<PAGE>

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

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

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

                                   FORM 10-Q

<Table>
<C>          <S>
 (Mark One)
    [X]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
             SECURITIES EXCHANGE ACT OF 1934



             FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2002




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



             FOR THE TRANSITION PERIOD FROM           TO
</Table>

                         COMMISSION FILE NUMBER 0-27030

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

                            INFINIUM SOFTWARE, INC.
             (Exact name of registrant as specified in its charter)

<Table>
<S>                                            <C>
                MASSACHUSETTS                                    04-2734036
       (State or other jurisdiction of               (IRS Employer Identification No.)
        incorporation or organization)
</Table>

                    25 COMMUNICATIONS WAY, HYANNIS, MA 02601
          (Address of principal executive offices, including Zip Code)

                                 (508) 778-2000
              (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 12 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.  Yes [X]     No [ ]

     The number of shares outstanding of the registrant's Common Stock on April
30, 2002, was 13,461,624.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>

                            INFINIUM SOFTWARE, INC.

                                     INDEX

PART I -- FINANCIAL INFORMATION

<Table>
<Caption>
                                                                         PAGE
                                                                         ----
<S>        <C>                                                           <C>
  ITEM 1.  Financial Statements (unaudited)
               Consolidated Balance Sheet at March 31, 2002 and
               September 30, 2001......................................    2
               Consolidated Statement of Operations for the three and
           six months ended March 31, 2002 and 2001....................    3
               Consolidated Statement of Cash Flows for the six months
           ended March 31, 2002 and 2001...............................    4
               Notes to Consolidated Financial Statements..............    5
  ITEM 2.  Management's Discussion and Analysis of Financial Condition
           and Results of Operations...................................   10
  ITEM 3.  Quantitative and Qualitative Disclosures About Market
           Risk........................................................   18

PART II -- OTHER INFORMATION
  ITEM 1.  Legal Proceedings...........................................   18
  ITEM 2.  Changes in Securities.......................................   18
  ITEM 3.  Defaults Upon Senior Securities.............................   18
  ITEM 4.  Submission of Matters to a Vote of Security Holders.........   18
  ITEM 5.  Other Information...........................................   18
  ITEM 6.  Exhibits and Reports on Form 8-K............................   18
SIGNATURE  ............................................................   19
</Table>

                                        1
<PAGE>

                        PART I -- FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

                            INFINIUM SOFTWARE, INC.

                           CONSOLIDATED BALANCE SHEET

<Table>
<Caption>
                                                               MARCH 31,    SEPTEMBER, 30
                                                                 2002           2001
                                                              -----------   -------------
                                                               (IN THOUSANDS, EXCEPT PER
                                                                    SHARE AMOUNTS)
                                                              (UNAUDITED)
<S>                                                           <C>           <C>
                           ASSETS
Current assets:
  Cash and cash equivalents.................................   $ 16,100       $ 13,210
  Marketable securities at fair market value................      1,372          2,076
  Accounts receivable, less allowance for doubtful accounts
     of $671 and $1,876 at March 31, 2002 and September 30,
     2001, respectively.....................................      7,228          6,841
  Prepaid expenses and other current assets.................      1,779          2,499
  Net current assets of discontinued operations.............         --            233
                                                               --------       --------
     Total current assets...................................     26,479         24,859
Property and equipment, net.................................      5,942          6,958
Capitalized software development costs, net.................        682          1,122
Other assets................................................      2,689          2,358
                                                               --------       --------
     Total assets...........................................   $ 35,792       $ 35,297
                                                               ========       ========
           LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
  Accounts payable..........................................   $  4,259       $  4,345
  Accrued expenses..........................................      9,399         12,505
  Current liabilities of discontinued operations............        126          1,094
  Income taxes payable......................................        279            282
  Lease obligations, short-term portion.....................        258            239
  Deferred revenue..........................................     25,904         27,588
                                                               --------       --------
     Total current liabilities..............................     40,225         46,053
                                                               --------       --------
Lease obligations, long-term portion........................        389            524
Deferred revenue............................................      1,399          1,400
                                                               --------       --------
     Total liabilities......................................     42,013         47,977
Common stock, $0.01 par value; authorized 40,000 shares,
  issued 13,662 and 13,365 shares at March 31, 2002 and
  September 30, 2001, respectively..........................        137            134
Additional paid-in capital..................................     39,142         38,936
Deferred stock-based compensation...........................       (336)          (297)
Accumulated deficit.........................................    (45,121)       (51,362)
Accumulated other comprehensive loss........................        (13)           (69)
                                                               --------       --------
                                                                 (6,191)       (12,658)
Less: treasury stock at cost, 206 and 171 shares at March
  31, 2002 and September 30, 2001, respectively.............        (30)           (22)
                                                               --------       --------
     Total stockholders' deficit............................     (6,221)       (12,680)
                                                               --------       --------
     Total liabilities and stockholders' deficit............   $ 35,792       $ 35,297
                                                               ========       ========
</Table>

   The accompanying notes are an integral part of the consolidated financial
                                  statements.
                                        2
<PAGE>

                            INFINIUM SOFTWARE, INC.

                      CONSOLIDATED STATEMENT OF OPERATIONS
                                  (UNAUDITED)

<Table>
<Caption>
                                                          THREE MONTHS ENDED      SIX MONTHS ENDED
                                                               MARCH 31,              MARCH 31,
                                                         ---------------------   -------------------
                                                           2002        2001        2002       2001
                                                         ---------   ---------   --------   --------
                                                          (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S>                                                      <C>         <C>         <C>        <C>
REVENUE:
  Software license fees................................   $ 2,900     $ 3,010    $ 5,060    $ 6,777
  Services revenue.....................................    13,635      15,902     27,810     34,131
                                                          -------     -------    -------    -------
     Total revenue.....................................    16,535      18,912     32,870     40,908
                                                          -------     -------    -------    -------
OPERATING COSTS AND EXPENSES:
  Cost of software license fees........................       431       1,231        807      2,647
  Cost of services.....................................     3,962       5,218      8,110     10,692
  Research and development.............................     2,592       3,948      5,385      7,866
  Sales and marketing..................................     4,475       7,178      8,776     15,195
  General and administrative...........................     1,919       2,921      3,871      5,301
                                                          -------     -------    -------    -------
     Total operating costs and expenses................    13,379      20,496     26,949     41,701
                                                          -------     -------    -------    -------
Income (loss) from operations..........................     3,156      (1,584)     5,921       (793)
Other income (loss), net...............................        27          80        (17)       310
Gain on sale of subsidiary.............................       337          --        337         --
                                                          -------     -------    -------    -------
Income (loss) from continuing operations before
  provision for income taxes...........................     3,520      (1,504)     6,241       (483)
Provision for income taxes.............................        --          --         --         --
                                                          -------     -------    -------    -------
Income (loss) from continuing operations...............     3,520      (1,504)     6,241       (483)
DISCONTINUED OPERATIONS:
Loss from operations of ASP segment....................        --      (1,436)        --     (3,362)
                                                          -------     -------    -------    -------
NET INCOME (LOSS)......................................   $ 3,520     $(2,940)   $ 6,241    $(3,845)
                                                          =======     =======    =======    =======
Basic income (loss) per share from continuing
  operations...........................................   $  0.27     $ (0.12)   $  0.48    $ (0.04)
                                                          =======     =======    =======    =======
Diluted income (loss) per share from continuing
  operations...........................................   $  0.25     $ (0.12)   $  0.45    $ (0.04)
                                                          =======     =======    =======    =======
Basic and diluted loss per share from ASP segment......   $    --     $ (0.11)   $    --    $ (0.26)
                                                          =======     =======    =======    =======
Basic income (loss) per share..........................   $  0.27     $ (0.23)   $  0.48    $ (0.30)
                                                          =======     =======    =======    =======
Diluted income (loss) per share........................   $  0.25     $ (0.23)   $  0.45    $ (0.30)
                                                          =======     =======    =======    =======
Weighted average shares outstanding -- basic...........    13,078      12,920     13,051     12,905
                                                          =======     =======    =======    =======
Weighted average shares outstanding -- diluted.........    14,147      12,920     13,717     12,905
                                                          =======     =======    =======    =======
</Table>

   The accompanying notes are an integral part of the consolidated financial
                                  statements.
                                        3
<PAGE>

                            INFINIUM SOFTWARE, INC.

                      CONSOLIDATED STATEMENT OF CASH FLOWS

<Table>
<Caption>
                                                              SIX MONTHS ENDED
                                                                  MARCH 31,
                                                              -----------------
                                                               2002      2001
                                                              -------   -------
                                                               (IN THOUSANDS)
                                                                 (UNAUDITED)
<S>                                                           <C>       <C>
Cash flows from operating activities:
Net income (loss)...........................................  $ 6,241   $(3,845)
Adjustments to reconcile net income (loss) to net cash
  provided by (used in) operating activities:
  Loss from discontinued operations.........................       --     3,362
  Depreciation and amortization.............................    1,612     3,820
  Write-down of marketable securities.......................        8        --
  Allowance for doubtful accounts...........................      278       206
  Non-cash compensation.....................................      143       188
  Gain on sale of subsidiary................................     (337)       --
  Changes in operating assets and liabilities, net of
     effects from the disposition of business:
     Accounts receivable....................................   (1,047)    8,654
     Prepaid expenses and other current assets..............      731     2,285
     Other assets...........................................     (350)       --
     Accounts payable.......................................      784    (1,309)
     Accrued expenses and other long-term liabilities.......   (2,922)   (3,185)
     Income taxes payable...................................       26       982
     Deferred revenue.......................................   (1,265)   (6,307)
                                                              -------   -------
       Net cash provided by continuing operations...........    3,902     4,851
       Net cash used in discontinued operations.............   (1,521)   (3,227)
                                                              -------   -------
       Net cash provided by operating activities............    2,381     1,624
                                                              -------   -------
Cash flows from investing activities:
  Proceeds from sale of subsidiary..........................        5        --
  Purchase of marketable securities.........................       --    (2,280)
  Sale of marketable securities.............................      696     3,275
  Purchase of property and equipment........................      (66)     (598)
  Capitalized software......................................      (61)   (1,744)
                                                              -------   -------
       Net cash provided by (used in) investing
        activities..........................................      574    (1,347)
                                                              -------   -------
Cash flows from financing activities:
Payments on capitalized lease obligations...................     (116)      (44)
Purchase of treasury stock..................................       (8)       --
Proceeds from exercise of stock options and employee stock
  purchase plan.............................................       27       (26)
                                                              -------   -------
       Net cash used in financing activities................      (97)      (70)
                                                              -------   -------
Effect of foreign exchange rate changes on cash.............       32        69
                                                              -------   -------
Net increase in cash and cash equivalents...................    2,890       276
                                                              -------   -------
Cash and cash equivalents, beginning of period..............   13,210    17,665
                                                              -------   -------
Cash and cash equivalents, end of period....................  $16,100   $17,941
                                                              =======   =======
Supplemental disclosure on non-cash investing and financing
  activities:
  Issuance of restricted stock..............................  $   234   $   860
</Table>

   The accompanying notes are an integral part of the consolidated financial
                                  statements.
                                        4
<PAGE>

                            INFINIUM SOFTWARE, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
                                  (UNAUDITED)

1.  BASIS OF PRESENTATION

     The information at March 31, 2002 and for the three and six months ended
March 31, 2002 and March 31, 2001 are unaudited, but includes all adjustments
(consisting only of normal recurring entries) which the Company's management
believes to be necessary for the fair presentation of the financial position,
results of operations, and changes in cash flows for the periods presented. The
accompanying interim consolidated financial statements should be read in
conjunction with the financial statements and related notes included in the
Company's Annual Report on Form 10-K for the fiscal year ended September 30,
2001. Certain information and notes normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to the Securities and Exchange Commission rules
and regulations. Interim results of operations for the three and six month
periods ended March 31, 2002 are not necessarily indicative of operating results
for the full fiscal year.

     Certain reclassifications have been made to the prior period financial
statements to conform to the current period presentation.

2.  COMPREHENSIVE INCOME (LOSS)

     The table below sets forth comprehensive income and loss as defined by
Statement of Financial Accounting Standards (SFAS) No. 130, Reporting
Comprehensive Income, for the three and six months ended March 31, 2002 and
2001:

<Table>
<Caption>
                                                   THREE MONTHS ENDED   SIX MONTHS ENDED
                                                       MARCH 31,           MARCH 31,
                                                   ------------------   ----------------
                                                    2002       2001      2002     2001
                                                   -------   --------   ------   -------
<S>                                                <C>       <C>        <C>      <C>
Net income (loss)................................  $3,520    $(2,940)   $6,241   $(3,845)
Other comprehensive income (loss):
Foreign currency translation adjustments.........     (31)        24        (1)       28
Unrealized gain (loss) on investments, net of
  related tax effect:............................      29         15        57      (521)
                                                   ------    -------    ------   -------
  Comprehensive income (loss)....................  $3,518    $(2,901)   $6,297   $(4,338)
                                                   ======    =======    ======   =======
</Table>

3.  NET INCOME (LOSS) PER COMMON SHARE

     The Company computes basic and diluted earnings per share in accordance
with SFAS No. 128, Earnings per Share. The following table reconciles the
numerator and denominator of the basic and diluted earnings (loss) per share
computations shown in the Consolidated Statement of Operations.

                                        5
<PAGE>
                            INFINIUM SOFTWARE, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     As per generally accepted accounting principles, the computation of net
income (loss) per share is based on the weighted average basic and diluted
shares outstanding. The computation of basic and diluted earnings (loss) per
share for the three and six months ended March 31, 2002 and 2001 is as follows:

<Table>
<Caption>
                                                    THREE MONTHS ENDED     SIX MONTHS ENDED
                                                        MARCH 31,             MARCH 31,
                                                   --------------------   ------------------
                                                     2002       2001       2002       2001
                                                   --------   ---------   -------   --------
                                                   (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S>                                                <C>        <C>         <C>       <C>
BASIC AND DILUTED INCOME (LOSS) PER SHARE:
Numerator:
Net income (loss):...............................   $3,520     $(2,940)   $6,241    $(3,845)
                                                    ======     =======    ======    =======
Denominator:
Weighted average common shares
  outstanding -- basic...........................   13,078      12,920    13,051     12,905
Dilutive options.................................      787          --       480         --
Dilutive unvested restricted stock...............      282          --       186         --
                                                    ------     -------    ------    -------
Weighted average common shares
  outstanding -- diluted.........................   14,147      12,920    13,717     12,905
                                                    ======     =======    ======    =======
Basic income (loss) per share....................   $ 0.27     $ (0.23)   $ 0.48    $ (0.30)
                                                    ======     =======    ======    =======
Dilutive income (loss) per share.................   $ 0.25     $ (0.23)   $ 0.45    $ (0.30)
                                                    ======     =======    ======    =======
</Table>

     Options to purchase 856,000 and 2,441,307 weighted average shares of common
stock for the three months ended March 31, 2002 and 2001, respectively, and
917,000 and 2,524,837 weighted average shares of common stock for the six months
ended March 31, 2002 and 2001, respectively, were excluded from the calculation
of diluted net income (loss) per share as the effect of their inclusion would
have been anti-dilutive. Total options outstanding were 2,327,055 and 2,504,069
at March 31, 2002 and 2001, respectively.

                                        6
<PAGE>
                            INFINIUM SOFTWARE, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

4.  SEGMENT INFORMATION AND GEOGRAPHIC AREAS

     The following table presents a summary of operating information for the
three and six months ended March 31, 2002 and 2001:

<Table>
<Caption>
                                                 THREE MONTHS ENDED    SIX MONTHS ENDED
                                                      MARCH 31,            MARCH 31,
                                                 -------------------   -----------------
                                                   2002       2001      2002      2001
                                                 --------   --------   -------   -------
<S>                                              <C>        <C>        <C>       <C>
Revenue:
  North American operations:
     Infinium..................................  $14,707    $15,018    $28,923   $33,818
     Cort payroll unit.........................      615      1,712      1,438     3,092
                                                 -------    -------    -------   -------
     Total North American operations...........   15,322     16,730     30,361    36,910
  International operations.....................    1,213      2,182      2,509     3,998
                                                 -------    -------    -------   -------
     Total.....................................  $16,535    $18,912    $32,870   $40,908
                                                 =======    =======    =======   =======
Income (loss) from operations:
  North American operations:
     Infinium..................................  $ 2,941    $(1,057)   $ 5,233   $   747
     Cort payroll unit.........................        5       (162)       153      (338)
                                                 -------    -------    -------   -------
     Total North American operations...........    2,946     (1,219)     5,386       409
  International operations.....................      210       (365)       535    (1,202)
                                                 -------    -------    -------   -------
     Total.....................................  $ 3,156    $(1,584)   $ 5,921   $  (793)
                                                 =======    =======    =======   =======
</Table>

     ASP revenues were $608 and $1,014 for the three and six months ended March
31, 2001, respectively, which is included in the loss from operations of ASP
segment in the Statement of Operations.

     The following table summarizes identifiable assets by business segment as
of March 31, 2002 and September 30, 2001:

<Table>
<Caption>
                                                              MARCH 31,   SEPTEMBER 30,
                                                                2002          2001
                                                              ---------   -------------
<S>                                                           <C>         <C>
Identifiable assets:
  North American operations:
     Infinium...............................................   $33,372       $31,794
     Cort payroll unit......................................       626           435
     Net assets of discontinued operations..................        --           233
                                                               -------       -------
  Total North American operations...........................    33,998        32,462
  International operations..................................     1,794         2,835
                                                               -------       -------
     Consolidated...........................................   $35,792       $35,297
                                                               =======       =======
</Table>

5.  ISSUANCE OF RESTRICTED STOCK

     On January 10, 2001, the Company instituted a Stock Option Exchange Program
(the Program). Under the provisions of the Program, employees were allowed to
exchange any of their stock options for shares of restricted stock on January
31, 2001, in general, at a rate of three options for each share of restricted
stock. At January 31, 2001, the Company issued approximately 179,000 shares and
cancelled approximately 537,000 options. At the close of business on January 31,
2001, the share price of the Company's stock was $2.13 per
                                        7
<PAGE>
                            INFINIUM SOFTWARE, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

share. On February 9, 2001, additional restricted stock grants of 225,000 shares
were awarded to executive management and an additional 16,000 and 10,000
restricted stock grants were awarded to other employees on January 22, 2001 and
March 12, 2001, respectively. The fair market value of the Company's stock was
$1.50 per share at the close of business on January 22, 2001 and $1.94 and $1.75
per share at the close of business on February 9, 2001 and March 12, 2001,
respectively. The cost of the Program was $382, and the cost of the additional
restricted stock grants was $436 for the awards to executive management and $42
for the awards to other employees. The combined cost of these events
approximates $860, which will be amortized over the vesting period of the
restricted stock grants, which range from 21 to 24 months. The Company
recognized $54 and $112 in expense during the three and six month periods ended
March 31, 2002, respectively. During the three and six months ended March 31,
2001, the Company recognized $74 in expense.

     On October 26, 2001, additional restricted stock grants of 296,000 shares
were awarded to executive management and other employees. The fair market value
of the Company's stock was $0.79 per share at the close of business on October
26, 2001. The cost of these additional restricted stock grants was $234 which
will be amortized over 36 months. The Company recognized $18 and $31 in expense
during the three and six month periods ended March 31, 2002, respectively.

     The Company repurchased 44,000 and 60,000 shares of restricted stock during
the three and six month periods ended March 31, 2002, respectively.

6.  RESTRUCTURING AND OTHER SPECIAL ITEMS

     During fiscal 2001, the Company executed a plan to reduce its workforce as
part of a continued company-wide cost-cutting effort. As a result of this
action, 136 employees were involuntary terminated, representing 28 percent of
the Company's workforce. Severance costs and related employee termination
benefit costs of $2,212 associated with these terminations were recorded as a
restructuring charge in fiscal year 2001. During the six months ended March 31,
2002, the Company did not make any adjustments to the restructuring accrual.

     As of March 31, 2002 and September 30, 2001, the Company had accrued
liability balances of $180 and $970, respectively, relating to these severance
costs. The remaining balance will be paid out through October 2002.

     In addition to the above amounts, during fiscal 2001 the Company recorded
severance and benefits costs of $1,073 associated with the termination of four
executives of the Company. As of March 31, 2002 and September 30, 2001, the
Company had accrued liability balances of $268 and $668, respectively, relating
to these severance costs. The remaining balance will be paid out through the end
of fiscal year 2002.

     As part of the restructuring plan, the Company consolidated certain
facilities. This consolidation led to the write-off of fixed assets in the
amount of $546 and the establishment of additional reserves for future lease
obligation payments totaling $841. As of March 31, 2002 and September 30, 2001,
the Company had accrued liabilities of $427 and $612, respectively, associated
with the consolidation of these facilities.

7.  DISCONTINUED OPERATIONS

     In September 2001, due to continued historical operating losses from its
Application Service Provider ("ASP") business segment and the industry outlook
for the ASP business generally, the Company's management decided to discontinue
ASP by phasing out of the business segment over a period of six months. As a
result, this business segment is classified as a discontinued operation in the
consolidated statement of operations. The remaining net assets at September 30,
2001 related to the ASP segment consist of accounts receivable from customers
and current deferred revenue balances and accrued liabilities for the cost of
disposal. In connection with the discontinuance of ASP, the Company wrote off
$6,100 of leasehold improvements and computers and equipment associated with the
ASP business, determined to be unrecover-
                                        8
<PAGE>
                            INFINIUM SOFTWARE, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

able in accordance with SFAS No. 121, Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed of (SFAS 121). This
charge was classified within loss from operations of ASP segment in the
consolidated statement of operations for fiscal year 2001.

     During the three and six months ended March 31, 2002, the ASP business
segment incurred charges of $393 and $968, respectively, which was offset
against the accrual of $1,094 originally booked in fiscal year 2001 for
estimated losses in accordance with APB Opinion No. 30, Reporting the Results of
Operations -- Reporting the Effects of Disposal of a Segment of a Business, and
Extraordinary, Unusual and Infrequently Occurring Events and Transactions. At
March 31, 2002, the remaining accrual for discontinued operations was $126,
which is consistent with management's current estimate.

8.  LINE OF CREDIT

     In October 2001, the Company entered into a line of credit with a financial
institution under which it can borrow up to $3,000, based on certain asset-based
balances. The agreement, which expires on December 31, 2002, contains certain
financial covenants including a prohibition against the payment of dividends as
well as minimum net deficit targets ranging from $19,000 in 2001 to $10,000 in
May 2002. The Company must also follow non-financial covenants including the
receipt of the financial institution's consent in the event of a merger or
consolidation with another entity and consent to acquire any assets or incur any
debts outside the normal course of business. The Company was in compliance with
all covenants at March 31, 2002. The Company has not borrowed under this line of
credit. The interest rate on any funds that are borrowed would be at the bank's
prime rate plus 1 percent.

9.  DIVESTITURE OF SUBSIDIARY

     On March 20, 2002, the Company sold the stock of its wholly owned
Netherlands subsidiary for proceeds of $5 in cash and the buyer's assumption of
net liabilities of $332. This transaction resulted in a gain of $337. As part of
the agreement, the Company retained certain intellectual property rights which
may give rise to royalty revenue over the next 33 months. The Company has not
recorded any royalty revenue related to this license agreement. The subsidiary's
results of operations were not material compared to the Company's consolidated
results of operations, and therefore, pro forma results are not presented.

                                        9
<PAGE>

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

     All statements contained herein that are not historical facts, including
but not limited to, statements regarding anticipated future revenue and expense
levels and capital requirements, the Company's future product development and
marketing plans, the Company's ability to generate cash from operations, and the
Company's ability to attract and retain employees, are based on current
expectations. These statements are forward looking in nature, involve a number
of risks and uncertainties, as more fully described under "Factors Affecting
Future Performance" contained herein and in the Company's Annual Report on Form
10-K for the year ended September 30, 2001, and are made pursuant to the Private
Securities Litigation Reform Act of 1995. Actual results may differ materially
from those described in the forward-looking statements.

OVERVIEW

     Infinium Software, Inc. ("Infinium", "the Company") develops, markets and
supports enterprise-level business software applications. Infinium offers Web
and server-based financial, human resources, supply chain management, process
manufacturing, business analytics and customer relationship management
solutions, services, support and deployment options to its customers.

     During fiscal year 2001, under the leadership of a new Chief Executive
Officer and President hired in February 2001, the Company reassessed its
business and established short term goals for fiscal 2001, which included
stabilizing the Company, focusing on its core competencies, improving the
profitability of the Company and preserving the Company's cash. As a part of
these efforts, the Company significantly reduced the Company's costs in the
third and fourth quarters of fiscal 2001. As part of its cost reduction efforts,
in September 2001, due to continued historical operating losses from its
Application Service Provider ("ASP") business segment and because the ASP did
not present an opportunity for timely profitability, the Company's management
decided to discontinue the ASP by phasing out of the business segment over a
period of six months. As a result, this business segment is classified as a
discontinued operation in the consolidated statement of operations. During
fiscal 2001, the Company also reduced its headcount by 36 percent. The Company
has realized reduced overhead expenses as a result of these restructuring
efforts during the first six months of fiscal 2002.

  CRITICAL ACCOUNTING POLICIES AND ESTIMATES

     The Company's discussion and analysis of financial conditions and results
of operations are based upon the Company's consolidated financial statements,
which have been prepared in accordance with accounting principles generally
accepted in the United States of America. The preparation of these financial
statements requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities, and disclosures of contingent assets
and liabilities, at the date of the financial statements and the reported
amounts of revenue and expense during the reporting period. Note 2 in the Notes
to the Consolidated Financial Statements in the Company's Annual Report on Form
10-K for the fiscal year ended September 30, 2001, describes the Company's
significant accounting policies used in the preparation of the consolidated
financial statements. On an on-going basis, the Company evaluates its estimates,
including, but not limited to, those related to bad debts, income taxes and
contingencies. The Company bases its estimates on historical experience and on
various other assumptions that are believed to be reasonable under the
circumstances, the results of which form the basis for making judgments about
the carrying values of assets and liabilities that are not readily apparent from
other sources. Actual results could differ from these estimates under different
assumptions or conditions.

     The Company believes the critical accounting policies listed below affect
significant judgments and estimates used in the preparation of the consolidated
financial statements.

     Revenue Recognition.  The Company recognizes software license fee revenues
in accordance with the provisions of AICPA Statement of Position 97-2, Software
Revenue Recognition, AICPA Statement of Position 98-9, Modification of SOP 97-2,
Software Revenue Recognition, with Respect to Certain Transactions (SOP 98-9)
and their related interpretations. The Company licenses software under
non-cancelable contrac-

                                        10
<PAGE>

tual license agreements and provides related professional services, including
support, training, consulting and implementation. Revenue from software license
fees is recognized when there is evidence of an arrangement, the product has
been delivered, fees are fixed or determinable, and collection of the related
receivable is deemed probable. The Company does not generally offer rights of
return, acceptance clauses and price protection to its customers. Typically, our
software license fees are due within a six-month period from the date of
contract. Revenues from sales of third party products are recorded net of
royalties, in accordance with Emerging Issue Task Force 99-19, Reporting Revenue
Gross as a Principle versus Net as an Agent. Generally, the Company's software
products do not require significant modification or customization. Installation
of the products is normally routine and is not essential to the functionality of
the product. The Company's sales frequently include maintenance contracts and
professional services with the sale of its software licenses. The Company has
established vendor-specific objective evidence of fair value (VSOE) for its
maintenance contracts and professional services, which is determined based upon
the prices charged to customers when these elements are sold separately.
Maintenance revenues, including those sold with the initial license fee, are
deferred based on VSOE, typically determined by the renewal rate of the annual
maintenance contract, and recognized ratably over the maintenance contract
period. Consulting and training service revenues, including those sold with
license fees, are recognized as the services are performed based on their
established VSOE. The amount of revenue allocated to the licenses sold with
services and/or maintenance is determined using the "residual method" of
accounting. Under the residual method, the total value of the arrangement is
allocated first to the undelivered elements based on their VSOE with the
remainder being allocated to license fees.

     Allowance for Doubtful Accounts.  The Company maintains allowances for
doubtful accounts for estimated losses resulting from the inability of the
Company's customers to make required payments. If the financial condition of
these customers were to deteriorate, resulting in an impairment of their ability
to make payments, additional allowances may be required or revenue could be
deferred until collectibility becomes probable. Management specifically analyzes
accounts receivable and analyzes historical bad debts, customer
credit-worthiness, current economic trends and changes in customer payment terms
when evaluating the adequacy of the allowance for doubtful accounts.

     Valuation of Long-Lived and Intangible Assets.  In accordance with
Financial Accounting Standards Board Statement No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of,"
("SFAS No. 121") the carrying value of intangible assets and other long-lived
assets is reviewed on a regular basis for the existence of facts or
circumstances, both internally and externally, that may suggest impairment.
Factors the Company considers important which could trigger the impairment
review include:

     - significant underperformance relative to historical or projected future
       operating results;

     - significant negative industry or economic trends;

     - significant decline in our stock price for a sustained period;

     - significant decline in our technological value as compared to the market;
       and

     - our market capitalization relative to net book value.

     If such circumstances exist, the Company evaluates the carrying value of
long-lived assets to determine if impairment exists based upon estimated
undiscounted future cash flows over the remaining useful life of the assets and
comparing that value to the carrying value of the assets. If the carrying value
of the asset is greater than the estimated future cash flows, the asset is
written down to the estimated fair value. The Company determines the estimated
fair value of the assets on a projected discounted cash flow method using a
discount rate determined by management to be commensurate with the risk inherent
in the current business model. In determining expected future cash flows, assets
are grouped at the lowest level for which cash flows are identifiable and
independent of cash flows from other asset groups. Our cash flow estimates
contain management's best estimates, using appropriate and customary assumptions
and projections at the time.

                                        11
<PAGE>

     Income taxes.  Deferred tax assets and liabilities are recognized for the
future tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their tax
bases. Deferred tax assets and liabilities are measured using enacted statutory
tax rates in effect in the year in which the differences are expected to
reverse. A deferred tax asset is established for the expected future benefit of
net operating loss and credit carry-forwards. Under Statement of Financial
Accounting Standards No. 109 ("SFAS No. 109"), Accounting for Income Taxes, the
Company cannot recognize a deferred tax asset for the future benefit of its net
operating losses, tax credits and temporary differences unless the Company can
establish that it is "more likely than not" that the deferred tax asset would be
realized. Due to the Company's recent history of net losses, the Company has not
recognized a tax asset and has recorded a full valuation allowance against its
otherwise recognizable deferred tax asset, in accordance with SFAS No. 109.
Future events could cause management to conclude that it is more likely than not
that Infinium will realize a portion of the deferred tax asset. Upon reaching
such a conclusion, the valuation allowance will be reduced and the deferred tax
asset will be recognized.

RESULTS OF OPERATIONS

  THREE MONTHS ENDED MARCH 31, 2002 COMPARED TO THREE MONTHS ENDED MARCH 31,
2001

     The following table sets forth the Company's consolidated statement of
operations data expressed as a percentage of total revenue and the percentage of
dollar increase or decrease from period to period for the three months ended
March 31, 2002 and 2001:

<Table>
<Caption>
                                                           THREE MONTHS ENDED MARCH 31,
                                                         ---------------------------------
                                                         % OF TOTAL          % OF $
                                                           REVENUE     INCREASE (DECREASE)
                                                         -----------   -------------------
                                                         2002   2001      2001 TO 2002
                                                         ----   ----   -------------------
<S>                                                      <C>    <C>    <C>
REVENUE:
  Software license fees................................   18%    16%            (4)%
  Services revenue.....................................   82     84            (14)
                                                         ---    ---
     Total revenue.....................................  100    100            (13)
                                                         ---    ---
OPERATING COSTS AND EXPENSES:
  Cost of software license fees........................    3      6            (65)
  Cost of services.....................................   24     28            (24)
  Research and development.............................   16     21            (34)
  Sales and marketing..................................   27     38            (38)
  General and administrative...........................   11     15            (34)
                                                         ---    ---
     Total operating costs and expenses................   81    108            (35)
                                                         ---    ---
Income (loss) from operations..........................   19     (8)           N/A
Other income (loss), net...............................   --     --            (66)
Gain on sale of subsidiary.............................    2     --            N/A
                                                         ---    ---
Income (loss) from continuing operations before
  provision for income taxes...........................   21     (8)           N/A
Provision for income taxes.............................    0      0            N/A
                                                         ---    ---
Income (loss) from continuing operations...............   21     (8)           N/A
DISCONTINUED OPERATIONS:
Loss from operations of ASP segment....................    0     (8)           N/A
                                                         ---    ---
NET INCOME (LOSS)......................................   21%   (16)%          N/A
                                                         ===    ===
</Table>

     Revenue.  Total revenue declined $2.4 million, or 13%, from $18.9 million
for the three months ended March 31, 2001 to $16.5 million for the three months
ended March 31, 2002. Software license fees declined

                                        12
<PAGE>

4%, from $3.0 million for the three months ended March 31, 2001 to $2.9 million
for the three months ended March 31, 2002. Service revenue, comprised of
maintenance fee revenue and consulting services revenue declined 14%, from $15.9
million for the three months ended March 31, 2001 to $13.6 million for the three
months ended March 31, 2002. This decrease was due primarily to a decrease in
demand for the Company's consulting service offerings due to lower software
license fees in the previous quarters. The components of service revenue are as
follows:

<Table>
<Caption>
                                                          THREE MONTHS ENDED MARCH 31,
                                                        --------------------------------
                                                                             % DECREASE
                                                         2002      2001     2001 TO 2002
                                                        -------   -------   ------------
                                                         (IN THOUSANDS, EXCEPT % DATA)
<S>                                                     <C>       <C>       <C>
Maintenance fee revenue...............................  $10,439   $10,411        --%
Consulting services revenue...........................    3,196     5,491       (42)%
                                                        -------   -------
  Total services revenue..............................  $13,635   $15,902       (14)%
                                                        =======   =======
</Table>

     Cost of Software License Fees.  Cost of software license fees consists
primarily of amortization expense related to capitalized software and the cost
of product media, manuals and shipping. Cost of software license fees decreased
65%, from $1.2 million for the three months ended March 31, 2001 to $431
thousand for the three months ended March 31, 2002. This decrease in dollar
amount is mainly due to a $240 thousand decrease in third party royalties and a
$499 thousand decrease in capitalized software amortization due to the change in
estimated useful life of capitalized software in fiscal year 2001. Cost of
software license fees as a percentage of software license fee revenue decreased
from 41% for the three months ended March 31, 2001 to 15% for the three months
ended March 31, 2002.

     Cost of Services.  Cost of services consists of costs to provide product
support, implementation, consulting, related facilities overhead, computer and
communications overhead and training services to licensees. Cost of services
decreased 24%, from $5.2 million for the three months ended March 31, 2001 to
$4.0 million for the three months ended March 31, 2002. The decrease is due to a
decrease in third party consulting expenses and a reduction in headcount
associated with the Company's reduction-in-force during fiscal year 2001. Cost
of services as a percentage of service revenue decreased from 33% for the three
months ended March 31, 2001 to 29% for the three months ended March 31, 2002.

     Research and Development.  Research and development expenses consist
primarily of engineering personnel, related facilities overhead, computer and
communications overhead, and third party contractor costs. Research and
development costs are reduced by capitalized software development costs.
Research and development expenses decreased 34%, from $3.9 million for the three
months ended March 31, 2001 to $2.6 million for the three months ended March 31,
2002. The decrease in dollar amount was primarily due to $1.1 million related to
personnel reductions associated with the Company's reduction-in-force during
fiscal year 2001 and $1.1 million related to general company-wide cost reduction
measures, offset by an $871 thousand decrease in capitalized software
development costs. Research and development expense as a percentage of total
revenue decreased from 21% for the three months ended March 31, 2001 to 16% for
the three months ended March 31, 2002.

     Sales and Marketing.  Sales and marketing expenses consist primarily of
salaries, commissions, travel, promotional expenses, facilities and computers
and communications costs for direct sales offices. Sales and marketing expenses
decreased 38%, from $7.2 million for the three months ended March 31, 2001 to
$4.5 million for the three months ended March 31, 2002. The decrease in dollar
amount was primarily due to $1.6 million related to personnel reductions
associated with the Company's reduction-in-force during fiscal year 2001 and
$1.1 million related to lower marketing and sales costs due to a company-wide
emphasis on expense reduction. Sales and marketing expense as a percentage of
total revenue was 38% and 27% for the three months ended March 31, 2001 and
2002, respectively.

     General and Administrative.  General and administrative expenses consist
primarily of salaries of executive and administrative personnel as well as
provisions for doubtful accounts, insurance, investor relations and professional
service fees. General and administrative expenses decreased 34% from $2.9
million for the

                                        13
<PAGE>

three months ended March 31, 2001 to $1.9 million for the three months ended
March 31, 2002. The decrease in dollar amount was primarily due to $800 thousand
related to personnel reductions associated with the Company's reduction-in-force
during fiscal year 2001 and $376 thousand related to amortization expense of
goodwill and intangible assets written-off in fiscal year 2001. General and
administrative expense as a percentage of total revenue was 15% and 11% for the
three months ended March 31, 2001 and 2002, respectively.

     Other income (loss), net.  Other income (loss), net consists of interest
income, interest expense, foreign currency exchange gain and losses, and
marketable equity securities gains and losses. Other income (loss), net
decreased $53 thousand due to lower interest income due to lower interest rates
and lower cash and marketable securities balances.

     Gain on sale of subsidiary.  On March 20, 2002, the Company sold the stock
of its wholly owned Netherlands subsidiary for proceeds of $5 thousand in cash
and the buyer's assumption of net liabilities of $332. This transaction resulted
in a gain of $337 thousand.

 SIX MONTHS ENDED MARCH 31, 2002 COMPARED TO SIX MONTHS ENDED MARCH 31, 2001

     The following table sets forth the Company's consolidated statement of
operations data expressed as a percentage of total revenue and the percentage of
dollar increase or decrease from period to period for the six months ended March
31, 2002 and 2001:

<Table>
<Caption>
                                                            SIX MONTHS ENDED MARCH 31,
                                                         ---------------------------------
                                                         % OF TOTAL
                                                           REVENUE           % OF $
                                                         -----------   INCREASE (DECREASE)
                                                         2002   2001      2001 TO 2002
                                                         ----   ----   -------------------
<S>                                                      <C>    <C>    <C>
REVENUE:
  Software license fees................................   15%    17%           (25)%
  Services revenue.....................................   85     83            (19)
                                                         ---    ---
     Total revenue.....................................  100    100            (20)
                                                         ---    ---
OPERATING COSTS AND EXPENSES:
  Cost of software license fees........................    3      7            (70)
  Cost of services.....................................   25     26            (24)
  Research and development.............................   16     19            (32)
  Sales and marketing..................................   27     37            (42)
  General and administrative...........................   11     13            (27)
                                                         ---    ---
     Total operating costs and expenses................   82    102            (35)
                                                         ---    ---
Income (loss) from operations..........................   18     (2)           N/A
Other income (loss), net...............................    0      1           (105)
Gain on sale of subsidiary.............................    1      0            N/A
                                                         ---    ---
Income (loss) from continuing operations before
  provision for income taxes...........................   19     (1)           N/A
Provision for income taxes.............................    0      0            N/A
                                                         ---    ---
Income (loss) from continuing operations...............   19     (1)           N/A
DISCONTINUED OPERATIONS:
Loss from operations of ASP segment....................    0     (8)           N/A
                                                         ---    ---
NET INCOME (LOSS)......................................   19%    (9)%          N/A
                                                         ===    ===
</Table>

                                        14
<PAGE>

     Revenue.  Total revenue declined $8.0 million, or 20%, from $40.9 million
for the six months ended March 31, 2001 to $32.9 million for the six months
ended March 31, 2002. Software license fees declined $1.7 million from $6.8
million for the six months ended March 31, 2001 to $5.1 million for the six
months ended March 31, 2002. This decrease reflects a slowdown in general
technology spending. Service revenue, comprised of maintenance fee revenue and
consulting services revenue, declined 19%, from $34.1 million for the six months
ended March 31, 2001 to $27.8 million for the six months ended March 31, 2002.
This decrease was due primarily to a decrease in demand for the Company's
consulting service offerings due to lower software license fees. The components
of service revenue are as follows:

<Table>
<Caption>
                                                             SIX MONTHS ENDED MARCH 31,
                                                        ------------------------------------
                                                                                 % DECREASE
                                                          2002        2001      2001 TO 2002
                                                        ---------   ---------   ------------
                                                        (IN THOUSANDS, EXCEPT
                                                               % DATA)
<S>                                                     <C>         <C>         <C>
Maintenance fee revenue...............................   $21,119     $21,155         --%
Consulting services revenue...........................     6,691      12,976        (48)
                                                         -------     -------
  Total services revenue..............................   $27,810     $34,131        (19)%
                                                         =======     =======
</Table>

     Cost of Software License Fees.  Cost of software license fees consists
primarily of amortization expense related to capitalized software and the cost
of product media, manuals and shipping. Cost of software license fees decreased
70%, from $2.6 million for the six months ended March 31, 2001 to $807 thousand
for the six months ended March 31, 2002. The decrease in dollar amount is
primarily due to a $725 thousand decrease in third party royalties and a $1.0
million decrease in capitalized software amortization due to the change in
estimated useful life of capitalized software in fiscal year 2001. Cost of
software license fees as a percentage of software license fee revenue decreased
from 39% for the six months ended March 31, 2001 to 16% for the six months ended
March 31, 2002.

     Cost of Services.  Cost of services consists of costs to provide product
support, implementation, consulting, related facilities overhead, computer and
communications overhead and training services to licensees. Cost of services
decreased 24%, from $10.7 million for the six months ended March 31, 2001 to
$8.1 million for the six months ended March 31, 2002. The decrease is due to a
decrease in third party consulting expenses and a reduction in headcount
associated with the Company's reduction-in-force during fiscal year 2001. Cost
of services as a percentage of service revenue decreased from 31% for the six
months ended March 31, 2001 to 29% for the six months ended March 31, 2002.

     Research and Development.  Research and development expenses consist
primarily of engineering personnel, related facilities overhead, computer and
communications overhead, and third party contractor costs. Research and
development costs are reduced by capitalized software development costs.
Research and development expenses decreased 32%, from $7.9 million for the six
months ended March 31, 2001 to $5.4 million for the six months ended March 31,
2002. The decrease in dollar amount was primarily due to $1.6 million related to
personnel reductions associated with the Company's reduction-in-force during
fiscal year 2001 and $2.3 million related to general company-wide cost reduction
measures, offset by a $1.7 million decrease in capitalized software development
costs. Research and development expense as a percentage of total revenue
decreased from 19% for the six months ended March 31, 2001 to 16% for the six
months ended March 31, 2002.

     Sales and Marketing.  Sales and marketing expenses consist primarily of
salaries, commissions, travel, promotional expenses, facilities and computers
and communications costs for direct sales offices. Sales and marketing expenses
decreased 42%, from $15.2 million for the six months ended March 31, 2001 to
$8.8 million for the six months ended March 31, 2002. The decrease in dollar
amount was primarily due to $3.7 million related to personnel reductions
associated with the Company's reduction-in-force during fiscal year 2001 and
$2.6 million related to lower marketing and sales costs due to a company-wide
emphasis on expense reduction. Sales and marketing expense as a percentage of
total revenue was 37% and 27% for the six months ended March 31, 2001 and 2002,
respectively.

                                        15
<PAGE>

     General and Administrative.  General and administrative expenses consist
primarily of salaries of executive and administrative personnel as well as
provisions for doubtful accounts, insurance, investor relations and professional
service fees. General and administrative expenses decreased 27%, from $5.3
million for the six months ended March 31, 2001 to $3.9 million for the six
months ended March 31, 2002. The decrease in dollar amount was primarily due to
$1.1 million related to personnel reductions associated with the Company's
reduction-in-force during fiscal year 2001 and $751 thousand related to
amortization expense of goodwill and intangible assets written-off in fiscal
year 2001. General and administrative expense as a percentage of total revenue
was 13% and 11% for the six months ended March 31, 2001 and 2002, respectively.

     Other income (loss), net.  Other income (loss), net consists of interest
income, interest expense, foreign currency exchange gain and losses, and
marketable equity securities gains and losses. Other income (loss), net
decreased $327 thousand due to lower interest income due to lower interest rates
and lower cash and marketable securities balances.

     Gain on sale of subsidiary.  On March 20, 2002, the Company sold the stock
of its wholly owned Netherlands subsidiary for proceeds of $5 thousand in cash
and the buyer's assumption of net liabilities of $332. This transaction resulted
in a gain of $337 thousand.

LIQUIDITY AND CAPITAL RESOURCES

     As of March 31, 2002, the Company had cash, cash equivalents and marketable
securities of $17.5 million resulting from a net increase of cash, cash
equivalents and marketable securities of $2.2 million during the first six
months of fiscal year 2002. Operating activities provided $2.4 million and $1.6
million for the six months ended March 31, 2002 and 2001, respectively, and
included $1.5 million and $3.2 million used in discontinued operations for the
six months ended March 31, 2002 and 2001, respectively. Cash flows from
operations for the six-month period ended March 31, 2002 was mainly due to net
income of $6.2 million and depreciation and amortization of $1.6 million, offset
by a decrease in accrued expenses of $2.9 million due to payments for severance,
bonuses and payroll and a decrease in deferred revenue of $1.3 million.

     Cash flows provided from (used in) investing activities was $574 thousand
and ($1.3) million for the six months ended March 31, 2002 and 2001,
respectively. Cash provided during the six months ended March 31, 2002 included
$696 thousand from sale of marketable securities and $5 thousand from the
proceeds from the sale of a subsidiary, partially offset by the purchase of
property and equipment of $66 thousand and capitalized software development
costs of $61 thousand.

     Cash flows used in financing activities were $97 thousand and $70 thousand
for the six months ended March 31, 2002 and 2001, respectively. Use of cash for
the six months ended March 31, 2002 included payments of capitalized lease
obligations of $116 thousand and purchase of treasury stock of $8 thousand,
offset by the proceeds from the exercise of options and employee stock purchase
plan of $27 thousand.

     In October 2001, the Company entered into a line of credit with a financial
institution under which it can borrow up to $3 million, based on certain
asset-based balances. The agreement, which expires on December 31, 2002,
contains certain financial covenants including a prohibition against the payment
of dividends as well as minimum net deficit targets ranging from $19 million in
2001 to $10 million in May 2002. The Company must also follow non-financial
covenants including the receipt of the financial institution's consent in the
event of a merger or consolidation with another entity and consent to acquire
any assets or incur any debts outside the normal course of business. The Company
was in compliance with all covenants at March 31, 2002. The Company has not
borrowed under this line of credit. The interest rate on any funds that are
borrowed would be at prime plus 1 percent.

     The Company does not have any special purpose entities or off-balance sheet
financing arrangements. The Company's lease obligations were disclosed in the
Annual Report on Form 10-K for the fiscal year September 30, 2001. There have
been no significant changes to the lease obligations subsequent to the Company's
Annual Report on Form 10-K.

                                        16
<PAGE>

     As a result of the enactment of the Job Creation and Worker Assistance Act
of 2002 on March 9, 2002, the Company will be able to carryback the Company's
2001 net operating loss for U.S. federal purposes to tax years 1996 to 1998. The
Company is currently assessing the amount it expects to recover in prior taxes
paid.

     Days sales outstanding ("DSO") increased to 39 days at March 31, 2002
compared to 36 days at September 30, 2001. The Company calculates DSO by
dividing the ending accounts receivable balance, net of allowances for doubtful
accounts, by the annualized revenue for the quarter, multiplied by 360. The
Company believes that this method of deriving DSO is indicative of actual
results due to the cyclical nature of software license and service transactions,
which are often consummated nearer the end of the quarter, as well as the
fluctuation of transactions from one quarter to the next. The Company's accounts
receivable balance at March 31, 2002, net of allowances for doubtful accounts
was $7.2 million versus $6.8 million as of September 30, 2001.

     Deferred revenue decreased $1.7 million (includes $374 decrease related to
sale of the Netherlands subsidiary), from $29.0 million at September 30, 2001 to
$27.3 million at March 31, 2002. The decrease in deferred revenue primarily
resulted from a decrease in the deferred consulting services component of
revenue due to lower prepaid customer bookings during the first six months of
fiscal 2002.

     Prior to the first quarter of fiscal 2002, the Company had incurred net
operating losses in each of the last three fiscal years ended September 2001,
2000 and 1999, and generated a negative cash flow from operations in each of the
last two years. In addition, software license fee sales and services revenues
have decreased in each of the last three fiscal years. However, for the six
months ended March 31, 2002, the Company had net income of $6.2 million. As of
March 31, 2002, the Company had a working capital deficit of $13.7 million and a
retained deficit of $6.2 million. Included in the working capital deficit is
$25.9 million of deferred revenue.

     During fiscal year 2001, under the leadership of a new Chief Executive
Officer and President hired in February 2001, the Company reassessed its
business and established short term goals for fiscal 2001, which included
stabilizing the Company, focusing on its core competencies, improving the
profitability of the Company and preserving the Company's cash. As a part of
these efforts, the Company significantly reduced the Company's costs in the
third and fourth quarters of fiscal 2001. As part of its cost reduction efforts,
in September 2001, due to continued historical operating losses from its
Application Service Provider ("ASP") business segment and because the ASP did
not present an opportunity for timely profitability, the Company's management
decided to discontinue the ASP by phasing out of the business segment over a
period of six months. As a result, this business segment is classified as a
discontinued operation in the consolidated statement of operations. During
fiscal 2001, the Company also reduced its headcount by 36 percent. The Company
has realized reduced overhead expenses as a result of these restructuring
efforts during the first six months of fiscal 2002. The Company believes that it
has sufficient cash, cash equivalents and marketable securities on hand to fund
its operations through at least fiscal 2002.

     While operating activities may provide cash in certain periods, to the
extent the Company anticipates growth in the future, the Company anticipates
that its operating and investing activities may use cash, and, consequently,
such growth may require the Company to obtain additional sources of financing.

     The Company's working capital and other capital requirements may change
because of unanticipated changes in business conditions or delays in market
acceptance of new products. Other considerations such as further expansion of
operations or research and development activities, competitive and technological
developments, and possible future acquisitions of businesses and/or product
rights may also affect the Company's capital requirements. There is no assurance
that the Company will be able to raise sufficient debt or equity capital on
terms that it considers acceptable, if at all. Accordingly, there can be no
assurance that the Company may not experience liquidity problems as a result or
because of adverse market conditions or other unfavorable events.

FACTORS AFFECTING FUTURE PERFORMANCE

     The factors affecting the Company's future performance have not changed
significantly from those enumerated in the Company's Annual Report on Form 10-K
for the year ended September 30, 2001.

                                        17
<PAGE>

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     The following discussion about the Company's market risk involves
forward-looking statements. Actual results could differ materially from those
discussed in the forward-looking statements. The Company is exposed to market
risk related to changes in interest rates and foreign currency exchange rates.
The Company does not use derivative financial instruments for speculative or
trading purposes.

INTEREST RATE RISK

     The Company is exposed to market risk from changes in interest rates
primarily through its investing and borrowing activities. The Company's
investing strategy to manage interest rate exposure is to invest in short-term,
highly liquid investments. The Company maintains a portfolio of highly liquid
cash equivalents and short-term investments (primarily in high grade municipal
notes). At March 31, 2002, the fair value of the Company's short-term
investments approximated market value.

FOREIGN CURRENCY RISK

     The Company faces exposure to movements in foreign currency exchange rates.
These exposures may change over time as business practices evolve and could have
a material adverse effect on the Company's business, financial condition and
results of operations. The Company does not use derivative financial instruments
to hedge foreign currency exposures or for trading. Historically, the Company's
primary exposures have been related to the operations of its foreign
subsidiaries. In the six month period ended March 31, 2002, the net impact of
foreign currency changes was not material.

                          PART II -- OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

     Not applicable

ITEM 2.  CHANGES IN SECURITIES

     Not applicable

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

     Not applicable

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     Not applicable

ITEM 5.  OTHER INFORMATION

     Not applicable

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

     (a) Reports on Form 8-K

          No reports on Form 8-K were filed during the quarter ended March 31,
     2002.

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<PAGE>

                                   SIGNATURE

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

                                          INFINIUM SOFTWARE, INC.

                                          BY: /s/ WILLIAM B. GERRAUGHTY JR.
                                            ------------------------------------
                                                 William B. Gerraughty Jr.
                                                  Chief Financial Officer
Dated: May 9, 2002

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