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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

For the Fiscal Year Ended June 30, 2003

OR

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

For the transition period from ____________ to _____________.



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Commission File Number 000-26934

Hyperion Solutions Corporation

(Exact name of registrant as specified in its charter)


|                                |  |                    
|------------------------------- |  | -------------------
|Delaware                        |  | 77-0277772         
|(State or other jurisdiction of |  | (I.R.S. Employer   
|incorporation or organization)  |  | 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]

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Exchange Act Rule 12b-2). Yes [X]  No [  ]

There were 36,159,454 shares of the registrants common stock, $0.001 par
value, outstanding as of July 31, 2003. The aggregate market value of the
registrants voting stock held by non-affiliates as of July 31, 2003 was
approximately $915 million based on the closing sale price on the Nasdaq
National Market reported for such date.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrants definitive Proxy Statement for its 2003 Annual
Meeting of Stockholders, scheduled to be held on November 10, 2003, are
incorporated by reference in Part III of this Form 10-K.





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HYPERION SOLUTIONS CORPORATION


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           
|              | ITEM 9A.CONTROLS AND PROCEDURES                                                                        
|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 AND RELATED STOCKHOLDER MATTERS
|              | 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 21.1 
|EXHIBIT 23.1 
|EXHIBIT 31.1 
|EXHIBIT 31.2 
|EXHIBIT 32.1 
|EXHIBIT 32.2 



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FORM 10-K

|              |  |                                                                                                |      |   
|------------- |  | ---------------------------------------------------------------------------------------------- | ---- | --
|              |  |                                                                                                | PAGE
|PART I.       |  |                                                                                                |      |   
|Item 1.       |  | Business                                                                                       |      | 3 
|Item 2.       |  | Properties                                                                                     |      | 10
|Item 3.       |  | Legal Proceedings                                                                              |      | 11
|Item 4.       |  | Submission of Matters to a Vote of Security Holders                                            |      | 11
|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                                     |      | 29
|Item 8.       |  | Financial Statements and Supplementary Data                                                    |      | 30
|Item 9.       |  | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure           |      | 54
|Item 9A       |  | Controls and Procedures                                                                        |      | 54
|PART III.     |  |                                                                                                |      |   
|Item 10.      |  | Directors and Executive Officers of the Registrant                                             |      | 54
|Item 11.      |  | Executive Compensation                                                                         |      | 54
|Item 12.      |  | Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters |      | 54
|Item 13.      |  | Certain Relationships and Related Transactions                                                 |      | 54
|PART IV.      |  |                                                                                                |      |   
|Item 14.      |  | Exhibits, Financial Statement Schedules, and Reports on Form 8-K                               |      | 55
|Signatures    |  | 57                                                                                            
|Exhibit Index |  | 59                                                                                            

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 is forward-looking in
nature. All statements included in this report on Form 10-K or made by
management of Hyperion Solutions Corporation and its subsidiaries, 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, expect, plan,
anticipate, intend, believe, estimate, predict, 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 is a leading provider of Business Performance
Management software, which enables companies to translate strategies into
plans, monitor execution and provide insight to manage and improve financial
and operational performance. Hyperion provides managers with reporting and
analysis tools and packaged and custom applications that support a process for
proactively managing their business to optimal performance against goals and,
most important, for anticipating and forecasting results.

Business Performance Management builds on business intelligence, which provides
managers with information, including historic analysis and statistical
predictions and forecasts, that enables them to understand how their business
is performing at any moment in time. Hyperion combines powerful business and
financial applications with an integrating business intelligence platform and
expertise in management processes. This combination delivers an integrated
Business Performance Management environment, which is being used by employees
at all levels across organizations to support continuous performance
improvement and accountability.

Our applications along with our development and deployment platform enable
Business Performance Management across a wide variety of functional and
operational areas beyond the finance areas of the business. We use our 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. We also 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.

AGREEMENT TO ACQUIRE BRIO SOFTWARE, INC.

In July 2003, we entered into a definitive agreement to acquire Brio Software,
Inc., a business intelligence software provider based in Santa Clara,
California. Under the terms of the agreement, Brio stockholders will receive a
combination of 0.109 of a share of Hyperion common stock and $0.363 in cash for
each share of Brio common stock. Based on the closing price of Hyperions
stock on July 22, 2003, one day prior to the date the acquisition was
announced, the transaction is valued at approximately $142 million. Brio
stockholders will own approximately 10.5% of Hyperions common stock after
completion of the transaction. The transaction has been approved by the boards
of directors of both companies and is subject to customary closing conditions,
including the approval of Brios stockholders and completion of
regulatory review. The
transaction is expected to close in the second quarter of fiscal 2004. The
acquisition of Brio will add to our product portfolio the Brio query and
reporting products, which access relational databases easily and quickly, and
can support thousands of users.

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INDUSTRY BACKGROUND

In response to todays competitive pressures and renewed focus on
profitability, many 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 and partner and customer interaction systems worldwide. With Business Performance
Management, organizations can consolidate their financial and operational
systems information and turn the raw data from these systems into meaningful
business information used to manage for optimal performance.
Additionally,
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) prepare to comply with new
and more stringent regulations on a global scope; and 5) extend existing
information technology investments to make information accessible and
actionable throughout the organization with the aim of increasing 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 combine a comprehensive suite of
applications with an integrating business intelligence platform. This
combination supports a management process that enables a continuous planning,
monitoring and reporting cycle.

STRATEGY

Our objective is to be the leading global provider of Business Performance
Management solutions. Our 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 objective 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 some of 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 confirms 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.

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Key elements of our strategy include:

Leverage Existing Market 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 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.

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, customer relationship management 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 include large systems integrators, regional
consulting firms, professional services organizations and value added
resellers (VARs). These partners deliver custom application consulting and
related implementation, integration and/or training services.
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
|- |  | Independent Software Vendor 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 more quickly and easily with reduced costs compared to
client-server and desktop implementations.

Maintain Sales and Support Relationships.We license our products to customers
throughout the world through a direct sales force as well as through OEMs,
VARs and independent distributors. 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.

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PRODUCTS

Hyperions Business Performance Management Applications

Hyperions Business Performance Management suite is a comprehensive suite of
interoperable applications that delivers performance scorecarding, modeling and
optimization, budgeting, planning and forecasting, consolidation and reporting
 on an open, scalable, secure and Web-based business intelligence platform.

Hyperion Planningis a comprehensive Web-architected application that helps
coordinate and manage all the elements of the planning, forecasting and
budgeting cycle. It drives collaborative, integrated, event-based planning,
forecasting and budgeting processes throughout the organization for a wide
range of financial and operational needs. Hyperion Planning provides a
comprehensive approach that can drive continuous profit improvement. Decision
makers and front-line managers communicate which course of action to take and
get budget holders to collaborate, so that all profitability improvements can
be identified and acted upon.

Hyperion Financial Managementis a comprehensive, Web-based application that
delivers financial consolidation, reporting and analysis in a single, highly
scalable solution. Employees, subsidiaries, branch offices and partners operate
from the same page and with a single unified view of key financial data at any
moment in time. Hyperion Financial Management generates consolidated results
for both internal management and regulatory bodies and is used to facilitate
compliance with the Sarbanes-Oxley Act of 2002.

Hyperion Business Modelingprovides advanced profitability analysis by
combining operational factors with supporting financial data to provide true
costs and profitability. It is a sophisticated enterprise-class modeling
solution that enables companies to test operational and financial planning
assumptions, optimize resources and measure profitability. With Hyperion
Business Modelings powerful simulation environment, managers dynamically test
and compare alternate business scenarios and identify the optimal solution to
maximize business performance.

Hyperion Strategic Financeis a strategic financial modeling application that
gives corporate development, finance and treasury executives real-time analysis
of alternative strategies. It enables them to analyze the financial impact of
critical business decisions and to choose the strategic path of greatest value
to deliver continuous performance improvement. Financial executives create
customized dashboards and report quickly and accurately to assess earnings and
demonstrate the quality of earnings in relation to cash flow.

Hyperion Performance Scorecardis a Web-based Balanced Scorecard Collaborative
application that provides a strategic management infrastructure for measuring
and monitoring business performance. Hyperion Performance Scorecard can give
companies a clear understanding of corporate strategy, objectives and
accountability, including method and non-method based scorecards, while
proactively monitoring their actions and performance against targets and
industry benchmarks.

Hyperion Enterpriseis a packaged application that can improve departmental
financial consolidation and reporting efficiency by streamlining the
collection, consolidation and reporting of financial results in a global
environment. It frees financial managers from spreadsheets and general ledgers,
enabling them to reduce the financial close cycle and improve the quality of
financial information. Hyperion Enterprise can be distributed and installed at
remote offices quickly and easily. It can be fully deployed by the finance
organization with limited IT support  even on a stand-alone PC.

Hyperion Pillarcan improve departmental budgeting efficiency by streamlining
the distributed, financial budgeting process and increasing accountability. It
frees managers from budget mechanics, enabling them to focus on value-added
reporting and analysis.

Hyperions Business Intelligence Platform: Hyperion Essbase XTD

Hyperion offers a foundation of enabling tools and technologies for the
development and deployment of business intelligence and Business Performance
Management applications.

Hyperion Essbase XTDis the business intelligence platform that provides the
technology foundation for Hyperions packaged and tailored applications for
Business Performance Management. Scalable, reliable and high-performing,
Hyperion Essbase XTD reduces the total cost of ownership and increases the
return on investment, compared to multiple solutions from several vendors, by
combining data integration, metadata management, online analytical processing,
query and reporting, ad hoc analysis and application development tools into a
comprehensive Business Performance Management solution.

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Hyperion Essbase XTD Platform Servicesis a set of business intelligence
technologies that integrates data and metadata from multiple sources, performs
advanced analytical processing and deploys business performance applications
across the enterprise. Comprehensive platform services run on multiple
operating systems, leverage multiple relational databases, access data from
diverse transactional business systems and deliver high-performance financial
and operational reporting. With Hyperion Essbase XTD Platform Services,
businesses leverage existing investments in technology and extend their
analytical capabilities across the enterprise.



| |  | Analytic Servicesenable sophisticated visual analysis that helps
companies better understand and optimize many aspects of their
business. By supporting historical and forward-looking analytic
applications, companies more effectively manage their business
performance and fulfill operational, tactical and strategic business
analysis needs.                                                                                                                                                  
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | Administration Servicescentralize the management of business
performance applications running on multiple servers and operating
systems in geographically dispersed locations, and reduce distribution
and maintenance costs compared to decentralized administration and
management.                                                                                                                                                                                                                
| 
| |  | Deployment Servicesextend the scalability and reliability of analytic
applications, and support thousands of concurrent users in distributed
environments with Web-based architectures. Connection pooling,
database clustering, load balancing and failover help ensure
applications are available 24X7.                                                                                                                                                                                            
| 
| |  | Integration Servicesprovide the tools and technologies to reduce the
time and expense of integrating operational data with Hyperion
Business Performance Management software. Specifically designed to
work in a mixed-vendor environment, Integration Services provide a
graphical environment to integrate data or metadata from transactional
business applications, relational databases, data warehouses and
legacy transactional systems as well as flat files, spreadsheets and XML
documents.

Hyperion Essbase XTD Application Frameworkis a tool set that enables rapid
creation, delivery and deployment of enterprise analytic and reporting
applications for the Web. 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 to meet their unique needs.



| |  | Analysis Studioprovides interactive analysis and delivery of
corporate information assets. Out-of-the-box solutions and easy-to-use
personalization and visualization tools provide a quick path to
Web-based analysis and reporting from relational and transactional
business systems as well as multidimensional and other data sources.                                                                                                                                                     
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | Developer Workbenchenables the rapid creation, management and
deployment of tailored analytic applications  with or without
programming knowledge. A comprehensive set of value-added application
programming interfaces (APIs), drag-and-drop components and services
accelerate the deployment of tailored analysis applications that can
grow and change with customer needs.                                                                                                             
| 
| |  | Open Application Foundationprovides an API that enables programmers
to extend the out-of-the-box functionality of Hyperion Essbase XTD. A
wide range of published APIs provide support for major, open industry
standards and protocols, and deliver an open, extensible architecture
that ensures interoperability and compatibility with current IT
infrastructures.                                                                                                                          
| 
| |  | Our extensive partner relationships offer our customers the ability to
extend the functionality of Hyperion Essbase XTD. Partner integration
offers the most comprehensive solutions for customers and includes
front-end reporting, data mining, an enterprise information
portal, application development and transactional business vendors.
Hyperion business partners provide packaged and custom-development
options that deliver information in client/server and Web-enabled
interfaces.

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 generally 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 737 employees as of July 31, 2003. We have
also established a global network of partners who deliver implementation and
training services.

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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 and
independent distributors. 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 and independent distributors. 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 2003, 2002 and 2001, approximately 39%, 35% 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.

Our sales and marketing organization consisted of 693 employees as of July 31,
2003, of which approximately 214 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 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 2003, 2002 and 2001
were 26%, 25% and 21% of total license revenues, respectively. Our channel
partners include such firms as American Management Systems, BearingPoint,
Deloitte & Touche LLP; Fujitsu Limited; Immix Inc.; International Business
Machines Corporation; Lawson Associates, Inc.; SPSS Corporation, and Teradata.

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 July 31, 2003, our product development was primarily performed by
441 employees located at our U.S. facilities in Sunnyvale, California;
Stamford, Connecticut; Orlando, Florida; and Skokie, Illinois; and at our
Canadian facility located in Toronto, Ontario.

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 deliver 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. As markets continue to develop for Business
Performance Management products, additional competitors may enter or expand
into those markets and competition may intensify.

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Competitors, some of whom have significantly greater financial, technical,
marketing and other resources than we do, may be better able to respond 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 the section entitled Factors
That May Affect Future Results in Item 7  Managements Discussion and
Analysis of Financial Condition and Results of Operations.

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 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 the release of
our 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
eight 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. See Item 3  Legal Proceedings for further discussion
of this matter.

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.

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We distribute our products under software license agreements that grant
customers a nonexclusive, nontransferable license to use 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 July 31, 2003, we employed a total of 2,224 employees. None of our
employees is represented by a labor union. We believe our relations with
employees are good. Our executive officers as of July 31, 2003 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      |  |     | 40 |          |  | Chief Financial Officer                      
|W. Russell Wayman   |  |     | 59 |          |  | Vice President, General Counsel and Secretary
|Nazhin Zarghamee    |  |     | 36 |          |  | 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.

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.

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.

AVAILABLE INFORMATION

We make available free of charge on or through our Internet website our annual
reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form
8-K and all amendments to those reports as soon as reasonably practicable after
they are electronically filed with, or furnished to, the Securities and
Exchange Commission. Our Internet website address is www.hyperion.com.
Information contained on our website is not part of this report.




ITEM 2. PROPERTIES

Our principal administrative, sales, marketing, services, training and research
and development facilities are located in Sunnyvale, Irvine and San Francisco,
California; Stamford, Connecticut; Dallas, Texas; Atlanta and Kennesaw,
Georgia; Lisle and Skokie, Illinois; Orlando, Florida; Waltham, Massachusetts;
Parsippany, New Jersey; Toronto, Canada; Egham and Manchester, England; Paris,
France; Frankfurt and Munich, Germany; Rome and Milan, Italy; Utrecht,
Netherlands; Madrid, Spain; Stockholm, Sweden; Zurich, Switzerland; North
Sydney, Australia; Sao Paolo, Brazil; Tokyo, Japan; Seoul, South Korea; 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.

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ITEM 3. LEGAL PROCEEDINGS

On July 11, 1997, Gentia Software filed a request for reexamination of our U.S.
Patent No. 5,359,724 (724 patent) with the United States Patent and
Trademark Office (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.




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 2003    |  | High |       | Low
|               |  |      |       |    
|First quarter  |  | $    | 24.80 |     |  | $ | 14.50 | 
|Second quarter |  | $    | 30.00 |     |  | $ | 17.55 | 
|Third quarter  |  | $    | 32.75 |     |  | $ | 21.45 | 
|Fourth quarter |  | $    | 38.06 |     |  | $ | 23.80 | 

|               |  |      |       |     |  |   |       | 
|-------------- |  | ---- | ----- | --- |  | - | ----- | 
|Fiscal 2002    |  | High |       | Low
|               |  |      |       |    
|First quarter  |  | $    | 16.98 |     |  | $ | 12.40 | 
|Second quarter |  | $    | 21.58 |     |  | $ | 12.51 | 
|Third quarter  |  | $    | 27.60 |     |  | $ | 19.00 | 
|Fourth quarter |  | $    | 27.06 |     |  | $ | 14.01 | 

As of July 31, 2003, we had 163 stockholders of record and approximately 11,500
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,                  
|                                                  |         |   |                                      
|                                                  |         |   | 2003                                  |        | 2002 |   | 2001    |        | 2000 |   | 1999   
|                                                  |         |   |                                       |        |      |   |         |        |      |   |        
|                                                  |         |   | (In thousands,
except per share data)
|Statement of Operations Data:                     |         |   |                                       |        |      |   |         |        |      |   |         |        |   |   |         |        |  |   |         |       
|Revenues                                          |         | $ | 510,458                               |        |      | $ | 492,018 |        |      | $ | 528,011 |        |   | $ | 499,332 |        |  | $ | 431,722 |       
|Costs and expenses (1)                            |         |   | 459,701                               |        |      |   | 471,944 |        |      |   | 582,891 |        |   |   | 460,935 |        |  |   | 416,600 |       
|Operating income (loss)                           |         |   | 50,757                                |        |      |   | 20,074  |        |      |   | (54,880 | )      |   |   | 38,397  |        |  |   | 15,122  |       
|Net income (loss)                                 |         |   | 34,110                                |        |      |   | 14,981  |        |      |   | (31,073 | )      |   |   | 28,819  |        |  |   | 7,973   |       
|Net income (loss) per share:                      |         |   |                                       |        |      |   |         |        |      |   |         |        |   |   |         |        |  |   |         |       
|                                                  | Basic   |   | $                                     | 0.99   |      |   | $       | 0.46   |      |   | $       | (0.95  | ) |   | $       | 0.91   |  |   | $       | 0.26   | 
|                                                  | Diluted |   | $                                     | 0.96   |      |   | $       | 0.45   |      |   | $       | (0.95  | ) |   | $       | 0.87   |  |   | $       | 0.26   | 
|Weighted average shares outstanding:              |         |   |                                       |        |      |   |         |        |      |   |         |        |   |   |         |        |  |   |         |       
|                                                  | Basic   |   |                                       | 34,451 |      |   |         | 32,836 |      |   |         | 32,592 |   |   |         | 31,665 |  |   |         | 30,196 | 
|                                                  | Diluted |   |                                       | 35,694 |      |   |         | 33,491 |      |   |         | 32,592 |   |   |         | 33,107 |  |   |         | 30,855 | 
|                                                 
|Balance Sheet Data:                               |         |   |                                       |        |      |   |         |        |      |   |         |        |   |   |         |        |  |   |         |       
|Cash, cash equivalents and short-term investments |         | $ | 416,554                               |        |      | $ | 330,258 |        |      | $ | 255,366 |        |   | $ | 295,159 |        |  | $ | 271,856 |       
|Working capital                                   |         |   | 350,649                               |        |      |   | 281,501 |        |      |   | 254,141 |        |   |   | 297,745 |        |  |   | 230,910 |       
|Total assets                                      |         |   | 654,758                               |        |      |   | 583,890 |        |      |   | 570,393 |        |   |   | 589,891 |        |  |   | 512,894 |       
|Deferred revenue                                  |         |   | 104,868                               |        |      |   | 94,910  |        |      |   | 100,234 |        |   |   | 88,828  |        |  |   | 81,089  |       
|Long-term debt                                    |         |   | 50,040                                |        |      |   | 80,802  |        |      |   | 91,045  |        |   |   | 102,518 |        |  |   | 103,752 |       
|Other liabilities                                 |         |   | 11,326                                |        |      |   | 11,743  |        |      |   | 14,303  |        |   |   |        |        |  |   |        |       
|Stockholders equity                              |         |   | 397,325                               |        |      |   | 299,657 |        |      |   | 267,319 |        |   |   | 309,861 |        |  |   | 240,776 |       



|(1) |  | Costs and expenses for the years ended June 30, 2003, 2002, 2001 and 2000
include restructuring and other charges of $0.8 million, $0.1 million,
$42.8 million and $2.1 million, respectively. See Note 15 of the Notes to
Consolidated Financial Statements for discussion of these restructuring
and other charges.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

OVERVIEW

Hyperion Solutions Corporation is a leading provider of Business Performance
Management software, which enables companies to translate strategies into
plans, monitor execution and provide insight to manage and improve financial
and operational performance. Hyperion provides managers with reporting and
analysis tools and packaged and custom applications that support a process for
proactively managing their business to optimal performance against goals and,
most important, for anticipating and forecasting results.

Business Performance Management builds on business intelligence, which provides
managers with information, including historic analysis and statistical
predictions and forecasts, that enables them to understand how their business
is performing at any moment in time. Hyperion combines powerful business and
financial applications with an integrating business intelligence platform and
expertise in management processes. This combination delivers an integrated
Business Performance Management environment, which is being used by employees
at all levels across organizations to support continuous performance
improvement and accountability.

Our applications along with our development and deployment platform enable
Business Performance Management across a wide variety of functional and
operational areas beyond the finance areas of the business. We use our 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. We also 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 most
significant judgments and estimates used in the preparation of our consolidated
financial statements.

Revenue Recognition

We derive revenues from licensing our software products and providing
maintenance, consulting and training 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 our software products to end users provided
there is persuasive evidence of an arrangement, the fee is fixed or
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. Amounts billed or payments received in
advance of revenue recognition are recorded as deferred revenue.

Maintenance agreements are generally twelve-month prepaid contracts that are
recognized ratably over the service period. VSOE of fair value for maintenance
is measured by the stated renewal rates included in the agreements.

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Customers may also enter into arrangements that are typically on a time and
materials basis for consulting and training services. VSOE of fair value for
consulting and training services is based upon the standard hourly rate we
charge for such services when sold separately. Training services are generally
prepaid prior to rendering the service. 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 products are fully functional upon delivery of the product
and implementation does not require significant modification or alteration.
Factors considered in determining whether the revenue should be accounted for
separately include, but are not limited to: 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. 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. In the infrequent circumstance where 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 81-1, Accounting for Performance of Construction-Type and Certain
Product-Type Contracts and Accounting Research Bulletin No. 45, Long-Term
Construction-Type 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. If we determine that
collection of a license fee is not reasonably assured, the fee is deferred and
revenue is recognized at the time collection becomes reasonably assured, which
is generally upon receipt of cash.

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 provisions, we analyze several factors, including: our
historical collection experience, customer concentrations, customer
credit-worthiness and current economic trends. If the historical data used to
calculate the allowance for doubtful accounts does not reflect our future
ability to collect outstanding receivables, we may record additional provisions
for doubtful accounts. We record the provision for doubtful accounts in general and administrative
expense and as a reduction of revenue in order to match the underlying cause of
the provision to the appropriate classification in our statement of operations.
For additional discussion of our provisions, refer to
the section entitled Liquidity and Capital Resources.

Our allowance for doubtful accounts was $8.2 million at June 30, 2003 and $10.7
million at June 30, 2002. The total provision for doubtful accounts was $5.8
million, $20.9 million and $27.7 million in fiscal 2003, 2002 and 2001,
respectively. Of these provisions, $1.4 million, $4.1 million and $6.0 million
were recorded in general and administrative expense in fiscal 2003, 2002 and
2001, respectively, and $4.4 million, $16.8 million and $21.7 million were
recorded as a reduction of revenue in fiscal 2003, 2002 and 2001, respectively.

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
expense
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 operations.

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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 foreign 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 Assets

We evaluate the recoverability of our long-lived assets, including property and
equipment and certain identifiable intangible assets, in accordance with
Statement of Financial Accounting Standards (SFAS) No. 144, Accounting for
the Impairment or Disposal of Long-Lived Assets, which we adopted on July 1,
2002. SFAS 144 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 historical or projected future operating results;      
| | - |  | ------------------------------------------------------------------------------------------------
|
| |  |  | significant changes in the manner of use of the assets or the strategy for our overall business;
|
| |  |  | significant decrease in the market value of the assets; and                                     
|
| |  |  | significant negative industry or economic trends.                                               

When we determine that the carrying amount of long-lived 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 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)            |                         | 2003 |                     | Revenue |  | 2002 |            | Revenue |   | 2001 |         | Revenue
|                          |                         |      |                     |         |  |      |            |         |   |      |         |        
|Software licenses:        |                         |      |                     |         |  |      |            |         |   |      |         |         |            |  |     |    |   |   |            |         |  |  |     |   
|                          | Application products    |      | $                   | 106,016 |  |      |            | 21      | % |      | $       | 92,698  |            |  |     | 19 | % |   | $          | 103,250 |  |  |     | 19 | %
|                          | Platform products       |      |                     | 95,750  |  |      |            | 19      | % |      |         | 103,368 |            |  |     | 21 | % |   |            | 124,744 |  |  |     | 24 | %
|                          |                         |      |                     |         |  |      |            |         |   |      |         |         |            |  |     |    |   |   |            |         |  |  |     |   
|                          |                         |      | 201,766             |         |  |      | 40         | %       |   |      | 196,066 |         |            |  | 40  | %  |   |   | 227,994    |         |  |  | 43  | % 
|Maintenance and services: |                         |      |                     |         |  |      |            |         |   |      |         |         |            |  |     |    |   |   |            |         |  |  |     |   
|                          | Maintenance             |      |                     | 212,157 |  |      |            | 41      | % |      |         | 186,052 |            |  |     | 38 | % |   |            | 170,840 |  |  |     | 32 | %
|                          | Consulting and training |      |                     | 96,535  |  |      |            | 19      | % |      |         | 109,900 |            |  |     | 22 | % |   |            | 129,177 |  |  |     | 25 | %
|                          |                         |      |                     |         |  |      |            |         |   |      |         |         |            |  |     |    |   |   |            |         |  |  |     |   
|                          |                         |      | 308,692             |         |  |      | 60         | %       |   |      | 295,952 |         |            |  | 60  | %  |   |   | 300,017    |         |  |  | 57  | % 
|                          |                         |      |                     |         |  |      |            |         |   |      |         |         |            |  |     |    |   |   |            |         |  |  |     |   
|Total revenues            |                         | $    | 510,458             |         |  |      | 100        | %       |   | $    | 492,018 |         |            |  | 100 | %  |   | $ | 528,011    |         |  |  | 100 | % 
|                          |                         |      |                     |         |  |      |            |         |   |      |         |         |            |  |     |    |   |   |            |         |  |  |     |   

Total revenues increased 4% in fiscal 2003 compared to fiscal 2002 and
decreased 7% in fiscal 2002 compared to fiscal 2001. Total revenues generated
from markets outside of North America, including export sales, for fiscal 2003,
2002 and 2001 were $200.1 million, $174.0 million and $170.6 million,
respectively, which represented 39%, 35% and 32% of total revenues,
respectively. The change in foreign exchange rates from fiscal 2002 to fiscal
2003 positively impacted fiscal 2003 revenues by approximately
$21.2 million,
or 4% of total revenues, primarily due to the strength of the Euro against
the U.S. dollar. The change in foreign exchange rates from fiscal 2001 to
fiscal 2002 did not have a material impact on our fiscal 2002 results.

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Software licenses.Software license revenues increased 3% in fiscal 2003
compared to fiscal 2002 and decreased 14% in fiscal 2002 compared to fiscal
2001. The increase in license revenue in fiscal 2003 was primarily due to
increased revenues from two of our newer, suite-based application products,
Hyperion Planning and Hyperion Financial Management. These two products were
still in the early stages of their product life cycles during most of fiscal
2002, but they began making significant contributions to total license revenue
in the fourth quarter of fiscal 2002 and into fiscal 2003. These increases in
suite-based application product sales were offset to some extent by declines in
revenue from our older, standalone application products, Hyperion Pillar and
Hyperion Enterprise, and our platform products.

The decrease in license revenue in fiscal 2002 resulted from a reduction in the
total number of transactions. This decline was primarily attributable to weak
economic conditions both domestically and internationally, which caused delays
in our customers capital spending, as well as a drop in revenues from
older-generation products that was more rapid than the increase in
newer-generation product revenues.

We separate license revenue into two main components- application license
revenue and platform license revenue. Application license revenue is generated
from our packaged business performance management applications, and platform
license revenue is generated from our Hyperion Essbase XTD platform and its
component products. In fiscal 2003, application revenue represented 53% of
total license revenue and platform revenue represented 47% of total license
revenue, compared to 47% application revenue and 53% platform revenue in fiscal
2002 and 45% application revenue and 55% platform revenue in fiscal 2001. A
65% increase in suite-based application sales in fiscal 2003, which include
Hyperion Planning and Hyperion Financial Management, combined with a 52%
decrease in standalone application sales, which include Hyperion Pillar and
Hyperion Enterprise, resulted in an overall 14% increase in total application
license revenue in fiscal 2003 compared to fiscal 2002. However, platform
sales decreased 7% in fiscal 2003 compared to fiscal 2002. The increase in
application license revenue combined with the decrease in platform license
revenue resulted in the increase in the ratio of application license revenue to
platform license revenue in fiscal 2003 compared to fiscal 2002.

In fiscal 2002, a 42% decrease in standalone application sales, partially
offset by a 57% increase in suite-based application sales, resulted in an
overall 10% decrease in total application license revenue in fiscal 2002
compared to fiscal 2001. Additionally, platform sales decreased 17% in fiscal
2002 compared to fiscal 2001. Because platform sales decreased at a higher
rate than application sales, the ratio of application license revenue to
platform license revenue increased in fiscal 2002 compared to fiscal 2001. Our
two newer, suite-based 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.

We market our products through our direct sales force and through channel
partners. To date, we have generated the majority of our license revenue
through our direct sales force, but we continue to focus on complementing our
direct sales force with channel partners, which include OEMs, VARs, system
integrators and independent distributors. License revenue from channel
partners comprised 26% of total license revenue in fiscal 2003 compared to 25%
in fiscal 2002 and 21% in fiscal 2001. No single channel partner represented
more than 10% of total revenue during fiscal 2003, 2002 or 2001.

Maintenance and services.Maintenance and services revenue increased 4% in
fiscal 2003 compared to fiscal 2002. Maintenance and services revenue
decreased 1% in fiscal 2002 compared to fiscal 2001.

In fiscal 2003, maintenance revenue increased 14%, primarily due to additional
sales of software to our customers and improvements in our invoicing and
collecting procedures for maintenance renewals, offset slightly by
customers no longer renewing maintenance services contracts. During fiscal 2002 and fiscal
2003, we analyzed our customer portfolio to identify customers who may have
been receiving maintenance services but were not paying for such services.
This initiative resulted in the recognition of maintenance revenues from
billings to customers in fiscal 2003 for maintenance services provided in prior
periods. In fiscal 2002, maintenance revenues increased 9% due to additional
sales of software to our customers and, to a lesser extent, to the improvements
in our invoicing and collecting procedures for maintenance renewals discussed
above.

Consulting and training services revenues decreased 12% in fiscal 2003 compared
to fiscal 2002 and decreased 15% in fiscal 2002 compared to fiscal 2001.
Consulting revenue decreased in fiscal 2003 due to our continued focus on
increasing the use of channel partners to provide consulting services for our
customers. As part of this effort, we reduced headcount in our North American
consulting organization by approximately 75 employees in the fourth quarter of
fiscal 2002 and further reduced headcount by approximately 25 employees during
fiscal 2003. In fiscal 2002, consulting revenue decreased due to our focus on
increasing the use of channel partners to provide consulting services for our
customers, as well as general economic weakness.

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COST OF REVENUES

|                         |  |                     |         |        |  |       |    |        |  |      |         |        |  |  |    |   |  |       |         |  |  |  |    |  
|------------------------ |  | ------------------- | ------- | ------ |  | ----- | -- | ------ |  | ---- | ------- | ------ |  |  | -- | - |  | ----- | ------- |  |  |  | -- | -
|                         |  | Year Ended June 30,
|                         |  |                    
|                         |  |                     |         |        |  | Gross |    |        |  |      |         | Gross  |  |  |    |   |  | Gross
|(In thousands)           |  | 2003                |         | Margin |  | 2002  |    | Margin |  | 2001 |         | Margin
|                         |  |                     |         |        |  |       |    |        |  |      |         |       
|Software licenses        |  | $                   | 15,419  |        |  |       | 92 | %      |  | $    | 15,430  |        |  |  | 92 | % |  | $     | 16,334  |  |  |  | 93 | %
|Maintenance and services |  |                     | 132,510 |        |  |       | 57 | %      |  |      | 137,047 |        |  |  | 54 | % |  |       | 161,016 |  |  |  | 46 | %

Cost of software license revenue.Cost of software license revenue consists
primarily of royalty expenses, amortization of capitalized software development
costs, amortization of acquired technologies, and the cost of product packaging
and documentation materials. Cost of software license revenue in fiscal 2003
remained relatively flat compared to fiscal 2002 while software license revenue
increased 3%. This was primarily due to a $1.9 million decrease in royalty
expenses due to a different mix of product sales and a $0.8 million decrease in
product packaging and documentation material costs due to our increased use of
electronic product distribution. These decreases were substantially offset by
a $1.5 million increase in amortization of capitalized software development
costs and a $1.1 million increase in amortization of acquired technologies. In
fiscal 2002, the cost of software license revenue decreased 6% compared to
fiscal 2001, primarily attributable to a $2.2 million decrease in royalty
expenses. This decrease in royalty expenses resulted from the 14% decrease in
software license revenue in fiscal 2001, as well as a change in the mix of
product sales.

In fiscal 2003, 2002 and 2001, we capitalized $2.0 million, $2.5 million, and
$2.2 million of software development costs, respectively, in accordance with
Statement of Financial Accounting Standards (SFAS) No. 86, Accounting for
the Costs of Computer Software to be Sold, Leased, or Otherwise Marketed. The
amounts capitalized relate to localization costs for our software products.
Capitalized software product development costs are amortized over the estimated
economic life of the products, which is generally three years. The
amortization of capitalized software development costs begins upon the general
release of the software to customers.

Cost of maintenance and services revenue.Cost of maintenance and services
revenue consists largely of compensation and benefits for consulting, training
and support personnel. Cost of maintenance and services revenue decreased 3%
in fiscal 2003 compared to fiscal 2002. The decrease in cost of maintenance
and services revenue is primarily attributable to our continued focus on
leveraging our channel partners to perform consulting services for our
customers. As a result of this effort, we reduced headcount in our North
American consulting organization by approximately 75 employees in the fourth
quarter of fiscal 2002 and further reduced headcount by approximately 25
employees during fiscal 2003. This reduction in headcount contributed to a
$2.2 million decrease in employee expenses for maintenance and services
personnel in fiscal 2003 compared to fiscal 2002. Further, independent
contractor and temporary staffing expenses decreased $1.0 million in fiscal
2003 compared to fiscal 2002 primarily due to our decreased use of external
personnel for product implementations for customers.

Cost of maintenance and services revenue decreased 15% in fiscal 2002 compared
to fiscal 2001, primarily due to a $15.0 million decrease in employee expenses.
This decrease in employee expenses was primarily due to our restructuring
activities in the fourth quarter of fiscal 2001, which resulted in significant
decreases in salary and variable compensation expenses. Variable compensation
also declined as a result of lower consulting revenues in fiscal 2002.

Gross margin on maintenance and services revenue was 57% in fiscal 2003
compared to 54% in fiscal 2002 and 46% in fiscal 2001. These increases in
gross margin are primarily due to the increases in maintenance revenue as a
percentage of total maintenance and services revenue. Maintenance revenue as a
percentage of total maintenance and services revenue increased in fiscal 2003
and 2002 due to maintenance revenue increases, as discussed above, as well as
consulting revenue decreases due to our increased use of channel partners to
provide consulting services.

OPERATING EXPENSES

|                           |  |                     |         |         |  |            |    |         |  |      |         |            |  |  |    |   |  |            |         |  |  |  |    |  
|-------------------------- |  | ------------------- | ------- | ------- |  | ---------- | -- | ------- |  | ---- | ------- | ---------- |  |  | -- | - |  | ---------- | ------- |  |  |  | -- | -
|                           |  | Year Ended June 30,
|                           |  |                    
|                           |  |                     |         |         |  | Percent of |    |         |  |      |         | Percent of |  |  |    |   |  | Percent of
|(In thousands)             |  | 2003                |         | Revenue |  | 2002       |    | Revenue |  | 2001 |         | Revenue   
|                           |  |                     |         |         |  |            |    |         |  |      |         |           
|Sales and marketing        |  | $                   | 190,025 |         |  |            | 37 | %       |  | $    | 182,311 |            |  |  | 37 | % |  | $          | 208,336 |  |  |  | 39 | %
|Research and development   |  |                     | 73,776  |         |  |            | 14 | %       |  |      | 72,206  |            |  |  | 15 | % |  |            | 81,597  |  |  |  | 15 | %
|General and administrative |  |                     | 47,207  |         |  |            | 9  | %       |  |      | 64,843  |            |  |  | 13 | % |  |            | 72,823  |  |  |  | 14 | %
|                           |  |                     |         |         |  |            |    |         |  |      |         |            |  |  |    |   |  |            |         |  |  |  |    |  
|Total operating expenses   |  | $                   | 311,008 |         |  |            |    |         |  | $    | 319,360 |            |  |  |    |   |  | $          | 362,756 |  |  |  |    |  
|                           |  |                     |         |         |  |            |    |         |  |      |         |            |  |  |    |   |  |            |         |  |  |  |    |  

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Sales and marketing.Sales and marketing expense increased 4% in fiscal 2003
compared to fiscal 2002 primarily due to a $6.5 million increase in marketing
expenses resulting from a heavier focus on a wide variety of demand generation
activities. We also increased spending in the area of brand building and the
advancement of Business Performance Management thought leadership.

Sales and marketing expense decreased 12% in fiscal 2002 compared to fiscal
2001 primarily due to the restructuring plan we initiated in the fourth quarter
of fiscal 2001 and related cost saving measures. In fiscal 2002, we
consolidated our 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.

Research and development.Research and development expense increased 2% in
fiscal 2003 compared to fiscal 2002. This increase is primarily attributable to
a $1.4 million increase in salaries and related employee expenses.

Research and development expense decreased 12% in fiscal 2002 compared to
fiscal 2001 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.

General and administrative.General and administrative expense decreased 27%
in fiscal 2003 compared to fiscal 2002. This decrease was primarily
attributable to a $2.7 million decrease in bad debt expense resulting from
improvements in the quality of our accounts receivable portfolio, a $4.1
million decrease in outsourcing costs, as we ended the outsourcing of our North
American accounting department in the fourth quarter of fiscal 2002, a $4.4
million decrease in occupancy and equipment costs primarily due to a decrease
in depreciation and amortization expense, as many fixed assets have become
fully depreciated during the past several quarters, and a $1.5 million decrease
in charges related to property and sales tax audits. These decreases were
partially offset by a $3.2 million increase in salaries and related employee
expenses resulting primarily from headcount increases as we brought our North
American accounting function in-house.

General and administrative expense decreased 11% in fiscal 2002 compared to
fiscal 2001 due primarily to decreases in professional services and independent
contractor expenditures of $9.2 million and a decrease in bad debt expense of
$1.9 million. These decreases are the direct result of our reduction in
discretionary spending, as well as our focus on invoicing and collection
process improvements.

RESTRUCTURING AND OTHER CHARGES

Restructuring and other charges totaled $0.8 million, $0.1 million, and $42.8
million in fiscal 2003, 2002 and 2001, respectively. The restructuring charges
in fiscal 2003 and 2002 resulted from adjustments made to the restructuring
charges recorded in the fourth quarter of fiscal 2001 and, thus, did not
represent new restructuring activities.

A summary of the fiscal 2001 restructuring and other charges and accrual
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 | )
|                                 |  |           |        |            |  |             |        |       |  |       |         |   |  |   |        |   |  |   |         |  
|Accrual 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    | )
|                                 |  |           |        |            |  |             |        |       |  |       |         |   |  |   |        |   |  |   |         |  
|Accrual balance at June 30, 2002 |  |           | 353    |            |  |             | 14,885 |       |  |       |        |   |  |   | 3,374  |   |  |   | 18,612  |  
|Cash paid                        |  |           | (353   | )          |  |             | (2,291 | )     |  |       |        |   |  |   | (1,524 | ) |  |   | (4,168  | )
|Adjustments                      |  |           |       |            |  |             | 764    |       |  |       |        |   |  |   |       |   |  |   | 764     |  
|                                 |  |           |        |            |  |             |        |       |  |       |         |   |  |   |        |   |  |   |         |  
|Accrual balance at June 30, 2003 |  | $         |       |            |  | $           | 13,358 |       |  | $     |        |   |  | $ | 1,850  |   |  | $ | 15,208  |  
|                                 |  |           |        |            |  |             |        |       |  |       |         |   |  |   |        |   |  |   |         |  

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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 were 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 other
charges 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 accrual balance at June
30, 2003 of $15.2 million, which relates primarily to future lease obligations,
is included in other current liabilities and other liabilities on our
consolidated balance sheet. Of this amount, approximately $3.9 million is
included in other current liabilities and approximately $11.3 million is
included in other liabilities on our 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.

INTEREST AND OTHER INCOME

Interest and other income consists primarily of interest earned on cash, cash
equivalent and short-term investment balances. Although we had higher average
cash and investment balances during fiscal 2003 compared to fiscal 2002 and
2001, interest and other income decreased to $5.8 million in fiscal 2003 from
$7.0 million in fiscal 2002 and $13.0 million in fiscal 2001 due to declines in
short-term interest rates during fiscal 2003 and 2002.

INTEREST AND OTHER EXPENSE

Interest and other expense consists primarily of interest paid and amortization
of deferred issuance costs related to our convertible subordinated notes due
March 2005. Interest and other expense decreased 37% to $2.9 million in fiscal
2003 from $4.6 million in fiscal 2002. During the first and second quarters of
fiscal 2003, we repurchased convertible subordinated notes with face values
totaling $28.7 million. These repurchases significantly contributed to the
decrease in interest and other expense in fiscal 2003 compared to fiscal 2002.

Interest and other expense decreased 16% to $4.6 million in fiscal 2002 from
$5.5 million in fiscal 2001. During the fourth quarter of fiscal 2002 and the
second quarter of fiscal 2001, we repurchased convertible subordinated notes
with face values totaling $10.0 million and $11.3 million, respectively. These
repurchases significantly contributed to the decrease in interest and other
expense in fiscal 2002 compared to fiscal 2001.

GAIN ON REDEMPTION OF DEBT

During fiscal 2003, we repurchased convertible subordinated notes with face
values totaling $28.7 million for a total cost of approximately $27.9 million,
which resulted in a gain, net of the write-off of associated deferred issuance
costs, of approximately $0.5 million. During fiscal 2002, we repurchased
convertible subordinated notes with face values totaling $10.0 million for a
total cost of $8.9 million, which resulted in a gain, net of the write-off of
associated deferred issuance costs, of approximately $0.9 million. During
fiscal 2001, we repurchased convertible subordinated notes with face values
totaling $11.3 million for a total cost of $8.7 million, which resulted in a
gain, net of the write-off of associated deferred issuance costs, of
approximately $2.4 million. Any further purchases of our convertible notes
will be determined based on an evaluation of market conditions and other
factors.

INCOME TAX PROVISION (BENEFIT)

Our effective income tax rates for fiscal 2003, 2002 and 2001 were 37%, 36% and
31%, respectively. Excluding the impact of restructuring and other charges,
our effective income tax rate for fiscal 2001 was 38%.

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Our effective income tax rate increased slightly in fiscal 2003 due to a
decrease in the impact of tax exempt interest and a change in the geographical
mix of income. Excluding the impact of restructuring and other charges in
fiscal 2001, our effective income tax rate decreased slightly 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 the first quarter of fiscal 2004 to remain at 37%. We
are currently assessing the impact of the pending acquisition of Brio Software,
Inc. on our effective income tax rate for periods after the closing of the
acquisition.

NET INCOME (LOSS)

As a result of the above factors, we generated net income of $34.1 million, or
$0.96 per diluted share, in fiscal 2003 compared to net income of $15.0
million, or $0.45 per diluted share, in fiscal 2002 and a net loss of $31.1
million, or $0.95 per diluted share, in fiscal 2001.

LIQUIDITY AND CAPITAL RESOURCES

|                                                    |  |                     |         |        |  |         |     |        |  |      |         |         |  |  |     |   |  |   |         |  
|--------------------------------------------------- |  | ------------------- | ------- | ------ |  | ------- | --- | ------ |  | ---- | ------- | ------- |  |  | --- | - |  | - | ------- | -
|                                                    |  | Year Ended June 30,
|                                                    |  |                    
|                                                    |  |                     |         |        |  | Percent |     |        |  |      |         | Percent |  |  |     |  
|(In thousands)                                      |  | 2003                |         | Change |  | 2002    |     | Change |  | 2001
|                                                    |  |                     |         |        |  |         |     |        |  |     
|Cash, cash equivalents and short-term investments   |  | $                   | 416,554 |        |  |         | 26  | %      |  | $    | 330,258 |         |  |  | 29  | % |  | $ | 255,366 |  
|Working capital                                     |  |                     | 350,649 |        |  |         | 25  | %      |  |      | 281,501 |         |  |  | 11  | % |  |   | 254,141 |  
|Net cash provided by operating activities           |  |                     | 88,113  |        |  |         | 4   | %      |  |      | 84,210  |         |  |  | 169 | % |  |   | 31,273  |  
|Net cash used in investing activities               |  |                     | (26,756 | )      |  |         | 83  | %      |  |      | (14,625 | )       |  |  | -62 | % |  |   | (38,959 | )
|Net cash provided by (used in) financing activities |  |                     | 20,144  |        |  |         | 388 | %      |  |      | 4,271   |         |  |  | 124 | % |  |   | (18,106 | )

To date, we have financed our business through positive cash flow from
operations and, to a lesser extent, through the issuance of common stock. In
fiscal 1998, we also raised capital through the issuance of $100.0 million of
convertible subordinated notes. During fiscal 2003, 2002 and 2001, we invested
our cash primarily in state and municipal bonds, U.S. government and agency
obligations, corporate notes and other highly-liquid securities.

In fiscal 2003, 2002 and 2001, we generated positive cash flow from operations
of $88.1 million, $84.2 million and $31.3 million, respectively. The increase
in operating cash flows in fiscal 2003 and 2002 compared to fiscal 2001 was
primarily attributable to the net income generated for these periods as well as
decreases in accounts receivable, which resulted from our focus on invoicing
and collection process improvements, primarily for maintenance and consulting
services. Based on our improved collection results, we reduced our
outstanding receivables to $107.0 million at June 30, 2003
from $120.9 million at June 30, 2002 and reduced our allowance
for doubtful accounts to $8.2 million at June 30, 2003 from $10.7
million at June 30, 2002. Our provisions for doubtful accounts were
$5.8 million, $20.9 million and $27.7 million in fiscal 2003,
2002 and 2001, respectively. The improvements in invoicing and collections
processes also contributed to reductions in average quarterly days sales
outstanding (DSO) to 61 days in fiscal 2003, from 80 days in fiscal 2002 and
103 days in fiscal 2001. We calculate accounts receivable DSO on a gross
basis by dividing the accounts receivable balance at the end of the quarter by
the amount of revenue recognized for the quarter multiplied by 90 days. We
continue to emphasize rapid billing and collection of receivables, however
there can be no assurance that we will be able to further reduce, or even
maintain the current average DSO. Our DSO can fluctuate depending on a number of factors,
including the volume of revenue that is recognized toward the end of each
quarter, the timing of annual maintenance billings during the fiscal year,
customer payment terms, and the variability of quarterly revenue. We expect to
continue to experience variability in our license revenue since a large portion
of our software licensing agreements are concluded in the last month of the
each fiscal quarter, which will impact our accounts receivable balances,
collections experience and DSO.

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Net cash used in investing activities amounted to $26.8 million, $14.6 million
and $39.0 million in fiscal 2003, 2002 and 2001, respectively. The net cash
used in investing activities in fiscal 2003 resulted primarily from purchases
of property and equipment of $19.8 million and payments for acquisitions of
$6.0 million. The net cash used in investing activities in fiscal 2002 was
primarily due to purchases of property and equipment of $13.5 million and
purchases of intangible assets of $5.8 million, primarily consisting of
acquired technologies. These cash outflows were partially offset by proceeds
from maturities of investments, net of purchases, of $5.4 million in fiscal
2002. The net cash used in investing activities in fiscal 2001 was primarily
due to purchases of property and equipment of $42.6 million, which was
partially offset by proceeds from maturities of investments, net of purchases,
of $8.3 million. Our capital expenditures in fiscal 2003, 2002 and 2001
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 2003 and 2002 was attributable to the acquisition of several critical
business systems during fiscal 2001, including our ERP platform and Vantive and
Callidus software.

Net cash provided by financing activities was $20.1 million in fiscal 2003,
compared to net cash provided by financing activities of $4.3 million in fiscal
2002 and net cash used in financing activities of $18.1 million in fiscal 2001.
The cash provided by financing activities in fiscal 2003 was due to $50.4
million of proceeds from the issuance of common stock pursuant to the exercise
of employee stock options and stock purchases under our equity plans, which was
partially offset by repurchases of convertible subordinated notes totaling
$27.9 million. The cash provided by financing activities in fiscal 2002 was
due to $13.3 million of proceeds from the issuance of common stock, which was
partially offset by repurchases of convertible subordinated notes totaling $8.9
million. 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 totaling $8.7 million. These amounts were
partially offset by proceeds from the issuance of common stock of $14.5 million
in fiscal 2001.

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, 2004. 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. In addition, our ability to generate positive cash
flows from operations will be impacted by changes in customer demand and
acceptance of our products as well as our ability to manage operating expenses
and achieve further operational efficiencies.

The following table summarizes our contractual obligations as of June 30, 2003
and the effect such obligations are expected to have on our liquidity and cash
flow in future periods (in thousands):

|                                    |  |                     |        |      |  |      |        |      |  |      |        |            |  |       |        |  |  |   |       |  |  |   |        |  |  |   |         | 
|----------------------------------- |  | ------------------- | ------ | ---- |  | ---- | ------ | ---- |  | ---- | ------ | ---------- |  | ----- | ------ |  |  | - | ----- |  |  | - | ------ |  |  | - | ------- | 
|                                    |  | Year Ended June 30, |        |      |  |      |        |      |  |     
|                                    |  |                     |        |      |  |      |        |      |  |     
|                                    |  | 2004                |        | 2005 |  | 2006 |        | 2007 |  | 2008 |        | Thereafter |  | Total
|                                    |  |                     |        |      |  |      |        |      |  |      |        |            |  |      
|Non-cancellable operating leases    |  | $                   | 19,357 |      |  | $    | 16,010 |      |  | $    | 13,078 |            |  | $     | 11,188 |  |  | $ | 8,967 |  |  | $ | 22,264 |  |  | $ | 90,864  | 
|4.5% convertible subordinated notes |  |                     |       |      |  |      | 50,040 |      |  |      |       |            |  |       |       |  |  |   |      |  |  |   |       |  |  |   | 50,040  | 
|                                    |  |                     |        |      |  |      |        |      |  |      |        |            |  |       |        |  |  |   |       |  |  |   |        |  |  |   |         | 
|                                    |  | $                   | 19,357 |      |  | $    | 66,050 |      |  | $    | 13,078 |            |  | $     | 11,188 |  |  | $ | 8,967 |  |  | $ | 22,264 |  |  | $ | 140,904 | 
|                                    |  |                     |        |      |  |      |        |      |  |      |        |            |  |       |        |  |  |   |       |  |  |   |        |  |  |   |         | 

Agreement to Acquire Brio Software, Inc.

In July 2003, we entered into a definitive agreement to acquire Brio Software,
Inc., a business intelligence software provider based in Santa Clara,
California. Under the terms of the agreement, Brio stockholders will receive a
combination of 0.109 of a share of our common stock and $0.363 in cash for each
share of Brio common stock. Based on the closing price of our stock on July
22, 2003, the date the acquisition was announced, the transaction is valued at
approximately $142 million. Brio stockholders will own approximately 10.5% of
our common stock after completion of the transaction. The transaction has been
approved by the boards of directors of both companies and is subject to
customary closing conditions, including the approval of Brios
stockholders and completion of
regulatory review. The transaction is expected to close in the second
quarter of fiscal 2004.

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Stock Repurchase Program

In July 2003, our board of directors authorized the company to repurchase up to
$125 million of our common stock. We will determine the timing and amount of
shares to be repurchased based upon market conditions and other factors, and
will use existing cash and short-term investments to finance the transactions.
The repurchased shares will be used for our stock option plans, employee stock
purchase and other stock benefit plans, and for general corporate purposes.

RECENT ACCOUNTING PRONOUNCEMENTS

In November 2002, the Financial Accounting Standards Board (FASB) issued
Interpretation No. 45 (FIN 45), Guarantors Accounting and Disclosure
Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of
Others. FIN 45 requires that a guarantor recognize, at the inception of a
guarantee, a liability for the fair value of the obligation undertaken in
issuing the guarantee or indemnification. FIN 45 also requires additional
disclosure by a guarantor in its interim and annual financial statements about
its obligations under certain guarantees and indemnifications. The initial
recognition and measurement provisions of FIN 45 are applicable for guarantees
issued or modified after December 31, 2002. The disclosure requirements of FIN
45 are effective for financial statements of interim or annual periods ending
after December 15, 2002. We adopted the recognition and measurement provisions
of FIN 45 prospectively to guarantees issued or modified after December 31,
2002, and the adoption did not have an impact on our financial position or
results of operations.

In January 2003, the FASB issued Interpretation No. 46 (FIN 46),
Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51.
FIN 46 requires certain variable interest entities to be consolidated by the
primary beneficiary of the entity if the equity investors in the entity do not
have the characteristics of a controlling financial interest or do not have
sufficient equity at risk for the entity to finance its activities without
additional subordinated financial support from other parties. FIN 46 is
effective for all new variable interest entities created or acquired after
January 31, 2003. For variable interest entities created or acquired prior to
February 1, 2003, the provisions of FIN 46 must be applied for the first
interim or annual period beginning after June 15, 2003. We adopted FIN 46 on
February 1, 2003 for new entities, and the adoption did not have a material
impact on our financial position or results of operations. We are currently
assessing the impact of adopting FIN 46 for pre-existing entities but do not
expect it will have a material impact on our financial position or results of
operations.

In April 2003, the FASB issued SFAS 149, Amendment of Statement 133 on
Derivative Instruments and Hedging Activities. SFAS 149 amends and clarifies
accounting for derivative instruments, including certain derivative instruments
embedded in other contracts and for hedging activities under SFAS 133,
Accounting for Derivative Instruments and Hedging Activities. SFAS 149 is
generally effective for derivative instruments, including derivative
instruments embedded in certain contracts, entered into or modified after June
30, 2003 and for hedging relationships designated after June 30, 2003. We do
not expect the adoption of SFAS 149 to have a material impact on our financial
position or results of operations.

In May 2003, the FASB issued SFAS 150, Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity. SFAS 150
improves the accounting for certain financial instruments that, under previous
guidance, issuers could account for as equity and requires that those
instruments be classified as liabilities (or assets in certain circumstances)
in statements of financial position. SFAS 150 also requires disclosures about
alternative ways of settling the instruments and the capital structure of
entitiesall of whose shares are mandatorily redeemable. SFAS 150 is generally
effective for all financial instruments entered into or modified after May 31,
2003, and otherwise is effective at the beginning of the first interim period
beginning after June 15, 2003. We do not expect the adoption of SFAS 150 to
have a material impact on our financial position or results of operations.

RELATED PARTY TRANSACTIONS

In fiscal 2003 and 2002, Siebel Systems purchased approximately $0.2 million
and $1.0 million, respectively, of software, maintenance and services from us
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 was on our board of directors from June 2000 to February
2003. As of June 30, 2003, all amounts due from Siebel related to these
transactions had been paid.

In fiscal 2003 and 2002, we purchased approximately $0.8 million and $3.0
million, respectively, of software, maintenance and services from Siebel for
purposes of implementing a worldwide customer relationship management system.
As of June 30, 2003, we had a payable to Siebel in the amount of $0.2 million
related to these transactions.

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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.

RISKS UNRELATED TO THE PENDING ACQUISITION OF BRIO

Product enhancement and new product introductions involve inherent risks.

Hyperion competes in a market characterized by rapid technological advances in
hardware and software development, evolving standards in computer hardware and
software technology and frequent new product introductions and enhancements.
Hyperion continually seeks to expand and refresh its product offerings to
include newer features or products, and enter into agreements allowing
integration of third-party technology into Hyperions products. The
introduction of new products or updated versions of continuing products has
inherent risks, including, but not limited to:



| |  |  | product quality, including the possibility of software defects;                                           
| | - |  | ----------------------------------------------------------------------------------------------------------
|
| |  |  | the fit of the new products and features with the customers needs;                                       
|
| |  |  | the successful adaptation of third-party technology into Hyperions products;                             
|
| |  |  | educating Hyperions sales, marketing and consulting personnel to work with the new products and features;
|
| |  |  | competition from earlier and more established entrants;                                                   
|
| |  |  | market acceptance of initial product releases;                                                            
|
| |  |  | marketing effectiveness; and                                                                              
|
| |  |  | the accuracy of assumptions about the nature of customer demand.                                          

Hyperions failure to successfully introduce, market and sell new products and
technologies, enhance and improve existing products in a timely manner, and
properly position and/or price Hyperions products, and 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 Hyperions
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. As more and
more of these newer products are deployed, Hyperions service and maintenance
organizations, along with its partners, will have to rapidly increase their
ability to install and service these products, and Hyperion 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 license
revenue.

Failure to upgrade older products will adversely affect revenue.

As newer products are introduced by Hyperion, or by its competition, the
markets demand for Hyperions older products declines. Declining demand
reduces revenue from additional licenses, and reduces maintenance revenue from
past purchasers of Hyperions software. We must continually upgrade Hyperions
older products in order for Hyperions customers to continue to see value in
Hyperions maintenance services. If Hyperion is unable to provide continued
improvements in functionality, or, alternatively, move customers with
Hyperions older products to Hyperions newer products, declining maintenance
and new license revenue from older products could have a material adverse
effect on Hyperions business.

If Hyperion is unable to develop new and enhanced products that achieve
widespread market acceptance, Hyperion may be unable to recoup product
development costs, and Hyperions earnings and revenue may decline.

Hyperions future success depends on its ability to address the rapidly
changing needs of its customers by developing and introducing new products,
product updates and services on a timely basis. Hyperion must also extend the
operation of its products to new platforms and keep pace with technological
developments and emerging industry standards. Hyperion commits substantial
resources to developing new software products and services. If the markets for
these new products do not develop as anticipated, or demand for Hyperions
products and services in these markets does not materialize or occurs more
slowly than Hyperion expects, Hyperion will have expended substantial resources
and capital without realizing sufficient revenue, and Hyperions business and
operating results could be adversely affected.

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Hyperion operates in a very competitive environment.

The markets in which Hyperion competes are intensely competitive, highly
fragmented and characterized by rapidly changing technology and evolving
standards. Hyperion has experienced, and expects it will continue to
experience, vigorous competition from current competitors and new competitors,
some of whom may have significantly greater financial, technical, marketing and
other resources than Hyperion does. Cognos competes with Hyperion across a
wide range of products, offering what they refer to as Corporate Performance
Management solutions, as do, generally, the major ERP vendors, including SAP
and Oracle. Many other companies compete in specific areas of Hyperions
business. SAS and Peoplesoft have OLAP products and analytic applications,
Business Objects (and Crystal) have query and reporting products, and numerous
smaller vendors offer specific applications that compete with a single Hyperion
product. Hyperion expects additional competition as other established and
emerging companies, including Microsoft and Peoplesoft, enter into both the
application and platform 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 Hyperions business, operating results and
financial condition.

Hyperion typically has 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 Hyperions
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, Hyperion must rely
on Hyperions forecasts of revenue for planning, modeling and other purposes.
However, forecasts are only estimates and may not correlate to revenues in a
particular quarter or over a longer period of time. Consequently, a
significant discrepancy between actual results and sales forecasts could cause
Hyperion to improperly plan or budget and thereby adversely affect Hyperions
business or results of operations. Any publicly stated revenue or earnings
projections by Hyperion are especially subject to this risk.

A change in pricing or marketing could adversely affect Hyperions business.

In an effort to simplify and clarify Hyperions product positioning and
marketing, Hyperion periodically makes changes to Hyperions product pricing or
product descriptions. While Hyperion does not believe these pricing and
marketing changes will have a material impact on license revenue, broadly based
changes to pricing or marketing messages could cause customers to change or
delay their purchasing decisions in response to such revisions. Additional
risks of such changes include delays in transactions as Hyperions sales force
learns how to deploy the new pricing or convey Hyperions new marketing
messages and delay or loss of revenues as the competition reacts to the pricing
and marketing changes, any of which could have a material adverse effect on
Hyperions business, results of operations or financial position.

Hyperion may not be able to continue its operational improvements.

As part of Hyperions focus on improving its operating margins, Hyperion is
driving toward increased efficiencies in Hyperions sales force, as well as
Hyperions 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 Hyperions profits.

Reorganizations may adversely affect productivity.

Hyperion has continued to make adjustments to Hyperions operations and
organization. These changes have historically resulted in productivity issues
in the short term. The revised operations and/or organization must keep
improving over past performance in order to provide better operating margins
and efficiencies. Failure to maintain or improve momentum and productivity
could materially adversely impact Hyperions revenue and profits.

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Hyperions international operations are subject to significant risks.

Hyperion derives a substantial portion of its revenue from customers located
outside of the United States, and Hyperion plans to expand its international
operations. Hyperions international operations are subject to risks,
including:



| |  |  | potential loss of proprietary information due to piracy,
misappropriation or weaker laws regarding intellectual property
protection;                                                                                                                                               
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | imposition of foreign laws and other governmental controls, including
trade and employment restrictions;                                                                                                                                                                           
|
| |  |  | fluctuations in currency exchange rates and economic instability such
as higher interest rates and inflation, which could reduce Hyperions
customers ability to obtain financing for software products or which
could make Hyperions products more expensive in those countries;
|
| |  |  | difficulties in hedging foreign currency transaction exposures;                                                                                                                                                                                                                    
|
| |  |  | longer payment cycles for sales in foreign countries and difficulties in collecting accounts receivable;                                                                                                                                                                           
|
| |  |  | difficulties in staffing and managing its international operations,
including difficulties related to administering Hyperions stock option
plan in some foreign countries;                                                                                                        
|
| |  |  | difficulties in coordinating the activities of Hyperions geographically dispersed and culturally diverse operations;                                                                                                                                                              
|
| |  |  | competition from local suppliers;                                                                                                                                                                                                                                                  
|
| |  |  | costs and delays associated with developing software in multiple languages; and                                                                                                                                                                                                    
|
| |  |  | political unrest, war or terrorism, particularly in areas in which Hyperion has facilities.                                                                                                                                                                                        

Hyperion may not be able to successfully address each of these challenges.

Additionally, Hyperion conducts a significant portion of its business in
currencies other than the United States dollar. Hyperions operating results
are, therefore, subject to fluctuations in foreign currency exchange rates.
Hyperions revenues and operating results are adversely affected when the
United States dollar strengthens relative to other currencies and are
positively affected when the United States dollar weakens. Changes in the
value of major foreign currencies, particularly the Euro, relative to the value
of the United States dollar positively affected revenues and operating results
in fiscal 2003. If the United States dollar strengthens relative to other
currencies, our revenues and operating results will be adversely affected.

There are significant organizational and product integration risks related to
business combinations.

In addition to its proposed acquisition of Brio, Hyperion has 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 these activities, including but not limited to:



| |  |  | the possibility that Hyperion pays more than the value it derives 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; and                                                       
|
| |  |  | the potential disruption of Hyperions ongoing business and the
distraction of management from Hyperions business.                                

These factors could have a material adverse effect on Hyperions business,
results of operations or financial position, especially in the case of a large
acquisition.

Hyperion is subject to the possibility of infringement claims.

Hyperion expects that software product developers will increasingly be subject
to infringement claims as the number of products and competitors in Hyperions
industry segment grows and the functionality of products in different industry
segments overlaps. Both Hyperion and Brio have in the past been subjected to
patent infringement claims. Any such claims, with or without merit, could be
time consuming and costly to defend, 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, and may require the
payment of substantial amounts of money. In the event of a successful product
infringement claim against Hyperion, and Hyperions failure or inability to
license the infringed or similar technology, Hyperions business, operating
results and financial condition could be materially adversely affected.

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Enforcement of Hyperions intellectual property rights may be difficult.

Hyperion relies primarily on a combination of patent, copyright and trademark
laws, trade secrets, confidentiality procedures and contractual provisions to
protect Hyperions proprietary rights. Hyperions means of protecting its
proprietary rights in the United States or abroad may not be adequate.

Hyperions stock price may be volatile.

The market price of Hyperions common stock is subject to significant
fluctuations. The market price of Hyperions common stock may be significantly
affected by factors, including but not limited to the announcement of new
products, product enhancements or technological innovation by Hyperion or
Hyperions competitors, announcements of acquisitions by Hyperion, changes in
Hyperions or Hyperions competitors results of operations, changes in
revenue, revenue growth rates and revenue mix, 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 Hyperions common stock could be adversely affected by such
fluctuations.

Hyperion is dependent upon indirect channel partners.

In addition to its direct sales force, Hyperion relies on indirect channel
partners such as OEMs, VARs and distributors for licensing and support of its
products in the United States and internationally. License revenue from
channel partners comprised 26% of Hyperions total license revenue for fiscal
2003. This channel involves a number of special risks, including:



| |  |  | Hyperions lack of control over the delivery of its products to
end-users;                               
| | - |  | ---------------------------------------------------------------------------------------------------------
|
| |  |  | Hyperions resellers and distributors may terminate their relationship with Hyperion on short notice; and
|
| |  |  | Hyperions resellers and distributors may market and distribute competing products.                      

Hyperions current indirect channel partners may not elect, or be able, to
market or support Hyperions products effectively or be able to release their
products embedded with Hyperion products in a timely manner. Hyperion may not
be able to effectively manage channel conflicts, and economic conditions or
industry demand may adversely affect these or other indirect channel partners
or these indirect channel partners may devote greater resources to marketing
and supporting the products of other companies. Revenues derived from indirect
channel partners may fluctuate significantly in subsequent periods.

Hyperion is exposed to product liability claims.

Hyperions license agreements with its customers typically contain provisions
designed to limit Hyperions exposure to potential product liability claims,
and Hyperion carries insurance to protect against such claims. It is possible,
however, that the limitation of liability provisions contained in Hyperions
license agreements may not be effective as a result of U.S. or foreign laws or
ordinances enacted in the future or because of judicial decisions, and that
liability insurance may not be available, or that coverage for specific claims
may be denied. Although Hyperion has not experienced any material product
liability claims to date, the sale and support of business performance
management products by Hyperion may entail the risk of such claims. A
successful product liability claim brought against Hyperion could have a
material adverse effect upon Hyperions business, operating results and
financial condition.

Defects in Hyperions products could increase its costs, adversely affect its
reputation, diminish demand for its products and hurt its operating results.

As a result of their complexity, Hyperions software products may contain
undetected errors or viruses. Errors in new products or product enhancements
might not be detected until after initiating commercial shipments, which could
result in additional costs, delays, possible damage to Hyperions reputation
and could cause diminished demand for Hyperionsproducts. This could lead to
customer dissatisfaction and reduce the opportunity to renew maintenance or
sell new licenses.

Some provisions in Hyperions charter documents and its stockholder rights plan
may prevent or deter an acquisition of Hyperion.

Some of the provisions in Hyperions charter documents may deter or prevent
certain corporate actions, such as a merger, tender offer or proxy contest,
which could affect the market value of Hyperions securities. These provisions
include:

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| |  |  | Hyperions board of directors is authorized to issue preferred stock
with any rights it may determine. Consequently, Hyperions board of
directors may issue preferred stock, without shareholder approval, that
has rights superior to the outstanding Hyperion common stock;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Hyperions board of directors is classified into three groups, with
each group of directors to hold office for three years, which has the
effect that two annual meetings, not one, are required to replace a
majority of Hyperions board of directors;                      
|
| |  |  | Hyperion stockholders are not entitled to cumulate votes for
directors; and                                                                                                                                                                                                   
|
| |  |  | special meetings of Hyperion stockholders may be called only by
Hyperions president or by the president or secretary upon written
request by a majority of the board of directors and may not be called by
Hyperions stockholders.                                          

Hyperion has in place a stockholder rights plan that is designed to discourage
coercive takeover offers. In general, Hyperions stockholder rights plan makes
it uneconomic for any person to acquire more than a 15% interest in Hyperion
without the consent of the Hyperion Board of Directors.

Hyperions board of directors could utilize the provisions of its charter
documents and stockholder rights plan to resist an offer from a third party to
acquire Hyperion, including an offer to acquire Hyperion common stock at a
premium to its trading price or an offer that is otherwise considered favorable
by Hyperion stockholders.

RISKS RELATED TO THE PENDING ACQUISITION OF BRIO

Hyperion may face challenges in integrating Brio with Hyperion and, as a
result, may not realize the expected benefits of the acquisition and the price
of Hyperion common stock may be adversely affected.

Hyperion may not be successful in integrating Brios business. Achieving the
benefits of the acquisition will depend on many factors, including:



| |  |  | the successful and timely integration of the products, technology and
sales operations of the two companies following the completion of the
acquisition;                                                                                                                                                   
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | managing software development activities to define a combined product
roadmap, ensure timely release of innovative products to market, and to
ensure timely development of product roadmaps, release of products to
market, and the development of efficient integration and migration
processes and tools;
|
| |  |  | combining product offerings, platforms and technologies quickly and
effectively;                                                                                                                                                                                                                           
|
| |  |  | demonstrating to our existing and potential customers that the
acquisition will not result in adverse changes in customer service
standards or business focus;                                                                                                                                             
|
| |  |  | retaining key alliances on attractive terms with partners and
suppliers;                                                                                                                                                                                                                                   
|
| |  |  | coordinating and integrating sales and marketing efforts to
effectively communicate the capabilities of the combined company, cross
selling related products to each others customers, and managing the
combined sales force and distribution channels to avoid channel
conflict;                         
|
| |  |  | maintaining employee morale, assimilating key employees and managing
an increased number of employees over large geographic distances;                                                                                                                                                                     
|
| |  |  | creating and effectively implementing uniform standards, controls,
procedures, policies and information systems; or                                                                                                                                                                                        
|
| |  |  | retaining or recruiting key personnel.                                                                                                                                                                                                                                                                     

The successful execution of these post-acquisition events will involve
considerable effort and time, especially considering the highly technical and
complex nature of each companys products. Failure to achieve a successful and
timely integration of Hyperions and Brios respective businesses could result
in the impairment of relationships with employees, customers and business
partners as a result of the integration of management and other key personnel
and the potential disruption of the combined companys ongoing business and
distraction of its management.

The combined company may not succeed in addressing integration issues or any
other problems encountered in connection with the acquisition, which could have
a material adverse effect on the business, financial condition and results of
operations of Hyperion and its subsidiaries, including Brio, and on the price
of shares of Hyperion common stock. The diversion of the attention of
management and any difficulties encountered in the process of combining the
companies could cause the disruption of, or a loss of momentum in, the
activities of the combined companys business.

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Charges to earnings resulting from the application of the purchase method of
accounting may adversely affect the market value of shares of Hyperion common
stock following the acquisition.

In accordance with United States generally accepted accounting principles, the
combined company will account for the acquisition using the purchase method of
accounting, which will result in charges to earnings that could have a material
adverse effect on the market value of shares of Hyperion common stock following
completion of the acquisition. Under purchase accounting, Hyperion will record
the market value of its shares issued in connection with the acquisition, the
fair market value of the options to purchase Brio common stock that will be
converted into options to purchase Hyperion shares and the amount of direct
transaction costs, as the cost of acquiring the business of Brio. The combined
company will allocate these total costs to Brios net tangible assets,
amortizable intangible assets, intangible assets with indefinite lives and
in-process research and development based on their fair values as of the date
of completion of the acquisition, and record the excess of the purchase price
over those fair values as goodwill. The portion of the estimated purchase
price allocated to in-process research and development will be expensed by
Hyperion in the quarter in which the acquisition is completed. Hyperion will
incur additional depreciation and amortization expense over the useful lives of
certain of the net tangible and intangible assets acquired in connection with
the acquisition. In addition, to the extent the value of these assets,
including goodwill or intangible assets with indefinite lives, becomes
impaired, Hyperion may be required to incur material charges relating to the
impairment of those assets. These depreciation, amortization, in-process
research and development and potential impairment charges will decrease the net
income of Hyperion in the foreseeable future, which could have a material
impact on Hyperions results of operations and the market value of shares of
Hyperion common stock following the acquisition.

The acquisition of Brio may not occur or may be significantly delayed

The acquisition is subject to review by the United States Federal Trade
Commission and the Department of Justice under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, or the HSR Act. Under this statute, Hyperion and
Brio are required to make pre-acquisition notification filings and to await the
expiration or early termination of statutory waiting periods prior to completing the acquisition. In addition, the acquisition is subject
to Law n. 8.884 of June 11, 1994, as amended, of Brazil, which requires
Hyperion and Brio to make a filing with the Brazilian Administrative Council
for Economic Defense. Hyperion and Brio have made these required
filings and are seeking to obtain all such required regulatory clearances prior
to the scheduled completion of the transaction. The reviewing authorities may
not permit the acquisition at all or may impose restrictions or conditions on
the acquisition that may seriously harm Hyperion if the acquisition is
completed. These conditions could include a complete or partial license,
divestiture, spin-off or the holding separate of assets or businesses.
Hyperion may refuse to complete the acquisition if restrictions or conditions
are required by governmental authorities that would require the divestiture of
any assets of Hyperion or Brio or would limit Hyperions freedom of action with
respect to, or its ability to retain, Brio or any part of Brio or any of
Hyperions other assets or businesses.

In addition Hyperion must distribute an offering document to Brio stockholders,
which is subject to review by the Securities and Exchange Commission. While the
SEC does not approve the offering document, the review process can involve
considerable delay, and could result in a decision by Hyperion to abandon the
attempt to prepare and circulate the offering document. Also, the Brio
stockholders must vote to approve the transaction by a majority of the shares
outstanding. There is no assurance that such approval will be
obtained. There are a number of other conditions that must be
satisfied in order for the acquisition to be completed. There can be
no assurance that all of these conditions will be met.

Delay or prevention of the acquisition would diminish or eliminate the
anticipated benefits of the acquisition or result in additional transaction
costs, loss of revenue or other effects. If the acquisition is not completed,
Hyperion must continue to rely on an OEM agreement to access the query and
reporting capabilities that Brios products contribute. Continued reliance on
an OEM source for query and reporting solutions may have an adverse effect on
margins. Also, the failure of the acquisition to close could further distract
management of Hyperion, and have an adverse impact on the continued effort to
drive operational efficiencies.

In order to complete the acquisition, even though Hyperion and Brio are not
required to, they may agree to restrictions or conditions imposed by antitrust
authorities in order to obtain regulatory approval, and these restrictions or
conditions could harm Hyperions operations. In addition, during or after the
statutory waiting periods imposed by the HSR Act, and even after completion of
the acquisition, governmental authorities could seek to block or challenge the acquisition as they deem
necessary or desirable in the public interest. In addition, in some
jurisdictions, a competitor, customer or other third party could initiate a
private action under the antitrust laws challenging or seeking to enjoin the
acquisition, before or after it is completed. Hyperion, Brio or the combined
company may not prevail, or may incur significant costs, in defending or
settling any action under the antitrust laws.

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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 high-quality, liquid securities. At
June 30, 2003, our short-term investments consisted of investment-grade debt
securities with a fair value of $18.5 million. The portfolio is invested in
securities with relatively short maturities 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% change in market
interest rates would not have a material impact on the value of our investment
portfolio.

As of June 30, 2003, our long-term debt consists of 4.5% convertible
subordinated notes due March 2005 with a face value of $50.0 million. Because
our long-term debt bears interest at a fixed interest rate, an immediate 10%
change in market interest rates would not have a material impact on our
interest expense.

FOREIGN CURRENCY EXCHANGE RATE RISK. We transact business in various foreign
currencies. Our exposure to foreign currency exchange rate fluctuations arises
in part from non-functional currency denominated trade accounts receivable and
intercompany accounts receivable. Intercompany accounts receivable arise when
software royalty fees and certain other costs incurred in the United States are
charged to our foreign sales subsidiaries. These intercompany accounts are
typically denominated in the functional currency of the foreign subsidiary,
which is typically their local currency. From time to time, we utilize foreign
currency forward exchange contracts to offset the risk associated with the
effects of these trade receivables and certain intercompany receivables for
which we anticipate settlement in the foreseeable future. As a result,
increases or decreases in these accounts due to foreign exchange rate changes
are offset by gains and losses on the forward contracts, so as to minimize
foreign currency transaction gains and losses. Our forward contracts generally
have terms of 60 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 operations. 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
2003, 2002 and 2001. As of June 30, 2003, we had net forward contracts to sell
U.S. dollar equivalent of $4.7 million in foreign currency. An immediate 10%
change in currency exchange rates affecting these contracts would not have a
material impact on our results of operations.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

|                                   |                                                                                                                                  |  |      |    | 
|---------------------------------- | -------------------------------------------------------------------------------------------------------------------------------- |  | ---- | -- | 
|                                   |                                                                                                                                  |  | Page
|                                   |                                                                                                                                  |  |     
|Report of Independent Auditors     |                                                                                                                                  |  | 31   |   
|Consolidated Financial Statements: |                                                                                                                                  |  |      |   
|                                   | Consolidated Balance Sheets as of June 30, 2003 and 2002                                                                         |  |      | 32 | 
|                                   | Consolidated Statements of Operations for the years ended June 30, 2003, 2002
and 2001                                           |  |      | 33 | 
|                                   | Consolidated Statements of Stockholders Equity and Comprehensive Income (Loss)
for the years ended June 30, 2003, 2002 and 2001 |  |      | 34 | 
|                                   | Consolidated Statements of Cash Flows for the years ended June 30, 2003, 2002
and 2001                                           |  |      | 35 | 
|                                   | Notes to Consolidated Financial Statements                                                                                       |  |      | 36 | 
|Financial Statement Schedule:      |                                                                                                                                  |  |      |   
|                                   | Schedule II  Valuation and Qualifying Accounts                                                                                  |  |      | 58 | 

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REPORT OF INDEPENDENT AUDITORS

|   |                                            |                                
|-- | ------------------------------------------ | -------------------------------
|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, 2003 and 2002, and the results of their operations and their cash
flows for each of the three years in the period ended June 30, 2003, 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
August 8, 2003

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

|                                           |                                                                                                                                   |   |          |         |          |   |         |         |  
|------------------------------------------ | --------------------------------------------------------------------------------------------------------------------------------- | - | -------- | ------- | -------- | - | ------- | ------- | -
|                                           |                                                                                                                                   |   | June 30, |         | June 30,
|                                           |                                                                                                                                   |   | 2003     |         | 2002    
|                                           |                                                                                                                                   |   |          |         |         
|ASSETS                                     |                                                                                                                                   |   |          |         |          |   |         |        
|Current assets:                            |                                                                                                                                   |   |          |         |          |   |         |        
|                                           | Cash and cash equivalents                                                                                                         |   | $        | 398,040 |          |   | $       | 311,130 |  
|                                           | Short-term investments                                                                                                            |   |          | 18,514  |          |   |         | 19,128  |  
|                                           | Accounts receivable, net of allowances of $8,231 and $10,660                                                                      |   |          | 98,774  |          |   |         | 110,196 |  
|                                           | Deferred income taxes                                                                                                             |   |          | 12,890  |          |   |         | 15,495  |  
|                                           | Prepaid expenses and other current assets                                                                                         |   |          | 18,498  |          |   |         | 17,240  |  
|                                           |                                                                                                                                   |   |          |         |          |   |         |        
|TOTAL CURRENT ASSETS                       |                                                                                                                                   |   | 546,716  |         |          |   | 473,189 |        
|                                           |                                                                                                                                   |   |          |         |          |   |         |        
|Property and equipment, net                |                                                                                                                                   |   | 67,533   |         |          |   | 67,787  |        
|Goodwill                                   |                                                                                                                                   |   | 12,774   |         |          |   | 8,171   |        
|Intangible assets, net                     |                                                                                                                                   |   | 8,120    |         |          |   | 10,572  |        
|Deferred income taxes                      |                                                                                                                                   |   | 13,633   |         |          |   | 17,993  |        
|Other assets                               |                                                                                                                                   |   | 5,982    |         |          |   | 6,178   |        
|                                           |                                                                                                                                   |   |          |         |          |   |         |        
|TOTAL ASSETS                               |                                                                                                                                   | $ | 654,758  |         |          | $ | 583,890 |        
|                                           |                                                                                                                                   |   |          |         |          |   |         |        
|LIABILITIES AND STOCKHOLDERS EQUITY       |                                                                                                                                   |   |          |         |          |   |         |        
|Current liabilities:                       |                                                                                                                                   |   |          |         |          |   |         |        
|                                           | Accounts payable and accrued expenses                                                                                             |   | $        | 45,631  |          |   | $       | 50,858  |  
|                                           | Accrued employee compensation and benefits                                                                                        |   |          | 41,637  |          |   |         | 39,005  |  
|                                           | Deferred revenue                                                                                                                  |   |          | 104,868 |          |   |         | 94,910  |  
|                                           | Other current liabilities                                                                                                         |   |          | 3,931   |          |   |         | 6,915   |  
|                                           |                                                                                                                                   |   |          |         |          |   |         |        
|TOTAL CURRENT LIABILITIES                  |                                                                                                                                   |   | 196,067  |         |          |   | 191,688 |        
|                                           |                                                                                                                                   |   |          |         |          |   |         |        
|Long-term debt                             |                                                                                                                                   |   | 50,040   |         |          |   | 80,802  |        
|Other liabilities                          |                                                                                                                                   |   | 11,326   |         |          |   | 11,743  |        
|                                           |                                                                                                                                   |   |          |         |          |   |         |        
|Commitments and contingencies (Note 11)    |                                                                                                                                   |   |          |         |          |   |         |        
|                                           |                                                                                                                                   |   |          |         |          |   |         |        
|Stockholders equity:                      |                                                                                                                                   |   |          |         |          |   |         |        
|                                           | Preferred stock - $0.001 par value; 5,000 shares authorized; none issued                                                          |   |          |        |          |   |         |        |  
|                                           | Common
stock - $0.001 par value; 300,000 shares authorized; 36,654 and
34,662 shares issued; 36,105 and 33,318 shares outstanding |   |          | 37      |          |   |         | 35      |  
|                                           | Additional paid-in capital                                                                                                        |   |          | 278,339 |          |   |         | 227,563 |  
|                                           | Treasury stock, at cost: 549 and 1,344 common shares                                                                              |   |          | (10,847 | )        |   |         | (23,097 | )
|                                           | Deferred stock-based compensation                                                                                                 |   |          | (2,893  | )        |   |         |        |  
|                                           | Retained earnings                                                                                                                 |   |          | 137,582 |          |   |         | 103,472 |  
|                                           | Accumulated other comprehensive loss                                                                                              |   |          | (4,893  | )        |   |         | (8,316  | )
|                                           |                                                                                                                                   |   |          |         |          |   |         |        
|TOTAL STOCKHOLDERS EQUITY                 |                                                                                                                                   |   | 397,325  |         |          |   | 299,657 |        
|                                           |                                                                                                                                   |   |          |         |          |   |         |        
|TOTAL LIABILITIES AND STOCKHOLDERS EQUITY |                                                                                                                                   | $ | 654,758  |         |          | $ | 583,890 |        
|                                           |                                                                                                                                   |   |          |         |          |   |         |        

See accompanying notes to consolidated financial statements.

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HYPERION SOLUTIONS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)

|                                    |                                 |                          |         |                     |         |      |         |         |         |   |         |         |         | 
|----------------------------------- | ------------------------------- | ------------------------ | ------- | ------------------- | ------- | ---- | ------- | ------- | ------- | - | ------- | ------- | ------- | 
|                                    |                                 |                          |         | Year Ended June 30,
|                                    |                                 |                          |         | 2003                |         | 2002 |         | 2001   
|                                    |                                 |                          |         |                     |         |      |         |        
|REVENUES                            |                                 |                          |         |                     |         |      |         |         |         |   |         |        
|                                    |                                 | Software licenses        |         | $                   | 201,766 |      |         | $       | 196,066 |   |         | $       | 227,994 | 
|                                    |                                 | Maintenance and services |         |                     | 308,692 |      |         |         | 295,952 |   |         |         | 300,017 | 
|                                    |                                 |                          |         |                     |         |      |         |         |         |   |         |        
|TOTAL REVENUES                      |                                 |                          | 510,458 |                     |         |      | 492,018 |         |         |   | 528,011 |        
|COSTS AND EXPENSES                  |                                 |                          |         |                     |         |      |         |         |         |   |         |        
|                                    | Cost of revenues:               |                          |         |                     |         |      |         |         |         |   |         |         |        
|                                    |                                 | Software licenses        |         |                     | 15,419  |      |         |         | 15,430  |   |         |         | 16,334  | 
|                                    |                                 | Maintenance and services |         |                     | 132,510 |      |         |         | 137,047 |   |         |         | 161,016 | 
|                                    | Sales and marketing             |                          |         | 190,025             |         |      |         | 182,311 |         |   |         | 208,336 |        
|                                    | Research and development        |                          |         | 73,776              |         |      |         | 72,206  |         |   |         | 81,597  |        
|                                    | General and administrative      |                          |         | 47,207              |         |      |         | 64,843  |         |   |         | 72,823  |        
|                                    | Restructuring and other charges |                          |         | 764                 |         |      |         | 107     |         |   |         | 42,785  |        
|                                    |                                 |                          |         |                     |         |      |         |         |         |   |         |        
|TOTAL COSTS AND EXPENSES            |                                 |                          | 459,701 |                     |         |      | 471,944 |         |         |   | 582,891 |        
|                                    |                                 |                          |         |                     |         |      |         |         |         |   |         |        
|OPERATING INCOME (LOSS)             |                                 |                          | 50,757  |                     |         |      | 20,074  |         |         |   | (54,880 | )      
|                                    |                                 |                          |         |                     |         |      |         |        
|                                    | Interest and other income       |                          |         | 5,848               |         |      |         | 7,027   |         |   |         | 12,987  |        
|                                    | Interest and other expense      |                          |         | (2,940              | )       |      |         | (4,635  | )       |   |         | (5,502  | )      
|                                    | Gain on redemption of debt      |                          |         | 478                 |         |      |         | 941     |         |   |         | 2,362   |        
|                                    |                                 |                          |         |                     |         |      |         |         |         |   |         |        
|INCOME (LOSS) BEFORE INCOME TAXES   |                                 |                          | 54,143  |                     |         |      | 23,407  |         |         |   | (45,033 | )      
|                                    | Income tax provision (benefit)  |                          |         | 20,033              |         |      |         | 8,426   |         |   |         | (13,960 | )      
|                                    |                                 |                          |         |                     |         |      |         |         |         |   |         |        
|NET INCOME (LOSS)                   |                                 | $                        | 34,110  |                     |         | $    | 14,981  |         |         | $ | (31,073 | )      
|                                    |                                 |                          |         |                     |         |      |         |         |         |   |         |        
|NET INCOME (LOSS) PER SHARE         |                                 |                          |         |                     |         |      |         |         |         |   |         |        
|                                    | Basic                           |                          | $       | 0.99                |         |      | $       | 0.46    |         |   | $       | (0.95   | )      
|                                    | Diluted                         |                          | $       | 0.96                |         |      | $       | 0.45    |         |   | $       | (0.95   | )      
|WEIGHTED AVERAGE SHARES OUTSTANDING |                                 |                          |         |                     |         |      |         |         |         |   |         |        
|                                    | Basic                           |                          |         | 34,451              |         |      |         | 32,836  |         |   |         | 32,592  |        
|                                    | Diluted                         |                          |         | 35,694              |         |      |         | 33,491  |         |   |         | 32,592  |        

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 |  | Deferred |       |         |  |              |         | Other       |  |         |         |            
|                                                  |                                             |                            |        |              |  |                |    | Par        |  |          |       |         |  |              |         |             |  | Paid-in |         | Stock-Based |  | Retained |        | Comprehensive |  |   |         |        
|                                                  |                                             |                            |        | Shares       |  | Value          |    | Shares     |  | Cost     |       | Capital |  | Compensation |         | Earnings    |  | Loss    |         | Total      
|                                                  |                                             |                            |        |              |  |                |    |            |  |          |       |         |  |              |         |             |  |         |         |            
|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,
net of tax     |                            |        |              |  |                |    |            |  |          |       |         |  |              |         |             |  |         |         |             |  |          |        |               |  |   |         |         |   |   |         | (3,712 | ) |   |         | (3,712  | )      
|                                                  |                                             |                            |        |              |  |                |    |            |  |          |       |         |  |              |         |             |  |         |         |             |  |          |        |               |  |   |         |         |   |   |         |        |   |   |         |         |         |  
|                                                  |                                             | Total comprehensive loss   |        |              |  |                |    |            |  |          |       |         |  |              |         |             |  |         |         |             |  |          |        |               |  |   |         |         |   |   |         |        |   |   |         |         | (34,785 | )
|                                                  |                                             |                            |        |              |  |                |    |            |  |          |       |         |  |              |         |             |  |         |         |             |  |          |        |               |  |   |         |         |   |   |         |        |   |   |         |        
|Treasury stock purchased                          |                                             |                            |        |              |  |                |    |            |  |          | 1,389 |         |  |              | (23,764 | )           |  |         |         |             |  |          |        |               |  |   |         |         |   |   |         |        |   |   | (23,764 | )      
|Stock issued under equity 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,
net of tax     |                            |        |              |  |                |    |            |  |          |       |         |  |              |         |             |  |         |         |             |  |          |        |               |  |   |         |         |   |   |         | 2,653  |   |   |         | 2,653   |        
|                                                  | Unrealized gains on investments,
net of tax |                            |        |              |  |                |    |            |  |          |       |         |  |              |         |             |  |         |         |             |  |          |        |               |  |   |         |         |   |   |         | 27     |   |   |         | 27      |        
|                                                  |                                             |                            |        |              |  |                |    |            |  |          |       |         |  |              |         |             |  |         |         |             |  |          |        |               |  |   |         |         |   |   |         |        |   |   |         |         |         |  
|                                                  |                                             | Total comprehensive income |        |              |  |                |    |            |  |          |       |         |  |              |         |             |  |         |         |             |  |          |        |               |  |   |         |         |   |   |         |        |   |   |         |         | 17,661  |  
|                                                  |                                             |                            |        |              |  |                |    |            |  |          |       |         |  |              |         |             |  |         |         |             |  |          |        |               |  |   |         |         |   |   |         |        |   |   |         |        
|Stock issued under equity 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 |        
|Comprehensive income:                             |                                             |                            |        |              |  |                |    |            |  |          |       |         |  |              |         |             |  |         |         |             |  |          |        |               |  |   |         |         |   |   |         |        |   |   |         |        
|                                                  | Net income                                  |                            |        |              |  |                |    |            |  |          |       |         |  |              |         |             |  |         |         |             |  |          |        |               |  |   |         | 34,110  |   |   |         |        |   |   |         | 34,110  |        
|                                                  | Currency translation effect,
net of tax     |                            |        |              |  |                |    |            |  |          |       |         |  |              |         |             |  |         |         |             |  |          |        |               |  |   |         |         |   |   |         | 3,376  |   |   |         | 3,376   |        
|                                                  | Unrealized gains on investments,
net of tax |                            |        |              |  |                |    |            |  |          |       |         |  |              |         |             |  |         |         |             |  |          |        |               |  |   |         |         |   |   |         | 47     |   |   |         | 47      |        
|                                                  |                                             |                            |        |              |  |                |    |            |  |          |       |         |  |              |         |             |  |         |         |             |  |          |        |               |  |   |         |         |   |   |         |        |   |   |         |         |         |  
|                                                  |                                             | Total comprehensive income |        |              |  |                |    |            |  |          |       |         |  |              |         |             |  |         |         |             |  |          |        |               |  |   |         |         |   |   |         |        |   |   |         |         | 37,533  |  
|                                                  |                                             |                            |        |              |  |                |    |            |  |          |       |         |  |              |         |             |  |         |         |             |  |          |        |               |  |   |         |         |   |   |         |        |   |   |         |        
|Stock issued under equity plans                   |                                             |                            | 1,992  |              |  |                | 2  |            |  |          | (795  | )       |  |              | 12,250  |             |  |         | 41,277  |             |  |          | (3,157 | )             |  |   |         |         |   |   |         |        |   |   | 50,372  |        
|Amortization of deferred
stock-based compensation |                                             |                            |        |              |  |                |    |            |  |          |       |         |  |              |         |             |  |         |         |             |  |          | 264    |               |  |   |         |         |   |   |         |        |   |   | 264     |        
|Income tax benefit from exercise
of stock options |                                             |                            |        |              |  |                |    |            |  |          |       |         |  |              |         |             |  |         | 9,499   |             |  |          |        |               |  |   |         |         |   |   |         |        |   |   | 9,499   |        
|                                                  |                                             |                            |        |              |  |                |    |            |  |          |       |         |  |              |         |             |  |         |         |             |  |          |        |               |  |   |         |         |   |   |         |        |   |   |         |        
|Balance at June 30, 2003                          |                                             |                            | 36,654 |              |  | $              | 37 |            |  |          | 549   |         |  | $            | (10,847 | )           |  | $       | 278,339 |             |  | $        | (2,893 | )             |  | $ | 137,582 |         |   | $ | (4,893  | )      |   | $ | 397,325 |        
|                                                  |                                             |                            |        |              |  |                |    |            |  |          |       |         |  |              |         |             |  |         |         |             |  |          |        |               |  |   |         |         |   |   |         |        |   |   |         |        

See accompanying notes to consolidated financial statements.

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

|                                                                                         |                                                                  |   |                     |         |      |   |         |         |   |   |         |         |  
|---------------------------------------------------------------------------------------- | ---------------------------------------------------------------- | - | ------------------- | ------- | ---- | - | ------- | ------- | - | - | ------- | ------- | -
|                                                                                         |                                                                  |   | Year Ended June 30,
|                                                                                         |                                                                  |   | 2003                |         | 2002 |   | 2001   
|                                                                                         |                                                                  |   |                     |         |      |   |        
|CASH FLOWS FROM OPERATING ACTIVITIES:                                                    |                                                                  |   |                     |         |      |   |         |         |   |   |         |        
|Net income (loss)                                                                        |                                                                  | $ | 34,110              |         |      | $ | 14,981  |         |   | $ | (31,073 | )      
|Adjustments to reconcile net income (loss) to net cash
provided by operating activities: |                                                                  |   |                     |         |      |   |         |         |   |   |         |        
|                                                                                         | (Gain) on redemption of debt                                     |   |                     | (478    | )    |   |         | (941    | ) |   |         | (2,362  | )
|                                                                                         | (Gain) loss on sale of assets                                    |   |                     | (49     | )    |   |         | 128     |   |   |         |        |  
|                                                                                         | Depreciation and amortization                                    |   |                     | 27,888  |      |   |         | 31,907  |   |   |         | 38,901  |  
|                                                                                         | Provision for accounts receivable allowances                     |   |                     | 5,797   |      |   |         | 20,850  |   |   |         | 27,677  |  
|                                                                                         | Deferred income taxes                                            |   |                     | 6,981   |      |   |         | (932    | ) |   |         | (12,602 | )
|                                                                                         | Income tax benefit from exercise of stock options                |   |                     | 9,499   |      |   |         | 1,233   |   |   |         | 1,475   |  
|                                                                                         | Non-cash
restructuring and other charges                         |   |                     |        |      |   |         |        |   |   |         | 10,902  |  
|Changes in operating assets and liabilities:                                             |                                                                  |   |                     |         |      |   |         |         |   |   |         |        
|                                                                                         | Accounts receivable                                              |   |                     | 9,001   |      |   |         | 31,856  |   |   |         | (22,629 | )
|                                                                                         | Prepaid expenses and other current assets                        |   |                     | 468     |      |   |         | 3,932   |   |   |         | (10,389 | )
|                                                                                         | Other assets                                                     |   |                     | (184    | )    |   |         | (621    | ) |   |         | 286     |  
|                                                                                         | Accounts payable and accrued expenses                            |   |                     | (6,451  | )    |   |         | (6,290  | ) |   |         | 2,278   |  
|                                                                                         | Accrued employee compensation and benefits                       |   |                     | 1,546   |      |   |         | 6,399   |   |   |         | (1,015  | )
|                                                                                         | Income taxes payable                                             |   |                     | (1,332  | )    |   |         | (28     | ) |   |         | (9,609  | )
|                                                                                         | Deferred revenue                                                 |   |                     | 6,447   |      |   |         | (8,892  | ) |   |         | 11,403  |  
|                                                                                         | Other current liabilities                                        |   |                     | (4,474  | )    |   |         | (6,812  | ) |   |         | 13,727  |  
|                                                                                         | Other liabilities                                                |   |                     | (656    | )    |   |         | (2,560  | ) |   |         | 14,303  |  
|                                                                                         |                                                                  |   |                     |         |      |   |         |         |   |   |         |        
|Net cash provided by operating activities                                                |                                                                  |   | 88,113              |         |      |   | 84,210  |         |   |   | 31,273  |        
|                                                                                         |                                                                  |   |                     |         |      |   |         |        
|CASH FLOWS FROM INVESTING ACTIVITIES:                                                    |                                                                  |   |                     |         |      |   |         |         |   |   |         |        
|                                                                                         | Purchases of investments                                         |   |                     | (24,520 | )    |   |         | (43,798 | ) |   |         | (43,616 | )
|                                                                                         | Proceeds from maturities of investments                          |   |                     | 25,180  |      |   |         | 49,194  |   |   |         | 51,907  |  
|                                                                                         | Purchases of property and equipment                              |   |                     | (19,846 | )    |   |         | (13,476 | ) |   |         | (42,573 | )
|                                                                                         | Proceeds from sale of property and equipment                     |   |                     | 644     |      |   |         | 223     |   |   |         |        |  
|                                                                                         | Purchases of intangible assets                                   |   |                     | (2,227  | )    |   |         | (5,768  | ) |   |         | (4,677  | )
|                                                                                         | Payments for acquisitions of businesses                          |   |                     | (5,987  | )    |   |         | (1,000  | ) |   |         |        |  
|                                                                                         |                                                                  |   |                     |         |      |   |         |         |   |   |         |        
|Net cash used in investing activities                                                    |                                                                  |   | (26,756             | )       |      |   | (14,625 | )       |   |   | (38,959 | )      
|                                                                                         |                                                                  |   |                     |         |      |   |         |        
|CASH FLOWS FROM FINANCING ACTIVITIES:                                                    |                                                                  |   |                     |         |      |   |         |         |   |   |         |        
|                                                                                         | Principal payments on mortgage loan                              |   |                     | (2,298  | )    |   |         | (242    | ) |   |         | (222    | )
|                                                                                         | Redemption of debt                                               |   |                     | (27,930 | )    |   |         | (8,931  | ) |   |         | (8,652  | )
|                                                                                         | Purchases of treasury stock                                      |   |                     |        |      |   |         |        |   |   |         | (23,764 | )
|                                                                                         | Proceeds from issuance of common stock                           |   |                     | 50,372  |      |   |         | 13,444  |   |   |         | 14,532  |  
|                                                                                         |                                                                  |   |                     |         |      |   |         |         |   |   |         |        
|Net cash provided by (used in) financing activities                                      |                                                                  |   | 20,144              |         |      |   | 4,271   |         |   |   | (18,106 | )      
|                                                                                         |                                                                  |   |                     |         |      |   |         |        
|Effect of exchange rate on cash and cash equivalents                                     |                                                                  |   | 5,409               |         |      |   | 4,370   |         |   |   | (3,712  | )      
|                                                                                         |                                                                  |   |                     |         |      |   |         |         |   |   |         |        
|INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                         |                                                                  |   | 86,910              |         |      |   | 78,226  |         |   |   | (29,504 | )      
|Cash and cash equivalents at beginning of year                                           |                                                                  |   | 311,130             |         |      |   | 232,904 |         |   |   | 262,408 |        
|                                                                                         |                                                                  |   |                     |         |      |   |         |         |   |   |         |        
|CASH AND CASH EQUIVALENTS AT END OF YEAR                                                 |                                                                  | $ | 398,040             |         |      | $ | 311,130 |         |   | $ | 232,904 |        
|                                                                                         |                                                                  |   |                     |         |      |   |         |         |   |   |         |        
|SUPPLEMENTAL CASH FLOW INFORMATION:                                                      |                                                                  |   |                     |         |      |   |         |         |   |   |         |        
|                                                                                         | Cash paid for interest                                           |   | $                   | 3,248   |      |   | $       | 4,316   |   |   | $       | 4,841   |  
|                                                                                         | Cash paid for income taxes                                       |   | $                   | 3,775   |      |   | $       | 9,095   |   |   | $       | 5,838   |  
|NON-CASH FINANCING ACTIVITY:                                                             |                                                                  |   |                     |         |      |   |         |         |   |   |         |        
|                                                                                         | Deferred stock-based compensation from restricted stock issuance |   | $                   | 3,157   |      |   | $       |        |   |   | $       |        |  

See accompanying notes to consolidated financial statements.

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HYPERION SOLUTIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



|1. |  | BUSINESS
|-- |  | --------

Hyperion Solutions Corporation provides Business Performance Management
software, which enables companies to translate strategies into plans, monitor
execution and provide insight to manage and improve financial and operational
performance. Hyperion provides managers with reporting and analysis tools and
packaged and custom applications that support a process for proactively
managing their business to optimal performance against goals and, most
important, for anticipating and forecasting results.

Business Performance Management builds on business intelligence, which provides
managers with information, including historic analysis and statistical
predictions and forecasts, that enables them to understand how their business
is performing at any moment in time. Hyperion combines powerful business and
financial applications with an integrating business intelligence platform and
expertise in management processes. This combination delivers an integrated
Business Performance Management environment, which is being used by employees
at all levels across organizations to support continuous performance
improvement and accountability.

Hyperions applications along with its development and deployment platform
enable Business Performance Management across a wide variety of functional and
operational areas beyond the finance areas of the business. Hyperion uses its
online analytical processing (OLAP) 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 also offers support and
services from offices in 20 countries and works 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.



|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. These
reclassifications had no effect on the prior periods total assets,
stockholders equity, net income (loss) or net cash flows.

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. Significant estimates include those
required in the valuation of intangible assets acquired in business
combinations, allowances for doubtful accounts, and valuation allowances for
deferred tax assets, among others. 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 licensing its software products and providing
maintenance, consulting and training 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 its software products to end users
provided there is persuasive evidence of an arrangement, the fee is fixed or
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. Amounts billed or payments received in
advance of revenue recognition are recorded as deferred revenue.

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Maintenance agreements are generally twelve-month prepaid contracts that are
recognized ratably over the service period. VSOE of fair value for maintenance
is measured by the stated renewal rates included in the agreements.

Customers may also enter into arrangements that are typically on a time and
materials basis for consulting and training services. VSOE of fair value for
consulting and training services is based upon the standard hourly rate
Hyperion charges for such services when sold separately. Training services are
generally prepaid prior to rendering the service. 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
significant modification or alteration. Factors considered in determining
whether the revenue should be accounted for separately include, but are not
limited to: 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. 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.
In the infrequent circumstance where 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
81-1, Accounting for Performance of Construction-Type and Certain Product-Type
Contracts and Accounting Research Bulletin No. 45, Long-Term
Construction-Type 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. If Hyperion determines that
collection of a license fee is not reasonably assured, the fee is deferred and
revenue is recognized at the time collection becomes reasonably assured, which
is generally upon receipt of cash.

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. Foreign currency translation adjustments are recorded in accumulated
other comprehensive income (loss), a separate component of shareholders equity.
Foreign currency transaction gains and losses, derived from monetary assets
and liabilities stated in a currency other than the functional currency, are
recorded in the consolidated statements of operations.

Hyperions intercompany accounts are typically denominated in the functional
currency of the foreign subsidiary. Gains and losses resulting from the
remeasurement of intercompany receivables that Hyperion considers to be of a
long-term investment nature are recorded in accumulated other comprehensive
income (loss), while gains and losses resulting from the remeasurement of
intercompany receivables from those international subsidiaries for which
Hyperion anticipates settlement in the foreseeable future are recorded in the
consolidated statements of operations. The net gains and losses recorded in
the consolidated statements of operations were not significant during the
periods presented.

Stock-Based Compensation

Hyperion has adopted the disclosure requirements of Statement of Financial
Accounting Standards (SFAS) No. 148, Accounting for Stock-Based Compensation
- Transition and Disclosure. SFAS 148 amends SFAS 123, Accounting for
Stock-Based Compensation, to provide alternative methods of transition for a
voluntary change to the fair value based method of accounting for stock-based
compensation and also amends the disclosure requirements of SFAS 123 to require
prominent disclosures in both annual and interim financial statements about the
methods of accounting for stock-based employee compensation and the effect of
the method used on reported results. As permitted by SFAS 148 and SFAS 123,
Hyperion continues to apply the accounting provisions of Accounting Principles
Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees.
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 25, no compensation expense is recognized in the statements of
operations.

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The weighted average estimated grant date fair value, as defined by SFAS 123,
for options granted under Hyperions stock option plans in fiscal 2003, 2002
and 2001 was $13.27, $10.90 and $13.16 per share, respectively. The weighted
average estimated grant date fair value, as defined by SFAS 123, for stock
purchase awards issued under Hyperions employee stock purchase plan in fiscal
2003, 2002 and 2001 was $9.03, $6.67 and $5.98 per share, respectively. The
estimated grant date fair values were calculated using the Black-Scholes model.

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

|                     |                                 |  |                     |      |      |  |      |      |   |  |  |      |  
|-------------------- | ------------------------------- |  | ------------------- | ---- | ---- |  | ---- | ---- | - |  |  | ---- | -
|                     |                                 |  | Year Ended June 30,
|                     |                                 |  | 2003                |      | 2002 |  | 2001
|                     |                                 |  |                     |      |      |  |     
|Stock option plans:  |                                 |  |                     |      |      |  |      |      |   |  |  |     
|                     | Expected dividend yield         |  |                     | 0    | %    |  |      | 0    | % |  |  | 0    | %
|                     | Expected stock price volatility |  |                     | 59   | %    |  |      | 70   | % |  |  | 84   | %
|                     | Risk free interest rate         |  |                     | 2.26 | %    |  |      | 4.53 | % |  |  | 4.97 | %
|                     | Expected term (in years)        |  |                     | 5.0  |      |  |      | 4.2  |   |  |  | 5.5  |  
|Stock purchase plan: |                                 |  |                     |      |      |  |      |      |   |  |  |     
|                     | Expected dividend yield         |  |                     | 0    | %    |  |      | 0    | % |  |  | 0    | %
|                     | Expected stock price volatility |  |                     | 63   | %    |  |      | 70   | % |  |  | 84   | %
|                     | Risk free interest rate         |  |                     | 1.21 | %    |  |      | 2.69 | % |  |  | 3.63 | %
|                     | Expected term (in years)        |  |                     | 0.5  |      |  |      | 0.5  |   |  |  | 0.5  |  

Had Hyperion recorded compensation expense based on the estimated grant date
fair values, as defined by SFAS 123, for awards granted under its stock option
plans and stock purchase plan, Hyperions net income (loss) and net income
(loss) per share would have been adjusted to the following pro forma amounts
(in thousands, except per share amounts):

|                                                                                        |                       |   |                     |      |      |   |         |       |   |   |         |       |  
|--------------------------------------------------------------------------------------- | --------------------- | - | ------------------- | ---- | ---- | - | ------- | ----- | - | - | ------- | ----- | -
|                                                                                        |                       |   | Year Ended June 30,
|                                                                                        |                       |   | 2003                |      | 2002 |   | 2001   
|                                                                                        |                       |   |                     |      |      |   |        
|Net income (loss), as reported                                                          |                       | $ | 34,110              |      |      | $ | 14,981  |       |   | $ | (31,073 | )    
|Deduct: stock-based compensation expense
determined under fair value method, net of tax |                       |   | (16,285             | )    |      |   | (16,108 | )     |   |   | (15,473 | )    
|                                                                                        |                       |   |                     |      |      |   |         |       |   |   |         |      
|Net income (loss), pro forma                                                            |                       | $ | 17,825              |      |      | $ | (1,127  | )     |   | $ | (46,546 | )    
|                                                                                        |                       |   |                     |      |      |   |         |       |   |   |         |      
|Net income (loss) per share:                                                            |                       |   |                     |      |      |   |         |       |   |   |         |      
|                                                                                        | Basic  as reported   |   | $                   | 0.99 |      |   | $       | 0.46  |   |   | $       | (0.95 | )
|                                                                                        | Basic  pro forma     |   | $                   | 0.52 |      |   | $       | (0.03 | ) |   | $       | (1.43 | )
|                                                                                        | Diluted  as reported |   | $                   | 0.96 |      |   | $       | 0.45  |   |   | $       | (0.95 | )
|                                                                                        | Diluted  pro forma   |   | $                   | 0.51 |      |   | $       | (0.03 | ) |   | $       | (1.43 | )

These pro forma amounts may not be representative of the effects for future
years as options vest over several years and additional awards are generally
granted each year.

Cash and Cash Equivalents

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.

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Short-Term Investments

Hyperions marketable investments are classified as available-for-sale
securities and are reported at fair value in accordance with SFAS 115,
Accounting for Certain Investments in Debt and Equity Securities. Unrealized
holding gains and losses are reported, net of tax, in accumulated other
comprehensive income (loss), a separate component of shareholders equity,
until realized. To date, unrealized gains and losses have not been material.
Realized gains on available-for-sale securities are included in interest and
other income in Hyperions statements of operations. Realized losses and
declines in value judged to be other than temporary on available-for-sale
securities are included in interest and other expense in Hyperions statements
of operations. The specific identification method is used to determine the
cost of securities sold.

Hyperion views its available-for-sale portfolio as available for use in its
current operations. Accordingly, Hyperion has classified all marketable
investments as short-term investments, even though the stated maturity dates
may be one year or more beyond the current balance sheet date.

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 provisions, Hyperion analyzes several factors, including: its
historical collection experience, customer concentrations, customer
credit-worthiness and current economic trends. If the historical data used to
calculate the allowance for doubtful accounts does not reflect Hyperions
future ability to collect outstanding receivables, Hyperion may record
additional provisions for doubtful accounts. Hyperion records the provision for doubtful accounts in general and
administrative expense and as a reduction of revenue in order to match the
underlying cause of the provision to the appropriate classification
in Hyperions statement of operations.

Hyperions allowance for doubtful accounts was $8.2 million at June 30, 2003
and $10.7 million at June 30, 2002. The total provision for doubtful accounts
was $5.8 million, $20.9 million and $27.7 million in fiscal 2003, 2002 and
2001, respectively. Of these provisions, $1.4 million, $4.1 million and $6.0
million were recorded in general and administrative expense in fiscal 2003,
2002 and 2001, respectively, and $4.4 million, $16.8 million and $21.7 million
were recorded as a reduction of revenue in fiscal 2003, 2002 and 2001,
respectively.

Fair Value of Financial Instruments

All current assets and current liabilities are stated at cost, which
approximates fair value due to their short-term nature. The fair value of
Hyperions 4.5% convertible subordinated notes was approximately $50.0 million
and $71.2 million at June 30, 2003 and 2002, respectively, based on available
market information.

Long-Lived Assets

Hyperion evaluates the recoverability of long-lived assets, including property
and equipment and certain identifiable intangible assets, in accordance with
SFAS 144, Accounting for the Impairment or Disposal of Long-Lived Assets,
which Hyperion adopted on July 1, 2002. SFAS 144 requires Hyperion 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
considered important which could trigger an impairment review include:



| |  |  | significant underperformance relative to historical or projected future operating results;      
| | - |  | ------------------------------------------------------------------------------------------------
|
| |  |  | significant changes in the manner of use of the assets or the strategy for our overall business;
|
| |  |  | significant decrease in the market value of the assets; and                                     
|
| |  |  | significant negative industry or economic trends.                                               

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When Hyperion determines that the carrying amount of long-lived assets may not
be recoverable based upon the existence of one or more of the above indicators,
it assesses 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 asset using a discount rate determined by
management to be commensurate with the risk inherent in Hyperions current
business model. The assumptions supporting the cash flows, including the
discount rates, are determined using managements best estimates as of the date
of the impairment review. If these estimates or their related assumptions
change in the future, Hyperion may be required to record additional impairment
charges for these assets and future results of operations could be adversely
affected.

Goodwill

Hyperion accounts for goodwill under SFAS 142, Goodwill and Other Intangible
Assets, which requires Hyperion to review for impairment of goodwill on an
annual basis, and between annual tests whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable. This
impairment review involves a two-step process.



| |  |  | Step 1- Compare the fair value of the reporting units to their carrying
amounts. If a units fair value exceeds its carrying amount, no further
work is performed and no impairment charge is necessary. For each
reporting unit where the carrying amount exceeds fair value, step 2 is
performed.
| |  |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Step 2- Compare the implied fair value of the reporting unit to its
carrying amount. If the carrying amount of the reporting units goodwill
exceeds its implied fair value, an impairment loss will be recognized in
an amount equal to that excess.                                              

Hyperion performed its goodwill impairment tests upon adoption of SFAS 142 and
again during the fourth quarters of fiscal 2002 and 2003 and was not required
to record any impairment losses on goodwill. Upon adoption of SFAS 142 on July
1, 2001, Hyperion ceased amortization of its existing net goodwill balance of
approximately $7.2 million. The effect of non-amortization of goodwill on
fiscal 2001 results would have decreased the reported net loss by approximately
$2.7 million, or $0.08 per share, basic and diluted.

Product Development Costs

Hyperion begins capitalizing software product development costs only after
establishing technological feasibility, and capitalization of costs ceases when
the product is available for general release to customers. Amortization of
these costs begins upon general release and represents the greater of the
amount computed using (i) the ratio of current gross revenues for the products
to the total of current and anticipated future gross revenues for the products,
or (ii) the straight-line method over the remaining estimated economic lives of
the products. To date, the significant majority of the costs capitalized
relate to localization costs for Hyperions software products.

Advertising Costs

Hyperions advertising costs are expensed as incurred. Advertising costs were
$4.1 million, $2.0 million and $0.5 million for fiscal 2003, 2002 and 2001,
respectively.

Income Taxes

Hyperion accounts for income taxes 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 its 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 the consolidated financial statements, Hyperion
estimates its income taxes in each of the jurisdictions in which it operates.
This process involves estimating actual current tax expense 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 the
consolidated balance sheet. Hyperion then assesses the likelihood that its
deferred tax assets will be recovered from future taxable income, and, to the
extent it believes that recovery is not likely, a valuation allowance is
established. To the extent Hyperion establishes a valuation allowance or
increases this allowance in a period, an expense is recorded within the tax
provision in the statements of operations.

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Significant management judgment is required in determining the provision for
income taxes, deferred tax assets and liabilities and any valuation allowance
recorded against the net deferred tax assets. Hyperion has recorded a
valuation allowance due to uncertainties related to its ability to utilize some
of its deferred tax assets, primarily relating to foreign net operating losses carried
forward, before they expire. The valuation allowance is based on estimates of
taxable income for each jurisdiction in which Hyperion operates and the period
over which the deferred tax assets will be recoverable. In the event that
actual results differ from these estimates, or these estimates are adjusted in
future periods, additional valuation allowances may need to be established,
which could materially impact Hyperions financial position and results of
operations.

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 cash equivalents 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 issuer.

For fiscal 2003, 2002 and 2001, Hyperion had no customers that accounted for
10% or more of total revenues. As of June 30, 2003 and 2002, Hyperion had no
customers that accounted for 10% or more of gross accounts receivable.
Hyperion does not require collateral from its customers prior to granting
credit.

Net Income (Loss) Per Share

Net income (loss) per share, which is also referred to as earnings per share
(EPS), is computed in accordance with SFAS 128, Earnings Per Share. Basic
EPS is computed by dividing net income available to common stockholders by the
weighted average number of common shares outstanding during the period. Diluted
EPS is computed by dividing net income available to common stockholders by the
weighted average number of common shares outstanding and potentially dilutive
securities outstanding during the period. Potentially dilutive securities
include stock options, unvested restricted shares, and shares issuable upon
conversion of Hyperions convertible subordinated notes. Potentially dilutive
securities are excluded from the computations of diluted EPS if their effect
would be antidilutive.

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

|                                          |  |                     |        |      |  |      |        |  |  |   |         |  
|----------------------------------------- |  | ------------------- | ------ | ---- |  | ---- | ------ |  |  | - | ------- | -
|                                          |  | Year Ended June 30,
|                                          |  | 2003                |        | 2002 |  | 2001
|                                          |  |                     |        |      |  |     
|Net income (loss)                         |  | $                   | 34,110 |      |  | $    | 14,981 |  |  | $ | (31,073 | )
|                                          |  |                     |        |      |  |      |        |  |  |   |         |  
|Shares used in computing basic EPS        |  |                     | 34,451 |      |  |      | 32,836 |  |  |   | 32,592  |  
|Effect of potentially dilutive securities |  |                     | 1,243  |      |  |      | 655    |  |  |   |        |  
|                                          |  |                     |        |      |  |      |        |  |  |   |         |  
|Shares used in computing diluted EPS      |  |                     | 35,694 |      |  |      | 33,491 |  |  |   | 32,592  |  
|                                          |  |                     |        |      |  |      |        |  |  |   |         |  
|Basic net income (loss) per share         |  | $                   | 0.99   |      |  | $    | 0.46   |  |  | $ | (0.95   | )
|Diluted net income (loss) per share       |  | $                   | 0.96   |      |  | $    | 0.45   |  |  | $ | (0.95   | )

For fiscal 2003, 2002 and 2001, stock option rights totaling 2.3 million
shares, 5.7 million shares and 8.4 million shares of common stock,
respectively, have been excluded from the diluted EPS calculations because
their effect would have been antidilutive. For fiscal 2003, 2002 and 2001, 1.1
million shares, 1.4 million shares and 1.6 million shares of common stock,
respectively, issuable upon conversion of the convertible subordinated notes
due March 2005 have been excluded from the diluted EPS calculations because
their effect would have been antidilutive.

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Comprehensive Income (Loss)

Comprehensive income (loss) includes foreign currency translation gains and
losses and unrealized gains and losses on available-for-sale securities.
Accumulated other comprehensive income (loss) consists of the following (in
thousands):

|                                                  |  |      |        |      |  |          |        |   |  |   |         |  
|------------------------------------------------- |  | ---- | ------ | ---- |  | -------- | ------ | - |  | - | ------- | -
|                                                  |  |      |        |      |  | June 30, |        |   |  |  
|                                                  |  | 2003 |        | 2002 |  | 2001    
|                                                  |  |      |        |      |  |         
|Cumulative translation adjustment                 |  | $    | (4,967 | )    |  | $        | (8,343 | ) |  | $ | (10,996 | )
|Unrealized gains on available-for-sale securities |  |      | 74     |      |  |          | 27     |   |  |   |        |  
|                                                  |  |      |        |      |  |          |        |   |  |   |         |  
|                                                  |  | $    | (4,893 | )    |  | $        | (8,316 | ) |  | $ | (10,996 | )
|                                                  |  |      |        |      |  |          |        |   |  |   |         |  

Derivative Instruments and Hedging Activities

Hyperion adopted SFAS 133, Accounting for Derivative Instruments and Hedging
Activities on July 1, 2000. SFAS 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 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.

From time to time, Hyperion utilizes foreign currency forward exchange
contracts to offset the risk associated with the effects of certain
non-functional currency receivables. As a result, increases or decreases to
these receivable balances due to foreign exchange rate changes are offset by
gains and losses on the forward contracts, so as to minimize foreign currency
transaction gains and losses. Hyperions forward contracts generally have
terms of 60 days or less. Hyperion does 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 Hyperions consolidated statements of operations.
Hyperions 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
2003, 2002 and 2001. As of June 30, 2003, Hyperion had net forward contracts
to sell U.S. dollar equivalent of $4.7 million in foreign currency.

Recent Accounting Pronouncements

In January 2003, the Financial Accounting Standards Board (FASB) issued
Interpretation No. 46 (FIN 46), Consolidation of Variable Interest Entities,
an Interpretation of ARB No. 51. FIN 46 requires certain variable interest
entities to be consolidated by the primary beneficiary of the entity if the
equity investors in the entity do not have the characteristics of a controlling
financial interest or do not have sufficient equity at risk for the entity to
finance its activities without additional subordinated financial support from
other parties. FIN 46 is effective for all new variable interest entities
created or acquired after January 31, 2003. For variable interest entities
created or acquired prior to February 1, 2003, the provisions of FIN 46 must be
applied for the first interim or annual period beginning after June 15, 2003.
Hyperion adopted FIN 46 on February 1, 2003 for new entities, and the adoption
did not have a material impact on its financial position or results of
operations. Hyperion is currently assessing the impact of adopting FIN 46 for
pre-existing entities but does not expect it will have a material impact on its
financial position or results of operations.

In April 2003, the FASB issued SFAS 149, Amendment of Statement 133 on
Derivative Instruments and Hedging Activities. SFAS 149 amends and clarifies
accounting for derivative instruments, including certain derivative instruments
embedded in other contracts and for hedging activities under SFAS 133,
Accounting for Derivative Instruments and Hedging Activities. SFAS 149 is
generally effective for derivative instruments, including derivative
instruments embedded in certain contracts, entered into or modified after June
30, 2003 and for hedging relationships designated after June 30, 2003.
Hyperion does not expect the adoption of SFAS 149 to have a material impact on
its financial position or results of operations.

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In May 2003, the FASB issued SFAS 150, Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity. SFAS 150
improves the accounting for certain financial instruments that, under previous
guidance, issuers could account for as equity and requires that those
instruments be classified as liabilities (or assets in certain circumstances)
in statements of financial position. SFAS 150 also requires disclosures about
alternative ways of settling the instruments and the capital structure of
entitiesall of whose shares are mandatorily redeemable. SFAS 150 is generally
effective for all financial instruments entered into or modified after May 31,
2003, and otherwise is effective at the beginning of the first interim period
beginning after June 15, 2003. Hyperion does not expect the adoption of SFAS
150 to have a material impact on its financial position or results of
operations.



|3. |  | BUSINESS COMBINATIONS
|-- |  | ---------------------

In April 2003, Hyperion acquired substantially all of the assets and assumed
certain liabilities of The Alcar Group, Inc., a strategic financial modeling
software provider based in Skokie, Illinois. This acquisition was accounted
for using the purchase method of accounting in accordance with SFAS 141,
Business Combinations. Hyperions consolidated statements of operations
include the results of Alcar from the date of acquisition.

Alcar provides strategic financial modeling solutions used by senior managers
in corporate finance and business development, treasury, strategy and risk
management. Alcars solution is used to analyze and model the financial impact
of critical business decisions, such as mergers, acquisitions, divestitures,
treasury activities, capital allocation and debt restructuring. Alcars
strategic modeling solution is an adjacent application that fills a customer
need and complements our Business Performance Management offering. Hyperion
expects the acquisition will result in greater integration of strategic
financial modeling in the Business Performance Management process.

The aggregate purchase price for the
net assets of Alcar was cash of $6.5 million, $0.5
million of which was deferred and will be paid in fiscal 2004. Additionally,
Hyperion may pay up to a maximum of $1.5 million in performance payments to the
shareholders of Alcar through fiscal 2005, subject to the achievement of
certain revenue targets. Of the $6.5 million purchase price, approximately
($0.1) million was allocated to the net tangible assets acquired, approximately
$2.3 million was allocated to acquired technologies, which are being amortized
over three years, and approximately $4.3 million was allocated to goodwill.
Under SFAS 142, Goodwill and Other Intangible Assets, goodwill is no longer
amortized but is subject to an annual impairment test. Pro forma
results have not been presented as the impact of this acquisition was
not material.



|4. |  | INVESTMENTS
|-- |  | -----------

Investments consist of the following (in thousands):

|                                       |  |               |        |            |  |            |    |       |  |   |     |   |  |   |        | 
|-------------------------------------- |  | ------------- | ------ | ---------- |  | ---------- | -- | ----- |  | - | --- | - |  | - | ------ | 
|                                       |  | June 30, 2003
|                                       |  |              
|                                       |  |               |        |            |  | Gross      |    | Gross |  |   |     |  
|                                       |  | Amortized     |        | Unrealized |  | Unrealized |    | Fair 
|                                       |  | Cost          |        | Gains      |  | Losses     |    | Value
|                                       |  |               |        |            |  |            |    |      
|State and municipal bonds              |  | $             | 14,426 |            |  | $          | 81 |       |  | $ | (10 | ) |  | $ | 14,497 | 
|U.S. government and
agency obligations |  |               | 4,014  |            |  |            | 3  |       |  |   |    |   |  |   | 4,017  | 
|                                       |  |               |        |            |  |            |    |       |  |   |     |   |  |   |        | 
|                                       |  | $             | 18,440 |            |  | $          | 84 |       |  | $ | (10 | ) |  | $ | 18,514 | 
|                                       |  |               |        |            |  |            |    |       |  |   |     |   |  |   |        | 

|                                       |  |               |        |            |  |            |    |       |  |   |    |   |  |   |        | 
|-------------------------------------- |  | ------------- | ------ | ---------- |  | ---------- | -- | ----- |  | - | -- | - |  | - | ------ | 
|                                       |  | June 30, 2002
|                                       |  |              
|                                       |  |               |        |            |  | Gross      |    | Gross |  |   |    |  
|                                       |  | Amortized     |        | Unrealized |  | Unrealized |    | Fair 
|                                       |  | Cost          |        | Gains      |  | Losses     |    | Value
|                                       |  |               |        |            |  |            |    |      
|State and municipal bonds              |  | $             | 1,000  |            |  | $          |   |       |  | $ |   |   |  | $ | 1,000  | 
|U.S. government and
agency obligations |  |               | 15,045 |            |  |            | 29 |       |  |   |   |   |  |   | 15,074 | 
|Corporate notes                        |  |               | 3,056  |            |  |            | 2  |       |  |   | (4 | ) |  |   | 3,054  | 
|                                       |  |               |        |            |  |            |    |       |  |   |    |   |  |   |        | 
|                                       |  | $             | 19,101 |            |  | $          | 31 |       |  | $ | (4 | ) |  | $ | 19,128 | 
|                                       |  |               |        |            |  |            |    |       |  |   |    |   |  |   |        | 

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The contractual maturities of available-for-sale debt securities classified as
short-term investments were as follows at June 30, 2003 (in thousands):

|                             |  |           |        |       |  |   |        | 
|---------------------------- |  | --------- | ------ | ----- |  | - | ------ | 
|                             |  | Amortized |        | Fair 
|                             |  | Cost      |        | Value
|                             |  |           |        |      
|Mature in less than one year |  | $         | 6,014  |       |  | $ | 6,017  | 
|Mature in 1-2 years          |  |           | 12,426 |       |  |   | 12,497 | 
|                             |  |           |        |       |  |   |        | 
|                             |  | $         | 18,440 |       |  | $ | 18,514 | 
|                             |  |           |        |       |  |   |        | 

Gross realized gains and losses from the sale of investments were not material
for fiscal 2003, 2002 and 2001.



|5. |  | PROPERTY AND EQUIPMENT
|-- |  | ----------------------

Property and equipment are recorded at cost, less accumulated depreciation and
amortization. Upon disposal of property and equipment, the cost and
accumulated depreciation or amortization of the assets are removed from the
accounting records, and the related gain or loss on disposal is recognized in
the results of operations. 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. Repairs and maintenance
expenditures, which are not considered improvements and do not extend the
useful lives of the assets, are expensed as incurred.

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

|                                          |  |          |         |          |  |        |          |   |  |            |        | 
|----------------------------------------- |  | -------- | ------- | -------- |  | ------ | -------- | - |  | ---------- | ------ | 
|                                          |  | June 30, |         | June 30, |  | Useful
|                                          |  | 2003     |         | 2002     |  | Life  
|                                          |  |          |         |          |  |       
|                                          |  |          |         |          |  |        |          |   |  | (in years)
|Land                                      |  | $        | 3,800   |          |  | $      | 3,800    |   |  |            |       | 
|Building and building improvements        |  |          | 36,135  |          |  |        | 36,031   |   |  |            | 5 - 39 | 
|Leasehold improvements                    |  |          | 15,641  |          |  |        | 14,431   |   |  |            | *      | 
|Furniture and fixtures                    |  |          | 15,076  |          |  |        | 15,182   |   |  |            | 7      | 
|Computer software                         |  |          | 29,445  |          |  |        | 26,575   |   |  |            | 3 - 5  | 
|Computer equipment                        |  |          | 41,281  |          |  |        | 85,259   |   |  |            | 2      | 
|Other equipment                           |  |          | 6,036   |          |  |        | 10,249   |   |  |            | 3 - 5  | 
|                                          |  |          |         |          |  |        |          |   |  |            |        | 
|                                          |  |          | 147,414 |          |  |        | 191,527  |   |  |            |        | 
|Accumulated depreciation and amortization |  |          | (79,881 | )        |  |        | (123,740 | ) |  |            |        | 
|                                          |  |          |         |          |  |        |          |   |  |            |        | 
|                                          |  | $        | 67,533  |          |  | $      | 67,787   |   |  |            |        | 
|                                          |  |          |         |          |  |        |          |   |  |            |        | 



| | * |  | Lesser of lease term or useful life
| | - |  | -----------------------------------

Depreciation and amortization of property and equipment totaled $20.6 million,
$26.1 million and $28.3 million in fiscal 2003, 2002 and 2001, respectively.
Additionally, a $5.3 million impairment charge to property and equipment was
recognized in the results of operations in fiscal 2001.



|6. |  | GOODWILL
|-- |  | --------

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

|                                       |  |          |        |          |  |   |       | 
|-------------------------------------- |  | -------- | ------ | -------- |  | - | ----- | 
|                                       |  | June 30, |        | June 30,
|                                       |  | 2003     |        | 2002    
|                                       |  |          |        |         
|Balance at beginning of year           |  | $        | 8,171  |          |  | $ | 7,169 | 
|Goodwill acquired during the period    |  |          | 4,250  |          |  |   | 1,000 | 
|Effect of foreign currency translation |  |          | 353    |          |  |   | 2     | 
|                                       |  |          |        |          |  |   |       | 
|Balance at end of year                 |  | $        | 12,774 |          |  | $ | 8,171 | 
|                                       |  |          |        |          |  |   |       | 

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|7. |  | INTANGIBLE ASSETS
|-- |  | -----------------

Intangible assets consist of the following (in thousands):

|                          |  |               |        |               |  |            |        |        |  |              |       |             |  |   |        |  |  |   |         |   |  |   |        | 
|------------------------- |  | ------------- | ------ | ------------- |  | ---------- | ------ | ------ |  | ------------ | ----- | ----------- |  | - | ------ |  |  | - | ------- | - |  | - | ------ | 
|                          |  | June 30, 2003 |        | June 30, 2002
|                          |  |               |        |              
|                          |  | Gross         |        |               |  |            |        |        |  |              |       | Gross       |  |   |        |  |  |   |         |  
|                          |  | Carrying      |        | Accumulated   |  |            |        |        |  | Carrying     |       | Accumulated |  |   |        | 
|                          |  | Amount        |        | Amortization  |  | Book Value |        | Amount |  | Amortization |       | Book Value 
|                          |  |               |        |               |  |            |        |        |  |              |       |            
|Product development costs |  | $             | 9,889  |               |  | $          | (6,285 | )      |  | $            | 3,604 |             |  | $ | 19,553 |  |  | $ | (14,544 | ) |  | $ | 5,009  | 
|Acquired technologies     |  |               | 6,533  |               |  |            | (2,082 | )      |  |              | 4,451 |             |  |   | 12,887 |  |  |   | (7,454  | ) |  |   | 5,433  | 
|Copyrights and trademarks |  |               | 333    |               |  |            | (268   | )      |  |              | 65    |             |  |   | 1,320  |  |  |   | (1,190  | ) |  |   | 130    | 
|                          |  |               |        |               |  |            |        |        |  |              |       |             |  |   |        |  |  |   |         |   |  |   |        | 
|                          |  | $             | 16,755 |               |  | $          | (8,635 | )      |  | $            | 8,120 |             |  | $ | 33,760 |  |  | $ | (23,188 | ) |  | $ | 10,572 | 
|                          |  |               |        |               |  |            |        |        |  |              |       |             |  |   |        |  |  |   |         |   |  |   |        | 

During fiscal 2003, 2002 and 2001, Hyperion capitalized product development
costs of approximately $2.0 million, $2.5 million and $2.2 million,
respectively. Amortization of intangible assets totaled $6.8 million, $4.9
million and $5.8 million, of which $3.4 million, $2.0 million and $2.1 million
related to product development costs, for fiscal 2003, 2002 and 2001,
respectively. Additionally, a $4.1 million impairment charge to certain
intangible assets was recognized in the results of operations in fiscal 2001.
Product development costs, acquired technologies, copyrights and trademarks are
generally amortized over three years.

Estimated amortization expense for these intangible assets will be
approximately $4.0 million, $3.1 million and $1.0 million in fiscal 2004, 2005
and 2006, respectively, assuming no impairment charges are recorded during
these years.



|8. |  | INCOME TAXES
|-- |  | ------------

Income (loss) before income taxes and income tax provision (benefit) consist of
the following (in thousands):

|                                   |          |   |                     |       |      |   |        |       |   |   |         |         |  
|---------------------------------- | -------- | - | ------------------- | ----- | ---- | - | ------ | ----- | - | - | ------- | ------- | -
|                                   |          |   | Year Ended June 30,
|                                   |          |   | 2003                |       | 2002 |   | 2001  
|                                   |          |   |                     |       |      |   |       
|Income (loss) before income taxes: |          |   |                     |       |      |   |        |       |   |   |         |        
|U.S.                               |          | $ | 29,788              |       |      | $ | 14,144 |       |   | $ | (13,249 | )      
|Non-U.S.                           |          |   | 24,355              |       |      |   | 9,263  |       |   |   | (31,784 | )      
|                                   |          |   |                     |       |      |   |        |       |   |   |         |        
|                                   |          | $ | 54,143              |       |      | $ | 23,407 |       |   | $ | (45,033 | )      
|                                   |          |   |                     |       |      |   |        |       |   |   |         |        
|Income tax provision (benefit):    |          |   |                     |       |      |   |        |       |   |   |         |        
|Current-                           |          |   |                     |       |      |   |        |       |   |   |         |        
|                                   | Federal  |   | $                   | 7,577 |      |   | $      | 6,181 |   |   | $       | (3,730  | )
|                                   | State    |   |                     | 1,246 |      |   |        | 558   |   |   |         | (441    | )
|                                   | Non-U.S. |   |                     | 4,244 |      |   |        | 2,706 |   |   |         | 2,813   |  
|                                   |          |   |                     |       |      |   |        |       |   |   |         |        
|                                   |          |   | 13,067              |       |      |   | 9,445  |       |   |   | (1,358  | )      
|Deferred-                          |          |   |                     |       |      |   |        |       |   |   |         |        
|                                   | Federal  |   |                     | 6,526 |      |   |        | (571  | ) |   |         | (13,845 | )
|                                   | State    |   |                     | 917   |      |   |        | (240  | ) |   |         | (603    | )
|                                   | Non-U.S. |   |                     | (477  | )    |   |        | (208  | ) |   |         | 1,846   |  
|                                   |          |   |                     |       |      |   |        |       |   |   |         |        
|                                   |          |   | 6,966               |       |      |   | (1,019 | )     |   |   | (12,602 | )      
|                                   |          |   |                     |       |      |   |        |       |   |   |         |        
|                                   |          | $ | 20,033              |       |      | $ | 8,426  |       |   | $ | (13,960 | )      
|                                   |          |   |                     |       |      |   |        |       |   |   |         |        

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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 (in thousands):

|                                  |  |          |        |          |  |   |        |  
|--------------------------------- |  | -------- | ------ | -------- |  | - | ------ | -
|                                  |  | June 30, |        | June 30,
|                                  |  | 2003     |        | 2002    
|                                  |  |          |        |         
|Deferred income tax assets:       |  |          |        |          |  |   |        |  
|Net operating loss carryforwards  |  | $        | 7,081  |          |  | $ | 7,157  |  
|Accounts receivable               |  |          | 3,654  |          |  |   | 3,406  |  
|Intangible assets                 |  |          | 1,987  |          |  |   | 4,611  |  
|Property and equipment            |  |          | 12,550 |          |  |   | 14,114 |  
|Accrued expenses                  |  |          | 9,236  |          |  |   | 12,089 |  
|Other                             |  |          | 451    |          |  |   | 452    |  
|                                  |  |          |        |          |  |   |        |  
|                                  |  |          | 34,959 |          |  |   | 41,829 |  
|Valuation allowance               |  |          | (6,926 | )        |  |   | (6,894 | )
|                                  |  |          |        |          |  |   |        |  
|                                  |  |          | 28,033 |          |  |   | 34,935 |  
|                                  |  |          |        |          |  |   |        |  
|Deferred income tax liabilities:  |  |          |        |          |  |   |        |  
|Product development costs         |  |          | 1,441  |          |  |   | 1,172  |  
|Deferred stock-based compensation |  |          | 69     |          |  |   | 275    |  
|                                  |  |          |        |          |  |   |        |  
|                                  |  |          | 1,510  |          |  |   | 1,447  |  
|                                  |  |          |        |          |  |   |        |  
|Net deferred income tax assets    |  | $        | 26,523 |          |  | $ | 33,488 |  
|                                  |  |          |        |          |  |   |        |  

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

|                                            |  |                     |      |      |  |      |      |   |  |  |      |  
|------------------------------------------- |  | ------------------- | ---- | ---- |  | ---- | ---- | - |  |  | ---- | -
|                                            |  | Year Ended June 30,
|                                            |  | 2003                |      | 2002 |  | 2001
|                                            |  |                     |      |      |  |     
|Statutory U.S. tax rate                     |  |                     | 35.0 | %    |  |      | 35.0 | % |  |  | 35.0 | %
|State income taxes, net of U.S. tax benefit |  |                     | 4.0  | %    |  |      | 4.0  | % |  |  | 5.0  | %
|Tax exempt interest                         |  |                     | -1.5 | %    |  |      | -2.6 | % |  |  | 3.7  | %
|Goodwill                                    |  |                     |     |      |  |      |     |   |  |  | -0.8 | %
|Non-U.S. operations, including export sales |  |                     | -1.2 | %    |  |      | -4.0 | % |  |  | -4.4 | %
|Net operating losses                        |  |                     | 0.1  | %    |  |      | 3.3  | % |  |  | -5.5 | %
|Other, net                                  |  |                     | 0.6  | %    |  |      | 0.3  | % |  |  | -1.7 | %
|                                            |  |                     |      |      |  |      |      |   |  |  |      |  
|Effective income tax rate                   |  |                     | 37.0 | %    |  |      | 36.0 | % |  |  | 31.3 | %
|                                            |  |                     |      |      |  |      |      |   |  |  |      |  

As of June 30, 2003 and 2002, Hyperions non-U.S. net operating loss
carryforwards for income tax purposes were approximately $17.3 million and
$17.2 million, respectively. If not utilized, the net operating loss
carryforwards will begin to expire in fiscal 2004. Hyperion does not believe
it is more likely than not that realization of the deferred tax assets is
assured and has, therefore, recorded a valuation allowance of $6.9 million as
of June 30, 2003 and 2002.



|9. |  | LONG-TERM DEBT
|-- |  | --------------

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

|                                    |  |          |        |          |  |   |        |  
|----------------------------------- |  | -------- | ------ | -------- |  | - | ------ | -
|                                    |  | June 30, |        | June 30,
|                                    |  | 2003     |        | 2002    
|                                    |  |          |        |         
|4.5% convertible subordinated notes |  | $        | 50,040 |          |  | $ | 78,750 |  
|Mortgage loan                       |  |          |       |          |  |   | 2,295  |  
|                                    |  |          |        |          |  |   |        |  
|                                    |  |          | 50,040 |          |  |   | 81,045 |  
|Less: current portion               |  |          |       |          |  |   | (243   | )
|                                    |  |          |        |          |  |   |        |  
|                                    |  | $        | 50,040 |          |  | $ | 80,802 |  
|                                    |  |          |        |          |  |   |        |  

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In March 1998, Hyperion issued $100.0 million of 4.5% convertible subordinated
notes, due March 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 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 $50.0 million and $71.2
million at June 30, 2003 and 2002, respectively, based on available market
information.

During fiscal 2003, Hyperion repurchased $28.7 million of the notes for a total
cost of $27.9 million, which resulted in a gain, net of the write-off of
associated deferred issuance costs, of approximately $0.5 million. During
fiscal 2002, Hyperion repurchased $10.0 million of the notes for a total cost
of $8.9 million, which resulted in a gain, net of the write-off of associated
deferred issuance costs, of approximately $0.9 million. During fiscal 2001,
Hyperion repurchased $11.3 million of the notes for a total cost of $8.7
million, which resulted in a gain, net of the write-off of associated deferred
issuance costs, of approximately $2.4 million.

In January 1995, Hyperion obtained a $9.5 million mortgage loan from the
Connecticut Development Authority to purchase its Stamford, Connecticut office
building. The mortgage loan was repayable in monthly installments of principal
and interest with the last payment due February 2005. In January 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 the interest rate on the
remaining principal balance increased by approximately 1.4%. In September
2002, Hyperion repaid the entire remaining principal balance of $2.2 million.



|10. |  | RELATED PARTY TRANSACTIONS
|--- |  | --------------------------

In fiscal 2003 and 2002, Siebel Systems purchased approximately $0.2 million
and $1.0 million, respectively, of software, maintenance and services from
Hyperion 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 was on the board of directors of Hyperion from June
2000 to February 2003. As of June 30, 2003, all amounts due from Siebel
related to these transactions had been paid.

In fiscal 2003 and 2002, Hyperion purchased approximately $0.8 million and $3.0
million, respectively, of software, maintenance and services from Siebel for
purposes of implementing a worldwide customer relationship management system.
As of June 30, 2003, Hyperion had a payable to Siebel in the amount of $0.2
million related to these transactions.



|11. |  | COMMITMENTS AND CONTINGENCIES
|--- |  | -----------------------------

Lease Commitments

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 some
of its facilities to third-party tenants. These subleases expire at various
dates through 2011.

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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 were as follows at June
30, 2003 (in thousands):

|            |  |              |        |          |  |          |        |            |  |   |        | 
|----------- |  | ------------ | ------ | -------- |  | -------- | ------ | ---------- |  | - | ------ | 
|            |  |              |        |          |  | Future   |        | Net Future
|            |  | Future Lease |        | Sublease |  | Lease   
|Fiscal Year |  | Payments     |        | Income   |  | Payments
|            |  |              |        |          |  |         
|2004        |  | $            | 19,357 |          |  | $        | 2,682  |            |  | $ | 16,675 | 
|2005        |  |              | 16,010 |          |  |          | 2,658  |            |  |   | 13,352 | 
|2006        |  |              | 13,078 |          |  |          | 2,351  |            |  |   | 10,727 | 
|2007        |  |              | 11,188 |          |  |          | 1,153  |            |  |   | 10,035 | 
|2008        |  |              | 8,967  |          |  |          | 1,163  |            |  |   | 7,804  | 
|Thereafter  |  |              | 22,264 |          |  |          | 1,098  |            |  |   | 21,166 | 
|            |  |              |        |          |  |          |        |            |  |   |        | 
|            |  | $            | 90,864 |          |  | $        | 11,105 |            |  | $ | 79,759 | 
|            |  |              |        |          |  |          |        |            |  |   |        | 

Rental expense for fiscal 2003, 2002 and 2001 under all lease agreements was
$16.0 million, $15.8 million and $16.9 million, respectively. Sublease income
was $2.8 million, $1.0 million and $0.2 million for fiscal 2003, 2002 and 2001,
respectively.

Guarantees and Indemnifications

In November 2002, the FASB issued Interpretation No. 45 (FIN 45),
Guarantors Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others. FIN 45 requires that a
guarantor recognize, at the inception of a guarantee, a liability for the fair
value of the obligation undertaken in issuing the guarantee or indemnification.
FIN 45 also requires additional disclosure by a guarantor in its interim and
annual financial statements about its obligations under certain guarantees and
indemnifications. The initial recognition and measurement provisions of FIN 45
are applicable for guarantees issued or modified after December 31, 2002. The
disclosure requirements of FIN 45 are effective for financial statements of
interim or annual periods ending after December 15, 2002. Hyperion adopted the
recognition and measurement provisions of FIN 45 prospectively to guarantees
issued or modified after December 31, 2002, and the adoption did not have an
impact on its financial position or results of operations. The following is a
summary of the agreements that Hyperion has determined are within the scope of
FIN 45:

As permitted under Delaware law, Hyperion has agreements whereby it indemnifies
its officers and directors for certain events or occurrences while the officer
or director is or was serving at Hyperions request in such capacity. The term
of the indemnification period is for the officers or directors lifetime. The
maximum potential amount of future payments Hyperion could be required to make
under these indemnification agreements is unlimited; however, Hyperion has a
director and officer insurance policy that limits its exposure and enables it
to recover a portion of any future amounts paid. As a result of the insurance
policy coverage, Hyperion believes the estimated fair value of these
indemnification agreements is minimal. Hyperion has no liabilities recorded
for these agreements as of June 30, 2003.

Hyperion includes standard intellectual property indemnification clauses in its
software license agreements. Pursuant to these clauses, Hyperion holds
harmless and agrees to defend the indemnified party, generally Hyperions
business partners and customers, in connection with certain patent, copyright
or trade secret infringement claims by third parties with respect to Hyperions
products. The term of the indemnification clauses is generally perpetual any
time after execution of the software license agreement. In the event an
infringement claim against Hyperion or an indemnified party is successful,
Hyperion, at its sole option, agrees to do one of the following: (i) procure
for the indemnified party the right to continue use of the software; (ii)
provide a modification to the software so that its use becomes non-infringing;
(iii) replace the software with software which is substantially similar in
functionality and performance; or (iv) refund the residual value of the
software license fees paid by the indemnified party for the infringing
software. Hyperion believes the estimated fair value of these intellectual
property indemnification clauses is minimal. Hyperion has no liabilities
recorded for these clauses as of June 30, 2003.

Hyperion generally warrants that its software products will perform in all
material respects in accordance with its standard published specifications in
effect at the time of delivery of the licensed products to the customer for a
period of ninety days following delivery. If necessary, Hyperion would provide
for the estimated cost of product warranties based on specific warranty claims
and claim history. Hyperion has not incurred significant expense under its
product warranties to date and, as a result, Hyperion believes the estimated
fair value of these warranties is minimal. Hyperion has no liabilities
recorded for these warranties as of June 30, 2003.

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Contingencies

On July 11, 1997, Gentia Software filed a request for reexamination of
Hyperions U.S. Patent No. 5,359,724 (724 patent) with the United States
Patent and Trademark Office (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 its financial position, results of operations or
cash flows.

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.



|12. |  | COMMON STOCK
|--- |  | ------------

Treasury Stock

During fiscal 2001, Hyperion repurchased a total of 1,389,000 shares of its
common stock for a total cost of $23.8 million. In fiscal 2003, 2002 and 2001,
Hyperion reissued 795,000 shares, 11,000 shares and 34,000 shares,
respectively, in connection with employee stock option exercises and employee
stock purchases. The remaining 549,000 shares are classified as treasury stock
at June 30, 2003.

Restricted Stock

In February 2003, Hyperion issued 125,000 shares of restricted stock to some of
its executive officers for nominal consideration. The restricted shares vest
in full on the fourth anniversary of the date of issuance, but can vest earlier
based on the achievement of performance-based objectives as set by the board of
directors. Hyperion recorded deferred stock-based compensation totaling $3.2
million related to the issuance of these restricted shares, which is being
amortized over the vesting period of the shares. In accordance with FASB
Interpretation No. 44, Accounting for Certain Transactions involving Stock
Compensation, an interpretation of APB Opinion No. 25, the deferred
stock-based compensation relating to the restricted shares will be re-measured
on the date the performance objectives are defined or determined to have been
earned by the board of directors. In the event a holder of these restricted
shares leaves Hyperion prior to the fourth anniversary of the date of issuance
and retains vested shares that would have been forfeited absent the achievement
of the performance objectives, the re-measured deferred stock-based
compensation will be recorded in the Hyperions statement of operations.

In October 1999, Hyperion issued 100,000 shares of restricted stock to its
Chairman and Chief Executive Officer for nominal consideration. The restricted
shares vest on a monthly basis over a four-year period. Hyperion recorded
deferred stock-based compensation totaling $1.9 million related to the issuance
of these restricted shares, which is being amortized over the vesting period of
the shares. This amount is not reflected as a separate component of
stockholders equity, but rather has been netted within additional paid-in
capital. In connection with the issuance of the restricted stock, Hyperion
provided a loan to this officer of $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 January 2002, the
CEOs employment agreement was
amended to provide for the forgiveness of a portion of the loan annually based
on the achievement of earnings per share targets set by the compensation
committee of the board of directors. Based on Hyperions financial performance
in fiscal 2003, the compensation committee forgave $0.4 million of the $1.0 million
outstanding principal balance and $0.1 million of accrued interest, which has been
recorded as an expense in fiscal 2003.



|13. |  | STOCK OPTION, EMPLOYEE STOCK PURCHASE, AND EMPLOYEE SAVINGS PLANS
|--- |  | -----------------------------------------------------------------

Stock Option Plans

As of June 30, 2003, Hyperion had an aggregate of 9.2 million shares reserved
for future issuance under its equity plans. The equity plans provide for the
issuance of common shares pursuant to stock option exercises, issuances of
restricted stock, and other equity-based awards. There were 1.6 million shares
available for grant under the equity plans as of June 30, 2003. Under the
equity plans, stock options and restricted stock 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
maximum terms of 6  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):

|                                 |           |  |        |        |       |   |          |       |       |  |        |        |          |   |       |       |  |  |          |        |   |   |       |       | 
|-------------------------------- | --------- |  | ------ | ------ | ----- | - | -------- | ----- | ----- |  | ------ | ------ | -------- | - | ----- | ----- |  |  | -------- | ------ | - | - | ----- | ----- | 
|                                 |           |  | 2003   |        | 2002  |   | 2001    
|                                 |           |  |        |        |       |   |         
|                                 |           |  |        |        |       |   | Weighted |       |       |  |        |        | Weighted |   |       |       |  |  | Weighted
|                                 |           |  |        |        |       |   | Average  |       |       |  |        |        | Average  |   |       |       |  |  | Average 
|                                 |           |  |        |        |       |   | Exercise |       |       |  |        |        | Exercise |   |       |       |  |  | Exercise
|                                 |           |  | Shares |        | Price |   | Shares   |       | Price |  | Shares |        | Price   
|                                 |           |  |        |        |       |   |          |       |       |  |        |        |         
|Outstanding at beginning of year |           |  | 9,102  |        |       | $ | 21.89    |       |       |  | 8,423  |        |          | $ | 23.02 |       |  |  | 7,492    |        |   | $ | 25.29 |      
|                                 | Granted   |  |        | 1,759  |       |   |          | 25.67 |       |  |        | 2,388  |          |   |       | 18.99 |  |  |          | 3,159  |   |   |       | 18.67 | 
|                                 | Exercised |  |        | (2,289 | )     |   |          | 18.34 |       |  |        | (348   | )        |   |       | 14.77 |  |  |          | (357   | ) |   |       | 13.79 | 
|                                 | Forfeited |  |        | (1,003 | )     |   |          | 25.56 |       |  |        | (1,361 | )        |   |       | 25.66 |  |  |          | (1,871 | ) |   |       | 26.55 | 
|                                 |           |  |        |        |       |   |          |       |       |  |        |        |          |   |       |       |  |  |          |        |   |   |       |      
|Outstanding at end of year       |           |  | 7,569  |        |       | $ | 23.35    |       |       |  | 9,102  |        |          | $ | 21.89 |       |  |  | 8,423    |        |   | $ | 23.02 |      
|                                 |           |  |        |        |       |   |          |       |       |  |        |        |          |   |       |       |  |  |          |        |   |   |       |      
|Exercisable at end of year       |           |  | 3,613  |        |       | $ | 24.56    |       |       |  | 4,304  |        |          | $ | 23.47 |       |  |  | 3,005    |        |   | $ | 24.16 |      
|                                 |           |  |        |        |       |   |          |       |       |  |        |        |          |   |       |       |  |  |          |        |   |   |       |      

The following table summarizes information about stock options outstanding and
exercisable at June 30, 2003 (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 |  |                     | 775   |                     |  |                  | 7.55 |             |  | $              | 13.08 |  |  |          | 334   |  |  | $ | 12.96 | 
|$15.00 - 19.99  |  |                     | 2,230 |                     |  |                  | 7.29 |             |  | $              | 17.34 |  |  |          | 1,267 |  |  | $ | 17.75 | 
|$20.00 - 24.99  |  |                     | 1,746 |                     |  |                  | 7.93 |             |  | $              | 21.98 |  |  |          | 670   |  |  | $ | 21.42 | 
|$25.00 - 29.99  |  |                     | 1,627 |                     |  |                  | 6.05 |             |  | $              | 26.89 |  |  |          | 413   |  |  | $ | 26.77 | 
|$30.00 - 56.50  |  |                     | 1,191 |                     |  |                  | 6.16 |             |  | $              | 38.47 |  |  |          | 929   |  |  | $ | 39.29 | 
|                |  |                     |       |                     |  |                  |      |             |  |                |       |  |  |          |       |  |  |   |       | 
|                |  |                     | 7,569 |                     |  |                  |      |             |  |                |       |  |  |          | 3,613 |  |  |   |       | 
|                |  |                     |       |                     |  |                  |      |             |  |                |       |  |  |          |       |  |  |   |       | 

Employee Stock Purchase Plan

Hyperion sponsors an employee stock purchase plan (ESPP) that 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% 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 10% of an employees eligible compensation, 1,000 shares per
offering period and a fair market value of $25,000 in any plan year. In fiscal
2003, 2002 and 2001, approximately 373,000 shares, 606,000 shares and 775,000
shares, respectively, were issued under the ESPP. At June 30, 2003,
approximately 597,000 shares were reserved for future issuance under the ESPP.

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 generally not more than $12,000 in calendar year 2003
and $11,000 in calendar year 2002. Hyperion contributes to the plan quarterly,
up to a maximum of $500 per quarter, per participant. Similar savings plans are
maintained with respect to certain non-U.S. employees. In fiscal 2003, 2002 and
2001, Hyperion contributed $3.8 million, $4.7 million and $5.4 million,
respectively, to the savings plans.

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|14. |  | 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 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.



|15. |  | RESTRUCTURING AND OTHER 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 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 other charges totaled $0.8 million, $0.1 million and $42.8
million in fiscal 2003, 2002 and 2001, respectively. The restructuring charges
in fiscal 2003 and 2002 resulted from adjustments made to the restructuring
charges recorded in the fourth quarter of fiscal 2001.

A summary of the fiscal 2001 restructuring and other charges and the related
accrual 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 | )
|                                 |  |           |        |            |  |             |        |       |  |       |         |   |  |   |        |   |  |   |         |  
|Accrual 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    | )
|                                 |  |           |        |            |  |             |        |       |  |       |         |   |  |   |        |   |  |   |         |  
|Accrual balance at June 30, 2002 |  |           | 353    |            |  |             | 14,885 |       |  |       |        |   |  |   | 3,374  |   |  |   | 18,612  |  
|Cash paid                        |  |           | (353   | )          |  |             | (2,291 | )     |  |       |        |   |  |   | (1,524 | ) |  |   | (4,168  | )
|Adjustments                      |  |           |       |            |  |             | 764    |       |  |       |        |   |  |   |       |   |  |   | 764     |  
|                                 |  |           |        |            |  |             |        |       |  |       |         |   |  |   |        |   |  |   |         |  
|Accrual balance at June 30, 2003 |  | $         |       |            |  | $           | 13,358 |       |  | $     |        |   |  | $ | 1,850  |   |  | $ | 15,208  |  
|                                 |  |           |        |            |  |             |        |       |  |       |         |   |  |   |        |   |  |   |         |  

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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 were 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 other
charges 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 accrual balance at June
30, 2003 of $15.2 million relates primarily to future lease obligations. Of
this amount, approximately $3.9 million is included in other current
liabilities and approximately $11.3 million is included in 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
structure through the execution of additional restructuring plans.



|16. |  | SEGMENT AND GEOGRAPHIC INFORMATION
|--- |  | ----------------------------------

SFAS 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: the Americas (United States,
Canada and Latin America), EMEA (Europe, Middle East and Africa) and APAC (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 131.
Geographic revenue information is primarily based on the ordering location of
the customer, and long-lived asset information is based on the physical
location of the assets. The following table presents revenues and long-lived
assets by geographic region (in thousands):

|          |          |   |                     |         |      |   |         |         |  |   |         |         | 
|--------- | -------- | - | ------------------- | ------- | ---- | - | ------- | ------- |  | - | ------- | ------- | 
|          |          |   | Year Ended June 30,
|          |          |   | 2003                |         | 2002 |   | 2001   
|          |          |   |                     |         |      |   |        
|Revenues: |          |   |                     |         |      |   |         |         |  |   |         |        
|          | Americas |   | $                   | 318,538 |      |   | $       | 324,352 |  |   | $       | 362,984 | 
|          | EMEA     |   |                     | 163,988 |      |   |         | 141,423 |  |   |         | 134,658 | 
|          | APAC     |   |                     | 27,932  |      |   |         | 26,243  |  |   |         | 30,369  | 
|          |          |   |                     |         |      |   |         |         |  |   |         |        
|          |          | $ | 510,458             |         |      | $ | 492,018 |         |  | $ | 528,011 |        
|          |          |   |                     |         |      |   |         |         |  |   |         |        

|                   |          |   |          |        |          |   |        |        | 
|------------------ | -------- | - | -------- | ------ | -------- | - | ------ | ------ | 
|                   |          |   | June 30, |        | June 30,
|                   |          |   | 2003     |        | 2002    
|                   |          |   |          |        |         
|Long-lived assets: |          |   |          |        |          |   |        |       
|                   | Americas |   | $        | 59,857 |          |   | $      | 58,730 | 
|                   | EMEA     |   |          | 6,360  |          |   |        | 7,834  | 
|                   | APAC     |   |          | 1,316  |          |   |        | 1,223  | 
|                   |          |   |          |        |          |   |        |        | 
|                   |          | $ | 67,533   |        |          | $ | 67,787 |       
|                   |          |   |          |        |          |   |        |       

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

|                          |                         |   |                     |         |      |   |         |         |  |   |         |         | 
|------------------------- | ----------------------- | - | ------------------- | ------- | ---- | - | ------- | ------- |  | - | ------- | ------- | 
|                          |                         |   | Year Ended June 30,
|                          |                         |   | 2003                |         | 2002 |   | 2001   
|                          |                         |   |                     |         |      |   |        
|Software licenses:        |                         |   |                     |         |      |   |         |         |  |   |         |        
|                          | Application products    |   | $                   | 106,016 |      |   | $       | 92,698  |  |   | $       | 103,250 | 
|                          | Platform products       |   |                     | 95,750  |      |   |         | 103,368 |  |   |         | 124,744 | 
|                          |                         |   |                     |         |      |   |         |         |  |   |         |        
|                          |                         |   | 201,766             |         |      |   | 196,066 |         |  |   | 227,994 |        
|Maintenance and services: |                         |   |                     |         |      |   |         |         |  |   |         |        
|                          | Maintenance             |   |                     | 212,157 |      |   |         | 186,052 |  |   |         | 170,840 | 
|                          | Consulting and training |   |                     | 96,535  |      |   |         | 109,900 |  |   |         | 129,177 | 
|                          |                         |   |                     |         |      |   |         |         |  |   |         |        
|                          |                         |   | 308,692             |         |      |   | 295,952 |         |  |   | 300,017 |        
|                          |                         |   |                     |         |      |   |         |         |  |   |         |        
|Total revenues            |                         | $ | 510,458             |         |      | $ | 492,018 |         |  | $ | 528,011 |        
|                          |                         |   |                     |         |      |   |         |         |  |   |         |        



|17. |  | SUBSEQUENT EVENTS
|--- |  | -----------------

Agreement to Acquire Brio Software, Inc.

In July 2003, Hyperion entered into a definitive agreement to acquire Brio
Software, Inc., a business intelligence software provider based in Santa Clara,
California. Under the terms of the agreement, Brio stockholders will receive a
combination of 0.109 of a share of Hyperion common stock and $0.363 in cash for
each share of Brio common stock. Based on the closing price of Hyperions
stock on July 22, 2003, one day prior to the date the acquisition was
announced, the transaction is valued at approximately $142 million. Brio
stockholders will own approximately 10.5% of Hyperions common stock after
completion of the transaction. The transaction has been approved by the boards
of directors of both companies and is subject to customary closing conditions,
including the approval of Brios stockholders and completion of regulatory
review. The
transaction is expected to close in the second quarter of fiscal 2004.

Stock Repurchase Program

In July 2003, Hyperions board of directors authorized the company to
repurchase up to $125 million of its common stock. Hyperion will determine the
timing and amount of shares to be repurchased based upon market conditions and
other factors, and will use existing cash and short-term investments to finance
the transactions. The repurchased shares will be used for Hyperions stock
option plans, employee stock purchase and other stock benefit plans, and for
general corporate purposes.



|18. |  | QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
|--- |  | -------------------------------------------

The following is a summary of the unaudited quarterly results of operations for
fiscal 2003 and 2002 (in thousands, except per share data):

|                               |  |         |         |         |  |         |         |         |  |   |         |  |  |   |         | 
|------------------------------ |  | ------- | ------- | ------- |  | ------- | ------- | ------- |  | - | ------- |  |  | - | ------- | 
|Fiscal 2003                    |  | Sep. 30 |         | Dec. 31 |  | Mar. 31 |         | Jun. 30
|                               |  |         |         |         |  |         |         |        
|Revenues                       |  | $       | 119,879 |         |  | $       | 126,037 |         |  | $ | 126,559 |  |  | $ | 137,983 | 
|Gross profit                   |  |         | 84,450  |         |  |         | 90,285  |         |  |   | 88,304  |  |  |   | 99,490  | 
|Net income                     |  |         | 9,112   |         |  |         | 7,569   |         |  |   | 8,267   |  |  |   | 9,162   | 
|Net income per share  diluted |  |         | 0.27    |         |  |         | 0.21    |         |  |   | 0.23    |  |  |   | 0.25    | 

|                               |  |         |         |         |  |         |         |         |  |   |         |  |  |   |         | 
|------------------------------ |  | ------- | ------- | ------- |  | ------- | ------- | ------- |  | - | ------- |  |  | - | ------- | 
|Fiscal 2002                    |  | Sep. 30 |         | Dec. 31 |  | Mar. 31 |         | Jun. 30
|                               |  |         |         |         |  |         |         |        
|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   | 
|Net income per share  diluted |  |         | 0.06    |         |  |         | 0.11    |         |  |   | 0.09    |  |  |   | 0.18    | 

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

None.




ITEM 9A. CONTROLS AND PROCEDURES

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES. Based on their evaluation as
of the end of the period covered by this Annual Report on Form 10-K, our chief
executive officer and chief financial officer have concluded that our
disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)
of the Securities Exchange Act of 1934) are effective to ensure that
information required to be disclosed by us in reports that we file or submit
under the Securities Exchange Act of 1934 is recorded, processed, summarized
and reported within the time periods specified in Securities and Exchange
Commission rules and forms.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING. There were no changes in
our internal control over financial reporting identified in connection with our
evaluation that occurred during our fourth fiscal quarter that have materially
affected, or are reasonably likely to materially affect, our internal control
over financial reporting.




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 2003
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 2003 Annual
Meeting of Stockholders.






ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS


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 2003 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 2003 Annual Meeting of Stockholders.

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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, 2003 and 2002                                                                         |  |      | 32 | 
|Consolidated Statements of Operations for the years ended June 30, 2003, 2002 and 2001                                           |  |      | 33 | 
|Consolidated Statements of Stockholders Equity and Comprehensive Income (Loss)
for the years ended June 30, 2003, 2002 and 2001 |  |      | 34 | 
|Consolidated Statements of Cash Flows for the years ended June 30, 2003, 2002 and 2001                                           |  |      | 35 | 
|Notes to Consolidated Financial Statements                                                                                       |  |      | 36 | 

(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.

(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.                                     
|2.3(q)      |  | - |  | Agreement and Plan of Merger and Reorganization among Hyperion Solutions Corporation,
T-Bird Acquisition, Inc., and Brio Software, Inc., dated as of July 23, 2003.                
|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(p)    |  | - |  | Employment Agreement with Jeffrey R. Rodek, dated September 11, 2002.                                                                                                              
|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(o)    |  | - |  | Employment Agreement with Godfrey R. Sullivan, dated October 17, 2001.                                                                                                             
|21.1        |  | - |  | List of subsidiaries of the Registrant (filed herewith).                                                                                                                           
|23.1        |  | - |  | Consent of PricewaterhouseCoopers LLP, independent accountants (filed herewith).                                                                                                   
|31.1        |  | - |  | Certification of Jeffrey R. Rodek pursuant to Rule 13a-14(a) (filed herewith).                                                                                                     
|31.2        |  | - |  | Certification of David W. Odell pursuant to Rule 13a-14(a) (filed herewith).                                                                                                       
|32.1        |  | - |  | Certification of Jeffrey R. Rodek pursuant to 18 U.S.C. Section 1350 (filed herewith).                                                                                             
|32.2        |  | - |  | Certification of David W. Odell pursuant to 18 U.S.C. Section 1350 (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.

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|(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.                                          
|   
|(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 Proxy
Statement dated October 11, 2002.                                                              
|   
|(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.                                                 
|   
|(o) |  | Incorporated by reference to the exhibits to the Registrants Annual
Report on Form 10-K dated September 25, 2002.                                                 
|   
|(p) |  | Incorporated by reference to the exhibits to the Registrants Quarterly
Report on Form 10-Q for the quarter ended September 30, 2002.                              
|   
|(q) |  | Incorporated by reference to the exhibits to the Registrants Schedule
13D Statement dated August 4, 2003.                                                         
|   
|(b) |  | Reports on Form 8-K:                                                                                                                                               



| |  | On April 22, 2003, we filed a current report on Form 8-K in connection with
the issuance of a press release dated April 22, 2003 announcing the financial
results for the third fiscal quarter ended March 31, 2003.
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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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: August 13, 2003 |  | Hyperion Solutions Corporation
|                      |  | (Registrant)                   | 
|                      |  |                                |  |                                       
|                      |  | By:                            |  | /s/ David W. Odell                    
|                      |  |                                |  |                                       
|                      |  |                                |  | David W. Odell
Chief Financial 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    |  | Chairman and Chief Executive Officer  |  | August 13, 2003
| |  |                         |  |                                       | 
| |  | Jeffrey R. Rodek        |  |                                       |  |                
| |  |                         |  |                                       |  |                
| |  | /s/ Godfrey R. Sullivan |  | President and Chief Operating Officer |  | August 13, 2003
| |  |                         |  |                                       | 
| |  | Godfrey R. Sullivan     |  |                                       |  |                
| |  |                         |  |                                       |  |                
| |  | /s/ Henry R. Autry      |  | Director                              |  | August 13, 2003
| |  |                         |  |                                       | 
| |  | Henry R. Autry          |  |                                       |  |                
| |  |                         |  |                                       |  |                
| |  | /s/ Terry Carlitz       |  | Director                              |  | August 13, 2003
| |  |                         |  |                                       | 
| |  | Terry Carlitz           |  |                                       |  |                
| |  |                         |  |                                       |  |                
| |  | /s/ Gary G. Greenfield  |  | Director                              |  | August 13, 2003
| |  |                         |  |                                       | 
| |  | Gary G. Greenfield      |  |                                       |  |                
| |  |                         |  |                                       |  |                
| |  | /s/ Aldo Papone         |  | Director                              |  | August 13, 2003
| |  |                         |  |                                       | 
| |  | Aldo Papone             |  |                                       |  |                
| |  |                         |  |                                       |  |                
| |  | /s/ John Riccitiello    |  | Director                              |  | August 13, 2003
| |  |                         |  |                                       | 
| |  | John Riccitiello        |  |                                       |  |                

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|                                                |  | 
|----------------------------------------------- |  | 
|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, 2003: |                                             |           |            |          |            |              |           |            |  |  |  |           |  |  |         |        |     |  |  |  |   |       
|                          | Allowance for doubtful accounts             |           | $          | 10,660   |            |              |           | 1,357      |  |  |  | 4,440     |  |  |         | 8,226  | (b) |  |  |  | $ | 8,231  | 
|                          | Valuation allowance for deferred tax assets |           |            | 6,894    |            |              |           | 32         |  |  |  |          |  |  |         |       |     |  |  |  |   | 6,926  | 
|                          | Restructuring components                    |           |            | 18,612   |            |              |           | 764        |  |  |  |          |  |  |         | 4,168  | (c) |  |  |  |   | 15,208 | 
|Year Ended June 30, 2002: |                                             |           |            |          |            |              |           |            |  |  |  |           |  |  |         |        |     |  |  |  |   |       
|                          | Allowance for doubtful accounts             |           | $          | 12,476   |            |              |           | 4,038      |  |  |  | 16,812    |  |  |         | 22,666 | (b) |  |  |  | $ | 10,660 | 
|                          | Valuation allowance for deferred tax assets |           |            | 6,075    |            |              |           | 819        |  |  |  |          |  |  |         |       |     |  |  |  |   | 6,894  | 
|                          | Restructuring components                    |           |            | 28,030   |            |              |           |           |  |  |  |          |  |  |         | 9,418  | (c) |  |  |  |   | 18,612 | 
|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  | (c) |  |  |  |   | 28,030 | 



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

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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.                                     
|            |  |   |  |                                                                                                                                                                                    
|2.3(q)      |  | - |  | Agreement and Plan of Merger and Reorganization among Hyperion Solutions Corporation,
T-Bird Acquisition, Inc., and Brio Software, Inc., dated as of July 23, 2003.                
|            |  |   |  |                                                                                                                                                                                    
|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(p)    |  | - |  | Employment Agreement with Jeffrey R. Rodek, dated January 1, 2002.                                                                                                                 
|            |  |   |  |                                                                                                                                                                                    
|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(o)    |  | - |  | Employment Agreement with Godfrey R. Sullivan, dated October 17, 2001.                                                                                                             
|            |  |   |  |                                                                                                                                                                                    
|21.1        |  | - |  | List of subsidiaries of the Registrant (filed herewith).                                                                                                                           
|            |  |   |  |                                                                                                                                                                                    
|23.1        |  | - |  | Consent of PricewaterhouseCoopers LLP, independent accountants (filed herewith).                                                                                                   
|            |  |   |  |                                                                                                                                                                                    
|31.1        |  | - |  | Certification of Jeffrey R. Rodek pursuant to Rule 13a-14(a) (filed herewith).                                                                                                     
|            |  |   |  |                                                                                                                                                                                    
|31.2        |  | - |  | Certification of David W. Odell pursuant to Rule 13a-14(a) (filed herewith).                                                                                                       
|            |  |   |  |                                                                                                                                                                                    
|32.1        |  | - |  | Certification of Jeffrey R. Rodek pursuant to 18 U.S.C. Section 1350 (filed herewith).                                                                                             
|            |  |   |  |                                                                                                                                                                                    
|32.2        |  | - |  | Certification of David W. Odell pursuant to 18 U.S.C. Section 1350 (filed herewith).                                                                                               

59