73)          $  (7.27)           $  (4.63)
                                                                 =======           ========            ========
</TABLE>

     Options and warrants to purchase 2,046,109, 1,213,587 and 1,912,938
weighted shares of common stock outstanding at September 30, 1998, 1997, and
1996, respectively, and 1,340,068 and 1,625,000 weighted shares of common stock
issuable upon the conversion of preferred stock at September 30, 1997 and 1996,
respectively, were excluded from the calculation of diluted earnings per share
because the effect of their inclusion would have been anti-dilutive.

                                       49

<PAGE>

                             MARCAM SOLUTIONS, INC.
             Notes to Consolidated Financial Statements (Continued)

     For purposes of computations of basic and diluted loss per share, the
distribution of one share of Marcam Solutions common stock for each two shares
of Marcam Corporation common stock in connection with the Distribution was
reflected as a 2-for-1 reverse stock split occurring on July 29, 1997.
Accordingly, historical basic and diluted loss per share and the corresponding
weighted average shares outstanding have been restated to present this stock
split.

     (m) New Accounting Pronouncements
         -----------------------------

     In June 1997, Statement of Financial Accounting Standards No. 130,
"Reporting Comprehensive Income" ("SFAS 130"), was issued, which requires
businesses to disclose comprehensive income and its components in general
purpose financial statements, with reclassification of prior period financial
statements. SFAS 130 is effective for fiscal periods beginning after December
15, 1997 and its adoption is not expected to have a material impact on the
Company's disclosures.

     In June 1997, Statement of Financial Accounting Standards No. 131,
"Disclosures about Segments of an Enterprise and Related Information" ("SFAS
131"), was issued, which redefines how operating segments are determined and
requires disclosures of certain financial and descriptive information about a
company's operating segments. SFAS 131 is effective for fiscal periods beginning
after December 15, 1997 and its adoption may require additional disclosure of
the Company's historical financial data.

     In October 1997, Statement of Position 97-2, "Software Revenue Recognition"
("SOP 97-2"), was issued, which provides guidance on applying generally accepted
accounting principles in recognizing revenue on software transactions and
replaces Statement of Position 91-1. SOP 97-2 is effective for transactions
entered into in fiscal periods beginning after December 15, 1997. The Company
will adopt the guidelines of SOP 97-2 as of October 1, 1998 and its adoption is
not expected to have a material impact on the Company's financial position and
results of operations.

     In March 1998, Statement of Position 98-1, "Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use" ("SOP 98-1"), was
issued, which provides guidance on applying generally accepted accounting
principles in accounting for the costs of computer software developed or
obtained for internal use. SOP 98-1 is effective for financial statements for
fiscal years beginning after December 15, 1998 (although earlier application is
encouraged), and will result in the capitalization of certain qualifying costs
incurred in the development of software for internal use. The Company will adopt
the guidelines of SOP 98-1 as of October 1, 1998, and its adoption is not
expected to have a material impact on the Company's financial position and
results of operations.

     In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities" ("SFAS 133"). SFAS 133 is effective for all fiscal
quarters of all fiscal years beginning after June 15, 1999 (October 1, 1999 for
the Company). SFAS 133 requires that all derivative instruments be recorded on
the balance sheet at their fair value. Changes in the fair value of derivatives
are recorded each period in current earnings or other comprehensive income,
depending on whether a derivative is designated as part of a hedge transaction
and, if it is, the type of hedge transaction. Management anticipates that, due
to the Company's limited use of derivative instruments, the adoption of FAS 133
will not have a material impact on the Company's financial position and results
of operations.

                                       50

<PAGE>

                             MARCAM SOLUTIONS, INC.
             Notes to Consolidated Financial Statements (Continued)

4.   ALLOWANCE FOR DOUBTFUL ACCOUNTS

     The Company provides reserves for customer receivable balances considered
potentially uncollectible. The Company's allowance for doubtful accounts
amounted to $2,235,000, $2,037,000 and $2,472,000 at September 30, 1998, 1997
and 1996, respectively. The provision charged to bad debt expense, which is
generally included in selling and marketing expenses, was $1,676,000, $3,820,000
and $3,828,000 for fiscal 1998, 1997 and 1996, respectively, and write-offs
against the allowance were $1,478,000, $2,598,000 and $4,361,000 for fiscal
1998, 1997 and 1996, respectively. In fiscal 1997, $1,657,000 of the allowance
was transferred to MAPICS, Inc. in connection with the Distribution described in
Note 2.


5.  PROPERTY AND EQUIPMENT

   Property and equipment consists of the following:

<TABLE>
<CAPTION>
                                                                 September 30,
                                                      -------------------------------------
                                                            1998                1997
                                                      -----------------    ----------------
                                                                 (In thousands)
<S>                                                      <C>                 <C>
Furniture and fixtures                                   $  2,965            $  2,742
Computer equipment and software                            21,437              18,635
Leasehold improvements                                      1,323               1,431
                                                         --------            --------
                                                           25,725              22,808
Accumulated depreciation and amortization                 (19,353)            (16,584)
                                                         --------            --------
                                                         $  6,372            $  6,224
                                                         ========            ========
</TABLE>

         The carrying value of assets under capital leases included in the above
was $570,000 and $612,000 at September 30, 1998 and 1997, respectively, which
was net of accumulated amortization of $595,000 and $586,000 at September 30,
1998 and 1997, respectively. In connection with the Distribution described in
Note 2, property and equipment with a net book value of $3,188,000 was
transferred to MAPICS during fiscal 1997.


6.   ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

     Accrued expenses and other current liabilities consists of:

<TABLE>
<CAPTION>
                                                                 September 30,
                                                      -------------------------------------
                                                           1998                 1997
                                                      ----------------     ----------------
                                                                 (In thousands)
<S>                                                       <C>                 <C>
Accrued commissions and royalties                         $ 7,320             $ 3,892
Accrued payroll and related expenses                        7,677               6,468
Accrued restructuring and other charges                       343               3,548
Accrued taxes                                               4,492               5,747
Other                                                       8,820               9,802
                                                          -------             -------
                                                          $28,652             $29,457
                                                          =======             =======
</TABLE>

     In connection with the Distribution described in Note 2, accrued expenses
and other current liabilities of $13,691,000 were transferred to MAPICS in
fiscal 1997.

                                       51

<PAGE>

                             MARCAM SOLUTIONS, INC.
             Notes to Consolidated Financial Statements (Continued)

     Restructuring and other charges reflected in the statements of operations
consist of the following:

<TABLE>
<CAPTION>
                                                                            Year Ended September 30,
                                                              -----------------------------------------------------
                                                                   1998               1997              1996
                                                              ---------------    ---------------   ----------------
                                                                                 (In thousands)
<S>                                                              <C>                <C>               <C>
Restructuring charges                                            $(1,758)           $ 4,210           $10,600
Write-off capitalized software                                        --             11,125                --
Spin-off costs incurred in the Distribution                         (138)             3,840                --
                                                                 -------            -------           -------

                                                                 $(1,896)           $19,175           $10,600
                                                                 =======            =======           =======
</TABLE>

1998 Charge Reversal
     During the third quarter of fiscal 1998, as a result of the substantial
completion of the planned restructuring actions and management's assessment of
future payments required, the Company reversed $1,896,000 of restructuring and
other charges accrued in previous periods. This amount is primarily the result
of cost savings achieved in relation to the amounts forecast at the time of the
restructurings. Savings from the original forecast were a result of lower than
expected severance payments to employees, lower than expected expenses
associated with the termination of leases, and the sale of fixed assets
associated with several facilities that were closed.

1997 Charges
     During the third quarter of fiscal 1997, the Company's business and
operating expense structure were reviewed to identify opportunities for cost
reductions, and actions were initiated to reduce operating expenses. As a result
of these actions as well as an assessment of capitalized software costs and the
costs associated with the Distribution, the Company recorded restructuring and
other charges in the third and fourth fiscal quarters of 1997 totaling
$19,175,000. Of this amount, approximately $1,710,000 related principally to
reductions in staffing (approximately 100 employees) throughout the business,
except the Protean and Avantis development organizations; $1,500,000 related to
the closure of certain European facilities, including associated write-offs of
property and equipment and lease cancellation costs; and $1,000,000 related to
other restructuring actions.

     An additional $11,125,000 of the fiscal 1997 charge related to the
write-off of the capitalized software development costs related to the Protean
and Avantis.Pro product lines. This write-off resulted from lower than expected
revenue from these product lines during fiscal 1997 and the continuing
uncertainty regarding market acceptance of, and significant revenue generation
from, these product lines in the near future.

     The charge also included costs of $3,840,000 incurred in connection with
the Distribution. See Note 2.

     Approximately $7,770,000 of the 1997 charges was expected to result in cash
expenditures. As of September 30, 1997, $2,379,000 related to the restructuring
charges remained in accrued liabilities.

1996 Charges
     In the third and fourth quarters of 1996, the Company recorded
restructuring charges of $8,300,000 and $2,300,000, respectively. These charges
resulted from the Company's completion of a review of its operating expenses and
overall operations. As a result, the Company divested its MXP product line and
committed to the restructuring of global operations. Approximately $6,870,000 of
the total 1996 restructuring charges was expected to result in cash
expenditures. As of September 30, 1997, $1,169,000 related to these charges
remained in accrued liabilities.

                                       52

<PAGE>

                             MARCAM SOLUTIONS, INC.
             Notes to Consolidated Financial Statements (Continued)

     Included in the 1996 restructuring charges was $5,500,000 associated with
the Company's decision to divest itself of the MXP product line, represented by
its Foresight Software, Inc. subsidiary. This charge represented the net loss
incurred in connection with the disposition of the stock of Foresight Software,
Inc. in a sale effective as of June 30, 1996, as well as additional costs of
divestiture. The Company received a promissory note, as revised, in the amount
of $1,847,000 from Foresight Software, Inc. and may be entitled to future
royalties. The Company has been recognizing the proceeds from the note and any
future royalties as cash payments are received, due to the uncertainty of
collection. The results of operations for fiscal 1996 of Foresight Software,
Inc. and the net assets divested were immaterial to the Company's consolidated
results of operations and financial position.

     The remaining $5,100,000 of the 1996 restructuring charges related to the
conversion of certain direct sales operations in the Asia Pacific region and in
Latin America to affiliate distribution channels and a headcount reduction in
Europe and North America. Of this amount, $570,000 related to the cost of
customer commitments, $1,990,000 related to employee severance payments for
approximately ninety employees, $1,370,000 related to lease cancellations and
other costs, and $1,170,000 related to the write-off of certain related fixed
assets and intangible assets.


7.   CAPITAL LEASE OBLIGATIONS AND CREDIT ARRANGEMENTS

     Capital lease obligations consists of the following:

<TABLE>
<CAPTION>
                                                            September 30,
                                                 -------------------------------------
                                                      1998                 1997
                                                 ----------------     ----------------
                                                            (In thousands)
<S>                                                   <C>                 <C>
Capital lease obligations                             $295                $624

Less: current maturities                               176                 306
                                                      ----                ----

Long-term capital lease obligations                   $119                $318
                                                      ====                ====
</TABLE>

     In May 1994, the Company issued to institutional investors $25,000,000 of
9.82% unsecured Subordinated Notes due April 30, 2001 (the "Subordinated Notes")
and warrants to purchase 383,333 shares of the Company's common stock (See Note
10). In July 1997, in connection with the Distribution, MAPICS assumed and
repaid the Subordinated Notes. The repayment resulted in an extraordinary loss
to Marcam Solutions of $3,009,000 related to the early extinguishment of this
debt. The extraordinary loss included prepayment penalties of $1,750,000 and the
write-off of deferred financing costs approximating $1,259,000. No tax benefit
was recognized for the extraordinary loss due to the uncertainty of realizing
that benefit.

                                       53


<PAGE>

                             MARCAM SOLUTIONS, INC.
             Notes to Consolidated Financial Statements (Continued)

8.    INCOME TAXES

     The components of the provision for income taxes are as follows:

<TABLE>
<CAPTION>
                                                                            Year Ended September 30,
                                                              -----------------------------------------------------
                                                                   1998               1997              1996
                                                              ---------------    ---------------   ----------------
                                                                                 (In Thousands)
<S>                                                              <C>                <C>                <C>
State:
     Current                                                     $   --             $   33             $   --
     Deferred                                                        --                 --                 --
                                                                 ------             ------             ------
       Total                                                         --                 33                 --
                                                                 ------             ------             ------

Foreign:
     Current                                                      1,695              5,234              4,975
     Deferred                                                      (595)               (67)              (389)
                                                                 ------             ------             ------
       Total                                                      1,100              5,167              4,586
                                                                 ------             ------             ------

Total                                                            $1,100             $5,200             $4,586
                                                                 ======             ======             ======
</TABLE>

     The components of income (loss) from domestic and foreign operations before
provision for income taxes are as follows:

<TABLE>
                                                                            Year Ended September 30,
                                                              -----------------------------------------------------
                                                                   1998               1997              1996
                                                              ---------------    ---------------   ----------------
                                                                                 (In thousands)
<S>                                                             <C>               <C>                <C>
Domestic                                                        $(7,151)          $(41,863)          $(25,593)
Foreign                                                           2,726                180              3,853
                                                                -------           --------           --------

     Total                                                      $(4,425)          $(41,683)          $(21,740)
                                                                =======           ========           ========
</TABLE>

     The Company's effective income tax rates of 24.9%, 12.5% and 21.1% for the
years ended September 30, 1998, 1997 and 1996, respectively, differ from the
expected income taxes for those years calculated by applying the Federal
statutory rate of 34% to loss before income taxes as follows:

<TABLE>
<CAPTION>
                                                                            Year Ended September 30,
                                                              -----------------------------------------------------
                                                                   1998               1997              1996
                                                              ---------------    ---------------   ----------------
                                                                                 (In thousands)

<S>                                                             <C>               <C>                 <C>
Expected tax benefit                                            $(1,505)          $(14,172)           $(7,392)
Losses not benefited                                              2,387             12,723              8,503
Tax effect of foreign activities                                    173              4,006              3,272
Foreign taxes incurred in the Distribution                           --              1,100                 --
Non-deductible expenses                                              45              1,489                 --
Other                                                                --                 54                203
                                                                -------           --------            -------
                                                                $ 1,100           $  5,200            $ 4,586
                                                                =======           ========            =======
</TABLE>

                                       54

<PAGE>

                             MARCAM SOLUTIONS, INC.
             Notes to Consolidated Financial Statements (Continued)

     Temporary differences between the financial statement carrying amounts and
tax bases of assets and liabilities that give rise to significant portions of
the net deferred income tax liability at September 30, 1998 and 1997 relate to
the following:

<TABLE>
<CAPTION>
                                                                                         September 30,
                                                                              -------------------------------------
                                                                                   1998                 1997
                                                                              ----------------     ----------------
                                                                                         (In thousands)
<S>                                                                             <C>                   <C>
Deferred tax assets:
     Net operating loss carryforwards                                           $  4,213              $   101
     Foreign, research and experimentation and other tax credits                   1,642                  532
     Deferred revenue                                                                998                2,391
     Accrued vacation                                                                380                  345
     Accrued compensation                                                            685                  345
     Reserve for bad debts                                                           483                   --
     Restructuring reserves                                                          131                  860
     Other reserves                                                                  804                  156
     Depreciation                                                                    344                   --
     Other                                                                           548                1,487
                                                                                --------              -------
                                                                                  10,228                6,217
Less:  Valuation reserve                                                         (10,005)              (5,831)
                                                                                --------              -------

Net deferred tax assets                                                              223                  386
                                                                                --------              -------

Deferred tax liabilities:
     Capitalized software                                                           (290)                (731)
     Other                                                                           (32)                (349)
                                                                                --------              -------
                                                                                    (322)              (1,080)
                                                                                --------              -------

Net deferred tax liabilities                                                    $    (99)             $  (694)
                                                                                ========              =======
</TABLE>

     In assessing the realizability of deferred tax assets, management considers
whether it is more likely than not that some or all of the deferred tax assets
will not be realized. The ultimate realization of deferred tax assets is
dependent upon the generation of future taxable income during periods in which
those temporary differences become deductible. Management considers the
scheduled reversal of deferred tax liabilities, projected future taxable income,
and other matters in making this assessment. As a result of its evaluation of
these factors, at September 30, 1998, management recorded a valuation reserve
for deferred tax assets of $10,005,000.

     At September 30, 1998, the Company had operating loss carryforwards of
approximately $10,500,000, foreign tax credit carryforwards of approximately
$786,000, and research and experimentation credit carryforwards of approximately
$820,000, expiring between 2002 and 2013. The current year net operating loss
includes amounts related to stock option exercises, the benefits of which will
be allocated to additional paid-in capital when realized.

     Pursuant to the tax sharing agreement between Marcam Solutions and MAPICS,
Marcam Solutions is generally responsible for certain state and local non-income
taxes and certain foreign income taxes for periods ending on or before the date
of the Distribution. MAPICS is generally responsible for all other taxes for
such periods, including any tax payments arising out of the Distribution. The
Company's tax provision for the year ended September 30, 1997 includes foreign
income taxes of $1,100,000 related to the sale for tax purposes of foreign
assets in connection with the Distribution.

                                       55

<PAGE>

                             MARCAM SOLUTIONS, INC.
             Notes to Consolidated Financial Statements (Continued)

     A provision has not been made for U.S. or additional foreign taxes on
$7,300,000 of undistributed earnings of foreign subsidiaries that could be
subject to taxation if remitted to the U.S., because the Company plans to keep
these amounts permanently reinvested overseas.

9.   COMMITMENTS AND CONTINGENCIES

Lease Commitments
-----------------

     The Company leases certain equipment and office space under noncancelable
agreements and leases which expire at various dates through 2004. At September
30, 1998, future minimum lease payments under noncancelable operating and
capital leases were as follows:

<TABLE>
<CAPTION>
                                                                                 Operating             Capital
                                                                                  Leases               Leases
                                                                              ----------------     ----------------
                                                                                         (In thousands)
<S>                                                                              <C>                     <C>
Year ended September 30:
     1999                                                                        $ 4,710                 $200
     2000                                                                          3,202                   64
     2001                                                                          1,296                   76
     2002                                                                            662                   --
     2003                                                                            426                   --
     Thereafter                                                                      142                   --
                                                                                 =======                 ----
     Total minimum lease payments                                                $10,438                  340
                                                                                 =======

     Less:  Amounts representing interest (annual rates from 6% to 12%)                                   (45)
                                                                                                         ----

     Present value of minimum capital lease obligations                                                   295

     Less: Current maturities                                                                            (176)
                                                                                                         -----

     Capital lease obligations, less current maturities                                                  $119
                                                                                                         ====
</TABLE>

     Total rental expense charged to operations was $5,258,000, $6,934,000 and
$9,087,000 for 1998, 1997 and 1996, respectively.

     On October 23, 1998, the Company entered into a non-cancelable lease
agreement for its headquarter operations. The lease term is for six years,
commencing on May 1, 1999. Aggregate lease payments during the six-year term of
this lease will amount to $18,449,000.

Litigation
----------

     On May 20, 1996, the Company entered into a definitive agreement to settle
the shareholder class action litigation brought against the Company and certain
of its former officers. An order of Final Approval and Final Judgment and an
Order of Dismissal was issued by the Federal District Court in Massachusetts.
The litigation, which was brought in August 1994, alleged violations of federal
securities law. Of the $5,750,000 settlement, the Company contributed $2,750,000
from its own funds, with the remainder provided by insurance. The Company
recorded a charge of $3,250,000 in the second quarter of fiscal 1996 to cover
the settlement and other expenses incurred in connection therewith.

                                       56

<PAGE>

                             MARCAM SOLUTIONS, INC.
             Notes to Consolidated Financial Statements (Continued)

      The Company is also subject to other legal proceedings and claims which
arise in the normal course of business. While the outcome of these matters
cannot be predicted with certainty, management does not believe the outcome of
any of these other legal matters will have a material adverse effect on the
Company's financial position or results of operations.


10.   STOCKHOLDERS' EQUITY

     As described in Note 2, on July 29, 1997, Marcam Corporation spun off in a
tax-free distribution to its stockholders the stock of Marcam Solutions, Inc.,
representing its business related to its PRISM, Protean and Avantis product
lines. In the Distribution, each stockholder of Marcam Corporation received one
share of Marcam Solutions common stock for each two shares of Marcam Corporation
common stock held and five shares of Marcam Solutions common stock for each
share of Marcam Corporation preferred stock held. Each holder of an outstanding
stock option to purchase shares of Marcam Corporation common stock retained such
Marcam Corporation option, which after the Distribution became an option to
purchase the same number of shares of MAPICS common stock, and was granted an
option to purchase shares of Marcam Solutions common stock equal to one-half of
the number of shares of Marcam Corporation common stock subject to such Marcam
Corporation option. Warrants outstanding at the Distribution date were similarly
modified or were transferred to MAPICS, Inc.

(a)  Preferred Stock
     ---------------

     In September 1995, Marcam Corporation issued and sold 225,000 shares of
Series D Convertible Preferred Stock, par value $1.00 per share, for an
aggregate purchase price of $22,500,000. In July 1996, Marcam Corporation issued
and sold 100,000 shares of Series E Convertible Preferred Stock, par value $1.00
per share, for an aggregate purchase price of $9,500,000, and warrants to
purchase an aggregate of 1,000,000 shares of Marcam Corporation common stock for
an aggregate purchase price of $500,000. In connection with the Distribution
described in Note 2, 325,000 shares of Series D and Series E preferred stock
were converted into 1,625,000 shares of Marcam Solutions common stock (See Note
10(e) regarding warrants).

     Marcam Solutions is authorized to issue 5,000,000 shares of Preferred
Stock, $0.01 par value per share.

(b)  Stock Option Plans
     ------------------

     The 1987 Marcam Corporation Stock Plan (the "1987 Plan") provided that the
Board of Directors may grant incentive options to key employees and
non-qualified options and stock awards to officers, employees and consultants to
purchase up to 1,750,000 shares of the Company's common stock. Incentive stock
options were granted at not less than the fair market value of the common stock
at the time of the grant. Non-qualified options were granted at not less than
the lesser of the book value per share of common stock as of the end of the
fiscal year of Marcam Corporation immediately preceding the date of such grant
or 50% of the fair market value of the common stock at the time of the grant.
Under the 1987 Plan, an aggregate of 120,000 shares of restricted common stock
were granted to various individuals. These grants became 50% vested in 4-1/2
years and 100% vested in 5-1/2 years according to their original vesting
schedules. In fiscal 1997 and 1996, grants representing 10,000 and 45,000 shares
of restricted common stock were canceled, respectively. The Company's ability to
grant additional options under the 1987 Plan expired on December 31, 1996.

     The Marcam Corporation 1991 Non-Employee Director Stock Option Plan, as
amended, provided for the issuance of options to purchase up to 210,000 shares
of common stock to eligible members of Marcam Corporation's Board of Directors
who were neither employees nor officers of Marcam Corporation.

                                       57

<PAGE>

                             MARCAM SOLUTIONS, INC.
             Notes to Consolidated Financial Statements (Continued)

     The Marcam Corporation 1994 Stock Plan (the "1994 Plan"), as amended,
provided that the Board of Directors may grant incentive options to key
employees and non-qualified options and stock awards to officers, employees and
consultants to purchase up to 2,000,000 shares of Marcam Corporation common
stock. Incentive stock options were granted at not less than the fair market
value of the common stock at the time of the grant. Non-qualified options were
granted at not less than the lesser of the book value per share of common stock
as of the end of the fiscal year of Marcam Corporation immediately preceding the
date of such grant or 50% of the fair market value of the common stock at the
time of the grant. Under the 1994 Plan, an aggregate of 6,000 shares of
restricted common stock were granted to various individuals in fiscal year 1996.
These grants became 50% vested in 4-1/2 years and 100% vested in 5-1/2 years,
according to their original vesting schedules.

     In a prior fiscal year, the Marcam Corporation Board of Directors
authorized options to purchase 25,260 shares of Marcam Corporation common stock
which were granted outside of the three then-existing stock option plans.

     In June 1997, the Marcam Solutions Board of Directors adopted the Marcam
Solutions 1997 Stock Plan (the "1997 Plan"). The 1997 Plan provides that the
Board of Directors may grant incentive options to key employees and
non-qualified options and stock awards to officers, employees and consultants to
purchase up to 2,750,000 shares of the Company's common stock. Incentive stock
options must be granted at not less than the fair market value of the common
stock at the time of the grant. The exercise price of non-qualified stock
options may be less than the fair market value of the common stock on the date
of grant, but in no case may the exercise price be less than the statutory
minimum. Options under the 1997 Plan generally vest over a 4 or 5 year period
and expire ten years from the date of grant.

     In June 1997, the Marcam Solutions Board of Directors adopted the Marcam
Solutions, Inc. 1997 Non-Employee Director Stock Option Plan (the "Directors
Plan"). The Directors Plan provides for the issuance of options to purchase up
to 160,000 shares of common stock to eligible members of the Company's Board of
Directors who are neither employees nor officers of the Company. The options
must be granted at not less than the fair market value of the common stock on
the date of grant. Options under the Directors Plan vest over a 4 year period
and expire ten years from the date of grant.

     Immediately prior to the Distribution, on July 29, 1997, options to
purchase an aggregate of 2,601,561 shares of Marcam Corporation common stock
were held by employees, consultants and directors of Marcam Corporation under
the stock option plans. In connection with the Distribution, each holder of an
outstanding stock option to purchase shares of Marcam Corporation common stock
(i) retained such Marcam Corporation option, which after the Distribution became
an option to purchase the same number of shares of MAPICS common stock (the
"Adjusted MAPICS Options"), and (ii) was granted an option to purchase shares of
Marcam Solutions common stock equal to one-half of the number of shares of
Marcam Corporation common stock subject to such Marcam Corporation option (the
"Adjusted Marcam Solutions Option"). The current exercise price of the Marcam
Corporation options was allocated between the Adjusted MAPICS Options and the
Adjusted Marcam Solutions Options on a basis intended to preserve the "spread"
value of the existing Marcam Corporation options. As adjusted, each of the two
options had the same ratio of exercise price per option to the market value per
share, the same vesting provisions, option periods and other terms and
conditions and, in the aggregate, the same difference between the market value
and exercise price as reflected in the original Marcam Corporation option.
Generally, each adjusted stock option vests based on years of service with
either Marcam Solutions or MAPICS, Inc. pursuant to the Distribution agreement.
Certain modifications made by MAPICS, Inc. to an Adjusted MAPICS Option may
require the Company to make similar modifications to the related Marcam
Solutions Option.

     The table presented below reflects the activity and historical prices of
Marcam Corporation stock options for the periods from September 30, 1995 through
July 29, 1997, the date of the Distribution. As of July 29, 1997, the Marcam
Corporation stock options were modified and options in Marcam Solutions, Inc.
were issued as described above. The table reflects activity and adjusted prices
of stock options for the period following the Distribution through September 30,
1998:

                                       58

<PAGE>

                             MARCAM SOLUTIONS, INC.
             Notes to Consolidated Financial Statements (Continued)

<TABLE>
<CAPTION>
                                                                    Number of Shares           Weighted Average
                                                                     Under Options              Exercise Price
                                                                 -----------------------      -------------------

<S>                                                                    <C>                         <C>
Balance, September 30, 1995                                            1,937,935                   $14.58
     Granted                                                             739,704                    14.32
     Exercised                                                          (112,789)                    5.17
     Canceled                                                           (455,371)                   13.23
                                                                       ---------

Balance, September 30, 1996                                            2,109,479                    15.28
     Granted                                                             783,870                    12.50
     Exercised                                                           (43,803)                    8.80
     Canceled                                                           (247,985)                   13.37
                                                                       ---------

Balance, July 29, 1997                                                 2,601,561                    14.74
     Modification of Marcam Corporation Stock Options                 (1,313,280)                    7.21
     Granted                                                             778,070                     8.21
     Exercised                                                           (58,270)                    5.45
     Canceled                                                            (35,596)                    6.37
                                                                       ---------

Balance, September 30, 1997                                            1,972,485                     7.76
     Granted                                                             746,999                     9.06
     Exercised                                                          (197,900)                    6.96
     Canceled                                                           (312,641)                    8.12
                                                                       ---------

Balance, September 30, 1998                                            2,208,943                   $ 8.22
                                                                       =========
</TABLE>

     At September 30, 1998 and 1997, 946,805 and 605,881 options, respectively,
were exercisable under the Marcam Solutions stock option plans. Options for
444,887 shares were available for grant at September 30, 1998.

     The following table summarizes information regarding stock options
outstanding at September 30, 1998:

<TABLE>
<CAPTION>
                                           Options Outstanding                          Options Exercisable
                            ---------------------------------------------------  -----------------------------------
                                                 Weighted
                                                 Average
                                                Remaining         Weighted                            Weighted
                                 Number        Contractual         Average           Number            Average
 Range of exercise prices     Outstanding      Life (years)    Exercise Price     Outstanding      Exercise Price
--------------------------- ---------------------------------- ----------------  ---------------  ------------------
<S>      <C>                  <C>                  <C>            <C>             <C>                <C>
$0.50                               750            0.6            $ 0.50              750            $ 0.50
$4.36  - $5.98                  252,239            6.7              5.44          164,733              5.40
$6.10  - $7.75                  480,867            7.5              7.03          227,363              6.95
$8.10  - $9.96                1,116,211            8.7              8.41          319,834              8.52
$10.00 - $11.58                 346,876            5.7             11.10          233,125             11.17
$13.14 - $14.57                  12,000            9.7             13.76            1,000             14.57
                              ---------                                           -------            
                              2,208,943            7.7            $ 8.22          946,805            $ 8.25
                              =========                                           =======
</TABLE>

                                       59

<PAGE>

                             MARCAM SOLUTIONS, INC.
             Notes to Consolidated Financial Statements (Continued)

(c)  Stock Purchase Plan
     -------------------

     The 1990 Marcam Corporation Employee Stock Purchase Plan ("1990 Plan")
permitted each full-time employee, excluding those owning 5% or more of the
Company's stock, to purchase, at 85% of the lesser of beginning or end of period
fair market value, up to 500 shares of common stock for each six-month period. A
total of 600,000 shares of common stock were authorized for issuance under the
1990 Plan. In fiscal years 1997 and 1996, 81,246 and 86,440 shares were issued,
respectively.

     In June 1997, the Marcam Solutions Board of Directors adopted the 1997
Marcam Solutions Employee Stock Purchase Plan ("1997 Stock Purchase Plan") which
permits each full-time employee, excluding those owning 5% or more of the
Company's stock, to purchase, at 85% of the lesser of beginning or end of period
fair market value, up to 250 shares of common stock for each six-month period. A
total of 300,000 shares of common stock are authorized for issuance under the
1997 Stock Purchase Plan. In fiscal year 1998, 85,254 shares were issued under
the 1997 Stock Purchase Plan. No shares were issued under the 1997 Stock
Purchase Plan in fiscal year 1997.

(d)  Accounting for Stock Based Compensation
     ---------------------------------------

     In October 1995, Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation ("FAS 123"), was issued which required
the Company to elect either expense recognition under FAS 123 or its
disclosure-only alternative for stock-based employee compensation. No expense
for stock-based compensation was recorded during 1998, 1997 or 1996. The expense
recognition provision encouraged by FAS 123 requires fair-value based financial
accounting to recognize compensation expense for employee stock compensation
plans. The Company adopted FAS 123 in 1997 and elected the disclosure-only
alternative provisions. Had compensation costs for stock-based compensation
plans related to employees of Marcam Corporation prior to the Distribution and
employees of Marcam Solutions subsequent to the Distribution been determined
based on the fair value at the grant date as calculated in accordance with FAS
123, the Company's net loss and basic and diluted loss per share for the years
ended September 30, 1998, 1997 and 1996 would have been as follows (in
thousands, except per share data).

<TABLE>
<CAPTION>
                                Year Ended                      Year Ended                      Year Ended
                            September 30, 1998              September 30, 1997              September 30, 1996
                      ------------------------------- ------------------------------- --------------------------------
                       As reported      Pro forma      As reported      Pro forma      As reported      Pro Forma
                      --------------- --------------- --------------  --------------- --------------- ----------------
<S>                     <C>             <C>             <C>             <C>             <C>             <C>
Net loss                $(5,525)        $(9,221)        $(46,883)       $(52,671)       $(26,326)       $(27,667)
Net loss per share      $ (0.73)        $ (1.22)        $  (7.77)       $  (8.73)       $  (4.63)       $  (4.86)
</TABLE>

     The fair value of stock-based compensation awards is estimated on the date
of grant using the Black-Scholes option-pricing model with the following
weighted-average assumptions used for grants in fiscal 1998, 1997 and 1996,
respectively: dividend yield of 0%, 0% and 0%; expected volatility of 72% in
1998, 55% prior to the Distribution and 65% subsequent to the Distribution in
1997, and 55% in 1996; risk-free interest rates of 5.71%, 6.23% and 5.68%; and
expected lives of 5 years, 5 years and 5 years. The weighted-average fair value
of options granted during fiscal 1998, 1997 and 1996 was $5.78, $5.80 and $7.66,
respectively. The weighted-average fair values on the grant date of shares
issued in connection with employee stock plans in fiscal 1998, 1997 and 1996 was
$5.81, $4.38 and $3.70, respectively. The effects of applying FAS 123 in this
pro forma disclosure are not likely to be representative of the effects on
reported net income in future years. Additional awards in future years are
anticipated. FAS 123 does not apply to awards prior to fiscal 1996. The 1997 pro
forma compensation charge under FAS 123 included a one-time charge of $3,034,000
related to the modification of options in connection with the Distribution.

                                       60

<PAGE>

                             MARCAM SOLUTIONS, INC.
             Notes to Consolidated Financial Statements (Continued)

(e)  Warrants
     --------

     Warrants to purchase an aggregate of 383,333 shares of Marcam Corporation
common stock issued in connection with the Subordinated Notes were valued in May
1994 at $1,300,000 and were recorded as other assets and additional paid-in
capital. The asset was being amortized over the term of the subordinated debt.
The asset was expensed upon the prepayment of the Subordinated Notes (see Note
7). In connection with the Distribution, these warrants were transferred to
MAPICS, Inc. in fiscal 1997.

     Warrants to purchase an aggregate of 1,000,000 shares of Marcam Corporation
Common Stock issued in connection with the issuance of the Series E Convertible
Preferred Stock (the "GA Warrants") were recorded as additional paid-in capital
in the amount of $500,000. The warrants may be exercised anytime between July
23, 1996 and July 23, 2003 and were originally priced at $15.36 per share. In
connection with the Distribution, the holders of the GA Warrants (i) retained
such GA Warrants, which after the Distribution became warrants to purchase
MAPICS common stock (the "MAPICS GA Warrants") and (ii) received warrants to
purchase 500,000 shares of Marcam Solutions common stock (the "Marcam Solutions
GA Warrants"). The exercise price of the GA warrants was allocated between the
MAPICS GA Warrants and the Marcam Solutions GA Warrants on a basis intended to
preserve the spread value of the original GA Warrants. The resulting exercise
price for the Marcam Solutions GA Warrants is $7.66 per share. No warrants have
been exercised as of September 30, 1998.

(f)  Stockholder Rights Plan
     -----------------------

     On July 17, 1997, the Company's Board of Directors adopted a Stockholder
Rights Agreement. The plan declared a dividend of one preferred stock purchase
right (a "Right") for each outstanding share of common stock to stockholders of
record at the close of business on July 21, 1997. Each Right entitles holders to
purchase one one-thousandth of a share (a "Unit") of a new series of junior
participating preferred stock, par value $0.01 per share, at an exercise price
of $25 per Unit, subject to adjustment. The Rights become exercisable for common
stock only under certain circumstances and in the event of particular events
relating to a change in control of the Company. The Rights may be redeemed by
the Company under certain circumstances pursuant to the Plan. The Rights expire
on July 17, 2007 unless earlier redeemed or exchanged. The Rights have certain
anti-takeover effects, in that they would cause substantial dilution to a person
or group that attempts to acquire a significant interest in the Company on terms
not approved by the Board of Directors.


11.   MAJOR CUSTOMERS AND GEOGRAPHIC INFORMATION

     The Company had no customers which accounted for 10% or more of total
revenues in fiscal 1998, 1997 or 1996.

     The Company markets its products worldwide. Revenues are grouped into three
main geographic segments: U.S., Europe and All Other. Financial data by
geographic area is as follows (in thousands):

                                       61

<PAGE>

                             MARCAM SOLUTIONS, INC.
             Notes to Consolidated Financial Statements (Continued)


<TABLE>
<CAPTION>
                                          U.S.          Europe         All Other     Eliminations         Total
                                       ------------   ------------    ------------   --------------    ------------
<S>                                     <C>            <C>              <C>            <C>               <C>
1998
----
Net sales to unaffiliated customers     $ 48,365       $46,329          $29,826        $     --          $124,520
Transfers between geographic areas         8,536            --            2,800         (11,336)               --
                                        --------       -------          -------        --------          --------
Total revenues                            56,901        46,329           32,626         (11,336)          124,520
                                        --------       -------          -------        --------          --------
Net income (loss)                        (20,896)        6,018              886           8,467            (5,525)
Identifiable assets                       36,418        21,157           11,927              --            69,502

1997
----
Net sales to unaffiliated customers     $ 90,533       $44,227          $29,120        $     --          $163,880
Transfers between geographic areas         3,248            --            2,298          (5,546)               --
                                        --------       -------          -------        --------          --------
Total revenues                            93,781        44,227           31,418          (5,546)          163,880
                                        --------       -------          -------        --------          --------
Net income (loss)                        (42,536)        1,908            3,006          (9,261)          (46,883)
Identifiable assets                       50,356        16,760           10,753              --            77,869

1996
----
Net sales to unaffiliated customers     $119,021       $51,990          $30,413        $     --          $201,424
Transfers between geographic areas         6,169            --            6,493         (12,662)               --
                                        --------       -------          -------        --------          --------
Total revenues                           125,190        51,990           36,906         (12,662)          201,424
                                        --------       -------          -------        --------          --------
Net income (loss)                        (24,662)        7,804            6,016         (15,484)          (26,326)
Identifiable assets                       94,135        28,399            9,668              --           132,202
</TABLE>


12.  SUPPLEMENTAL CASH FLOW INFORMATION

     Cash paid for income taxes and interest and non-cash investing and
financing activities for the years ended September 30, 1998, 1997 and 1996 are
summarized as follows (in thousands):

<TABLE>
<CAPTION>
                                                                1998                1997                 1996
                                                          -----------------    ----------------    -----------------
<S>                                                           <C>                <C>                   <C>
Cash paid during the year for:
     Income taxes                                             $3,249             $ 3,645               $1,241
     Interest                                                 $   70             $ 2,256               $2,793

Capital lease obligations incurred                            $   --             $    --               $1,388

Assumption of Subordinated Notes by MAPICS                    $   --             $25,000               $   --
</TABLE>


13.   EMPLOYEE BENEFIT PLAN

       In fiscal 1995, Marcam Corporation began to sponsor for eligible
employees a profit sharing retirement plan, and in fiscal 1997 Marcam Solutions
began to sponsor a similar plan (the "Plans"). In connection with the
Distribution described in Note 2, the Marcam Corporation plan was transferred to
MAPICS, Inc. The Plans were established under the provisions of Internal Revenue
Code Section 401(k). Participants may defer a portion of their annual
compensation on a pre-tax basis. The Company may elect to make matching
contributions based on a percentage of employees' contributions, subject to
limitations as defined in the Plans. Company matching contributions amounted to
$738,000, $877,000 and $431,000 for the years ended September 30, 1998, 1997 and
1996, respectively.

                                       62

<PAGE>

                             MARCAM SOLUTIONS, INC.
             Notes to Consolidated Financial Statements (Continued)

14.  ACQUISITIONS

     On February 26, 1993, the Company acquired from International Business
Machines Corporation ("IBM") the exclusive worldwide marketing rights to the
MAPICS product line for 25 years. The Company also acquired the option to
purchase the MAPICS product line and certain related intellectual property
rights. As part of the acquisition of the marketing rights, the Company recorded
$10,699,000 of intangible assets acquired, consisting principally of installed
customer base and affiliation networks, trade names and trademarks, and software
technology. The intangible assets were being amortized over their estimated
useful lives of 5 to 15 years. In connection with the Distribution, MAPICS
intangible costs with a net book value of $4,895,000 were transferred to MAPICS,
Inc.


15.  RELATED PARTY TRANSACTIONS

     The Company has a number of marketing and product development relationships
with IBM. IBM has also purchased licenses for the Company's product for internal
use, as well as for marketing purposes. The Company has purchased certain
services, equipment and software licenses from IBM.

     IBM also markets and distributes some Marcam products on the Company's
behalf in certain geographies, including Europe, Latin America and Asia Pacific.
In fiscal year 1996, the Company recorded royalties from IBM of approximately
$604,000 relating to sales of the Company's products.

     The Company also licenses products and provides services to IBM in the
ordinary course of business. During fiscal years 1996, the Company recognized an
aggregate of approximately $409,000 from licensing products and providing
services to IBM. IBM also sells products and provides services, including
distribution and translation services, to the Company in the ordinary course of
business.

     The Company's total revenues that were derived from transactions with IBM
were $1,100,000 for fiscal 1996. Transactions with IBM in 1998 and 1997 were
immaterial.

                                       63


<PAGE>

Supplemental Financial Information

     The following quarterly information is unaudited and, in the opinion of
management, includes all adjustments (consisting only of normal recurring
adjustments) necessary to present fairly the operating results for each quarter.
The length of the Company's sales cycle, which typically ranges from three to
twelve months, and the timing of major contracts are factors in the variability
in quarterly results.

<TABLE>
<CAPTION>
                                           First           Second           Third           Fourth
                                          Quarter          Quarter         Quarter         Quarter           Year
                                         ----------       ----------      ----------      -----------      ----------
                                                            (In thousands, except per share data)
<S>                                       <C>              <C>            <C>              <C>              <C>
1998
----
Revenues                                  $28,108          $31,049        $ 30,953         $ 34,410         $124,520
Operating loss                             (3,297)            (311)           (393)(C)       (2,237)          (6,238)
Net income (loss)                          (3,343)              20              13 (C)       (2,215)          (5,525)
Basic and diluted net income (loss)
   per share                                (0.45)            0.00            0.00 (C)        (0.29)           (0.73)

1997(E)
-----------
Revenues                                  $45,747          $43,804        $ 44,042         $ 30,287         $163,880
Operating loss                             (1,394)          (3,601)        (24,817)(A)       (6,755)(B)      (36,567)
Loss before extraordinary item             (3,095)          (5,321)        (26,977)(A)       (8,481)(B)      (43,874)
Net loss                                   (3,095)          (5,321)        (26,977)(A)      (11,490)(B)      (46,883)
Basic and diluted loss per share
   before extraordinary item                (0.54)           (0.92)          (4.70)(A)        (1.23)(B)        (7.27)
Basic and diluted net loss per share
   (D)                                      (0.54)           (0.92)          (4.70)(A)        (1.66)(B)        (7.77)


(A) The Third Quarter 1997 results include restructuring and other charges of
    $18,535, or $3.22 per diluted share.

(B) Fourth Quarter 1997 results include other charges of $640, or $.09 per
    diluted share, and an extraordinary loss of $3,009, or $.43 per diluted
    share.


(C) Third Quarter 1998 results include a restructuring charge reversal of
    $1,896, or $0.22 per diluted share.

(D) Historical weighted average shares outstanding and basic and diluted net
    loss per share have been restated for the Distribution, which has been
    presented in part as a 2-for-1 reverse stock split occurring on July 29,
    1997.

(E) See Note 2 of the Notes to Consolidated Financial Statements and
    Management's Discussion and Analysis of Financial Condition and Results of
    Operations "Overview" for discussion of the Distribution occurring on July
    29, 1997, which is presented in part as a disposal of the business, assets
    and liabilities of the Company's MAPICS product line. Consequently, the
    supplemental financial information for the year ended September 30, 1997
    includes ten months of results related to the MAPICS business.


                                       64


<PAGE>

Supplemental Pro Forma Financial Information

     The following unaudited pro forma financial information for the fiscal
quarters during 1997 reflects how the disposition of the MAPICS business might
have affected the statements of operations if the disposition had occurred on
October 1, 1996. The pro forma financial information is presented as if Marcam
Solutions had been operated as a separate entity, principally by deducting the
operating results of MAPICS from the historical consolidated operating results
of Marcam Corporation. The pro forma data is for informational purposes only and
may not necessarily reflect future results of operations or what the results of
operations would have been had Marcam Solutions been operating as a separate
entity. Actual results for the year ended September 30, 1998 have been presented
for comparative purposes.

                                           First           Second           Third           Fourth
                                          Quarter          Quarter         Quarter         Quarter           Year
                                         ----------       ----------      ----------      -----------      ----------
                                                            (In thousands, except per share data)
<S>                                       <C>             <C>             <C>             <C>              <C>
1998
----
Revenues                                  $28,108         $31,049         $ 30,953        $ 34,410         $124,520
Operating loss                             (3,297)           (311)            (393)(C)      (2,237)          (6,238)
Net income (loss)                          (3,343)             20               13 (C)      (2,215)          (5,525)
Basic and diluted net income (loss)
   per share                                (0.45)           0.00             0.00 (C)       (0.29)           (0.73)

1997(E)
-------
Revenues                                  $22,368         $23,018         $ 22,045        $ 25,520         $ 92,951
Operating loss                             (7,187)         (8,380)         (29,678)(A)      (6,842)(B)      (52,087)
Loss before extraordinary item             (8,767)         (9,932)         (31,698)(A)      (7,733)(B)      (58,130)
Net loss                                   (8,767)         (9,932)         (31,698)(A)     (10,742)(B)      (61,139)
Basic and diluted loss per share
   before extraordinary item                (1.53)          (1.73)           (5.51)(A)       (1.12)(B)        (9.63)
Basic and diluted net loss per share
   (D)                                      (1.53)          (1.73)           (5.51)(A)       (1.55)(B)       (10.13)
</TABLE>


(A) The Third Quarter 1997 results include restructuring and other charges of
    $18,535, or $3.22 per diluted share.

(B) Fourth Quarter 1997 results include other charges of $640, or $.09 per
    diluted share, and an extraordinary loss of $3,009, or $.43 per diluted
    share.

(C) Third Quarter 1998 results include a restructuring charge reversal of
    $1,896, or $0.22 per diluted share.

(D) Historical weighted average shares outstanding and basic and diluted net
    loss per share have been restated for the Distribution, which has been
    presented in part as a 2-for-1 reverse stock split occurring on July 29,
    1997.

(E) See Note 2 of the Notes to Consolidated Financial Statements and
    Management's Discussion and Analysis of Financial Condition and Results of
    Operations "Overview" for discussion of the Distribution occurring on July
    29, 1997, which is presented in part as a disposal of the business, assets
    and liabilities of the Company's MAPICS product line.

                                       65

<PAGE>

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

     Not applicable.

                                       66

<PAGE>

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     Information regarding the Company's directors will be set forth under the
captions "Election of Directors" and "The Board of Directors and its Committees"
in the Company's definitive proxy statement for its annual meeting of
stockholders to be held on February 24, 1999 which will be filed with the
Securities and Exchange Commission within 120 days of September 30, 1998, and is
incorporated herein by reference.

     Information regarding the Company's executive officers is contained in Part
I of this report.

ITEM 11. EXECUTIVE COMPENSATION

     Information required by this item will appear under the caption "Executive
Compensation" in the Company's definitive proxy statement for its annual meeting
of stockholders to be held on February 24, 1999 which will be filed with the
Securities and Exchange Commission within 120 days of September 30, 1998, and is
incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     Information required by this item will appear under the caption "Securities
Ownership of Certain Beneficial Owners and Management" in the Company's
definitive proxy statement for its annual meeting of stockholders to be held on
February 24, 1999 which will be filed with the Securities and Exchange
Commission within 120 days of September 30, 1998, and is incorporated herein by
reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     Information required by this item will appear under the caption "Certain
Relationships and Related Transactions" in the Company's definitive proxy
statement for its annual meeting of stockholders to be held on February 24, 1999
which will be filed with the Securities and Exchange Commission within 120 days
of September 30, 1998, and is incorporated herein by reference.

                                       67

<PAGE>

                                     PART IV

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

(a)(1)  List of Financial Statements
        ----------------------------

     The following are the consolidated financial statements of Marcam
Solutions, Inc. and its subsidiaries appearing elsewhere herein:

     Report of Independent Accountants

     Consolidated Balance Sheets as of September 30, 1998 and 1997

     Consolidated Statements of Operations for each of the three years in the
        period ended September 30, 1998

     Consolidated Statements of Stockholders' Equity for each of the three years
        in the period ended September 30, 1998

     Consolidated Statements of Cash Flows for each of the three years in
        the period ended September 30, 1998

     Notes to Consolidated Financial Statements

(a)(2)  List of Schedules
        -----------------

     All other schedules to the consolidated financial statements are omitted as
the required information is either inapplicable or presented in the consolidated
financial statements or related notes.

(a)(3)  List of Exhibits
        ----------------

     The Exhibits which are filed with this report or which are incorporated by
reference are set forth in the Exhibit Index hereto.

(b)     Reports on Form 8-K:
        --------------------

     None

                                       68

<PAGE>


                                   SIGNATURES
                                   ----------


Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this Report to be signed on its
behalf by the undersigned, thereunto duly authorized, this 17th day of December,
1998.

                                          MARCAM SOLUTIONS, INC.


                                          /s/ Jonathan C. Crane
                                          -------------------------------------
                                          Jonathan C. Crane
                                          President and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been duly signed below by the following persons on behalf of the registrant
on this 17th day of December, 1998 in the capacities indicated.

<TABLE>
<CAPTION>
Signature                                                     Title(s)
---------                                                     --------
<S>                                                           <C>
/s/ Jonathan C. Crane                                         Chairman of the Board of Directors, President
-------------------------------                               and Chief Executive Officer and Director (principal
Jonathan C. Crane                                             executive officer)


/s/ Denis E. Liptak                                           Chief Financial Officer (principal financial
-------------------------------                               and accounting officer)
Denis E. Liptak

/s/ John Campbell                                             Director
-------------------------------
John Campbell


/s/ William O. Grabe                                          Director
-------------------------------
William O. Grabe


/s/ Joe M. Henson                                             Director
-------------------------------
Joe M. Henson


/s/ Michael J. Quinlan                                        Director
-------------------------------
Michael J. Quinlan

/s/ Franchon M. Smithson                                      Director
-------------------------------
Franchon M. Smithson
</TABLE>

                                       69

<PAGE>


                                  EXHIBIT INDEX

     The following designated exhibits are, as indicated below, either filed
herewith or have heretofore been filed with the Securities and Exchange
Commission and are referred to and incorporated by reference to such filings.


<TABLE>
<CAPTION>
      Exhibit No.                                  Description                         SEC Document Reference
      -----------                                  -----------                         ----------------------
<S>                         <C>                                                        <C>
      2                     Revised form of Distribution Agreement between the         000-22841
                            Registrant and MAPICS, Inc.                                Exhibit 2 to Form 10 dated July
                                                                                       15, 1997 as amended on July 22,
                                                                                       1997

      3.1, 4.1              Certificate of Incorporation of the Registrant             333-29285
                                                                                       Exhibit 3.1

      3.2, 4.2              By-laws of  the Registrant                                 333-29285
                                                                                       Exhibit 3.2

      4.3                   Specimen certificate representing the Common Stock         333-29285
                                                                                       Exhibit 4.1

      4.4                   Form of Warrant                                            000-22841
                                                                                       Exhibit 4.3 to Form 10 dated
                                                                                       July 15, 1997 as amended on
                                                                                       July 22, 1997

      4.5                   Amended and Restated Rights Agreement dated as of
                            September 18, 1998, between the Registrant and
                            BankBoston, N.A., which includes as Exhibit A the
                            form of Certificate of Designation of Preferred
                            Stock, as Exhibit B the Form of Rights Certificate,
                            and as Exhibit C the Summary of Rights to Purchase
                            Preferred Stock

      10.1                  Revised form of General Services Agreement between         000-22841
                            MAPICS, Inc. and the Registrant                            Exhibit 10.1 to Form 10 dated
                                                                                       July 15, 1997 as amended on
                                                                                       July 22, 1997

      10.2                  Revised form of Tax Sharing between MAPICS, Inc. and the   000-22841
                            Registrant                                                 Exhibit 10.2 to Form 10 dated
                                                                                       July 15, 1997 as amended on
                                                                                       July 22, 1997

      10.3                  Marcam Solutions, Inc. 1997 Stock Plan, as amended         333-53599
                                                                                       Exhibit 4.1

      10.4                  Marcam Solutions, Inc. 1997 Non-Employee Director Stock    333-29285
                            Option Plan                                                Exhibit 10.6

      10.5                  Lease by and between the Registrant and Dominic J.         33-3566
                            Saraceno, as amended, dated June 13, 1988                  Exhibit 10.7
</TABLE>

                                       70



<PAGE>


<TABLE>
<S>                         <C>                                                        <C>
      10.6                  Second and Third Amendments, each dated as of August 29,   0-18674
                            1990,to Lease by and between Registrant and Dominic J.     Exhibit 10.17 to Annual Report
                            Saraceno, as amended, dated June 13, 1988                  on Form 10-K for the fiscal
                                                                                       year ended September 30, 1990

      10.7                  Fourth Amendment, dated June 30, 1992, to Lease by and     0-18674
                            between Registrant and Dominic J. Saraceno, as amended,    Exhibit 10.19 to Annual Report
                            dated June 13, 1988                                        on Form 10-K for the fiscal
                                                                                       year ended September 30, 1992

      10.8                  Fifth Amendment, dated May 19, 1993, to Lease by and       0-18674
                            between Registrant and Dominic J. Saraceno, as amended,    Exhibit 10.27 to Annual Report
                            dated June 13, 1988                                        on Form 10-K for the fiscal
                                                                                       year ended September 30, 1993

      10.9                  Letter Agreement dated June 10, 1997 by and among Marcam   000-22841
                            Corporation, the Registrant and Michael J. Quinlan         Exhibit 10.1 to Quarterly
                                                                                       Report on Form 10-Q dated
                                                                                       August 22, 1997

       10.10*                Marcam/NEC Distribution Agreement between Marcam World     0-18674
                             Trade Corporation and NEC Corporation dated as             Exhibit 10.33 to Annual Report
                             of March 31, 1995                                          on Form 10-K for the fiscal
                                                                                        year ended September 30, 1995,
                                                                                        as amended

       10.11*                Marcam/NEC Technology Transfer and License Agreement by    0-18674
                             and between the Registrant and NEC Corporation dated as    Exhibit 10.34 to Annual Report
                             of March 31, 1995                                          on Form 10-K for the fiscal
                                                                                        year ended September 30, 1995,
                                                                                        as amended

       10.12                 Form of Letter Agreement dated June 10, 1997 by and        000-22841
                             among Marcam Corporation, the Registrant and Messrs.       Exhibit 10.2 to Quarterly
                             Ebling and Liptak and Ms. Clark                            Report on Form 10-Q dated
                                                                                        August 22, 1997

       10.13                 Letter Agreement dated October 23, 1997 by and between     000-2284
                             the Registrant and Michael J. Quinlan                      Exhibit 10.13 to Annual Report
                                                                                        on Form 10-K for the fiscal
                                                                                        year ended September 30, 1997

       10.14                 1997 Employee Stock Purchase Plan, as amended.             000-2284
                                                                                        Exhibit 10.15 to Annual Report
                                                                                        on Form 10-K for the fiscal
                                                                                        year ended September 30, 1997

       10.15                 Form of Indemnification Agreements entered into by the
                             Registrant with Messrs. Crane, Campbell, Grabe, Henson,
                             Margolis, Quinlan, Smithson, Ebling, and Liptak
</TABLE>

                                       71

<PAGE>



<TABLE>
<S>                         <C>
       10.16                 Lease by and between the Registrant and Wells
                             Avenue Senior Holdings, LLC dated October 23, 1998

       21                    Subsidiaries of the Registrant

       23.1                  Consent of PricewaterhouseCoopers LLP

       27                    Financial Data Schedule
</TABLE>
---------------------------------------

* Confidential Treatment Granted



                                       72