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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549



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FORM 10-K

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

FOR THE FISCAL YEAR ENDED JUNE 30, 2002

OR

|      |  |                                                                                                           
|----- |  | ----------------------------------------------------------------------------------------------------------
|[   ] |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)

For the transition period from ____________ to _____________.



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COMMISSION FILE NUMBER 0-26934

HYPERION SOLUTIONS CORPORATION
(Exact name of registrant as specified in its charter)

|                                                                        |  |                                                
|----------------------------------------------------------------------- |  | -----------------------------------------------
|DELAWARE
(State or other jurisdiction of
incorporation or organization) |  | 77-0277772
(I.R.S. Employer
Identification No.)

1344 CROSSMAN AVENUE, SUNNYVALE, CALIFORNIA 94089
(Address of principal executive offices, including zip code)

Registrants telephone number, including area code: (408) 744-9500

Securities registered pursuant to Section 12(b) of the Act: NONE

Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, PAR VALUE $0.001

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

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

As of September 16, 2002, there were 33,547,554 shares of the registrants
common stock, $0.001 par value, outstanding. The aggregate market value of the
registrants voting stock held by nonaffiliates as of September 16, 2002 was
approximately $694 million.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrants Proxy Statement for its 2002 Annual Meeting of
Stockholders, scheduled to be held on November 13, 2002, are incorporated by
reference in Part III hereof.





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TABLE OF CONTENTS



|              |                                                                                               |  |  |  |  |  |  | 
|------------- | --------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART I       
|              | ITEM 1. BUSINESS                                                                             
|              | ITEM 2. PROPERTIES                                                                           
|              | ITEM 3. LEGAL PROCEEDINGS                                                                    
|              | ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                  
|PART II      
|              | ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERS                
|              | ITEM 6. SELECTED FINANCIAL DATA                                                              
|              | ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|              | ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                          
|              | ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                                          
|              | ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE 
|PART III     
|              | ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT                                  
|              | ITEM 11. EXECUTIVE COMPENSATION                                                              
|              | ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT                      
|              | ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                                      
|PART IV      
|              | ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K                     
|SIGNATURES   
|EXHIBIT INDEX
|EXHIBIT 10.15
|EXHIBIT 10.24
|EXHIBIT 21.1 
|EXHIBIT 23.1 
|EXHIBIT 99.1 



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HYPERION SOLUTIONS CORPORATION

FORM 10-K

|           |  |                                                                                       |  |     
|---------- |  | ------------------------------------------------------------------------------------- |  | ----
|           |  |                                                                                       |  | PAGE
|           |  |                                                                                       |  |     
|PART I.    |  |                                                                                       |  |     
|          
|Item 1.    |  | Business                                                                              |  | 3   
|Item 2.    |  | Properties                                                                            |  | 10  
|Item 3.    |  | Legal Proceedings                                                                     |  | 10  
|Item 4.    |  | Submission of Matters to a Vote of Security Holders                                   |  | 10  
|          
|PART II.   |  |                                                                                       |  |     
|          
|Item 5.    |  | Market for Registrants Common Equity and Related Stockholder Matters                 |  | 11  
|Item 6.    |  | Selected Financial Data                                                               |  | 12  
|Item 7.    |  | Managements Discussion and Analysis of Financial Condition and Results of Operations |  | 13  
|Item 7A.   |  | Quantitative and Qualitative Disclosures About Market Risk                            |  | 24  
|Item 8.    |  | Financial Statements and Supplementary Data                                           |  | 25  
|Item 9.    |  | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure  |  | 46  
|          
|PART
III.  |  |                                                                                       |  |     
|          
|Item 10.   |  | Directors and Executive Officers of the Registrant                                    |  | 46  
|Item 11.   |  | Executive Compensation                                                                |  | 46  
|Item 12.   |  | Security Ownership of Certain Beneficial Owners and Management                        |  | 46  
|Item 13.   |  | Certain Relationships and Related Transactions                                        |  | 46  
|          
|PART
IV.   |  |                                                                                       |  |     
|          
|Item 14.   |  | Exhibits, Financial Statement Schedules and Reports on Form 8-K                       |  | 46  
|          
|Signatures |  |                                                                                       |  | 49  

Hyperion, the Hyperion H logo, Essbase,
Hyperion Essbase XTD, Hyperion Planning, Hyperion Financial Management, Hyperion
Performance Scorecard, Hyperion Business Modeling, Hyperion Pillar and Hyperion
Enterprise are registered trademarks or trademarks of Hyperion
Solutions Corporation. All other trademarks and company names mentioned are the
property of their respective owners. All rights reserved.

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FORWARD-LOOKING STATEMENTS

Certain information contained in this report on Form 10-K and the Annual Report
is forward-looking in nature. All statements included in this report on Form
10-K and the Annual Report or made by management of Hyperion Solutions
Corporation and its subsidiaries (Hyperion), other than statements of
historical fact, are forward-looking statements. Examples of forward-looking
statements include statements regarding Hyperions future financial results,
operating results, business strategies, projected costs, products, competitive
positions and plans and objectives of management for future operations. In some
cases, forward-looking statements can be identified by terminology such as
may, will, should, would, expects, plans, anticipates, intends,
believes, estimates, predicts, potential, continue, or the negative
of these terms or other comparable terminology. Any expectations based on these
forward-looking statements are subject to risks and uncertainties and other
important factors, including those discussed in the section entitled Factors
That May Affect Future Results. These and many other factors could affect
Hyperions future financial and operating results, and could cause actual
results to differ materially from expectations based on forward-looking
statements made in this document or elsewhere by Hyperion or on its behalf.
Hyperion does not undertake an obligation to update its forward-looking
statements to reflect future events or circumstances.




PART I




ITEM 1.   BUSINESS

GENERAL

Hyperion Solutions Corporation
(Hyperion) delivers business performance management software solutions that enable
companies to continually measure performance, anticipate results and drive
profitability across key business activities. Our customers use our products to
help them collaborate enterprise-wide, focus resources, improve operational
efficiencies and leverage opportunities for growth.

Our business performance management solutions provide comprehensive support for
the entire process of goal setting, business modeling, planning, budgeting,
performance monitoring, analyzing and reporting throughout organizations. Our
products complement existing enterprise resource planning (ERP), customer
relationship management (CRM), supply chain management (SCM) and transaction
systems by integrating data from multiple sources, providing a common view
across the enterprise and enabling an integrated business performance
management process that aligns individual goals with corporate objectives.

We provide applications along with a development and deployment platform to
enable enterprise-class business performance management across a wide variety
of functional and business activity areas. We use our best-of-breed online
analytical processing (OLAP) technology, Hyperion Essbase, as the foundation
for our platform, Hyperion Essbase XTD. Components within Hyperion Essbase XTD
can be used individually to create tailored applications or in conjunction with
our packaged applications to support the entire business performance management
process. With our platform and our packaged business performance management
applications, we provide customers some of the deepest and broadest product
offerings in the market. In addition, we offer support and
services from offices in 20 countries and work with over 330 partners to
provide solutions to more than 6,000 customer organizations
worldwide. Hyperion was formed in August 1998 when Arbor Software,
founded in 1991, acquired Hyperion Software, founded in 1981.

INDUSTRY BACKGROUND

In response to todays competitive pressures and renewed focus on
profitability, most businesses are seeking systems that can support the full
business cycle from strategy formulation to the creation and adaptation of
plans and operational execution, as well as the monitoring and reporting of
results. Companies need to unlock the volumes of transactional and operational
information captured in different information systems and in different formats.
It is common for organizations to have multiple general ledger,
order entry, partner and customer interaction systems worldwide. With business
performance management solutions, organizations can consolidate their financial
and operational information and turn this raw data into meaningful
business information. More importantly, our business performance management
solutions can scale from executive management through to the line manager.

We see five business imperatives driving increased demand for business
performance management solutions. These are the need to 1) increase
visibility, agility and measurable accountability across the enterprise; 2)
achieve necessary alignment among business and functional units for tight
strategy execution; 3) increase the quality of management reports and have
every manager work from the same set of facts; 4) extend existing information
technology investments in operational enterprise

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resource planning, customer relationship management and other legacy
transactional systems; and 5) make information accessible and actionable
throughout the organization to increase the speed, quality and accuracy of
decision making.

These imperatives are in contrast to the tactical manner in which some
organizations address analysis requirements today. Using standalone
applications, query and reporting tools and spreadsheets, for example,
employees in different functional areas conduct analyses that are potentially
incomplete or inaccurate. Deployment of pervasive business performance
management applications provides consistent information and allows
organizations to create and execute strategic, financial and operational plans
that are in alignment.

To be useful, all of the data must be accessed, cleansed, transformed,
extracted and then analyzed using an assortment of sophisticated quantitative
methods. It must be summarized, visualized and presented in a variety of
formats  from spreadsheets and specialized financial report formats, to
multidimensional views and graphical Web-based presentations  that are
meaningful and intuitive to users throughout the organization. Since most
global organizations use multiple operational systems that capture data in
different formats, integrating and interpreting this enterprise data is an
increasingly critical requirement. To take full advantage of the value of the
data stored in existing systems and accelerate decision-making requires
specific business performance management applications that provide data quality
and integrity, scalability and ease-of-use across the organization.

Our business performance management solutions are comprehensive, scalable, open
and enterprise-class. They meet industry needs with a suite and platform
approach specifically designed to leverage the investment organizations have
already made in raw data collection and operational systems. Business
performance management applications represent the next logical step in the
evolution of enterprise application software.

STRATEGY

Our objective is to be the leading global provider of business performance
management solutions. These solutions give our customers the power to leverage
their information assets for strategic purposes and enable organizations to
measure performance, anticipate results and drive profitability. We intend to
accomplish this by leading with our applications, as those customer wins tend
to drive additional platform license revenue. In addition, we will
continue to expand our network of partners delivering business performance
management capabilities on our platform, including value added solutions for
emerging areas of performance management such as customer relationship, supply
chain, and industry-specific markets. We will also continue to enhance our
scalable, open Hyperion Essbase technology, deliver the best applications available and provide
complementary support and
service offerings.

We believe that high levels of customer service and satisfaction are critical
to the successful marketing and sale of our new and existing products. We
provide a broad range of worldwide consulting, training and support services
that help customers and partners implement, customize, enhance, support and
extend their business performance management solutions. We are committed to
maintaining a world-class workforce to deliver these offerings and support more
than 330 partners that deliver complementary products and services, meeting a
wide variety of customer requirements. These solutions include additional
packaged business performance management applications, data and application
integration technologies, tools, and training services that leverage the
Hyperion Essbase XTD platform as the foundation. We believe that the number of
partners offering solutions based on our business performance management
applications and technology validates the value of our platform.
These partner relationships increase the network effects of our platform,
enhance our market reach and provide our customers with comprehensive business
performance management solutions that deliver greater flexibility and choice.

Key elements of our strategy include:

Leverage Existing Market Leadership Position. We plan to enhance the core
component of our Hyperion Essbase XTD platform for ease of development and
increased interoperability of business performance management applications,
with even greater scalability and ease-of-use features and tighter integration
with relational data sources. We intend to actively seek the co-development of
vertical and horizontal applications with outside organizations. We also
intend to enable all of our packaged applications to fully exploit the Hyperion
Essbase XTD platform, creating a key differentiation with competing products.
We believe that these activities will increase our ability and our partners
ability to deliver an integrated suite of business performance management
applications across key market areas. We believe our key strengths are our
established distribution channels and comprehensive strategic technology. We
also believe that our proven domain expertise and credibility gained from
market leadership in the financial area can be leveraged to fully exploit the
substantial market opportunity that exists in the applications area and expand
to the adjacent operational analytics space.

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Increase Focus and Penetration of Key Markets.We plan to focus our
intellectual capital and leverage our partners to provide best-of-breed
business performance management solutions in key markets, including financial
management, CRM analysis, supply-chain analysis, workforce analysis,
industry-specific solutions, general OLAP-based solutions and data warehousing.

Foster Strategic Partner Relationships.To accelerate the adoption of business
performance management solutions, we have established over 330 relationships,
including the following:



| |  | Consulting Partners, including large systems integrators, regional
consulting firms, professional services organizations and value added
resellers, deliver custom application consulting and related
implementation, integration and/or training services.
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | Independent Software Vendor (ISV) Partners integrate their products with
our core technology to develop business intelligence enhancements and
deliver added value with their solutions.                                                                   
| 
| |  | Original Equipment Manufacturer (OEM) Partners embed our products in
their own applications to form specialized analytical solutions for
vertical markets or functional applications.                                                                      
| 
| |  | Distribution Partners market, distribute and support our software
solutions in remote markets where we do not have a wholly-owned corporate
presence.                                                                                                      
| 
| |  | Technology Partners offer tools and technologies that integrate with our
business intelligence platform and help customers build, use, and manage
our analytical and business performance management solutions.                                            
| 
| |  | Alliance Partners cooperatively position and market the benefits of a
comprehensive, integrated, multi-vendor solution to the marketplace based
upon our business performance management products.                                                         

Our partner network enhances and expands our distribution channels and extends
our business performance management solutions by providing a wider range of
choices for our customers.

Leverage the Web for Ease-of-Implementation and Ease-of-Use.Our new packaged
application products are designed to leverage web-based technologies and enable
collaboration throughout the organization. By building scalable, high
performance applications that can be accessed via an intranet or the Internet,
corporations can improve their business processes, gain efficiencies, improve
agility to respond to changing market conditions and improve bottom line
performance. By leveraging the web browser as a user interface, a
corporations information technology department can deploy and maintain
applications quickly and easily with reduced costs. From an end-user
perspective, web-based applications are easy to learn and enhance productivity,
resulting in reduced training costs and faster return on investment.

Maintain Sales and Support Relationships.We license our products to customers
throughout the world through a direct sales force as well as through original
equipment manufacturers, value added resellers (VARs), independent distributors
and sales agents. Together with our partners, we often provide installation and
post-sale consulting support to build long-term customer relationships.

Generate Follow-on Revenues.We generate revenues from existing customers
through licensing for additional users, the cross selling of licenses of new
products, annual maintenance fees and sales of training and consulting
services. Follow-on revenues leverage sales and marketing resources and
strengthen relationships with our customers.

BUSINESS PERFORMANCE MANAGEMENT SOFTWARE SOLUTIONS

We offer customers application software products and technology
software products. Applications include financial and business performance
management products that provide customers the opportunity to strategize,
model, plan and measure performance. Technology products include an open,
scalable, flexible and integrating platform with Hyperion Essbase as its
foundation, and Hyperion tools, incorporating domain-specific business rules,
data storage, integration, interoperability, query, reporting, visualization
and development capabilities. Together with our partners, we offer a suite of
business performance management solutions that are compelling in the industry
and help customers measure performance, anticipate results and drive
profitability.

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Application Products

Our business performance management applications provide comprehensive support
for the strategy setting, business modeling, planning, performance measurement,
reporting and analysis needs of finance and operations staffs in organizations
worldwide. Our business performance management applications complement
existing ERP and transaction systems  integrating data from multiple sources,
providing a common view across the organization and enabling an integrated
financial and performance management process that aligns individual goals with
corporate objectives.

Hyperion Planning is a Web-based budgeting, planning and forecasting
application that supports financial and operational planning to align with
strategic plans and goals. It enables collaborative, event-based operational
planning processes throughout the organization. Using Hyperion Planning,
strategic and senior managers and front line decision-makers can communicate a
desired course of action to facilitate effective collaboration so that the
planning process is optimized and efficient. When a material event occurs that
changes a critical assumption, planners can quickly adapt, ensuring that plans
are relevant and useful. Hyperion Planning is built on the Hyperion Essbase XTD
platform and is most appropriate for companies seeking a solution that delivers
real-time planning, sophisticated modeling, dynamic forecasting and
event-driven reallocation of resources to a large number of users.

Hyperion Financial Management is a comprehensive, Web-based application that
delivers global collection, financial consolidation, reporting and analysis in
a single, highly scalable solution. With Hyperion Financial Management,
companies can unify their financial information (actuals, budgets, forecasts,
statistics) into a single application. They can centrally manage and
collaborate on financial information and processes for their global operations,
via the Internet, intranet, extranet and a standard Web browser. Employees,
branch offices and partners operate with a single, unified view of key
financial data at any moment in time. Hyperion Financial Management is
designed for diverse, multi-entity organizations that have a centralized
approach to managing their financial management and reporting processes and
that are seeking to align their decision-making processes with overall business
goals. It is a financial reporting and analysis system that can manage all
financial information and deploy it enterprise-wide. Hyperion Financial
Management takes advantage of the Hyperion Essbase XTD platform and is most
appropriate for companies seeking a centralized approach to comprehensive
financial management unifying all decision makers across the enterprise and
leading to improved efficiencies, faster business cycle times and greater
company agility.

Hyperion Performance Scorecard, a Balanced Scorecard Collaborative certified
application, is a Web-based business analysis application designed to help
employees throughout an organization gain a clear understanding of
organizational strategy and accountability. Hyperion Performance Scorecard
helps companies set and communicate goals, establish key performance metrics
and accountability and continuously measure performance against company goals
and objectives. With performance scorecarding, organizations can align and
focus the enterprise on business objectives, plans and actions; empower
employees with clearly defined performance measures; and enable continuous
performance improvement and agility at all levels. We believe organizations
that deploy Hyperion Performance Scorecard are better able to bridge the gap
between strategy and execution, engage a broader range of employees in planning
activities and respond more proactively to changing business conditions.
Hyperion Performance Scorecard embeds industry-leading metric libraries,
exposes world class benchmarking services and supports customized and standard
performance measurement frameworks, including the Balanced Scorecard.

Hyperion Business Modeling is a Web-enabled business analysis application that
helps organizations optimize resources and execute efficiently. Hyperion
Business Modeling is an enterprise-class activity based modeling solution that
enables organizations to test operational and financial planning assumptions,
model processes and activities, optimize resources and measure profitability.
By using business models, managers and analysts test operational and financial
plans for the purpose of strategic decision-making. Business modeling also
enables organizations to test scenarios, validate strategies and optimize
resources to improve profitability.

Hyperion Enterprise is designed to simplify the collection, consolidation and
reporting of financial results, reduce the time organizations spend on these
activities and improve financial analysis and planning capabilities. It is
appropriate for global organizations seeking a comprehensive consolidation and
reporting solution with many remote sites and low IT support requirements.
Complementing Hyperion Enterprise, Hyperion Enterprise Reporting is an advanced
financial reporting solution. An intuitive graphical interface helps users
create sophisticated production-quality financial reports for printing or
online access. Embedded process-specific financial intelligence provides
accurate and detailed financial information, while a comprehensive library of
financial functions and calculations allow users to derive new metrics.

Hyperion Pillar is a business analysis application for departmental budgeting
and planning. It is designed to increase the reliability and efficiency of a
hierarchically controlled bottom-up budgeting process. By facilitating
participation of line managers and business activity experts in this process,
Hyperion Pillar can improve an organizations ability to shorten cyclical
budget cycle times and deliver consistent budget revisions and projected
financial statements. Hyperion Pillar enables a

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company to increase usage and decrease the maintenance of the budgeting and
planning process. It is appropriate for organizations seeking a budgeting
solution supporting remote users with limited IT resource requirements.

Technology Products

Hyperion Essbase XTD uses our best-of breed OLAP technology, Hyperion Essbase,
as its foundation. OLAP is an enabling technology that allows data to be explored
well beyond the capabilities of traditional reporting systems. Using
sophisticated statistical and mathematical calculations, intuitive
multidimensional views and a highly scalable architecture, it supports
interactive reporting, analysis, modeling and planning activities. We believe,
based on independent industry analyst product evaluations and market share
estimates, that Hyperion Essbase is the industrys leading OLAP technology.

Hyperion Essbase XTD provides an open and integrating platform that delivers
the foundation technologies  platform services, application framework,
powerful analytics, query and reporting tools  to support business performance
management solutions. Built on a flexible, multi-tiered architecture, Hyperion
Essbase XTD delivers scalability, performance and reliability at a low total
cost of ownership. With Hyperion Essbase XTD as the foundation, businesses can
quickly develop and easily deploy any of our business performance management
solutions out-of-the-box. Alternatively, they can customize and extend these
applications to meet their specific needs with Essbase XTD Application
Framework and Platform Services.

Essbase XTD Platform Services are a set of business intelligence technologies
that integrate data and metadata from multiple sources, perform advanced
analytical processing and deploy business performance applications across the
enterprise. Comprehensive platform services run on multiple operating systems,
leverage multiple relational databases and access data from diverse ERP, CRM
and SCM systems. With Essbase XTD Platform Services, businesses can leverage
their existing investments in technology and quickly extend their analytical
capabilities across the enterprise. Essbase XTD Query and Reporting Services
rounds out the platform services and delivers high performance
enterprise reporting. Dynamically scheduled reports also are delivered in a
variety of formats to meet individual end user needs.

Essbase XTD Application Framework is a rich tool set that enables rapid
creation, delivery and deployment of enterprise-class analytic and reporting
applications for the Web. With Hyperion Application Framework, users can share
and view personalized content and reports from multiple data sources through a
standard Web browser. Out-of-the-box solutions provide a quick path to
interactive analysis and reporting. Easy-to-use development tools allow users
to rapidly extend, or build custom analytic applications.

SERVICES AND SUPPORT

We believe that high levels of customer service and satisfaction are important
to the successful marketing and sale of our products. We offer an extensive
selection of worldwide training, consulting and technical support services to
install, implement and support our products. Consulting and training services
are not included in software license fees, but are provided on a time and
materials basis. Within the area of technical support, enhanced support
offerings are not included in the software license fees. Our services and
support organization consisted of 760 employees as of August 31, 2002. We have
also established a global network of partners who deliver implementation and
training services.

Under the terms of our standard license agreement, customers may, at their
option, pay a maintenance fee annually. This maintenance fee entitles customers
to technical support, including telephone and Web-based support, and to any
updates and enhancements provided for their software.

SALES AND MARKETING

We market and sell our products in North America, Latin America, Europe and
Asia Pacific through our direct sales force and through OEMs, VARs, independent
distributors and sales agents. We support our sales force with lead generation
and marketing programs, which include telemarketing, public relations, direct
mail, advertising, seminars, trade shows, education, ongoing customer
communication programs, third-party alliances and user group conferences.
Worldwide and regional user conferences are held annually. Regional user
meetings and product-specific focus groups are also scheduled periodically.
Sales cycles generally last from three to nine months. We have dedicated sales,
marketing and technical alliance resources designed to optimize our partner
relationships. The direct sales force is compensated for direct sales as well
as sales made through channel partners to ensure appropriate cooperation with
our OEMs and VARs, independent distributors and sales agents. We have licensed
our software to more than 6,000 organizations worldwide, many of which are
multidivision and/or multilocation organizations with diverse information
management requirements. In fiscal 2002, 2001 and 2000, approximately 35%, 32%
and 32%, respectively, of our total revenues were derived from markets outside
of North America. In the past three fiscal years, no single customer accounted
for more than 10% of total revenues.

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Our sales and marketing organization consisted of 718 employees as of August
31, 2002, of which approximately 235 employees were quota-carrying sales
representatives. We have sales offices at our worldwide headquarters in
Sunnyvale, California and in more than 40 other locations throughout North
America, Latin America, Europe and Asia Pacific. Product support and training
are also available in many of these locations.

We have been able to leverage sales and marketing through our partnering
strategy with channel partners that distribute or resell our products in their
respective markets. We have license and distribution agreements with
independent distributors and sales agents in many countries worldwide. The
distributors generally maintain sales and services personnel dedicated to our
products. The distribution agreements generally provide for the right to offer
our products within a territory in return for royalties typically equal to 50%
of license and maintenance fees.

License revenues derived from channel partners in fiscal 2002, 2001 and 2000
were 25%, 21% and 27% of total license revenues, respectively. Our channel
partners include such firms as Deloitte & Touche LLP; Fujitsu Limited; Immix
Inc.; International Business Machines Corporation; i2 Technologies, Inc.; KPMG
Consulting Inc.; Lawson Associates, Inc.; and SPSS Corporation.

RESEARCH AND DEVELOPMENT

Our products have been developed by our internal staff, contract developers and
through strategic acquisitions. Our development efforts are focused on new
products, as well as on maintaining the competitiveness of our current product
line. As of August 31, 2002, our product development was primarily performed
by 418 employees located at our facilities in Sunnyvale, California; Stamford,
Connecticut; Orlando, Florida; Atlanta, Georgia and Toronto, Canada.

COMPETITION

The markets in which we compete are intensely competitive, highly fragmented
and characterized by rapidly changing technology and evolving standards.
Current and potential competitors offer a variety of reporting, analysis,
modeling and planning software solutions and generally fall within four
categories: (1) vendors of packaged business analysis applications; (2) vendors
of enterprise software applications that support transaction processes and
front/back office automation; (3) vendors of OLAP server software that may also
be marketed as part of a platform offering; and (4) vendors of front-end
information access tools. While competition is intense, we believe that no
other competitor currently has the singular focus and breadth of products and
services required to deliver enterprise-wide business performance management
solutions. As markets continue to develop for business performance management
products, additional competitors may enter or expand into those markets and
competition may intensify.

Competitors, some of whom have significantly greater financial, technical,
marketing and other resources than we do, may be able to respond more quickly
to new or emerging technologies and changes in customer requirements or devote
greater resources to the development, promotion and sale of their products than
us. Also, certain current and potential competitors may have greater name
recognition or more extensive customer bases that could be leveraged, thereby
gaining market share to our detriment. We expect additional competition as
other established and emerging companies enter into the enterprise software
market and new products and technologies are introduced. In addition, as we
develop and enhance our software and complementary products, the resulting new
functionality may duplicate the functionality of, and thus compete with, other
products offered by our channel partners. Increased competition could result in
price reductions, fewer customer orders, reduced gross margins and loss of
market share, any of which would materially adversely affect our business,
operating results and financial condition.

Current and potential competitors may make strategic acquisitions or establish
cooperative relationships among themselves or with third-parties, thereby
increasing their ability to address the needs of our existing and prospective
customers. Further competitive pressures, such as those resulting from
competitors discounting of their products, may require us to reduce the price
of our software products, which would materially adversely affect our business,
operating results and financial condition. There can be no assurance that we
will be able to compete successfully against current and future competitors,
and the failure to do so would have a material adverse effect on our business,
operating results and financial condition. See Item 7. Factors That May Affect
Future Results.

PROPRIETARY RIGHTS AND LICENSES

We rely primarily on a combination of patent, copyright and trademark laws,
trade secrets, confidentiality procedures and contractual provisions to protect
our proprietary rights. Despite our efforts, unauthorized parties may attempt
to copy aspects of

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our products or to obtain and use information that we regard as proprietary.
Policing unauthorized use of our products is difficult and, while we are unable
to determine the extent to which piracy of our software products exists,
software piracy is expected to be a persistent problem. In addition, the laws
of some foreign countries do not protect our proprietary rights as fully as do
the laws of the United States. There can be no assurance that our means of
protecting our proprietary rights in the United States or abroad will be
adequate or that competitors will not independently develop similar technology.
We have entered into source code escrow agreements with a number of our
customers and channel partners requiring release of source code under certain
conditions. Generally, such agreements provide that such parties will have a
limited, nonexclusive right to use such code in the event that there is an
undismissed bankruptcy proceeding by or against us, if we cease to do business
or if we materially fail to meet our contractual obligations. The release of
source code may increase the likelihood of misappropriation by third-parties.

We currently have a small number of patents relating to our products, including
seven United States patents and a number of patent applications pending in the
United States and abroad. There can be no assurance that our patents will not
be invalidated, circumvented or challenged, that the rights granted thereunder
will provide competitive advantages to us or that any of our pending or future
patent applications, whether or not being currently challenged by applicable
governmental patent examiners, will be issued with the scope of the claims
sought by us, if at all. Furthermore, there can be no assurance that other
companies will not develop technologies that are similar or superior to our
technology or design around the patents owned by us. In 1998, the U.S. Patent
and Trademark Office granted two requests for reexamination of our U.S. Patent
No. 5,359,724. The reexamination proceedings are currently pending. An adverse
outcome of the reexamination proceedings could involve loss of some or all of
the claims of the patent. On August 29, 2002 we settled a patent infringement
claim brought by Timeline, Inc. See Item 3. Legal Proceedings for further
discussion of both of these matters.

We expect that software product developers will increasingly be subject to
infringement claims as the number of products and competitors in our industry
segment grows and the functionality of products in different industry segments
overlaps. Any such claims, with or without merit, could be time consuming to
defend, result in costly litigation, divert managements attention and
resources, cause product shipment delays or require us to enter into royalty or
licensing agreements. Such royalty or licensing agreements, if required, may
not be available on terms acceptable to us, if at all. In the event of a
successful claim of product infringement against us and our failure or
inability to license the infringed or similar technology, our business,
operating results and financial condition would be materially adversely
affected.

We rely upon certain software that we license from third-parties, including
software that is integrated with our internally developed software and used in
our products to perform key functions. There can be no assurance that these
third-party software licenses will continue to be available to us on
commercially reasonable terms. The loss of, or inability to maintain, any such
software licenses could result in shipment delays or reductions until
equivalent software could be developed, identified, licensed and integrated,
which would materially adversely affect our business, operating results and
financial condition.

We distribute our products under software license agreements that grant
customers a nonexclusive, nontransferable license to our products and contain
terms and conditions prohibiting the unauthorized reproduction or transfer of
our products. Generally, we do not provide end users with the source code for
our products except under the escrow arrangements described above.

EMPLOYEES

As of August 31, 2002, we employed a total of 2,252 employees. None of our
employees is represented by a labor union. We believe our relations with
employees are good.

Our executive officers as of August 31, 2002 are as follows:

|                    |  |     |    |          |  |                                              
|------------------- |  | --- | -- | -------- |  | ---------------------------------------------
|Name                |  | Age |    | Position
|                    |  |     |    |         
|Jeffrey R. Rodek    |  |     | 49 |          |  | Chairman and Chief Executive Officer         
|Godfrey R. Sullivan |  |     | 49 |          |  | President and Chief Operating Officer        
|David W. Odell      |  |     | 39 |          |  | Chief Financial Officer                      
|W. Russell Wayman   |  |     | 58 |          |  | Vice President, General Counsel and Secretary
|Nazhin Zarghamee    |  |     | 35 |          |  | Chief Marketing Officer                      

Jeffrey R. Rodek has served as Chairman and Chief Executive Officer of Hyperion
since October 1999. He has been a member of Hyperions Board of Directors since
January 1998. Prior to joining Hyperion, Mr. Rodek served as President and
Worldwide Chief Operating Officer of Ingram Micro, a distributor of electronic
products, from January 1995 to October 1999.

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Godfrey R. Sullivan joined Hyperion as President and Chief Operating Officer in
October 2001. Prior to joining Hyperion, Mr. Sullivan served as Chief
Executive Officer of Promptu Corporation, an enterprise marketing automation
software company, from October 2000 to August 2001. Previously, he spent eight
years at AutoDesk, Inc., a design software and digital media company, in
various senior management positions.

David W. Odell joined Hyperion as Chief Financial Officer and Corporate Vice
President in August 2000. He joined Hyperion from KPMG LLP, a public accounting
firm. He was with KPMG for over fifteen years, most recently as a partner in
the firms Sydney, Australia office.

W. Russell Wayman joined Hyperion as Corporate Vice President, General Counsel
and Secretary in January 2001. Prior to that he was Vice President and General
Counsel of Etec Systems, Inc, a semiconductor manufacturing equipment company,
from 1998 to 2000, and Vice President and General Counsel of Storage Technology
Corporation, a manufacturer of computer disk and tape storage devices, from
1990 to 1998.

Nazhin Zarghamee joined Hyperion as Chief Marketing Officer in February 2002.
Before joining Hyperion, Ms. Zarghamee served as Vice President of Worldwide
Marketing at Documentum, an enterprise content management company, from October
1999 to October 2001. From April 1999 to October 1999, Ms. Zarghamee served as
Vice President of Marketing for The Business Network. From August 1994 to
April 1999, Ms. Zarghamee was employed by Oracle Corporation, most recently as
Senior Director of Worldwide Marketing.




ITEM 2.   PROPERTIES

Our principal administrative, sales, marketing, services, training and research
and development facilities are located in Sunnyvale and San Francisco,
California; Stamford, Connecticut; Dallas, Texas; Atlanta and Kennesaw,
Georgia; Lisle, Illinois; Orlando, Florida; Toronto, Canada; Waltham,
Massachusetts; Paris, France; and Singapore. We occupy approximately 100,000
square feet at our worldwide headquarters in Sunnyvale, California, pursuant to
a lease that expires in December 2006. We also own and occupy approximately
230,000 square feet in Stamford, Connecticut. In addition, we lease office
space throughout the world for our local sales and services needs. We believe
that our existing facilities are adequate for our current needs. If additional
space is needed in the future, we believe that suitable space will be available
on commercially reasonable terms.




ITEM 3.   LEGAL PROCEEDINGS

On June 27, 2001, Timeline, Inc. filed a complaint against us in the United
States District Court for the Western District of Washington alleging that we
infringe U.S. Patent Nos. 5,802,511; 6,023,694; and 6,026,392 (the Timeline
patents) and seeking a permanent injunction and monetary damages, including
treble damages. On August 29, 2002, we settled the lawsuit with
Timeline, and
each company agreed to dismiss its claims with prejudice. Under the settlement
agreement, we obtained a fully paid-up license to the Timeline patents and
agreed to pay Timeline a settlement totaling $1.05 million, payable over four
months. This settlement has been recorded in fiscal 2002, and the
resulting liability is included in accounts payable and accrued
expenses on our consolidated balance sheet.

On July 11, 1997, Gentia Software filed a request for reexamination of our U.S.
Patent No. 5,359,724 with the United States Patent and Trademark Office (the
PTO) arguing that the 724 patent was anticipated and obvious in light of
certain prior art references. On September 11, 1997, the PTO granted the
request for reexamination. On February 27, 1998, Gentia Software filed with the
PTO a request for a second reexamination of the 724 patent based on additional
prior art references. On May 22, 1998, the PTO granted that request for
reexamination, which was later consolidated with the first reexamination. On
March 31, 1999, the PTO issued a non-final office action rejecting the claims
of the 724 patent. We filed our response to the office action on May 31, 1999.
No final office action has been issued by the PTO. We believe that the outcome
of such action will not have a material adverse effect on our financial
position, results of operations or cash flows.

From time to time, in the normal course of business, various claims are made
against us. At this time, in the opinion of management, there are no pending
claims the outcome of which is expected to result in a material adverse effect
on our financial position, results of operations or cash flows.




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

During the fourth quarter of the fiscal year covered by this report, no matter
was submitted to a vote of security holders through the solicitation of proxies
or otherwise.

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PART II




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

Our common stock trades on the Nasdaq National Market under the symbol HYSL.
The following table sets forth, for the periods indicated, the high and low
sales prices of our common stock as reported on the Nasdaq National Market.

|            |                |      |   |        |  |  |   |        | 
|----------- | -------------- | ---- | - | ------ |  |  | - | ------ | 
|Fiscal 2002 |                | High |   | Low   
|            |                |      |   |       
|            | First quarter  |      | $ | 16.980 |  |  | $ | 12.400 | 
|            | Second quarter |      | $ | 21.580 |  |  | $ | 12.510 | 
|            | Third quarter  |      | $ | 27.600 |  |  | $ | 19.000 | 
|            | Fourth quarter |      | $ | 27.065 |  |  | $ | 14.010 | 

|            |                |      |   |        |  |  |   |        | 
|----------- | -------------- | ---- | - | ------ |  |  | - | ------ | 
|Fiscal 2001 |                | High |   | Low   
|            |                |      |   |       
|            | First quarter  |      | $ | 34.938 |  |  | $ | 22.000 | 
|            | Second quarter |      | $ | 26.625 |  |  | $ | 10.875 | 
|            | Third quarter  |      | $ | 24.250 |  |  | $ | 14.250 | 
|            | Fourth quarter |      | $ | 17.500 |  |  | $ | 12.688 | 

As of August 31, 2002, we had 174 stockholders of record and approximately
10,000 beneficial holders of our common stock.

We have never declared or paid any cash dividends on our capital stock. We
currently intend to retain all earnings to finance future growth and,
therefore, we do not anticipate paying any cash dividends in the foreseeable
future.

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ITEM 6.   SELECTED FINANCIAL DATA

|                                                  |                                         |   |                                          |        |      |   |         |        |      |   |         |        |  |   |         |        |  |   |         |        | 
|------------------------------------------------- | --------------------------------------- | - | ---------------------------------------- | ------ | ---- | - | ------- | ------ | ---- | - | ------- | ------ |  | - | ------- | ------ |  | - | ------- | ------ | 
|                                                  |                                         |   | Year Ended June 30,                     
|                                                  |                                         |   |                                         
|                                                  |                                         |   | 2002                                     |        | 2001 |   | 2000    |        | 1999 |   | 1998   
|                                                  |                                         |   |                                          |        |      |   |         |        |      |   |        
|                                                  |                                         |   | (In thousands, except per share amounts)
|                                                 
|                                                 
|                                                 
|                                                 
|Statement of Income Data:                         |                                         |   |                                          |        |      |   |         |        |      |   |         |        |  |   |         |        |  |   |         |       
|Revenues                                          |                                         | $ | 492,018                                  |        |      | $ | 528,011 |        |      | $ | 499,332 |        |  | $ | 431,722 |        |  | $ | 382,968 |       
|Costs and expenses (1)                            |                                         |   | 471,944                                  |        |      |   | 582,891 |        |      |   | 460,935 |        |  |   | 416,600 |        |  |   | 330,677 |       
|Operating income (loss)                           |                                         |   | 20,074                                   |        |      |   | (54,880 | )      |      |   | 38,397  |        |  |   | 15,122  |        |  |   | 52,291  |       
|Income (loss) before extraordinary item           |                                         |   | 14,379                                   |        |      |   | (32,537 | )      |      |   | 28,819  |        |  |   | 7,973   |        |  |   | 34,757  |       
|Net income (loss)                                 |                                         |   | 14,981                                   |        |      |   | (31,073 | )      |      |   | 28,819  |        |  |   | 7,973   |        |  |   | 34,757  |       
|Basic EPS:                                        |                                         |   |                                          |        |      |   |         |        |      |   |         |        |  |   |         |        |  |   |         |       
|                                                  | Income (loss) before extraordinary item |   | $                                        | 0.44   |      |   | $       | (0.99  | )    |   | $       | 0.91   |  |   | $       | 0.26   |  |   | $       | 1.19   | 
|                                                  | Net income (loss)                       |   | $                                        | 0.46   |      |   | $       | (0.95  | )    |   | $       | 0.91   |  |   | $       | 0.26   |  |   | $       | 1.19   | 
|Diluted EPS:                                      |                                         |   |                                          |        |      |   |         |        |      |   |         |        |  |   |         |        |  |   |         |       
|                                                  | Income (loss) before extraordinary item |   | $                                        | 0.43   |      |   | $       | (0.99  | )    |   | $       | 0.87   |  |   | $       | 0.26   |  |   | $       | 1.13   | 
|                                                  | Net income (loss)                       |   | $                                        | 0.45   |      |   | $       | (0.95  | )    |   | $       | 0.87   |  |   | $       | 0.26   |  |   | $       | 1.13   | 
|Weighted average shares outstanding:              |                                         |   |                                          |        |      |   |         |        |      |   |         |        |  |   |         |        |  |   |         |       
|                                                  | Basic                                   |   |                                          | 32,836 |      |   |         | 32,592 |      |   |         | 31,665 |  |   |         | 30,196 |  |   |         | 29,121 | 
|                                                  | Diluted                                 |   |                                          | 33,491 |      |   |         | 32,592 |      |   |         | 33,107 |  |   |         | 30,855 |  |   |         | 30,770 | 
|                                                 
|Balance Sheet Data:                               |                                         |   |                                          |        |      |   |         |        |      |   |         |        |  |   |         |        |  |   |         |       
|Cash, cash equivalents and short-term investments |                                         | $ | 330,258                                  |        |      | $ | 255,366 |        |      | $ | 295,159 |        |  | $ | 271,856 |        |  | $ | 257,347 |       
|Working capital                                   |                                         |   | 281,501                                  |        |      |   | 254,141 |        |      |   | 297,745 |        |  |   | 230,910 |        |  |   | 218,033 |       
|Total assets                                      |                                         |   | 583,890                                  |        |      |   | 570,393 |        |      |   | 589,891 |        |  |   | 512,894 |        |  |   | 476,665 |       
|Deferred revenue                                  |                                         |   | 94,910                                   |        |      |   | 100,234 |        |      |   | 88,828  |        |  |   | 81,089  |        |  |   | 63,724  |       
|Long-term debt                                    |                                         |   | 80,802                                   |        |      |   | 91,045  |        |      |   | 102,518 |        |  |   | 103,752 |        |  |   | 107,314 |       
|Stockholders equity                              |                                         |   | 299,657                                  |        |      |   | 267,319 |        |      |   | 309,861 |        |  |   | 240,776 |        |  |   | 213,225 |       



---

|(1) |  | Costs and expenses for the years ended June 30, 2002, 2001 and 2000
include restructuring and non-recurring charges of $0.1 million, $42.8
million and $2.1 million, respectively (see Note 14 of the Notes to
Consolidated Financial Statements for discussion of these restructuring
and non-recurring charges).
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(2) |  | Certain prior year balances have been reclassified to conform to the
current year presentation.                                                                                                                                                                                                                   

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

OVERVIEW

Hyperion delivers business performance
management software solutions that enable companies to continually measure
performance, anticipate results and drive profitability across key business
activities. Our customers use our products to help them collaborate
enterprise-wide, focus resources, improve operational efficiencies and leverage
opportunities for growth.

Our business performance management solutions provide comprehensive support for
the entire process of goal setting, business modeling, planning, budgeting,
performance monitoring, analyzing and reporting throughout organizations. Our
products complement existing enterprise resource planning, customer
relationship management, supply chain management and transaction systems by
integrating data from multiple sources, providing a common view across the
enterprise and enabling an integrated business performance management process
that aligns individual goals with corporate objectives.

We provide applications along with a development and deployment platform to
enable enterprise-class business performance management across a wide variety
of functional and business activity areas. We use our best-of-breed online
analytical processing technology, Hyperion Essbase, as the foundation for our
platform, Hyperion Essbase XTD. Components within Hyperion Essbase XTD can be
used individually to create tailored applications or in conjunction with our
packaged applications to support the entire business performance management
process. With our platform and our packaged business performance management
applications, we provide customers some of the deepest and broadest product
offerings in the market. In addition, we offer support and
services from offices in 20 countries and work with over 330 partners to
provide solutions to more than 6,000 customer organizations worldwide. Hyperion was formed in August 1998 when Arbor Software, founded in 1991,
acquired Hyperion Software, founded in 1981.

CRITICAL ACCOUNTING POLICIES

The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates,
and such differences could affect the results of operations reported in future
periods. We believe the following critical accounting policies affect our more
significant judgments and estimates used in the preparation of our consolidated
financial statements.

Revenue Recognition

We derive revenues from the licensing of our software products and providing
maintenance and professional services. Our standard software license agreement
is a perpetual license to use our products on an end user, concurrent user or
central processing unit basis. We record revenue from licensing of software
products to end users provided there is persuasive evidence of an arrangement,
the fee is fixed and determinable, collection is reasonably assured and
delivery of the product has occurred as prescribed by Statement of Position
(SOP) No. 97-2, Software Revenue Recognition, issued by the American
Institute of Certified Public Accountants. For arrangements with multiple
elements, and for which vendor specific objective evidence (VSOE) of fair
value exists for the undelivered elements, we recognize revenue for the
delivered elements based upon the residual method in accordance with SOP 98-9,
Modifications of SOP 97-2 with Respect to Certain Transactions. VSOE of fair
value for all elements of an arrangement is based upon the normal pricing and
discounting practices for those products and services when sold separately.
VSOE of fair value for services is based upon the standard hourly rate we
charge for such services when sold separately. VSOE of fair value for
maintenance is measured by the stated renewal rates included in the contracts.
If we cannot objectively determine the fair value of any undelivered element
included in a multiple-element arrangement, we defer revenue until all elements
are delivered, services have been performed or until fair value can be
objectively determined. License revenue from resellers or distributors is
recognized upon sell-through to the end customer. Amounts billed or payments
received in advance of revenue recognition are recorded as deferred revenue.

Maintenance agreements are generally a 12 month prepaid contract that is
recognized ratably over the period. Customers may also enter into a
professional services arrangement that is typically on a time and materials
basis and includes consulting and training services. Consulting and training
revenues are typically recognized as earned.

Consulting revenues are generated primarily from implementation services
related to the installation of our products. These arrangements are generally
accounted for separately from the license revenue because the arrangements
qualify as service transactions as defined in SOP 97-2. Our services are
generally not essential to the functionality of the software. Our

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products are fully functional upon delivery of the product and implementation
does not require any significant modification or alteration. Our services
often include assistance with product adoption. Other significant factors
considered in determining whether the revenue should be accounted for
separately include degree of risk, availability of services from other vendors,
timing of payments and impact of milestones or acceptance criteria on the
realizability of the software license fee. Customers generally purchase these
services to facilitate the adoption of our products and obtain dedicated
personnel to participate in the services being performed, but they may also
decide to use their own internal resources or appoint other professional
service organizations to provide these services. Payments related to the
software product to which the services relate are typically billed
independently from the services and, therefore, are not coincident with
performance of such services. License agreements generally do not include
acceptance provisions. If an arrangement does not qualify for separate
accounting of the license and service elements, license revenue is generally
recognized together with the consulting services using the
percentage-of-completion method of contract accounting in accordance with SOP
No. 81-1, Accounting for Performance of Construction-Type and Certain
Product-Type Contracts and Accounting Research Bulletin No. 45, Long-Term
Construction-Type Contracts.

Allowance for Doubtful Accounts

We make judgments as to our ability to collect outstanding receivables and
provide allowances for a portion of receivables when collection becomes
doubtful. Provisions are made based upon a specific review of all significant
outstanding invoices. For those invoices not specifically reviewed, provisions
are made at differing rates, based upon the age of the receivable. In
determining these percentages, we analyze our historical collection experience,
customer concentrations, customer credit-worthiness and current economic
trends. If the historical data we use to calculate the allowance provided for
doubtful accounts does not reflect the future ability to collect outstanding
receivables, additional provisions for doubtful accounts may be needed and
future results of operations could be adversely affected.

Income Taxes

Income taxes are accounted for using an asset and liability approach, which
requires the recognition of taxes payable or refundable for the current year
and deferred tax assets and liabilities for the future tax consequences of
events that have been recognized in our financial statements or tax returns.
The measurement of current and deferred tax assets and liabilities are based on
provisions of the enacted tax law. The effects of future changes in tax laws
or rates are not anticipated.

During the preparation of our consolidated financial statements, we are
required to estimate our income taxes in each of the jurisdictions in which we
operate. This process involves us estimating our actual current tax exposure
together with assessing temporary differences resulting from differing
treatment of items, such as deferred revenue, for tax and accounting purposes.
These differences result in deferred tax assets and liabilities, which are
included within our consolidated balance sheet. We then assess the likelihood
that our deferred tax assets will be recovered from future taxable income, and,
to the extent we believe that recovery is not likely, we establish a valuation
allowance. To the extent we establish a valuation allowance or increase this
allowance in a period, we record an expense within the tax provision in our
statements of income.

Significant management judgment is required in determining our provision for
income taxes, our deferred tax assets and liabilities and any valuation
allowance recorded against our net deferred tax assets. We have recorded a
valuation allowance due to uncertainties related to our ability to utilize some
of our deferred tax assets, primarily relating to net operating losses carried
forward, before they expire. The valuation allowance is based on our estimates
of taxable income by jurisdiction in which we operate and the period over which
our deferred tax assets will be recoverable. In the event that actual results
differ from these estimates, or we adjust these estimates in future periods, we
may need to establish an additional valuation allowance, which could materially
impact our financial position and results of operations.

Valuation of Long-Lived and Intangible Assets

We evaluate the recoverability of our property and equipment and intangible
assets in accordance with Statement of Financial Accounting Standards (SFAS)
No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed of. SFAS No. 121 requires us to review for impairment
of long-lived assets whenever events or changes in circumstances indicate that
the carrying amount of an asset may not be recoverable. Factors we consider
important which could trigger an impairment review include:



| |  | significant underperformance relative to expected historical or projected future operating results;
|- |  | ---------------------------------------------------------------------------------------------------
| |  | significant changes in the manner of use of the assets or the strategy for our overall business;   
| |  | significant negative industry or economic trends;                                                  
| |  | significant decline in our stock price for a sustained period; and                                 
| |  | our market capitalization relative to net book value.                                              

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When we determine that the carrying amount of long-lived or intangible assets
may not be recoverable based upon the existence of one or more of the above
indicators, we assess the assets for impairment based on the estimated future
undiscounted cash flows expected to result from the use of the asset and its
eventual disposition. If the carrying amount of an asset exceeds its estimated
future undiscounted cash flows, an impairment loss is recorded for the excess
of the assets carrying amount over its fair value. Fair value is generally
determined based on the estimated future discounted cash flows over the
remaining useful life of the of the asset using a discount rate determined by
our management to be commensurate with the risk inherent in our current
business model. The assumptions supporting the cash flows, including the
discount rates, are determined using our best estimates as of the date of the
impairment review. If these estimates or their related assumptions change in
the future, we may be required to record additional impairment charges for
these assets and future results of operations could be adversely affected.

RESULTS OF OPERATIONS

REVENUES

|                            |                         |      |                             |         |  |      |            |         |   |      |         |         |            |  |     |    |   |   |            |         |  |  |     |    |  
|--------------------------- | ----------------------- | ---- | --------------------------- | ------- |  | ---- | ---------- | ------- | - | ---- | ------- | ------- | ---------- |  | --- | -- | - | - | ---------- | ------- |  |  | --- | -- | -
|                            |                         |      | Year Ended June
        30,
|                            |                         |      |                            
|                            |                         |      |                             |         |  |      | Percent of |         |   |      |         |         | Percent of |  |     |    |   |   | Percent of
|(In thousands)              |                         | 2002 |                             | revenue |  | 2001 |            | revenue |   | 2000 |         | revenue
|                            |                         |      |                             |         |  |      |            |         |   |      |         |        
|Software
          licenses |                         | $    | 196,066                     |         |  |      | 40         | %       |   | $    | 227,994 |         |            |  | 43  | %  |   | $ | 240,326    |         |  |  | 48  | % 
|Maintenance and services    |                         |      |                             |         |  |      |            |         |   |      |         |         |            |  |     |    |   |   |            |         |  |  |     |   
|                            | Maintenance             |      |                             | 186,052 |  |      |            | 38      | % |      |         | 170,840 |            |  |     | 32 | % |   |            | 154,452 |  |  |     | 31 | %
|                            | Consulting and training |      |                             | 109,900 |  |      |            | 22      | % |      |         | 129,177 |            |  |     | 25 | % |   |            | 104,554 |  |  |     | 21 | %
|                            |                         |      |                             |         |  |      |            |         |   |      |         |         |            |  |     |    |   |   |            |         |  |  |     |   
|                            |                         |      | 295,952                     |         |  |      | 60         | %       |   |      | 300,017 |         |            |  | 57  | %  |   |   | 259,006    |         |  |  | 52  | % 
|                            |                         |      |                             |         |  |      |            |         |   |      |         |         |            |  |     |    |   |   |            |         |  |  |     |   
|Total
          revenues    |                         | $    | 492,018                     |         |  |      | 100        | %       |   | $    | 528,011 |         |            |  | 100 | %  |   | $ | 499,332    |         |  |  | 100 | % 
|                            |                         |      |                             |         |  |      |            |         |   |      |         |         |            |  |     |    |   |   |            |         |  |  |     |   

Total revenues decreased 7% in fiscal 2002, compared to an increase of 6% in
fiscal 2001. The decrease in fiscal 2002 was attributable to lower license,
consulting and training revenues as a result of continued cutbacks in
technology spending amid a generally weak worldwide economy, a drop in revenues
from older-generation products that was more rapid than the increase in
newer-generation product revenues, and our increased emphasis on the use of our
channel partners to provide consulting services to our customers. The increase
in fiscal 2001 was due to an increase in maintenance and services revenue,
which was primarily attributable to a larger installed base of customers
receiving ongoing maintenance and support services and an increase in
technology product related services. The change in foreign exchange rates from
fiscal 2001 to fiscal 2002 did not have a material impact on fiscal 2002
results. The change in foreign exchange rates from fiscal 2000 to fiscal 2001
negatively impacted fiscal 2001 results by approximately $14.4 million, or 3%
of total revenue, due primarily to the decline in the Euro, British Pound
Sterling and the Japanese Yen against the U.S. dollar.

Total revenues generated from markets outside North America, including export
sales, for fiscal 2002, 2001 and 2000 were $174.0 million, $170.6 million and
$161.2 million, or 35%, 32% and 32% of total revenues, respectively.

Software licenses.Software license revenues decreased 14% in fiscal 2002,
compared to a decrease of 5% in fiscal 2001. While our average transaction
size increased 6% to approximately $117,000 for fiscal 2002 from approximately
$110,000 for fiscal 2001, we had a reduction in the total number of
transactions, thus resulting in lower license revenue. This decline was
primarily attributable to continuing weak economic conditions both domestically
and internationally, which has caused delays in our customers capital
spending, and a drop in revenues from older-generation products that was more
rapid than the increase in newer-generation product revenues. The decline in
software license revenues in fiscal 2001 was due to a longer sales cycle caused
by the economic weakness in North American sales. Channel revenues also
declined as a percentage of total software revenues in fiscal 2001 compared to
fiscal 2000 and application product revenue declined as a percentage of total
software revenue as our new products were still in the early stages of their
product life cycles.

The split between application and technology product license revenues was
47%-53% in fiscal 2002, 45%-55% in fiscal 2001 and 49%-51% in fiscal 2000.
Application license revenue is generated from our packaged financial and
business performance management applications, and technology product license
revenue is generated from Hyperion Essbase and related tools. Increasingly, we
are winning deals by leading with our application products, which helps drive additional technology business as part of an integrated business
performance management suite of products. Our two new
financial

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application products, Hyperion Planning and
Hyperion Financial Management, largely accounted for the increase in application license revenue as a
percentage of total license revenue in fiscal 2002. In fiscal 2001, we signed
more large deals with technology products included whereas in fiscal 2000 we
sold a significant number of pure application product deals, which resulted in
a decrease in application license revenue as a percentage of total license
revenue in fiscal 2001. In addition, Hyperion Planning and Hyperion Financial
Management were still in the early stages of their product life cycles in
fiscal 2001 and the first half of fiscal 2002. (See the heading
Product Enhancement and New Product Introductions Involve
Inherent Risk in the section entitled Factors that May
Affect Future Results.)

We market our products through our direct sales force and channel partners.
Historically, we have generated the majority of our revenue from the direct
sales force. We continue to focus on complementing our direct sales force with
channel partners, which consists of OEMs, VARs, independent distributors and
sales agents. Revenue from all channel partners comprised 25%, 21% and 27% of
license revenue in fiscal 2002, 2001 and 2000, respectively. The increase in
the percentage of total license revenue derived through our channel partners in
fiscal 2002 was primarily due to a greater emphasis on effectively leveraging
our channel partners. This increase continues to bring us closer to our target
for direct sales force and channel partner revenue split of 67%  33%. No
single partner represented more than 10% of total revenue during fiscal 2002,
2001 or 2000.

Maintenance and services.Maintenance and services revenue decreased 1% in
fiscal 2002, compared to an increase of 16% in fiscal 2001. The decrease in
absolute dollars in fiscal 2002 was primarily due to a 15% decrease in
consulting and training revenues. Consulting revenues decreased as a result of
our increased use of our channel partners to provide consulting services and
general economic weakness. Partially offsetting the decrease in consulting
revenue was a 9% increase in maintenance revenue, which was due to
year-over-year growth of our installed customer base.

Maintenance and services revenue increased 16% in fiscal 2001 due primarily to
the 24% increase in services revenue related to the increase in technology
product related services. Maintenance revenues increased 11% in fiscal 2001
due to a larger installed base of customers receiving ongoing maintenance and
support services.

COST OF REVENUES

|                         |  |                     |         |        |  |       |    |        |  |      |         |        |  |  |    |   |  |       |         |  |  |  |    |  
|------------------------ |  | ------------------- | ------- | ------ |  | ----- | -- | ------ |  | ---- | ------- | ------ |  |  | -- | - |  | ----- | ------- |  |  |  | -- | -
|                         |  | Year Ended June 30,
|                         |  |                    
|                         |  |                     |         |        |  | Gross |    |        |  |      |         | Gross  |  |  |    |   |  | Gross
|(In thousands)           |  | 2002                |         | margin |  | 2001  |    | margin |  | 2000 |         | margin
|                         |  |                     |         |        |  |       |    |        |  |      |         |       
|Software licenses        |  | $                   | 15,430  |        |  |       | 92 | %      |  | $    | 16,334  |        |  |  | 93 | % |  | $     | 8,782   |  |  |  | 96 | %
|Maintenance and services |  |                     | 137,047 |        |  |       | 54 | %      |  |      | 161,016 |        |  |  | 46 | % |  |       | 146,348 |  |  |  | 44 | %

Cost of software license revenues.Cost of software license revenues consists
primarily of royalty expenses, cost of product packaging and documentation
materials, amortization of capitalized software development costs and
amortization of acquired technologies. The 6% decrease in the cost of software
license revenues in fiscal 2002 compared to fiscal 2001 was primarily
attributable to the 14% decrease in software license revenue and the related
decrease in royalty payments to third-parties. The 86% increase in the cost of
software license revenues in fiscal 2001 compared to fiscal 2000 principally
reflects increased royalty payments to third-parties for software supplied by
them and distributed by us. The total cost of software license revenues as a
percentage of license revenues was 8%, 7% and 4% for fiscal 2002, 2001 and
2000, respectively.

In fiscal 2002, 2001 and 2000, we capitalized $0.6 million, $2.2 million and
$2.6 million of software product development costs, respectively, in accordance
with SFAS No. 86, Accounting for the Costs of Computer Software to be Sold,
Leased, or Otherwise Marketed. The amounts capitalized relate to development
and localization of our software products. Capitalized software product
development costs are amortized over the estimated economic life of the
products, but generally for no more than three years. The amortization of
capitalized product development costs begins upon the general release of the
software to customers.

Cost of maintenance and services revenues.The cost of providing maintenance
and services consists largely of compensation and benefits for consulting,
education and support personnel. The 15% decrease in cost of maintenance and
services revenue in fiscal 2002 compared to fiscal 2001 was primarily due to
controls over headcount and employee related expenses, mainly as a result of
our restructuring in the fourth quarter of fiscal 2001. The decrease was also
due in part to a reduction in variable pay as a result of lower consulting
revenues. The continued gross margin improvement on maintenance and services
revenue is a direct reflection of our focus on margin improvement and the
results of rebalancing our cost structure.

The 10% increase in the cost of maintenance and service revenues in fiscal 2001
compared to fiscal 2000 was due primarily to additional staffing expenses for
both installation and ongoing support services. These staffing expenses grew
with an increase in headcount and utilization of independent contractors to
assist with the implementation of our technology products.

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OPERATING EXPENSES

|                           |  |                     |         |         |  |            |    |         |  |      |         |            |  |  |    |   |  |            |         |  |  |  |    |  
|-------------------------- |  | ------------------- | ------- | ------- |  | ---------- | -- | ------- |  | ---- | ------- | ---------- |  |  | -- | - |  | ---------- | ------- |  |  |  | -- | -
|                           |  | Year Ended June 30,
|                           |  |                    
|                           |  |                     |         |         |  | Percent of |    |         |  |      |         | Percent of |  |  |    |   |  | Percent of
|(In thousands)             |  | 2002                |         | revenue |  | 2001       |    | revenue |  | 2000 |         | revenue   
|                           |  |                     |         |         |  |            |    |         |  |      |         |           
|Sales and marketing        |  | $                   | 182,311 |         |  |            | 37 | %       |  | $    | 208,336 |            |  |  | 39 | % |  | $          | 189,467 |  |  |  | 38 | %
|Research and development   |  |                     | 72,206  |         |  |            | 15 | %       |  |      | 81,597  |            |  |  | 15 | % |  |            | 70,154  |  |  |  | 14 | %
|General and administrative |  |                     | 64,843  |         |  |            | 13 | %       |  |      | 72,823  |            |  |  | 14 | % |  |            | 44,423  |  |  |  | 9  | %
|                           |  |                     |         |         |  |            |    |         |  |      |         |            |  |  |    |   |  |            |         |  |  |  |    |  
|Total operating expenses   |  | $                   | 319,360 |         |  |            |    |         |  | $    | 362,756 |            |  |  |    |   |  | $          | 304,044 |  |  |  |    |  
|                           |  |                     |         |         |  |            |    |         |  |      |         |            |  |  |    |   |  |            |         |  |  |  |    |  

In the fourth quarter of fiscal 2001, we announced a corporate restructuring
plan designed to bring costs more in line with revenues and strengthen the
financial performance of the business. The restructuring plan included a
company-wide initiative to align personnel with our new strategy, which
resulted in a reduction of our workforce by approximately 300, or 12% of the
worldwide headcount. Employee groups impacted by the restructuring include
personnel involved in corporate services, product business units, sales and
customer support. In addition, we consolidated some of our facilities and
exited other facilities. We also focused on reducing all other discretionary
expenditures with emphasis on travel costs and external consulting costs across
all functional areas. As a result of this restructuring plan and our strong
focus on controlling costs in fiscal 2002, total operating expenses are down
12% from fiscal 2001.

Sales and marketing.Sales and marketing expense decreased 12% in fiscal 2002
due to the restructuring plan and cost saving measures discussed above, as well
as our continuing focus on marketing our products through our channel partners.
We have consolidated marketing activities into a centralized marketing
organization to reduce overlap of marketing activities in an effort to support
future revenue growth while at the same time control related expenses. The
decrease in sales and marketing expense in fiscal 2002 was primarily
attributable to decreases in marketing expenses of $9.1 million and decreases
in salaries and related employee expenses of $8.4 million.

Sales and marketing expense increased 10% in fiscal 2001 due to incentive
compensation payments to sales personnel, increases in compensation associated
with additional headcount, and increases in marketing and promotional expenses
associated with both a corporate branding advertising campaign and new product
launches.

Research and development.Research and development expense decreased 12% in
fiscal 2002 primarily due to a decrease in the utilization of independent
contractors and temporary staffing of $4.8 million and decreases in salaries
and related employee expenses of $4.5 million. We have focused our efforts in
research and development on our core products, thereby reducing our reliance on
independent contractors and reducing operating costs.

Research and development expense increased 16% in fiscal 2001 due to increases
in compensation and independent contractor expenses related to the release of
new products and enhanced versions of existing products.

General and administrative.General and administrative expense decreased 11%
in fiscal 2002 due primarily to decreases in professional services and
independent contractor expenditures of $9.2 million and a decrease in bad debt
expense of $2.0 million. These decreases are the direct result of our
reduction in discretionary spending, as well as our focus on invoicing and
collection process improvements.

General and administrative expense increased 64% in fiscal 2001 due primarily
to an increase in bad debt expense, fees related to the outsourcing of our
accounting function and professional services fees related to our efforts to
reduce our days sales outstanding.

RESTRUCTURING AND NON-RECURRING CHARGES

Restructuring and non-recurring charges totaled $0.1 million, $42.8 million and
$2.1 million in fiscal 2002, 2001 and 2000, respectively. The restructuring
and non-recurring charge in fiscal 2002 resulted from adjustments made to the
restructuring and non-recurring charge recorded in the fourth quarter of fiscal
2001.

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A summary of the fiscal 2001 restructuring and non-recurring charge and reserve
balance is as follows (in thousands):

|                                 |  |           |        |            |  |             |        |       |  |       |         |   |  |   |        |   |  |   |         |  
|-------------------------------- |  | --------- | ------ | ---------- |  | ----------- | ------ | ----- |  | ----- | ------- | - |  | - | ------ | - |  | - | ------- | -
|                                 |  |           |        |            |  |             |        |       |  | Asset |         |   |  |   |        |   |  |  
|                                 |  | Severance |        | Facilities |  | Impairments |        | Other |  | Total
|                                 |  |           |        |            |  |             |        |       |  |      
|Initial charge                   |  | $         | 8,674  |            |  | $           | 17,227 |       |  | $     | 11,008  |   |  | $ | 5,876  |   |  | $ | 42,785  |  
|Cash paid                        |  |           | (3,137 | )          |  |             |       |       |  |       |        |   |  |   |       |   |  |   | (3,137  | )
|Non-cash                         |  |           |       |            |  |             |       |       |  |       | (11,008 | ) |  |   | (610   | ) |  |   | (11,618 | )
|                                 |  |           |        |            |  |             |        |       |  |       |         |   |  |   |        |   |  |   |         |  
|Reserve balance at June 30, 2001 |  |           | 5,537  |            |  |             | 17,227 |       |  |       |        |   |  |   | 5,266  |   |  |   | 28,030  |  
|Cash paid                        |  |           | (5,058 | )          |  |             | (2,735 | )     |  |       |        |   |  |   | (751   | ) |  |   | (8,544  | )
|Adjustments                      |  |           | (126   | )          |  |             | 393    |       |  |       |        |   |  |   | (1,141 | ) |  |   | (874    | )
|                                 |  |           |        |            |  |             |        |       |  |       |         |   |  |   |        |   |  |   |         |  
|Reserve balance at June 30, 2002 |  | $         | 353    |            |  | $           | 14,885 |       |  | $     |        |   |  | $ | 3,374  |   |  | $ | 18,612  |  
|                                 |  |           |        |            |  |             |        |       |  |       |         |   |  |   |        |   |  |   |         |  

As of June 30, 2001, we had communicated to all impacted employees regarding
employee separation benefits and the timing of separation, and all 300
positions had been separated or were in the separation process, resulting in
cash payments of $3.1 million. Additional payments of $5.1 million were made
during fiscal 2002 and the remaining severance payments of approximately $0.4
million will be paid in the first half of fiscal 2003. All restructuring
activities related to the disposal and/or impairment of long-term assets were
completed as of June 30, 2001, and all restructuring activities associated with
the consolidation of facilities were completed by June 30, 2002.

Approximately $11.6 million of the $42.8 million restructuring and
non-recurring charge recorded in fiscal 2001 did not require an outflow of
cash, but the remaining $31.2 million has required or will require the use of
cash (primarily payments due under long-term lease obligations). The reserve
balance at June 30, 2002 of $18.6 million, which relates primarily to future
lease obligations, is included in other current liabilities and other
liabilities on the accompanying consolidated balance sheet. We substantially
completed our restructuring activities related to the restructuring plan
described above during fiscal 2002, however payments due under long-term lease
obligations will continue to be made over the remaining lives of the leases.
If we are unable to maintain a cost structure that is in appropriate balance
with revenue going forward, whether due to failure to increase revenue
adequately or failure to keep costs down, we could find it necessary to further
adjust our cost structure through the execution of additional restructuring
plans.

In fiscal 2000, we recorded a non-recurring charge of approximately $2.1
million associated with restructuring our European operations and costs
associated with outsourcing our North American accounting department. This
charge was comprised primarily of severance costs, substantially all of which
had been paid as of June 30, 2001.

INTEREST INCOME AND EXPENSE

|                 |  |                     |        |        |  |         |     |        |  |      |        |         |  |  |    |   |  |   |        |  
|---------------- |  | ------------------- | ------ | ------ |  | ------- | --- | ------ |  | ---- | ------ | ------- |  |  | -- | - |  | - | ------ | -
|                 |  | Year Ended June 30,
|                 |  |                    
|                 |  |                     |        |        |  | Percent |     |        |  |      |        | Percent |  |  |    |  
|(In thousands)   |  | 2002                |        | change |  | 2001    |     | change |  | 2000
|                 |  |                     |        |        |  |         |     |        |  |     
|Interest income  |  | $                   | 7,027  |        |  |         | -46 | %      |  | $    | 12,987 |         |  |  | 0  | % |  | $ | 13,010 |  
|Interest expense |  |                     | (4,635 | )      |  |         | -16 | %      |  |      | (5,502 | )       |  |  | -2 | % |  |   | (5,588 | )

Interest income consists of interest earned on cash, cash equivalent and
short-term investment balances. Although our cash and investment balances
increased during fiscal 2002 compared to fiscal 2001, interest income decreased
due to the sharp decline in interest rates during fiscal 2002. Interest income
decreased slightly in fiscal 2001 compared to fiscal 2000 due to a decrease in
our cash and investment balances resulting primarily from the repurchases of
our common stock and convertible subordinated notes and reduced employee stock
option exercises in fiscal 2001.

Interest expense consists primarily of the interest paid and amortization of
issuance costs related to the convertible subordinated notes we issued in March
1998 and the interest on our mortgage loan. As discussed below, we repurchased
convertible subordinated notes with a face value of $10.0 million and $11.3
million during fiscal 2002 and 2001, respectively, thus reducing the amount of
interest expense incurred during these years.

PROVISION FOR (BENEFIT FROM) INCOME TAXES

Our effective income tax rates for fiscal 2002, 2001 and 2000 were 36%, 31% and
37%, respectively. Excluding the impact of restructuring and non-recurring
charges, our effective income tax rate was 38% in fiscal 2001. Our effective
tax rate decreased in fiscal 2002 due to the elimination of a permanent
difference related to the amortization of goodwill and a change in the
geographical mix of income. We expect our effective tax rate for fiscal 2003
to remain at 36%.

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EXTRAORDINARY GAIN

During fiscal 2002, we repurchased convertible subordinated notes with a face
value of $10.0 million for a total cost of $8.9 million, resulting in an
extraordinary gain of approximately $0.6 million after income taxes, or
approximately $0.02 per share. During fiscal 2001, we repurchased convertible
subordinated notes with a face value of $11.3 million for a total cost of $8.7
million, resulting in an extraordinary gain of approximately $1.5 million after
income taxes, or approximately $0.04 per share. Depending on market conditions
and other factors, we may repurchase additional convertible subordinated notes
in the open market in fiscal 2003.

NET INCOME (LOSS)

As a result of the above factors, we generated net income of $15.0 million, or
$0.45 per diluted share, in fiscal 2002 compared to a net loss of $31.1
million, or $0.95 per diluted share, in fiscal 2001, and net income of $28.8
million, or $0.87 per diluted share, in fiscal 2000.

LIQUIDITY AND CAPITAL RESOURCES

|                                                    |  |                     |         |        |  |         |     |        |  |      |         |         |  |  |      |   |  |   |         |  
|--------------------------------------------------- |  | ------------------- | ------- | ------ |  | ------- | --- | ------ |  | ---- | ------- | ------- |  |  | ---- | - |  | - | ------- | -
|                                                    |  | Year Ended June 30,
|                                                    |  |                    
|                                                    |  |                     |         |        |  | Percent |     |        |  |      |         | Percent |  |  |      |  
|(In thousands)                                      |  | 2002                |         | change |  | 2001    |     | change |  | 2000
|                                                    |  |                     |         |        |  |         |     |        |  |     
|Cash, cash equivalents and short-term investments   |  | $                   | 330,258 |        |  |         | 29  | %      |  | $    | 255,366 |         |  |  | -13  | % |  | $ | 295,159 |  
|Working capital                                     |  |                     | 281,501 |        |  |         | 11  | %      |  |      | 254,141 |         |  |  | -15  | % |  |   | 297,745 |  
|Net cash provided by operating activities           |  |                     | 84,355  |        |  |         | 170 | %      |  |      | 31,273  |         |  |  | 13   | % |  |   | 27,774  |  
|Net cash used in investing activities               |  |                     | (14,625 | )      |  |         | -62 | %      |  |      | (38,959 | )       |  |  | 50   | % |  |   | (25,986 | )
|Net cash provided by (used in) financing activities |  |                     | 4,126   |        |  |         | 123 | %      |  |      | (18,106 | )       |  |  | -159 | % |  |   | 30,672  |  

To date, we have financed our business through positive cash flow from
operations and, to a lesser extent, through the issuance of capital stock and
convertible subordinated notes. During fiscal 2002, 2001 and 2000, we invested
our cash primarily in state and municipal bonds, U.S. government and agency
obligations, corporate notes and other highly-liquid securities with maturities
of three months or less.

In fiscal 2002, 2001 and 2000, we generated positive cash flow from operations
of $84.3 million, $31.3 million and $27.8 million, respectively. The
considerable increase in operating cash flows for fiscal 2002 was primarily
attributable to the net income for the year and a significant decrease in
accounts receivable, resulting from our focus on invoicing and collection
process improvements.

Net cash used in investing activities amounted to $14.6 million, $39.0 million
and $26.0 million in fiscal 2002, 2001 and 2000, respectively. Our capital
expenditures in fiscal 2002, 2001 and 2000 consisted primarily of purchases of
resources to manage our operations, including computer hardware and software
and leasehold improvements. The higher level of purchases of property and
equipment in fiscal 2001 compared to fiscal 2002 and 2000 was attributable to
the acquisition of several critical business systems during fiscal 2001,
including Vantive, Callidus and our ERP platform.

Net cash provided by financing activities was $4.1 million in fiscal 2002,
compared to net cash used in financing activities of $18.1 million in fiscal
2001 and net cash provided by financing activities of $30.7 million in fiscal
2000. The cash provided by financing activities in fiscal 2002 was due to
$13.2 million of proceeds from the exercise of stock options and the employee
stock purchase plan, which was partially offset by $8.9 million used to
repurchase convertible subordinated notes. The negative cash flow from
financing activities in fiscal 2001 primarily resulted from the repurchases of
our common stock and convertible subordinated notes during the period. In
November 2000, our board of directors authorized the repurchase of up to $100.0
million of our outstanding common stock at market prices over the following
twelve months. Pursuant to this repurchase program, we repurchased 1,389,000
shares during fiscal 2001 at a cost of approximately $23.8 million. During
fiscal 2001, we also repurchased convertible subordinated notes for a total
cost of $8.7 million. These amounts were partially offset by proceeds from the
exercise of stock options and the employee stock purchase plan of $14.0 million
for fiscal 2001. During fiscal 2000, the cash provided by financing activities
resulted from proceeds from the exercise of stock options and the employee
stock purchase plan of $35.2 million. In fiscal 2000, we also made principal
payments of $4.5 million related to the loan agreement with the Connecticut
Development Authority governing the $9.5 million mortgage loan issued to us in
1995 to purchase an office and research facility in Stamford, Connecticut.

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We intend to fund our capital requirements, as well as our liquidity needs,
with existing cash, cash equivalent and short-term investment balances as well as cash generated from future operations, if any.
However, capital requirements will depend on many factors, including our rate
of revenue growth, market acceptance of our products, the timing and extent of
development projects and increases in operating expenses, all of which are
subject to uncertainty. We believe that our existing cash, cash equivalent and
short-term investment balances, and cash generated from our future operations,
if any, will be sufficient to finance our business through at least June 30,
2003. However, to the extent that existing cash, cash equivalent and
short-term investment balances and cash generated by operations are
insufficient to fund future activities, we may need to raise additional funds
through public or private debt or equity financing. Additional funds may not
be available on terms favorable to us or at all.

The following table summarizes our contractual obligations as of June 30, 2002
and the effect such obligations are expected to have on our liquidity and cash
flow in future periods (in thousands):

|                                    |  |                     |        |      |  |      |        |      |  |      |        |            |  |       |        |  |  |   |       |  |  |   |        |  |  |   |         | 
|----------------------------------- |  | ------------------- | ------ | ---- |  | ---- | ------ | ---- |  | ---- | ------ | ---------- |  | ----- | ------ |  |  | - | ----- |  |  | - | ------ |  |  | - | ------- | 
|                                    |  | Year Ended June 30, |        |      |  |      |        |      |  |     
|                                    |  |                     |        |      |  |      |        |      |  |     
|                                    |  | 2003                |        | 2004 |  | 2005 |        | 2006 |  | 2007 |        | Thereafter |  | Total
|                                    |  |                     |        |      |  |      |        |      |  |      |        |            |  |      
|Non-cancellable operating leases    |  | $                   | 20,299 |      |  | $    | 16,113 |      |  | $    | 14,418 |            |  | $     | 11,788 |  |  | $ | 9,662 |  |  | $ | 23,555 |  |  | $ | 95,835  | 
|4.5% convertible subordinated notes |  |                     |       |      |  |      |       |      |  |      | 78,750 |            |  |       |       |  |  |   |      |  |  |   |       |  |  |   | 78,750  | 
|Mortgage loan                       |  |                     | 243    |      |  |      | 258    |      |  |      | 1,794  |            |  |       |       |  |  |   |      |  |  |   |       |  |  |   | 2,295   | 
|                                    |  |                     |        |      |  |      |        |      |  |      |        |            |  |       |        |  |  |   |       |  |  |   |        |  |  |   |         | 
|                                    |  | $                   | 20,542 |      |  | $    | 16,371 |      |  | $    | 94,962 |            |  | $     | 11,788 |  |  | $ | 9,662 |  |  | $ | 23,555 |  |  | $ | 176,880 | 
|                                    |  |                     |        |      |  |      |        |      |  |      |        |            |  |       |        |  |  |   |       |  |  |   |        |  |  |   |         | 

RECENT ACCOUNTING PRONOUNCEMENTS

In July 2001, the Financial Accounting Standards Board (FASB) issued SFAS No.
141, Business Combinations, which supersedes Accounting Principles Board
(APB) Opinion No. 16, Business Combinations. SFAS No. 141 requires the
purchase method of accounting for business combinations initiated after June
30, 2001 and eliminates the pooling-of-interests method. In addition, SFAS No.
141 establishes specific criteria for the recognition of intangible assets
separately from goodwill and requires unallocated negative goodwill to be
written-off immediately as an extraordinary gain. The adoption of the
provisions of SFAS No. 141, effective July 1, 2001, did not have a material
impact on our financial position, results of operations or cash flows.

In July 2001, the FASB also issued SFAS No. 142, Goodwill and Other Intangible
Assets. This statement supersedes APB Opinion No. 17, Intangible Assets,
and requires, among other things, the discontinuance of amortization related to
goodwill and indefinite lived intangible assets. In addition, the standard
includes provisions upon adoption for the reclassification of certain existing
recognized intangibles as goodwill, reassessment of the useful lives of
existing recognized intangibles and reclassification of certain intangibles out
of previously reported goodwill. Under SFAS No. 142, goodwill is tested for
impairment annually, and is tested for impairment between annual tests whenever
events or changes in circumstances indicate that the carrying amount may not be
recoverable. Impairment testing for goodwill is done at a reporting unit
level. Currently, We have identified one reporting unit under the criteria set
forth by SFAS No. 142. An impairment loss would generally be recognized when
the carrying amount of the reporting units net assets, including goodwill,
exceeds the estimated fair value of the reporting unit. We adopted SFAS No. 142
on July 1, 2001, which resulted in us no longer amortizing our existing net
goodwill balance of approximately $7.2 million. With the adoption of SFAS No.
142, intangible assets with a definite life are amortized on a straight-line
basis over periods ranging from 3 to 7 years. Intangible assets with a
definite life are tested for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. An impairment loss would be recognized when the carrying amount of
an asset exceeds the estimated undiscounted cash flows expected to result from
the use of the asset and its eventual disposition. The amount of the
impairment loss is calculated as the excess of the assets carrying value over
its fair value. Fair value is generally determined using a discounted cash
flow analysis. The impact of SFAS No. 142 on fiscal 2001 results would have
decreased our loss before extraordinary item and net loss by approximately $2.7
million, or $0.08 per diluted share. The impact of SFAS No. 142 on fiscal 2000
results would have increased our income before extraordinary item and net
income by approximately $1.7 million, or $0.05 per diluted share.

In October 2001, the FASB issued SFAS No. 144, Accounting for the Impairment
or Disposal of Long-Lived Assets. This statement supersedes SFAS No. 121,
Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to Be Disposed of. Although retaining many of the fundamental recognition and
measurement provisions of SFAS No. 121, the new statement significantly changes
the criteria that would have to be met to classify an asset as held-for-sale.
The statement also supersedes certain provisions of APB Opinion No. 30,
Reporting the Results of Operations  Reporting the Effects of Disposal of a
Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring
Events and Transactions, and will require expected future operating losses
from discontinued operations to be displayed in discontinued operations in the

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period in which the losses are incurred rather than as of the measurement date,
as presently required. As required by SFAS No. 144, we adopted this new
statement on July 1, 2002. The adoption did not have a material impact on our
financial position, results of operations or cash flows.

In November 2001, the FASB issued a Staff Announcement that requires
classification of reimbursements for out-of-pocket expenses incurred as
revenue in the income statement. This Announcement was effective for reporting
periods beginning after December 15, 2001. We adopted this Announcement
effective January 1, 2002. As a result of this Announcement, we no longer
record out-of-pocket expense reimbursements as a reduction of costs incurred
and comparative financial statements from prior periods have been reclassified.
For the years ended June 30, 2001 and 2000, approximately $11.3 million and
$6.9 million has been reclassified primarily from cost of maintenance and
services to maintenance and services revenues to conform to our current period
presentation.

In May 2002, the FASB issued SFAS No. 145, Rescission of FASB Statements Nos.
4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections.
SFAS No. 145 eliminates Statement 4 (and Statement 64, as it amends Statement
4), which requires gains and losses from extinguishments of debt to be
aggregated and, if material, classified as an extraordinary item, net of the
related income tax effect. As a result, the criteria in APB Opinion 30 will
now be used to determine the classification of those gains and losses. SFAS
No. 145 amends FASB Statement No. 13 to require that certain lease
modifications that have economic effects similar to sale-leaseback transactions
be accounted for in the same manner as sale-leaseback transactions. This
amendment is consistent with the FASBs goal of requiring similar accounting
treatment for transactions that have similar economic effects. In addition,
SFAS No. 145 makes technical corrections to existing pronouncements. While
those corrections are not substantive in nature, in some instances, they may
change accounting practice. This statement is effective for fiscal years
beginning after May 15, 2002 for the provisions related to the rescission of
Statements 4 and 64, and for all transactions entered into after May 15, 2002
for the provision related to the amendment of Statement 13, although early
adoption is permitted. We are currently assessing the impact of SFAS No. 145
on our operating results and financial condition.

In July 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated
with Exit or Disposal Activities, which nullifies Emerging Issues Task Force
(EITF) Issue No. 94-3. SFAS No. 146 requires that a liability for a cost
associated with an exit or disposal activity be recognized when the liability
is incurred, whereas EITF No. 94-3 had required recognition of the liability as
of the commitment date of an exit plan. This statement is effective for exit
or disposal activities initiated after December 31, 2002. We are currently
assessing the impact of SFAS No. 146 on our operating results and financial
condition.

RELATED PARTY TRANSACTIONS

In March 2002, Siebel Systems, Inc. purchased several products from us for
approximately $0.9 million for purposes of implementing an enterprise-wide
financial planning system. In addition, Siebel has a future option to purchase
the same products in accordance with normal contractual terms and conditions.
The Chief Financial Officer of Siebel is on our board of directors.

In March 2002, we purchased approximately $3.0 million of software, maintenance
and services from Siebel for the purpose of implementing a worldwide customer
relationship management system. We capitalized in property and equipment
approximately $2.6 million of this amount, as it related to software licenses,
and recorded the remaining $0.4 million in prepaid expenses. The prepaid
expenses are being amortized as the services are provided, and approximately
$0.1 million was amortized during the year ended June 30, 2002.

FACTORS THAT MAY AFFECT FUTURE RESULTS

We operate in a very competitive and rapidly changing environment that involves
numerous risks, some of which are beyond our control. The following discussion
highlights some of these risks.

GENERAL ECONOMIC CONDITIONS MAY ADVERSELY AFFECT OUR BUSINESS. Our revenue
growth and profitability depend on the overall demand for computer software and
services, which in turn depend on general economic and business conditions.
While we have been able to increase revenues sequentially over the last several
quarters, continued softness in the economy could result in decreased revenues
or lower growth rates. There can be no assurance that we will be able to
effectively promote revenue growth rates in all economic conditions.

PRODUCT ENHANCEMENT AND NEW PRODUCT INTRODUCTIONS INVOLVE INHERENT RISKS. We
compete in a market characterized by rapid technological advances in hardware
and software development, evolving standards

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in computer hardware and software technology and frequent new product
introductions and enhancements. We continually expand and refresh our product
offerings to include newer features or products, and enter into agreements
allowing integration of third-party technology into our products. The
introduction of new products or updated versions of continuing products has
inherent risks, including, but not limited to, product quality, the fit of the
new products and features with the customers needs, the successful adaptation
of third-party technology into our products, educating our sales, marketing and
consulting personnel to work with the new products and features, competition
from earlier and more established entrants, general economic conditions, market
acceptance of initial product releases, marketing effectiveness and the
accuracy of assumptions about the nature of customer demand. Our failure to
successfully introduce, market and sell new products and technologies or
enhance and improve existing products in a timely manner, and position and/or
price its products, undetected errors or delays in new products or new versions
of a product and/or the failure of anticipated market growth could have a
material adverse effect on our business, results of operations or financial
position. These risks tend to be greater when newer products, such as Hyperion
Financial Management and Hyperion Planning, make up a larger portion of the
overall product mix. In the coming year, as more and more of these newer
products are deployed, our service and maintenance organizations, along with our partners,
will have to
rapidly increase their ability to install and service these products, and we must rapidly improve their ease-of-implementation and ease-of-use.
The failure to successfully increase these capacities and make these improvements could result in significantly
lower customer satisfaction, which could lead to lower revenue.

WE OPERATE IN A VERY COMPETITIVE ENVIRONMENT. The markets in which we compete
are intensely competitive, highly fragmented and characterized by rapidly
changing technology and evolving standards. We have experienced, and expect
that we will continue to experience, vigorous competition from both current and
new competitors, some of whom may have significantly greater financial,
technical, marketing and other resources than we do. We expect additional
competition as other established and emerging companies enter into both the
OLAP and application parts of the business performance management software
market. This competition could result in price reductions, fewer customer
orders, reduced gross margins and loss of market share, any of which would
materially adversely affect our business, operating results and financial
condition.

CHANGING OUR PRICING COULD ADVERSELY AFFECT OUR BUSINESS. In an effort to
simplify and clarify our product positioning and marketing, we periodically
make changes to our product pricing. While we do not believe these pricing
changes will have a material impact on license revenue, any such broadly based
changes to pricing could have a material adverse effect on our business,
results of operations or financial position as customers change or delay their
purchasing decisions in response to such pricing revisions. Additional risks of
such pricing changes include delays in transactions as our sales force learns
how to deploy the new pricing, and delay or loss of revenues as the competition
reacts to the pricing changes. In the future, intense competition in the
various markets in which we compete may put pressure on us to reduce prices on
certain products, particularly in the markets where certain vendors offer deep
discounts in an effort to recapture or gain market share or to sell other
software or hardware products. Any such price reductions could have a material
adverse effect on our business, results of operations or financial position.

WE MAY NOT BE ABLE TO CONTINUE OUR OPERATIONAL IMPROVEMENTS. As part of our
focus on improving our operating margins, we are driving toward continued
efficiencies in not only our sales force, but also our services, product
development, product marketing, finance, and other administrative processes.
The ability to continue to realize current efficiencies, and find ways to
improve on past performance is crucial to the improvement of operating margins.
Any increase in the relative cost of these functions, or failure to continue to
realize current efficiencies, could have a material adverse effect on our
profits. There is also a risk that, as newer sales, services and marketing
strategies are implemented, the changes will either be unduly disruptive or
less effective.

BACK-ENDED QUARTERS. Quarterly revenues and operating results are highly
dependent on the volume and timing of the signing of licensing agreements and
product deliveries during the quarter, which are difficult to forecast.
Significant portions of our quarterly software licensing agreements are
concluded in the last month of the fiscal quarter, generally with a
concentration of such revenues earned in the final week of that month. Due to
the relatively fixed nature of certain costs, including personnel and
facilities expenses, a decline or shortfall in quarterly and/or annual revenues
typically results in lower profitability or may result in losses. Prior to the
very end of any quarter, we must rely on our forecasts of revenue for planning,
modeling and other purposes. Forecasts are only estimates and may not correlate
to revenues in a particular quarter or over a longer period of time. A
significant discrepancy between actual results and sales forecasts could cause
us to improperly plan or budget and thereby adversely affect our business or
results of operations. Any publicly stated revenue or earnings projections by
us are especially subject to this risk.

RESTRUCTURING MAY ADVERSELY AFFECT PRODUCTIVITY. We
have continued to restructure and make other adjustments to our sales and other
operations and may do so in the future. These changes have historically
resulted in temporary sales or other productivity issues in the short term. The
restructured organization must keep

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improving over past performance in
order to provide better operating margins and efficiencies. Failure of the organization
to maintain or improve momentum and productivity could materially impact our revenue and profits.

INTERNATIONAL OPERATIONS ARE SUBJECT TO SIGNIFICANT RISKS. A substantial
portion of our revenue is derived from international sales and is, therefore,
subject to the related risks, including the general economic conditions in each
country, the overlap of different tax structures, the difficulty of managing an
organization spread over various countries, changes in regulatory requirements,
compliance with a variety of foreign laws and regulations, longer payment
cycles, volatilities of exchange rates, import and export licensing
requirements, trade restrictions and changes in tariff rates. There can be no
assurances that we will be able to successfully address each of these
challenges.

INABILITY TO HIRE AND RETAIN EMPLOYEES COULD HARM OUR BUSINESS. Our future
operating results depend significantly upon the retention and hiring of
technical and management personnel. Competition for such personnel is intense,
and there can be no assurance that we will retain our key managerial or
technical personnel or attract such personnel in the future. Either directly or
through personnel search firms, we actively recruit qualified development,
sales and marketing personnel. We have at times experienced difficulty
recruiting or retaining qualified personnel and there can be no assurance that
we will not experience such difficulties in the future, which could have a
material adverse effect on our business, operating results and financial
condition. We will seek approval of additional stock options under our
employee stock option plan at our 2002 Annual Meeting of Stockholders.
Stockholders have shown increasing reluctance to approve stock option plans.
We requested the stockholders approve additional shares for our employee option
plan at our 2001 Annual Meeting of Stockholders, and the additional shares were
not approved. If we are not able to offer prospective and current employees
stock options on a basis generally comparable to other companies competing for
the same workers, it will have a material adverse impact on our ability to
attract and retain a competitive, motivated and dedicated workforce.

THERE ARE SIGNIFICANT ORGANIZATIONAL AND PRODUCT INTEGRATION RISKS RELATED TO
BUSINESS COMBINATIONS. We have made and may in the future make acquisitions
of, mergers with, or significant investments in, businesses that offer
complementary products, services and technologies. There are risks involved in
business combinations, including but not limited to: the possibility that we
pay more than the value we derive from the acquisition; the difficulty of
integrating the operations and personnel of the acquired businesses; the
possibility that all aspects of the integration are not completed or that all
of the anticipated synergies of the acquisition are not realized; the potential
product liability associated with selling the acquired companys products; the
potential disruption of our ongoing business and the distraction of management
from our business. These factors could have a material adverse effect on our
business, results of operations or financial position, especially in the case
of a large acquisition.

WE ARE SUBJECT TO THE POSSIBILITY OF INFRINGEMENT CLAIMS. We expect that
software product developers will increasingly be subject to infringement claims
as the number of products and competitors in our industry segment grows and the
functionality of products in different industry segments overlaps. Any such
claims, with or without merit, could be time consuming to defend, result in
costly litigation, divert managements attention and resources, cause product
shipment delays or require us to enter into royalty or licensing agreements.
Such royalty or licensing agreements, if required, may not be available on
terms acceptable to us, if at all. In the event of a successful claim of
product infringement against us and our failure or inability to license the
infringed or similar technology, our business, operating results and financial
condition would be materially adversely affected.

ENFORCEMENT OF OUR INTELLECTUAL PROPERTY RIGHTS MAY BE DIFFICULT. We rely
primarily on a combination of patent, copyright and trademark laws, trade
secrets, confidentiality procedures and contractual provisions to protect our
proprietary rights. There can be no assurance that our means of protecting its
proprietary rights in the United States or abroad will be adequate or that
competitors will not independently develop similar technology.

OUR STOCK PRICE MAY BE VOLATILE. The market price of our common stock is
subject to significant fluctuations. The market price of our common stock may
be significantly affected by factors, including but not limited to, the
announcement of new products, product enhancements or technological innovation
by us or our competitors, changes in our or our competitors results of
operations, changes in revenue, revenue growth rates and revenue mix for us as
a whole or for specific geographic areas or business units, changes in earnings
estimates by market analysts and general market conditions or market conditions
specific to particular industries. Technology stocks have experienced wide
fluctuations in prices, which sometimes have been unrelated to their operating
performance. The market price of our common stock could be adversely affected
by such fluctuations.

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ITEM 7A.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk.The primary objective of our investment activities is to
preserve principal while maximizing yields, without significantly increasing
risk. To achieve this objective, we maintain our portfolio of cash equivalents
and short-term investments in a variety of securities, including government and
corporate obligations, certificates of deposit and money market funds. At June
30, 2002, our investment portfolio consisted of investment-grade debt
securities, excluding those classified as cash equivalents, with a fair value
of $19.1 million. The portfolio is invested in short-term securities to
minimize interest rate risk and for liquidity purposes in the event of
immediate cash needs. Due to the short duration of our investment portfolio,
an immediate 10% increase in market interest rates would not have a material
effect on our investment portfolio.

Our long-term debt bears interest at fixed interest rates and, therefore,
relative to our long-term debt, an immediate 10% change in market interest
rates would not have a material impact our financial condition or results of
operations. As of June 30, 2002, our long-term debt consists of 4.5%
convertible subordinated notes due March 2005 with a face value of $78.8
million and a mortgage loan with an outstanding principal balance of $2.3
million bearing interest at 6.0%.

Foreign Currency Exchange Rate Risk.We transact business in various foreign
currencies. Our exposure to foreign currency exchange rate fluctuations arises
in part from intercompany accounts in which costs incurred in the United States
are charged to our foreign sales subsidiaries. Additionally, intercompany
balances arise from software royalty fees that are charged to our foreign
subsidiaries. These intercompany accounts are typically denominated in the
functional currency of the foreign subsidiary. From time to time, we utilize
foreign currency forward exchange contracts to offset the risk associated with
the effects of certain intercompany balances for which we anticipate settlement
in the foreseeable future. As a result, increases or decreases in our
intercompany accounts due to foreign exchange rate changes are offset by gains
and losses on the forward contracts, so as to mitigate the possibility of
foreign currency transaction gains and losses. Our forward contracts generally
have terms of 90 days or less. We do not use forward contracts for trading
purposes. All foreign currency transactions and all outstanding forward
contracts are marked to market at the end of the period with unrealized gains
and losses included in our consolidated statements of income. Our ultimate
realized gain or loss with respect to currency fluctuations will depend on the
currency exchange rates and other factors in effect as the contracts mature.
Net foreign exchange transaction gains and losses were not material for fiscal
2002, 2001 and 2000. We had no open foreign currency forward exchange
contracts as of June 30, 2002.

We are also exposed to foreign currency exchange rate fluctuations as the
income statements of our foreign subsidiaries are translated into U.S. dollars
upon consolidation. As exchange rates vary, these results, when translated,
may vary from expectations and adversely impact overall expected profitability.
The effect of foreign exchange rate fluctuations for fiscal 2002 was not
material.

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ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

|                                   |                                                                                                                                  |  |      |    | 
|---------------------------------- | -------------------------------------------------------------------------------------------------------------------------------- |  | ---- | -- | 
|                                   |                                                                                                                                  |  | Page
|                                   |                                                                                                                                  |  |     
|Report of Independent Accountants  |                                                                                                                                  |  | 26   |   
|                                  
|Consolidated Financial Statements: |                                                                                                                                  |  |      |   
|                                   | Consolidated Balance Sheets as of June 30, 2002 and 2001                                                                         |  |      | 27 | 
|                                   | Consolidated Statements of Income for the years ended June 30, 2002, 2001 and 2000                                               |  |      | 28 | 
|                                   | Consolidated Statements of Stockholders Equity and Comprehensive Income (Loss)
for the years ended June 30, 2002, 2001 and 2000 |  |      | 29 | 
|                                   | Consolidated Statements of Cash Flows for the years ended June 30, 2002, 2001 and
2000                                           |  |      | 30 | 
|                                   | Notes to Consolidated Financial Statements                                                                                       |  |      | 31 | 
|                                  
|Financial Statement Schedule:      |                                                                                                                                  |  |      |   
|                                   | Schedule II  Valuation and Qualifying Accounts                                                                                  |  |      | 51 | 

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REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders of
Hyperion Solutions Corporation:

In our opinion, the consolidated financial statements listed in the
accompanying index present fairly, in all material respects, the financial
position of Hyperion Solutions Corporation and its subsidiaries (Hyperion) at
June 30, 2002 and 2001, and the results of their operations and their cash
flows for each of the three years in the period ended June 30, 2002, in
conformity with accounting principles generally accepted in the United States
of America. In addition, in our opinion, the financial statement schedule
listed in the accompanying index presents fairly, in all material respects, the
information set forth therein when read in conjunction with the related
consolidated financial statements. These financial statements and the financial
statement schedule are the responsibility of Hyperions management; our
responsibility is to express an opinion on these financial statements and the
financial statement schedule based on our audits. We conducted our audits of
these statements in accordance with auditing standards generally accepted in
the United States of America 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 our opinion.

/s/    PricewaterhouseCoopers LLP

San Jose, California
July 25, 2002, except Note 10,
which is as of August 29, 2002

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HYPERION SOLUTIONS CORPORATION
CONSOLIDATED BALANCE SHEETS
(in thousands, except par value)

|                                                             |                                                                                                             |   |          |         |          |   |         |         |  
|------------------------------------------------------------ | ----------------------------------------------------------------------------------------------------------- | - | -------- | ------- | -------- | - | ------- | ------- | -
|                                                             |                                                                                                             |   | June 30, |         | June 30,
|                                                             |                                                                                                             |   | 2002     |         | 2001    
|                                                             |                                                                                                             |   |          |         |         
|ASSETS                                                       |                                                                                                             |   |          |         |          |   |         |        
|Current assets:                                              |                                                                                                             |   |          |         |          |   |         |        
|                                                             | Cash and cash equivalents                                                                                   |   | $        | 311,130 |          |   | $       | 232,904 |  
|                                                             | Short-term investments                                                                                      |   |          | 19,128  |          |   |         | 22,462  |  
|                                                             | Accounts receivable, net of allowances of $10,660 and $12,476                                               |   |          | 110,196 |          |   |         | 156,835 |  
|                                                             | Deferred income taxes                                                                                       |   |          | 15,495  |          |   |         | 19,175  |  
|                                                             | Prepaid expenses and other current assets                                                                   |   |          | 17,240  |          |   |         | 20,491  |  
|                                                             |                                                                                                             |   |          |         |          |   |         |        
|TOTAL CURRENT ASSETS                                         |                                                                                                             |   | 473,189  |         |          |   | 451,867 |        
|                                                            
|Property and equipment, net                                  |                                                                                                             |   | 69,866   |         |          |   | 80,752  |        
|Goodwill                                                     |                                                                                                             |   | 8,171    |         |          |   | 7,169   |        
|Intangible assets, net                                       |                                                                                                             |   | 8,493    |         |          |   | 9,303   |        
|Deferred income taxes                                        |                                                                                                             |   | 17,993   |         |          |   | 13,294  |        
|Other assets                                                 |                                                                                                             |   | 6,178    |         |          |   | 8,008   |        
|                                                             |                                                                                                             |   |          |         |          |   |         |        
|TOTAL ASSETS                                                 |                                                                                                             | $ | 583,890  |         |          | $ | 570,393 |        
|                                                             |                                                                                                             |   |          |         |          |   |         |        
|                                                            
|LIABILITIES AND STOCKHOLDERS EQUITY                         |                                                                                                             |   |          |         |          |   |         |        
|Current liabilities:                                         |                                                                                                             |   |          |         |          |   |         |        
|                                                             | Accounts payable and accrued expenses                                                                       |   | $        | 50,858  |          |   | $       | 52,211  |  
|                                                             | Accrued employee compensation and benefits                                                                  |   |          | 39,005  |          |   |         | 31,554  |  
|                                                             | Deferred revenue                                                                                            |   |          | 94,910  |          |   |         | 100,234 |  
|                                                             | Other current liabilities                                                                                   |   |          | 6,915   |          |   |         | 13,727  |  
|                                                             |                                                                                                             |   |          |         |          |   |         |        
|TOTAL CURRENT LIABILITIES                                    |                                                                                                             |   | 191,688  |         |          |   | 197,726 |        
|                                                            
|Long-term debt                                               |                                                                                                             |   | 80,802   |         |          |   | 91,045  |        
|Other liabilities                                            |                                                                                                             |   | 11,743   |         |          |   | 14,303  |        
|                                                            
|Stockholders equity:                                        |                                                                                                             |   |          |         |          |   |         |        
|                                                             | Preferred stock  $0.001 par value; 5,000 shares authorized;
none issued                                    |   |          |        |          |   |         |        |  
|                                                             | Common stock  $0.001 par value; 300,000 shares authorized;
34,662 and 33,715 shares issued and outstanding |   |          | 35      |          |   |         | 34      |  
|                                                             | Additional paid-in capital                                                                                  |   |          | 227,563 |          |   |         | 212,952 |  
|                                                             | Treasury stock, at cost: 1,344 and 1,355 common shares                                                      |   |          | (23,097 | )        |   |         | (23,270 | )
|                                                             | Retained earnings                                                                                           |   |          | 103,472 |          |   |         | 88,599  |  
|                                                             | Accumulated other comprehensive loss                                                                        |   |          | (8,316  | )        |   |         | (10,996 | )
|                                                             |                                                                                                             |   |          |         |          |   |         |        
|TOTAL STOCKHOLDERS EQUITY                                   |                                                                                                             |   | 299,657  |         |          |   | 267,319 |        
|                                                             |                                                                                                             |   |          |         |          |   |         |        
|TOTAL LIABILITIES AND STOCKHOLDERS EQUITY                   |                                                                                                             | $ | 583,890  |         |          | $ | 570,393 |        
|                                                             |                                                                                                             |   |          |         |          |   |         |        
|                                                            
|See accompanying notes to consolidated financial statements.

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HYPERION SOLUTIONS CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)

|                                                             |                                                                                        |                                         |         |                     |         |      |         |         |         |   |         |         |         | 
|------------------------------------------------------------ | -------------------------------------------------------------------------------------- | --------------------------------------- | ------- | ------------------- | ------- | ---- | ------- | ------- | ------- | - | ------- | ------- | ------- | 
|                                                             |                                                                                        |                                         |         | Year Ended June 30,
|                                                             |                                                                                        |                                         |         |                    
|                                                             |                                                                                        |                                         |         | 2002                |         | 2001 |         | 2000   
|                                                             |                                                                                        |                                         |         |                     |         |      |         |        
|REVENUES                                                     |                                                                                        |                                         |         |                     |         |      |         |         |         |   |         |        
|                                                             |                                                                                        | Software licenses                       |         | $                   | 196,066 |      |         | $       | 227,994 |   |         | $       | 240,326 | 
|                                                             |                                                                                        | Maintenance and services                |         |                     | 295,952 |      |         |         | 300,017 |   |         |         | 259,006 | 
|                                                             |                                                                                        |                                         |         |                     |         |      |         |         |         |   |         |        
|TOTAL REVENUES                                               |                                                                                        |                                         | 492,018 |                     |         |      | 528,011 |         |         |   | 499,332 |        
|                                                            
|COSTS AND EXPENSES                                           |                                                                                        |                                         |         |                     |         |      |         |         |         |   |         |        
|                                                             | Cost of revenues:                                                                      |                                         |         |                     |         |      |         |         |         |   |         |         |        
|                                                             |                                                                                        | Software licenses                       |         |                     | 15,430  |      |         |         | 16,334  |   |         |         | 8,782   | 
|                                                             |                                                                                        | Maintenance and services                |         |                     | 137,047 |      |         |         | 161,016 |   |         |         | 146,348 | 
|                                                             | Sales and marketing                                                                    |                                         |         | 182,311             |         |      |         | 208,336 |         |   |         | 189,467 |        
|                                                             | Research and development                                                               |                                         |         | 72,206              |         |      |         | 81,597  |         |   |         | 70,154  |        
|                                                             | General and administrative                                                             |                                         |         | 64,843              |         |      |         | 72,823  |         |   |         | 44,423  |        
|                                                             | Restructuring and non-recurring charges                                                |                                         |         | 107                 |         |      |         | 42,785  |         |   |         | 2,066   |        
|                                                             | Merger credits                                                                         |                                         |         |                    |         |      |         |        |         |   |         | (305    | )      
|                                                             |                                                                                        |                                         |         |                     |         |      |         |         |         |   |         |        
|TOTAL COSTS AND EXPENSES                                     |                                                                                        |                                         | 471,944 |                     |         |      | 582,891 |         |         |   | 460,935 |        
|                                                             |                                                                                        |                                         |         |                     |         |      |         |         |         |   |         |        
|OPERATING INCOME (LOSS)                                      |                                                                                        |                                         | 20,074  |                     |         |      | (54,880 | )       |         |   | 38,397  |        
|                                                            
|                                                             | Interest income                                                                        |                                         |         | 7,027               |         |      |         | 12,987  |         |   |         | 13,010  |        
|                                                             | Interest expense                                                                       |                                         |         | (4,635              | )       |      |         | (5,502  | )       |   |         | (5,588  | )      
|                                                             |                                                                                        |                                         |         |                     |         |      |         |         |         |   |         |        
|INCOME (LOSS) BEFORE INCOME TAXES                            |                                                                                        |                                         | 22,466  |                     |         |      | (47,395 | )       |         |   | 45,819  |        
|                                                             | Provision for (benefit from) income taxes                                              |                                         |         | 8,087               |         |      |         | (14,858 | )       |   |         | 17,000  |        
|                                                             |                                                                                        |                                         |         |                     |         |      |         |         |         |   |         |        
|INCOME (LOSS) BEFORE EXTRAORDINARY ITEM                      |                                                                                        |                                         | 14,379  |                     |         |      | (32,537 | )       |         |   | 28,819  |        
|                                                             | Extraordinary item- gain on redemption of debt, net of
income tax of $339, $898 and $0 |                                         |         | 602                 |         |      |         | 1,464   |         |   |         |        |        
|                                                             |                                                                                        |                                         |         |                     |         |      |         |         |         |   |         |        
|NET INCOME (LOSS)                                            |                                                                                        | $                                       | 14,981  |                     |         | $    | (31,073 | )       |         | $ | 28,819  |        
|                                                             |                                                                                        |                                         |         |                     |         |      |         |         |         |   |         |        
|                                                            
|EARNINGS (LOSS) PER SHARE                                    |                                                                                        |                                         |         |                     |         |      |         |         |         |   |         |        
|                                                             | Basic:                                                                                 |                                         |         |                     |         |      |         |         |         |   |         |         |        
|                                                             |                                                                                        | Income (loss) before extraordinary item |         | $                   | 0.44    |      |         | $       | (0.99   | ) |         | $       | 0.91    | 
|                                                             |                                                                                        | Extraordinary gain                      |         |                     | 0.02    |      |         |         | 0.04    |   |         |         |        | 
|                                                             |                                                                                        |                                         |         |                     |         |      |         |         |         |   |         |        
|                                                             |                                                                                        | Net income (loss)                       |         | $                   | 0.46    |      |         | $       | (0.95   | ) |         | $       | 0.91    | 
|                                                             |                                                                                        |                                         |         |                     |         |      |         |         |         |   |         |        
|                                                             | Diluted:                                                                               |                                         |         |                     |         |      |         |         |         |   |         |         |        
|                                                             |                                                                                        | Income (loss) before extraordinary item |         | $                   | 0.43    |      |         | $       | (0.99   | ) |         | $       | 0.87    | 
|                                                             |                                                                                        | Extraordinary gain                      |         |                     | 0.02    |      |         |         | 0.04    |   |         |         |        | 
|                                                             |                                                                                        |                                         |         |                     |         |      |         |         |         |   |         |        
|                                                             |                                                                                        | Net income (loss)                       |         | $                   | 0.45    |      |         | $       | (0.95   | ) |         | $       | 0.87    | 
|                                                             |                                                                                        |                                         |         |                     |         |      |         |         |         |   |         |        
|                                                            
|WEIGHTED AVERAGE SHARES OUTSTANDING                          |                                                                                        |                                         |         |                     |         |      |         |         |         |   |         |        
|                                                             |                                                                                        | Basic                                   |         |                     | 32,836  |      |         |         | 32,592  |   |         |         | 31,665  | 
|                                                             |                                                                                        | Diluted                                 |         |                     | 33,491  |      |         |         | 32,592  |   |         |         | 33,107  | 
|                                                            
|See accompanying notes to consolidated financial statements.

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HYPERION SOLUTIONS CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY & COMPREHENSIVE INCOME (LOSS)
(in thousands)


|                                                  |                                 |                            |        |              |  |                |       |            |  |       |         |         |  |          |         |             |   |          |         |               |         |        |         |   |  |   |         |   |        |   |         |  |  | 
|------------------------------------------------- | ------------------------------- | -------------------------- | ------ | ------------ |  | -------------- | ----- | ---------- |  | ----- | ------- | ------- |  | -------- | ------- | ----------- | - | -------- | ------- | ------------- | ------- | ------ | ------- | - |  | - | ------- | - | ------ | - | ------- |  |  | 
|                                                  |                                 |                            |        | Common Stock |  | Treasury Stock |       |            |  |       |         |         |  |          |         | Accumulated |   |          |         |              
|                                                  |                                 |                            |        |              |  |                |       | Additional |  |       |         |         |  | Other    |         |             |   |         
|                                                  |                                 |                            |        |              |  |                |       | Par        |  |       |         |         |  | Par      |         | Paid-in     |   | Retained |         | Comprehensive |         |        |         |  
|                                                  |                                 |                            |        | Shares       |  | Value          |       | Shares     |  | Value |         | Capital |  | Earnings |         | Loss        |   | Total   
|                                                  |                                 |                            |        |              |  |                |       |            |  |       |         |         |  |          |         |             |   |         
|Balance at June 30, 1999                          |                                 |                            | 30,842 |              |  | $              | 31    |            |  |       |        |         |  | $        |        |             |   | $        | 153,545 |               |         | $      | 90,917  |   |  | $ | (3,717  | ) |        | $ | 240,776 | 
|Comprehensive income:                             |                                 |                            |        |              |  |                |       |            |  |       |         |         |  |          |         |             |   |          |         |               |         |        |         |   |  |   |         |   |        |   |         | 
|                                                  | Net income                      |                            |        |              |  |                |       |            |  |       |         |         |  | 28,819   |         |             |   |          |         |               |         | 28,819 |        
|                                                  | Currency translation effect     |                            |        |              |  |                |       |            |  |       |         |         |  |          |         | (3,567      | ) |          |         | (3,567        | )      
|                                                  |                                 |                            |        |              |  |                |       |            |  |       |         |         |  |          |         |             |   |          |         |               |         |        |         |   |  |   |         |   |        |   |         | 
|                                                  |                                 | Total comprehensive income |        |              |  |                |       |            |  |       |         |         |  |          |         |             |   |          | 25,252  |              
|                                                  |                                 |                            |        |              |  |                |       |            |  |       |         |         |  |          |         |             |   |          |         |               |         |        |         |   |  |   |         |   |        |   |         | 
|Shares issued under stock plans                   |                                 |                            | 1,774  |              |  |                | 2     |            |  |       |         |         |  |          | 35,197  |             |   |          |         |               |         |        | 35,199  |  
|Income tax benefit from exercise
of stock options |                                 |                            |        |              |  |                |       |            |  |       | 8,634   |         |  |          |         |             |   |          | 8,634   |              
|                                                  |                                 |                            |        |              |  |                |       |            |  |       |         |         |  |          |         |             |   |          |         |               |         |        |         |   |  |   |         |   |        |   |         | 
|Balance at June 30, 2000                          |                                 |                            | 32,616 |              |  |                | 33    |            |  |       |        |         |  |          |        |             |   |          | 197,376 |               |         |        | 119,736 |   |  |   | (7,284  | ) |        |   | 309,861 | 
|Comprehensive loss:                               |                                 |                            |        |              |  |                |       |            |  |       |         |         |  |          |         |             |   |          |         |               |         |        |         |   |  |   |         |   |        |   |         | 
|                                                  | Net loss                        |                            |        |              |  |                |       |            |  |       |         |         |  | (31,073  | )       |             |   |          |         | (31,073       | )      
|                                                  | Currency translation effect     |                            |        |              |  |                |       |            |  |       |         |         |  |          |         | (3,712      | ) |          |         | (3,712        | )      
|                                                  |                                 |                            |        |              |  |                |       |            |  |       |         |         |  |          |         |             |   |          |         |               |         |        |         |   |  |   |         |   |        |   |         | 
|                                                  |                                 | Total comprehensive loss   |        |              |  |                |       |            |  |       |         |         |  |          |         |             |   |          | (34,785 | )            
|                                                  |                                 |                            |        |              |  |                |       |            |  |       |         |         |  |          |         |             |   |          |         |               |         |        |         |   |  |   |         |   |        |   |         | 
|Treasury shares repurchased                       |                                 |                            |        |              |  |                | 1,389 |            |  |       | (23,764 | )       |  |          |         |             |   |          |         |               | (23,764 | )     
|Shares issued under stock plans                   |                                 |                            | 1,099  |              |  |                | 1     |            |  |       | (34     | )       |  |          | 494     |             |   |          | 14,101  |               |         |        | (64     | ) |  |   |         |   | 14,532 |  
|Income tax benefit from exercise
of stock options |                                 |                            |        |              |  |                |       |            |  |       | 1,475   |         |  |          |         |             |   |          | 1,475   |              
|                                                  |                                 |                            |        |              |  |                |       |            |  |       |         |         |  |          |         |             |   |          |         |               |         |        |         |   |  |   |         |   |        |   |         | 
|Balance at June 30, 2001                          |                                 |                            | 33,715 |              |  |                | 34    |            |  |       | 1,355   |         |  |          | (23,270 | )           |   |          | 212,952 |               |         |        | 88,599  |   |  |   | (10,996 | ) |        |   | 267,319 | 
|Comprehensive income:                             |                                 |                            |        |              |  |                |       |            |  |       |         |         |  |          |         |             |   |          |         |               |         |        |         |   |  |   |         |   |        |   |         | 
|                                                  | Net income                      |                            |        |              |  |                |       |            |  |       |         |         |  | 14,981   |         |             |   |          |         | 14,981        |        
|                                                  | Currency translation effect     |                            |        |              |  |                |       |            |  |       |         |         |  |          |         | 2,653       |   |          |         | 2,653         |        
|                                                  | Unrealized gains on investments |                            |        |              |  |                |       |            |  |       |         |         |  |          |         | 27          |   |          |         | 27            |        
|                                                  |                                 |                            |        |              |  |                |       |            |  |       |         |         |  |          |         |             |   |          |         |               |         |        |         |   |  |   |         |   |        |   |         | 
|                                                  |                                 | Total comprehensive income |        |              |  |                |       |            |  |       |         |         |  |          |         |             |   |          | 17,661  |              
|                                                  |                                 |                            |        |              |  |                |       |            |  |       |         |         |  |          |         |             |   |          |         |               |         |        |         |   |  |   |         |   |        |   |         | 
|Shares issued under stock plans                   |                                 |                            | 947    |              |  |                | 1     |            |  |       | (11     | )       |  |          | 173     |             |   |          | 13,378  |               |         |        | (108    | ) |  |   |         |   | 13,444 |  
|Income tax benefit from exercise
of stock options |                                 |                            |        |              |  |                |       |            |  |       | 1,233   |         |  |          |         |             |   |          | 1,233   |              
|                                                  |                                 |                            |        |              |  |                |       |            |  |       |         |         |  |          |         |             |   |          |         |               |         |        |         |   |  |   |         |   |        |   |         | 
|Balance at June 30, 2002                          |                                 |                            | 34,662 |              |  | $              | 35    |            |  |       | 1,344   |         |  | $        | (23,097 | )           |   | $        | 227,563 |               |         | $      | 103,472 |   |  | $ | (8,316  | ) |        | $ | 299,657 | 
|                                                  |                                 |                            |        |              |  |                |       |            |  |       |         |         |  |          |         |             |   |          |         |               |         |        |         |   |  |   |         |   |        |   |         | 

See accompanying notes to consolidated financial statements.

29



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HYPERION SOLUTIONS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

|                                                                                         |                                                                          |   |                     |         |      |   |         |         |   |   |         |         |  
|---------------------------------------------------------------------------------------- | ------------------------------------------------------------------------ | - | ------------------- | ------- | ---- | - | ------- | ------- | - | - | ------- | ------- | -
|                                                                                         |                                                                          |   | Year Ended June 30,
|                                                                                         |                                                                          |   |                    
|                                                                                         |                                                                          |   | 2002                |         | 2001 |   | 2000   
|                                                                                         |                                                                          |   |                     |         |      |   |        
|CASH FLOWS FROM OPERATING ACTIVITIES:                                                    |                                                                          |   |                     |         |      |   |         |         |   |   |         |        
|Net income (loss)                                                                        |                                                                          | $ | 14,981              |         |      | $ | (31,073 | )       |   | $ | 28,819  |        
|Adjustments to reconcile net income (loss) to net cash
provided by operating activities: |                                                                          |   |                     |         |      |   |         |         |   |   |         |        
|                                                                                         | Gain on redemption of debt                                               |   |                     | (941    | )    |   |         | (2,362  | ) |   |         |        |  
|                                                                                         | Loss on sale of assets                                                   |   |                     | 128     |      |   |         |        |   |   |         |        |  
|                                                                                         | Depreciation and amortization                                            |   |                     | 31,907  |      |   |         | 38,901  |   |   |         | 34,482  |  
|                                                                                         | Provision for accounts receivable allowances                             |   |                     | 20,850  |      |   |         | 27,677  |   |   |         | 8,316   |  
|                                                                                         | Deferred income taxes                                                    |   |                     | (932    | )    |   |         | (12,602 | ) |   |         | (3,368  | )
|                                                                                         | Income tax benefit from exercise of stock options                        |   |                     | 1,233   |      |   |         | 1,475   |   |   |         | 8,634   |  
|                                                                                         | Other                                                                    |   |                     |        |      |   |         | 10,902  |   |   |         |        |  
|Changes in assets and liabilities:                                                       |                                                                          |   |                     |         |      |   |         |         |   |   |         |        
|                                                                                         | Accounts receivable                                                      |   |                     | 31,856  |      |   |         | (22,629 | ) |   |         | (59,454 | )
|                                                                                         | Prepaid expenses and other current assets                                |   |                     | 3,932   |      |   |         | (10,389 | ) |   |         | (2,060  | )
|                                                                                         | Other assets                                                             |   |                     | (621    | )    |   |         | 286     |   |   |         | 546     |  
|                                                                                         | Accounts payable and accrued expenses                                    |   |                     | (6,290  | )    |   |         | 2,278   |   |   |         | (2,015  | )
|                                                                                         | Accrued employee compensation and benefits                               |   |                     | 6,399   |      |   |         | (1,015  | ) |   |         | 2,301   |  
|                                                                                         | Income taxes payable                                                     |   |                     | 117     |      |   |         | (9,609  | ) |   |         | 3,834   |  
|                                                                                         | Deferred revenue                                                         |   |                     | (8,892  | )    |   |         | 11,403  |   |   |         | 7,739   |  
|                                                                                         | Other current liabilities                                                |   |                     | (6,812  | )    |   |         | 13,727  |   |   |         |        |  
|                                                                                         | Other liabilities                                                        |   |                     | (2,560  | )    |   |         | 14,303  |   |   |         |        |  
|                                                                                         |                                                                          |   |                     |         |      |   |         |         |   |   |         |        
|Net cash provided by operating activities                                                |                                                                          |   | 84,355              |         |      |   | 31,273  |         |   |   | 27,774  |        
|CASH FLOWS FROM INVESTING ACTIVITIES:                                                    |                                                                          |   |                     |         |      |   |         |         |   |   |         |        
|                                                                                         | Proceeds from maturity of investments, net                               |   |                     | 5,396   |      |   |         | 8,291   |   |   |         | 5,590   |  
|                                                                                         | Purchases of property and equipment, net                                 |   |                     | (15,067 | )    |   |         | (42,573 | ) |   |         | (21,805 | )
|                                                                                         | Purchases of intangible and other assets                                 |   |                     | (4,954  | )    |   |         | (4,677  | ) |   |         | (4,683  | )
|                                                                                         | Business acquisitions                                                    |   |                     |        |      |   |         |        |   |   |         | (5,088  | )
|                                                                                         |                                                                          |   |                     |         |      |   |         |         |   |   |         |        
|Net cash used in investing activities                                                    |                                                                          |   | (14,625             | )       |      |   | (38,959 | )       |   |   | (25,986 | )      
|CASH FLOWS FROM FINANCING ACTIVITIES:                                                    |                                                                          |   |                     |         |      |   |         |         |   |   |         |        
|                                                                                         | Principal payments on mortgage loan                                      |   |                     | (242    | )    |   |         | (222    | ) |   |         | (4,527  | )
|                                                                                         | Redemption of debt                                                       |   |                     | (8,931  | )    |   |         | (8,652  | ) |   |         |        |  
|                                                                                         | Treasury stock transactions, net                                         |   |                     | 64      |      |   |         | (23,270 | ) |   |         |        |  
|                                                                                         | Proceeds from exercise of stock options and employee
stock purchase plan |   |                     | 13,235  |      |   |         | 14,038  |   |   |         | 35,199  |  
|                                                                                         |                                                                          |   |                     |         |      |   |         |         |   |   |         |        
|Net cash provided by (used in) financing activities                                      |                                                                          |   | 4,126               |         |      |   | (18,106 | )       |   |   | 30,672  |        
|Effect of exchange rate on cash and cash equivalents                                     |                                                                          |   | 4,370               |         |      |   | (3,712  | )       |   |   | (3,567  | )      
|                                                                                         |                                                                          |   |                     |         |      |   |         |         |   |   |         |        
|INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                         |                                                                          |   | 78,226              |         |      |   | (29,504 | )       |   |   | 28,893  |        
|Cash and cash equivalents at beginning of year                                           |                                                                          |   | 232,904             |         |      |   | 262,408 |         |   |   | 233,515 |        
|                                                                                         |                                                                          |   |                     |         |      |   |         |         |   |   |         |        
|CASH AND CASH EQUIVALENTS AT END OF YEAR                                                 |                                                                          | $ | 311,130             |         |      | $ | 232,904 |         |   | $ | 262,408 |        
|                                                                                         |                                                                          |   |                     |         |      |   |         |         |   |   |         |        
|SUPPLEMENTAL CASH FLOW INFORMATION:                                                      |                                                                          |   |                     |         |      |   |         |         |   |   |         |        
|                                                                                         | Cash paid for income taxes                                               |   | $                   | 9,095   |      |   | $       | 5,838   |   |   | $       | 8,500   |  
|                                                                                         | Cash paid for interest                                                   |   | $                   | 4,316   |      |   | $       | 4,841   |   |   | $       | 4,712   |  

See accompanying notes to consolidated financial statements.

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HYPERION SOLUTIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.   BUSINESS

Hyperion Solutions Corporation (Hyperion)
develops, markets and supports business performance management
software solutions that enable companies to continually measure performance,
anticipate results and drive profitability across key business activities.
Hyperions customers use its products to help them collaborate enterprise-wide,
focus resources, improve operational efficiencies and leverage opportunities
for growth.

Hyperions business performance management solutions provide comprehensive
support for the entire process of goal setting, business modeling, planning,
budgeting, performance monitoring, analyzing and reporting throughout
organizations. Hyperions products complement existing enterprise resource
planning, customer relationship management, supply chain management and
transaction systems by integrating data from multiple sources, providing a
common view across the enterprise and enabling an integrated business
performance management process that aligns individual goals with corporate
objectives.

Hyperion provides applications along with a development and deployment platform
to enable enterprise-class business performance management across a wide
variety of functional and business activity areas. Hyperion uses its online
analytical processing technology, Hyperion Essbase, as the foundation for its
platform, Hyperion Essbase XTD. Components within Hyperion Essbase XTD can be
used individually to create tailored applications or in conjunction with
Hyperions packaged applications to support the entire business performance
management process. Hyperion was formed in August 1998 when Arbor
Software, founded in 1991, acquired Hyperion Software, founded in
1981.

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Principles of Consolidation

The consolidated financial statements include the accounts of Hyperion and its
subsidiaries, all of which are wholly-owned. All significant intercompany
accounts and transactions have been eliminated.

Certain prior period amounts in the consolidated financial statements and notes
thereto have been reclassified to conform to the current period presentation.

Use of Estimates

The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ from
those estimates, and such differences could affect the results of operations
reported in future periods.

Revenue Recognition

Hyperion derives revenues from the licensing of its software products and
providing maintenance and professional services. Hyperions standard software
license agreement is a perpetual license to use its products on an end user,
concurrent user or central processing unit basis. Hyperion records revenue
from licensing of software products to end users provided there is persuasive
evidence of an arrangement, the fee is fixed and determinable, collection is
reasonably assured and delivery of the product has occurred as prescribed by
Statement of Position (SOP) No. 97-2, Software Revenue Recognition, issued
by the American Institute of Certified Public Accountants. For arrangements
with multiple elements, and for which vendor specific objective evidence
(VSOE) of fair value exists for the undelivered elements, revenue is
recognized for the delivered elements based upon the residual method in
accordance with SOP 98-9, Modifications of SOP 97-2 with Respect to Certain
Transactions. VSOE of fair value for all elements of an arrangement is based
upon the normal pricing and discounting practices for those products and
services when sold separately. VSOE of fair value for services is based upon
the standard hourly rate Hyperion charges for such services when sold
separately. VSOE of fair value for maintenance is measured by the

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stated renewal rates included in the contracts. If the fair value of any
undelivered element included in a multiple-element arrangement cannot be
objectively determined, revenue is deferred until all elements are delivered,
services have been performed or until fair value can be objectively determined.
License revenue from resellers or distributors is recognized upon sell-through
to the end customer. Amounts billed or payments received in advance of revenue
recognition are recorded as deferred revenue.

Maintenance agreements are generally a 12 month prepaid contract that is
recognized ratably over the period. Customers may also enter into a
professional services arrangement that is typically on a time and materials
basis and includes consulting and training services. Consulting and training
revenues are typically recognized as earned.

Consulting revenues are generated primarily from implementation services
related to the installation of Hyperions products. These arrangements are
generally accounted for separately from the license revenue because the
arrangements qualify as service transactions as defined in SOP 97-2.
Hyperions services are generally not essential to the functionality of the
software. Hyperions products are fully functional upon delivery of the
product and implementation does not require any significant modification or
alteration. Hyperions services often include assistance with product
adoption. Other significant factors considered in determining whether the
revenue should be accounted for separately include degree of risk, availability
of services from other vendors, timing of payments and impact of milestones or
acceptance criteria on the realizability of the software license fee.
Customers generally purchase these services to facilitate the adoption of
Hyperions products and obtain dedicated personnel to participate in the
services being performed, but they may also decide to use their own internal
resources or appoint other professional service organizations to provide these
services. Payments related to the software product to which the services
relate are typically billed independently from the services and, therefore, are
not coincident with performance of such services. License agreements generally
do not include acceptance provisions. If an arrangement does not qualify for
separate accounting of the license and service elements, license revenue is
generally recognized together with the consulting services using the
percentage-of-completion method of contract accounting in accordance with SOP
No. 81-1, Accounting for Performance of Construction-Type and Certain
Product-Type Contracts and Accounting Research Bulletin No. 45, Long-Term
Construction-Type Contracts.

Foreign Currency

The functional currency of Hyperions international subsidiaries is their local
currency. The financial statements of these subsidiaries are translated into
United States dollars using the period-end exchange rates for assets and
liabilities, and average exchange rates for the period for revenues and
expenses. Translation gains and losses that Hyperion considers to be of a
long-term investment nature are recorded in accumulated other comprehensive
income (loss), a separate component of shareholders equity. Translation gains
and losses for those international subsidiaries for which Hyperion anticipates
settlement in the foreseeable future are recorded in the consolidated
statements of income. Net gains and losses resulting from foreign exchange
transactions are also included in the consolidated statements of income. The
net gains and losses recorded in the consolidated statements of income were not
significant during the periods presented.

Stock-Based Compensation

Hyperion accounts for stock option grants in accordance with Accounting
Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to
Employees, and complies with the disclosure provisions of Statement of
Financial Accounting Standards (SFAS) No. 123, Accounting for Stock-Based
Compensation. Hyperion generally grants its stock options at exercise prices
equal to the fair market value of the underlying stock on the date of grant
and, therefore, under APB Opinion No. 25, no compensation expense is recognized
in the statements of income.

Cash, Cash Equivalents and Short-Term Investments

Hyperion classifies highly-liquid investments with remaining maturities of
three months or less at the time of purchase as cash equivalents. Cash
equivalents are comprised primarily of investment-grade commercial paper, and
U.S. federal, state and political subdivision obligations.

Investments are comprised of U.S. government and debt securities. Investments
with remaining maturities exceeding three months but less than one year are
classified as short-term investments. Investments with maturities greater than
one year are classified as long-term investments. All debt securities that
have readily determinable fair values have been classified as
available-for-sale in accordance with SFAS No. 115, Accounting for Certain
Investments in Debt and Equity Securities. As a result, investments are
reported at fair value, and unrealized holding gains and losses, net of
applicable taxes, are reported in accumulated other comprehensive income
(loss), a separate component of stockholders equity, until realized. To date,
unrealized gains and losses have not been material. On a quarterly basis,
management evaluates individual securities to

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determine whether a decline in fair value is other than temporary. If the
decline in fair value is considered to be other than temporary, the cost basis
of the individual security is written down to fair value as a new cost basis
and the amount of the write-down is included in the statement of income.
Interest income is recognized when earned. Realized gains and losses for
marketable securities are derived using the specific identification method for
determining the cost of the securities sold.

Allowance for Doubtful Accounts

Hyperion makes judgments as to its ability to collect outstanding receivables
and provides allowances for a portion of receivables when collection becomes
doubtful. Provisions are made based upon a specific review of all significant
outstanding invoices. For those invoices not specifically reviewed, provisions
are made at differing rates, based upon the age of the receivable. In
determining these percentages, Hyperion analyzes its historical collection
experience, customer concentrations, customer credit-worthiness and current
economic trends. If the historical data used to calculate the allowance
provided for doubtful accounts does not reflect the future ability to collect
outstanding receivables, additional provisions for doubtful accounts may be
needed.

Fair Value of Financial Instruments

All current assets and current liabilities, because of their short-term nature,
are stated at cost, which approximates fair value. The fair value of
Hyperions 4.5% convertible subordinated notes was approximately $71.2 million
at June 30, 2002, based on quoted market prices. The carrying amount of
Hyperions mortgage loan approximates fair value due to the market value
interest rate which this loan bears.

Long-Lived Assets

Hyperion accounts for long-lived assets under SFAS No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of,
which requires Hyperion to review for impairment of long-lived assets whenever
events or changes in circumstances indicate that the carrying amount of an
asset might not be recoverable. When such an event occurs, Hyperion estimates
the future cash flows expected to result from the use of the asset and its
eventual disposition. If the undiscounted expected future cash flows are less
than the carrying amount of the asset, an impairment loss is recognized. An
impairment charge of $4.1 million was recorded during the year ended June 30,
2001.

Product Development Costs

Hyperion begins capitalizing software product development costs, principally
wages and contractor fees, only after establishing technological feasibility.
Capitalization ceases when the product is available for general release.
Annual amortization of these costs represents the greater of the amount
computed using (i) the ratio that current gross revenues for the products bear
to the total current and anticipated future gross revenues for the products, or
(ii) the straight-line method over the remaining estimated economic life of the
products (generally three years). The amortization of capitalized product
development costs begins upon the general release of the software to customers.

Income Taxes

Income taxes are accounted for using an asset and liability approach, which
requires the recognition of taxes payable or refundable for the current year
and deferred tax assets and liabilities for the future tax consequences of
events that have been recognized in Hyperions financial statements or tax
returns. The measurement of current and deferred tax assets and liabilities are
based on provisions of the enacted tax law; the effects of future changes in
tax laws or rates are not anticipated. The measurement of deferred tax assets
is reduced, if necessary, by the amount of any tax benefits that, based on
available evidence, are not expected to be realized.

Concentration of Credit Risk

Financial instruments that potentially subject Hyperion to a concentration of
credit risk principally comprise cash and cash equivalents, short-term
investments and accounts receivable. Regarding its cash equivalent and
short-term investments, Hyperion only invests in instruments with an investment
credit rating of AA and better. Hyperion places its investments for safekeeping
with high-credit-quality financial institutions, and by policy, limits the
amount of credit exposure from any one institution or issuer.

For fiscal 2002, 2001 and 2000, Hyperion had no customers that accounted for
10% or more of total revenues. As of June 30, 2002 and 2001, Hyperion had no
customers that accounted for 10% or more of gross accounts receivable.

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Earnings Per Share

Earnings per share, or EPS, is computed in accordance with SFAS No. 128,
Earnings Per Share. Basic EPS is computed by dividing net income (loss)
available to common stockholders by the weighted average number of common
shares outstanding during the period. Diluted EPS is computed using the
weighted average number of common shares outstanding and potentially dilutive
securities outstanding during the period. Potentially dilutive securities
consist of stock options (using the treasury stock method) and shares issuable
upon conversion of the convertible subordinated notes (using the if-converted
method). Potentially dilutive securities are excluded from the computation of
diluted EPS if their effect would be antidilutive.

The following table sets forth the computation of basic and diluted earnings
(loss) per share (in thousands, except per share amounts):

|                                                |                                         |   |                     |      |      |   |         |       |   |   |        |      | 
|----------------------------------------------- | --------------------------------------- | - | ------------------- | ---- | ---- | - | ------- | ----- | - | - | ------ | ---- | 
|                                                |                                         |   | Year Ended June 30,
|                                                |                                         |   |                    
|                                                |                                         |   | 2002                |      | 2001 |   | 2000   
|                                                |                                         |   |                     |      |      |   |        
|Numerator:                                      |                                         |   |                     |      |      |   |         |       |   |   |        |     
|Income (loss) before extraordinary item         |                                         | $ | 14,379              |      |      | $ | (32,537 | )     |   | $ | 28,819 |     
|Extraordinary item  gain on redemption of debt |                                         |   | 602                 |      |      |   | 1,464   |       |   |   |       |     
|                                                |                                         |   |                     |      |      |   |         |       |   |   |        |     
|Net income (loss)                               |                                         | $ | 14,981              |      |      | $ | (31,073 | )     |   | $ | 28,819 |     
|                                                |                                         |   |                     |      |      |   |         |       |   |   |        |     
|Denominator for basic EPS                       |                                         |   | 32,836              |      |      |   | 32,592  |       |   |   | 31,665 |     
|Dilutive effect of stock options                |                                         |   | 655                 |      |      |   |        |       |   |   | 1,442  |     
|                                                |                                         |   |                     |      |      |   |         |       |   |   |        |     
|Denominator for diluted EPS                     |                                         |   | 33,491              |      |      |   | 32,592  |       |   |   | 33,107 |     
|                                                |                                         |   |                     |      |      |   |         |       |   |   |        |     
|Basic EPS:                                      |                                         |   |                     |      |      |   |         |       |   |   |        |     
|                                                | Income (loss) before extraordinary item |   | $                   | 0.44 |      |   | $       | (0.99 | ) |   | $      | 0.91 | 
|                                                | Extraordinary gain                      |   |                     | 0.02 |      |   |         | 0.04  |   |   |        |     | 
|                                                |                                         |   |                     |      |      |   |         |       |   |   |        |     
|                                                | Net income (loss)                       |   | $                   | 0.46 |      |   | $       | (0.95 | ) |   | $      | 0.91 | 
|                                                |                                         |   |                     |      |      |   |         |       |   |   |        |     
|Diluted EPS:                                    |                                         |   |                     |      |      |   |         |       |   |   |        |     
|                                                | Income (loss) before extraordinary item |   | $                   | 0.43 |      |   | $       | (0.99 | ) |   | $      | 0.87 | 
|                                                | Extraordinary gain                      |   |                     | 0.02 |      |   |         | 0.04  |   |   |        |     | 
|                                                |                                         |   |                     |      |      |   |         |       |   |   |        |     
|                                                | Net income (loss)                       |   | $                   | 0.45 |      |   | $       | (0.95 | ) |   | $      | 0.87 | 
|                                                |                                         |   |                     |      |      |   |         |       |   |   |        |     

For fiscal 2002, 2001 and 2000, stock option rights totaling 5.7 million, 8.4
million and 1.7 million common shares, respectively, have been excluded from
the diluted EPS calculations because their effect would have been antidilutive.
For fiscal 2002, 2001 and 2000, 1.4 million, 1.6 million and 1.8 million
shares of common stock issuable upon conversion of the convertible subordinated
notes due 2005 have been excluded from the diluted EPS calculation because of
their antidilutive effect.

Comprehensive Income (Loss)

Comprehensive income (loss) includes foreign currency translation gains and
losses and unrealized gains and losses on available-for-sale securities. The
net unrealized gains and losses on available-for-sale securities for the years
ended June 30, 2001 and 2000 were not material.

Derivative Instruments and Hedging Activities

Effective July 1, 2000, Hyperion adopted SFAS No. 133, Accounting for
Derivative Instruments and Hedging Activities. SFAS No. 133 establishes
accounting and reporting standards requiring that every derivative instrument,
including certain derivative instruments embedded in other contracts, be
recorded in the balance sheet as either an asset or liability measured at its
fair value. SFAS No. 133 requires that changes in the derivatives fair value
be recognized currently in earnings unless specific hedge accounting criteria
are met. Special accounting for qualifying hedges allows a derivatives gains
and losses to offset related results on the hedged item in the income statement
to the extent effective, and requires that Hyperion formally document,
designate and assess the effectiveness of transactions that receive hedge
accounting. The adoption of SFAS No. 133

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did not have a material effect on Hyperions financial condition or results of
operations.

Recent Accounting Pronouncements

In July 2001, the Financial Accounting Standards Board (FASB) issued SFAS No.
141, Business Combinations, which supersedes APB Opinion No. 16, Business
Combinations. SFAS No. 141 requires the purchase method of accounting for
business combinations initiated after June 30, 2001 and eliminates the
pooling-of-interests method. In addition, SFAS No. 141 establishes specific
criteria for the recognition of intangible assets separately from goodwill and
requires unallocated negative goodwill to be written-off immediately as an
extraordinary gain. The adoption of the provisions of SFAS No. 141, effective
July 1, 2001, did not have a material impact on Hyperions financial position,
results of operations or cash flows.

In July 2001, the FASB also issued SFAS No. 142, Goodwill and Other Intangible
Assets. This statement supersedes APB Opinion No. 17, Intangible Assets,
and requires, among other things, the discontinuance of amortization related to
goodwill and indefinite lived intangible assets. In addition, the standard
includes provisions upon adoption for the reclassification of certain existing
recognized intangibles as goodwill, reassessment of the useful lives of
existing recognized intangibles and reclassification of certain intangibles out
of previously reported goodwill. Under SFAS No. 142, goodwill is tested for
impairment annually, and is tested for impairment between annual tests whenever
events or changes in circumstances indicate that the carrying amount may not be
recoverable. Impairment testing for goodwill is done at a reporting unit
level. Currently, Hyperion has identified one reporting unit under the
criteria set forth by SFAS No. 142. An impairment loss would generally be
recognized when the carrying amount of the reporting units net assets,
including goodwill, exceeds the estimated fair value of the reporting unit.
Hyperion adopted SFAS No. 142 effective July 1, 2001, which resulted in
Hyperion no longer amortizing its existing net goodwill balance of
approximately $7.2 million. With the adoption of SFAS No. 142, intangible
assets with a definite life are amortized on a straight-line basis over periods
ranging from 3 to 7 years. Intangible assets with a definite life are tested
for impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. An impairment loss would be
recognized when the carrying amount of an asset exceeds the estimated
undiscounted cash flows expected to result from the use of the asset and its
eventual disposition. The amount of the impairment loss is calculated as the
excess of the assets carrying value over its fair value. Fair value is
generally determined using a discounted cash flow analysis. The impact of SFAS
No. 142 on fiscal 2001 results would have decreased the loss before
extraordinary item and the net loss by approximately $2.7 million, or $0.08 per
diluted share. The impact of SFAS No. 142 on fiscal 2000 results would have
increased income before extraordinary item and net income by approximately $1.7
million, or $0.05 per diluted share.

In October 2001, the FASB issued SFAS No. 144, Accounting for the Impairment
or Disposal of Long-Lived Assets. This statement supersedes SFAS No. 121,
Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to Be Disposed of. Although retaining many of the fundamental recognition and
measurement provisions of SFAS No. 121, the new statement significantly changes
the criteria that would have to be met to classify an asset as held-for-sale.
The statement also supersedes certain provisions of APB Opinion No. 30,
Reporting the Results of Operations  Reporting the Effects of Disposal of a
Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring
Events and Transactions, and will require expected future operating losses
from discontinued operations to be displayed in discontinued operations in the
period in which the losses are incurred rather than as of the measurement date,
as presently required. As required by SFAS No. 144, Hyperion adopted this new
statement on July 1, 2002. The adoption did not have a material impact on its
financial position, results of operations or cash flows.

In November 2001, the FASB issued a Staff Announcement that requires
classification of reimbursements for out-of-pocket expenses incurred as
revenue in the income statement. This Announcement was effective for reporting
periods beginning after December 15, 2001. Hyperion adopted this Announcement
effective January 1, 2002. As a result, Hyperion no longer records
out-of-pocket expense reimbursements as a reduction of costs incurred and
comparative financial statements from prior periods have been reclassified.
For the years ended June 30, 2001 and 2000, approximately $11.3 million and
$6.9 million has been reclassified primarily from cost of maintenance and
services to maintenance and services revenues to conform to the current period
presentation.

In May 2002, the FASB issued SFAS No. 145, Rescission of FASB Statements Nos.
4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections.
SFAS No. 145 eliminates Statement 4 (and Statement 64, as it amends Statement
4), which requires gains and losses from extinguishments of debt to be
aggregated and, if material, classified as an extraordinary item, net of the
related income tax effect. As a result, the criteria in APB Opinion 30 will
now be used to determine the classification of those gains and losses. SFAS
No. 145 amends FASB Statement No. 13 to require that certain lease
modifications that have economic effects similar to sale-leaseback transactions
be accounted for in the same manner as

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sale-leaseback transactions. This amendment is consistent with the FASBs goal
of requiring similar accounting treatment for transactions that have similar
economic effects. In addition, SFAS No. 145 makes technical corrections to
existing pronouncements. While those corrections are not substantive in
nature, in some instances, they may change accounting practice. This statement
is effective for fiscal years beginning after May 15, 2002 for the provisions
related to the rescission of Statements 4 and 64, and for all transactions
entered into after May 15, 2002 for the provision related to the amendment of
Statement 13, although early adoption is permitted. Hyperion is currently
assessing the impact of SFAS No. 145 on its operating results and financial
condition.

In July 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated
with Exit or Disposal Activities, which nullifies Emerging Issues Task Force
(EITF) Issue No. 94-3. SFAS No. 146 requires that a liability for a cost
associated with an exit or disposal activity be recognized when the liability
is incurred, whereas EITF No. 94-3 had required recognition of the liability as
of the commitment date of an exit plan. This statement is effective for exit
or disposal activities initiated after December 31, 2002. Hyperion is
currently assessing the impact of SFAS No. 146 on its operating results and
financial condition.

3.   INVESTMENTS

Investments consist of the following at June 30 (in thousands):

|                                       |  |      |        |      |  |   |        | 
|-------------------------------------- |  | ---- | ------ | ---- |  | - | ------ | 
|                                       |  | 2002 |        | 2001
|                                       |  |      |        |     
|State and municipal bonds              |  | $    | 1,000  |      |  | $ | 1,000  | 
|U.S. government and agency obligations |  |      | 15,074 |      |  |   | 8,452  | 
|Corporate notes                        |  |      | 3,054  |      |  |   | 9,995  | 
|Foreign debt securities                |  |      |       |      |  |   | 5,013  | 
|                                       |  |      |        |      |  |   |        | 
|                                       |  | $    | 19,128 |      |  | $ | 24,460 | 
|                                       |  |      |        |      |  |   |        | 

Included in foreign debt securities at June 30, 2001 are investments totaling
approximately $2.0 million that have contractual maturities of between one and
two years. These investments are included in other assets on the accompanying
balance sheet. Gross realized gains and losses from the sale of investments
were not material for the years ended June 30, 2002, 2001 and 2000.

4.   PROPERTY AND EQUIPMENT

Property and equipment consist of the following at
June 30 (in thousands):

|                                          |  |      |          |            |  |      |          |   |  |            |        | 
|----------------------------------------- |  | ---- | -------- | ---------- |  | ---- | -------- | - |  | ---------- | ------ | 
|                                          |  |      |          |            |  |      |          |   |  | Useful    
|                                          |  | 2002 |          | 2001       |  | Life
|                                          |  |      |          |            |  |     
|                                          |  |      |          | (In years)
|                                         
|                                         
|                                         
|                                         
|Land                                      |  | $    | 3,800    |            |  | $    | 3,800    |   |  |            | N/A    | 
|Building and building improvements        |  |      | 35,799   |            |  |      | 35,756   |   |  |            | 5 - 39 | 
|Leasehold improvements                    |  |      | 14,195   |            |  |      | 16,718   |   |  | lease term
|Computer equipment                        |  |      | 85,259   |            |  |      | 77,199   |   |  |            | 2      | 
|Computer software                         |  |      | 23,969   |            |  |      | 21,387   |   |  |            | 3 - 5  | 
|Other equipment                           |  |      | 10,249   |            |  |      | 10,813   |   |  |            | 3 - 5  | 
|Furniture and fixtures                    |  |      | 15,182   |            |  |      | 13,375   |   |  |            | 7      | 
|Assets not yet placed in service          |  |      | 5,153    |            |  |      | 3,828    |   |  |            | N/A    | 
|                                          |  |      |          |            |  |      |          |   |  |            |        | 
|                                          |  |      | 193,606  |            |  |      | 182,876  |   |  |            |        | 
|Accumulated depreciation and amortization |  |      | (123,740 | )          |  |      | (102,124 | ) |  |            |        | 
|                                          |  |      |          |            |  |      |          |   |  |            |        | 
|                                          |  | $    | 69,866   |            |  | $    | 80,752   |   |  |            |        | 
|                                          |  |      |          |            |  |      |          |   |  |            |        | 

Property and equipment are recorded at cost. Depreciation is generally
computed using the straight-line method over the estimated useful lives of the
applicable assets. Leasehold improvements are amortized over the lesser of
the remaining term of the lease or the useful life of the improvements.
Depreciation and amortization of property and equipment totaled $26.1 million,
$28.3 million and $25.6 million in fiscal 2002, 2001 and 2000, respectively.
Additionally, a $5.3 million impairment charge to property and equipment was
recognized in fiscal 2001.

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5.   GOODWILL

The changes in the carrying amount of goodwill consist of the following (in
thousands):

|                                    |  |      |       |      |  |   |        |  
|----------------------------------- |  | ---- | ----- | ---- |  | - | ------ | -
|                                    |  | 2002 |       | 2001
|                                    |  |      |       |     
|Balance at beginning of year        |  | $    | 7,169 |      |  | $ | 8,555  |  
|Goodwill acquired during the period |  |      | 1,000 |      |  |   | 2,784  |  
|Amortization                        |  |      |      |      |  |   | (4,300 | )
|Other                               |  |      | 2     |      |  |   | 130    |  
|                                    |  |      |       |      |  |   |        |  
|Balance at end of year              |  | $    | 8,171 |      |  | $ | 7,169  |  
|                                    |  |      |       |      |  |   |        |  

6.   INTANGIBLE ASSETS

Intangible assets consist of the following at June 30 (in thousands):

|                                        |  |          |        |              |  |          |         |              |  |   |        |  |  |   |         |  
|--------------------------------------- |  | -------- | ------ | ------------ |  | -------- | ------- | ------------ |  | - | ------ |  |  | - | ------- | -
|                                        |  | 2002     |        | 2001        
|                                        |  |          |        |             
|                                        |  | Gross    |        |              |  |          |         | Gross        |  |   |        | 
|                                        |  | Carrying |        | Accumulated  |  | Carrying |         | Accumulated 
|                                        |  | Amount   |        | Amortization |  | Amount   |         | Amortization
|                                        |  |          |        |              |  |          |         |             
|Product development costs               |  | $        | 17,474 |              |  | $        | (14,544 | )            |  | $ | 17,596 |  |  | $ | (13,281 | )
|Acquired technologies                   |  |          | 12,887 |              |  |          | (7,454  | )            |  |   | 9,515  |  |  |   | (5,167  | )
|Copyrights and trademarks               |  |          | 1,320  |              |  |          | (1,190  | )            |  |   | 1,263  |  |  |   | (1,146  | )
|Product distribution and
service rights |  |          |       |              |  |          |        |              |  |   | 546    |  |  |   | (23     | )
|                                        |  |          |        |              |  |          |         |              |  |   |        |  |  |   |         |  
|                                        |  | $        | 31,681 |              |  | $        | (23,188 | )            |  | $ | 28,920 |  |  | $ | (19,617 | )
|                                        |  |          |        |              |  |          |         |              |  |   |        |  |  |   |         |  

During fiscal 2002, 2001 and 2000, Hyperion capitalized product development
costs of approximately $0.6 million, $2.2 million and $2.6 million,
respectively. Amortization of intangible assets totaled $4.9 million, $5.8
million and $6.1 million, of which $2.0 million, $2.1 million and $2.2
million related to product development costs, for fiscal 2002, 2001 and 2000,
respectively. Additionally, a $4.1 million impairment charge to reduce certain
intangible assets was recognized in fiscal 2001. Product development costs,
acquired technologies, copyrights and trademarks are generally amortized over
three years, and product distribution rights are amortized over seven years.

Estimated amortization expense for these intangible assets will be
approximately $4.9 million, $2.1 million and $1.5 million in fiscal 2003, 2004
and 2005, respectively, assuming no impairment charges are recorded during
these years.

7.   INCOME TAXES

The provision for income taxes consists of the following (in thousands):

|          |                 |   |                     |       |      |   |         |         |   |   |        |        |  
|--------- | --------------- | - | ------------------- | ----- | ---- | - | ------- | ------- | - | - | ------ | ------ | -
|          |                 |   | Year Ended June 30,
|          |                 |   |                    
|          |                 |   | 2002                |       | 2001 |   | 2000   
|          |                 |   |                     |       |      |   |        
|Current:  |                 |   |                     |       |      |   |         |         |   |   |        |       
|          | U.S.            |   | $                   | 6,181 |      |   | $       | (3,730  | ) |   | $      | 16,960 |  
|          | State           |   |                     | 558   |      |   |         | (441    | ) |   |        | 2,527  |  
|          | Other countries |   |                     | 2,706 |      |   |         | 2,813   |   |   |        | 1,481  |  
|          |                 |   |                     |       |      |   |         |         |   |   |        |       
|          |                 |   | 9,445               |       |      |   | (1,358  | )       |   |   | 20,968 |       
|Deferred: |                 |   |                     |       |      |   |         |         |   |   |        |       
|          | U.S.            |   |                     | (571  | )    |   |         | (13,845 | ) |   |        | (1,522 | )
|          | State           |   |                     | (240  | )    |   |         | (603    | ) |   |        | (447   | )
|          | Other countries |   |                     | (208  | )    |   |         | 1,846   |   |   |        | (1,999 | )
|          |                 |   |                     |       |      |   |         |         |   |   |        |       
|          |                 |   | (1,019              | )     |      |   | (12,602 | )       |   |   | (3,968 | )     
|          |                 |   |                     |       |      |   |         |         |   |   |        |       
|          |                 | $ | 8,426               |       |      | $ | (13,960 | )       |   | $ | 17,000 |       
|          |                 |   |                     |       |      |   |         |         |   |   |        |       

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Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and their tax bases. Significant components of deferred tax assets
and liabilities consist of the following at June 30 (in thousands):

|                                 |  |      |        |      |  |   |        |  
|-------------------------------- |  | ---- | ------ | ---- |  | - | ------ | -
|                                 |  | 2002 |        | 2001
|                                 |  |      |        |     
|Deferred income tax assets:      |  |      |        |      |  |   |        |  
|Net operating loss carryforwards |  | $    | 7,157  |      |  | $ | 6,195  |  
|Accounts receivable              |  |      | 3,406  |      |  |   | 5,152  |  
|Intangible assets                |  |      | 4,611  |      |  |   | 3,813  |  
|Property and equipment           |  |      | 14,114 |      |  |   | 9,690  |  
|Accrued expenses                 |  |      | 12,089 |      |  |   | 14,023 |  
|Other                            |  |      | 452    |      |  |   | 1,747  |  
|                                 |  |      |        |      |  |   |        |  
|                                 |  |      | 41,829 |      |  |   | 40,620 |  
|Valuation allowance              |  |      | (6,894 | )    |  |   | (6,075 | )
|                                 |  |      |        |      |  |   |        |  
|                                 |  |      | 34,935 |      |  |   | 34,545 |  
|                                 |  |      |        |      |  |   |        |  
|Deferred income tax liabilities: |  |      |        |      |  |   |        |  
|Product development costs        |  |      | 1,172  |      |  |   | 1,626  |  
|Deferred compensation            |  |      | 275    |      |  |   | 450    |  
|                                 |  |      |        |      |  |   |        |  
|                                 |  |      | 1,447  |      |  |   | 2,076  |  
|                                 |  |      |        |      |  |   |        |  
|Net deferred income tax assets   |  | $    | 33,488 |      |  | $ | 32,469 |  
|                                 |  |      |        |      |  |   |        |  

The effective income tax rate varied from the statutory U.S. federal tax rate
as follows:

|                                            |  |                     |      |      |  |      |      |   |  |  |      |  
|------------------------------------------- |  | ------------------- | ---- | ---- |  | ---- | ---- | - |  |  | ---- | -
|                                            |  | Year Ended June 30,
|                                            |  |                    
|                                            |  | 2002                |      | 2001 |  | 2000
|                                            |  |                     |      |      |  |     
|Statutory U.S. tax rate                     |  |                     | 35.0 | %    |  |      | 35.0 | % |  |  | 35.0 | %
|State income taxes, net of U.S. tax benefit |  |                     | 4.0  | %    |  |      | 5.0  | % |  |  | 3.0  | %
|Tax exempt interest                         |  |                     | -2.6 | %    |  |      | 3.7  | % |  |  | -4.8 | %
|Goodwill                                    |  |                     |     |      |  |      | -0.8 | % |  |  | 1.7  | %
|Non-U.S. operations, including export sales |  |                     | -4.0 | %    |  |      | -4.4 | % |  |  | -1.1 | %
|Change in valuation allowance               |  |                     | 3.3  | %    |  |      | -5.5 | % |  |  | 0.3  | %
|Acquired in-process technology              |  |                     |     |      |  |      |     |   |  |  | 1.8  | %
|Other, net                                  |  |                     | 0.3  | %    |  |      | -1.7 | % |  |  | 1.2  | %
|                                            |  |                     |      |      |  |      |      |   |  |  |      |  
|Effective income tax rate                   |  |                     | 36.0 | %    |  |      | 31.3 | % |  |  | 37.1 | %
|                                            |  |                     |      |      |  |      |      |   |  |  |      |  

As of June 30, 2002 and 2001, Hyperions non-U.S. net operating loss
carryforwards for income tax purposes were approximately $17.2 million and
$15.2 million, respectively. If not utilized, the net operating loss
carryforwards will begin to expire in 2003. Hyperion does not believe it is
more likely than not that realization of the deferred tax asset is assured and
has, therefore, recorded a valuation allowance of $6.9 million and $6.1 million
as of June 30, 2002 and 2001.

8.   LONG-TERM DEBT

Long-term debt consists of the following at June 30 (in thousands):

|                                    |  |      |        |      |  |   |        |  
|----------------------------------- |  | ---- | ------ | ---- |  | - | ------ | -
|                                    |  | 2002 |        | 2001
|                                    |  |      |        |     
|4.5% convertible subordinated notes |  | $    | 78,750 |      |  | $ | 88,750 |  
|Mortgage loan                       |  |      | 2,295  |      |  |   | 2,524  |  
|                                    |  |      |        |      |  |   |        |  
|                                    |  |      | 81,045 |      |  |   | 91,274 |  
|Less: current portion               |  |      | (243   | )    |  |   | (229   | )
|                                    |  |      |        |      |  |   |        |  
|                                    |  | $    | 80,802 |      |  | $ | 91,045 |  
|                                    |  |      |        |      |  |   |        |  

In March 1998, Hyperion issued $100.0 million of 4.5% convertible subordinated
notes, due 2005. The notes are subordinated to all existing and future senior
debt and are convertible into shares of Hyperions common stock at a conversion
price of $56.36 per share. The notes are redeemable at the option of Hyperion,
in whole or in part, at any time on or after March 20, 2001, at 104.5% of the
principal amount initially, and thereafter at prices declining to 100% at
maturity, in each case together

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with accrued interest. Each holder of the notes has the right, subject to
certain conditions and restrictions, to require Hyperion to offer to repurchase
all outstanding notes, in whole or in part, owned by such holder, at specified
repurchase prices together with accrued interest upon the occurrence of certain
events. Hyperion incurred $3.3 million of costs in connection with the issuance
of the notes, which were deferred and included in other assets. These finance
costs are being recognized as interest expense over the term of the notes using
the straight-line method, which approximates the effective interest method.
Interest on the notes began accruing March 16, 1998 and is payable
semi-annually on March 15 and September 15. The fair value of the notes was
approximately $71.2 million at June 30, 2002, based on quoted market prices.

During fiscal 2002, Hyperion repurchased $10.0 million of the notes for a total
cost of $8.9 million, resulting in an extraordinary gain of approximately $0.6
million after income taxes, or approximately $0.02 per share. During fiscal
2001, Hyperion repurchased $11.3 million of the notes for a total cost of $8.7
million, resulting in an extraordinary gain of approximately $1.5 million after
income taxes, or approximately $0.04 per share.

Hyperion obtained a mortgage loan of $9.5 million from the Connecticut
Development Authority to purchase its Stamford, Connecticut office building.
The mortgage loan is repayable in monthly installments of principal and
interest with the last payment due February 2005. As of January 1, 2000,
Hyperion had employed fewer employees in its Stamford, Connecticut office than
required under the terms of the loan. As a result, Hyperion prepaid $4.1
million of the outstanding principal balance and incurred additional interest
expense of $0.2 million. In addition, the interest rate on the remaining
outstanding principal balance increased by approximately 1.4%. As of June 30,
2002, the loan bears interest at 6.0% per annum.

Future maturities of the loan and notes are as follows (in thousands):

|     |  |   |        | 
|---- |  | - | ------ | 
|2003 |  | $ | 243    | 
|2004 |  |   | 258    | 
|2005 |  |   | 80,544 | 
|     |  |   |        | 
|     |  | $ | 81,045 | 
|     |  |   |        | 

9.   RELATED PARTY TRANSACTIONS

In March 2002, Siebel Systems, Inc. purchased several products from Hyperion
for approximately $0.9 million for purposes of implementing an enterprise-wide
financial planning system. In addition, Siebel has a future option to purchase
the same products in accordance with normal contractual terms and conditions.
The Chief Financial Officer of Siebel is on the board of directors of Hyperion.

In March 2002, Hyperion purchased approximately $3.0 million of software,
maintenance and services from Siebel for the purpose of implementing a
worldwide customer relationship management system. Hyperion capitalized in
property and equipment approximately $2.6 million of this amount, as it related
to software licenses, and recorded the remaining $0.4 million in prepaid
expenses. The prepaid expenses are being amortized as the services are
provided, and approximately $0.1 million was amortized during the year ended
June 30, 2002.

10.   COMMITMENTS AND CONTINGENCIES

Hyperion leases office and research facilities and certain computer and other
equipment under operating lease agreements expiring at various dates through
2016. In addition to base rent, Hyperion is responsible for certain taxes,
utilities and maintenance costs. Additionally, several leases include rentals
based upon changes in the Consumer Price Index or the fair market rental value
of the property and options for renewal or purchase. Hyperion subleases
certain of its facilities to third-party tenants. These subleases expire at
various dates from 2003 to 2016.

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Future minimum lease payments under all non-cancellable operating leases with
terms in excess of one year and future sublease income are as follows (in
thousands):

|            |  |              |        |                 |  |                  |        |  |  |   |        | 
|----------- |  | ------------ | ------ | --------------- |  | ---------------- | ------ |  |  | - | ------ | 
|            |  | Future Lease |        | Future Sublease |  | Net Future Lease
|Fiscal Year |  | Payments     |        | Income          |  | Payments        
|            |  |              |        |                 |  |                 
|2003        |  | $            | 20,299 |                 |  | $                | 1,856  |  |  | $ | 18,443 | 
|2004        |  |              | 16,113 |                 |  |                  | 1,564  |  |  |   | 14,549 | 
|2005        |  |              | 14,418 |                 |  |                  | 1,567  |  |  |   | 12,851 | 
|2006        |  |              | 11,788 |                 |  |                  | 1,589  |  |  |   | 10,199 | 
|2007        |  |              | 9,662  |                 |  |                  | 1,613  |  |  |   | 8,049  | 
|Thereafter  |  |              | 23,555 |                 |  |                  | 8,389  |  |  |   | 15,166 | 
|            |  |              |        |                 |  |                  |        |  |  |   |        | 
|            |  | $            | 95,835 |                 |  | $                | 16,578 |  |  | $ | 79,257 | 
|            |  |              |        |                 |  |                  |        |  |  |   |        | 

Rental expense for the years ended June 30, 2002, 2001 and 2000 under all lease
agreements was $15.8 million, $16.9 million and $13.1 million, respectively.
Sublease income was $1.0 million, $0.2 million and $0.2 million for the years
ended June 30, 2002, 2001 and 2000, respectively.

On June 27, 2001, Timeline, Inc. filed a complaint against Hyperion in the
United States District Court for the Western District of Washington alleging
that Hyperion infringes U.S. Patent Nos. 5,802,511; 6,023,694; and 6,026,392
(the Timeline patents) and seeking a permanent injunction and monetary
damages, including treble damages. On August 29, 2002, subsequent to the
balance sheet date, Hyperion settled the lawsuit with Timeline, and each
company agreed to dismiss its claims with prejudice. Under the settlement
agreement, Hyperion obtained a fully paid-up license to the Timeline patents
and agreed to pay Timeline a settlement totaling $1.05 million, payable over
four months. This settlement has been recorded in fiscal 2002, and the
resulting liability is included in accounts payable and accrued expenses on the
accompanying consolidated balance sheet.

On July 11, 1997, Gentia Software filed a request for reexamination of
Hyperions U.S. Patent No. 5,359,724 with the United States Patent and
Trademark Office (the PTO) arguing that the 724 patent was anticipated and
obvious in light of certain prior art references. On September 11, 1997, the
PTO granted the request for reexamination. On February 27, 1998, Gentia
Software filed with the PTO a request for a second reexamination of the 724
patent based on additional prior art references. On May 22, 1998, the PTO
granted that request for reexamination, which was later consolidated with the
first reexamination. On March 31, 1999, the PTO issued a non-final office
action rejecting the claims of the 724 patent. Hyperion filed its response to
the office action on May 31, 1999. No final office action has been issued by
the PTO. Hyperion believes that the outcome of such action will not have a
material adverse effect on the financial position, results of operations or
cash flows of Hyperion.

From time to time, in the normal course of business, various claims are made
against Hyperion. At this time, in the opinion of management, there are no
pending claims the outcome of which is expected to result in a material adverse
effect on the financial position, results of operations or cash flows of
Hyperion.

11.   COMMON STOCK

During fiscal 2001, Hyperion repurchased a total of 1,389,000 shares of common
stock. Hyperion reissued 11,000 and 34,000 of these shares in fiscal 2002 and
2001, respectively, in connection with stock options exercises. The remaining
1,344,000 shares are classified as treasury stock at June 30, 2002.

During fiscal 2000, Hyperion granted 100,000 restricted shares of common stock
to the Chairman and Chief Executive Officer of Hyperion. The market value of
the shares awarded of $1.9 million was recorded as unearned compensation -
restricted stock. This amount is not reflected as a separate component of
stockholders equity, but rather has been netted within additional paid-in
capital. Unearned compensation is being amortized to expense over the four-year
vesting period of the shares and amounted to $0.5 million, $0.5 million and
$0.3 million in fiscal 2002, 2001 and 2000, respectively. In connection with
the issuance of the restricted stock, Hyperion provided a loan to this officer
for $1.0 million. The loan matures in October 2005 and is secured by a pledge
of such restricted stock. Interest accrues at 6.02% per annum and is due upon
maturity. In fiscal 2002, the loan was amended to provide for the forgiveness
of a portion of the loan annually in the event that the earnings per share of
Hyperion equal or exceed targets set by the Compensation Committee of the Board
of Directors.

12.   STOCK OPTION, EMPLOYEE STOCK PURCHASE, AND EMPLOYEE SAVINGS PLANS

Stock Option Plans

As of June 30, 2002, Hyperion had an aggregate of 11.8 million common shares
authorized for issuance under its equity plans. The equity plans provide for
the issuance of common shares pursuant to stock option exercises and other
equity based awards. There were 1.4 million shares available for grant under
the equity plans as of June 30, 2002. Under the equity plans, stock options
can be issued to employees and to non-employee directors.

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Stock options are granted under the equity plans with exercise prices equal to
the fair market value of the common stock on the date of grant and generally vest over a period of four years. Options granted
under the equity plans have a maximum term of 10 years from the date of grant.
Options provide for accelerated vesting upon certain events, including an
employees involuntary termination, as defined in the plan, within eighteen
months following a change in control of Hyperion.

The following table presents a summary of Hyperions stock option activity for
the years ended June 30 (shares in thousands):

|                                 |           |  |        |        |       |   |          |       |       |  |        |        |          |   |       |       |  |  |          |        |   |   |       |       | 
|-------------------------------- | --------- |  | ------ | ------ | ----- | - | -------- | ----- | ----- |  | ------ | ------ | -------- | - | ----- | ----- |  |  | -------- | ------ | - | - | ----- | ----- | 
|                                 |           |  | 2002   |        | 2001  |   | 2000    
|                                 |           |  |        |        |       |   |         
|                                 |           |  |        |        |       |   | Weighted |       |       |  |        |        | Weighted |   |       |       |  |  | Weighted
|                                 |           |  |        |        |       |   | Average  |       |       |  |        |        | Average  |   |       |       |  |  | Average 
|                                 |           |  |        |        |       |   | Exercise |       |       |  |        |        | Exercise |   |       |       |  |  | Exercise
|                                 |           |  | Shares |        | Price |   | Shares   |       | Price |  | Shares |        | Price   
|                                 |           |  |        |        |       |   |          |       |       |  |        |        |         
|Outstanding at beginning of year |           |  | 8,423  |        |       | $ | 23.02    |       |       |  | 7,492  |        |          | $ | 25.29 |       |  |  | 5,355    |        |   | $ | 22.69 |      
|                                 | Granted   |  |        | 2,388  |       |   |          | 18.99 |       |  |        | 3,159  |          |   |       | 18.67 |  |  |          | 5,123  |   |   |       | 26.98 | 
|                                 | Exercised |  |        | (348   | )     |   |          | 14.77 |       |  |        | (357   | )        |   |       | 13.79 |  |  |          | (1,251 | ) |   |       | 21.97 | 
|                                 | Forfeited |  |        | (1,361 | )     |   |          | 25.66 |       |  |        | (1,871 | )        |   |       | 26.55 |  |  |          | (1,735 | ) |   |       | 24.68 | 
|                                 |           |  |        |        |       |   |          |       |       |  |        |        |          |   |       |       |  |  |          |        |   |   |       |      
|Outstanding at end of year       |           |  | 9,102  |        |       | $ | 21.89    |       |       |  | 8,423  |        |          | $ | 23.02 |       |  |  | 7,492    |        |   | $ | 25.29 |      
|                                 |           |  |        |        |       |   |          |       |       |  |        |        |          |   |       |       |  |  |          |        |   |   |       |      
|Exercisable at end of year       |           |  | 4,304  |        |       | $ | 23.47    |       |       |  | 3,005  |        |          | $ | 24.16 |       |  |  | 1,665    |        |   | $ | 21.46 |      
|                                 |           |  |        |        |       |   |          |       |       |  |        |        |          |   |       |       |  |  |          |        |   |   |       |      

The following table summarizes information about stock options outstanding at
June 30, 2002 (shares in thousands):

|                |  |                     |       |                     |  |                  |      |             |  |                |       |  |  |          |       |  |  |   |       | 
|--------------- |  | ------------------- | ----- | ------------------- |  | ---------------- | ---- | ----------- |  | -------------- | ----- |  |  | -------- | ----- |  |  | - | ----- | 
|                |  | Options Outstanding |       | Options Exercisable
|                |  |                     |       |                    
|                |  |                     |       |                     |  | Weighted Average |      | Weighted    |  |                |       |  |  | Weighted
|Range of        |  | Number              |       | Remaining Years of  |  | Average          |      | Number      |  | Average       
|Exercise Prices |  | Outstanding         |       | Contractual Life    |  | Exercise Price   |      | Exercisable |  | Exercise Price
|                |  |                     |       |                     |  |                  |      |             |  |                |      
|$0.50 - 14.99   |  |                     | 1,306 |                     |  |                  | 7.70 |             |  | $              | 12.86 |  |  |          | 540   |  |  | $ | 12.42 | 
|$15.00 - 15.99  |  |                     | 1,385 |                     |  |                  | 8.48 |             |  | $              | 15.12 |  |  |          | 504   |  |  | $ | 15.12 | 
|$16.00 - 19.99  |  |                     | 1,969 |                     |  |                  | 7.63 |             |  | $              | 18.77 |  |  |          | 1,108 |  |  | $ | 18.98 | 
|$20.00 - 25.99  |  |                     | 2,407 |                     |  |                  | 8.59 |             |  | $              | 22.10 |  |  |          | 716   |  |  | $ | 22.06 | 
|$26.00 - 35.99  |  |                     | 1,254 |                     |  |                  | 7.00 |             |  | $              | 29.61 |  |  |          | 892   |  |  | $ | 29.47 | 
|$36.00 - 57.63  |  |                     | 781   |                     |  |                  | 7.12 |             |  | $              | 43.75 |  |  |          | 544   |  |  | $ | 43.31 | 
|                |  |                     |       |                     |  |                  |      |             |  |                |       |  |  |          |       |  |  |   |       | 
|                |  |                     | 9,102 |                     |  |                  |      |             |  |                |       |  |  |          | 4,304 |  |  |   |       | 
|                |  |                     |       |                     |  |                  |      |             |  |                |       |  |  |          |       |  |  |   |       | 

Employee Stock Purchase Plan

Hyperion sponsors an employee stock purchase plan, or ESPP, which is qualified
under Section 423 of the Internal Revenue Code. Under the ESPP, substantially
all employees may purchase Hyperion common stock through payroll deductions at
a price equal to 85 percent of the lower of the fair market value at the
beginning or end of each six-month offering period. Stock purchases under the
ESPP are limited to ten percent of an employees eligible compensation, up to
1,000 shares in a six-month period and a fair market value of $25,000 in any
plan year. Shares issued under the ESPP were 606,000 for fiscal 2002, 775,000
for fiscal 2001 and 360,000 for fiscal 2000. At June 30, 2002, 970,000 shares
were reserved for future issuance under the ESPP.

Pro Forma Disclosure

The weighted average estimated grant date fair value, as defined by SFAS No.
123, for options granted under Hyperions stock option plans in fiscal 2002,
2001 and 2000 was $10.89, $13.21 and $11.26 per share, respectively. The
weighted average estimated grant date fair value, as defined by SFAS No. 123,
for purchase awards issued under Hyperions employee stock purchase plan in
fiscal 2002, 2001 and 2000 was $4.17, $4.71 and $7.80 per share, respectively.
The estimated grant date fair values were calculated using the Black-Scholes
model.

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The following weighted average assumptions were used in the estimated grant
date fair value calculations for stock option and purchase awards:

|                     |                                 |  |                     |      |      |  |      |      |   |  |  |      |  
|-------------------- | ------------------------------- |  | ------------------- | ---- | ---- |  | ---- | ---- | - |  |  | ---- | -
|                     |                                 |  | Year Ended June 30,
|                     |                                 |  |                    
|                     |                                 |  | 2002                |      | 2001 |  | 2000
|                     |                                 |  |                     |      |      |  |     
|Stock option plans:  |                                 |  |                     |      |      |  |      |      |   |  |  |     
|                     | Expected dividend yield         |  |                     | 0    | %    |  |      | 0    | % |  |  | 0    | %
|                     | Expected stock price volatility |  |                     | 70   | %    |  |      | 84   | % |  |  | 40   | %
|                     | Risk free interest rate         |  |                     | 4.53 | %    |  |      | 4.97 | % |  |  | 6.24 | %
|                     | Expected term (in years)        |  |                     | 4.2  |      |  |      | 5.5  |   |  |  | 4.3  |  
|Stock purchase plan: |                                 |  |                     |      |      |  |      |      |   |  |  |     
|                     | Expected dividend yield         |  |                     | 0    | %    |  |      | 0    | % |  |  | 0    | %
|                     | Expected stock price volatility |  |                     | 70   | %    |  |      | 84   | % |  |  | 40   | %
|                     | Risk free interest rate         |  |                     | 2.69 | %    |  |      | 3.63 | % |  |  | 6.22 | %
|                     | Expected term (in years)        |  |                     | 0.5  |      |  |      | 0.5  |   |  |  | 0.5  |  

Had Hyperion recorded compensation expense based on the estimated grant date
fair value, as defined by SFAS No. 123, for awards granted under its stock
option plans and stock purchase plan, Hyperions net income (loss) and earnings
(loss) per share would have been reduced to the pro forma amounts below (in
thousands, except per share amounts):

|                             |                       |  |                     |        |      |  |      |         |   |  |   |        | 
|---------------------------- | --------------------- |  | ------------------- | ------ | ---- |  | ---- | ------- | - |  | - | ------ | 
|                             |                       |  | Year Ended June 30,
|                             |                       |  |                    
|                             |                       |  | 2002                |        | 2001 |  | 2000
|                             |                       |  |                     |        |      |  |     
|Net income (loss):           |                       |  |                     |        |      |  |      |         |   |  |   |       
|                             | As reported           |  | $                   | 14,981 |      |  | $    | (31,073 | ) |  | $ | 28,819 | 
|                             | Pro forma             |  | $                   | (882   | )    |  | $    | (55,731 | ) |  | $ | 18,220 | 
|Net income (loss) per share: |                       |  |                     |        |      |  |      |         |   |  |   |       
|                             | As reported  basic   |  | $                   | 0.46   |      |  | $    | (0.95   | ) |  | $ | 0.91   | 
|                             | As reported  diluted |  | $                   | 0.45   |      |  | $    | (0.95   | ) |  | $ | 0.87   | 
|                             | Pro forma  basic     |  | $                   | (0.03  | )    |  | $    | (1.71   | ) |  | $ | 0.58   | 
|                             | Pro forma  diluted   |  | $                   | (0.03  | )    |  | $    | (1.71   | ) |  | $ | 0.55   | 

Because the determination of the fair value of options granted includes an
expected volatility factor in addition to the other factors described in the
tables above and because additional option grants are expected to be made each
year, the above pro forma disclosures are not representative of the pro forma
effects of option grants on reported results for future years.

Employee Savings Plans

Hyperion maintains an employee savings plan that qualifies as a cash or
deferred salary arrangement under Section 401(k) of the Internal Revenue Code.
Under the plan, participating U.S. employees may defer up to 15% of their
pre-tax compensation, but not more than $11,000 for calendar year 2002.
Hyperion contributes to the plan annually, up to a maximum of $2,000 per
participant. Similar savings plans are maintained with respect to certain
non-U.S. employees. In fiscal 2002, 2001 and 2000, Hyperion contributed $4.7
million, $5.4 million and $3.6 million, respectively, to the savings plans.

13.   STOCKHOLDER RIGHTS PLAN

In June 1998, Hyperion adopted a stockholder rights plan in which preferred
stock purchase rights were distributed as a rights dividend at the rate of one
right for each share of common stock held as of the close of business on July
3, 1998. The rights plan is designed to deter coercive or unfair takeover
tactics and to prevent an acquirer from gaining control of Hyperion without
offering a fair price to all of Hyperions stockholders. The plan is intended
to protect the interests of stockholders in the event Hyperion is confronted in
the future with coercive or unfair takeover tactics.

Each right will entitle holders of Hyperions common stock to buy one
one-thousandth of a share of Series A Junior Participating Preferred Stock of
Hyperion at an exercise price of $250 per one one-thousandth of a preferred
share. Generally, the rights will be exercisable only if a person or group
acquires more than 15% of the common stock or announces a tender or exchange
offer which would result in its ownership of 15% or more of the common stock,
or a person owning 10% or more of the common stock is determined by the board
to be an adverse person, as defined in the rights plan. Under the rights plan,
the ownership, tender offer and exchange offer thresholds of 15% increase to
25% for certain grandfathered stockholders and

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approximately 20.5% for one stockholder that held approximately 19.5% of
Hyperions issued and outstanding stock on July 3, 1998.

If any person or group becomes the beneficial owner of 15% or more of the
common stock, referred to as a flip-in event, each right not owned by such
person or related parties will entitle its holder to purchase, at the then
current exercise price of the right, common stock of Hyperion having a value of
twice the rights exercise price (or, in certain circumstances, a combination
of cash, property, common stock or other securities or a reduction in the
exercise price having an aggregate value equal to the value of the common stock
otherwise purchasable). After the occurrence of a flip-in event and before any
person or affiliated group becomes the owner of 50% or more of the then
outstanding common stock, Hyperion may also exchange one share of common stock
for each right outstanding. In addition, if Hyperion is involved in a merger or
other business combination transaction with another person in which its common
stock is changed or converted, or sells or transfers more than 50% of its
assets or earning power to another person, each right that has not previously
been exercised will entitle its holder to purchase, at the then current
exercise price of the right, shares of common stock of such other person having
a value of twice the rights exercise price.

Hyperion can redeem the rights at $0.01 per right prior to the date the
ownership thresholds are passed. The rights will expire on July 3, 2008, unless
earlier redeemed or exchanged.

14.   RESTRUCTURING AND NON-RECURRING CHARGES

In June 2001, Hyperion announced a corporate restructuring plan designed to
bring costs more in line with revenues and strengthen the financial performance
of the business. The restructuring plan included a company-wide initiative to
align personnel with Hyperions new strategy, which resulted in a reduction of
the workforce by approximately 300, or 12% of the worldwide headcount.
Employee groups impacted by the restructuring include personnel involved in
corporate services, product business units, sales and customer support. In
addition, Hyperion consolidated some of its facilities and exited other
facilities.

Restructuring and non-recurring charges totaled $0.1 million, $42.8 million and
$2.1 million in fiscal 2002, 2001 and 2000, respectively. The restructuring
and non-recurring charge in fiscal 2002 resulted from adjustments made to the
restructuring and non-recurring charge recorded in the fourth quarter of fiscal
2001.

A summary of the fiscal 2001 restructuring and non-recurring charge and reserve
balance is as follows (in thousands):

|                                 |  |           |        |            |  |             |        |       |  |       |         |   |  |   |        |   |  |   |         |  
|-------------------------------- |  | --------- | ------ | ---------- |  | ----------- | ------ | ----- |  | ----- | ------- | - |  | - | ------ | - |  | - | ------- | -
|                                 |  |           |        |            |  |             |        |       |  | Asset |         |   |  |   |        |   |  |  
|                                 |  | Severance |        | Facilities |  | Impairments |        | Other |  | Total
|                                 |  |           |        |            |  |             |        |       |  |      
|Initial charge                   |  | $         | 8,674  |            |  | $           | 17,227 |       |  | $     | 11,008  |   |  | $ | 5,876  |   |  | $ | 42,785  |  
|Cash paid                        |  |           | (3,137 | )          |  |             |       |       |  |       |        |   |  |   |       |   |  |   | (3,137  | )
|Non-cash                         |  |           |       |            |  |             |       |       |  |       | (11,008 | ) |  |   | (610   | ) |  |   | (11,618 | )
|                                 |  |           |        |            |  |             |        |       |  |       |         |   |  |   |        |   |  |   |         |  
|Reserve balance at June 30, 2001 |  |           | 5,537  |            |  |             | 17,227 |       |  |       |        |   |  |   | 5,266  |   |  |   | 28,030  |  
|Cash paid                        |  |           | (5,058 | )          |  |             | (2,735 | )     |  |       |        |   |  |   | (751   | ) |  |   | (8,544  | )
|Adjustments                      |  |           | (126   | )          |  |             | 393    |       |  |       |        |   |  |   | (1,141 | ) |  |   | (874    | )
|                                 |  |           |        |            |  |             |        |       |  |       |         |   |  |   |        |   |  |   |         |  
|Reserve balance at June 30, 2002 |  | $         | 353    |            |  | $           | 14,885 |       |  | $     |        |   |  | $ | 3,374  |   |  | $ | 18,612  |  
|                                 |  |           |        |            |  |             |        |       |  |       |         |   |  |   |        |   |  |   |         |  

As of June 30, 2001, Hyperion had communicated to all impacted employees
regarding employee separation benefits and the timing of separation, and all
300 positions had been separated or were in the separation process, resulting
in cash payments of $3.1 million. Additional payments of $5.1 million were
made during fiscal 2002 and the remaining severance payments of approximately
$0.4 million will be paid in the first half of fiscal 2003. All restructuring
activities related to the disposal and/or impairment of long-term assets were
completed as of June 30, 2001, and all restructuring activities associated with
the consolidation of facilities were completed by June 30, 2002.

Approximately $11.6 million of the $42.8 million restructuring and
non-recurring charge recorded in fiscal 2001 did not require an outflow of
cash, but the remaining $31.2 million has required or will require the use of
cash (primarily payments due under long-term lease obligations). The reserve
balance at June 30, 2002 of $18.6 million, which relates primarily to future
lease obligations, is included in other current liabilities and other
liabilities on the accompanying consolidated balance sheet. Hyperion
substantially completed its restructuring activities related to the
restructuring plan described above during fiscal 2002, however payments due
under long-term lease obligations will continue to be made over the remaining
lives of the leases. If Hyperion is unable to maintain a cost structure that
is in appropriate balance with revenue going forward, whether due to failure to
increase revenue adequately or failure to keep costs down, Hyperion could find
it necessary to further adjust its cost

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structure through the execution of additional restructuring plans.

In fiscal 2000, Hyperion recorded a non-recurring charge of approximately $2.1
million associated with restructuring its European operations and costs
associated with outsourcing its North American accounting department. This
charge was comprised primarily of severance costs, all of which have been paid
as of June 30, 2002.

15.   SEGMENT AND GEOGRAPHICAL INFORMATION

SFAS No. 131, Disclosures about Segments of an Enterprise and Related
Information, established standards for reporting information about operating
segments in a companys financial statements. Operating segments are defined
as components of an enterprise about which separate financial information is
available that is evaluated regularly by the chief operating decision maker, or
decision making group, in deciding how to allocate resources and in assessing
performance. Hyperion has identified one industry segment: the development and
marketing of business performance management software and related services.
This segment operates in three geographic regions: Americas, Europe and Asia
Pacific. Hyperions products are marketed internationally through Hyperions
direct sales force, independent distributors and application resellers.

Enterprise-wide information is provided in accordance with SFAS No. 131.
Geographic sales information is primarily based on the ordering location of the
customer. Long-lived asset information is based on the physical location of
the assets.

The following table is a breakdown of financial information by geographic area
(in thousands):

|                          |  |          |         |        |  |         |         |       |  |      |        |  |  |   |         | 
|------------------------- |  | -------- | ------- | ------ |  | ------- | ------- | ----- |  | ---- | ------ |  |  | - | ------- | 
|                          |  |          |         |        |  |         |         |       |  | Asia |        |  |  |  
|                          |  | Americas |         | Europe |  | Pacific |         | Total
|                          |  |          |         |        |  |         |         |      
|Year Ended June 30, 2002: |  |          |         |        |  |         |         |       |  |      |        |  |  |   |         | 
|Total revenues            |  | $        | 324,352 |        |  | $       | 141,423 |       |  | $    | 26,243 |  |  | $ | 492,018 | 
|Long-lived assets         |  |          | 60,809  |        |  |         | 7,834   |       |  |      | 1,223  |  |  |   | 69,866  | 
|Year Ended June 30, 2001: |  |          |         |        |  |         |         |       |  |      |        |  |  |   |         | 
|Total revenues            |  | $        | 362,984 |        |  | $       | 134,658 |       |  | $    | 30,369 |  |  | $ | 528,011 | 
|Long-lived assets         |  |          | 71,317  |        |  |         | 8,268   |       |  |      | 1,167  |  |  |   | 80,752  | 
|Year Ended June 30, 2000: |  |          |         |        |  |         |         |       |  |      |        |  |  |   |         | 
|Total revenues            |  | $        | 341,004 |        |  | $       | 131,860 |       |  | $    | 26,468 |  |  | $ | 499,332 | 
|Long-lived assets         |  |          | 63,444  |        |  |         | 7,014   |       |  |      | 1,211  |  |  |   | 71,669  | 

The following table presents external revenues for groups of similar products
and services (in thousands):

|                          |                         |   |                     |         |      |   |         |         |  |   |         |         | 
|------------------------- | ----------------------- | - | ------------------- | ------- | ---- | - | ------- | ------- |  | - | ------- | ------- | 
|                          |                         |   | Year Ended June 30,
|                          |                         |   |                    
|                          |                         |   | 2002                |         | 2001 |   | 2000   
|                          |                         |   |                     |         |      |   |        
|Software licenses:        |                         |   |                     |         |      |   |         |         |  |   |         |        
|                          | Application products    |   | $                   | 92,698  |      |   | $       | 103,250 |  |   | $       | 118,814 | 
|                          | Technology products     |   |                     | 103,368 |      |   |         | 124,744 |  |   |         | 121,512 | 
|                          |                         |   |                     |         |      |   |         |         |  |   |         |        
|                          |                         |   | 196,066             |         |      |   | 227,994 |         |  |   | 240,326 |        
|Maintenance and services: |                         |   |                     |         |      |   |         |         |  |   |         |        
|                          | Maintenance             |   |                     | 186,052 |      |   |         | 170,840 |  |   |         | 154,452 | 
|                          | Consulting and training |   |                     | 109,900 |      |   |         | 129,177 |  |   |         | 104,544 | 
|                          |                         |   |                     |         |      |   |         |         |  |   |         |        
|                          |                         |   | 295,952             |         |      |   | 300,017 |         |  |   | 259,006 |        
|                          |                         |   |                     |         |      |   |         |         |  |   |         |        
|Total revenues            |                         | $ | 492,018             |         |      | $ | 528,011 |         |  | $ | 499,332 |        
|                          |                         |   |                     |         |      |   |         |         |  |   |         |        

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16.   QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

The following is a summary of the unaudited quarterly results of operations for
the years ended June 30, 2002 and 2001 (in thousands, except per share
amounts):

|                           |  |         |         |         |  |         |         |         |  |   |         |  |  |   |         | 
|-------------------------- |  | ------- | ------- | ------- |  | ------- | ------- | ------- |  | - | ------- |  |  | - | ------- | 
|Fiscal 2002                |  | Sep. 30 |         | Dec. 31 |  | Mar. 31 |         | Jun. 30
|                           |  |         |         |         |  |         |         |        
|Total revenues             |  | $       | 117,336 |         |  | $       | 118,903 |         |  | $ | 119,959 |  |  | $ | 135,820 | 
|Gross profit               |  |         | 78,008  |         |  |         | 80,988  |         |  |   | 83,174  |  |  |   | 97,371  | 
|Net income                 |  |         | 1,946   |         |  |         | 3,729   |         |  |   | 3,085   |  |  |   | 6,221   | 
|Diluted earnings per share |  |         | 0.06    |         |  |         | 0.11    |         |  |   | 0.09    |  |  |   | 0.18    | 

|                                  |  |         |         |         |  |         |         |         |  |   |         |   |  |   |         |  
|--------------------------------- |  | ------- | ------- | ------- |  | ------- | ------- | ------- |  | - | ------- | - |  | - | ------- | -
|Fiscal 2001                       |  | Sep. 30 |         | Dec. 31 |  | Mar. 31 |         | Jun. 30
|                                  |  |         |         |         |  |         |         |        
|Total revenues                    |  | $       | 117,996 |         |  | $       | 137,340 |         |  | $ | 132,662 |   |  | $ | 140,014 |  
|Gross profit                      |  |         | 75,602  |         |  |         | 94,415  |         |  |   | 85,965  |   |  |   | 94,680  |  
|Net income (loss)                 |  |         | (4,093  | )       |  |         | 2,270   |         |  |   | (1,321  | ) |  |   | (27,929 | )
|Diluted earnings (loss) per share |  |         | (0.12   | )       |  |         | 0.07    |         |  |   | (0.04   | ) |  |   | (0.87   | )

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

None.




PART III




ITEM 10.   DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The information required by this Item 10 with respect to executive officers is
set forth in Part I of this Form 10-K. The information required by this Item
10 with respect to directors is incorporated herein by reference to the section
entitled Election of Directors in our definitive Proxy Statement for our 2002
Annual Meeting of Stockholders.




ITEM 11.   EXECUTIVE COMPENSATION

The information required by this item is incorporated herein by reference to
the sections entitled Director Compensation and Executive Compensation and
Related Information in our definitive Proxy Statement for our 2002 Annual
Meeting of Stockholders.




ITEM 12.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The information required by this item is incorporated herein by reference to
the section entitled Stock Ownership of Certain Beneficial Owners and
Management in our definitive Proxy Statement for our 2002 Annual Meeting of
Stockholders.




ITEM 13.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information required by this item is incorporated herein by reference to
the section entitled Certain Relationships and Related Transactions in our
definitive Proxy Statement for our 2002 Annual Meeting of Shareholders.




PART IV




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

|    |                                                                                                      
|--- | -----------------------------------------------------------------------------------------------------
|(a) | The following documents are filed as part of this report:                                            
|   
|    | (1)   The consolidated financial statements of Hyperion Solutions
Corporation are included in Item 8:

| |                                                                                                                                  |  |      |    | 
| | -------------------------------------------------------------------------------------------------------------------------------- |  | ---- | -- | 
| |                                                                                                                                  |  | Page
| |                                                                                                                                  |  |     
| | Consolidated Balance Sheets as of June 30, 2002 and 2001                                                                         |  |      | 27 | 
| | Consolidated Statements of Income for the years ended June 30, 2002, 2001 and 2000                                               |  |      | 28 | 
| | Consolidated Statements of Stockholders Equity and Comprehensive Income (Loss)
for the years ended June 30, 2002, 2001 and 2000 |  |      | 29 | 
| | Consolidated Statements of Cash Flows for the years ended June 30, 2002, 2001 and
2000                                           |  |      | 30 | 
| | Notes to Consolidated Financial Statements                                                                                       |  |      | 31 | 

| |     |                                                                                                                                                                                         
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (2) | Financial statement schedule, which is included at the end of this
report:                                                                                                              
|
| |     | Schedule II  Valuation and Qualifying Accounts                                                                                                                                         
|
| |     | All other schedules have been omitted since they are either not required,
not applicable or the information has been included in the consolidated
financial statements or notes thereto.

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| |     |          
| | --- | ---------
| | (3) | Exhibits:

|            |       |  |   |             |                                                                                                                                                                                    
|----------- | ----- |  | - | ----------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |       |  |   | Description
|            |       |  |   |            
|2.          | 1(a)  |  |  |             | Agreement and Plan of Merger
dated May 25, 1998, by and among Registrant, Merger Sub and Hyperion.                                                                                 
|2.          | 2(j)  |  |  |             | Share Purchase Agreement, dated April 14, 1999, by and among the Registrant, HSC Acquisition
Co., and the shareholders of Sapling Corporation.                                     
|3.          | 1(h)  |  |  |             | Registrants Restated
Certificate of Incorporation.                                                                                                                                
|3.          | 2(g)  |  |  |             | Registrants Amended and
Restated Bylaws.                                                                                                                                          
|4.          | 1(b)  |  |  |             | Specimen Certificate of the
Registrants Common Stock.                                                                                                                             
|4.          | 2(d)  |  |  |             | Indenture dated March 15, 1998, by and between Registrant and State Street Bank and Trust
Company of California, N.A.                                                              
|4.          | 3(d)  |  |  |             | Registration Rights Agreement dated March 15, 1998, by and between the Registrant and Morgan
Stanley & Co. Incorporated and BancAmerica Robertson Stephens.                        
|10.         | 2(b)  |  |  |             | 1992 Stock Option Plan.                                                                                                                                                            
|10.         | 3(l)  |  |  |             | 1995 Stock Option/Stock
Issuance Plan.                                                                                                                                             
|10.         | 4(m)  |  |  |             | Employee Stock Purchase Plan.                                                                                                                                                      
|10.         | 5(b)  |  |  |             | Form of Indemnification
Agreement.                                                                                                                                                 
|10.         | 6(c)  |  |  |             | Real Property Lease between the Registrant and SBC&D & Company dated as of July 16, 1996.                                                                                          
|10.         | 7(e)  |  |  |             | Hyperion Software Corporation
1991 Stock Plan.                                                                                                                                     
|10.         | 8(e)  |  |  |             | Hyperion Software Corporation
1991 Non-Employee Director Stock Option Plan.                                                                                                        
|10.         | 9(f)  |  |  |             | Loan Agreement with the Connecticut Development Authority, dated January 20, 1995,
regarding financing of an office facility (including related
Promissory Note and Mortgage Deed).
|10.         | 15    |  |  |             | Employment Agreement with
Jeffrey R. Rodek, dated January 1, 2002 (filed herewith).                                                                                                
|10.         | 16(i) |  |  |             | Restricted Stock Award Agreement with Jeffrey R. Rodek, dated October 11, 1999.                                                                                                    
|10.         | 17(i) |  |  |             | Secured Promissory Note with Jeffrey R. Rodek, dated October 11, 1999.                                                                                                             
|10.         | 19(k) |  |  |             | Hyperion Solutions
Corporation 1999 Stock Option Plan.                                                                                                                             
|10.         | 20(k) |  |  |             | Security and Pledge Agreement with Jeffrey R. Rodek, dated October 11, 1999.                                                                                                       
|10.         | 21(n) |  |  |             | Employment Agreement with David W. Odell, dated December 6, 2000.                                                                                                                  
|10.         | 22(n) |  |  |             | Employment Agreement with W. Russell Wayman, dated January 22, 2001.                                                                                                               
|10.         | 24    |  |  |             | Employment Agreement with
Godfrey R. Sullivan, dated October 17, 2001 (filed herewith).                                                                                            
|21.         | 1     |  |  |             | List of subsidiaries of the
Registrant (filed herewith).                                                                                                                           
|23.         | 1     |  |  |             | Consent of
PricewaterhouseCoopers LLP, independent accountants (filed herewith).                                                                                                   
|99.         | 1     |  |  |             | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
SarbanesOxley Act of 2002 (filed herewith).                                           

|    |                                                                                                                                                                     |                                  
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------
|(a) | Previously filed as an Exhibit to the Registrants Current Report on
Form 8-K, dated May 25, 1998.                                                                 
|   
|(b) | Incorporated by reference to such exhibit as filed in the Registrants
Registration Statement on Form S-1, filed November 6, 1995 (file no.
33-97098), as amended. 
|   
|(c) | Previously filed as an Exhibit to the Registrants Annual Report on
Form 10-K, filed June 28, 1997.                                                                
|   
|(d) | Previously filed as an Exhibit to the Registrants Current Report on
Form 8-K, filed March 5, 1998.                                                                
|   
|    | Incorporated by reference to the exhibits to a Hyperion Software
Corporation Registration Statement or Current Report (file no. 0-19538):                          
|   
|    | (e)                                                                                                                                                                 | Form S-1 file no. 33-42855.      
|   
|    | (f)                                                                                                                                                                 | Form 10-Q filed in February 1995.
|   
|(g) | Incorporated by reference to such exhibit as filed in the Registrants
Registration Statement on Form S-4 (file no. 333-57197), as amended,
filed on June 18, 1998.
|   

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|    |                                                                                                                                                         | 
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------- | 
|(h) | Incorporated by reference to such exhibit as filed in the Registrants
Current Report on Form 8-K, dated August 24, 1998 and filed on October
13, 1998.
|   
|(i) | Incorporated by reference to the exhibits to the Registrants Quarterly
Report on Form 10-Q for the quarter ended December 31, 1999.                   
|   
|(j) | Incorporated by reference to the exhibits to the Registrants Annual
Report on Form 10-K dated September 28, 1999.                                     
|   
|(k) | Incorporated by reference to the exhibits to the Registrants Annual
Report on Form 10-K dated September 28, 2000.                                     
|   
|(l) | Incorporated by reference to the exhibits to the Registrants Quarterly
Report on Form 10-Q for the quarter ended December 31, 2000.                   
|   
|(m) | Incorporated by reference to the exhibits to the Registrants Quarterly
Report on Form 10-Q for the quarter ended December 31, 2001.                   
|   
|(n) | Incorporated by reference to the exhibits to the Registrants Annual
Report on Form 10-K dated September 14, 2001.                                     
|   
|(b) | Reports on Form 8-K:                                                                                                                                   
|   
|    | Hyperion did not file any reports on Form 8-K during the three-month period
ended June 30, 2002.                                                       

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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.

|                          |                                             |                                                                   
|------------------------- | ------------------------------------------- | ------------------------------------------------------------------
|Date:  September 24, 2002 | Hyperion Solutions Corporation
(Registrant)
|                         
|                          | By:                                         | /s/    David W. OdellDavid W. Odell
Chief Financial Officer       
|                         
|                          | By:                                         | /s/    Nolene P. FabreNolene P. Fabre
Principal Accounting Officer

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

|                                               |  |                                       |  |                   
|---------------------------------------------- |  | ------------------------------------- |  | ------------------
|Signature                                      |  | Title                                 |  | Date              
|                                               |  |                                       |  |                   
|/s/    Jeffrey R. Rodek
Jeffrey R. Rodek       |  | Chairman and Chief Executive Officer  |  | September 24, 2002
|                                              
|/s/    Godfrey R. Sullivan
Godfrey R. Sullivan |  | President and Chief Operating Officer |  | September 24, 2002
|                                              
|/s/    Henry R. Autry
Henry R. Autry           |  | Director                              |  | September 24, 2002
|                                              
|/s/    Kenneth A. Goldman
Kenneth A. Goldman   |  | Director                              |  | September 24, 2002
|                                              
|/s/    Gary G. Greenfield
Gary G. Greenfield   |  | Director                              |  | September 24, 2002
|                                              
|/s/    Aldo Papone
Aldo Papone                 |  | Director                              |  | September 24, 2002
|                                              
|/s/    John Riccitiello
John Riccitiello       |  | Director                              |  | September 24, 2002

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CERTIFICATIONS

I, Jeffrey R. Rodek, Chief Executive Officer, certify that:

|   |                                                                                                                                                                                                                                                                                                                             
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1. | I have reviewed this annual report on Form 10-K of Hyperion Solutions
Corporation;                                                                                                                                                                                                                                          
|  
|2. | Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this annual report; and
|  
|3. | Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this annual
report.                       

| |       |                                        
| | ----- | ---------------------------------------
| | By:   | /s/    Jeffrey R. RodekJeffrey R. Rodek
|
| | Date: | September 24, 2002                     

I, David W. Odell, Chief Financial Officer, certify that:

|   |                                                                                                                                                                                                                                                                                                                             
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1. | I have reviewed this annual report on Form 10-K of Hyperion Solutions
Corporation;                                                                                                                                                                                                                                          
|  
|2. | Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this annual report; and
|  
|3. | Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this annual
report.                       

| |       |                                    
| | ----- | -----------------------------------
| | By:   | /s/    David W. OdellDavid W. Odell
|
| | Date: | September 24, 2002                 

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##### Table of Contents



SCHEDULE II  VALUATION AND QUALIFYING ACCOUNTS
(in thousands)

|                          |                                             |           |            |          |            |             |           |            |  |           |  |        |         |  |  |        |     |  |   |        | 
|------------------------- | ------------------------------------------- | --------- | ---------- | -------- | ---------- | ----------- | --------- | ---------- |  | --------- |  | ------ | ------- |  |  | ------ | --- |  | - | ------ | 
|                          |                                             |           |            |          |            |             | Additions |            |  |           |  |        |         |  | 
|                          |                                             |           |            |          |            |             |           |            |  |           |  |        |         |  | 
|                          |                                             |           | Balance at |          | Charged to |             | Charged   |            |  |           |  |        | Balance
|                          |                                             |           | Beginning  |          | Costs and  |             | to Other  |            |  |           |  |        | at End 
|Description               |                                             | of Period |            | Expenses |            | Accounts(a) |           | Deductions |  | of Period
|                          |                                             |           |            |          |            |             |           |            |  |          
|Year
Ended June 30, 2000: |                                             |           |            |          |            |             |           |            |  |           |  |        |         |  |  |        |     |  |   |       
|                          | Allowance for doubtful accounts             |           | $          | 11,800   |            |             |           | 1,460      |  |           |  | 6,856  |         |  |  | 3,866  | (b) |  | $ | 16,250 | 
|                          | Valuation allowance for deferred tax assets |           |            | 4,014    |            |             |           | 124        |  |           |  |       |         |  |  | 666    | (c) |  |   | 3,472  | 
|Year Ended June 30, 2001: |                                             |           |            |          |            |             |           |            |  |           |  |        |         |  |  |        |     |  |   |       
|                          | Allowance for doubtful accounts             |           | $          | 16,250   |            |             |           | 5,950      |  |           |  | 21,727 |         |  |  | 31,451 | (b) |  | $ | 12,476 | 
|                          | Valuation allowance for deferred tax assets |           |            | 3,472    |            |             |           | 2,603      |  |           |  |       |         |  |  |       |     |  |   | 6,075  | 
|                          | Restructuring components                    |           |            |         |            |             |           | 31,167     |  |           |  |       |         |  |  | 3,137  | (d) |  |   | 28,030 | 
|Year Ended June 30, 2002: |                                             |           |            |          |            |             |           |            |  |           |  |        |         |  |  |        |     |  |   |       
|                          | Allowance for doubtful accounts             |           | $          | 12,476   |            |             |           | 3,925      |  |           |  | 18,749 |         |  |  | 24,490 | (b) |  | $ | 10,660 | 
|                          | Valuation allowance for deferred tax assets |           |            | 6,075    |            |             |           | 819        |  |           |  |       |         |  |  |       |     |  |   | 6,894  | 
|                          | Restructuring components                    |           |            | 28,030   |            |             |           |           |  |           |  |       |         |  |  | 9,418  | (d) |  |   | 18,612 | 



---

|(a) |  | Charged to revenues          
|--- |  | -----------------------------
|   
|   
|   
|   
|(b) |  | Write-offs, net of recoveries
|   
|   
|   
|   
|(c) |  | Recognition and adjustments  
|   
|   
|   
|   
|(d) |  | Cash payments and adjustments

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##### Table of Contents






EXHIBIT INDEX

|            |       |  |   |             |                                                                                                                                                                                    
|----------- | ----- |  | - | ----------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |       |  |   | Description
|            |       |  |   |            
|2.          | 1(a)  |  |  |             | Agreement and Plan of Merger
dated May 25, 1998, by and among Registrant, Merger Sub and Hyperion.                                                                                 
|2.          | 2(j)  |  |  |             | Share Purchase Agreement, dated April 14, 1999, by and among the Registrant, HSC Acquisition
Co., and the shareholders of Sapling Corporation.                                     
|3.          | 1(h)  |  |  |             | Registrants Restated
Certificate of Incorporation.                                                                                                                                
|3.          | 2(g)  |  |  |             | Registrants Amended and
Restated Bylaws.                                                                                                                                          
|4.          | 1(b)  |  |  |             | Specimen Certificate of the
Registrants Common Stock.                                                                                                                             
|4.          | 2(d)  |  |  |             | Indenture dated March 15, 1998, by and between Registrant and State Street Bank and Trust
Company of California, N.A.                                                              
|4.          | 3(d)  |  |  |             | Registration Rights Agreement dated March 15, 1998, by and between the Registrant and Morgan
Stanley & Co. Incorporated and BancAmerica Robertson Stephens.                        
|10.         | 2(b)  |  |  |             | 1992 Stock Option Plan.                                                                                                                                                            
|10.         | 3(l)  |  |  |             | 1995 Stock Option/Stock
Issuance Plan.                                                                                                                                             
|10.         | 4(m)  |  |  |             | Employee Stock Purchase Plan.                                                                                                                                                      
|10.         | 5(b)  |  |  |             | Form of Indemnification
Agreement.                                                                                                                                                 
|10.         | 6(c)  |  |  |             | Real Property Lease between the Registrant and SBC&D & Company dated as of July 16, 1996.                                                                                          
|10.         | 7(e)  |  |  |             | Hyperion Software Corporation
1991 Stock Plan.                                                                                                                                     
|10.         | 8(e)  |  |  |             | Hyperion Software Corporation
1991 Non-Employee Director Stock Option Plan.                                                                                                        
|10.         | 9(f)  |  |  |             | Loan Agreement with the Connecticut Development Authority, dated January 20, 1995,
regarding financing of an office facility (including related
Promissory Note and Mortgage Deed).
|10.         | 15    |  |  |             | Employment Agreement with
Jeffrey R. Rodek, dated January 1, 2002 (filed herewith).                                                                                                
|10.         | 16(i) |  |  |             | Restricted Stock Award Agreement with Jeffrey R. Rodek, dated October 11, 1999.                                                                                                    
|10.         | 17(i) |  |  |             | Secured Promissory Note with Jeffrey R. Rodek, dated October 11, 1999.                                                                                                             
|10.         | 19(k) |  |  |             | Hyperion Solutions
Corporation 1999 Stock Option Plan.                                                                                                                             
|10.         | 20(k) |  |  |             | Security and Pledge Agreement with Jeffrey R. Rodek, dated October 11, 1999.                                                                                                       
|10.         | 21(n) |  |  |             | Employment Agreement with David W. Odell, dated December 6, 2000.                                                                                                                  
|10.         | 22(n) |  |  |             | Employment Agreement with W. Russell Wayman, dated January 22, 2001.                                                                                                               
|10.         | 24    |  |  |             | Employment Agreement with
Godfrey R. Sullivan, dated October 17, 2001 (filed herewith).                                                                                            
|21.         | 1     |  |  |             | List of subsidiaries of the
Registrant (filed herewith).                                                                                                                           
|23.         | 1     |  |  |             | Consent of
PricewaterhouseCoopers LLP, independent accountants (filed herewith).                                                                                                   
|99.         | 1     |  |  |             | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
SarbanesOxley Act of 2002 (filed herewith).                                           

|    |                                                                                                                                                                     |                                  
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------
|(a) | Previously filed as an Exhibit to the Registrants Current Report on
Form 8-K, dated May 25, 1998.                                                                 
|   
|(b) | Incorporated by reference to such exhibit as filed in the Registrants
Registration Statement on Form S-1, filed November 6, 1995 (file no.
33-97098), as amended. 
|   
|(c) | Previously filed as an Exhibit to the Registrants Annual Report on
Form 10-K, filed June 28, 1997.                                                                
|   
|(d) | Previously filed as an Exhibit to the Registrants Current Report on
Form 8-K, filed March 5, 1998.                                                                
|   
|    | Incorporated by reference to the exhibits to a Hyperion Software
Corporation Registration Statement or Current Report (file no. 0-19538):                          
|   
|    | (e)                                                                                                                                                                 | Form S-1 file no. 33-42855.      
|   
|    | (f)                                                                                                                                                                 | Form 10-Q filed in February 1995.
|   
|(g) | Incorporated by reference to such exhibit as filed in the Registrants
Registration Statement on Form S-4 (file no. 333-57197), as amended,
filed on June 18, 1998.
|   
|(h) | Incorporated by reference to such exhibit as filed in the Registrants
Current Report on Form 8-K, dated August 24, 1998 and filed on October
13, 1998.            
|   
|(i) | Incorporated by reference to the exhibits to the Registrants Quarterly
Report on Form 10-Q for the quarter ended December 31, 1999.                               
|   
|(j) | Incorporated by reference to the exhibits to the Registrants Annual
Report on Form 10-K dated September 28, 1999.                                                 
|   
|(k) | Incorporated by reference to the exhibits to the Registrants Annual
Report on Form 10-K dated September 28, 2000.                                                 
|   
|(l) | Incorporated by reference to the exhibits to the Registrants Quarterly
Report on Form 10-Q for the quarter ended December 31, 2000.                               
|   
|(m) | Incorporated by reference to the exhibits to the Registrants Quarterly
Report on Form 10-Q for the quarter ended December 31, 2001.                               
|   
|(n) | Incorporated by reference to the exhibits to the Registrants Annual
Report on Form 10-K dated September 14, 2001.                                                 

52