<PAGE>   1

================================================================================

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

                               ------------------

                                    FORM 10-Q

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

                FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 1999

                                       OR

         [ ]      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 0-26934

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


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


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

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

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

As of February 9, 2000, there were 32,019,320 shares of the Registrant's common
stock, $.001 par value, outstanding.

================================================================================



<PAGE>   2


                         Hyperion Solutions Corporation

                                    Form 10-Q


                                    CONTENTS

PART I.  FINANCIAL INFORMATION                                              PAGE

Item 1. Financial Statements (Unaudited)

   Condensed Consolidated Balance Sheet--December 31, 1999 and
     June 30, 1999............................................................2

   Condensed Consolidated Statement of Operations-- Three Months
     Ended December 31, 1999 and 1998; Six Months Ended December 31,
     1999 and 1998............................................................3

   Condensed Consolidated Statement of Cash Flows--
      Six Months Ended December 31, 1999 and 1998.............................4

   Notes to Condensed Consolidated Financial Statements--December 31,
      1999....................................................................5

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

PART II. OTHER INFORMATION

Item 1. Legal Proceedings....................................................17

Item 6. Exhibits and Reports on Form 8-K.....................................18

SIGNATURES...................................................................19



Copyright 2000 Hyperion Solutions Corporation. All rights reserved. Hyperion,
Essbase, Pillar, Hyperion Enterprise, Hyperion Reporting, LedgerLink, Business
Intelligence, and Financial Intelligence are registered trademarks and Hyperion
Solutions, the Hyperion "H" logo, See The Future First, Essbase-Ready, Hyperion
Essbase, Hyperion Allocations, Hyperion DataExtend, Hyperion Distributed
Retrieve, Hyperion Distributed Schedules, Hyperion Drill Manager, Hyperion
Objects, Hyperion Quicksends, Hyperion Schedules, Hyperion Integration Server,
HyperionReady, and Hyperion Web Gateway are trademarks of Hyperion Solutions
Corporation. Wired for OLAP and the Appsource Corporation logo are trademarks of
Appsource Corporation, a wholly owned subsidiary of Hyperion Solutions
Corporation. All other trademarks and company names mentioned are the property
of their respective owners.

For further information, refer to the Hyperion Solutions Corporation annual
report on Form 10-K for the year ended June 30, 1999.


<PAGE>   3


                         Hyperion Solutions Corporation

                      Condensed Consolidated Balance Sheet
                      (in thousands, except per share data)

<TABLE>
<CAPTION>
                                                                              DECEMBER 31,       JUNE 30,
                                                                                  1999             1999
                                                                              ---------------------------
                                                                               (Unaudited)        (Note)
<S>                                                                             <C>              <C>
ASSETS
Current assets:
   Cash and cash equivalents                                                    $245,523         $233,515
   Short-term investments                                                         38,097           38,341
   Accounts receivable--net of allowances of $12,250 and $11,800                 113,747          110,744
   Prepaid expenses and other current assets                                       6,429            6,290
   Deferred income taxes                                                          10,037           10,386
                                                                                -------------------------
TOTAL CURRENT ASSETS                                                             413,833          399,276

Property and equipment--at cost, less accumulated depreciation
   and amortization of $77,356 and $65,444                                        68,735           75,456
Acquired technologies, goodwill and other intangible assets--at
   cost, less accumulated amortization of $20,657 and $17,186                     24,565           26,522
Other assets                                                                      13,382           11,640
                                                                                -------------------------
Total assets                                                                    $520,515         $512,894
                                                                                =========================

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Accounts payable and accrued expenses                                        $ 49,151         $ 55,012
   Accrued employee compensation and benefits                                     24,869           29,920
   Income taxes payable                                                            1,526            2,345
   Deferred revenue                                                               82,785           81,089
                                                                                -------------------------
TOTAL CURRENT LIABILITIES                                                        158,331          168,366

Long-term debt                                                                   100,000          103,752

Stockholders' equity:
   Preferred stock--$.001 par value; 5,000 shares authorized;
      none issued
   Common stock--$.001 par value; 300,000 shares authorized;
      31,462 and 30,842 shares issued and outstanding                                 31               31
   Additional paid-in capital                                                    162,347          153,545
   Retained earnings                                                             104,015           90,917
   Currency translation adjustments                                               (4,209)          (3,717)
                                                                                -------------------------
TOTAL STOCKHOLDERS' EQUITY                                                       262,184          240,776
                                                                                -------------------------
Total liabilities and stockholders' equity                                      $520,515         $512,894
                                                                                =========================
</TABLE>



Note: the balance sheet at June 30, 1999 has been derived from the audited
      financial statements at that date.

See accompanying notes.



                                      -2-
<PAGE>   4


                         Hyperion Solutions Corporation

           Condensed Consolidated Statement of Operations (Unaudited)
                      (in thousands, except per share data)

<TABLE>
<CAPTION>
                                                      THREE MONTHS ENDED                   SIX MONTHS ENDED
                                                         DECEMBER 31,                        DECEMBER 31,
                                                    1999              1998              1999              1998
                                                  --------------------------          --------------------------
<S>                                               <C>               <C>               <C>               <C>
REVENUES
   Software licenses                              $ 55,740          $ 51,886          $102,141          $105,590
   Maintenance and services                         60,053            55,072           120,902           106,250
                                                  --------------------------          --------------------------
Total revenues                                     115,793           106,958           223,043           211,840
                                                  --------------------------          --------------------------

COSTS AND EXPENSES
Cost of revenues:
   Software licenses                                 1,703             1,753             3,001             4,537
   Maintenance and services                         32,561            28,681            62,124            56,242
Sales and marketing                                 45,483            40,169            86,917            78,368
Research and development                            16,670            14,889            32,962            30,266
General and administrative                          10,334             9,342            20,760            18,086
Merger costs (credits)                                (305)                               (305)           21,800
                                                  --------------------------          --------------------------
                                                   106,446            94,834           205,459           209,299
                                                  --------------------------          --------------------------
OPERATING INCOME                                     9,347            12,124            17,584             2,541

Interest income                                      3,186             2,906             5,981             5,888
Interest expense                                    (1,260)           (1,282)           (2,667)           (2,614)
                                                  --------------------------          --------------------------
INCOME BEFORE INCOME TAXES                          11,273            13,748            20,898             5,815

Provision for income taxes                           4,200             5,100             7,800             7,100
                                                  --------------------------          --------------------------
NET INCOME (LOSS)                                 $  7,073          $  8,648          $ 13,098          $ (1,285)
                                                  ==========================          ==========================

EARNINGS (LOSS) PER SHARE
   Basic                                          $    .23          $    .29          $    .42          $   (.04)
   Diluted                                        $    .22          $    .28          $    .41          $   (.04)

AVERAGE NUMBER OF SHARES OUTSTANDING
   Basic                                            31,086            30,073            30,979            29,900
   Diluted                                          32,477            30,922            32,016            29,900
</TABLE>



See accompanying notes.



                                      -3-
<PAGE>   5


                         Hyperion Solutions Corporation

           Condensed Consolidated Statement of Cash Flows (Unaudited)
                                 (in thousands)

<TABLE>
<CAPTION>
                                                                      SIX MONTHS ENDED
                                                                         DECEMBER 31,
                                                                    1999              1998
                                                                 ---------------------------

<S>                                                              <C>                <C>
CASH PROVIDED BY OPERATING ACTIVITIES                            $ 13,557           $  3,873

INVESTING ACTIVITIES
   Purchases of property and equipment                             (5,726)           (15,408)
   Sale of short-term investments, net                                244              2,439
   Intangible and other assets                                     (2,663)            (1,038)
                                                                 ---------------------------
Cash used by investing activities                                  (8,145)           (14,007)

FINANCING ACTIVITIES
   Principal payments on notes payable                               (297)              (583)
   Exercise of stock options by employees                           7,385             10,003
                                                                 ---------------------------
Cash provided by financing activities                               7,088              9,420

Effect of exchange rate changes                                      (492)               991
                                                                 ---------------------------

INCREASE IN CASH AND CASH EQUIVALENTS                              12,008                277
Cash and cash equivalents at beginning of period                  233,515            221,868
                                                                 ---------------------------

CASH AND CASH EQUIVALENTS AT END OF PERIOD                       $245,523           $222,145
                                                                 ===========================

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
   Cash paid during the period for:
      Income taxes                                               $  7,823           $ 17,267
      Interest                                                      2,361              2,395
</TABLE>


See accompanying notes.


                                      -4-
<PAGE>   6


                         Hyperion Solutions Corporation

        Notes to Condensed Consolidated Financial Statements (Unaudited)

                                December 31, 1999


A. BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments, consisting
only of normal recurring accruals, considered necessary for a fair presentation
have been included in the accompanying unaudited financial statements. Operating
results for the three- and six-month periods ended December 31, 1999 are not
necessarily indicative of the results that may be expected for the full year
ending June 30, 2000. For further information, refer to the consolidated
financial statements and footnotes thereto for the year ended June 30, 1999
included in the Hyperion Solutions Corporation (the "Company" or "Hyperion")
report on Form 10-K filed on September 28, 1999.

B. EARNINGS PER SHARE

Shares used in computing basic and diluted earnings (loss) per share are based
on the weighted average shares outstanding in each period. Basic earnings (loss)
per share excludes the effects of stock options, warrants and convertible
securities. Diluted earnings (loss) per share includes the dilutive effect of
the assumed exercise of stock option, warrant and/or convertible security rights
using the treasury stock method.

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

<TABLE>
<CAPTION>
                                                            THREE MONTHS ENDED               SIX MONTHS ENDED
                                                               DECEMBER 31,                    DECEMBER 31,
                                                           1999            1998            1999            1998
                                                         -----------------------         -----------------------

<S>                                                      <C>             <C>             <C>             <C>
Numerator--net income (loss)                             $ 7,073         $ 8,648         $13,098         $(1,285)
                                                         =======================         =======================

Denominator for basic EPS--weighted-average shares        31,086          30,073          30,979          29,900
   Effect of dilutive securities:
      Stock option rights                                  1,391             849           1,037
                                                         -----------------------         -----------------------
Denominator for diluted EPS--adjusted weighted-
   average shares and assumed conversions                 32,477          30,922          32,016          29,900
                                                         =======================         =======================

Basic earnings (loss) per share                          $   .23         $   .29         $   .42         $  (.04)
Diluted earnings (loss) per share                        $   .22         $   .28         $   .41         $  (.04)
</TABLE>


                                      -5-
<PAGE>   7


                         Hyperion Solutions Corporation

  Notes to Condensed Consolidated Financial Statements (Unaudited) (continued)

                                December 31, 1999


B. EARNINGS PER SHARE (CONTINUED)

Because their effect would be antidilutive, certain stock option rights for 1.4
million and 2.1 million common shares were excluded from the diluted EPS
calculation, respectively, for the three- and six-month periods ended December
31, 1999. For the same reason, shares of common stock issuable upon conversion
of the convertible subordinated notes due 2005 have been excluded from the
diluted EPS calculation.

C. COMPREHENSIVE INCOME

Comprehensive income is a measure of all changes in equity of an enterprise that
results from recognized transactions and other economic events of a period other
than transactions with owners in their capacity as owners. For the periods
indicated, comprehensive income (loss) of the Company was as follows (in
thousands):

<TABLE>
<CAPTION>
                                                      THREE MONTHS ENDED        SIX MONTHS ENDED
                                                         DECEMBER 31,             DECEMBER 31,
                                                       1999        1998        1999         1998
                                                     -------------------      -------------------

<S>                                                  <C>          <C>         <C>         <C>
Net income (loss)                                    $ 7,073      $8,648      $13,098     $(1,285)
Currency translation adjustments, net of tax          (1,016)       (220)        (310)        595
                                                     -------------------      -------------------
Comprehensive income (loss)                          $ 6,057      $8,428      $12,788     $  (690)
                                                     ===================      ===================
</TABLE>


D. CONTINGENCIES

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

E. SEGMENT AND GEOGRAPHICAL INFORMATION

The Company has identified two reportable operating segments based on the
criteria of Statement of Financial Accounting Standards No. 131, "Disclosures
about Segments of an Enterprise and Related Information": software licensing,
and maintenance and services. Software license fees are derived from the sale of
software product licenses. Maintenance and services revenues come from providing
product installation, support and training services.

The Company's Chief Executive Officer evaluates performance based on measures of
segment revenues, gross profit and company-wide operating results. Employee
headcount and operating costs and expenses are managed by functional areas,
rather than by revenue segments. Moreover, the Company does not account for or
report to the CEO its assets or capital expenditures by segments. The
significant accounting policies of the reportable segments are the same as those
summarized in the Company's annual report on Form 10-K filed on September 28,
1999.




                                      -6-
<PAGE>   8


                         Hyperion Solutions Corporation

  Notes to Condensed Consolidated Financial Statements (Unaudited) (continued)

                                December 31, 1999


E. SEGMENT AND GEOGRAPHICAL INFORMATION (CONTINUED)

The accompanying statement of operations discloses the financial information of
the Company's reportable segments in accordance with Statement 131 for the
three- and six-month periods ended December 31, 1999 and 1998.

<TABLE>
<CAPTION>
                                                                               Other
                                                U.S.            U.K.       International
                                             Operations     Operations       Operations      Eliminations    Consolidated
-------------------------------------------------------------------------------------------------------------------------
                                                                           (in thousands)
<S>                                           <C>             <C>             <C>              <C>             <C>
THREE MONTHS ENDED DECEMBER 31,
-------------------------------------------------------------------------------------------------------------------------
1999
Revenues:
   Customers                                  $ 98,228        $ 9,019         $  8,546                         $115,793
   Intercompany                                  3,861                           7,061         $(10,922)
-------------------------------------------------------------------------------------------------------------------------
        Total                                  102,089          9,019           15,607          (10,922)        115,793
=========================================================================================================================
Operating income (loss)                       $ 17,387        $ 1,594         $ (9,634)                        $  9,347
=========================================================================================================================

1998
Revenues:
   Customers                                  $ 90,498        $ 7,770         $  8,690                         $106,958
   Intercompany                                  3,654                           7,412         $(11,066)
-------------------------------------------------------------------------------------------------------------------------
        Total                                   94,152          7,770           16,102          (11,066)        106,958
=========================================================================================================================
Operating income (loss)                       $ 18,428        $   398         $ (6,702)                        $ 12,124
=========================================================================================================================


SIX MONTHS ENDED DECEMBER 31,
-------------------------------------------------------------------------------------------------------------------------
1999
Revenues:
   Customers                                  $191,392        $15,497         $ 16,154                         $223,043
   Intercompany                                  7,095                          13,130         $(20,225)
-------------------------------------------------------------------------------------------------------------------------
        Total                                  198,487         15,497           29,284          (20,225)        223,043
=========================================================================================================================
Operating income (loss)                         37,254         (1,698)         (17,972)                          17,584
=========================================================================================================================
Identifiable assets                           $437,132        $15,239         $ 68,144                         $520,515
=========================================================================================================================

1998
Revenues:
   Customers                                  $177,696        $18,081         $ 16,063                         $211,840
   Intercompany                                  6,617             75           11,737         $(18,429)
-------------------------------------------------------------------------------------------------------------------------
        Total                                  184,313         18,156           27,800          (18,429)        211,840
=========================================================================================================================
Operating income (loss)                         12,077          4,332          (13,868)                           2,541
=========================================================================================================================
Identifiable assets                           $404,862        $21,434         $ 58,328                         $484,624
=========================================================================================================================
</TABLE>



                                      -7-
<PAGE>   9


                         Hyperion Solutions Corporation

  Notes to Condensed Consolidated Financial Statements (Unaudited) (continued)

                                December 31, 1999


E. SEGMENT AND GEOGRAPHICAL INFORMATION (CONTINUED)

       "Other International Operations" relate to subsidiaries in Austria,
       Belgium, Canada, Finland, France, Germany, Italy, Japan, the Netherlands,
       Singapore, Spain, Sweden and Switzerland. Operating income from
       operations outside the United States approximates income before income
       taxes of such operations. Intercompany revenues between geographic areas
       are accounted for at prices representative of unaffiliated party
       transactions of a similar nature.

       Revenues from markets outside the United States were as follows (dollars
       in thousands):

<TABLE>
<CAPTION>
                                                Three Months Ended           Six Months Ended
                                                    December 31,               December 31,
                                                 1999         1998           1999        1998
                                               ----------------------     ---------------------

       <S>                                     <C>          <C>             <C>         <C>
       U.K. operations                         $ 9,019      $ 7,770         $15,497     $18,081
       Other international operations            8,546        8,690          16,154      16,063
       Export                                   23,894       19,633          46,755      39,753
       -----------------------------------------------------------------------------------------
                                               $41,459      $36,093         $78,406     $73,897
       =========================================================================================
       Percentage of total revenues               35.8%        33.7%           35.2%       34.9%
       =========================================================================================
</TABLE>

       The majority of "Export" revenues, some of which are generated
       through independent distributors and agents, results from
       product licenses and services sold to customers throughout
       Europe.



                                      -8-
<PAGE>   10


                         Hyperion Solutions Corporation

                     Management's Discussion and Analysis of
                  Financial Condition and Results of Operations


OVERVIEW
--------------------------------------------------------------------------------

Hyperion develops, markets and supports enterprise analytic application software
that helps companies better understand, optimize and operate their businesses.
Hyperion's products complement software that companies use to capture and
organize data. Hyperion's products integrate with, extend and enhance
transaction processing applications, enterprise resource planning (ERP) and
customer relationship management packaged applications, and data warehouses. The
Company's offerings are based on Hyperion's enterprise-class analytic platform
and include packaged analytic applications, OLAP (on-line analytical processing)
server technology, data and application integration technologies, and a family
of robust tools for client-server and web-enabled reporting, analysis,
presentation and application development. Hyperion and its partners deliver
client/server and web-based products for a broad range of analytic applications
including budgeting and planning, financial consolidation and reporting,
activity-based management, performance management, campaign management analysis,
promotional analysis, sales forecasting, demand planning, e-business analysis
and industry-specific solutions. The Company's solutions are used by large
organizations worldwide.

Hyperion derives revenues from licensing its software products and providing
related product installation, support and training services. Customers are
billed an initial fee for the software upon delivery. A maintenance fee
entitling customers to routine support and product updates is billed annually.
With operations in twenty-six countries, Hyperion licenses its products
throughout the world primarily through a direct sales force. Products also are
licensed through independent distributors and sales agents, including other
technology and application software companies, and major accounting firms
("channel partners"). The Company includes in revenues its net share of revenues
generated by distributors. In the event that an agent has facilitated the sale
and Hyperion is the licensor, the license revenue is reported gross and a
commission charge is reflected.


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

REVENUES

<TABLE>
<CAPTION>
                                           Second Quarter Ended                    Six Months Ended
December 31,                          1999       CHANGE        1998           1999       CHANGE       1998
--------------------------------    ----------------------------------     -------------------------------------
                                                             (dollars in thousands)

<S>                                 <C>            <C>       <C>            <C>           <C>          <C>
Software licenses                   $55,740        7.4%      $51,886        $102,141      (3.3)%       $105,590
Percentage of total revenues           48.1%                    48.5%           45.8%                      49.8%
--------------------------------    ----------------------------------     -------------------------------------
Maintenance and services            $60,053        9.0%      $55,072        $120,902      13.8%        $106,250
Percentage of total revenues           51.9%                    51.5%           54.2%                      50.2%
--------------------------------    ----------------------------------     -------------------------------------
</TABLE>


                                      -9-
<PAGE>   11


                         Hyperion Solutions Corporation

                     Management's Discussion and Analysis of
            Financial Condition and Results of Operations (continued)

Software license revenues for the three-month period ended December 31,1999
rose primarily as a result of an increase in the number of licenses sold (unit
volume) versus, for example, price increases. The growth in software sales was
led by demand for packaged analytic applications and tools. For the six-month
period, software license revenues declined primarily as a result of a decrease
in the September 1999 quarter in the number of licenses sold (unit volume).
Particularly within North America, the Company was hampered by sales-marketing
execution issues that stemmed from the Company's August 1998 business
combination. The decline in sales productivity, caused by the necessary decision
to combine and cross train the separate sales forces and other factors, first
occurred in the December 1998 quarter.

The increase in maintenance and services revenue is mainly attributable to the
year-to-year growth of the Company's installed customer base.

Revenues, including export sales, generated from markets outside the United
States for the first half of fiscal 2000 and 1999 were $78.4 million and $73.9
million, or 35.2% and 34.9% of total revenues, respectively. The increase was
due primarily to revenue growth in Canada, Italy and Scandinavia.

Revenues derived from channel partners for the three months ended December 31,
1999 and 1998 were 14.1% and 13.1% of total revenues, respectively. For the six
months ended December 31, 1999 and 1998, partner revenues were 14.5% and 13% of
total revenues.

COST OF REVENUES

<TABLE>
<CAPTION>
                                           Second Quarter Ended                    Six Months Ended
December 31,                          1999       CHANGE        1998           1999       CHANGE       1998
--------------------------------    ----------------------------------     -------------------------------------
                                                             (dollars in thousands)

<S>                                 <C>            <C>       <C>            <C>           <C>          <C>
Software licenses                   $ 1,703        (2.9)%    $ 1,753        $ 3,001       (33.9)%      $ 4,537
Gross profit percentage                96.9%                    96.6%          97.1%                      95.7%
--------------------------------    ----------------------------------     -------------------------------------
Maintenance and services            $32,561         13.5%    $28,681        $62,124        10.5%       $56,242
Gross profit percentage                45.8%                    47.9%          48.6%                      47.1%
--------------------------------    ----------------------------------     -------------------------------------
</TABLE>

Cost of software license revenues consists primarily of the cost of product
packaging and documentation materials, amortization of capitalized software
costs, amortization of certain intangible assets related to business
acquisitions, and royalty expenses. The amortization of capitalized software
costs begins upon the general release of the software to customers. The decrease
in the cost of software license revenues for the six-month period principally
reflects a decrease in amortization of capitalized software costs.

The increase in the cost of maintenance and service revenues was due primarily
to additional staffing expense for both installation and ongoing support
services.



                                      -10-
<PAGE>   12


                         Hyperion Solutions Corporation

                    Management's Discussion and Analysis of
           Financial Condition and Results of Operations (continued)


OPERATING EXPENSES

<TABLE>
<CAPTION>
                                           Second Quarter Ended                    Six Months Ended
December 31,                          1999       CHANGE        1998           1999       CHANGE       1998
--------------------------------    ----------------------------------     -------------------------------------
                                                             (dollars in thousands)

<S>                                 <C>            <C>       <C>            <C>           <C>          <C>
Sales and marketing                 $45,483        13.2%     $40,169        $86,917       10.9%        $78,368
Percentage of total revenues           39.3%                    37.6%          39.0%                      37.0%
--------------------------------    ----------------------------------     -------------------------------------
Research and development            $16,670        12.0%     $14,889        $32,962        8.9%        $30,266
Percentage of total revenues           14.4%                    13.9%          14.8%                      14.3%
--------------------------------    ----------------------------------     -------------------------------------
General and administrative          $10,334        10.6%     $ 9,342        $20,760       14.8%        $18,086
Percentage of total revenues            8.9%                     8.7%           9.3%                       8.5%
--------------------------------    ----------------------------------     -------------------------------------
</TABLE>

The increase in sales and marketing expenses is primarily due to a net increase
in sales-marketing personnel and, to a lesser extent, greater overall marketing
initiatives.

The increase in research and development expenses reflects additional personnel
costs associated with expanded product research and development activities. In
each of the six-month periods ended December 31, 1999 and 1998, the Company
capitalized $1 million of software development costs in accordance with
Statement of Financial Accounting Standards No. 86, "Accounting for the Costs of
Computer Software to be Sold, Leased or Otherwise Marketed." The amounts
capitalized relate to the Company's development of enterprise-wide, packaged
analytic application solutions for client/server environments and represented
2.8% and 3.1% of total research and development expenditures. Capitalized
software costs are amortized over the estimated economic life of the product,
but generally not more than three years.

The increase in general and administrative expenses resulted, for the most part,
from an increase in personnel costs incurred to manage and support the growth of
the Company's overall operations, offset to a lesser extent by a change in
accounting estimates of $1.7 million, primarily related to product warranties
for older product lines.

The merger of Arbor Software Corporation (former name of the Company) and
Hyperion Software Corporation was completed on August 24, 1998. In the quarter
ended September 30, 1998, the Company charged $21.8 million, $18.7 million after
taxes, to operations for nonrecurring costs incurred in connection with the
business combination.

PROVISION FOR INCOME TAXES

Excluding the impact of merger costs in the prior year, the Company's effective
income tax rate remained substantially unchanged at approximately 37%. The
Company's expected effective rate for the remainder of the fiscal year is 37%.




                                      -11-
<PAGE>   13


                         Hyperion Solutions Corporation

                     Management's Discussion and Analysis of
            Financial Condition and Results of Operations (continued)


NET INCOME (LOSS)

As a result of the above factors, net income for the three-month period ended
December 31, 1999 decreased to $7.1 million, or by 18.2%, from $8.6 million and
net income for the six-month period ended December 31, 1999 increased to $13.1
million, or by 1,119.3%, from a net loss of $1.3 million for the corresponding
period of 1998.

To date, the overall impact of inflation on the Company has not been material.

In December 1999, the staff of the Securities and Exchange Commission issued
its Staff Accounting Bulletin ("SAB") No. 101, "Revenue Recognition." SAB No.
101 provides guidance on the measurement and timing of revenue recognition in
financial statements of public companies. Changes in accounting policies to
apply the guidance of SAB No. 101 must be adopted by recording the cumulative
effect of the change in the fiscal quarter ending September 30, 2000.
Management believes that adoption of SAB No. 101 will not have a material
impact on the financial statements.

In June 1998, the Financial Accounting Standards Board issued Statement No. 133,
"Accounting for Derivative Instruments and Hedging Activities." Statement 133
requires all derivative instruments (such as most foreign currency and interest
rate swaps, options, forwards, futures, collars, and warrants) to be recorded on
the balance sheet at fair value and establishes "special accounting" for the
following three different types of hedges: hedges of changes in the fair value
of assets, liabilities or firm commitments (fair value hedges), hedges of
variable cash flows of forecasted transactions (cash flow hedges), and hedges of
foreign currency exposures of net investments in foreign operations. Though the
accounting treatment and criteria for each of the three types of hedges are
unique, they all result in recognizing offsetting changes in value or cash flows
of both the hedge and the hedged item in earnings in the same period. Changes in
the fair value of derivatives that do not meet the criteria of one of these
three categories of hedges are to be included in earnings in the period of the
change. Statement 133, as amended, is effective for the Company beginning in
fiscal 2001, and the Company has not yet determined the impact, if any, the
adoption of the statement will have on its financial statements.

RISK FACTORS, INCLUDING YEAR 2000 COMPLIANCE

Except for the historical information contained in this report on Form 10-Q, the
matters discussed herein are forward-looking statements that involve risks and
uncertainties. Actual events and the Company's future results may vary
significantly based on a number of factors, including, but not limited to, those
discussed in the following paragraphs of this section; whether the process of
effecting the Arbor Software/Hyperion Software business combination can be
effectively managed to realize the synergies anticipated to result therefrom;
the impact of competitive products and pricing; whether the process of effecting
the Company's recent acquisitions can be effectively managed to realize the
synergies anticipated to result therefrom; and whether the Company can
successfully develop and bring to market new product offerings in high growth
sectors of the business analytics market. Any forward-looking statements should
be considered in light of these factors as well as other risks as detailed
elsewhere in this quarterly report, and in the Company's most recent annual
report on Form 10-K. Further, readers are cautioned not to place undue reliance
on these forward-looking statements, which speak only as of the date hereof.



                                      -12-
<PAGE>   14


                         Hyperion Solutions Corporation

                     Management's Discussion and Analysis of
            Financial Condition and Results of Operations (continued)


YEAR 2000 READINESS DISCLOSURE

Many currently installed computer systems and software products are coded to
accept only two-digit entries in the date code field and cannot distinguish 21st
century dates from 20th century dates. These date code fields will need to
distinguish 21st century dates from 20th century dates and, as a result, many
companies' software and computer systems may need to be upgraded or replaced in
order to comply with such "Year 2000" requirements. To the Company's knowledge,
it has not experienced any significant problems as a result of Year 2000 issues.

State of Readiness of the Company's Year 2000 Issues

The Company continues to assess both the readiness of its internal business
information systems for handling the Year 2000 and the compliance of products
sold by the Company. The Company has had to modify and/or replace portions of
its internal business information systems so that the systems will function
properly with respect to dates in the Year 2000 and beyond.

The Company believes that all current versions of its products are Year 2000
compliant. However, prior versions of certain of these products currently
installed at certain customer sites will require upgrading or other
modifications to become Year 2000 compliant. The Company believes that it is not
legally responsible for costs incurred by these customers to achieve Year 2000
compliance. However, there can be no assurance that these customers will not
assert claims against the Company with respect to Year 2000 issues and, in the
event such claims are asserted and adjudicated in favor of these customers, the
Company's liability could be material. The Company has taken steps to identify
affected customers, raise customer awareness related to noncompliance of certain
of the Company's older products and assist its customers in assessing their
risks. The Company may incur increasing costs regarding customer satisfaction
related to these actions over the next few years. Since the Company's customer
satisfaction programs are currently ongoing, the scope of any resulting Year
2000 issues is not fully known and potential liability resulting from these
issues is unclear, and the potential impact on the Company's business, operating
results and financial condition with respect to these matters is not known at
this time.

The Company's Hyperion accounting software, a product set formerly offered by
the Company, was not originally Year 2000 compliant. The Company is aware of a
limited number of customers who continue to use this product set. The Company
was obligated under its agreements with certain of these customers to provide
upgrades to this product set which are Year 2000 compliant. Beginning in the
quarter ended December 1998, the Company made available and to date has
delivered to these customers a Year 2000 compliant release of its accounting
software. The Company has also made available to these customers a migration
path to a product offered pursuant to the Company's alliance with Baan/Coda,
which the Company believes is Year 2000 compliant. However, there can be no
assurance that such product is Year 2000 compliant. The Company does not expect
the cost associated with this compliance effort, including planning,
implementation and testing, to be material to its financial condition, although
there can be no assurance that the Company will not be required to incur
significant unanticipated costs in relation to its compliance obligations. Such
unanticipated costs, if incurred, could have a material adverse effect on the
Company's business, operating results and financial condition.



                                      -13-
<PAGE>   15


                         Hyperion Solutions Corporation

                     Management's Discussion and Analysis of
            Financial Condition and Results of Operations (continued)


The Company has had discussions with and received compliance information from
its significant vendors, service providers and large customers to evaluate Year
2000 issues, if any, relating to the interaction of their systems with the
Company's internal systems. The Company has gathered written compliance
information from a large majority of these third parties and has received
information on all relevant outside system dependencies. At this time, after
having carefully reviewed the compliance data relating to these third parties
and their interaction with the Company, and based on discussions with some of
the other third parties, the Company has achieved a sufficient level of Year
2000 compliance regarding these dependencies without incurring significant
costs. However, a failure by these third parties to address adequately their
Year 2000 readiness could have a material adverse affect on the Company's
business, operating results or financial condition.

Costs Associated with the Company's Year 2000 Issues

To date, the Company has not incurred any material expenditures in connection
with identifying or evaluating Year 2000 compliance issues. Most of its expenses
have related to the opportunity cost of time spent by employees of the Company
evaluating the Company's internal business information systems, the products
sold by the Company and the interaction of the Company's internal business
information systems with the internal systems of third parties. Although the
Company is not aware of any material operational issues or costs associated with
preparing its internal business information systems and its products for the
Year 2000, there can be no assurances that the Company will not experience
serious unanticipated negative consequences and/or material costs caused by
undetected errors or defects in the technology used in the Company's internal
business information systems or products the Company sells. Such unanticipated
negative consequences and/or material costs, if incurred, could have a material
adverse effect on the Company's business, operating results or financial
condition.

Contingency Plan Regarding the Company's Year 2000 Issues

As the Company is not aware of any material Year 2000 compliance issues, it has
not developed a Year 2000-specific contingency plan. If material Year 2000
compliance issues are discovered, the Company will evaluate the need for one or
more contingency plans relating to such issues.

In addition, the Company is aware of the potential for claims against it and
other companies for damages arising from products and services that were not
Year 2000 ready. The Company continues to believe that any such claims against
it would be without merit.

While the Company believes that its planning efforts are adequate to address its
Year 2000 issues on a timely basis, there can be no assurance that there will
not be a delay in, or increased costs associated with, implementation of changes
to address any such issues, which could have a material adverse effect on the
Company's business, operating results or financial condition.



                                      -14-
<PAGE>   16


                         Hyperion Solutions Corporation

                     Management's Discussion and Analysis of
            Financial Condition and Results of Operations (continued)


MARKET RISKS

At December 31, 1999, the Company's investment portfolio consisted of
investment-grade debt securities, excluding those classified as cash
equivalents, of $38.1 million. The portfolio is invested predominantly in
short-term securities to minimize interest rate risk and for liquidity purposes
in the event of immediate cash needs. Accordingly, if market interest rates were
to increase immediately and uniformly by 10% from levels as of December 31,
1999, the decline in the fair value of the portfolio would not be material.

The Company's long-term debt bears interest, for the most part, at a fixed rate
and, therefore, relative to its long-term debt, an immediate 10% change in
market interest rates would not materially impact the Company's financial
statements.

Approximately one-third of the Company's sales, cost of sales and marketing is
transacted in local currencies. As a result, the Company's operations from
markets outside the United States are subject to foreign exchange rate
fluctuations.

FACTORS THAT MAY AFFECT FUTURE RESULTS

The Company had a software licensing backlog of approximately $15 million at
June 30, 1999, which sales were completed in the September 1999 quarter upon
shipment of product to customers. The amount decreased sequentially in the
September 1999 and December 1999 quarters, and at December 31, 1999, the Company
had a software licensing backlog of approximately $6 million. The Company's
backlog fluctuates from period to period; however, the Company anticipates that
the level of backlog will continue to decrease in the March 2000 quarter.
Nonetheless, quarterly revenues and operating results are highly dependent on
the volume and timing of the signing of licensing agreements and product
deliveries during the quarter, which are difficult to forecast. The Company's
future operating results may fluctuate due to these and other factors, such as
customer buying patterns, the deferral and/or realization of deferred software
license revenues according to contract terms, the timing of new product
introductions and product upgrade releases, the Company's ability or inability
to retain qualified personnel, its overall hiring plans, the scheduling of sales
and marketing programs, new product development by the Company, its channel
partners or its competitors and currency exchange rate movements. A significant
portion of the Company's quarterly software licensing agreements is concluded in
the last month of the fiscal quarter, generally with a concentration of such
revenues earned in the final ten business days of that month. The Company
generally has realized lower revenues in its first (September) and third (March)
fiscal quarters than in the immediately preceding quarters. Total revenues and
net income were $115.8 million and $7.1 million, respectively, for the second
quarter of fiscal 2000, and $107.3 million and $6 million, respectively, for the
first quarter of fiscal 2000. The Company believes that these revenue
fluctuations are caused by customer buying patterns, including traditionally
slow purchase activity in the summer months and low purchase activity in the
corporate financial applications market during the March quarter, as many
potential customers are busy with their year-end closing and financial
reporting. In any case, due to the relatively fixed nature of certain costs,
including personnel and facilities expenses, a decline or shortfall in quarterly
and/or annual revenues typically results in lower profitability or may result in
losses.



                                      -15-
<PAGE>   17


                         Hyperion Solutions Corporation

                     Management's Discussion and Analysis of
            Financial Condition and Results of Operations (continued)



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

To date, the Company has financed its business through positive cash flow from
operations and, to a lesser extent, through the issuance of its capital stock
and convertible subordinated notes. For fiscal years 1997, 1998 and 1999, and
for the six months ended December 31, 1999, the Company generated positive cash
flow from operations of $49.7 million, $87.6 million, $43.2 million and $13.6
million, respectively.

Cash used by investing activities amounted to $8.1 million for the first half of
fiscal 2000, including $5.7 million primarily for purchases of computer
equipment and software, and $2.7 million for intangible and other assets,
comprised primarily of $1 million for product development costs and $1 million
for a loan to an executive officer.

Financing activities in the first half of fiscal 2000, including stock options
exercised by employees and payments of indebtedness, generated cash of $7.1
million. In connection with the stock options exercised by certain of its
employees (for a total of 620 thousand common shares), the Company recognized
(as a credit to additional paid-in capital) an income tax benefit of $1.4
million for the six months ended December 31, 1999.

As of December 31, 1999, the Company had cash, cash equivalents and short-term
investments of $283.6 million, working capital of $255.5 million, and $100
million of long-term debt. Cash equivalents are comprised primarily of
investment-grade commercial paper, U.S. federal, state and political subdivision
obligations with varying terms of three months or less. The Company anticipates
capital expenditures of approximately $30 million for its 2000 fiscal year. The
Company intends to continue to review potential acquisitions and business
alliances that it believes would enhance its growth and profitability.

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

The Company believes that its current cash and short-term investment balances,
and the funds generated from its operations, if any, will be sufficient to
finance the Company's business for at least the next year.



                                      -16-
<PAGE>   18




                         Hyperion Solutions Corporation

                           Part II. Other Information



ITEM 1. LEGAL PROCEEDINGS

On April 16, 1996, Gentia Software filed an action against the Company in the
United States District Court for the District of Massachusetts (the
"Massachusetts action") seeking a declaratory judgment that U.S. Patent No.
5,359,724 (the "`724 patent"), owned by the Company, is invalid and not
infringed by Gentia Software's products. On April 18, 1996, the Company filed an
action against Gentia Software in the United States District Court for the
Northern District of California (the "California action") alleging that Gentia
Software infringes the `724 patent, and seeking a permanent injunction and
monetary damages, including treble damages. On May 13, 1996, the Company filed a
motion to transfer the Massachusetts action to California, which was granted on
November 18, 1996. The Company filed its answer and a counterclaim for patent
infringement in the transferred case on December 12, 1996. On April 7, 1997, the
Court consolidated both actions into a single case pending in the United States
District Court for the Northern District of California. On January 23, 2000, the
Company and Gentia Software entered into a Settlement Agreement terminating the
lawsuit, including both consolidated actions. Under the Settlement Agreement,
Gentia Software agreed to remove certain functionality from its software, and
both the Company and Gentia Software dismissed their claims against the other.
Other terms of the Settlement Agreement are confidential.

On July 11, 1997, Gentia Software filed a request for reexamination of the `724
patent with the United States Patent and Trademark Office (the "PTO"). On
September 11, 1997, the PTO granted the request for reexamination. On February
27, 1998, Gentia Software filed a request for a second reexamination of the `724
patent with the PTO. On May 22, 1998, the PTO granted that request for
reexamination which was later consolidated with the first reexamination. On
March 31, 1999, the PTO issued a non-final office action rejecting the claims of
the `724 patent. Hyperion filed its response to the office action on May 31,
1999. No final office action has been issued by the Patent Office.

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


                                      -17-


<PAGE>   19


                         Hyperion Solutions Corporation

                     Part II. Other Information (continued)



ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

Exhibit No.   Description
-----------   -----------

   10.1       - Employment Agreement with Jeffrey R. Rodek, dated October 11,
                1999
   10.2       - Restricted Stock Award Agreement with Jeffrey R. Rodek, dated
                October 11, 1999
   10.3       - Secured Promissory Note with Jeffrey R. Rodek, dated
                October 11, 1999
   10.4       - Employment Offer Letter with Michael L. Sternad, dated
                October 11, 1999
   10.5       - Amended and Restated Agreement between James A. Perakis and
                Hyperion Solutions Corporation, dated January 1, 1999
   10.6       - Hyperion Solutions Corporation 1999 Stock Option Plan

The Company did not file any reports on Form 8-K during the three-month period
ended December 31, 1999.




                                      -18-
<PAGE>   20


                         Hyperion Solutions Corporation

          Form 10-Q for the three-month period ended December 31, 1999




SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.




                        Hyperion Solutions Corporation




                        /s/ Michael L. Sternad                         2/10/2000
                        --------------------------------------------------------
                        Michael L. Sternad                                  Date
                        Chief Financial Officer










                                      -19-