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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-K
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the Fiscal Year Ended June 30, 2005
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to .
 
 Commission File Number 000-26934
 Hyperion Solutions Corporation
  Delaware
    
    77-0277772(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)
 5450 Great America Parkway, Santa Clara, California 95054
   
 þ o
 þ
 þ o
 o þ




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2




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HYPERION SOLUTIONS CORPORATION
 FORM 10-K
 PAGEPART I.Item 1.
    
    Business
    
    
    4Item 2.
    
    Properties
    
    
    11Item 3.
    
    Legal Proceedings
    
    
    12Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    12PART II.Item 5.
    
    Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
    
    
    13Item 6.
    
    Selected Financial Data
    
    
    15Item 7.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    16Item 7A.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    36Item 8.
    
    Financial Statements and Supplementary Data
    
    
    38Item 9.
    
    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    
    70Item 9A.
    
    Controls and Procedures
    
    
    70PART III.Item 10.
    
    Directors and Executive Officers of the Registrant
    
    
    71Item 11.
    
    Executive Compensation
    
    
    71Item 12.
    
    Security Ownership of Certain Beneficial Owners and Management
    
    
    71Item 13.
    
    Certain Relationships and Related Transactions
    
    
    71Item 14.
    
    Principal Accounting Fees and Services
    
    
    71PART IV.Item 15.
    
    Exhibits and Financial Statement Schedules
    
    
    72Signatures
    
    
    73Exhibit Index
    
    
    75EXHIBIT 10.9EXHIBIT 21.1EXHIBIT 23.1EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1EXHIBIT 32.2
   3




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CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS
  
 PART I
 
 ITEM 1. BUSINESS
 OVERVIEW
       4




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BUSINESS PERFORMANCE MANAGEMENT BACKGROUND
   1.
    
    Accelerate and increase the quality of decision making by leveraging existing
information technology investments to make information more accessible and actionable
throughout the organization;2.
    
    Increase the quality of management reports and have every manager work from the same
set of facts;3.
    
    Achieve necessary alignment among business and functional units for tight strategy
execution;4.
    
    Increase visibility, agility, and measurable accountability across the enterprise; and5.
    
    Prepare to comply with more stringent corporate governance regulations on a global
scale.
   STRATEGY
  Deliver Enterprise-Class Solutions. enterprise-wide
 Focus on the Success of Our 10,000+ Customer s.
 Expand Our Market Leadership through the Launch of Hyperion System 9.
 5




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Acquire New Customers with our BI Platform.
 Continue our Start Anywhere Approach to Product Adoption.
 Expand Strategic Partner Relationships.
 PRODUCTS
     Enterprise Planning, Budgeting, and Forecasting
 Hyperion Planning
 Hyperion Strategic Finance
 6




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Consolidations and Financial Reporting
 Hyperion Financial Management
 Query and Reporting
 Hyperion Performance Suite
  Interactive Dashboards
 Advanced Analytics
 Hyperion Essbase 7X the
 Hyperion Master Data Management Server (MDM Server)
 Hyperion Hub
 7




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SALES AND MARKETING
      SERVICES AND SUPPORT
  8




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RESEARCH AND DEVELOPMENT
   COMPETITION
    PROPRIETARY RIGHTS AND LICENSES
   9




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EMPLOYEES
  Name
    
    Age
    
    PositionGodfrey R. Sullivan
    
    
    52
    
    
    President and Chief Executive OfficerJeffrey R. Rodek
    
    
    52
    
    
    Executive ChairmanDavid W. Odell
    
    
    42
    
    
    Chief Financial OfficerBurton Goldfield
    
    
    49
    
    
    Senior Vice President, Worldwide Field OperationsMark D. Cochran
    
    
    46
    
    
    Vice President, General Counsel and SecretaryHeidi M. Melin
    
    
    40
    
    
    Chief Marketing Officer
    10




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AVAILABLE INFORMATION
  
 ITEM 2. PROPERTIES
    11




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ITEM 3. LEGAL PROCEEDINGS
   
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  12




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PART II
 
 ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
                PURCHASES OF EQUITY SECURITIES
  Fiscal 2005
    
    High
    
    LowFirst quarter
    
    $
    42.59
    
    
    $
    31.93Second quarter
    
    $
    46.62
    
    
    $
    35.06Third quarter
    
    $
    51.11
    
    
    $
    44.11Fourth quarter
    
    $
    47.75
    
    
    $
    37.88
 Fiscal 2004
    
    High
    
    LowFirst quarter
    
    $
    36.57
    
    
    $
    25.59Second quarter
    
    $
    35.50
    
    
    $
    28.35Third quarter
    
    $
    41.79
    
    
    $
    29.79Fourth quarter
    
    $
    44.25
    
    
    $
    36.08
  Dividend Policy
  Securities Authorized for Issuance under Equity Compensation Plans
  Weighted-Average
    
    Number of SecuritiesNumber of Securities
    
    Exercise Price of
    
    Remaining Availableto be Issued upon
    
    Outstanding
    
    for Future IssuanceExercise of
    
    Options,
    
    under EquityOutstanding Options,
    
    Warrants and
    
    Compensation PlansWarrants and Rights
    
    Rights
    
    [1]Equity compensation
plans approved by
security holders
    
    
    5,494,610
    
    
    $
    34.03
    
    
    
    2,485,716Equity compensation
plans not approved
by security holders
    
    
    778,671
    
    
    $
    25.47
    
    
    
    38,858Total
    
    
    6,273,181
    
    
    $
    32.97
    
    
    
    2,524,574
 
 [1]
    
    Includes 1,379,889 shares of our common stock remaining available for future issuance under
the ESPP as of June 30, 2005.  13




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Issuer Purchases of Equity Securities
  Total Number of
    
    ApproximateTotal Number
    
    
    
    
    
    Shares Purchased as
    
    Dollar Value ofof Shares
    
    Average Price
    
    Part of Publicly
    
    Shares that MayPurchased
    
    Paid per
    
    Announced Plans
    
    Yet Be PurchasedPeriod
    
    [1]
    
    Share
    
    [2]
    
    Under the Plans(In thousands, except per share data)April 1, 2005 - April 30, 2005
    
    
    91
    
    
    $
    44.46
    
    
    
    91
    
    
    $
    12,306May 1, 2005 - May 31, 2005
    
    
    278
    
    
    $
    41.15
    
    
    
    278
    
    
    
    125,866June 1, 2005 - June 30, 2005
    
    
    392
    
    
    $
    40.82
    
    
    
    392
    
    
    
    109,864
 
 [1]
    
    All stock repurchases during the three months
ended June 30, 2005, were made in open-market
transactions as part of our publicly announced
plans.[2]
    
    On May 20, 2004, we announced that our board
of directors had authorized a plan to repurchase
up to $75.0 million of our common stock. In the
fourth quarter of fiscal 2005, a total of
389,898 shares were purchased under this plan.
In total, we have purchased 1,851,798 shares
under this plan. On May 16, 2005, we announced
that our board of directors had authorized an
additional plan to repurchase up to $125.0
million of our common stock. In the fourth
quarter of fiscal 2005, a total of 371,076
shares were purchased under this plan. At July
29, 2005, $88.8 million of the funds approved
for repurchases under our plans were available. 14




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ITEM 6. SELECTED FINANCIAL DATA
 Year Ended June 30,(In thousands, except per share data)
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001Consolidated Statement of Operations Data:Revenues:Software licenses
    
    $
    273,408
    
    
    $
    240,096
    
    
    $
    201,766
    
    
    $
    196,066
    
    
    $
    227,994Maintenance and services
    
    
    429,185
    
    
    
    382,104
    
    
    
    308,692
    
    
    
    295,952
    
    
    
    300,017Total revenues
    
    
    702,593
    
    
    
    622,200
    
    
    
    510,458
    
    
    
    492,018
    
    
    
    528,011Costs and expenses:Cost of software license revenues
    
    
    16,136
    
    
    
    13,362
    
    
    
    15,419
    
    
    
    15,430
    
    
    
    16,334Cost of maintenance and services revenues
    
    
    158,272
    
    
    
    147,816
    
    
    
    132,510
    
    
    
    137,047
    
    
    
    161,016Sales and marketing
    
    
    255,182
    
    
    
    225,951
    
    
    
    190,025
    
    
    
    182,311
    
    
    
    208,336Research and development
    
    
    104,108
    
    
    
    96,240
    
    
    
    73,776
    
    
    
    72,206
    
    
    
    81,597General and administrative
    
    
    68,056
    
    
    
    63,621
    
    
    
    47,207
    
    
    
    64,843
    
    
    
    72,823Restructuring and other charges
    
    
    6,048
    
    
    
    4,202
    
    
    
    764
    
    
    
    107
    
    
    
    42,785In-process research and development
    
    
    
    
    
    
    2,300
    
    
    
    
    
    
    
    
    
    
    
    Total costs and expenses
    
    
    607,802
    
    
    
    553,492
    
    
    
    459,701
    
    
    
    471,944
    
    
    
    582,891Operating income (loss)
    
    
    94,791
    
    
    
    68,708
    
    
    
    50,757
    
    
    
    20,074
    
    
    
    (54,880
    )Interest and other income
    
    
    7,844
    
    
    
    4,283
    
    
    
    5,848
    
    
    
    7,027
    
    
    
    12,987Interest and other expense
    
    
    (53
    )
    
    
    (1,230
    )
    
    
    (2,940
    )
    
    
    (4,635
    )
    
    
    (5,502
    )Gain (loss) on redemption of debt
    
    
    
    
    
    
    (936
    )
    
    
    478
    
    
    
    941
    
    
    
    2,362Income (loss) before income taxes
    
    
    102,582
    
    
    
    70,825
    
    
    
    54,143
    
    
    
    23,407
    
    
    
    (45,033
    )Income tax provision (benefit)
    
    
    35,903
    
    
    
    27,055
    
    
    
    20,033
    
    
    
    8,426
    
    
    
    (13,960
    )Net income (loss)
    
    $
    66,679
    
    
    $
    43,770
    
    
    $
    34,110
    
    
    $
    14,981
    
    
    $
    (31,073
    )Basic net income (loss) per share
    
    $
    1.68
    
    
    $
    1.15
    
    
    $
    0.99
    
    
    $
    0.46
    
    
    $
    (0.95
    )Diluted net income (loss) per share
    
    $
    1.62
    
    
    $
    1.10
    
    
    $
    0.96
    
    
    $
    0.45
    
    
    $
    (0.95
    )Shares used in computing basic net income
(loss) per share
    
    
    39,689
    
    
    
    37,988
    
    
    
    34,451
    
    
    
    32,836
    
    
    
    32,592Shares used in computing diluted net income
(loss) per share
    
    
    41,257
    
    
    
    39,754
    
    
    
    35,694
    
    
    
    33,491
    
    
    
    32,592Consolidated Balance Sheet Data:Cash, cash equivalents, and short-term
investments
    
    $
    440,748
    
    
    $
    368,175
    
    
    $
    416,554
    
    
    $
    330,258
    
    
    $
    255,366Working capital
    
    
    330,220
    
    
    
    273,983
    
    
    
    350,649
    
    
    
    281,501
    
    
    
    254,141Total assets [1]
    
    
    899,436
    
    
    
    813,606
    
    
    
    656,543
    
    
    
    588,069
    
    
    
    574,979Deferred revenue
    
    
    140,772
    
    
    
    136,286
    
    
    
    104,868
    
    
    
    94,910
    
    
    
    100,234Long-term debt
    
    
    
    
    
    
    
    
    
    
    50,040
    
    
    
    80,802
    
    
    
    91,045Long-term restructuring liabilities and other
    
    
    24,830
    
    
    
    26,619
    
    
    
    11,326
    
    
    
    11,743
    
    
    
    14,303Stockholders equity
    
    
    583,900
    
    
    
    519,571
    
    
    
    397,325
    
    
    
    299,657
    
    
    
    267,319
 
 [1]
    
    As discussed further in Note 2 of the Consolidated Financial Statements, we
reclassified $9.0 million from income taxes payable to prepaid expenses and other
current assets on our consolidated balance sheet as of June 30, 2004. In addition, we also
increased both prepaid expenses and other current assets and income
taxes payable on our consolidated balance sheets as of June 30,
2003, 2002, and 2001, by $1.8 million, $4.2 million, and $4.6 million, respectively. These reclassifications resulted in changes to amounts
previously reported as total assets on the consolidated balance sheets as of June 30, 2004,
2003, 2002, and 2001. 15




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ITEM 7.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 OVERVIEW
       CRITICAL ACCOUNTING POLICIES
  Revenue Recognition
  16




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Accounts Receivable Allowances
   Income Taxes
  17




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Valuation of Goodwill, Intangibles, and Long-Lived Assets
    RESULTS OF OPERATIONS
  18




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Year Ended June 30,2004
    
    2003Revenues
    
    $
    653,049
    
    
    $
    612,203Net income
    
    
    39,878
    
    
    
    7,618Basic net income per share
    
    
    1.02
    
    
    
    0.20Diluted net income per share
    
    
    0.97
    
    
    
    0.19
  Year Ended June 30,Percent of
    
    
    
    
    
    
    Percent of
    
    
    
    
    
    
    Percent ofTotal
    
    
    
    
    
    
    Total
    
    
    
    
    
    
    Total(In thousands)
    
    2005
    
    
    Revenue
    
    
    2004
    
    
    Revenue
    
    
    2003
    
    
    RevenueREVENUESSoftware licenses
    
    $
    273,408
    
    
    
    39
    %
    
    $
    240,096
    
    
    
    39
    %
    
    $
    201,766
    
    
    
    40
    %Maintenance and services:Maintenance
    
    
    299,093
    
    
    
    42
    %
    
    
    264,866
    
    
    
    42
    %
    
    
    212,157
    
    
    
    41
    %Consulting and training
    
    
    130,092
    
    
    
    19
    %
    
    
    117,238
    
    
    
    19
    %
    
    
    96,535
    
    
    
    19
    %429,185
    
    
    
    61
    %
    
    
    382,104
    
    
    
    61
    %
    
    
    308,692
    
    
    
    60
    %TOTAL REVENUES
    
    
    702,593
    
    
    
    100
    %
    
    
    622,200
    
    
    
    100
    %
    
    
    510,458
    
    
    
    100
    %COSTS AND EXPENSESCost of revenues:Software licenses
    
    
    16,136
    
    
    
    2
    %
    
    
    13,362
    
    
    
    2
    %
    
    
    15,419
    
    
    
    3
    %Maintenance and services
    
    
    158,272
    
    
    
    23
    %
    
    
    147,816
    
    
    
    24
    %
    
    
    132,510
    
    
    
    26
    %Sales and marketing
    
    
    255,182
    
    
    
    36
    %
    
    
    225,951
    
    
    
    36
    %
    
    
    190,025
    
    
    
    37
    %Research and development
    
    
    104,108
    
    
    
    15
    %
    
    
    96,240
    
    
    
    16
    %
    
    
    73,776
    
    
    
    15
    %General and administrative
    
    
    68,056
    
    
    
    10
    %
    
    
    63,621
    
    
    
    10
    %
    
    
    47,207
    
    
    
    9
    %Restructuring charges
    
    
    6,048
    
    
    
    1
    %
    
    
    4,202
    
    
    
    1
    %
    
    
    764
    
    
    
    0
    %In-process research and development
    
    
    
    
    
    
    
    
    
    
    2,300
    
    
    
    0
    %
    
    
    
    
    
    
    TOTAL COSTS AND EXPENSES
    
    
    607,802
    
    
    
    87
    %
    
    
    553,492
    
    
    
    89
    %
    
    
    459,701
    
    
    
    90
    %OPERATING INCOME
    
    
    94,791
    
    
    
    13
    %
    
    
    68,708
    
    
    
    11
    %
    
    
    50,757
    
    
    
    10
    %Interest and other income
    
    
    7,844
    
    
    
    1
    %
    
    
    4,283
    
    
    
    0
    %
    
    
    5,848
    
    
    
    1
    %Interest and other expense
    
    
    (53
    )
    
    
    0
    %
    
    
    (1,230
    )
    
    
    0
    %
    
    
    (2,940
    )
    
    
    (0
    )%Gain (loss) on redemption of debt
    
    
    
    
    
    
    
    
    
    
    (936
    )
    
    
    0
    %
    
    
    478
    
    
    
    0
    %INCOME BEFORE INCOME TAXES
    
    
    102,582
    
    
    
    14
    %
    
    
    70,825
    
    
    
    11
    %
    
    
    54,143
    
    
    
    11
    %Income tax provision
    
    
    35,903
    
    
    
    5
    %
    
    
    27,055
    
    
    
    4
    %
    
    
    20,033
    
    
    
    4
    %NET INCOME
    
    $
    66,679
    
    
    
    9
    %
    
    $
    43,770
    
    
    
    7
    %
    
    $
    34,110
    
    
    
    7
    %
 19




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Year Ended June 30,2005-2004
    
    
    2005-2004
    
    
    2004-2003
    
    
    2004-2003(In thousands)
    
    2005
    
    
    2004
    
    
    2003
    
    
    Change
    
    
    %
    
    
    Change
    
    
    %REVENUESSoftware licenses
    
    $
    273,408
    
    
    $
    240,096
    
    
    $
    201,766
    
    
    $
    33,312
    
    
    
    14
    %
    
    $
    38,330
    
    
    
    19
    %Maintenance and services:Maintenance
    
    
    299,093
    
    
    
    264,866
    
    
    
    212,157
    
    
    
    34,227
    
    
    
    13
    %
    
    
    52,709
    
    
    
    25
    %Consulting and training
    
    
    130,092
    
    
    
    117,238
    
    
    
    96,535
    
    
    
    12,854
    
    
    
    11
    %
    
    
    20,703
    
    
    
    21
    %429,185
    
    
    
    382,104
    
    
    
    308,692
    
    
    
    47,081
    
    
    
    12
    %
    
    
    73,412
    
    
    
    24
    %TOTAL REVENUES
    
    
    702,593
    
    
    
    622,200
    
    
    
    510,458
    
    
    
    80,393
    
    
    
    13
    %
    
    
    111,742
    
    
    
    22
    %COSTS AND EXPENSESCost of revenues:Software licenses
    
    
    16,136
    
    
    
    13,362
    
    
    
    15,419
    
    
    
    2,774
    
    
    
    21
    %
    
    
    (2,057
    )
    
    
    (13
    )%Maintenance and services
    
    
    158,272
    
    
    
    147,816
    
    
    
    132,510
    
    
    
    10,456
    
    
    
    7
    %
    
    
    15,306
    
    
    
    12
    %Sales and marketing
    
    
    255,182
    
    
    
    225,951
    
    
    
    190,025
    
    
    
    29,231
    
    
    
    13
    %
    
    
    35,926
    
    
    
    19
    %Research and development
    
    
    104,108
    
    
    
    96,240
    
    
    
    73,776
    
    
    
    7,868
    
    
    
    8
    %
    
    
    22,464
    
    
    
    30
    %General and administrative
    
    
    68,056
    
    
    
    63,621
    
    
    
    47,207
    
    
    
    4,435
    
    
    
    7
    %
    
    
    16,414
    
    
    
    35
    %Restructuring charges
    
    
    6,048
    
    
    
    4,202
    
    
    
    764
    
    
    
    1,846
    
    
    
    44
    %
    
    
    3,438
    
    
    
    450
    %In-process research and development
    
    
    
    
    
    
    2,300
    
    
    
    
    
    
    
    (2,300
    )
    
    
    (100
    )%
    
    
    2,300
    
    
    
    100
    %TOTAL COSTS AND EXPENSES
    
    
    607,802
    
    
    
    553,492
    
    
    
    459,701
    
    
    
    54,310
    
    
    
    10
    %
    
    
    93,791
    
    
    
    20
    %OPERATING INCOME
    
    
    94,791
    
    
    
    68,708
    
    
    
    50,757
    
    
    
    26,083
    
    
    
    38
    %
    
    
    17,951
    
    
    
    35
    %Interest and other income
    
    
    7,844
    
    
    
    4,283
    
    
    
    5,848
    
    
    
    3,561
    
    
    
    83
    %
    
    
    (1,565
    )
    
    
    (27
    )%Interest and other expense
    
    
    (53
    )
    
    
    (1,230
    )
    
    
    (2,940
    )
    
    
    1,177
    
    
    
    96
    %
    
    
    1,710
    
    
    
    58
    %Gain (loss) on redemption of debt
    
    
    
    
    
    
    (936
    )
    
    
    478
    
    
    
    936
    
    
    
    100
    %
    
    
    (1,414
    )
    
    
    (296
    )%INCOME BEFORE INCOME TAXES
    
    
    102,582
    
    
    
    70,825
    
    
    
    54,143
    
    
    
    31,757
    
    
    
    45
    %
    
    
    16,682
    
    
    
    31
    %Income tax provision
    
    
    35,903
    
    
    
    27,055
    
    
    
    20,033
    
    
    
    8,848
    
    
    
    33
    %
    
    
    7,022
    
    
    
    35
    %NET INCOME
    
    $
    66,679
    
    
    $
    43,770
    
    
    $
    34,110
    
    
    $
    22,909
    
    
    
    52
    %
    
    $
    9,660
    
    
    
    28
    %
 REVENUES
   20




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##### Table of Contents



Software license revenue.
   Maintenance and services revenue.
   COST OF REVENUES
 Year Ended June 30,Percent of
    
    
    
    
    
    Percent of
    
    
    
    
    
    Percent ofRelated
    
    
    
    
    
    Related
    
    
    
    
    
    Related(In thousands)
    
    2005
    
    Revenue
    
    2004
    
    Revenue
    
    2003
    
    RevenueSoftware licenses
    
    $
    16,136
    
    
    
    6
    %
    
    $
    13,362
    
    
    
    6
    %
    
    $
    15,419
    
    
    
    8
    %Maintenance and services
    
    
    158,272
    
    
    
    37
    %
    
    
    147,816
    
    
    
    39
    %
    
    
    132,510
    
    
    
    43
    %
 Cost of software license revenue.
  21




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Cost of maintenance and services revenue.
   OPERATING EXPENSES
 Sales and marketing.
  Research and development.
  22




---



##### Table of Contents



General and administrative.
  RESTRUCTURING AND OTHER CHARGES
      23




---



##### Table of Contents



AssetSeverance
    
    
    Facilities
    
    
    Impairments
    
    
    Other
    
    
    TotalAccrual balance at June 30, 2002
    
    $
    353
    
    
    $
    14,885
    
    
    $
    
    
    
    $
    3,374
    
    
    $
    18,612Adjustments
    
    
    
    
    
    
    764
    
    
    
    
    
    
    
    
    
    
    
    764Cash payments
    
    
    (353
    )
    
    
    (2,291
    )
    
    
    
    
    
    
    (1,524
    )
    
    
    (4,168
    )Accrual balance at June 30, 2003
    
    
    
    
    
    
    13,358
    
    
    
    
    
    
    
    1,850
    
    
    
    15,208Restructuring charges and adjustments
    
    
    3,410
    
    
    
    792
    
    
    
    
    
    
    
    
    
    
    
    4,202Cash payments
    
    
    (3,299
    )
    
    
    (2,073
    )
    
    
    
    
    
    
    (91
    )
    
    
    (5,463
    )Accrual balance at June 30, 2004
    
    
    111
    
    
    
    12,077
    
    
    
    
    
    
    
    1,759
    
    
    
    13,947Restructuring charges and adjustments
    
    
    1,029
    
    
    
    4,850
    
    
    
    646
    
    
    
    
    
    
    
    6,525Non-cash items
    
    
    (5
    )
    
    
    (241
    )
    
    
    (646
    )
    
    
    (9
    )
    
    
    (901
    )Cash payments
    
    
    (1,040
    )
    
    
    (7,447
    )
    
    
    
    
    
    
    
    
    
    
    (8,487
    )Accrual balance at June 30, 2005
    
    $
    95
    
    
    $
    9,239
    
    
    $
    
    
    
    $
    1,750
    
    
    $
    11,084
  AssetSeverance
    
    
    Facilities
    
    
    Impairments
    
    
    TotalBalance at June 30, 2003
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Restructuring costs, net of adjustments
    
    
    4,767
    
    
    
    26,588
    
    
    
    4,719
    
    
    
    36,074Non-cash items
    
    
    
    
    
    
    
    
    
    
    (4,719
    )
    
    
    (4,719
    )Cash payments
    
    
    (3,263
    )
    
    
    (4,181
    )
    
    
    
    
    
    
    (7,444
    )Balance at June 30, 2004
    
    
    1,504
    
    
    
    22,407
    
    
    
    
    
    
    
    23,911Restructuring costs, net of adjustments
    
    
    
    
    
    
    (477
    )
    
    
    
    
    
    
    (477
    )Non-cash items
    
    
    (29
    )
    
    
    (103
    )
    
    
    
    
    
    
    (132
    )Cash payments
    
    
    (1,114
    )
    
    
    (6,479
    )
    
    
    
    
    
    
    (7,593
    )Balance at June 30, 2005
    
    $
    361
    
    
    $
    15,348
    
    
    $
    
    
    
    $
    15,709
   IN-PROCESS RESEARCH AND DEVELOPMENT
  24




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INTEREST AND OTHER INCOME
  INTEREST AND OTHER EXPENSE
  GAIN (LOSS) ON REDEMPTION OF DEBT
   INCOME TAX PROVISION
  NET INCOME
   LIQUIDITY AND CAPITAL RESOURCES
 As Reported
    
    As ReclassifiedJune 30,
    
    June 30,
    
    June 30,(In thousands)
    
    2005
    
    2004
    
    2003
    
    2004
    
    2003Cash and cash equivalents
    
    $
    170,740
    
    
    $
    365,181
    
    
    $
    398,040
    
    
    $
    172,261
    
    
    $
    167,362Short-term investments
    
    
    270,008
    
    
    
    2,994
    
    
    
    18,514
    
    
    
    195,914
    
    
    
    249,192Working capital
    
    
    330,220
    
    
    
    273,983
    
    
    
    350,649
    
    
    
    273,983
    
    
    
    350,649
 25




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##### Table of Contents



Year Ended
    
    As Reported
    
    As ReclassifiedJune 30,
    
    Year Ended June 30,
    
    Year Ended June 30,(In thousands)
    
    2005
    
    2004
    
    2003
    
    2004
    
    2003Net cash provided by operating activities
    
    $
    130,689
    
    
    $
    86,461
    
    
    $
    88,113
    
    
    $
    86,461
    
    
    $
    88,113Net cash provided by (used in) investing
activities
    
    
    (114,970
    )
    
    
    (2,200
    )
    
    
    (26,756
    )
    
    
    35,558
    
    
    
    (110,584
    )Net cash provided by (used in) financing
activities
    
    
    (16,467
    )
    
    
    (121,354
    )
    
    
    20,144
    
    
    
    (121,354
    )
    
    
    20,144
    As Reported
    
    As ReclassifiedYear Ended June 30,
    
    Year Ended June 30,(In thousands)
    
    2004
    
    2003
    
    2004
    
    2003Purchases of investments
    
    $
    (12,110
    )
    
    $
    (24,520
    )
    
    $
    (164,886
    )
    
    $
    (358,873
    )Proceeds from sales and
maturities of
investments
    
    
    41,497
    
    
    
    25,180
    
    
    
    232,031
    
    
    
    275,705
   26




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##### Table of Contents



Payments Due InTotal
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Fiscal 2011Payments
    
    
    
    
    
    
    Fiscal 2007
    
    
    Fiscal 2009
    
    
    andDue
    
    
    Fiscal 2006
    
    
    and 2008
    
    
    and 2010
    
    
    ThereafterNon-cancelable operating leases
    
    $
    118,459
    
    
    $
    23,374
    
    
    $
    37,963
    
    
    $
    24,614
    
    
    $
    32,508Future sublease income
    
    
    (16,801
    )
    
    
    (4,588
    )
    
    
    (7,365
    )
    
    
    (4,578
    )
    
    
    (270
    )$
    101,658
    
    
    $
    18,786
    
    
    $
    30,598
    
    
    $
    20,036
    
    
    $
    32,238
  27




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##### Table of Contents



RECENT ACCOUNTING PRONOUNCEMENTS
       28




---



##### Table of Contents



FACTORS THAT MAY AFFECT FUTURE RESULTS
  Product enhancement and new product introductions involve inherent risks.
  
    
    Product quality, including the possibility of software defects;
    
    Delays in releasing new products;
    
    Customers delaying purchase decisions in anticipation of new products to be released;
    
    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;
    
    Technological challenges involved in integrating Hyperion products into cohesive
business performance management systems offerings;
    
    Marketing effectiveness, including challenges in distribution; and
    
    The accuracy of assumptions about the nature of customer demand.
  Fluctuations in our quarterly operating results may not be predictable and may result in
significant volatility in our stock price.
  29




---



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Hyperion operates in a very competitive environment.
     If Hyperion is unable to develop or acquire 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.
  Failure to upgrade older products will adversely affect sales.
  30




---



##### Table of Contents



Hyperion typically has back-ended quarters which may cause its actual revenues in a quarter to vary
from sales forecasts.
  A change in pricing or marketing could adversely affect Hyperions business.
  Exchange rate fluctuations may adversely affect results.
  Hyperion may not be able to continue its operational improvements.
  Reorganizations may adversely affect productivity.
  While we believe we currently have adequate internal control over financial reporting, we are
required to evaluate our internal control over financial reporting under Section 404 of the
Sarbanes Oxley Act of 2002 and are exposed to future
 31




---



##### Table of Contents



risks of non-compliance, and any adverse results from such evaluation could result in a loss of
investor confidence in our financial reports and have an adverse effect on our stock price.
    Hyperions international operations are subject to significant risks.
  
    
    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;
    
    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;
    
    Longer payment cycles for sales in foreign countries and difficulties in collecting accounts receivable;
    
    Difficulties in staffing and managing our international operations, including increased
turnover as economic opportunities increase in countries such as India and 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 faces significant challenges and risks associated with compliance and internal governance.
 32




---



##### Table of Contents



There are significant risks related to any business combination.
  
    
    The possibility that Hyperion pays more than the value it derives from the acquisition;
    
    The difficulty of integrating the products, 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;
    
    Difficulties in managing software development activities to define a combined product
roadmap, ensuring timely development of new products, timely release of new products to
market, and the development of efficient integration and migration processes and tools;
    
    The difficulty of retaining key alliances on attractive terms with partners and suppliers;
    
    The difficulty of retaining and recruiting key personnel and maintaining employee morale;
    
    The potential product liability associated with selling the acquired companys products;
    
    The potential disruption of Hyperions ongoing business and the distraction of
management from Hyperions business; and
    
    The potential write-down of impaired goodwill and intangible and other assets. In
particular, Hyperion recorded approximately $121.2 million of goodwill related to the
acquisition of Brio that will not be amortized in the ordinary course of business. To the
extent that the business acquired in that transaction (primarily the Performance Suite
products) does not remain competitive, some or all of the goodwill related to that
acquisition could be charged against future earnings.
  Hyperion is subject to the possibility of infringement claims.
   33




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##### Table of Contents



Enforcement of Hyperions intellectual property rights may be difficult.
    Hyperions stock price may be volatile.
  Hyperion is dependent upon indirect channel partners.
  
    
    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.
 34




---



##### Table of Contents



Hyperion is exposed to product liability claims.
  Defects in Hyperions products could increase its costs, adversely affect its reputation, diminish
demand for its products, and hurt its operating results.
  Employee turnover could adversely impact revenue, costs, and productivity.
  Some provisions in Hyperions charter documents and its stockholder rights plan may prevent or
deter an acquisition of Hyperion.
  
    
    Hyperions board of directors is authorized to issue preferred stock with any rights it
may determine. Consequently, without shareholder approval, Hyperions board of directors
may issue preferred stock 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 holding office for three years. The effect of this classified board is that two
annual meetings, not one, are required to replace a majority of the 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.
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---



##### Table of Contents



The accounting treatment for employee stock options has changed and will significantly impact
Hyperions earnings for periods beginning with the first quarter of fiscal 2006.
  Failure to obtain approval for additional shares of common stock to be granted as employee stock
options or restricted stock could adversely affect our ability to attract and retain employees.
  We are incurring substantial costs and devoting more management resources to comply with increasing
regulation of corporate governance and disclosure.
  
 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 Foreign Currency Exchange Risk.
  36




---



##### Table of Contents



Interest Rate Risk.
 37




---



##### Table of Contents



ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
 PageReport of Independent Registered Public Accounting Firm
    
    
    39Consolidated Financial Statements:Consolidated Balance Sheets as of June 30, 2005 and 2004
    
    
    40Consolidated Statements of Operations for the years ended June 30, 2005, 2004, and 2003
    
    
    41Consolidated Statements of Stockholders Equity and Comprehensive Income for the years ended June 30, 2005, 2004, and 2003
    
    
    42Consolidated Statements of Cash Flows for the years ended June 30, 2005, 2004, and 2003
    
    
    43Notes to Consolidated Financial Statements
    
    
    45Financial Statement Schedule:Schedule II
 Valuation and Qualifying Accounts for the years ended
June 30, 2005, 2004, and 2003
    
    
    74
  38




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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
   Consolidated financial statements and financial statement schedule
  Internal control over financial reporting
     
 39




---



##### Table of Contents



HYPERION SOLUTIONS CORPORATION
 
 CONSOLIDATED BALANCE SHEETS
  June 30,
    
    June 30,2005
    
    2004ASSETSCurrent assets:Cash and cash equivalents (Note 2)
    
    $
    170,740
    
    
    $
    172,261Short-term investments (Note 2)
    
    
    270,008
    
    
    
    195,914Accounts receivable, net of allowances of $10,053 and $8,758
    
    
    141,045
    
    
    
    133,491Deferred income taxes
    
    
    10,976
    
    
    
    12,348Prepaid expenses and other current assets
    
    
    28,157
    
    
    
    27,385TOTAL CURRENT ASSETS
    
    
    620,926
    
    
    
    541,399Property and equipment, net
    
    
    74,911
    
    
    
    72,020Goodwill
    
    
    137,898
    
    
    
    139,952Intangible assets, net
    
    
    29,811
    
    
    
    30,945Deferred income taxes
    
    
    30,287
    
    
    
    24,279Other assets
    
    
    5,603
    
    
    
    5,011TOTAL ASSETS
    
    $
    899,436
    
    
    $
    813,606LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable and accrued liabilities
    
    $
    56,657
    
    
    $
    58,121Accrued employee compensation and benefits
    
    
    53,298
    
    
    
    51,267Income taxes payable
    
    
    32,703
    
    
    
    17,508Deferred revenue
    
    
    140,772
    
    
    
    136,286Restructuring liabilities
    
    
    7,276
    
    
    
    4,234TOTAL CURRENT LIABILITIES
    
    
    290,706
    
    
    
    267,416Long-term restructuring liabilities and other
    
    
    24,830
    
    
    
    26,619TOTAL LIABILITIES
    
    
    315,536
    
    
    
    294,035Commitments and contingencies (Note 13)Stockholders equity:Preferred stock  $0.001 par value; 5,000 shares authorized; none issued
    
    
    
    
    
    
    Common stock  $0.001 par value; 300,000 shares authorized;
40,102 and 39,408 shares issued and outstanding
    
    
    40
    
    
    
    39Additional paid-in capital
    
    
    489,157
    
    
    
    434,584Deferred stock-based compensation
    
    
    (4,393
    )
    
    
    (7,494
    )Retained earnings
    
    
    100,491
    
    
    
    93,915Accumulated other comprehensive loss
    
    
    (1,395
    )
    
    
    (1,473
    )TOTAL STOCKHOLDERS EQUITY
    
    
    583,900
    
    
    
    519,571TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    899,436
    
    
    $
    813,606
  40




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##### Table of Contents



HYPERION SOLUTIONS CORPORATION
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
  Year Ended June 30,2005
    
    2004
    
    2003REVENUESSoftware licenses
    
    $
    273,408
    
    
    $
    240,096
    
    
    $
    201,766Maintenance and services
    
    
    429,185
    
    
    
    382,104
    
    
    
    308,692TOTAL REVENUES
    
    
    702,593
    
    
    
    622,200
    
    
    
    510,458COSTS AND EXPENSESCost of revenues:Software licenses
    
    
    16,136
    
    
    
    13,362
    
    
    
    15,419Maintenance and services
    
    
    158,272
    
    
    
    147,816
    
    
    
    132,510Sales and marketing
    
    
    255,182
    
    
    
    225,951
    
    
    
    190,025Research and development
    
    
    104,108
    
    
    
    96,240
    
    
    
    73,776General and administrative
    
    
    68,056
    
    
    
    63,621
    
    
    
    47,207Restructuring charges
    
    
    6,048
    
    
    
    4,202
    
    
    
    764In-process research and development
    
    
    
    
    
    
    2,300
    
    
    
    TOTAL COSTS AND EXPENSES
    
    
    607,802
    
    
    
    553,492
    
    
    
    459,701OPERATING INCOME
    
    
    94,791
    
    
    
    68,708
    
    
    
    50,757Interest and other income
    
    
    7,844
    
    
    
    4,283
    
    
    
    5,848Interest and other expense
    
    
    (53
    )
    
    
    (1,230
    )
    
    
    (2,940
    )Gain (loss) on redemption of debt
    
    
    
    
    
    
    (936
    )
    
    
    478INCOME BEFORE INCOME TAXES
    
    
    102,582
    
    
    
    70,825
    
    
    
    54,143Income tax provision
    
    
    35,903
    
    
    
    27,055
    
    
    
    20,033NET INCOME
    
    $
    66,679
    
    
    $
    43,770
    
    
    $
    34,110Basic net income per share
    
    $
    1.68
    
    
    $
    1.15
    
    
    $
    0.99Diluted net income per share
    
    $
    1.62
    
    
    $
    1.10
    
    
    $
    0.96Shares used in computing basic net income per share
    
    
    39,689
    
    
    
    37,988
    
    
    
    34,451Shares used in computing diluted net income per share
    
    
    41,257
    
    
    
    39,754
    
    
    
    35,694
  41




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HYPERION SOLUTIONS CORPORATION
 
 CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY & COMPREHENSIVE INCOME
  AccumulatedCommon Stock
    
    Additional
    
    
    
    
    
    
    
    
    
    Deferred
    
    
    
    
    
    OtherPar
    
    Paid-in
    
    Treasury Stock
    
    Stock-Based
    
    Retained
    
    ComprehensiveShares
    
    Value
    
    Capital
    
    Shares
    
    Cost
    
    Compensation
    
    Earnings
    
    Gain (Loss)
    
    TotalBalance at June 30, 2002
    
    
    34,662
    
    
    $
    35
    
    
    $
    227,563
    
    
    
    1,344
    
    
    $
    (23,097
    )
    
    $
    
    
    
    $
    103,472
    
    
    $
    (8,316
    )
    
    $
    299,657Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    34,110
    
    
    
    
    
    
    
    34,110Currency translation effect,
net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,376
    
    
    
    3,376Unrealized gains on
investments, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    47
    
    
    
    47Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    37,533Stock issued under equity plans
    
    
    1,992
    
    
    
    2
    
    
    
    41,277
    
    
    
    (795
    )
    
    
    12,250
    
    
    
    (3,157
    )
    
    
    
    
    
    
    
    
    
    
    50,372Amortization of deferred
stock-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    264
    
    
    
    
    
    
    
    
    
    
    
    264Income tax benefit from
exercise of stock options
    
    
    
    
    
    
    
    
    
    
    9,499
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,499Balance at June 30, 2003
    
    
    36,654
    
    
    
    37
    
    
    
    278,339
    
    
    
    549
    
    
    
    (10,847
    )
    
    
    (2,893
    )
    
    
    137,582
    
    
    
    (4,893
    )
    
    
    397,325Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    43,770
    
    
    
    
    
    
    
    43,770Currency translation effect,
net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,510
    
    
    
    3,510Unrealized losses on
investments, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (90
    )
    
    
    (90
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    47,190Stock and options issued in
connection with Brio acq.
    
    
    4,213
    
    
    
    4
    
    
    
    132,957
    
    
    
    
    
    
    
    
    
    
    
    (7,113
    )
    
    
    
    
    
    
    
    
    
    
    125,848Stock issued under equity plans
    
    
    2,481
    
    
    
    2
    
    
    
    51,658
    
    
    
    (549
    )
    
    
    10,847
    
    
    
    (1,839
    )
    
    
    (294
    )
    
    
    
    
    
    
    60,374Stock repurchased and retired
    
    
    (3,940
    )
    
    
    (4
    )
    
    
    (43,898
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (87,143
    )
    
    
    
    
    
    
    (131,045
    )Amortization of deferred
stock-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,351
    
    
    
    
    
    
    
    
    
    
    
    4,351Income tax benefit from
exercise of stock options
    
    
    
    
    
    
    
    
    
    
    15,528
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,528Balance at June 30, 2004
    
    
    39,408
    
    
    
    39
    
    
    
    434,584
    
    
    
    
    
    
    
    
    
    
    
    (7,494
    )
    
    
    93,915
    
    
    
    (1,473
    )
    
    
    519,571Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    66,679
    
    
    
    
    
    
    
    66,679Currency translation effect,
net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (183
    )
    
    
    (183
    )Unrealized gains on
investments, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    261
    
    
    
    261Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    66,757Stock issued under equity plans
    
    
    2,764
    
    
    
    3
    
    
    
    68,185
    
    
    
    
    
    
    
    
    
    
    
    (392
    )
    
    
    (227
    )
    
    
    
    
    
    
    67,569Stock repurchased and retired
    
    
    (2,070
    )
    
    
    (2
    )
    
    
    (24,158
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (59,876
    )
    
    
    
    
    
    
    (84,036
    )Amortization of deferred
stock-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,810
    
    
    
    
    
    
    
    
    
    
    
    2,810Reduction of deferred
stock-based compensation due
to stock option cancellations
    
    
    
    
    
    
    
    
    
    
    (683
    )
    
    
    
    
    
    
    
    
    
    
    683
    
    
    
    
    
    
    
    
    
    
    
    Income tax benefit from
exercise of stock options
    
    
    
    
    
    
    
    
    
    
    11,229
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,229Balance at June 30, 2005
    
    
    40,102
    
    
    $
    40
    
    
    $
    489,157
    
    
    
    
    
    
    $
    
    
    
    $
    (4,393
    )
    
    $
    100,491
    
    
    $
    (1,395
    )
    
    $
    583,900
  42




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##### Table of Contents



HYPERION SOLUTIONS CORPORATION
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
  Year Ended June 30,2005
    
    2004
    
    2003CASH FLOWS FROM OPERATING ACTIVITIES:Net income
    
    $
    66,679
    
    
    $
    43,770
    
    
    $
    34,110Adjustments to reconcile net income to net cash
provided by operating activities:(Gain) loss on redemption of debt
    
    
    
    
    
    
    936
    
    
    
    (478
    )(Gain) loss on sale of assets
    
    
    80
    
    
    
    170
    
    
    
    (49
    )Depreciation and amortization
    
    
    37,270
    
    
    
    36,858
    
    
    
    27,888Provision for accounts receivable allowances
    
    
    6,056
    
    
    
    8,118
    
    
    
    5,797Deferred income taxes
    
    
    841
    
    
    
    (2,999
    )
    
    
    6,981Income tax benefit from exercise of stock options
    
    
    11,229
    
    
    
    15,528
    
    
    
    9,499In-process research and development
    
    
    
    
    
    
    2,300
    
    
    
    Changes in operating assets and liabilities, net of the effect of
acquisitions:Accounts receivable
    
    
    (13,703
    )
    
    
    (20,030
    )
    
    
    9,001Prepaid expenses and other current assets
    
    
    (527
    )
    
    
    (10,816
    )
    
    
    (1,317
    )Other assets
    
    
    1,416
    
    
    
    2,029
    
    
    
    (184
    )Accounts payable and accrued liabilities
    
    
    (8,213
    )
    
    
    (9,631
    )
    
    
    (6,451
    )Accrued employee compensation and benefits
    
    
    1,840
    
    
    
    (26
    )
    
    
    1,546Income taxes payable
    
    
    15,346
    
    
    
    22,676
    
    
    
    453Deferred revenue
    
    
    5,097
    
    
    
    534
    
    
    
    6,447Restructuring liabilities
    
    
    5,132
    
    
    
    303
    
    
    
    (4,474
    )Long-term restructuring liabilities and other
    
    
    2,146
    
    
    
    (3,259
    )
    
    
    (656
    )Net cash provided by operating activities
    
    
    130,689
    
    
    
    86,461
    
    
    
    88,113CASH FLOWS FROM INVESTING ACTIVITIES:Purchases of investments
    
    
    (509,314
    )
    
    
    (164,886
    )
    
    
    (358,873
    )Proceeds from sales and maturities of investments
    
    
    432,919
    
    
    
    232,031
    
    
    
    275,705Purchases of property and equipment
    
    
    (24,616
    )
    
    
    (22,565
    )
    
    
    (19,846
    )Proceeds from sale of property and equipment
    
    
    160
    
    
    
    100
    
    
    
    644Purchases of intangible assets
    
    
    (5,894
    )
    
    
    (2,224
    )
    
    
    (2,227
    )Payments for acquisitions, net of cash acquired
    
    
    (8,225
    )
    
    
    (6,898
    )
    
    
    (5,987
    )Net cash provided by (used in) investing activities
    
    
    (114,970
    )
    
    
    35,558
    
    
    
    (110,584
    )CASH FLOWS FROM FINANCING ACTIVITIES:Principal payments on mortgage loan
    
    
    
    
    
    
    
    
    
    
    (2,298
    )Redemption of debt
    
    
    
    
    
    
    (50,683
    )
    
    
    (27,930
    )Purchases of common stock
    
    
    (84,036
    )
    
    
    (131,045
    )
    
    
    Proceeds from issuance of common stock
    
    
    67,569
    
    
    
    60,374
    
    
    
    50,372Net cash provided by (used in) financing activities
    
    
    (16,467
    )
    
    
    (121,354
    )
    
    
    20,144Effect of exchange rate on cash and cash equivalents
    
    
    (773
    )
    
    
    4,234
    
    
    
    5,409INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
    
    
    (1,521
    )
    
    
    4,899
    
    
    
    3,082Cash and cash equivalents at beginning of year
    
    
    172,261
    
    
    
    167,362
    
    
    
    164,280CASH AND CASH EQUIVALENTS AT END OF YEAR
    
    $
    170,740
    
    
    $
    172,261
    
    
    $
    167,362
  43




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##### Table of Contents



HYPERION
SOLUTIONS CORPORATION
 CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
 Year Ended June 30,2005
    
    2004
    
    2003SUPPLEMENTAL CASH FLOW INFORMATION:Cash paid for interest
    
    $
    31
    
    
    $
    2,568
    
    
    $
    3,248Cash paid for income taxes
    
    $
    8,733
    
    
    $
    5,424
    
    
    $
    3,775NON-CASH FINANCING ACTIVITIES:Value of stock issued for acquisitions
    
    $
    
    
    
    $
    116,625
    
    
    $
    Deferred stock-based compensation from restricted stock issuance
    
    $
    479
    
    
    $
    3,524
    
    
    $
    3,157
  44




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##### Table of Contents



HYPERION SOLUTIONS CORPORATION
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 1. BUSINESS
     2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Basis of Presentation and Principles of Consolidation
   As Reported
    
    As ReclassifiedJune 30,
    
    June 30,(In thousands)
    
    2004
    
    2003
    
    2004
    
    2003Cash and cash equivalents
    
    $
    365,181
    
    
    $
    398,040
    
    
    $
    172,261
    
    
    $
    167,362Short-term investments
    
    
    2,994
    
    
    
    18,514
    
    
    
    195,914
    
    
    
    249,192
  45




---



##### Table of Contents



As Reported
    
    As ReclassifiedYear Ended June 30,
    
    Year Ended June 30,(In thousands)
    
    2004
    
    2003
    
    2004
    
    2003Purchases of investments
    
    $
    (12,110
    )
    
    $
    (24,520
    )
    
    $
    (164,886
    )
    
    $
    (358,873
    )Proceeds from sales and
maturities of
investments
    
    
    41,497
    
    
    
    25,180
    
    
    
    232,031
    
    
    
    275,705Net cash provided by
(used in) investing
activities
    
    
    (2,200
    )
    
    
    (26,756
    )
    
    
    35,558
    
    
    
    (110,584
    )
  As Reported
    
    As ReclassifiedJune 30,
    
    June 30,(In thousands)
    
    2004
    
    2003
    
    2004
    
    2003Prepaid expenses and other current assets
    
    $
    18,434
    
    
    $
    18,498
    
    
    $
    27,385
    
    
    $
    20,283Total assets
    
    
    804,655
    
    
    
    654,758
    
    
    
    813,606
    
    
    
    656,543Income taxes payable
    
    
    8,557
    
    
    
    
    
    
    
    17,508
    
    
    
    1,785Total liabilities
    
    
    285,084
    
    
    
    257,433
    
    
    
    294,035
    
    
    
    259,218
 Use of Estimates
  Revenue Recognition
   46




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##### Table of Contents



Foreign Currency
   Stock-Based Compensation
  47




---



##### Table of Contents



Year Ended June 30,2005
    
    2004
    
    2003Net income, as reported
    
    $
    66,679
    
    
    $
    43,770
    
    
    $
    34,110Add: stock-based compensation expense
included in reported net income, net of tax
    
    
    1,826
    
    
    
    2,741
    
    
    
    186Deduct: stock-based compensation expense
determined under fair value method, net of tax
    
    
    (16,879
    )
    
    
    (19,074
    )
    
    
    (16,471
    )Net income, pro forma
    
    $
    51,626
    
    
    $
    27,437
    
    
    $
    17,825Net income per share:Basic  as reported
    
    $
    1.68
    
    
    $
    1.15
    
    
    $
    0.99Basic  pro forma
    
    $
    1.30
    
    
    $
    0.72
    
    
    $
    0.52Diluted  as reported
    
    $
    1.62
    
    
    $
    1.10
    
    
    $
    0.96Diluted  pro forma
    
    $
    1.26
    
    
    $
    0.70
    
    
    $
    0.51
    Year Ended June 30,2005
    
    2004
    
    2003Stock option plans:Expected dividend yield
    
    
    0
    %
    
    
    0
    %
    
    
    0
    %Expected stock price volatility
    
    
    43
    %
    
    
    53
    %
    
    
    59
    %Risk free interest rate
    
    
    3.73
    %
    
    
    2.29
    %
    
    
    2.26
    %Expected term (in years)
    
    
    4.4
    
    
    
    5.0
    
    
    
    5.0Stock purchase plan:Expected dividend yield
    
    
    0
    %
    
    
    0
    %
    
    
    0
    %Expected stock price volatility
    
    
    45
    %
    
    
    52
    %
    
    
    63
    %Risk free interest rate
    
    
    2.59
    %
    
    
    1.08
    %
    
    
    1.21
    %Expected term (in years)
    
    
    0.5
    
    
    
    0.5
    
    
    
    0.5
   48




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##### Table of Contents



Cash and Cash Equivalents
  Short-Term Investments
   Accounts Receivable Allowances
   Fair Value of Financial Instruments
  Long-Lived Assets
  49




---



##### Table of Contents




    
    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
  Goodwill
  1.
    
    Compare the fair value of Hyperions single reporting unit to its carrying amount. If
the reporting units fair value exceeds its carrying amount, no further work is performed
and no impairment charge is necessary. If the reporting units carrying amount exceeds its
fair value, step 2, as follows, is performed.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.
  Product Development Costs
  Advertising Costs
  Income Taxes
  50




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##### Table of Contents



Concentration of Credit Risk
   Net Income Per Share
  51




---



##### Table of Contents



Year Ended June 30,2005
    
    2004
    
    2003Net income
    
    $
    66,679
    
    
    $
    43,770
    
    
    $
    34,110Shares used in computing basic net income
per share
    
    
    39,689
    
    
    
    37,988
    
    
    
    34,451Effect of potentially dilutive securities
    
    
    1,568
    
    
    
    1,766
    
    
    
    1,243Shares used in computing diluted net income
per share
    
    
    41,257
    
    
    
    39,754
    
    
    
    35,694Basic net income per share
    
    $
    1.68
    
    
    
    1.15
    
    
    $
    0.99Diluted net income per share
    
    $
    1.62
    
    
    
    1.10
    
    
    $
    0.96
  Accumulated Other Comprehensive Loss
  June 30,
    
    June 30,
    
    June 30,2005
    
    2004
    
    2003Unrealized gain (loss) on
available-for-sale securities
    
    $
    246
    
    
    $
    (15
    )
    
    $
    75Cumulative translation adjustment
    
    
    (1,641
    )
    
    
    (1,458
    )
    
    
    (4,968
    )$
    (1,395
    )
    
    $
    (1,473
    )
    
    $
    (4,893
    )
 Derivative Instruments and Hedging Activities
    52




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##### Table of Contents



Recent Accounting Pronouncements
        53




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##### Table of Contents



3. BUSINESS COMBINATIONS
 Brio Software, Inc.
       Current assets
    
    $
    48,791Property and equipment
    
    
    9,493Goodwill
    
    
    121,187Intangible assets
    
    
    30,000Deferred taxes
    
    
    7,065In-process research and development
    
    
    2,300Deferred compensation
    
    
    7,113Current liabilities
    
    
    (16,565
    )Deferred revenue
    
    
    (28,717
    )Restructuring costs
    
    
    (36,074
    )Total purchase price
    
    $
    144,593
  54




---



##### Table of Contents



Fair
    
    UsefulIdentifiable Intangible Assets
    
    Value
    
    LifeCapitalized software
    
    $
    15,500
    
    
    4 yearsPatents and core technology
    
    
    4,000
    
    
    6 yearsMaintenance agreements
    
    
    4,400
    
    
    5 yearsCustomer contracts and related relationships
    
    
    6,000
    
    
    4 yearsValue added reseller relationships
    
    
    100
    
    
    1 year$
    30,000
  Pro Forma Financial Information (Unaudited)
  Year Ended June 30,2004
    
    2003Revenues
    
    $
    653,049
    
    
    $
    612,203Net income
    
    
    39,878
    
    
    
    7,618Basic net income per share
    
    
    1.02
    
    
    
    0.20Diluted net income per share
    
    
    0.97
    
    
    
    0.19
 The Alcar Group, Inc.
   55




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##### Table of Contents



Acquisitions in Fiscal Year 2005
   4. INVESTMENTS
  June 30, 2005Amortized
    
    Gross Unrealized
    
    Gross Unrealized
    
    FairCost
    
    Gains
    
    Losses
    
    ValueTax-exempt auction rate securities
    
    $
    115,875
    
    
    $
    
    
    
    $
    
    
    
    $
    115,875Tax-exempt variable rate demand notes
    
    
    89,320
    
    
    
    
    
    
    
    
    
    
    
    89,320State and municipal bonds
    
    
    64,621
    
    
    
    192
    
    
    
    
    
    
    
    64,813$
    269,816
    
    
    $
    192
    
    
    $
    
    
    
    $
    270,008
 June 30, 2004Amortized
    
    Gross Unrealized
    
    Gross Unrealized
    
    FairCost
    
    Gains
    
    Losses
    
    ValueTax-exempt auction rate securities
    
    $
    192,920
    
    
    $
    
    
    
    $
    
    
    
    $
    192,920U.S. government and agency
obligations
    
    
    2,804
    
    
    
    
    
    
    
    (14
    )
    
    
    2,790State and municipal bonds
    
    
    206
    
    
    
    
    
    
    
    (2
    )
    
    
    204$
    195,930
    
    
    $
    
    
    
    $
    (16
    )
    
    $
    195,914
  56




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##### Table of Contents



June 30,
    
    June 30,2005
    
    2004Due within one year
    
    $
    23,099
    
    
    $
    2,994Due after one year through five years
    
    
    45,950
    
    
    
    Due after five years through ten years
    
    
    1,030
    
    
    
    5,500Due after ten years
    
    
    199,929
    
    
    
    187,420$
    270,008
    
    
    $
    195,914
   5. PROPERTY AND EQUIPMENT
   June 30,
    
    June 30,
    
    Useful2005
    
    2004
    
    Life(in years)Building and building improvements
    
    $
    35,214
    
    
    $
    35,003
    
    
    5 - 39Leasehold improvements
    
    
    14,537
    
    
    
    8,641
    
    
    2  15 *Furniture and fixtures
    
    
    9,611
    
    
    
    12,511
    
    
    7Computer software
    
    
    45,409
    
    
    
    40,709
    
    
    3 - 5Computer equipment
    
    
    35,400
    
    
    
    35,030
    
    
    2Other equipment
    
    
    4,663
    
    
    
    4,049
    
    
    3 - 5Gross property and equipment
    
    
    144,834
    
    
    
    135,943Accumulated depreciation and amortization
    
    
    (73,723
    )
    
    
    (67,723
    )Land
    
    
    3,800
    
    
    
    3,800
    
    
    N/ANet property and equipment
    
    $
    74,911
    
    
    $
    72,020
 
 *
    
    Lesser of lease term or useful life  57




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##### Table of Contents



6. GOODWILL
  June 30,
    
    June 30,2005
    
    2004Balance at beginning of year
    
    $
    139,952
    
    
    $
    12,774Goodwill from acquisitions
    
    
    3,116
    
    
    
    127,156Adjustment of income tax benefits received in connection with Brio acquisition
    
    
    (5,484
    )
    
    
    Effect of foreign currency translation
    
    
    314
    
    
    
    22Balance at end of year
    
    $
    137,898
    
    
    $
    139,952
 7. INTANGIBLE ASSETS
  June 30, 2005
    
    June 30, 2004Gross Carrying
    
    Accumulated
    
    Book
    
    Gross Carrying
    
    Accumulated
    
    BookAmount
    
    Amortization
    
    Value
    
    Amount
    
    Amortization
    
    ValueProduct development costs
    
    $
    12,471
    
    
    $
    (6,013
    )
    
    $
    6,458
    
    
    $
    10,384
    
    
    $
    (7,008
    )
    
    $
    3,376Acquired technologies
    
    
    31,340
    
    
    
    (14,348
    )
    
    
    16,992
    
    
    
    25,433
    
    
    
    (6,652
    )
    
    
    18,781Other intangibles
    
    
    10,616
    
    
    
    (4,255
    )
    
    
    6,361
    
    
    
    10,731
    
    
    
    (1,943
    )
    
    
    8,788$
    54,427
    
    
    $
    (24,616
    )
    
    $
    29,811
    
    
    $
    46,548
    
    
    $
    (15,603
    )
    
    $
    30,945
  58




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##### Table of Contents



Fiscal Year
    

Estimated
Amortization Expense2006
    
    $
    12,5142007
    
    
    11,2782008
    
    
    4,9012009
    
    
    9232010
    
    
    195$
    29,811
 8. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
  June 30,
    
    June 30,2005
    
    2004Accounts payable
    
    $
    12,180
    
    
    $
    11,056Other accrued taxes
    
    
    15,671
    
    
    
    15,188Term note payable
    
    
    
    
    
    
    866Other accrued liabilities
    
    
    28,806
    
    
    
    31,011$
    56,657
    
    
    $
    58,121
 9. ACCRUED EMPLOYEE COMPENSATION AND BENEFITS
  June 30,
    
    June 30,2005
    
    2004Accrued management bonuses
    
    $
    14,037
    
    
    $
    12,023Accrued sales commissions
    
    
    13,507
    
    
    
    11,394Accrued vacation
    
    
    10,476
    
    
    
    10,865Other accrued employee compensation and benefits
    
    
    15,278
    
    
    
    16,985$
    53,298
    
    
    $
    51,267
 10. INCOME TAXES
  Year Ended June 30,2005
    
    2004
    
    2003Income before income taxes:U.S.
    
    $
    75,292
    
    
    $
    46,106
    
    
    $
    29,788Non-U.S.
    
    
    27,290
    
    
    
    24,719
    
    
    
    24,355$
    102,582
    
    
    $
    70,825
    
    
    $
    54,143
 59




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##### Table of Contents



Year Ended June 30,2005
    
    2004
    
    2003Income tax provision:Current -Federal
    
    $
    22,601
    
    
    $
    19,416
    
    
    $
    7,577State
    
    
    3,845
    
    
    
    3,110
    
    
    
    1,246Non-U.S.
    
    
    10,975
    
    
    
    8,923
    
    
    
    4,24437,421
    
    
    
    31,449
    
    
    
    13,067Deferred -Federal
    
    
    (1,881
    )
    
    
    (3,846
    )
    
    
    6,526State
    
    
    1,221
    
    
    
    (336
    )
    
    
    917Non-U.S.
    
    
    (858
    )
    
    
    (212
    )
    
    
    (477
    )(1,518
    )
    
    
    (4,394
    )
    
    
    6,966$
    35,903
    
    
    $
    27,055
    
    
    $
    20,033
  June 30,
    
    June 30,2005
    
    2004Deferred income tax assets:Net operating loss and credit carryforwards
    
    $
    26,071
    
    
    $
    31,140Accounts receivable
    
    
    3,845
    
    
    
    3,185Property and equipment
    
    
    12,452
    
    
    
    11,703Intangible assets
    
    
    3,596
    
    
    
    Accrued expenses
    
    
    7,131
    
    
    
    9,164Deferred stock-based compensation
    
    
    1,088
    
    
    
    1,417Other
    
    
    
    
    
    
    94054,183
    
    
    
    57,549Valuation allowance
    
    
    (10,424
    )
    
    
    (16,364
    )43,759
    
    
    
    41,185Deferred income tax liabilities:Product development costs
    
    
    2,496
    
    
    
    1,293Intangible assets
    
    
    
    
    
    
    3,2652,496
    
    
    
    4,558Net deferred income tax assets
    
    $
    41,263
    
    
    $
    36,627
 60




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##### Table of Contents



Year Ended June 30,2005
    
    2004
    
    2003Statutory U.S. tax rate
    
    
    35.0
    %
    
    
    35.0
    %
    
    
    35.0
    %State income taxes, net of U.S. tax benefit
    
    
    4.2
    %
    
    
    4.0
    %
    
    
    4.0
    %Tax exempt interest
    
    
    (1.8
    )%
    
    
    (1.2
    )%
    
    
    (1.5
    )%Write-off of in-process R&D
    
    
    
    
    
    
    1.2
    %
    
    
    Non-U.S. operations, including export sales
    
    
    (1.8
    )%
    
    
    (1.3
    )%
    
    
    (1.2
    )%Net operating losses
    
    
    (0.2
    )%
    
    
    0.3
    %
    
    
    0.1
    %Other, net
    
    
    (0.4
    )%
    
    
    0.2
    %
    
    
    0.6
    %Effective income tax rate
    
    
    35.0
    %
    
    
    38.2
    %
    
    
    37.0
    %
  11. LONG-TERM DEBT
    12. RELATED PARTY TRANSACTIONS
   61




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##### Table of Contents



13. COMMITMENTS AND CONTINGENCIES
 Lease Commitments
   Future Lease
    
    
    Future Sublease
    
    
    Net Future LeaseFiscal Year
    
    Payments
    
    
    Income
    
    
    Payments2006
    
    $
    23,374
    
    
    $
    4,588
    
    
    $
    18,7862007
    
    
    20,471
    
    
    
    4,051
    
    
    
    16,4202008
    
    
    17,492
    
    
    
    3,314
    
    
    
    14,1782009
    
    
    13,242
    
    
    
    2,471
    
    
    
    10,7712010
    
    
    11,372
    
    
    
    2,107
    
    
    
    9,265Thereafter
    
    
    32,508
    
    
    
    270
    
    
    
    32,238$
    118,459
    
    
    $
    16,801
    
    
    $
    101,658
  Guarantees and Indemnifications
     62




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Contingencies
   63




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##### Table of Contents



14. COMMON STOCK
 Stock Repurchases
   Restricted Stock
     64




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##### Table of Contents



15. STOCK OPTION, EMPLOYEE STOCK PURCHASE, AND EMPLOYEE SAVINGS PLANS
 Stock Option Plans
    2005
    
    
    2004
    
    
    2003Weighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    AverageExercise
    
    
    
    
    
    
    Exercise
    
    
    
    
    
    
    ExerciseShares
    
    
    Price
    
    
    Shares
    
    
    Price
    
    
    Shares
    
    
    PriceOutstanding at beginning of year
    
    
    7,304
    
    
    $
    26.63
    
    
    
    7,569
    
    
    $
    23.35
    
    
    
    9,102
    
    
    $
    21.89Granted
    
    
    2,014
    
    
    
    43.94
    
    
    
    1,979
    
    
    
    33.38
    
    
    
    1,759
    
    
    
    25.67Assumed through acquisition
of Brio
    
    
    
    
    
    
    
    
    
    
    1,087
    
    
    
    21.07
    
    
    
    
    
    
    
    Exercised
    
    
    (2,418
    )
    
    
    23.20
    
    
    
    (2,584
    )
    
    
    19.68
    
    
    
    (2,289
    )
    
    
    18.34Forfeited
    
    
    (627
    )
    
    
    32.42
    
    
    
    (747
    )
    
    
    27.28
    
    
    
    (1,003
    )
    
    
    25.56Outstanding at end of year
    
    
    6,273
    
    
    $
    32.97
    
    
    
    7,304
    
    
    $
    26.63
    
    
    
    7,569
    
    
    $
    23.35Exercisable at end of year
    
    
    2,773
    
    
    $
    27.42
    
    
    
    3,658
    
    
    $
    25.30
    
    
    
    3,613
    
    
    $
    24.56
  Options Outstanding
    
    Options ExercisableWeighted Average
    
    Weighted
    
    
    
    
    
    WeightedRange of
    
    Number
    
    Remaining Years of
    
    Average
    
    Number
    
    AverageExercise Prices
    
    Outstanding
    
    Contractual Life
    
    Exercise Price
    
    Exercisable
    
    Exercise Price$8.75  19.99
    
    
    769
    
    
    
    5.45
    
    
    $
    14.76
    
    
    
    644
    
    
    $
    14.75$20.00  24.99
    
    
    752
    
    
    
    5.82
    
    
    $
    22.12
    
    
    
    553
    
    
    $
    21.92$25.00  29.99
    
    
    811
    
    
    
    3.94
    
    
    $
    26.94
    
    
    
    483
    
    
    $
    26.95$30.00  34.99
    
    
    1,427
    
    
    
    4.45
    
    
    $
    32.35
    
    
    
    606
    
    
    $
    32.33$35.00  49.99
    
    
    2,457
    
    
    
    5.19
    
    
    $
    43.47
    
    
    
    467
    
    
    $
    42.06$50.00  345.33
    
    
    57
    
    
    
    5.26
    
    
    $
    70.95
    
    
    
    20
    
    
    $
    109.656,273
    
    
    
    
    
    
    
    
    
    
    
    2,773
 Employee Stock Purchase Plan
  65




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##### Table of Contents



Employee Savings Plans
  16. STOCKHOLDER RIGHTS PLAN
     17. RESTRUCTURING AND OTHER CHARGES
  66




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##### Table of Contents



Severance
    
    
    Facilities
    
    
    Asset Impairments
    
    
    Other
    
    
    TotalAccrual balance at June 30, 2002
    
    $
    353
    
    
    $
    14,885
    
    
    $
    
    
    
    $
    3,374
    
    
    $
    18,612Adjustments
    
    
    
    
    
    
    764
    
    
    
    
    
    
    
    
    
    
    
    764Cash payments
    
    
    (353
    )
    
    
    (2,291
    )
    
    
    
    
    
    
    (1,524
    )
    
    
    (4,168
    )Accrual balance at June 30, 2003
    
    
    
    
    
    
    13,358
    
    
    
    
    
    
    
    1,850
    
    
    
    15,208Restructuring charges and adjustments
    
    
    3,410
    
    
    
    792
    
    
    
    
    
    
    
    
    
    
    
    4,202Cash payments
    
    
    (3,299
    )
    
    
    (2,073
    )
    
    
    
    
    
    
    (91
    )
    
    
    (5,463
    )Accrual balance at June 30, 2004
    
    
    111
    
    
    
    12,077
    
    
    
    
    
    
    
    1,759
    
    
    
    13,947Restructuring charges and adjustments
    
    
    1,029
    
    
    
    4,850
    
    
    
    646
    
    
    
    
    
    
    
    6,525Non-cash items
    
    
    (5
    )
    
    
    (241
    )
    
    
    (646
    )
    
    
    (9
    )
    
    
    (901
    )Cash payments
    
    
    (1,040
    )
    
    
    (7,447
    )
    
    
    
    
    
    
    
    
    
    
    (8,487
    )Accrual balance at June 30, 2005
    
    $
    95
    
    
    $
    9,239
    
    
    $
    
    
    
    $
    1,750
    
    
    $
    11,084
 67




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##### Table of Contents



Severance
    
    
    Facilities
    
    
    Asset Impairments
    
    
    TotalBalance at June 30, 2003
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Restructuring costs, net of adjustments
    
    
    4,767
    
    
    
    26,588
    
    
    
    4,719
    
    
    
    36,074Non-cash items
    
    
    
    
    
    
    
    
    
    
    (4,719
    )
    
    
    (4,719
    )Cash payments
    
    
    (3,263
    )
    
    
    (4,181
    )
    
    
    
    
    
    
    (7,444
    )Balance at June 30, 2004
    
    
    1,504
    
    
    
    22,407
    
    
    
    
    
    
    
    23,911Restructuring costs, net of adjustments
    
    
    
    
    
    
    (477
    )
    
    
    
    
    
    
    (477
    )Non-cash items
    
    
    (29
    )
    
    
    (103
    )
    
    
    
    
    
    
    (132
    )Cash payments
    
    
    (1,114
    )
    
    
    (6,479
    )
    
    
    
    
    
    
    (7,593
    )Balance at June 30, 2005
    
    $
    361
    
    
    $
    15,348
    
    
    $
    
    
    
    $
    15,709
   18. SEGMENT AND GEOGRAPHIC INFORMATION
   Year Ended June 30,2005
    
    
    2004
    
    
    2003Revenues:Americas
    
    $
    428,600
    
    
    $
    380,894
    
    
    $
    318,538EMEA
    
    
    226,382
    
    
    
    199,780
    
    
    
    163,988APAC
    
    
    47,611
    
    
    
    41,526
    
    
    
    27,932$
    702,593
    
    
    $
    622,200
    
    
    $
    510,458
  68




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##### Table of Contents



June 30,
    
    
    June 30,2005
    
    
    2004Long-lived assets:Americas
    
    $
    68,041
    
    
    $
    63,936EMEA
    
    
    5,046
    
    
    
    5,680APAC
    
    
    1,824
    
    
    
    2,404$
    74,911
    
    
    $
    72,020
   Year Ended June 30,2005
    
    
    2004
    
    
    2003Software licenses
    
    $
    273,408
    
    
    $
    240,096
    
    
    $
    201,766Maintenance and services:Maintenance
    
    
    299,093
    
    
    
    264,866
    
    
    
    212,157Consulting and training
    
    
    130,092
    
    
    
    117,238
    
    
    
    96,535429,185
    
    
    
    382,104
    
    
    
    308,692Total revenues
    
    $
    702,593
    
    
    $
    622,200
    
    
    $
    510,458
 19. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
   Fiscal 2005
    
    Sep. 30
    
    Dec. 31
    
    Mar. 31
    
    Jun. 30Revenues
    
    $
    159,538
    
    
    $
    176,978
    
    
    $
    177,107
    
    
    $
    188,970Gross profit
    
    
    118,905
    
    
    
    133,038
    
    
    
    132,474
    
    
    
    143,768Net income
    
    
    11,613
    
    
    
    15,550
    
    
    
    18,811
    
    
    
    20,705Net income per share  diluted
    
    
    0.29
    
    
    
    0.38
    
    
    
    0.45
    
    
    
    0.50
 Fiscal 2004
    
    Sep. 30
    
    Dec. 31
    
    Mar. 31
    
    Jun. 30Revenues
    
    $
    123,552
    
    
    $
    156,136
    
    
    $
    166,144
    
    
    $
    176,368Gross profit
    
    
    90,032
    
    
    
    115,683
    
    
    
    123,198
    
    
    
    132,109Net income
    
    
    9,687
    
    
    
    6,618
    
    
    
    12,726
    
    
    
    14,739Net income per share  diluted
    
    
    0.26
    
    
    
    0.16
    
    
    
    0.32
    
    
    
    0.36
 69




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##### Table of Contents



ITEM 9.
    
    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
  
 ITEM 9A. CONTROLS AND PROCEDURES
 (a)
    
    DISCLOSURE CONTROLS AND PROCEDURES.Our management, with the participation of our Chief
Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our
disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e)
under the Securities Exchange Act of 1934, as amended (the Exchange Act), as of the end of
the period covered by this report. Based on such evaluation, our Chief Executive Officer and
Chief Financial Officer have concluded that, as of the end of such period, our disclosure
controls and procedures are effective.
 (b)
    
    INTERNAL CONTROL OVER FINANCIAL REPORTING.There have not been any changes in our internal
control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f)
under the Exchange Act) during the fourth fiscal quarter that have materially affected, or are
reasonably likely to materially affect, our internal control over financial reporting.
 (c)
    
    MANAGEMENTS REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING.Our management is
responsible for establishing and maintaining adequate internal control over financial
reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Under the
supervision and with the participation of our management, including our chief executive
officer and chief financial officer, we conducted an evaluation of the effectiveness of our
internal control over financial reporting as of June 30, 2005 based on the framework in
Internal Control  Integrated Frameworkissued by the Committee of Sponsoring Organizations of
the Treadway Commission. Based on our evaluation under the framework in Internal Control 
Integrated Framework,our management concluded that our internal control over financial
reporting was effective as of June 30, 2005. Our managements assessment of the effectiveness
of our internal control over financial reporting as of June 30, 2005 has been audited by
PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in
their report included at Item 8 in this Annual Report on Form 10-K.
 ITEM 9B. OTHER INFORMATION
  70




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##### Table of Contents



PART III
 
 ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
  
 ITEM 11. EXECUTIVE COMPENSATION
  
 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
  
 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
  
 ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
  71




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##### Table of Contents



PART IV
 
 ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
 (a) Documents filed as part of this report
 (1)
    
    The following financial statements are filed as part of this annual report:
 PageConsolidated Balance Sheets as of June 30, 2005 and 2004
    
    
    40Consolidated Statements of Operations for the years ended June 30, 2005, 2004, and 2003
    
    
    41Consolidated Statements of Stockholders Equity and Comprehensive Income for the years ended June 30, 2005, 2004, and 2003
    
    
    42Consolidated Statements of Cash Flows for the years ended June 30, 2005, 2004, and 2003
    
    
    43Notes to Consolidated Financial Statements
    
    
    45
 (2)
    
    The following financial statement schedule is filed as part of this annual report:
 PageSchedule II  Valuation and Qualifying Accounts
    
    
    74
 All other schedules are omitted because they are either not required or not applicable or
the required information is included in the consolidated financial statements or notes
thereto.(3)
    
    The exhibits listed in the accompanying Exhibit Index are filed or incorporated by
reference as part of this annual report.
 (b) Exhibits
  (c) Financial Statement Schedule
  72




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##### Table of Contents



SIGNATURES
  Date: August 31, 2005
    
    Hyperion Solutions Corporation(Registrant)By:
    
    /s/ David W. OdellDavid W. OdellChief Financial OfficerBy:
    
    /s/ William B. DewesWilliam B. DewesGlobal Controller(Principal Accounting Officer)
  Signature
    
    Title
    
    Date/s/ Godfrey R. Sullivan

     Godfrey R. Sullivan
    
    Director, President and
Chief Executive Officer
(Principal Executive Officer)
    
    August 31, 2005/s/ Jeffrey R. Rodek

     Jeffrey R. Rodek
    
    Executive Chairman
    
    August 31, 2005/s/ Henry R. Autry

     Henry R. Autry
    
    Director
    
    August 31, 2005/s/ Terry Carlitz
     Terry Carlitz
    
    Director
    
    August 31, 2005/s/ Yorgen Edholm
     Yorgen Edholm
    
    Director
    
    August 31, 2005/s/ Gary G. Greenfield

     Gary G. Greenfield
    
    Director
    
    August 31, 2005/s/ Aldo Papone
     Aldo Papone
    
    Director
    
    August 31, 2005/s/ John Riccitiello
     John Riccitiello
    
    Director
    
    August 31, 2005
 73




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##### Table of Contents



SCHEDULE II  VALUATION AND QUALIFYING ACCOUNTS
  AdditionsCharged to Costs
    
    
    
    
    
    
    
    
    
    BalanceBalance at Beginning
    
    and Expenses /
    
    Charged to Other
    
    
    
    
    
    at Endof Period
    
    (Benefit to Income)
    
    Accounts
    
    Deductions
    
    of PeriodYear Ended June 30, 2005:Allowance for doubtful accounts
    
    $
    8,758
    
    
    $
    43
    
    
    $
    6,013
    (a)
    
    $
    4,761
    (b)
    
    $
    10,053Valuation allowance for deferred tax assets
    
    
    16,364
    
    
    
    (250
    )
    
    
    
    
    
    
    5,690
    (d)
    
    
    10,424Year Ended June 30, 2004:Allowance for doubtful accounts
    
    $
    8,231
    
    
    
    1,364
    
    
    
    6,754
    (a)
    
    
    7,591
    (b)
    
    $
    8,758Valuation allowance for deferred tax assets
    
    
    6,926
    
    
    
    
    
    
    
    10,372
    (c)
    
    
    934
    
    
    
    16,364Year Ended June 30, 2003:Allowance for doubtful accounts
    
    $
    10,660
    
    
    
    1,357
    
    
    
    4,440
    (a)
    
    
    8,226
    (b)
    
    $
    8,231Valuation allowance for deferred tax assets
    
    
    6,894
    
    
    
    32
    
    
    
    
    
    
    
    
    
    
    
    6,926
 
 (a)
    
    Charged to revenues(b)
    
    Write-offs, net of recoveries(c)
    
    Charged to goodwill(d)
    
    Includes adjustment of $2.4 million relating to goodwill 74




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##### Table of Contents



EXHIBIT INDEX
 ExhibitNumber
    
    Description3.1
    
    Restated Certificate of Incorporation (incorporated by reference to the exhibits to the
Registrants Current Report on Form 8-K filed on October 13, 1998).3.2
    
    Amended and Restated Bylaws (incorporated by reference to the exhibits to the
Registrants Registration Statement on Form S-4, as amended, filed on June 18, 1998).4.1
    
    Specimen Certificate of the Registrants Common Stock (incorporated by reference to the
exhibits to the Registrants Registration Statement on Form S-1, as amended, filed on
November 6, 1995).10.1
    
    1992 Stock Option Plan (incorporated by reference to the exhibits to the Registrants
Registration Statement on Form S-1, as amended, filed on November 6, 1995).10.2
    
    1995 Stock Option/Stock Issuance Plan, as amended and restated through November 14, 2002
(incorporated by reference to the exhibits to the Registrants Registration Statement on
Form S-8 filed on December 20, 2002).10.3
    
    1999 Stock Option Plan (incorporated by reference to the exhibits to the Registrants
Annual Report on Form 10-K filed on September 28, 2000).10.4
    
    Employee Stock Purchase Plan, as amended and restated as of September 16, 2003
(incorporated by reference to the exhibits to the Registrants Proxy Statement filed on
October 6, 2003).10.5
    
    Hyperion Software Corporation 1991 Stock Plan (incorporated by reference to the exhibits
to Hyperion Software Corporations Registration Statement on Form S-1 as amended, filed
on November 6, 1995).10.6
    
    Hyperion Software Corporation 1991 Non-Employee Director Stock Option Plan (incorporated
by reference to the exhibits to Hyperion Software Corporations Registration Statement
on Form S-1 as amended, filed on November 6, 1995).10.7
    
    Form of Indemnification Agreement (incorporated by reference to the exhibits to the
Registrants Registration Statement on Form S-1, as amended, filed on November 6, 1995).10.8
    
    Lease Agreement between the Registrant and SBC&D Co., Inc., dated July 16, 1996
(incorporated by reference to the exhibits to the Registrants Annual Report on Form
10-K filed on June 27, 1997).10.9
    
    Lease Agreement between the Registrant and Prentiss Properties Acquisition Partners,
L.P., dated June 16, 2004 (filed herewith).10.10*
    
    Employment Agreement with Jeffrey R. Rodek, dated July 21, 2005 (incorporated by
reference to the exhibits to the Registrants Current Report on Form 8-K filed on July
22, 2005).10.11*
    
    Restricted Stock Award Agreement with Jeffrey R. Rodek, dated October 11, 1999
(incorporated by reference to the exhibits to the Registrants Quarterly Report on Form
10-Q filed on February 14, 2000).10.12
    
    Secured Promissory Note with Jeffrey R. Rodek, dated October 11, 1999 (incorporated by
reference to the exhibits to the Registrants Quarterly Report on Form 10-Q filed on
February 14, 2000).10.13
    
    Security and Pledge Agreement with Jeffrey R. Rodek, dated October 11, 1999
(incorporated by reference to the exhibits to the Registrants Annual Report on Form
10-K filed on September 28, 2000).10.14*
    
    Employment Agreement with David W. Odell, dated July 21, 2005 (incorporated by reference
to the exhibits to the Registrants Current Report on Form 8-K filed on July 22, 2005).10.15*
    
    Employment Agreement with Godfrey R. Sullivan, dated July 21, 2005 (incorporated by
reference to the
 75




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##### Table of Contents



ExhibitNumber
    
    Descriptionexhibits to the Registrants Current Report on Form 8-K filed on July
22, 2005).10.16*
    
    Employment Agreement with Burton Goldfield, dated January 1, 2004 (incorporated by
reference to the exhibits to the Registrants Annual Report on Form 10-K filed on
September 13, 2004).10.17*
    
    Employment Agreement with Mark Cochran, dated July 21, 2005 (incorporated by reference
to the exhibits to the Registrants Current Report on Form 8-K filed on July 22, 2005).10.18*
    
    Employment Agreement with Heidi Melin, dated June 13, 2005 (incorporated by reference to
the exhibits to the Registrants Current Report on Form 8-K filed June 13, 2005).21.1
    
    List of subsidiaries of the Registrant (filed herewith).23.1
    
    Consent of PricewaterhouseCoopers LLP, independent registered public accounting firm
(filed herewith).31.1
    
    Certification of Godfrey R. Sullivan 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 Godfrey R. Sullivan 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).
 
 *
    
    Indicates management contract or compensatory plan or arrangement. 76