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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549




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FORM 10-Q

|  |  |                                                                                        
|- |  | ---------------------------------------------------------------------------------------
|þ |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2002

OR

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

For the transition period from ____________ to _____________.



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Commission File Number 0-26934

Hyperion Solutions Corporation

(Exact name of registrant as specified in its charter)


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

1344 Crossman Avenue, Sunnyvale,
California 94089(Address of principal executive offices, including zip code)

(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. Yesþ  No
 ̈

As of November 4, 2002, there were 34,085,467 shares of the
Registrants common stock, $0.001 par value, outstanding.



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TABLE OF CONTENTS



|                                      |                                                                                               |                                                                      |  |  |  |  |  | 
|------------------------------------- | --------------------------------------------------------------------------------------------- | -------------------------------------------------------------------- |  |  |  |  |  | 
|PART I. FINANCIAL INFORMATION        
|                                      | ITEM 1. FINANCIAL STATEMENTS                                                                 
|                                      |                                                                                               | CONDENSED CONSOLIDATED BALANCE SHEETS                               
|                                      |                                                                                               | CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
|                                      |                                                                                               | CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS                     
|                                      |                                                                                               | NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)    
|                                      | ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|                                      | ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                           
|                                      | ITEM 4. CONTROLS AND PROCEDURES                                                              
|PART II. OTHER INFORMATION           
|                                      | ITEM 1. LEGAL PROCEEDINGS                                                                    
|                                      | ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K                                                     
|SIGNATURES                           
|CHIEF EXECUTIVE OFFICER CERTIFICATION
|CHIEF FINANCIAL OFFICER CERTIFICATION
|EXHIBIT INDEX                        
|EXHIBIT 10.15                        
|EXHIBIT 99.1                         



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Hyperion Solutions Corporation

Form 10-Q

|        |  |                                                                                                                             |  |     
|------- |  | --------------------------------------------------------------------------------------------------------------------------- |  | ----
|        |  |                                                                                                                             |  | PAGE
|        |  |                                                                                                                             |  |     
|PART I  |  | FINANCIAL INFORMATION                                                                                                       |  |     
|       
|Item 1  |  | Financial Statements (Unaudited):                                                                                           |  |     
|       
|        |  | Condensed Consolidated Balance Sheets at September 30, 2002 and June 30, 2002                                               |  | 2   
|       
|        |  | Condensed Consolidated Statements of Income and Comprehensive Income for the three months
ended September 30, 2002 and 2001 |  | 3   
|       
|        |  | Condensed Consolidated Statements of Cash Flows for the three months ended September 30, 2002
and 2001                      |  | 4   
|       
|        |  | Notes to Condensed Consolidated Financial Statements                                                                        |  | 5   
|       
|Item 2  |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                                       |  | 9   
|       
|Item 3  |  | Quantitative and Qualitative Disclosures About Market Risk                                                                  |  | 15  
|       
|Item 4  |  | Controls and Procedures                                                                                                     |  | 16  
|       
|PART II |  | OTHER INFORMATION                                                                                                           |  |     
|       
|Item 1  |  | Legal Proceedings                                                                                                           |  | 17  
|       
|Item 6  |  | Exhibits and Reports on Form 8-K                                                                                            |  | 17  
|       
|        |  | Signatures                                                                                                                  |  | 18  
|       
|        |  | Certifications                                                                                                              |  | 19  

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

1



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PART I. FINANCIAL INFORMATION




ITEM 1. FINANCIAL STATEMENTS




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

|                                           |                                                                                                             |   |               |         |          |   |         |         |  
|------------------------------------------ | ----------------------------------------------------------------------------------------------------------- | - | ------------- | ------- | -------- | - | ------- | ------- | -
|                                           |                                                                                                             |   | September 30, |         | June 30,
|                                           |                                                                                                             |   | 2002          |         | 2002    
|                                           |                                                                                                             |   |               |         |         
|                                           |                                                                                                             |   | (Unaudited)   |         |          |   |        
|ASSETS                                     |                                                                                                             |   |               |         |          |   |         |        
|Current assets:                            |                                                                                                             |   |               |         |          |   |         |        
|                                           | Cash and cash equivalents                                                                                   |   | $             | 325,893 |          |   | $       | 311,130 |  
|                                           | Short-term investments                                                                                      |   |               | 20,129  |          |   |         | 19,128  |  
|                                           | Accounts receivable, net of allowances of $8,989 and $10,660                                                |   |               | 81,153  |          |   |         | 110,196 |  
|                                           | Deferred income taxes                                                                                       |   |               | 14,998  |          |   |         | 15,495  |  
|                                           | Prepaid expenses and other current assets                                                                   |   |               | 15,589  |          |   |         | 17,240  |  
|                                           |                                                                                                             |   |               |         |          |   |         |        
|TOTAL CURRENT ASSETS                       |                                                                                                             |   | 457,762       |         |          |   | 473,189 |        
|                                          
|Property and equipment, net                |                                                                                                             |   | 68,162        |         |          |   | 69,866  |        
|Goodwill                                   |                                                                                                             |   | 8,040         |         |          |   | 8,171   |        
|Intangible assets, net                     |                                                                                                             |   | 9,251         |         |          |   | 8,493   |        
|Deferred income taxes                      |                                                                                                             |   | 17,695        |         |          |   | 17,993  |        
|Other assets                               |                                                                                                             |   | 6,040         |         |          |   | 6,178   |        
|                                           |                                                                                                             |   |               |         |          |   |         |        
|TOTAL ASSETS                               |                                                                                                             | $ | 566,950       |         |          | $ | 583,890 |        
|                                           |                                                                                                             |   |               |         |          |   |         |        
|LIABILITIES AND STOCKHOLDERS EQUITY       |                                                                                                             |   |               |         |          |   |         |        
|Current liabilities:                       |                                                                                                             |   |               |         |          |   |         |        
|                                           | Accounts payable and accrued expenses                                                                       |   | $             | 40,546  |          |   | $       | 50,858  |  
|                                           | Accrued employee compensation and benefits                                                                  |   |               | 28,119  |          |   |         | 39,005  |  
|                                           | Deferred revenue                                                                                            |   |               | 94,261  |          |   |         | 94,910  |  
|                                           | Other current liabilities                                                                                   |   |               | 6,482   |          |   |         | 6,915   |  
|                                           |                                                                                                             |   |               |         |          |   |         |        
|TOTAL CURRENT LIABILITIES                  |                                                                                                             |   | 169,408       |         |          |   | 191,688 |        
|                                          
|Long-term debt                             |                                                                                                             |   | 73,750        |         |          |   | 80,802  |        
|Other liabilities                          |                                                                                                             |   | 11,373        |         |          |   | 11,743  |        
|                                          
|Contingencies (Note 3)                     |                                                                                                             |   |               |         |          |   |         |        
|                                          
|Stockholders equity:                      |                                                                                                             |   |               |         |          |   |         |        
|                                           | Preferred stock  $0.001 par value; 5,000 shares authorized; none issued                                    |   |               |        |          |   |         |        |  
|                                           | Common stock  $0.001 par value; 300,000 shares authorized;
34,914 and 34,662 shares issued and outstanding |   |               | 35      |          |   |         | 35      |  
|                                           | Additional paid-in capital                                                                                  |   |               | 232,044 |          |   |         | 227,563 |  
|                                           | Treasury stock, at cost: 1,344 and 1,344 common shares                                                      |   |               | (23,097 | )        |   |         | (23,097 | )
|                                           | Retained earnings                                                                                           |   |               | 112,584 |          |   |         | 103,472 |  
|                                           | Accumulated other comprehensive loss                                                                        |   |               | (9,147  | )        |   |         | (8,316  | )
|                                           |                                                                                                             |   |               |         |          |   |         |        
|TOTAL STOCKHOLDERS EQUITY                 |                                                                                                             |   | 312,419       |         |          |   | 299,657 |        
|                                           |                                                                                                             |   |               |         |          |   |         |        
|TOTAL LIABILITIES AND STOCKHOLDERS EQUITY |                                                                                                             | $ | 566,950       |         |          | $ | 583,890 |        
|                                           |                                                                                                             |   |               |         |          |   |         |        

See accompanying notes to condensed consolidated financial statements.

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HYPERION SOLUTIONS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(In thousands, except per share amounts)
(Unaudited)

|                                        |                          |   |                    |        |      |   |         |        | 
|--------------------------------------- | ------------------------ | - | ------------------ | ------ | ---- | - | ------- | ------ | 
|                                        |                          |   | Three Months Ended
|                                        |                          |   | September 30,     
|                                        |                          |   |                   
|                                        |                          |   | 2002               |        | 2001
|                                        |                          |   |                    |        |     
|REVENUES                                |                          |   |                    |        |      |   |         |       
|                                        | Software licenses        |   | $                  | 44,591 |      |   | $       | 38,808 | 
|                                        | Maintenance and services |   |                    | 75,288 |      |   |         | 78,528 | 
|                                        |                          |   |                    |        |      |   |         |       
|TOTAL REVENUES                          |                          |   | 119,879            |        |      |   | 117,336 |       
|                                       
|COSTS AND EXPENSES                      |                          |   |                    |        |      |   |         |       
|Cost of revenues:                       |                          |   |                    |        |      |   |         |       
|                                        | Software licenses        |   |                    | 3,050  |      |   |         | 2,995  | 
|                                        | Maintenance and services |   |                    | 32,379 |      |   |         | 36,333 | 
|Sales and marketing                     |                          |   | 41,078             |        |      |   | 41,447  |       
|Research and development                |                          |   | 17,872             |        |      |   | 18,896  |       
|General and administrative              |                          |   | 11,966             |        |      |   | 15,324  |       
|Restructuring and non-recurring charges |                          |   |                   |        |      |   | 282     |       
|                                        |                          |   |                    |        |      |   |         |       
|TOTAL COSTS AND EXPENSES                |                          |   | 106,345            |        |      |   | 115,277 |       
|                                        |                          |   |                    |        |      |   |         |       
|OPERATING INCOME                        |                          |   | 13,534             |        |      |   | 2,059   |       
|                                       
|Interest income                         |                          |   | 1,459              |        |      |   | 2,142   |       
|Interest expense                        |                          |   | (782               | )      |      |   | (1,161  | )     
|Gain on redemption of debt              |                          |   | 252                |        |      |   |        |       
|                                        |                          |   |                    |        |      |   |         |       
|INCOME BEFORE INCOME TAXES              |                          |   | 14,463             |        |      |   | 3,040   |       
|Provision for income taxes              |                          |   | 5,351              |        |      |   | 1,094   |       
|                                        |                          |   |                    |        |      |   |         |       
|NET INCOME                              |                          | $ | 9,112              |        |      | $ | 1,946   |       
|                                        |                          |   |                    |        |      |   |         |       
|Other comprehensive income (loss)       |                          |   | (831               | )      |      |   | 2,569   |       
|                                        |                          |   |                    |        |      |   |         |       
|COMPREHENSIVE INCOME                    |                          | $ | 8,281              |        |      | $ | 4,515   |       
|                                        |                          |   |                    |        |      |   |         |       
|EARNINGS PER SHARE                      |                          |   |                    |        |      |   |         |       
|                                        | Basic                    |   | $                  | 0.27   |      |   | $       | 0.06   | 
|                                        | Diluted                  |   | $                  | 0.27   |      |   | $       | 0.06   | 
|WEIGHTED AVERAGE SHARES OUTSTANDING     |                          |   |                    |        |      |   |         |       
|                                        | Basic                    |   |                    | 33,435 |      |   |         | 32,444 | 
|                                        | Diluted                  |   |                    | 34,141 |      |   |         | 32,542 | 

See accompanying notes to condensed consolidated financial statements.

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

|                                                                                  |                                                                          |                            |         |                    |       |      |         |         |       | 
|--------------------------------------------------------------------------------- | ------------------------------------------------------------------------ | -------------------------- | ------- | ------------------ | ----- | ---- | ------- | ------- | ----- | 
|                                                                                  |                                                                          |                            |         | Three Months Ended
|                                                                                  |                                                                          |                            |         | September 30,     
|                                                                                  |                                                                          |                            |         |                   
|                                                                                  |                                                                          |                            |         | 2002               |       | 2001
|                                                                                  |                                                                          |                            |         |                    |       |     
|CASH FLOWS FROM OPERATING ACTIVITIES                                              |                                                                          |                            |         |                    |       |      |         |        
|Net income                                                                        |                                                                          | $                          | 9,112   |                    |       | $    | 1,946   |        
|Adjustments to reconcile net income to net cash provided by operating activities: |                                                                          |                            |         |                    |       |      |         |        
|                                                                                  | Gain on redemption of debt                                               |                            |         | (252               | )     |      |         |        |      
|                                                                                  | Gain on sale of assets                                                   |                            |         | (17                | )     |      |         |        |      
|                                                                                  | Depreciation and amortization                                            |                            |         | 7,635              |       |      |         | 8,305   |      
|                                                                                  | Provision for accounts receivable allowances                             |                            |         | 1,648              |       |      |         | 5,666   |      
|                                                                                  | Deferred income taxes                                                    |                            |         | 795                |       |      |         | (3,099  | )    
|                                                                                  | Income tax benefit from exercise of stock options                        |                            |         | 902                |       |      |         | 141     |      
|Changes in assets and liabilities:                                                |                                                                          |                            |         |                    |       |      |         |        
|                                                                                  | Accounts receivable                                                      |                            |         | 27,072             |       |      |         | 31,116  |      
|                                                                                  | Prepaid expenses and other current assets                                |                            |         | (1,051             | )     |      |         | 838     |      
|                                                                                  | Other assets                                                             |                            |         | (19                | )     |      |         | (27     | )    
|                                                                                  | Accounts payable and accrued expenses                                    |                            |         | (10,056            | )     |      |         | (9,656  | )    
|                                                                                  | Accrued employee compensation and benefits                               |                            |         | (10,848            | )     |      |         | (3,396  | )    
|                                                                                  | Income taxes payable                                                     |                            |         | 2,707              |       |      |         | 3,894   |      
|                                                                                  | Deferred revenue                                                         |                            |         | (672               | )     |      |         | (6,245  | )    
|                                                                                  | Other current liabilities                                                |                            |         | (433               | )     |      |         | (1,116  | )    
|                                                                                  | Other liabilities                                                        |                            |         | (370               | )     |      |         | (2,338  | )    
|                                                                                  |                                                                          |                            |         |                    |       |      |         |        
|Net cash provided by operating activities                                         |                                                                          |                            | 26,153  |                    |       |      | 26,029  |        
|                                                                                  |                                                                          |                            |         |                    |       |      |         |        
|CASH FLOWS FROM INVESTING ACTIVITIES                                              |                                                                          |                            |         |                    |       |      |         |        
|                                                                                  | Purchases of investments                                                 |                            |         | (8,029             | )     |      |         | (13,728 | )    
|                                                                                  | Proceeds from maturities of investments                                  |                            |         | 7,040              |       |      |         | 15,750  |      
|                                                                                  | Purchases of property and equipment                                      |                            |         | (6,046             | )     |      |         | (2,008  | )    
|                                                                                  | Proceeds from disposal of property and equipment                         |                            |         | 148                |       |      |         | 155     |      
|                                                                                  | Purchases of intangible and other assets                                 |                            |         | (718               | )     |      |         | (1,251  | )    
|                                                                                  |                                                                          |                            |         |                    |       |      |         |        
|Net cash used in investing activities                                             |                                                                          |                            | (7,605  | )                  |       |      | (1,082  | )      
|                                                                                  |                                                                          |                            |         |                    |       |      |         |        
|CASH FLOWS FROM FINANCING ACTIVITIES                                              |                                                                          |                            |         |                    |       |      |         |        
|                                                                                  | Principal payments on mortgage loan                                      |                            |         | (2,298             | )     |      |         | (59     | )    
|                                                                                  | Redemption of debt                                                       |                            |         | (4,692             | )     |      |         |        |      
|                                                                                  | Treasury stock transactions, net                                         |                            |         |                   |       |      |         | 64      |      
|                                                                                  | Proceeds from exercise of stock options and employee stock purchase plan |                            |         | 3,579              |       |      |         | 426     |      
|                                                                                  |                                                                          |                            |         |                    |       |      |         |        
|Net cash provided by (used in) financing activities                               |                                                                          |                            | (3,411  | )                  |       |      | 431     |        
|                                                                                 
|Effect of exchange rate on cash and cash equivalents                              |                                                                          |                            | (374    | )                  |       |      | 3,282   |        
|                                                                                  |                                                                          |                            |         |                    |       |      |         |        
|INCREASE IN CASH AND CASH EQUIVALENTS                                             |                                                                          |                            | 14,763  |                    |       |      | 28,660  |        
|Cash and cash equivalents at beginning of period                                  |                                                                          |                            | 311,130 |                    |       |      | 232,904 |        
|                                                                                  |                                                                          |                            |         |                    |       |      |         |        
|CASH AND CASH EQUIVALENTS AT END OF PERIOD                                        |                                                                          | $                          | 325,893 |                    |       | $    | 261,564 |        
|                                                                                  |                                                                          |                            |         |                    |       |      |         |        
|SUPPLEMENTAL CASH FLOW INFORMATION:                                               |                                                                          |                            |         |                    |       |      |         |        
|                                                                                  |                                                                          | Cash paid for income taxes |         | $                  | 668   |      |         | $       | 452   | 
|                                                                                  |                                                                          | Cash paid for interest     |         | $                  | 1,805 |      |         | $       | 2,036 | 

See accompanying notes to condensed consolidated financial statements.

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HYPERION SOLUTIONS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
SEPTEMBER 30, 2002

1. Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with accounting principles generally accepted in
the United States of America for interim financial information and pursuant to
the rules and regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations. However,
management believes that the disclosures are adequate to make the information
presented not misleading. 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 months ended September 30, 2002
are not necessarily indicative of the results that may be expected for the full
year ending June 30, 2003. The balance sheet at June 30, 2002 has been derived
from the audited financial statements as of and for the year ended June 30,
2002, but it does not include all information and footnotes required by
generally accepted accounting principles. For further information, refer to
the consolidated financial statements and accompanying notes for the year ended
June 30, 2002 included in the Hyperion Solutions Corporation (Hyperion)
Annual Report on Form 10-K.

Certain prior period amounts have been reclassified to conform to the current
period presentation.

2. Significant Accounting Policies

Revenue Recognition

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

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

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

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Allowance for Doubtful Accounts

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

Comprehensive Income

Comprehensive income includes foreign currency translation gains and losses and
unrealized gains and losses on available-for-sale securities. The net
unrealized gains and losses on available-for-sale securities for the three
months ended September 30, 2002 and 2001 were not material.

Earnings Per Share

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

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

|                                                    |  |                    |        |      |  |   |        | 
|--------------------------------------------------- |  | ------------------ | ------ | ---- |  | - | ------ | 
|                                                    |  | Three Months Ended
|                                                    |  | September 30,     
|                                                    |  |                   
|                                                    |  | 2002               |        | 2001
|                                                    |  |                    |        |     
|Net income                                          |  | $                  | 9,112  |      |  | $ | 1,946  | 
|                                                   
|Shares used in computing basic earnings per share   |  |                    | 33,435 |      |  |   | 32,444 | 
|Dilutive effect of stock options                    |  |                    | 706    |      |  |   | 98     | 
|                                                    |  |                    |        |      |  |   |        | 
|Shares used in computing diluted earnings per share |  |                    | 34,141 |      |  |   | 32,542 | 
|                                                    |  |                    |        |      |  |   |        | 
|Basic earnings per share                            |  | $                  | 0.27   |      |  | $ | 0.06   | 
|Diluted earnings per share                          |  | $                  | 0.27   |      |  | $ | 0.06   | 
|                                                    |  |                    |        |      |  |   |        | 

For the three months ended September 30, 2002 and 2001, stock option rights
totaling 4.6 million shares and 7.6 million shares, respectively, have been
excluded from the diluted EPS calculations because their effect would have been
antidilutive. Additionally, 1.3 million shares and 1.6 million shares of
common stock issuable upon conversion of the convertible subordinated notes
have been excluded from the diluted EPS calculations for the three months ended
September 30, 2002 and 2001, respectively, because their effect would have been
antidilutive.

Recent Accounting Pronouncements

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

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In January 2002, the Emerging Issues Task Force (EITF) issued EITF Issue No.
01-14 Income Statement Characterization of Reimbursements Received for Out of
Pocket Expenses Incurred, which requires that reimbursements received for
out-of-pocket expenses be reflected as revenues in the statement of income.
EITF No. 01-14 is effective for financial reporting periods beginning after
December 15, 2001. Hyperion adopted EITF No. 01-14 on January 1, 2002 and
reclassified the statement of income for the three months ended September 30,
2001 to conform to the current presentation. As a result, approximately $2.7
million has been reclassified primarily from cost of maintenance and services
to maintenance and services revenue for the three months ended September 30,
2001.

In May 2002, the FASB issued SFAS No. 145, Rescission of FASB Statements Nos.
4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections.
SFAS No. 145 eliminates Statement 4 (and Statement 64, as it amends Statement
4), which requires gains and losses from extinguishments of debt to be
aggregated and, if material, classified as an extraordinary item, net of the
related income tax effect. As a result, the criteria in APB Opinion No. 30
will now be used to determine the classification of those gains and losses.
SFAS No. 145 also amends FASB Statement No. 13 to require that certain lease
modifications that have economic effects similar to sale-leaseback transactions
be accounted for in the same manner as sale-leaseback transactions. This
amendment is consistent with the FASBs goal of requiring similar accounting
treatment for transactions that have similar economic effects. In addition,
SFAS No. 145 makes technical corrections to existing pronouncements. While
those corrections are not substantive in nature, in some instances, they may
change accounting practice. This statement is effective for fiscal years
beginning after May 15, 2002 for the provisions related to the rescission of
Statements 4 and 64, and for all transactions entered into after May 15, 2002
for the provision related to the amendment of Statement 13, although early
adoption is permitted. As required by SFAS No. 145, Hyperion adopted this new
statement on July 1, 2002. As a result, gains on the redemption of debt, which
were previously presented as extraordinary items on the consolidated statements
of income, are now included in income before income taxes. The adoption did
not have a material impact on Hyperions financial position, results of
operations or cash flows.

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

3. Contingencies

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

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

4. Segment and Geographic Information

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

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

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The following table presents revenues and long-lived assets by geographic
region (in thousands):

|          |          |       |   |                                 |         |      |   |        |         | 
|--------- | -------- | ----- | - | ------------------------------- | ------- | ---- | - | ------ | ------- | 
|          |          |       |   | Three
Months EndedSeptember 30,
|          |          |       |   | 2002                            |         | 2001
|          |          |       |   |                                 |         |     
|Revenues: |          |       |   |                                 |         |      |   |       
|          | Americas |       | $ | 76,878                          |         |      | $ | 80,106 |        
|          | EMEA     |       |   | 35,834                          |         |      |   | 30,801 |        
|          | APAC     |       |   | 7,167                           |         |      |   | 6,429  |        
|          |          |       |   |                                 |         |      |   |       
|          |          | Total |   | $                               | 119,879 |      |   | $      | 117,336 | 
|          |          |       |   |                                 |         |      |   |       

|                   |          |       |   |               |        |          |   |        |        | 
|------------------ | -------- | ----- | - | ------------- | ------ | -------- | - | ------ | ------ | 
|                   |          |       |   | September 30, |        | June 30,
|                   |          |       |   | 2002          |        | 2002    
|                   |          |       |   |               |        |         
|Long-lived assets: |          |       |   |               |        |          |   |       
|                   | Americas |       | $ | 59,790        |        |          | $ | 60,809 |       
|                   | EMEA     |       |   | 7,116         |        |          |   | 7,834  |       
|                   | APAC     |       |   | 1,256         |        |          |   | 1,223  |       
|                   |          |       |   |               |        |          |   |       
|                   |          | Total |   | $             | 68,162 |          |   | $      | 69,866 | 
|                   |          |       |   |               |        |          |   |       

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

|                                       |                         |   |                                 |        |      |   |         |        | 
|-------------------------------------- | ----------------------- | - | ------------------------------- | ------ | ---- | - | ------- | ------ | 
|                                       |                         |   | Three
Months EndedSeptember 30,
|                                       |                         |   | 2002                            |        | 2001
|                                       |                         |   |                                 |        |     
|Software licenses:                     |                         |   |                                 |        |      |   |         |       
|                                       | Application products    |   | $                               | 23,661 |      |   | $       | 15,711 | 
|                                       | Platform products       |   |                                 | 20,930 |      |   |         | 23,097 | 
|                                       |                         |   |                                 |        |      |   |         |       
|Total software license revenue         |                         |   | 44,591                          |        |      |   | 38,808  |       
|                                      
|Maintenance and services:              |                         |   |                                 |        |      |   |         |       
|                                       | Maintenance             |   |                                 | 51,578 |      |   |         | 43,876 | 
|                                       | Consulting and training |   |                                 | 23,710 |      |   |         | 34,652 | 
|                                       |                         |   |                                 |        |      |   |         |       
|Total maintenance and services revenue |                         |   | 75,288                          |        |      |   | 78,528  |       
|                                       |                         |   |                                 |        |      |   |         |       
|Total revenues                         |                         | $ | 119,879                         |        |      | $ | 117,336 |       
|                                       |                         |   |                                 |        |      |   |         |       

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|        |                                                                                      
|------- | -------------------------------------------------------------------------------------
|ITEM
2. | MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FORWARD-LOOKING STATEMENTS

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

OVERVIEW

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

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

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

RESULTS OF OPERATIONS

REVENUES

|                         |                         |      |                                  |         |  |      |            |         |   |   |         |        |            |  |     |    |  
|------------------------ | ----------------------- | ---- | -------------------------------- | ------- |  | ---- | ---------- | ------- | - | - | ------- | ------ | ---------- |  | --- | -- | -
|                         |                         |      | Three Months Ended September 30,
|                         |                         |      |                                 
|                         |                         |      |                                  |         |  |      | Percent of |         |   |   |         |        | Percent of
|(In thousands)           |                         | 2002 |                                  | Revenue |  | 2001 |            | Revenue
|                         |                         |      |                                  |         |  |      |            |        
|Software licenses        |                         | $    | 44,591                           |         |  |      | 37         | %       |   | $ | 38,808  |        |            |  | 33  | % 
|Maintenance and services |                         |      |                                  |         |  |      |            |         |   |   |         |        |            |  |     |   
|                         | Maintenance             |      |                                  | 51,578  |  |      |            | 43      | % |   |         | 43,876 |            |  |     | 37 | %
|                         | Consulting and training |      |                                  | 23,710  |  |      |            | 20      | % |   |         | 34,652 |            |  |     | 30 | %
|                         |                         |      |                                  |         |  |      |            |         |   |   |         |        |            |  |     |   
|                         |                         |      | 75,288                           |         |  |      | 63         | %       |   |   | 78,528  |        |            |  | 67  | % 
|                         |                         |      |                                  |         |  |      |            |         |   |   |         |        |            |  |     |   
|Total revenues           |                         | $    | 119,879                          |         |  |      | 100        | %       |   | $ | 117,336 |        |            |  | 100 | % 
|                         |                         |      |                                  |         |  |      |            |         |   |   |         |        |            |  |     |   

Software licenses.Software license revenues increased 15% in the first
quarter of fiscal 2003 compared to the first quarter of fiscal 2002, and our
average transaction size increased 36% to approximately $135,000 in the first
quarter of fiscal 2003 from approximately $99,000 in the first quarter of
fiscal 2002. Contributing to the increase in license revenue in the first
quarter of fiscal 2003 was the continued market penetration of our two newer
suite-based application products, Hyperion Planning and Hyperion Financial
Management.

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The split between application and platform product license revenues in the
first quarter of fiscal 2003 was 53% applications revenue and 47% platform
revenue, compared to 40% application revenue and 60% platform revenue in the
first quarter of fiscal 2002. Application license revenue is generated from
our packaged business performance management applications, and platform license
revenue is generated from our Hyperion Essbase XTD platform and its component
products. Our two newer suite-based application products, Hyperion Planning
and Hyperion Financial Management, largely accounted for the increase in
application license revenue as a percentage of total license revenue in the
first quarter of fiscal 2003 compared to the first quarter of fiscal 2002.
Hyperion Planning and Hyperion Financial Management were still in the early
stages of their product life cycles in the first quarter of fiscal 2002, but,
later in fiscal 2002 and into the first quarter of fiscal 2003, Hyperion
Planning and Hyperion Financial Management made significant contributions to
total license revenue.

We market our products through our direct sales force and through channel
partners. To date, we have generated the majority of our revenue through our
direct sales force, but we continue to focus on complementing our direct sales
force with channel partners, which include original equipment manufacturers,
value added resellers, system integrators, independent distributors and sales
agents. License revenue from channel partners comprised 25% of total license
revenue in the first quarter of fiscal 2003 compared to 28% of license revenue
in the first quarter of fiscal 2002. Effectively leveraging our channel
partners continues to be one of our key strategies, and our goal is to derive
33% of our license revenue through our channel partners. While total indirect
license revenues grew 5% to $11.3 million in the first quarter of fiscal 2003
from $10.8 million in the first quarter of fiscal 2002, indirect license
revenue as a percentage of total license revenue decreased. Because a large
portion of indirect license revenues are recorded in arrears, the events of
September 11, 2001 had a greater impact on direct revenues in the first quarter
of fiscal 2002 compared to the impact on indirect revenues, causing the ratio
of indirect license revenues to total license revenues to be higher in the
first quarter of fiscal 2002. No single partner represented more than 10% of
total revenue during the first quarter of fiscal 2003 or 2002.

Maintenance and services.Maintenance and services revenue decreased 4% in the
first quarter of fiscal 2003 compared to the first quarter of fiscal 2002.
This decrease was due to a 32% decrease in consulting and training revenues.
Consulting revenues decreased as a result of our increased use of channel
partners to provide consulting services to our customers, as well as general
economic weakness. Partially offsetting the decrease in consulting and
training revenue was an 18% increase in maintenance revenue, which was due to
year-over-year growth of our installed customer base.

COST OF REVENUES

|                         |  |                                  |        |        |  |       |    |        |  |   |        |       |  |  |    |  
|------------------------ |  | -------------------------------- | ------ | ------ |  | ----- | -- | ------ |  | - | ------ | ----- |  |  | -- | -
|                         |  | Three Months Ended September 30,
|                         |  |                                 
|                         |  |                                  |        |        |  | Gross |    |        |  |   |        | Gross
|(In thousands)           |  | 2002                             |        | Margin |  | 2001  |    | Margin
|                         |  |                                  |        |        |  |       |    |       
|Software licenses        |  | $                                | 3,050  |        |  |       | 93 | %      |  | $ | 2,995  |       |  |  | 92 | %
|Maintenance and services |  |                                  | 32,379 |        |  |       | 57 | %      |  |   | 36,333 |       |  |  | 54 | %

Cost of software license revenues.Cost of software license revenue consists
primarily of royalty expenses, amortization of capitalized software development
costs, amortization of acquired technologies and the cost of product packaging
and documentation materials. Cost of software license revenues in the first
quarter of fiscal 2003 remained relatively flat compared to the first quarter
of fiscal 2002 despite a 15% increase in software license revenue. This was
attributable to a different product mix in the first quarter of fiscal 2003,
which resulted in reduced third-party royalty expense. The total cost of
software license revenues as a percentage of total license revenues was 7% and
8% for the first quarter of fiscal 2003 and 2002, respectively.

In the first quarter of fiscal 2003 and 2002, we capitalized $0.4 million and
$0.2 million of software product development costs, respectively, in accordance
with Statement of Financial Accounting Standards (SFAS) No. 86, Accounting
for the Costs of Computer Software to be Sold, Leased, or Otherwise Marketed.
The amounts capitalized relate to localization costs for our software products.
Capitalized software product development costs are amortized over the
estimated economic life of the products, but generally for no more than three
years. The amortization of capitalized product development costs begins upon
the general release of the software to customers.

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Cost of maintenance and services revenues.Cost of maintenance and services
revenue consists largely of compensation and benefits for consulting, education
and support personnel. The 11% decrease in cost of maintenance and services
revenue in the first quarter of fiscal 2003 compared to the first quarter of
fiscal 2002 is primarily attributable to our continued focus on leveraging our
channel partners to perform consulting services for our customers. As a
result, we reduced headcount in our North American consulting organization by
approximately 75 employees in the fourth quarter of fiscal 2002. This
reduction in headcount contributed to a $1.7 million decrease in employee
expenses for maintenance and services personnel in the first quarter of fiscal
2003 compared to the first quarter of fiscal 2002. Further, independent
contractor and temporary staffing expenses decreased $0.9 million due to our
decreased use of external personnel for product implementations. In addition,
internal meeting costs decreased $0.6 million in the first quarter of fiscal
2003 compared to the first quarter of fiscal 2002, as our annual sales kickoff
event, which was historically held in the first quarter of each fiscal year, is
now held in the fourth fiscal quarter. Our fiscal 2002 sales kickoff event was
held in the first quarter of fiscal 2002, and our fiscal 2003 sales kickoff
event was held in the fourth quarter of fiscal 2002.

The increase in gross margin on maintenance and services revenue is primarily
due to the increase in maintenance revenue as a percentage of total maintenance
and services revenue, as margins on the maintenance revenue stream are higher
than margins on the services revenue stream.

OPERATING EXPENSES

|                           |  |                                  |        |         |  |            |    |         |  |   |        |            |  |  |    |  
|-------------------------- |  | -------------------------------- | ------ | ------- |  | ---------- | -- | ------- |  | - | ------ | ---------- |  |  | -- | -
|                           |  | Three Months Ended September 30,
|                           |  |                                 
|                           |  |                                  |        |         |  | Percent of |    |         |  |   |        | Percent of
|(In thousands)             |  | 2002                             |        | Revenue |  | 2001       |    | Revenue
|                           |  |                                  |        |         |  |            |    |        
|Sales and marketing        |  | $                                | 41,078 |         |  |            | 34 | %       |  | $ | 41,447 |            |  |  | 35 | %
|Research and development   |  |                                  | 17,872 |         |  |            | 15 | %       |  |   | 18,896 |            |  |  | 16 | %
|General and administrative |  |                                  | 11,966 |         |  |            | 10 | %       |  |   | 15,324 |            |  |  | 13 | %
|                           |  |                                  |        |         |  |            |    |         |  |   |        |            |  |  |    |  
|Total operating expenses   |  | $                                | 70,916 |         |  |            |    |         |  | $ | 75,667 |            |  |  |    |  
|                           |  |                                  |        |         |  |            |    |         |  |   |        |            |  |  |    |  

In the fourth quarter of fiscal 2001, we announced a corporate restructuring
plan designed to bring our cost structure more in line with revenues and
strengthen our financial performance. The restructuring plan included a
company-wide initiative to align personnel with our new strategy, which
resulted in a reduction of our workforce by approximately 300, or 12% of the
worldwide headcount. Employee groups impacted by the restructuring include
personnel involved in corporate services, product business units, sales and
customer support. In addition, we consolidated some of our facilities and
exited other facilities. We also focused on reducing other discretionary
expenditures with emphasis on travel costs and external consulting costs across
all functional areas. As a result of this restructuring plan and our strong
focus on controlling costs throughout fiscal 2002 and into fiscal 2003, total
operating expenses declined 6% in the first quarter of fiscal 2003 compared to
the first quarter of fiscal 2002.

Sales and marketing.Sales and marketing expense declined 1% in the first
quarter of fiscal 2003 compared to the first quarter of fiscal 2002 due in part
to the restructuring plan and cost saving measures discussed above.
Additionally, employee expenses decreased $2.9 million in the first quarter of
fiscal 2003 compared to the first quarter of fiscal 2002 primarily due to
headcount reductions and changes in the structure of our sales compensation
plans. Also, internal meeting costs decreased $1.0 million as our annual sales
kickoff event, which was historically held in the first quarter of each fiscal
year, is now held in the fourth fiscal quarter. Our fiscal 2002 sales kickoff
event was held in the first quarter of fiscal 2002, and our fiscal 2003 sales
kickoff event was held in the fourth quarter of fiscal 2002. Partially
offsetting these decreases was a $1.6 million increase in marketing expenses,
which resulted from increased advertising and tradeshow activities, and a $0.8
million increase in external personnel and professional services fees relating
to our marketing and strategy initiatives.

Research and development.Research and development expense decreased 5% in the
first quarter of fiscal 2003 compared to the first quarter of fiscal 2002
primarily due to a decrease in the cost of independent contractors and
temporary staffing of $0.8 million. We have focused our research and
development efforts on our core products, thereby reducing our utilization of
independent contractors for product development activities.

General and administrative.General and administrative expense decreased 22%
in the first quarter of fiscal 2003 compared to the first quarter of fiscal
2002 due in part to the restructuring plan and cost saving measures discussed
above. Also contributing to the decrease in general and administrative expense
was a $1.0 million decrease in outsourcing costs as we have ended the
outsourcing of our North American accounting department, a $1.8 million
decrease in occupancy and equipment costs primarily due to a decrease in
depreciation and amortization expense as many fixed assets had become
fully-depreciated between the first quarter of fiscal 2002 and the first
quarter of fiscal 2003, and a $1.5 million decrease in charges related to
property and sales tax audits. These decreases were partially offset by a $0.6
million net increase in employee expenses resulting primarily from headcount
increases as we brought our North American accounting function in-house.

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INTEREST INCOME AND EXPENSE

|                 |  |                                  |       |        |  |         |     |   |  |   |        |  
|---------------- |  | -------------------------------- | ----- | ------ |  | ------- | --- | - |  | - | ------ | -
|                 |  | Three Months Ended September 30,
|                 |  |                                 
|                 |  |                                  |       |        |  | Percent |     |   |  |  
|(In thousands)   |  | 2002                             |       | Change |  | 2001   
|                 |  |                                  |       |        |  |        
|Interest income  |  | $                                | 1,459 |        |  |         | -32 | % |  | $ | 2,142  |  
|Interest expense |  |                                  | (782  | )      |  |         | -33 | % |  |   | (1,161 | )

Interest income consists of interest earned on cash, cash equivalent and
short-term investment balances. Although we had higher average cash and
investment balances during the first quarter of fiscal 2003 compared to the
first quarter of fiscal 2002, interest income decreased due to the sharp
decline in short-term interest rates during fiscal 2002.

Interest expense consists primarily of interest paid and amortization of
issuance costs related to our convertible subordinated notes and interest paid
on our mortgage loan. Since the first quarter of fiscal 2002, we have
repurchased convertible subordinated notes with a face value of $15.0 million,
which has resulted in the decrease in interest expense in the first quarter of
fiscal 2003 compared to the first quarter of fiscal 2002.

GAIN ON REDEMPTION OF DEBT

During the first quarter of fiscal 2003, we repurchased convertible
subordinated notes with a face value of $5.0 million for a total cost of
approximately $4.7 million, resulting in a gain of approximately $250,000. Any
further purchases of our convertible notes will be determined based on an
evaluation of market conditions and other factors.

PROVISION FOR INCOME TAXES

Our effective income tax rate for the first quarter of fiscal 2003 was 37%
compared to 36% for the first quarter of fiscal 2002. We expect our effective
tax rate to remain at 37% for the remainder of fiscal 2003.

NET INCOME

As a result of the above factors, we generated net income of $9.1 million, or
$0.27 per diluted share, in the first quarter of fiscal 2003 compared to net
income of $1.9 million, or $0.06 per diluted share, in the first quarter of
fiscal 2002.

LIQUIDITY AND CAPITAL RESOURCES

|                                                    |  |                                  |         |        |  |         |      |   |  |   |         |  
|--------------------------------------------------- |  | -------------------------------- | ------- | ------ |  | ------- | ---- | - |  | - | ------- | -
|                                                    |  | Three Months Ended September 30,
|                                                    |  |                                 
|                                                    |  |                                  |         |        |  | Percent |      |   |  |  
|(In thousands)                                      |  | 2002                             |         | Change |  | 2001   
|                                                    |  |                                  |         |        |  |        
|Working capital                                     |  | $                                | 288,354 |        |  |         | 9    | % |  | $ | 263,849 |  
|Cash, cash equivalents and short-term investments   |  |                                  | 346,022 |        |  |         | 22   | % |  |   | 284,039 |  
|Net cash provided by operating activities           |  |                                  | 26,153  |        |  |         | 0    | % |  |   | 26,029  |  
|Net cash used in investing activities               |  |                                  | (7,605  | )      |  |         | -603 | % |  |   | (1,082  | )
|Net cash provided by (used in) financing activities |  |                                  | (3,411  | )      |  |         | -891 | % |  |   | 431     |  

To date, we have financed our business through positive cash flow from
operations and, to a lesser extent, through the issuance of capital stock and
convertible subordinated notes. As of September 30, 2002, our cash is invested
primarily in state and municipal bonds, U.S. government and agency obligations,
corporate notes and other highly-liquid securities with maturities of three
months or less.

In the first quarter of fiscal 2003 and 2002, we generated positive cash flow
from operations of $26.2 million and $26.0 million, respectively. Our
operating cash flows during these periods were primarily due to the net income
generated during the periods and the significant decreases in our accounts
receivable balances, resulting from our focus on invoicing and collection
process improvements. These positive operating cash flows were partially
offset by decreases in accounts payable, accrued expenses and accrued employee
compensation and benefits.

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Net cash used in investing activities amounted to $7.6 million and $1.1 million
during the first quarter of fiscal 2003 and 2002, respectively. Purchases of
property and equipment in the first quarter of fiscal 2003 were $6.0 million
compared to $2.0 million in the first quarter of fiscal 2002. The increase in
capital expenditures in 2003 primarily relates to the purchase and
implementation of our worldwide customer relationship management system, as
well as purchases of other software products.

Net cash used in financing activities was $3.4 million in the first quarter of
fiscal 2003 compared to net cash provided by financing activities of
approximately $430,000 in the first quarter of fiscal 2002. The net cash used
in financing activities in the first quarter of fiscal 2003 was due to the
repurchase of our convertible subordinated notes with a face value of $5.0
million for a total cost of approximately $4.7 million and the repayment of the
$2.3 million mortgage loan on our Connecticut facility, partially offset by
$3.6 million of proceeds from the exercise of stock options during the period.
The net cash provided by financing activities in the first quarter of fiscal
2002 primarily resulted from proceeds from the exercise of stock options during
the period.

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

RECENT ACCOUNTING PRONOUNCEMENTS

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

In January 2002, the Emerging Issues Task Force (EITF) issued EITF Issue No.
01-14 Income Statement Characterization of Reimbursements Received for Out of
Pocket Expenses Incurred, which requires that reimbursements received for
out-of-pocket expenses be reflected as revenues in the statement of income.
EITF No. 01-14 is effective for financial reporting periods beginning after
December 15, 2001. We adopted EITF No. 01-14 on January 1, 2002 and
reclassified the statement of income for the three months ended September 30,
2001 to conform to the current presentation. As a result, approximately $2.7
million has been reclassified primarily from cost of maintenance and services
to maintenance and services revenue for the three months ended September 30,
2001.

In May 2002, the FASB issued SFAS No. 145, Rescission of FASB Statements Nos.
4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections.
SFAS No. 145 eliminates Statement 4 (and Statement 64, as it amends Statement
4), which requires gains and losses from extinguishments of debt to be
aggregated and, if material, classified as an extraordinary item, net of the
related income tax effect. As a result, the criteria in APB Opinion No. 30
will now be used to determine the classification of those gains and losses.
SFAS No. 145 also amends FASB Statement No. 13 to require that certain lease
modifications that have economic effects similar to sale-leaseback transactions
be accounted for in the same manner as sale-leaseback transactions. This
amendment is consistent with the FASBs goal of requiring similar accounting
treatment for transactions that have similar economic effects. In addition,
SFAS No. 145 makes technical corrections to existing pronouncements. While
those corrections are not substantive in nature, in some instances, they may
change accounting practice. This statement is effective for fiscal years
beginning after May 15, 2002 for the provisions related to the rescission of
Statements 4 and 64, and for all transactions entered into after May 15, 2002
for the provision related to the amendment of Statement 13, although early
adoption is permitted. As required by SFAS No. 145, we adopted this new
statement on July 1, 2002. As a result, gains on the redemption of debt, which
were previously presented as extraordinary items on our consolidated statements
of income, are now included in income before income taxes. The adoption did
not have a material impact on our financial position, results of operations or
cash flows.

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

FACTORS THAT MAY AFFECT FUTURE RESULTS

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

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

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

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

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

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

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

REORGANIZATION MAY ADVERSELY AFFECT PRODUCTIVITY. We have continued to make
adjustments to our operations and organization. These changes have historically
resulted in productivity issues in the short term. The revised operations
and/or organization must keep improving over past performance in order to
provide better operating margins and efficiencies. Failure to maintain or
improve momentum and productivity could materially impact our revenue and
profits.

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

INABILITY TO HIRE AND RETAIN EMPLOYEES COULD HARM OUR BUSINESS. Our future
operating results depend significantly upon the retention and hiring of
technical and management personnel. Competition for such personnel is intense,
and there can be no assurance that we will retain our key managerial or
technical personnel or attract such personnel in the future. Either directly or
through personnel search firms, we actively recruit qualified development,
sales and marketing personnel. We have at times experienced difficulty
recruiting or retaining qualified personnel and there can be no assurance that
we will not experience such difficulties in the future, which could have a
material adverse effect on our business, operating results and financial
condition.

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

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

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

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




ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

INTEREST RATE RISK. The primary objective of our investment activities is to
preserve principal while maximizing yields, without significantly increasing
risk. To achieve this objective, we maintain our portfolio of cash equivalents
and short-term investments in a variety of securities, including government and
corporate obligations, certificates of deposit and money market funds. At
September 30, 2002, our investment portfolio consisted of investment-grade debt
securities, excluding those classified as cash equivalents, with a fair value
of $20.1 million. The portfolio is invested in short-term securities to
minimize interest rate risk and for liquidity purposes in the event of
immediate cash needs. Due to the short duration of our investment portfolio,
an immediate 10% change in market interest rates would not have a material
impact on our investment portfolio.

Our long-term debt bears interest at a fixed interest rate and, therefore,
relative to our long-term debt, an immediate 10% change in market interest
rates would not have a material impact on our financial condition or results of
operations. As of September 30, 2002, our long-term debt consists of 4.5%
convertible subordinated notes due March 2005 with a face value of $73.8
million.

FOREIGN CURRENCY EXCHANGE RATE RISK. We transact business in various foreign
currencies. Our exposure to foreign currency exchange rate fluctuations arises
in part from intercompany accounts in which costs incurred in the United States
are charged to our foreign sales subsidiaries. Additionally, intercompany
balances arise from software royalty fees that are charged to our foreign
subsidiaries. These intercompany accounts are typically denominated in the
functional currency of the foreign subsidiary, which is typically the local
currency. From time to time, we utilize foreign currency forward exchange
contracts to offset the risk associated with the effects of certain
intercompany balances for which we anticipate settlement in the foreseeable
future. As a result, increases or decreases in our intercompany accounts due
to foreign exchange rate changes are offset by gains and losses on the forward
contracts, so as to mitigate the possibility of foreign currency transaction
gains and losses. Our forward contracts generally have terms of 90 days or
less. We do not use forward contracts for trading purposes. All foreign
currency transactions and all outstanding forward contracts are marked to
market at the end of the period with unrealized gains and losses included in
our consolidated statements of income. Our ultimate realized gain or loss with
respect to currency fluctuations will depend on the currency exchange rates and
other factors in effect as the contracts mature. Net foreign exchange
transaction gains and losses were not material for the first quarter of fiscal
2003 and 2002. We had no open foreign currency forward exchange contracts as
of September 30, 2002 and 2001.

We are also exposed to foreign currency exchange rate fluctuations as the
income statements of our foreign subsidiaries are translated into U.S. dollars
upon consolidation. As exchange rates vary, these results, when translated,
may vary from expectations and adversely impact overall expected profitability.
The effect of foreign exchange rate fluctuations on our consolidated statements
of income for the first quarter of fiscal 2003 and 2002 was not material.




ITEM 4. CONTROLS AND PROCEDURES

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES. Based on their evaluation as
of a date within 90 days of the filing date of this Quarterly Report on Form
10-Q, our chief executive officer and chief financial officer have concluded
that our disclosure controls and procedures (as defined in Rules 13a-14(c) and
15d-14(c) of the Securities Exchange Act of 1934) are effective to ensure that
information required to be disclosed by us in reports that we file or submit
under the Securities Exchange Act of 1934 is recorded, processed, summarized
and reported within the time periods specified in Securities and Exchange
Commission rules and forms.

CHANGES IN INTERNAL CONTROLS. There were no significant changes in our
internal controls or in other factors that could significantly affect these
controls subsequent to the date of their evaluation, nor were there any
significant deficiencies or material weaknesses in our internal controls.
Accordingly, no corrective actions were required or undertaken.

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PART II. OTHER INFORMATION




ITEM 1. LEGAL PROCEEDINGS

On June 27, 2001, Timeline, Inc. filed a complaint against us in the United
States District Court for the Western District of Washington alleging that we
infringe U.S. Patent Nos. 5,802,511; 6,023,694; and 6,026,392 (the Timeline
patents) and seeking a permanent injunction and monetary damages, including
treble damages. On August 29, 2002, we settled the lawsuit with Timeline, and
each company agreed to dismiss its claims with prejudice. Under the settlement
agreement, we obtained a fully paid-up license to the Timeline patents and
agreed to pay Timeline a settlement totaling $1.05 million, payable over four
months. In accordance with generally accepted accounting principles, this
settlement was recorded in fiscal 2002, and the resulting liability was
included in accounts payable and accrued expenses on our consolidated balance
sheet at June 30, 2002.

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

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




ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K



|(a) |  | Exhibits
|--- |  | --------

|      |  |   |  |                                                                                                                        
|----- |  | - |  | -----------------------------------------------------------------------------------------------------------------------
|10.15 |  | - |  | Employment Agreement with Jeffrey R. Rodek, dated September 11, 2002.                                                  
|99.1  |  | - |  | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley
Act of 2002.



|(b) |  | Reports on Form 8-K                                                                                                                                                                                             
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | On September 6, 2002, we filed a current report on Form 8-K in connection
with the issuance of a press release dated August 29, 2002 announcing the
settlement of our pending patent dispute with Timeline, Inc.

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SIGNATURES

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

|                        |  |                                             |  |                                             
|----------------------- |  | ------------------------------------------- |  | --------------------------------------------
|Date: November 11, 2002 |  | Hyperion Solutions Corporation
(Registrant)
|                        |  | By:                                         |  | /s/ David W. Odell                          
|                        |  |                                             |  |                                             
|                        |  |                                             |  | David W. Odell
Chief Financial Officer      
|                        |  | By:                                         |  | /s/ Nolene P. Fabre                         
|                        |  |                                             |  |                                             
|                        |  |                                             |  | Nolene P. Fabre
Principal Accounting Officer

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CHIEF EXECUTIVE OFFICER CERTIFICATION

I, Jeffrey R. Rodek, Chief Executive Officer of Hyperion Solutions Corporation,
certify that:



|1. |  | I have reviewed this quarterly report on Form 10-Q of Hyperion
Solutions Corporation (the Registrant);                                                                                                                                                                                                                      
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
|  
|3. |  | Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the Registrant as of, and for, the periods presented in
this quarterly report;                   
|  
|4. |  | The Registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the Registrant and
we have:                                                                                                     



| | a) |  | designed such disclosure controls and procedures to
ensure that material information relating to the Registrant,
including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in
which this quarterly report is being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | evaluated the effectiveness of the Registrants
disclosure controls and procedures as of a date within 90 days
prior to the filing date of this quarterly report (the Evaluation
Date); and                                                                                                  
|
| | c) |  | presented in this quarterly report our conclusions about
the effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date;                                                                                                                        



|5. |  | The Registrants other certifying officers and I have disclosed,
based on our most recent evaluation, to the Registrants auditors and
the audit committee of the Registrants board of directors (or persons
performing the equivalent functions):
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | all significant deficiencies in the design or operation
of internal controls which could adversely affect the Registrants
ability to record, process, summarize and report financial data
and have identified for the Registrants auditors any material
weaknesses in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | any fraud, whether or not material, that involves
management or other employees who have a significant role in the
Registrants internal controls; and                                                                                                                                        



|6. |  | The Registrants other certifying officers and I have indicated in
this quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant deficiencies
and material weaknesses.
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Dated: November 11, 2002

/s/ Jeffrey R. Rodek

Jeffrey R. Rodek
Chief Executive Officer

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CHIEF FINANCIAL OFFICER CERTIFICATION

I, David W. Odell, Chief Financial Officer of Hyperion Solutions Corporation,
certify that:



|1. |  | I have reviewed this quarterly report on Form 10-Q of Hyperion
Solutions Corporation (the Registrant);                                                                                                                                                                                                                      
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
|  
|3. |  | Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the Registrant as of, and for, the periods presented in
this quarterly report;                   
|  
|4. |  | The Registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the Registrant and
we have:                                                                                                     



| | a) |  | designed such disclosure controls and procedures to
ensure that material information relating to the Registrant,
including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in
which this quarterly report is being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | evaluated the effectiveness of the Registrants
disclosure controls and procedures as of a date within 90 days
prior to the filing date of this quarterly report (the Evaluation
Date); and                                                                                                  
|
| | c) |  | presented in this quarterly report our conclusions about
the effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date;                                                                                                                        



|5. |  | The Registrants other certifying officers and I have disclosed,
based on our most recent evaluation, to the Registrants auditors and
the audit committee of the Registrants board of directors (or persons
performing the equivalent functions):
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | all significant deficiencies in the design or operation
of internal controls which could adversely affect the Registrants
ability to record, process, summarize and report financial data
and have identified for the Registrants auditors any material
weaknesses in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | any fraud, whether or not material, that involves
management or other employees who have a significant role in the
Registrants internal controls; and                                                                                                                                        



|6. |  | The Registrants other certifying officers and I have indicated in
this quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant deficiencies
and material weaknesses.
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Dated: November 11, 2002

/s/ David W. Odell

David W. Odell
Chief Financial Officer

20



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##### Table of Contents






EXHIBIT INDEX

|      |  |   |  |                                                                                                                        
|----- |  | - |  | -----------------------------------------------------------------------------------------------------------------------
|10.15 |  | - |  | Employment Agreement with Jeffrey R. Rodek, dated September 11, 2002.                                                  
|     
|99.1  |  | - |  | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley
Act of 2002.

21