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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549





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 March 31, 2003

OR

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

For the transition period from         to        .



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Commission File Number 000-26934

|                                                                                     
|-------------------------------------------------------------------------------------
|Hyperion Solutions Corporation
(Exact name of
registrant as specified in its charter)

|                                                                        |  |                                                
|----------------------------------------------------------------------- |  | -----------------------------------------------
|Delaware
(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. Yes þ No o

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

As of May 9, 2003, there were 36,456,155 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 99.1                         
|EXHIBIT 99.2                         



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Hyperion Solutions Corporation

Form 10-Q

|                              |  |                                                                                                                                  |      |   
|----------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------- | ---- | --
|                              |  |                                                                                                                                  | PAGE
|PART I. FINANCIAL INFORMATION |  |                                                                                                                                 
|Item 1                        |  | Financial Statements (Unaudited):                                                                                                |      | 3 
|                              |  | Condensed Consolidated Balance Sheets at March 31, 2003 and June 30, 2002                                                        |      | 3 
|                              |  | Condensed Consolidated Statements of Income and Comprehensive Income for the three and nine
months ended March 31, 2003 and 2002 |      | 4 
|                              |  | Condensed Consolidated Statements of Cash Flows for the nine months ended March 31, 2003
and 2002                                |      | 5 
|                              |  | Notes to Condensed Consolidated Financial Statements                                                                             |      | 6 
|Item 2                        |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                                            |      | 11
|Item 3                        |  | Quantitative and Qualitative Disclosures About Market Risk                                                                       |      | 18
|Item 4                        |  | Controls and Procedures                                                                                                          |      | 18
|PART II. OTHER INFORMATION    |  |                                                                                                                                 
|Item 1                        |  | Legal Proceedings                                                                                                                |      | 19
|Item 6                        |  | Exhibits and Reports on Form 8-K                                                                                                 |      | 19
|                              |  | Signatures                                                                                                                       |      | 20
|                              |  | Chief Executive Officer Certification                                                                                            |      | 21
|                              |  | Chief Financial Officer Certification                                                                                            |      | 22
|                              |  | Exhibit Index                                                                                                                    |      | 23

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

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PART I. FINANCIAL INFORMATION




ITEM 1. FINANCIAL STATEMENTS

HYPERION SOLUTIONS CORPORATION




CONDENSED CONSOLIDATED BALANCE SHEETS


(In thousands, except par value)


|                                           |                                                                                                             |   |             |         |          |   |         |         |  
|------------------------------------------ | ----------------------------------------------------------------------------------------------------------- | - | ----------- | ------- | -------- | - | ------- | ------- | -
|                                           |                                                                                                             |   | March 31,   |         | June 30,
|                                           |                                                                                                             |   | 2003        |         | 2002    
|                                           |                                                                                                             |   |             |         |         
|                                           |                                                                                                             |   | (Unaudited) |         |          |   |        
|ASSETS                                     |                                                                                                             |   |             |         |          |   |         |        
|Current assets:                            |                                                                                                             |   |             |         |          |   |         |        
|                                           | Cash and cash equivalents                                                                                   |   | $           | 378,860 |          |   | $       | 311,130 |  
|                                           | Short-term investments                                                                                      |   |             | 9,923   |          |   |         | 19,128  |  
|                                           | Accounts receivable, net of allowances of $10,460 and $10,660                                               |   |             | 77,287  |          |   |         | 110,196 |  
|                                           | Deferred income taxes                                                                                       |   |             | 13,718  |          |   |         | 15,495  |  
|                                           | Prepaid expenses and other current assets                                                                   |   |             | 14,293  |          |   |         | 17,240  |  
|                                           |                                                                                                             |   |             |         |          |   |         |         |  
|TOTAL CURRENT ASSETS                       |                                                                                                             |   | 494,081     |         |          |   | 473,189 |        
|Property and equipment, net                |                                                                                                             |   | 65,586      |         |          |   | 69,866  |        
|Goodwill                                   |                                                                                                             |   | 8,281       |         |          |   | 8,171   |        
|Intangible assets, net                     |                                                                                                             |   | 7,103       |         |          |   | 8,493   |        
|Deferred income taxes                      |                                                                                                             |   | 17,338      |         |          |   | 17,993  |        
|Other assets                               |                                                                                                             |   | 5,964       |         |          |   | 6,178   |        
|                                           |                                                                                                             |   |             |         |          |   |         |         |  
|TOTAL ASSETS                               |                                                                                                             | $ | 598,353     |         |          | $ | 583,890 |        
|                                           |                                                                                                             |   |             |         |          |   |         |         |  
|LIABILITIES AND STOCKHOLDERS EQUITY       |                                                                                                             |   |             |         |          |   |         |        
|Current liabilities:                       |                                                                                                             |   |             |         |          |   |         |        
|                                           | Accounts payable and accrued expenses                                                                       |   | $           | 39,455  |          |   | $       | 50,858  |  
|                                           | Accrued employee compensation and benefits                                                                  |   |             | 33,484  |          |   |         | 39,005  |  
|                                           | Income taxes payable                                                                                        |   |             | 232     |          |   |         |        |  
|                                           | Deferred revenue                                                                                            |   |             | 99,279  |          |   |         | 94,910  |  
|                                           | Other current liabilities                                                                                   |   |             | 4,595   |          |   |         | 6,915   |  
|                                           |                                                                                                             |   |             |         |          |   |         |         |  
|TOTAL CURRENT LIABILITIES                  |                                                                                                             |   | 177,045     |         |          |   | 191,688 |        
|Long-term debt                             |                                                                                                             |   | 50,040      |         |          |   | 80,802  |        
|Other liabilities                          |                                                                                                             |   | 11,686      |         |          |   | 11,743  |        
|Commitments and 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;
36,384 and 34,662 shares issued and outstanding |   |             | 36      |          |   |         | 35      |  
|                                           | Additional paid-in capital                                                                                  |   |             | 264,722 |          |   |         | 227,563 |  
|                                           | Treasury stock, at cost: 1,343 and 1,344 common shares                                                      |   |             | (23,091 | )        |   |         | (23,097 | )
|                                           | Deferred stock-based compensation                                                                           |   |             | (3,090  | )        |   |         |        |  
|                                           | Retained earnings                                                                                           |   |             | 128,420 |          |   |         | 103,472 |  
|                                           | Accumulated other comprehensive loss                                                                        |   |             | (7,415  | )        |   |         | (8,316  | )
|                                           |                                                                                                             |   |             |         |          |   |         |         |  
|TOTAL STOCKHOLDERS EQUITY                 |                                                                                                             |   | 359,582     |         |          |   | 299,657 |        
|                                           |                                                                                                             |   |             |         |          |   |         |         |  
|TOTAL LIABILITIES AND STOCKHOLDERS EQUITY |                                                                                                             | $ | 598,353     |         |          | $ | 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 |        | Nine Months Ended
|                                    |                          |   | March 31,          |        | March 31,        
|                                    |                          |   | 2003               |        | 2002              |   | 2003    |        | 2002
|                                    |                          |   |                    |        |                   |   |         |        |     
|REVENUES                            |                          |   |                    |        |                   |   |         |        |      |   |         |         |  |   |         |        
|                                    | Software licenses        |   | $                  | 50,449 |                   |   | $       | 49,979 |      |   | $       | 146,176 |  |   | $       | 134,977 | 
|                                    | Maintenance and services |   |                    | 76,110 |                   |   |         | 69,980 |      |   |         | 226,299 |  |   |         | 221,221 | 
|                                    |                          |   |                    |        |                   |   |         |        |      |   |         |         |  |   |         |         | 
|TOTAL REVENUES                      |                          |   | 126,559            |        |                   |   | 119,959 |        |      |   | 372,475 |         |  |   | 356,198 |        
|COSTS AND EXPENSES                  |                          |   |                    |        |                   |   |         |        |      |   |         |         |  |   |         |        
|Cost of revenues:                   |                          |   |                    |        |                   |   |         |        |      |   |         |         |  |   |         |        
|                                    | Software licenses        |   |                    | 4,136  |                   |   |         | 4,256  |      |   |         | 10,782  |  |   |         | 10,823  | 
|                                    | Maintenance and services |   |                    | 34,119 |                   |   |         | 32,529 |      |   |         | 98,654  |  |   |         | 103,205 | 
|Sales and marketing                 |                          |   | 46,932             |        |                   |   | 44,604  |        |      |   | 136,672 |         |  |   | 129,661 |        
|Research and development            |                          |   | 18,598             |        |                   |   | 18,124  |        |      |   | 54,577  |         |  |   | 53,743  |        
|General and administrative          |                          |   | 10,412             |        |                   |   | 16,279  |        |      |   | 34,231  |         |  |   | 47,008  |        
|Restructuring charges               |                          |   |                   |        |                   |   | (418    | )      |      |   | 596     |         |  |   | 44      |        
|                                    |                          |   |                    |        |                   |   |         |        |      |   |         |         |  |   |         |         | 
|TOTAL COSTS AND EXPENSES            |                          |   | 114,197            |        |                   |   | 115,374 |        |      |   | 335,512 |         |  |   | 344,484 |        
|                                    |                          |   |                    |        |                   |   |         |        |      |   |         |         |  |   |         |         | 
|OPERATING INCOME                    |                          |   | 12,362             |        |                   |   | 4,585   |        |      |   | 36,963  |         |  |   | 11,714  |        
|Interest and other income           |                          |   | 1,458              |        |                   |   | 1,437   |        |      |   | 4,491   |         |  |   | 5,504   |        
|Interest and other expense          |                          |   | (698               | )      |                   |   | (1,202  | )      |      |   | (2,332  | )       |  |   | (3,531  | )      
|Gain on redemption of debt          |                          |   |                   |        |                   |   |        |        |      |   | 478     |         |  |   |        |        
|                                    |                          |   |                    |        |                   |   |         |        |      |   |         |         |  |   |         |         | 
|INCOME BEFORE INCOME TAXES          |                          |   | 13,122             |        |                   |   | 4,820   |        |      |   | 39,600  |         |  |   | 13,687  |        
|Provision for income taxes          |                          |   | 4,855              |        |                   |   | 1,735   |        |      |   | 14,652  |         |  |   | 4,927   |        
|                                    |                          |   |                    |        |                   |   |         |        |      |   |         |         |  |   |         |         | 
|NET INCOME                          |                          | $ | 8,267              |        |                   | $ | 3,085   |        |      | $ | 24,948  |         |  | $ | 8,760   |        
|                                    |                          |   |                    |        |                   |   |         |        |      |   |         |         |  |   |         |         | 
|Other comprehensive income (loss)   |                          |   | 243                |        |                   |   | (1,067  | )      |      |   | 901     |         |  |   | 276     |        
|                                    |                          |   |                    |        |                   |   |         |        |      |   |         |         |  |   |         |         | 
|COMPREHENSIVE INCOME                |                          | $ | 8,510              |        |                   | $ | 2,018   |        |      | $ | 25,849  |         |  | $ | 9,036   |        
|                                    |                          |   |                    |        |                   |   |         |        |      |   |         |         |  |   |         |         | 
|EARNINGS PER SHARE                  |                          |   |                    |        |                   |   |         |        |      |   |         |         |  |   |         |        
|                                    | Basic                    |   | $                  | 0.24   |                   |   | $       | 0.09   |      |   | $       | 0.73    |  |   | $       | 0.27    | 
|                                    | Diluted                  |   | $                  | 0.23   |                   |   | $       | 0.09   |      |   | $       | 0.71    |  |   | $       | 0.26    | 
|WEIGHTED AVERAGE SHARES OUTSTANDING |                          |   |                    |        |                   |   |         |        |      |   |         |         |  |   |         |        
|                                    | Basic                    |   |                    | 34,795 |                   |   |         | 32,918 |      |   |         | 34,119  |  |   |         | 32,694  | 
|                                    | Diluted                  |   |                    | 36,078 |                   |   |         | 34,107 |      |   |         | 35,231  |  |   |         | 33,259  | 

See accompanying notes to condensed consolidated financial statements.

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HYPERION SOLUTIONS CORPORATION




CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


(In thousands)
(Unaudited)


|                                                                                  |                                                                          |                            |         |                   |       |      |         |         |       | 
|--------------------------------------------------------------------------------- | ------------------------------------------------------------------------ | -------------------------- | ------- | ----------------- | ----- | ---- | ------- | ------- | ----- | 
|                                                                                  |                                                                          |                            |         | Nine Months Ended
|                                                                                  |                                                                          |                            |         | March 31,        
|                                                                                  |                                                                          |                            |         | 2003              |       | 2002
|                                                                                  |                                                                          |                            |         |                   |       |     
|CASH FLOWS FROM OPERATING ACTIVITIES                                              |                                                                          |                            |         |                   |       |      |         |        
|Net income                                                                        |                                                                          | $                          | 24,948  |                   |       | $    | 8,760   |        
|Adjustments to reconcile net income to net cash provided by operating activities: |                                                                          |                            |         |                   |       |      |         |        
|                                                                                  | Gain on redemption of debt                                               |                            |         | (478              | )     |      |         |        |      
|                                                                                  | Gain on sale of assets                                                   |                            |         | (35               | )     |      |         |        |      
|                                                                                  | Depreciation and amortization                                            |                            |         | 21,113            |       |      |         | 24,067  |      
|                                                                                  | Provision for accounts receivable allowances                             |                            |         | 5,378             |       |      |         | 14,358  |      
|                                                                                  | Deferred income taxes                                                    |                            |         | 2,449             |       |      |         | 314     |      
|                                                                                  | Income tax benefit from exercise of stock options                        |                            |         | 4,946             |       |      |         | 974     |      
|Changes in operating assets and liabilities:                                      |                                                                          |                            |         |                   |       |      |         |        
|                                                                                  | Accounts receivable                                                      |                            |         | 28,769            |       |      |         | 46,290  |      
|                                                                                  | Prepaid expenses and other current assets                                |                            |         | (464              | )     |      |         | 694     |      
|                                                                                  | Other assets                                                             |                            |         | (203              | )     |      |         | (304    | )    
|                                                                                  | Accounts payable and accrued expenses                                    |                            |         | (10,760           | )     |      |         | (7,592  | )    
|                                                                                  | Accrued employee compensation and benefits                               |                            |         | (5,793            | )     |      |         | (903    | )    
|                                                                                  | Income taxes payable                                                     |                            |         | 3,899             |       |      |         | (3,102  | )    
|                                                                                  | Deferred revenue                                                         |                            |         | 3,183             |       |      |         | (13,107 | )    
|                                                                                  | Other current liabilities                                                |                            |         | (3,810            | )     |      |         | (6,780  | )    
|                                                                                  | Other liabilities                                                        |                            |         | (297              | )     |      |         | (2,166  | )    
|                                                                                  |                                                                          |                            |         |                   |       |      |         |        
|Net cash provided by operating activities                                         |                                                                          |                            | 72,845  |                   |       |      | 61,503  |        
|                                                                                  |                                                                          |                            |         |                   |       |      |         |        
|CASH FLOWS FROM INVESTING ACTIVITIES                                              |                                                                          |                            |         |                   |       |      |         |        
|                                                                                  | Purchases of investments                                                 |                            |         | (12,093           | )     |      |         | (29,657 | )    
|                                                                                  | Proceeds from maturities of investments                                  |                            |         | 21,280            |       |      |         | 41,203  |      
|                                                                                  | Purchases of property and equipment                                      |                            |         | (13,635           | )     |      |         | (10,740 | )    
|                                                                                  | Proceeds from sale of property and equipment                             |                            |         | 455               |       |      |         |        |      
|                                                                                  | Purchases of intangible assets                                           |                            |         | (1,647            | )     |      |         | (3,935  | )    
|                                                                                  | Payments for acquisitions                                                |                            |         |                  |       |      |         | (1,000  | )    
|                                                                                  |                                                                          |                            |         |                   |       |      |         |        
|Net cash used in investing activities                                             |                                                                          |                            | (5,640  | )                 |       |      | (4,129  | )      
|                                                                                  |                                                                          |                            |         |                   |       |      |         |        
|CASH FLOWS FROM FINANCING ACTIVITIES                                              |                                                                          |                            |         |                   |       |      |         |        
|                                                                                  | Principal payments on mortgage loan                                      |                            |         | (2,298            | )     |      |         | (180    | )    
|                                                                                  | Redemption of debt                                                       |                            |         | (27,930           | )     |      |         |        |      
|                                                                                  | Treasury stock transactions, net                                         |                            |         | 6                 |       |      |         | 64      |      
|                                                                                  | Proceeds from exercise of stock options and employee stock purchase plan |                            |         | 29,058            |       |      |         | 8,629   |      
|                                                                                  |                                                                          |                            |         |                   |       |      |         |        
|Net cash provided by (used in) financing activities                               |                                                                          |                            | (1,164  | )                 |       |      | 8,513   |        
|Effect of exchange rate on cash and cash equivalents                              |                                                                          |                            | 1,689   |                   |       |      | 911     |        
|                                                                                  |                                                                          |                            |         |                   |       |      |         |        
|INCREASE IN CASH AND CASH EQUIVALENTS                                             |                                                                          |                            | 67,730  |                   |       |      | 66,798  |        
|Cash and cash equivalents at beginning of period                                  |                                                                          |                            | 311,130 |                   |       |      | 232,904 |        
|                                                                                  |                                                                          |                            |         |                   |       |      |         |        
|CASH AND CASH EQUIVALENTS AT END OF PERIOD                                        |                                                                          | $                          | 378,860 |                   |       | $    | 299,702 |        
|                                                                                  |                                                                          |                            |         |                   |       |      |         |        
|SUPPLEMENTAL CASH FLOW INFORMATION:                                               |                                                                          |                            |         |                   |       |      |         |        
|                                                                                  |                                                                          | Cash paid for income taxes |         | $                 | 2,788 |      |         | $       | 6,062 | 
|                                                                                  |                                                                          | Cash paid for interest     |         | $                 | 3,097 |      |         | $       | 4,129 | 

See accompanying notes to condensed consolidated financial statements.

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HYPERION SOLUTIONS CORPORATION




NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 2003


1.     Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have
been prepared 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 accounting
principles generally accepted in the United States of America have been
condensed or omitted pursuant to these rules and regulations. However,
management believes that the disclosures are adequate to ensure the information
presented is not misleading. The balance sheet at June 30, 2002 has been
derived from the audited financial statements, but does not include all
disclosures required by generally accepted accounting principles. These
unaudited condensed consolidated financial statements should be read in
conjunction with the audited financial statements and notes thereto included in
our annual report on Form 10-K for the fiscal year ended June 30, 2002.

In the opinion of management, all adjustments, consisting only of normal
recurring items, considered necessary for a fair presentation have been
included in the accompanying unaudited financial statements. The results of
operations for the interim periods presented are not necessarily indicative of
the operating results to be expected for any subsequent interim period or for
the fiscal year ending June 30, 2003. Certain prior period balances have been
reclassified to conform to the current period presentation.

2.     Significant Accounting Policies

Revenue Recognition

Hyperion derives revenues from licensing 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. 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 twelve-month prepaid contract that is
recognized ratably over the period. Customers may also enter into professional
services arrangements that are typically on a time and materials basis and
include 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 and
nine months ended March 31, 2003 and 2002 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 available to common stockholders by the
weighted average number of common shares outstanding during the period. Diluted
EPS is computed by dividing net income available to common stockholders by the
weighted average number of common shares outstanding and potentially dilutive
securities outstanding during the period. Potentially dilutive securities
include stock options and shares issuable upon conversion of Hyperions
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 |        | Nine Months Ended
|                                          |  | March 31,          |        | March 31,        
|                                          |  | 2003               |        | 2002              |  | 2003 |        | 2002
|                                          |  |                    |        |                   |  |      |        |     
|Net income                                |  | $                  | 8,267  |                   |  | $    | 3,085  |      |  | $ | 24,948 |  |  | $ | 8,760  | 
|Shares used in computing basic EPS        |  |                    | 34,795 |                   |  |      | 32,918 |      |  |   | 34,119 |  |  |   | 32,694 | 
|Effect of potentially dilutive securities |  |                    | 1,283  |                   |  |      | 1,189  |      |  |   | 1,112  |  |  |   | 565    | 
|                                          |  |                    |        |                   |  |      |        |      |  |   |        |  |  |   |        | 
|Shares used in computing diluted EPS      |  |                    | 36,078 |                   |  |      | 34,107 |      |  |   | 35,231 |  |  |   | 33,259 | 
|                                          |  |                    |        |                   |  |      |        |      |  |   |        |  |  |   |        | 
|Basic EPS                                 |  | $                  | 0.24   |                   |  | $    | 0.09   |      |  | $ | 0.73   |  |  | $ | 0.27   | 
|Diluted EPS                               |  | $                  | 0.23   |                   |  | $    | 0.09   |      |  | $ | 0.71   |  |  | $ | 0.26   | 

For the three months ended March 31, 2003 and 2002, stock option rights
totaling 2.3 million shares and 2.6 million shares, respectively, have been
excluded from the diluted EPS calculations because their effect would have been
antidilutive. For the nine months ended March 31, 2003 and 2002, stock option
rights totaling 2.6 million shares and 5.6 million shares, respectively, have
been excluded from the diluted EPS calculations because their effect would have
been antidilutive.

For the three months ended March 31, 2003 and 2002, 0.9 million and 1.6 million
shares of common stock, respectively, issuable upon conversion of the
convertible subordinated notes have been excluded from the diluted EPS
calculations because their effect would have been antidilutive. For the nine
months ended March 31, 2003 and 2002, 1.2 million and 1.6 million shares of
common stock, respectively, issuable upon conversion of the convertible
subordinated notes have been excluded from the diluted EPS calculations because
their effect would have been antidilutive.

Stock-Based Compensation

Hyperion has adopted the disclosure requirements of SFAS No. 148, Accounting
for Stock-Based Compensation - Transition and Disclosure during the quarter
ended March 31, 2003. SFAS No. 148 amends SFAS No. 123, Accounting for
Stock-Based Compensation, to provide alternative methods of transition for a
voluntary change to the fair value based method of accounting for stock-based
compensation and also amends the disclosure requirements of SFAS 123 to require
prominent disclosures in both annual and interim financial statements about the
methods of accounting for stock-based employee compensation and the effect of
the method used on reported results. As permitted by SFAS 148 and SFAS 123,
Hyperion continues to apply the accounting provisions of Accounting Principles
Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees.
Hyperion generally grants its stock options at exercise prices equal to the
fair market value of the underlying stock on the date of grant and, therefore,
under APB Opinion No. 25, no compensation expense is recognized in the
statements of income. Had Hyperion

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

|                                                                                        |                       |   |                    |      |                   |   |        |       |      |   |         |      |  |   |         |       |  
|--------------------------------------------------------------------------------------- | --------------------- | - | ------------------ | ---- | ----------------- | - | ------ | ----- | ---- | - | ------- | ---- |  | - | ------- | ----- | -
|                                                                                        |                       |   | Three Months Ended |      | Nine Months Ended
|                                                                                        |                       |   | March 31,          |      | March 31,        
|                                                                                        |                       |   | 2003               |      | 2002              |   | 2003   |       | 2002
|                                                                                        |                       |   |                    |      |                   |   |        |       |     
|Net income, as reported                                                                 |                       | $ | 8,267              |      |                   | $ | 3,085  |       |      | $ | 24,948  |      |  | $ | 8,760   |      
|Deduct: stock-based compensation expense
determined under fair value method, net of tax |                       |   | (4,209             | )    |                   |   | (4,117 | )     |      |   | (12,177 | )    |  |   | (11,932 | )    
|                                                                                        |                       |   |                    |      |                   |   |        |       |      |   |         |      |  |   |         |      
|Pro forma net income (loss)                                                             |                       | $ | 4,058              |      |                   | $ | (1,032 | )     |      | $ | 12,771  |      |  | $ | (3,172  | )    
|                                                                                        |                       |   |                    |      |                   |   |        |       |      |   |         |      |  |   |         |      
|Earnings per share:                                                                     |                       |   |                    |      |                   |   |        |       |      |   |         |      |  |   |         |      
|                                                                                        | Basic - as reported   |   | $                  | 0.24 |                   |   | $      | 0.09  |      |   | $       | 0.73 |  |   | $       | 0.27  |  
|                                                                                        | Basic - pro forma     |   | $                  | 0.12 |                   |   | $      | (0.03 | )    |   | $       | 0.37 |  |   | $       | (0.10 | )
|                                                                                        | Diluted - as reported |   | $                  | 0.23 |                   |   | $      | 0.09  |      |   | $       | 0.71 |  |   | $       | 0.26  |  
|                                                                                        | Diluted - pro forma   |   | $                  | 0.11 |                   |   | $      | (0.03 | )    |   | $       | 0.37 |  |   | $       | (0.10 | )

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

Recent Accounting Pronouncements

In July 2002, the Financial Accounting Standards Board (FASB) issued SFAS No.
146, Accounting for Costs Associated with Exit or Disposal Activities, which
nullifies Emerging Issues Task Force (EITF) Issue No. 94-3. SFAS No. 146
requires that a liability for a cost associated with an exit or disposal
activity be recognized when the liability is incurred, whereas EITF No. 94-3
had required recognition of the liability as of the commitment date of an exit
plan. This statement is effective for exit or disposal activities initiated
after December 31, 2002. Hyperion adopted SFAS No. 146 on January 1, 2003, and
the adoption did not have a material impact on its financial position or
results of operations.

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

3.     Commitments and Contingencies

Guarantees and Indemnifications

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

As permitted under Delaware law, Hyperion has agreements whereby it indemnifies
its officers and directors for certain events or occurrences while the officer
or director is or was serving at Hyperions request in such capacity. The term
of the indemnification period is for the officers or directors lifetime. The
maximum potential amount of future payments Hyperion could be required to make
under these indemnification agreements is unlimited; however, Hyperion has a
director and officer insurance policy that limits its exposure and enables it
to recover a portion of any future amounts paid. As a result of the

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insurance policy coverage, Hyperion believes the estimated fair value of these indemnification agreements
is minimal. Hyperion has no liabilities recorded for these agreements as of
March 31, 2003.

Hyperion includes standard intellectual property indemnification clauses in its
software license agreements. Pursuant to these clauses, Hyperion holds
harmless and agrees to defend the indemnified party, generally Hyperions
business partners and customers, in connection with certain patent, copyright
or trade secret infringement claims by third parties with respect to Hyperions
products. The term of the indemnification clauses is generally perpetual any
time after execution of the software license agreement. In the event an
infringement claim against Hyperion or an indemnified party is successful,
Hyperion, at its sole option, agrees to do one of the following: (i) procure
for the indemnified party the right to continue use of the software; (ii)
provide a modification to the software so that its use becomes non-infringing;
(iii) replace the software with software which is substantially similar in
functionality and performance; or (iv) refund the residual value of the
software license fees paid by the indemnified party for the infringing
software. Hyperion believes the estimated fair value of these agreements is
minimal. Hyperion has no liabilities recorded for these agreements as of March
31, 2003.

Hyperion generally warrants that its software products will perform in all
material respects in accordance with its standard published specifications in
effect at the time of delivery of the licensed products to the customer for a
period of ninety days following delivery. If necessary, Hyperion would provide
for the estimated cost of product warranties based on specific warranty claims and claim
history. Hyperion has not incurred significant expense under its product
warranties to date and, as a result, Hyperion believes the estimated fair value
of these warranties is minimal. Hyperion has no liabilities recorded for these
warranties as of March 31, 2003.

Contingencies

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

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

4.     Restricted Stock

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

5.     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 (United States,
Canada and Latin America), EMEA (Europe, Middle East and Africa) and APAC (Asia
Pacific). Hyperions products are marketed internationally through Hyperions
direct sales force, independent distributors and application resellers.

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

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

|          |          |   |                    |        |                   |   |         |        |      |   |         |         |  |   |         |         | 
|--------- | -------- | - | ------------------ | ------ | ----------------- | - | ------- | ------ | ---- | - | ------- | ------- |  | - | ------- | ------- | 
|          |          |   | Three Months Ended |        | Nine Months Ended
|          |          |   | March 31,          |        | March 31,        
|          |          |   | 2003               |        | 2002              |   | 2003    |        | 2002
|          |          |   |                    |        |                   |   |         |        |     
|Revenues: |          |   |                    |        |                   |   |         |        |      |   |         |         |  |   |         |        
|          | Americas |   | $                  | 78,762 |                   |   | $       | 81,175 |      |   | $       | 232,960 |  |   | $       | 236,907 | 
|          | EMEA     |   |                    | 40,963 |                   |   |         | 34,069 |      |   |         | 118,557 |  |   |         | 100,910 | 
|          | APAC     |   |                    | 6,834  |                   |   |         | 4,715  |      |   |         | 20,958  |  |   |         | 18,381  | 
|          |          |   |                    |        |                   |   |         |        |      |   |         |         |  |   |         |         | 
|Total     |          | $ | 126,559            |        |                   | $ | 119,959 |        |      | $ | 372,475 |         |  | $ | 356,198 |        
|          |          |   |                    |        |                   |   |         |        |      |   |         |         |  |   |         |         | 

|                   |          |   |           |        |          |   |        |        | 
|------------------ | -------- | - | --------- | ------ | -------- | - | ------ | ------ | 
|                   |          |   | March 31, |        | June 30,
|                   |          |   | 2003      |        | 2002    
|                   |          |   |           |        |         
|Long-lived assets: |          |   |           |        |          |   |        |       
|                   | Americas |   | $         | 58,028 |          |   | $      | 60,809 | 
|                   | EMEA     |   |           | 6,386  |          |   |        | 7,834  | 
|                   | APAC     |   |           | 1,172  |          |   |        | 1,223  | 
|                   |          |   |           |        |          |   |        |        | 
|Total              |          | $ | 65,586    |        |          | $ | 69,866 |       
|                   |          |   |           |        |          |   |        |        | 

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

|                                        |                         |   |                    |        |                   |   |         |        |      |   |         |         |  |   |         |         | 
|--------------------------------------- | ----------------------- | - | ------------------ | ------ | ----------------- | - | ------- | ------ | ---- | - | ------- | ------- |  | - | ------- | ------- | 
|                                        |                         |   | Three Months Ended |        | Nine Months Ended
|                                        |                         |   | March 31,          |        | March 31,        
|                                        |                         |   | 2003               |        | 2002              |   | 2003    |        | 2002
|                                        |                         |   |                    |        |                   |   |         |        |     
|Software licenses:                      |                         |   |                    |        |                   |   |         |        |      |   |         |         |  |   |         |        
|                                        | Application products    |   | $                  | 29,270 |                   |   | $       | 21,466 |      |   | $       | 76,098  |  |   | $       | 60,769  | 
|                                        | Platform products       |   |                    | 21,179 |                   |   |         | 28,513 |      |   |         | 70,078  |  |   |         | 74,208  | 
|                                        |                         |   |                    |        |                   |   |         |        |      |   |         |         |  |   |         |         | 
|Total software license revenues         |                         |   | 50,449             |        |                   |   | 49,979  |        |      |   | 146,176 |         |  |   | 134,977 |        
|Maintenance and services:               |                         |   |                    |        |                   |   |         |        |      |   |         |         |  |   |         |        
|                                        | Maintenance             |   |                    | 53,174 |                   |   |         | 46,699 |      |   |         | 157,157 |  |   |         | 135,459 | 
|                                        | Consulting and training |   |                    | 22,936 |                   |   |         | 23,281 |      |   |         | 69,142  |  |   |         | 85,762  | 
|                                        |                         |   |                    |        |                   |   |         |        |      |   |         |         |  |   |         |         | 
|Total maintenance and services revenues |                         |   | 76,110             |        |                   |   | 69,980  |        |      |   | 226,299 |         |  |   | 221,221 |        
|                                        |                         |   |                    |        |                   |   |         |        |      |   |         |         |  |   |         |         | 
|Total revenues                          |                         | $ | 126,559            |        |                   | $ | 119,959 |        |      | $ | 372,475 |         |  | $ | 356,198 |        
|                                        |                         |   |                    |        |                   |   |         |        |      |   |         |         |  |   |         |         | 

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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, other than
statements of historical fact, are forward-looking statements. Examples of
forward-looking statements include statements regarding Hyperions future
financial results, operating results, business strategies, projected costs,
products, competitive positions and plans and objectives of management for
future operations. In some cases, forward-looking statements can be identified
by terminology such as may, will, should, would, expect, plan,
anticipate, intend, believe, estimate, predict, potential,
continue, or the negative of these terms or other comparable terminology.
Any expectations based on these forward-looking statements are subject to risks
and uncertainties and other important factors, including those discussed in the
section entitled Factors That May Affect Future Results. These and many
other factors could affect Hyperions future financial and operating results,
and could cause actual results to differ materially from expectations based on
forward-looking statements made in this document or elsewhere by Hyperion or on
its behalf. Hyperion does not undertake an obligation to update its
forward-looking statements to reflect future events or circumstances.

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. 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 March 31, |         |   |      |         |         |            |      |     |         | Nine Months Ended March 31, |   |            |         | 
|                          |                         |      |         |         | 
|                          |                         |      |         |         |  |      | Percent of                   |         |   |      |         |         | Percent of |      |     |         |                             |   | Percent of |         |  |  |     |    | Percent of
|(In thousands)            |                         | 2003 |         | Revenue |  | 2002 |                              | Revenue |   | 2003 |         | Revenue |            | 2002 |     | Revenue
|                          |                         |      |         |         |  |      |                              |         |   |      |         |         |            |      |     |        
|Software licenses         |                         | $    | 50,449  |         |  |      | 40                           | %       |   | $    | 49,979  |         |            |      | 42  | %       |                             | $ | 146,176    |         |  |  | 39  | %  |            | $ | 134,977 |         |  |  | 38  | % 
|Maintenance and services: |                         |      |         |         |  |      |                              |         |   |      |         |         |            |      |     |         |                             |   |            |         |  |  |     |    |            |   |         |         |  |  |     |   
|                          | Maintenance             |      |         | 53,174  |  |      |                              | 42      | % |      |         | 46,699  |            |      |     | 39      | %                           |   |            | 157,157 |  |  |     | 42 | %          |   |         | 135,459 |  |  |     | 38 | %
|                          | Consulting and training |      |         | 22,936  |  |      |                              | 18      | % |      |         | 23,281  |            |      |     | 19      | %                           |   |            | 69,142  |  |  |     | 19 | %          |   |         | 85,762  |  |  |     | 24 | %
|                          |                         |      |         |         |  |      |                              |         |   |      |         |         |            |      |     |         |                             |   |            |         |  |  |     |    |            |   |         |         |  |  |     |   
|                          |                         |      | 76,110  |         |  |      | 60                           | %       |   |      | 69,980  |         |            |      | 58  | %       |                             |   | 226,299    |         |  |  | 61  | %  |            |   | 221,221 |         |  |  | 62  | % 
|                          |                         |      |         |         |  |      |                              |         |   |      |         |         |            |      |     |         |                             |   |            |         |  |  |     |    |            |   |         |         |  |  |     |   
|Total revenues            |                         | $    | 126,559 |         |  |      | 100                          | %       |   | $    | 119,959 |         |            |      | 100 | %       |                             | $ | 372,475    |         |  |  | 100 | %  |            | $ | 356,198 |         |  |  | 100 | % 
|                          |                         |      |         |         |  |      |                              |         |   |      |         |         |            |      |     |         |                             |   |            |         |  |  |     |    |            |   |         |         |  |  |     |   

Software licenses.Software license revenues increased 1% in the three months
ended March 31, 2003 compared to the three months ended March 31, 2002 and
increased 8% in the nine months ended March 31, 2003 compared to the nine
months ended March 31, 2002. The increase in license revenue in the third
quarter and first nine months of fiscal 2003 was primarily due to increased
revenues from two of our newer suite-based application products, Hyperion
Planning and Hyperion Financial Management. These two products were still in
the very early stages of their product life cycles during most of fiscal 2002,
but they began making significant contributions to total license revenue in the
fourth quarter of fiscal 2002 and into fiscal 2003. These increases in
suite-based application product sales were offset to some extent by declines in
revenue from our older, standalone application products, Hyperion Pillar and
Hyperion Enterprise, and our platform products.

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We separate license revenue into two main components- application license
revenue and platform license revenue. Application license revenue is generated
from our packaged business performance management applications, and platform
license revenue is generated from our Hyperion Essbase XTD platform and its
component products. In the third quarter of fiscal 2003, application revenue
represented 58% of total license revenue and platform revenue represented 42%
of total license revenue, compared to 43% application revenue and 57% platform
revenue in the third quarter of fiscal 2002. A 98% increase in suite-based
application sales, which include Hyperion Planning and Hyperion Financial
Management, combined with a 47% decrease in standalone application sales, which
include Hyperion Pillar and Hyperion Enterprise, resulted in an overall 36%
increase in total application license revenue in the third quarter of fiscal
2003 compared to the third quarter of fiscal 2002. However, platform sales
decreased 26% in the third quarter of fiscal 2003 compared to the third quarter
of fiscal 2002. The increase in application license revenue combined with the
decrease in platform license revenue resulted in the increase in the ratio of
application license revenue to platform license revenue in the third quarter of
fiscal 2003.

For the first nine months of fiscal 2003, license revenue was comprised of 52%
application revenue and 48% platform revenue, compared to 45% application
revenue and 55% platform revenue for the first nine months of fiscal 2002. A
101% increase in suite-based application sales, partially offset by a 51%
decrease in standalone application sales, resulted in an overall 25% increase
in total application license revenue in the first nine months of fiscal 2003
compared to the first nine months of fiscal 2002. This increase in application
license revenue combined with a 6% decrease in platform license revenue,
resulted in the increase in the ratio of application license revenue to
platform license revenue in the first nine months of fiscal 2003.

We market our products through our direct sales force and through channel
partners. To date, we have generated the majority of our license revenue
through our direct sales force, but we continue to focus on complementing our
direct sales force with channel partners, which include original equipment
manufacturers, value added resellers, system integrators, independent
distributors and sales agents. License revenue from channel partners comprised
30% of total license revenue in the third quarter of fiscal 2003 compared to
26% in the third quarter of fiscal 2002. In the first nine months of fiscal
2003 license revenue from channel partners comprised 28% of total license
revenue compared to 26% in the first nine months of fiscal 2002. Effectively
leveraging our channel partners continues to be one of our key strategies, and
our goal is to move towards deriving 33% of our license revenue through our
channel partners. Consistent with fiscal 2002, no single channel partner
represented more than 10% of total revenue during the third quarter or first
nine months of fiscal 2003.

Maintenance and services.Maintenance and services revenue increased 9% in the
three months ended March 31, 2003 compared to the three months ended March 31,
2002. This increase was due to a 14% increase in maintenance revenue, which was
primarily due to improvements in our invoicing and collecting procedures for
maintenance renewals. Partially offsetting this increase in maintenance revenue
was a 1% decrease in consulting and training revenue. In the nine months ended
March 31, 2003, maintenance and services revenue increased 2% compared to the
nine months ended March 31, 2002. The slight increase in maintenance and
services revenue was due to a 16% increase in maintenance revenue, which was
substantially offset by a 19% decrease in consulting and training revenue,
which resulted from our increased use of channel partners to provide consulting
services to our customers.

COST OF REVENUES

|                         |  |                              |        |                             |  |       |    |        |  |      |        |        |  |      |    |        |  |       |        |  |  |  |    |       |  |   |         |  |  |  |    |  
|------------------------ |  | ---------------------------- | ------ | --------------------------- |  | ----- | -- | ------ |  | ---- | ------ | ------ |  | ---- | -- | ------ |  | ----- | ------ |  |  |  | -- | ----- |  | - | ------- |  |  |  | -- | -
|                         |  | Three Months Ended March 31, |        | Nine Months Ended March 31,
|                         |  |                              |        |                            
|                         |  |                              |        |                             |  | Gross |    |        |  |      |        | Gross  |  |      |    |        |  | Gross |        |  |  |  |    | Gross
|(In thousands)           |  | 2003                         |        | Margin                      |  | 2002  |    | Margin |  | 2003 |        | Margin |  | 2002 |    | Margin
|                         |  |                              |        |                             |  |       |    |        |  |      |        |        |  |      |    |       
|Software licenses        |  | $                            | 4,136  |                             |  |       | 92 | %      |  | $    | 4,256  |        |  |      | 91 | %      |  | $     | 10,782 |  |  |  | 93 | %     |  | $ | 10,823  |  |  |  | 92 | %
|Maintenance and services |  |                              | 34,119 |                             |  |       | 55 | %      |  |      | 32,529 |        |  |      | 54 | %      |  |       | 98,654 |  |  |  | 56 | %     |  |   | 103,205 |  |  |  | 53 | %

Cost of software license revenue.Cost of software license revenue consists
primarily of royalty expenses, amortization of capitalized software development
costs, amortization of acquired technologies, and the cost of product packaging
and documentation materials. Cost of software license revenue in the three
months ended March 31, 2003 decreased 3% compared to the three months ended
March 31, 2002 despite the 1% increase in software license revenue. This
decrease was primarily attributable to a $0.7 million decrease in royalty
expenses due to a different mix of product sales in the third quarter of fiscal
2003 compared to the third quarter of fiscal 2002, and a $0.4 million decrease
in product packaging and documentation material costs due to the increased use
of electronic product distribution. These decreases were partially offset by a
$0.5 million increase in amortization of capitalized software development costs
and a $0.3 million increase in amortization of acquired technologies. Cost of
software license revenue in the nine months ended March 31, 2003 remained
relatively flat compared to the nine months ended March 31, 2002 despite the 8%
increase in software license revenue. This was primarily due to a $1.1
million decrease in royalty expenses and a $0.7 million decrease in product
packaging and documentation material costs. These decreases were partially
offset by a $0.8 million increase in amortization of capitalized software
development costs and a $0.9 million increase in amortization of acquired
technologies.

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In the first nine months of fiscal 2003 and 2002, we capitalized $1.4 million
and $0.6 million of software development costs, respectively, in accordance
with Statement of Financial Accounting Standards (SFAS) No. 86, Accounting
for the Costs of Computer Software to be Sold, Leased, or Otherwise Marketed.
The amounts capitalized relate to localization costs for our software products.
Capitalized software product development costs are amortized over the
estimated economic life of the products, which is generally three years. The
amortization of capitalized software development costs begins upon the general
release of the software to customers.

Cost of maintenance and services revenue.Cost of maintenance and services
revenue consists largely of compensation and benefits for consulting, training
and support personnel. Cost of maintenance and services revenue increased 5%
in the three months ended March 31, 2003 compared to the three months ended
March 31, 2002. The increase in cost of maintenance and services revenue is
primarily attributable to a $1.5 million increase in variable compensation
expenses. Cost of maintenance and services revenue decreased 4% for the nine
months ended March 31, 2003 compared to the nine months ended March 31, 2002.
The decrease in cost of maintenance and services revenue is primarily
attributable to our continued focus on leveraging our channel partners to
perform consulting services for our customers. As a result of this effort, we
reduced headcount in our North American consulting organization by
approximately 75 employees in the fourth quarter of fiscal 2002. This
reduction in headcount contributed to a $2.4 million decrease in employee
expenses for maintenance and services personnel in the first nine months of
fiscal 2003 compared to the first nine months of fiscal 2002. Further,
independent contractor and temporary staffing expenses decreased $1.4 million
nine months ended March 31, 2003 compared to nine months ended March 31, 2002
due to our decreased use of external personnel for product implementations.

Gross margin on maintenance and services revenue increased to 55% in the third
quarter of fiscal 2003 from 54% in the third quarter of fiscal 2002 and
increased to 56% in the first nine months of fiscal 2003 from 53% in the first
nine months of fiscal 2002. These increases in gross margin are primarily due
to the increases 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 March 31, |        |         |  |            |    | Nine Months Ended March 31, |  |      |        |           
|                           |  |                              |        |        
|                           |  |                              |        |         |  | Percent of |    |                             |  |      |        | Percent of |  |      |    |         |  | Percent of |         |  |  |  |    | Percent of
|(In thousands)             |  | 2003                         |        | Revenue |  | 2002       |    | Revenue                     |  | 2003 |        | Revenue    |  | 2002 |    | Revenue
|                           |  |                              |        |         |  |            |    |                             |  |      |        |            |  |      |    |        
|Sales and marketing        |  | $                            | 46,932 |         |  |            | 37 | %                           |  | $    | 44,604 |            |  |      | 37 | %       |  | $          | 136,672 |  |  |  | 37 | %          |  | $ | 129,661 |  |  |  | 36 | %
|Research and development   |  |                              | 18,598 |         |  |            | 15 | %                           |  |      | 18,124 |            |  |      | 15 | %       |  |            | 54,577  |  |  |  | 15 | %          |  |   | 53,743  |  |  |  | 15 | %
|General and administrative |  |                              | 10,412 |         |  |            | 8  | %                           |  |      | 16,279 |            |  |      | 14 | %       |  |            | 34,231  |  |  |  | 9  | %          |  |   | 47,008  |  |  |  | 13 | %
|                           |  |                              |        |         |  |            |    |                             |  |      |        |            |  |      |    |         |  |            |         |  |  |  |    |            |  |   |         |  |  |  |    |  
|Total operating expenses   |  | $                            | 75,942 |         |  |            |    |                             |  | $    | 79,007 |            |  |      |    |         |  | $          | 225,480 |  |  |  |    |            |  | $ | 230,412 |  |  |  |    |  
|                           |  |                              |        |         |  |            |    |                             |  |      |        |            |  |      |    |         |  |            |         |  |  |  |    |            |  |   |         |  |  |  |    |  

Sales and marketing.Sales and marketing expense increased 5% in the three
months ended March 31, 2003 compared to the three months ended March 31, 2002.
This increase was mainly due to a $1.8 million increase in marketing expenses,
which resulted from increased advertising and tradeshow activities during the
quarter. Sales and marketing expense increased 5% in the nine months ended
March 31, 2003 compared to the nine months ended March 31, 2002 primarily due
to a $5.9 million increase in marketing expenses resulting from increased
advertising and tradeshow activities, and a $1.4 million increase in business
travel and related expenses associated with our increased marketing activities
and our increase in revenues.

Research and development.Research and development expense increased 3% in the
three months ended March 31, 2003 compared to the three months ended March 31,
2002. This increase was primarily due to a $0.3 million increase in external
personnel costs. In the nine months ended March 31, 2003, research and
development expense increased 2% compared to the nine months ended March 31,
2002. This increase is attributable to a $0.8 million increase in employee
expenses.

General and administrative.General and administrative expense decreased 36%
in the three months ended March 31, 2003 compared to the three months ended
March 31, 2002. This decrease was primarily attributable to a $1.7 million
decrease in bad debt expense resulting from improvements we have made in our
invoicing and collection procedures, a $1.1 million decrease in outsourcing
costs, as we ended the outsourcing of our North American accounting department
in the fourth quarter of fiscal 2002, and a $0.8 million decrease in occupancy
and equipment costs primarily due to a decrease in depreciation and
amortization expense, as many fixed assets have become fully depreciated during
the past several quarters. These decreases were partially offset by a $0.7
million increase in employee expenses resulting primarily from headcount
increases as we brought our North American accounting function in-house.
General and administrative expense decreased 27% in the first nine months of
fiscal 2003 compared to the first nine months of fiscal 2002. This decrease was
primarily due to a $3.1 million decrease in outsourcing costs, a $3.8 million
decrease in occupancy and equipment costs, a $2.2 million decrease in bad debt
expense, and a $1.5 million decrease in charges related to property and sales
tax audits. These decreases were partially offset by a $2.2 million increase
in employee expenses resulting from the headcount increases discussed above.

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RESTRUCTURING CHARGES

The restructuring charges (credits) recorded in the three months ended March
31, 2002 and the nine months ended March 31, 2003 and 2002 resulted primarily
from adjustments to our estimates of sub-lease income relating to the original
restructuring charge we recorded in the fourth quarter of fiscal 2001.

INTEREST AND OTHER INCOME

Interest and other income consists primarily of interest earned on cash, cash
equivalent and short-term investment balances. Although we had higher average
cash and investment balances during the three and nine months ended March 31,
2003 compared to the three and nine months ended March 31, 2002, interest and
other income remained relatively flat in the third quarter of fiscal 2003 and
decreased 18% in the first nine months of fiscal 2003 compared to the
comparable periods in fiscal 2002 due to declines in short-term interest rates
during fiscal 2002 and 2003.

INTEREST AND OTHER EXPENSE

Interest and other expense consists primarily of interest paid and amortization
of deferred issuance costs related to our convertible subordinated notes due in
March 2005. During the first and second quarters of fiscal 2003, we
repurchased convertible subordinated notes with face values totaling $28.7
million. This resulted in a 42% decrease in interest and other expense in the
third quarter of fiscal 2003 compared to the third quarter of fiscal 2002 and a
34% decrease in interest and other expense in the first nine months of fiscal
2003 compared to the first nine months of fiscal 2002.

GAIN ON REDEMPTION OF DEBT

During the first and second quarters of fiscal 2003, we repurchased convertible
subordinated notes with face values totaling $28.7 million for a total cost of
approximately $27.9 million, resulting in a net gain of approximately $0.5
million. 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 three and nine months ended March 31,
2003 was 37% compared to an effective income tax rate of 36% for the three and
nine months ended March 31, 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 $8.3 million, or
$0.23 per diluted share, for the three months ended March 31, 2003 compared to
net income of $3.1 million, or $0.09 per diluted share, for the three months
ended March 31, 2002. For the nine months ended March 31, 2003, our net income
was $24.9 million, or $0.71 per diluted share, compared to net income of $8.8
million, or $0.26 per diluted share, for the nine months ended March 31, 2002.

LIQUIDITY AND CAPITAL RESOURCES

|                                                    |  |                             |         |        |  |         |      |    |  |   |         |  
|--------------------------------------------------- |  | --------------------------- | ------- | ------ |  | ------- | ---- | -- |  | - | ------- | -
|                                                    |  | Nine Months Ended March 31,
|                                                    |  |                            
|                                                    |  |                             |         |        |  | Percent |      |    |  |  
|(In thousands)                                      |  | 2003                        |         | Change |  | 2002   
|                                                    |  |                             |         |        |  |        
|Cash, cash equivalents and short-term investments   |  | $                           | 388,783 |        |  |         | 24   | %  |  | $ | 312,636 |  
|Working capital                                     |  |                             | 317,036 |        |  |         | 13   | %  |  |   | 280,237 |  
|Net cash provided by operating activities           |  |                             | 72,845  |        |  |         | 18   | %  |  |   | 61,503  |  
|Net cash used in investing activities               |  |                             | (5,640  | )      |  |         | 37   | %  |  |   | (4,129  | )
|Net cash provided by (used in) financing activities |  |                             | (1,164  | )      |  |         | (114 | %) |  |   | 8,513   |  

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 March 31, 2003, 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 nine months ended March 31, 2003 and 2002, we generated positive cash
flow from operations of $72.8 million and $61.5 million, respectively. In the
nine months ended March 31, 2003, our operating cash flows were primarily due
to the net income generated during the period and the significant decrease in
our accounts receivable balance, partially offset by decreases in accounts
payable, accrued expenses and accrued employee compensation and benefits. In
the nine months ended March 31, 2002,

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our operating cash flows were also primarily due to the net income generated
during the period and the significant decrease in our accounts receivable
balance, which were partially offset by decreases in accounts payable, accrued
expenses, deferred revenue and other current liabilities. In the nine months
ended March 31, 2003 and 2002, a significant portion of our operating cash
flows were attributable to the substantial decreases in our accounts receivable
balances, resulting from our focus on invoicing and collection process
improvements. Given the process improvements we have implemented and the
resulting decreases in accounts receivable over the past several quarters, we
expect that our operating cash flow attributable to changes in our accounts
receivable balances will decrease in future periods.

Net cash used in investing activities amounted to $5.6 million in the nine
months ended March 31, 2003 compared to net cash used in investing activities
of $4.1 million in the nine months ended March 31, 2002. The net cash used in
investing activities in the first nine months of fiscal 2003 resulted from
purchases of property, equipment and intangible assets of $15.3 million,
partially offset by proceeds from maturities of investments, net of purchases,
of $9.2 million. The net cash used in investing activities in the first nine
months of fiscal 2002 resulted from purchases of property, equipment and
intangible assets of $14.7 million, partially offset by proceeds from
maturities of investments, net of purchases, of $11.5 million.

Net cash used in financing activities was $1.2 million in the nine months ended
March 31, 2003 compared to net cash provided by financing activities of $8.5
million in the nine months ended March 31, 2002. The net cash used in
financing activities in the first nine months of fiscal 2003 was due to the
repurchase of our convertible subordinated notes with a face value of $28.7
million for a total cost of approximately $27.9 million and the repayment of
the $2.3 million mortgage loan on our Connecticut facility, partially offset by
$29.1 million of proceeds from the sale of shares through our employee stock
option and stock purchase plans during the period. The net cash provided by
financing activities in the first nine months of fiscal 2002 primarily resulted
from $8.6 million of proceeds from the sale of shares through our employee
stock option and stock purchase plans 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 March 31, 2004.
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.

There has been no significant change in the amount of our contractual
obligations as of March 31, 2003 compared to those disclosed in our annual
report on Form 10-K for the fiscal year ending June 30, 2002, except for the
effects of the repurchase of convertible subordinated notes discussed above.

RECENT ACCOUNTING PRONOUNCEMENTS

In July 2002, the Financial Accounting Standards Board (FASB) issued SFAS No.
146, Accounting for Costs Associated with Exit or Disposal Activities, which
nullifies Emerging Issues Task Force (EITF) Issue No. 94-3. SFAS No. 146
requires that a liability for a cost associated with an exit or disposal
activity be recognized when the liability is incurred, whereas EITF No. 94-3
had required recognition of the liability as of the commitment date of an exit
plan. This statement is effective for exit or disposal activities initiated
after December 31, 2002. We adopted SFAS No. 146 on January 1, 2003, and the
adoption did not have a material impact on our financial position or results of
operations.

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

In January 2003, the FASB issued Interpretation No. 46 (FIN 46),
Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51.
FIN 46 requires certain variable interest entities to be consolidated by the
primary beneficiary of the entity if the equity investors in the entity do not
have the characteristics of a controlling financial interest or do not have
sufficient equity at risk for the entity to finance its activities without
additional subordinated financial support from other parties. FIN 46 is
effective immediately for all new variable interest entities created or
acquired after January 31, 2003. For variable interest entities created or
acquired prior to February 1, 2003, the provisions of FIN 46 must be applied
for the first interim or annual

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period beginning after June 15, 2003. We adopted FIN 46 on February 1, 2003,
and the adoption did not have a material impact on our financial position or
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 our 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.

FAILURE TO UPGRADE OLDER PRODUCTS WILL ADVERSELY AFFECT REVENUE. As newer
products are introduced by us, or by our competition, the markets demand for
our older products declines. Declining demand reduces revenue from additional
licenses, and reduces maintenance revenue from past purchasers of our software.
We must continually upgrade our older products, so our customers continue to
see value in our maintenance services. If we are unable to provide continued
improvements in functionality, or, alternatively, move customers with our older
products to our newer products, declining maintenance and new license revenue
from older products could have a material adverse effect on our business.

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 weakness 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 current
competitors, new competitors, and from mergers of two or more 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 platform 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.

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.

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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 cause customers to 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, any of which 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 increased
efficiencies in our sales force, as well as 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.

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 adversely 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. 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
these activities, 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 and costly to defend,
divert managements attention and resources, cause product shipment delays or
require us to enter into royalty or licensing agreements. Such royalty or
licensing agreements, if required, may not be available on terms acceptable to
us, if at all. 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 could be
materially adversely affected.

ENFORCEMENT OF OUR INTELLECTUAL PROPERTY RIGHTS MAY BE DIFFICULT. We rely
primarily on a combination of patent, copyright and trademark laws, trade
secrets, confidentiality procedures and contractual provisions to protect our
proprietary rights. There can be no assurance that our means of protecting our
proprietary rights in the United States or abroad will be adequate.

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

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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
March 31, 2003, our investment portfolio consisted of investment-grade debt
securities, excluding those classified as cash equivalents, with a fair value
of $9.9 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 the value of our investment portfolio.

As of March 31, 2003, our long-term debt consists of 4.5% convertible
subordinated notes due March 2005 with a face value of $50.0 million. Because
our long-term debt bears interest at a fixed interest rate, an immediate 10%
change in market interest rates would not have a material impact on our
interest expense.

FOREIGN CURRENCY EXCHANGE RATE RISK. We transact business in various foreign
currencies. Our exposure to foreign currency exchange rate fluctuations arises
in part from 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 their 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 minimize any foreign currency transaction gains and losses.
Our forward contracts generally have terms of 60 days or less. We do not use
forward contracts for trading purposes. All foreign currency transactions and
all outstanding forward contracts are marked-to-market at the end of the period
with unrealized gains and losses included in our consolidated statements of
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 three and nine months ended March 31, 2003 and
2002. As of March 31, 2003, we had net forward contracts to sell U.S. dollar
equivalent of $3.1 million in foreign currency. An immediate 10% change in
currency exchange rates affecting these contracts would not have a material
impact on the value of the contracts.




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 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
| | -------------

|            |  |                                                                                                                                               |  |  |  | 
|----------- |  | --------------------------------------------------------------------------------------------------------------------------------------------- |  |  |  | 
|Exhibit No. |  | Description                                                                                                                                  
|            |  |                                                                                                                                              
|99.1        |  | - Certification of Jeffrey R. Rodek pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002.
|           
|99.2        |  | - Certification of David W. Odell 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 January 23, 2003, we filed a current report on Form 8-K in connection with
the issuance of a press release dated January 23, 2003 announcing the
financial results for the second fiscal quarter ended December 31, 2002.                                                                                  
|
| | On March 3, 2003, we filed a current report on Form 8-K in connection with
the issuance of two press releases dated March 3, 2003 announcing the
resignation of Ken Goldman as a member of the Hyperion board of directors and
announcing the appointment of Terry Carlitz to the Hyperion board of
directors.

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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:   May 14, 2003 |  | Hyperion Solutions Corporation
(Registrant)
|                     |  |                                             |  |                                                                                                        
|                     |  | By:                                         |  | /s/ DAVID W. ODELL

David W. Odell
Chief Financial Officer                                             
|                     |  |                                             |  |                                                                                                        
|                     |  | By:                                         |  | /s/ NOLENE P. FABRE
Nolene P. Fabre
Vice President and Global Controller
(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: May 14, 2003

/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: May 14, 2003

/s/ DAVID W. ODELL
David W. Odell
Chief Financial Officer

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EXHIBIT INDEX

|            |  |                                                                                                                                               |  |  |  | 
|----------- |  | --------------------------------------------------------------------------------------------------------------------------------------------- |  |  |  | 
|Exhibit No. |  | Description                                                                                                                                  
|            |  |                                                                                                                                              
|99.1        |  | - Certification of Jeffrey R. Rodek pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002.
|           
|99.2        |  | - Certification of David W. Odell pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002.  

22