##### 









UNITED STATES SECURITIES AND EXCHANGE
COMMISSION

Washington, D.C. 20549


Form 10-K


|           |  |                                                                                           
|---------- |  | ------------------------------------------------------------------------------------------
|(Mark One) |  |                                                                                           
|þ          |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR
	15(d)
	OF THE SECURITIES EXCHANGE ACT OF 1934    
|          
|           |  | For the fiscal year ended December 31,
	2001                                              
|          
|or        
|          
|o          |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR
	15(d)
	OF THE SECURITIES EXCHANGE ACT OF 1934
|          
|           |  | For the transition period
	from           to          .                                   

Commission file number 000-28085

Caminus Corporation

(Exact name of Registrant as specified in its
charter)


|                                                                |  |                                   
|--------------------------------------------------------------- |  | ----------------------------------
|Delaware                                                        |  | 13-4081739                        
|(State or other jurisdiction of
	incorporation or organization) |  | (IRS employer
	identification no.)

825 Third Avenue

New York, New York 10022


(Address of principal executive offices and
zip code)


Registrants telephone number, including
area code:

(212) 515-3600


Securities registered pursuant to
Section 12(b) of the Act:

None


Securities registered pursuant to
Section 12(g) of the Act:

Common Stock, $.01 par value


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 if disclosure of
delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be
contained, to the best of the registrants knowledge, in
definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any
amendment to this
Form 10-K.  o

The aggregate market value of the common equity
held by non-affiliates of the registrant, computed using the
closing sale price of common stock on February 4, 2002, as
reported on the Nasdaq National Market, was approximately
$334,783,159 (affiliates included for this computation only:
directors, executive officers and holders of more than 5% of the
registrants common stock).

The number of shares outstanding of the
registrants common stock as of February 4, 2002 was
17,931,610.

Documents Incorporated by Reference

Portions of the Registrants Proxy Statement
for its 2002 Annual Meeting of Stockholders are being
incorporated by reference into Part III of the
Form 10-K.









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CAMINUS CORPORATION

Index to Annual Report on

Form 10-K filed with the


Securities and Exchange Commission


Year Ended December 31, 2001


Items in Form 10-K

|           |  |      |     |  |  |                                                                                        |  |  |    | 
|---------- |  | ---- | --- |  |  | -------------------------------------------------------------------------------------- |  |  | -- | 
|           |  | Item |     |  |  | Page                                                                                  
|           |  |      |     |  |  |                                                                                       
|Part I.    |  |      | 1.  |  |  | Business                                                                               |  |  | 2  | 
|           |  |      | 2.  |  |  | Properties                                                                             |  |  | 15 | 
|           |  |      | 3.  |  |  | Legal Proceedings                                                                      |  |  | 15 | 
|           |  |      | 4.  |  |  | Submission of Matters to a Vote of Security
	Holders                                   |  |  | 15 | 
|           |  |      |     |  |  | Executive Officers of the Registrant                                                   |  |  | 15 | 
|Part II.   |  |      | 5.  |  |  | Market for Registrants Common Equity and
	Related Stockholder Matters                 |  |  | 16 | 
|           |  |      | 6.  |  |  | Selected Financial Data                                                                |  |  | 18 | 
|           |  |      | 7.  |  |  | Managements Discussion and Analysis of
	Financial Condition and Results of Operations |  |  | 21 | 
|           |  |      | 7A. |  |  | Quantitative and Qualitative Disclosures About
	Market Risk                            |  |  | 37 | 
|           |  |      | 8.  |  |  | Financial Statements and Supplementary Data                                            |  |  | 38 | 
|           |  |      | 9.  |  |  | Changes in and Disagreements with Accountants on
	Accounting and
	Financial Disclosure |  |  | 38 | 
|Part III.  |  |      | 10. |  |  | Directors and Executive Officers of the Registrant                                     |  |  | 38 | 
|           |  |      | 11. |  |  | Executive Compensation                                                                 |  |  | 38 | 
|           |  |      | 12. |  |  | Security Ownership of Certain Beneficial Owners
	and Management                        |  |  | 38 | 
|           |  |      | 13. |  |  | Certain Relationships and Related Transactions                                         |  |  | 38 | 
|Part IV.   |  |      | 14. |  |  | Exhibits, Financial Statement Schedules, and
	Reports on Form 8-K                      |  |  | 39 | 
|Signatures |  |      | 40  | 

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This annual report, including the documents
incorporated by reference into this annual report, contains
forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. All
statements, other than statements of historical facts, included
in this annual report, or in documents incorporated by reference
into this annual report, regarding our strategy, future
operations, financial position, future revenues, projected
costs, prospects, plans and objectives of management are
forward-looking statements. The words anticipates,
believes, estimates,
expects, predicts,
potential, intends,
continue, may, plans,
projects, will, should,
could, would and similar expressions are
intended to identify forward-looking statements, although not
all forward-looking statements contain these identifying words.
We cannot guarantee that we actually will achieve the plans,
intentions or expectations disclosed in our forward-looking
statements, and you should not place undue reliance on our
forward-looking statements. Forward-looking statements are
inherently subject to risks, uncertainties and assumptions.
Actual results or events could differ materially from the plans,
intentions and expectations disclosed in the forward-looking
statements that we make. We have included important factors in
the cautionary statements included in this annual report,
particularly under the heading Managements
Discussion and Analysis of Financial Condition and Results of
Operations  Certain Factors that May Affect Our
Business, that we believe could cause actual results or
events to differ materially from the forward-looking statements
that we make. Our forward-looking statements do not reflect the
potential impact of any future acquisitions, mergers,
dispositions, joint ventures or investments that we may be a
party to or make. We do not assume any obligation to update any
forward-looking statements. You should also carefully review the
risks outlined in other documents that we file from time to time
with the Securities and Exchange Commission, including our
Quarterly Reports on Form 10-Q that we will file in 2002.

We use the following registered trademarks:
Caminus®, Altra®, AltraNet®, and Zai*Net®.
We also use the following trademarks: Zai*Net
SoftwareTM, Zai*Net ManagerTM, Zai*Net
Risk AnalyticsTM, Zai*Net PhysicalsTM,
Zai*Net ModelsTM, Zai*Net WeatherDeltaTM,
Zai*Net GasMaster IITM, Gas*MasterTM,
PowerMarketsTM, PowerOptionsTM,
GasOptionsTM, ProjectFinanceTM,
Power*MasterTM, Zai*Net PowerMasterTM,
Plant*MasterTM, StoreFrontTM,
NucleusTM, Nucleus SoftwareTM, Nucleus
ManagerTM, Nucleus Risk AnalyticsTM,
Nucleus PhysicalsTM, AltraTM, Altra
SoftwareTM, Altra GasTM, Altra
PowerTM, Altra PipelineTM, Altra
WebTM, and Altra WebExchangeTM. All other
trademarks and registered trademarks used in this annual report
are the property of their respective owners.

We use market data, industry forecasts, and
industry projections throughout this annual report, which we
have obtained from market research, publicly available
information and industry publications. These sources generally
state that the information that they provide has been obtained
from sources believed to be reliable, but that the accuracy and
completeness of such information are not guaranteed. The
forecasts and projections included in this annual report are
based on industry surveys and the preparers experience in
the industry, and there is no assurance that any of the
projected amounts will be achieved. Similarly, while we believe
that the surveys and market research that others have performed
are reliable, we have not independently verified this
information.

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PART I

Item 1.     Business

Overview

We are a leading provider of software and
strategic consulting services that facilitate energy trading,
transaction processing, risk management, and decision support
within the wholesale energy markets. Our integrated software
solutions enable energy companies to more efficiently and
profitably trade energy, streamline transaction management,
manage complex risk scenarios, and make optimal operational
decisions. Our software can be used by any entity that buys,
sells, trades, or takes a position in energy. We believe that we
offer the broadest array of integrated software solutions
available in the marketplace today. We serve customers in every
segment of the wholesale energy industry, including traders,
marketers, generators, producers, gatherers, processors,
pipeline companies, utilities, distribution companies, and
public agencies. We currently have approximately
300 customers, including British Energy, Consolidated
Edison, Conoco, Dynegy, El Paso Energy, Endesa, and Royal
Dutch/ Shell. For a discussion of our two business segments,
software solutions and strategic consulting, as well as
geographic information about us, please see the Caminus
Corporation consolidated financial statements.

Our products cover all functional areas across
the energy value chain, including production, analytics and
decision support, trading, risk, scheduling, operations,
settlement, invoicing, and accounting. Our software also handles
all major commodities and related products, including natural
gas, or gas, electric power, or power, oil, coal, emissions, and
weather derivatives, as well as all major traded instruments,
from simple spot deals to complex financial derivatives such as
options and swaps.

We have built a depth of industry expertise that
we believe is unmatched in the energy trading, transaction
processing, and risk management software markets. Focused
exclusively on the energy markets since our inception, we have
built a team of approximately 500 individuals located primarily
in Houston, New York and London. The majority of our
professionals are dedicated to understanding competitive market
requirements, mastering the intricacies of energy risk
management, and studying regulatory and market trends. The
result is a portfolio of software products, and services that
serves the unique needs of companies operating in todays
competitive wholesale energy markets.

Industry Background: Competitive Wholesale
Energy Markets



| |             
| | ------------
| | Introduction

The energy industry comprises one of the largest
vertical markets in the United States and Europe. The two
largest and fastest-growing segments of the industry are the
markets for wholesale power and gas. While the annual retail
market for power and gas in the United States currently stands
at more than $350 billion according to the
U.S. Department of Energy, Energy Information
Administration, or EIA, the traded wholesale market for these
physical commodities exceeds $1.4 trillion annually
according to Forrester Research. By the time the final sale is
made to end-users, every molecule of gas and electron of power
will likely have been bought and sold several times.
Traditionally, vertically integrated energy market participants
have captured the entire power and gas market by controlling the
value chain from exploration and generation to distribution and
settlement. However, over the past two decades, governments in
the United States and Europe have significantly reduced the
regulation of the power and gas markets in order to stimulate
competition. As a result, robust competitive wholesale energy
markets have emerged, as transactions that were previously
internal to integrated energy enterprises have now become
arms-length business transactions between different entities
along the value chain.

In the United States, deregulation of the gas
industry began in the 1980s, when distributors of gas were
relieved of their obligation to purchase gas supplies from
pipeline companies. The result was the entry of a new wave of
gas marketers into the wholesale markets. According to the EIA,
from 1986 to 1994, the number of wholesale marketers grew from
51 to 353 entities. The wholesale gas market continued
to grow through deregulation during the 1990s when pipelines
were required to unbundle transportation and product sales. More
recently, the wholesale U.S. power market was opened to
competition through deregulation beginning in

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the mid-1990s. The Federal Energy Regulatory
Commissions mandate for open access to the transmission
network resulted in the rise of independent merchant generators
as well as power marketers who buy and sell power without owning
any generation assets. At the retail level, each state has taken
its own approach and timing to deregulation. According to the
EIA, 23 states have enacted some form of legislation
addressing retail electric deregulation, and 21 states have
enacted similar legislation concerning retail gas.


The governments of Europe have also been opening
their energy markets to competition, fostering an active and
growing wholesale trading market. In the United Kingdom, for
instance, gas trading volume is 14 times that of physical
consumption, meaning gas is bought and sold many times in the
wholesale markets before reaching the end-user. At the retail
level, deregulation has already occurred in the United Kingdom
and Germany. In addition, the European Commission has issued a
number of directives calling for wholesale and retail
deregulation of energy markets across continental Europe over
the next four years. The European Commissions directives
require a fully deregulated power market for business consumers
by 2003, for gas business users by 2004, and for all power and
gas consumers by 2005. These directives are expected to generate
considerable momentum towards continued deregulation in European
Union member states, which include the significant energy
markets of Spain, Italy, and France.



| |                
| | ---------------
| | Emerging Trends

The catalyst for the emergence of competitive
wholesale energy markets in the United States and Europe was
deregulation. The development and growth of these markets has
been characterized and shaped by several significant industry
trends, including:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The breakup of vertically integrated
	providers.In order to remain
	competitive and take advantage of deregulation, traditional
	utilities are breaking up to focus on specific pieces of the
	energy value chain. Electrical power generation and gas
	production assets have been sold, marketing affiliates have been
	created, new merchant power producers have been spun off, and
	separate competitive retail electric providers have emerged from
	local distribution utilities. Transactions previously controlled
	by a single vertically integrated provider are now handled by a
	variety of unrelated market participants. In the U.S. power
	market, for example, according to the EIA, the share of
	generation controlled by utilities has fallen from 89% in 1998
	to 71% in 2001. In some regions, electric power is being sold by
	generators into electric power pools and is then purchased from
	the pool by electric power marketers and end-users. In other
	cases, competing suppliers negotiate contracts with end-users
	directly.                                                                                                                       
|
| |  | The rise in trading volumes and
	liquidity.The acceleration in
	wholesale energy trading volumes sparked by industry
	deregulation has increased market liquidity. This has enabled
	new market entrants and unbundled utilities to more easily
	participate in the trading markets, leading to a further rise in
	trading volumes and greater market liquidity. The emergence of
	standardized energy contracts and energy exchanges has also
	helped foster liquidity in the wholesale gas and power markets.
	According to Forrester Research, North American wholesale
	trading of physical and financial energy contracts has surpassed
	$5 trillion annually. In Europe, seven separate power
	exchanges have emerged to handle the growing volume of
	transactions. The emergence of market hubs has further
	facilitated price transparency and liquidity. While only a
	handful of major traded market hubs existed in the early 1990s,
	daily publications in the United States currently report on
	traded prices at over 30 major market hubs in both gas,
	such as Henry Hub and Chicago Hub, and power, such as Cinergy,
	Palo Verde and the California-Oregon Border.
|
| |  | Convergence of power and gas
	markets.The EIA estimates that 88% of
	generation capacity added in the United States over the next
	20 years will be gas-fired plants. According to the EIA,
	gas will grow from accounting for 13% of power production to 28%
	by 2020. This sharp increase in gas-fired generation links
	prices and risks across gas and power, with volatility in either
	commodity directly impacting the other. Changes in the price of
	gas will directly impact the price of power, and changes in the
	demand for power will directly impact the price of gas. As a
	result, energy market participants will increasingly be forced
	to manage risks across commodities, even if they do not
	participate in all markets. The convergence of the two markets
	has been illustrated by recent corporate                                                                                                                                                                                                                                                                                                                                                      

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| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   | restructuring activity. Between 1997 and 2000, 23
	mergers between primarily gas and primarily power businesses
	occurred as experienced gas marketers attempted to leverage
	their expertise in the more recently deregulated wholesale power
	markets.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|
| |  | Increased exposure to
	risk.The development of competitive
	wholesale energy markets has created new types and levels of
	risk faced by market participants. As wholesale supply has moved
	towards arms-length transactions instead of vertically
	integrated supply chains, participants have been exposed to, and
	in some cases profited from, significant price volatility. For
	example, substantial price volatility has been experienced in
	power markets, partly due to the unique nature of the commodity.
	Power is worth different amounts in different locations, cannot
	be stored in significant quantities economically or transported
	long distances economically, and costs of generation and
	transmission vary significantly. Demand can vary dramatically by
	time of day, day of week, and weather conditions. All of these
	factors contribute to substantial price volatility, and, thus,
	growing risk exposure. The summer of 1998 saw the wholesale
	prices of power in the midwestern United States increase from
	$25 per megawatt hour, or Mwh, to over $7,500 per Mwh due to a
	record heat wave and transmission constraints. Similar price
	spikes were experienced in California during the winter of
	2000-2001, resulting in rolling blackouts and financial crises
	for several California-based energy companies. Given that many
	participants effectively hold long or short positions, depending
	on whether they have energy obligations without controlling
	assets or have assets without firm obligations, exposure to
	price risk can be significant. Participants are not only exposed
	to increased levels, but new types of risk, including credit,
	basis, and cash flow risk.

Our Market Opportunity

Our opportunity is defined in large part by the
structural changes affecting the competitive wholesale energy
markets.



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The volume of transactions in the wholesale
	energy markets has increased
	substantially.Deregulation has
	contributed to a large increase in the volume of transactions in
	the wholesale energy markets, which in turn has increased the
	demand for third-party provided support systems and services.
	Historically, utilities were vertically integrated suppliers of
	power, which they delivered to end-users as an essentially
	one-step internal business operation. Increasingly, integrated
	utilities are being replaced by numerous market participants
	functioning at various points in the energy value chain,
	resulting in multiple transactions at the wholesale level before
	power is ultimately delivered. As discussed above, according to
	Forrester Research, in dollar volume the wholesale power and gas
	markets in the United States are four to five times the annual
	size of the retail markets for those same commodities,
	demonstrating that power and gas are traded many times before
	they are delivered to end-users. As a result, the number of
	transactions that must be captured and recorded between market
	participants, statements that must be issued, invoices that must
	be paid, balances that must be managed, and schedules that must
	be exchanged have increased substantially. Market participants
	are increasingly turning to third-party vendors for solutions
	that can manage todays high volume of trades and assist in
	the evaluation and management of positions across instruments
	and commodities.
|
| |  | Deregulation has increased risk exposure for
	market participants.The development
	of wholesale energy markets has created new types and levels of
	risk faced by market participants, including as a result of
	significant price volatility such as that seen in the midwestern
	United States in 1998 and in California in 2000 and 2001. In
	turn, organizations functioning within this new paradigm are
	increasingly turning to third-party provided software solutions
	to manage the increased types and levels of risk that they now
	face. Third-party provided software typically offers many
	benefits, including greater innovation, faster implementation,
	more frequent upgrades, subject matter specialization and
	expertise, and cost savings. As the complexity of the market
	continues to grow, we believe that the risks faced will become
	more difficult to manage, and that market participants will
	increasingly look to third-party provided software solutions and
	services in order to better compete in their respective markets.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

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| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The increasing convergence of the power and
	gas markets is adding risk and complexity to wholesale energy
	markets.As gas-fired power plants
	account for an increasing percentage of total generating
	capacity, the two commodities are becoming increasingly
	interrelated. As a result there is an increasing demand for
	systems that can handle multiple energy commodities. Firms that
	were previously unconcerned about risks in unrelated
	markets now find that they need to manage risk across multiple
	markets, including some in which they do not directly
	participate. This interrelation between and among commodities,
	from a risk evaluation and management point of view, is further
	enhancing the need for sophisticated software solutions and
	related services.

Deregulation and the corresponding growth of
wholesale markets have also resulted in an increasing number and
range of energy market participants. New participants have
emerged in every segment of the energy value chain, including
merchant power producers, independent system operators, power
pools, transmission companies, distributors, marketers,
retailers, producers, gatherers, processors, storage operators,
pipelines, local distribution companies, commodity exchanges,
traders, brokers, and financial institutions. These new
participants face the same issues of increased risk, complexity,
and transaction volume, and, as a result, they are turning
towards specialized software to manage these issues. The growth
in the number of these new participants is thus further
enhancing demand for energy trading, transaction processing, and
risk management software.

The growth of the competitive wholesale energy
markets stimulated by the regulatory and market trends discussed
above has resulted in a substantial opportunity for providers of
third-party trading, transaction processing, and risk management
software such as us. The rise in wholesale energy trading
volumes, the increase in market complexity, the emphasis on
managing multiple energy-related risks, and the convergence of
energy commodity markets have fueled demand for third-party
software that can manage the transactions, processes, risks, and
operational challenges that market participants now face. This
demand is further enhanced by the fact that almost all wholesale
market participants, with the exception of gas pipeline
companies, are devoid of legacy systems that can address the
challenges they face in the nascent competitive energy markets.
These companies thus need new software across their wholesale
energy businesses.

Market Size

The size and growth of the wholesale energy
market is a key driver behind the continued growth of the energy
information technology market. The wholesale physical energy
trading market in North America was estimated at over
$1.4 trillion in 2001 by Forrester Research and was
predicted to grow over 10% annually for the foreseeable future.
The European wholesale physical market is estimated, according
to industry publications, to be at least half the size of the
North American market. Furthermore, North American financial
wholesale energy transactions are valued at an additional
$3.5 trillion annually according to Forrester Research.

The META Group estimates the worldwide market for
energy trading, transaction processing, and risk management
software and services to be approximately $2.5 billion
annually. Based on our analysis and industry research, we
believe that a more conservative estimate of the North American
and European market for the types of products and services that
we provide, from all sources including third-party providers and
in-house development, is approximately $1.5 billion
annually. The above estimates reflect only the wholesale energy
markets, and do not reflect penetration into other markets such
as the retail energy market.



| |                                                
| | -----------------------------------------------
| | Number of Wholesale Energy Market
	Participants

Based on U.S. Commerce Department data,
U.S. Office of Pipeline Safety data, U.S. Department
of Energy reports, and industry publications, there are over
4,000 wholesale energy market participants in the United States.
These range from leading marketers and pipelines to small
municipalities and gathering companies. The majority of these
entities are potential customers for our current products and
services. The META Group estimates that 121 of these entities
are major market participants with annual revenues of more than
$1.0 billion, 100 of these entities have annual revenues of
between $500 million and $1.0 billion, and 206 of
these entities have annual revenues of between $250 million
and $500 million. We believe that the

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competitive European wholesale energy markets
have experienced a similar proliferation in the number of market
participants.




| |                                                    
| | ---------------------------------------------------
| | Categories of Wholesale Energy Market
	Participants

The categories of wholesale energy market
participants who are potential customers of our products and
services include:

|                    |  |                             
|------------------- |  | ----------------------------
|Market              |  | Participants                
|                    |  |                             
|Power               |  | Power generating companies  
|                    |  | Merchant power producers    
|                    |  | Utilities                   
|                    |  | Independent system operators
|                    |  | Power pools                 
|                    |  | Public power agencies       
|                    |  | Transmission companies      
|                    |  | Distribution companies      
|                    |  | Marketers                   
|                    |  | Municipalities              
|Related Commodities |  | Oil producers and marketers 
|                    |  | Coal producers and marketers
|Gas                 |  | Producers                   
|                    |  | Gatherers                   
|                    |  | Processors                  
|                    |  | Storage operators           
|                    |  | Pipeline companies          
|                    |  | Distribution companies      
|                    |  | Marketers                   
|                    |  | Retailers                   
|Energy Trading      |  | Commodity exchanges         
|                    |  | Over-the-counter traders    
|                    |  | Brokers                     
|                    |  | Financial institutions      
|                    |  | Commodities traders         

Our Strategy

Our goal is to be the leading provider of
trading, transaction processing, and risk management software
solutions and strategic consulting services to the global energy
market. To achieve our goal, we intend to:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Extend Our Product
	Leadership.Our products and services
	are largely differentiated by the fact that they have been
	designed and built exclusively for the wholesale energy markets.
	We believe this is a critical point of distinction as the
	wholesale energy markets have many unique requirements, in terms
	of both functionality and flexibility, which generally do not
	lend themselves to more generic solutions. We provide customers
	with a suite of specialized, innovative and highly sophisticated
	products and services that deliver substantial added value and
	meet their specific needs.                                                                                                                                                                                                                                                                                                                                                                                                  
|
| |  | Exploit Our Leading Market
	Positions.We believe an important
	benefit of our leading market positions in both North America
	and Europe is our ability to leverage this position into new
	sales opportunities. Most of the more than 4,000 competitive
	wholesale energy market participants in the United States alone
	are increasingly finding themselves in need of additional
	solutions to optimize their trading, transaction processing, and
	risk management operations. When these parties assess their
	alternatives, we believe they will look at our installed base of
	approximately 300 customers, which includes power and gas
	marketers, electric utilities, merchant power producers, oil and
	gas producers, pipeline companies, transmission and distribution
	companies, power agencies, municipalities, energy services
	providers, storage operators, and financial institutions, as
	validation of the leading functionality, flexibility, and value
	our products and services deliver.
|
| |  | Leverage Cross-Selling
	Opportunities.Based on our
	comprehensive and integrated product offering, we believe we are
	well positioned to expand sales into our existing customer base.
	Most wholesale energy market participants are continually
	searching for new tools for managing the new operational
	challenges and business risks they face. Given the strength,
	breadth and depth of our solutions, as well as our track record
	of delivering innovative products, we have the opportunity to
	sell                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

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| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   | additional products into our existing customer
	base as they confront these new challenges and risks. To
	maximize these opportunities, our direct sales force is trained
	on how to continually perform needs assessments and respond
	accordingly.                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|
| |  | Capture New and Complementary Market
	Opportunities.We continually pursue
	opportunities to help our clients enter and operate within new
	and complementary markets. For example, some of our customers
	are pursuing market opportunities within the emerging market for
	weather derivative products. Accordingly, we responded with our
	Zai*Net WeatherDelta product, which enables users to mitigate
	the risks of weather on load, generation, retail contracts, and
	traded positions. In the future, we believe similar
	opportunities will arise within other commodity-related markets,
	such as greenhouse gases, as well as other energy sub-verticals,
	including the retail, commercial and industrial markets.
|
| |  | Capitalize on Our Industry-Specific Knowledge
	and Expertise.We plan to continue
	attracting, developing and growing the industrys deepest
	and most talented team of energy subject matter experts,
	software engineers, managers and executives. Our dedicated team
	of approximately 500 individuals focused exclusively on the
	wholesale energy market is committed to developing new and
	innovative products and services for our customers, both through
	internal development efforts and external acquisitions.                                                                                                                                                                                                    
|
| |  | Leverage Our Strategic Consulting
	Practice.We intend to further
	leverage our strategic consulting practice, both in the United
	States and internationally, and expect that this in-house
	expertise will help us penetrate new wholesale market
	opportunities as they arise. Additionally, our strategic
	consulting practice provides top level access into some of the
	worlds most successful energy companies and positions us
	to offer our entire suite of products and services to these
	organizations.                                                                                                                                                                                                          

Products and Services

Software Solutions

We provide energy market participants with
sophisticated software to compete in every segment of the
deregulated wholesale markets. Since our inception, we have been
exclusively focused on providing software solutions and
strategic consulting services to the wholesale energy markets.
We have developed highly sophisticated, enterprise-wide risk
management software by combining an intimate knowledge of the
energy sector with a large, highly skilled staff of quantitative
PhDs. Our software solutions enhance our customers
efficiency, risk management, and profitability across the
wholesale energy value chain, from production and decision
analysis through distribution and settlement. Specifically, our
software solution groups include:



| |   |                                              
| | - | ---------------------------------------------
| |  | trading and transaction management solutions;
|
| |  | energy risk management solutions;            
|
| |  | advanced analytics solutions;                
|
| |  | physical gas solutions; and                  
|
| |  | physical power solutions.                    



| |                                              
| | ---------------------------------------------
| | Trading and Transaction Management
	Solutions

Overview and
Benefits.Our trading and transaction
management solutions suite enables energy market participants to
efficiently control all elements of a transaction, including
trading, risk, credit, back office, and accounting, on a single
platform, in real time. The suite allows users to manage
multiple physical commodities and financial instruments.
Specifically, the system handles power, gas, oil, coal,
emissions, and weather-related transactions as well as multiple
traded instruments, ranging from simple spot deals to complex
options and swaps.

Target Market.The
suite is designed specifically to meet the requirements of
wholesale energy trading and marketing companies, utilities,
generating companies, power pools, oil and gas producers,
processors, and pipelines. Its integrated front-, mid-, and back
office functionality, modular design, and sophisticated user

7



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interface enables customers to evaluate
portfolios, execute trades, manage risks, and schedule and
account for transactions on a single system.


Key Features.The
suites key features include:



| |   |                                                                                            
| | - | -------------------------------------------------------------------------------------------
| |  | real-time physical and financial trade capture;                                            
|
| |  | multi-commodity trading and scheduling
	functionality;                                     
|
| |  | real-time management of trading risks across
	trading portfolios;                          
|
| |  | intelligent real-time portfolio valuation and
	what if scenario functionality;           
|
| |  | support for both wholesale and retail operations,
	consolidated at the corporate level; and
|
| |  | ability to generate enterprise wide and
	customized reports in real time.                  



| |                                 
| | --------------------------------
| | Energy Risk Management Solutions

Overview and
Benefits.Our energy risk management
solutions suite provides an array of proprietary and standard
risk management solutions that can be tailored to meet the needs
of energy market participants that have varying market
strategies, exposure levels, and risk tolerances. Users can
measure, calculate and analyze the wide range of risks faced by
them, including price risk, basis risk, interest rate risk,
volatility risk, correlation risk, and cash flow risk. Built on
an integrated platform, the suite allows users to perform
integrated risk management across a wide spectrum of
commodities, traded instruments, markets and geographies.

Target Market.The
suite is useful to any entity that buys, sells, or takes a
position in energy. Within these entities, our software directly
benefits traders, risk managers, credit officers, structured
product specialists, and senior managers.

Key Features.The
suites key features include:



| |   |                                                                                                                                         
| | - | ----------------------------------------------------------------------------------------------------------------------------------------
| |  | standard mark-to-market and Value-at-Risk
	calculations;                                                                                
|
| |  | proprietary Monte Carlo Value-at-Risk models;                                                                                           
|
| |  | real-time, seamless integration of proprietary
	valuation models developed by customers;                                                
|
| |  | exotic option pricing and analysis tools;                                                                                               
|
| |  | standard and complex portfolio simulations and
	stress-testing; and                                                                     
|
| |  | standard and customizable reports covering, among
	other things, profits and losses, portfolio valuation, audit and
	potential exposure.



| |                             
| | ----------------------------
| | Advanced Analytics Solutions

Overview and
Benefits.Our advanced analytics
solutions suite provides customers with a comprehensive
energy-specific suite of high-end analytics and decision support
software. Included in the suite are a number of sophisticated
tools that help energy market participants value, hedge,
optimize and operate their physical assets and contracts as well
as manage their broad range of energy exposure. As part of our
advanced analytics solutions, we have developed the
industrys first software application for assessing the
impact of weather variations and volumetric risk on energy load,
generation assets, retail contracts, and traded positions.

Target Market.The
suite is useful to energy market participants that own or
operate physical assets, buy or supply energy, or face exposure
to energy price fluctuations. Examples of such participants
include power generation companies, oil and gas producers,
energy trading and marketing companies, and gas storage owners.

8



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Key Features.The
suites key features include:



| |   |                                                                                                                                              
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------
| |  | highly accurate trinomial tree models;                                                                                                       
|
| |  | use of empirical analysis of energy assets and
	data to generate more accurate valuations and enhance quality of
	asset management decisions;
|
| |  | complex risk applications that assess the impact
	of weather and volumetric variations on energy demand and traded
	positions;               
|
| |  | for gas storage asset owners, valuation of gas
	storage facilities as well as the associated real options linked
	to these assets; and       
|
| |  | for generation asset owners, valuation of
	generation assets and associated real options based on actual
	physical constraints.              



| |                       
| | ----------------------
| | Physical Gas Solutions

Overview and
Benefits.Our physical gas solutions
suite enables customers to efficiently integrate and manage
their gas operations, including purchases and sales,
transportation, settlement, invoicing, and accounting. The suite
manages all aspects of physical gas life cycle from production
to end use, with the scalability to manage transaction volumes
of the largest players in the industry and the depth of
functionality to manage the complexity of region- and
pipeline-specific operations. The benefits of streamlining the
gas management process include the ability to handle increased
throughput, reduce operational risk, increase cash flow, and
enhance enterprise-wide transaction transparency and reporting
functionality.

Target Market.The
suite targets companies that buy, sell, trade, transport, or
distribute gas. These entities include gas producers, gatherers,
processors, traders, marketers, pipelines, and local
distribution companies.

Key Features.The
suites key features include:



| |   |                                                                                    
| | - | -----------------------------------------------------------------------------------
| |  | wellhead accounting and division of interest
	functionality for gas producers;     
|
| |  | comprehensive contract administration;                                             
|
| |  | built-in interfaces between marketers and
	third-party pipeline operators;         
|
| |  | integrated operations features, including gas
	trading, nominations and scheduling;
|
| |  | comprehensive gas accounting, invoicing and
	settlement functionality;             
|
| |  | integrated monitoring of transportation and
	storage contracts; and                
|
| |  | complete and continuously updated compliance with
	energy regulatory standards.    



| |                         
| | ------------------------
| | Physical Power Solutions

Overview and
Benefits.Our physical power solutions
suite facilitates the process of buying and selling, scheduling,
monitoring, and recording electricity transactions among market
participants. Our software facilitates the process of physical
power management, including managing purchase and sales
contracts, settlement calculations, real-time generation
dispatch, curtailment management, billing, and invoicing. Among
the benefits of this solution suite are increased efficiency of
the power scheduling process, a reduction in the operational
risk of managing physical power assets, and increased profit
opportunities through a real-time, integrated view of capacity
available for purchase or sale.

Target Market.The
suite benefits entities that manage schedules for buying,
selling, or transmitting power, including merchant power
producers, marketers, utilities, municipalities, power
cooperatives, and public agencies.

9



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Key Features.The
suites key features include:



| |   |                                                                                                                                                                                                     
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | ability to create hourly and to-the-minute power
	schedules;                                                                                                                                        
|
| |  | automatic export of data to market operators via
	interfaces to all Independent System Operators;                                                                                                   
|
| |  | automatic generation and exchange of tagging
	information required by the North America Energy Reliability
	Council, or NERC, for both tag agents, or marketers, and tag
	authorities, or utilities;
|
| |  | accurate modeling of all physical generation
	parameters, such as heat curves and ramp rates, for precise
	scheduling and settlement; and                                                           
|
| |  | capability to manage meter data for invoicing and
	billing.                                                                                                                                         



| |               
| | --------------
| | Leading Brands

Our software solution suites are marketed and
sold under industry-leading brand names, including Zai*Net,
Nucleus, Altra, ACES, FrontOffice, GasMaster and WeatherDelta.
We believe that these brands have strong name recognition in the
wholesale energy markets in which we compete.



| |                
| | ---------------
| | Product Pricing

We license our software for a one-time perpetual
license fee, which typically consists of a base fee plus charges
for optional modules and system users. The one-time perpetual
license fee for base packages can range from $200,000 to
$400,000 for a system with basic functionality, the ability to
manage only across a single commodity, and a small number of
users. Incremental modules for enhanced functionality,
additional commodities, specialized features, and specific
market interfaces are priced from approximately $10,000 to over
$200,000. Depending on the number of users and modules licensed,
our initial system license fees typically range from $500,000 to
$1 million.

Substantially all of our customers enter into an
annual maintenance agreement providing them with regularly
published software upgrades and post-implementation customer
support. Customers pay an annual maintenance fee that is
typically equal to 20% of the license fee.

Software Services

We offer a broad range of professional services
to assist our customers in implementing our software products.
Our software is configured, implemented, and integrated
specifically to meet each customers trading, risk
management, scheduling, and operations needs. Our philosophy is
to focus on the needs of each specific customer and to tailor
our services accordingly. Our consultants provide comprehensive
training, support, and advice on the effective application of
our software to each customers specific business
operations. The types of services we offer include:



| |   |                                                                                                                                                                                                                                                                                
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Implementation
	Consulting.Assisting customers with
	the initial installation of our software or newly licensed
	modules, conversion of their historical data into system
	databases, and configuring the operational parameters of systems
	to match their business practices.
|
| |  | Application
	Consulting.Advising and training our
	customers on best practices to help them maximize the benefits
	provided by our software. We offer detailed process
	documentation and training customized for each customers
	business practices.                         
|
| |  | Post-implementation Customer
	Support.Answering customer questions
	and resolving problems concerning both standard software
	functionality and customer-specific issues through remote
	diagnosis, telephone hotline support, and site visits.                                

These services and the professionals that deliver
them contribute to a strong relationship with our customers,
enabling us to assess their future requirements and to sell them
additional products and services.

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Strategic Consulting

Our strategic consulting practice provides
wholesale energy market participants with strategic advice on
how to operate in and profit from competitive energy markets. We
assist our clients in formulating and implementing strategies
appropriate for their respective geographies and markets. We
have significant expertise in risk management, business strategy
and analysis, and competitive market development. Our reputation
in strategic consulting is based on our experience and in-depth
understanding of competitive energy markets. We also provide
advice to regulators. For example, in the United Kingdom, we
have been at the forefront of changes in the deregulated energy
sector and helped successfully shape the New Electricity Trading
Arrangements, or NETA, on behalf of the British government.

Our strategic consulting practice includes the
following core areas of expertise:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Risk Management.The
	rapidly changing dynamics of deregulated markets are forcing
	energy participants along the entire value chain to re-evaluate
	their approach to managing the risks in their businesses. Many
	market participants are facing new levels and types of risk and
	are forced to deal with unprecedented transaction complexity. We
	assist our clients in successfully managing and profiting from
	these market dynamics by developing optimal risk strategies and
	policies. We offer a complete range of risk management
	consultancy services, independently or in conjunction with our
	software products. We have developed several trading and risk
	management training courses for customers with global operations
	and have successfully led several workshops at major European
	energy conferences.
|
| |  | Business Strategy and
	Analysis.We regularly advise energy
	market participants on crucial strategic issues such as energy
	investments, divestitures, entrance into new markets, and
	competitive activities. We have significant experience in the
	economic evaluation of new and existing energy projects. Energy
	firms and financial institutions rely regularly on our
	qualitative and quantitative analyses to guide their investment
	decisions in energy ventures. Our software products enhance our
	strategic consulting practice by providing our professionals
	with sophisticated tools for valuing energy assets and modeling
	market dynamics.                                                                                                                                                                   
|
| |  | Competitive Market
	Development.We have advised
	regulatory bodies and independent agencies on optimal policies
	and structures. Our consultants worked with British regulators
	to help design and establish the worlds first fully
	competitive gas and power markets. We also advise energy market
	participants on how to optimally operate within their unique
	regulatory environments. We are currently leveraging our
	regulatory expertise into other energy markets transitioning to
	competitive environments.                                                                                                                                                                                                                                                                                                         

Sales

We sell our products and services exclusively
through a direct sales channel. We have a sales organization in
both North America and Europe responsible for selling our entire
suite of products and services in these respective regions. Both
regions utilize a common sales methodology and process for
managing our sales pipeline. Global sales efforts are tightly
coordinated. Each sales organization is led by a highly
experienced sales management executive with a strong background
in building and leading large enterprise software sales teams.

We use a team sales approach in which
professional, commissioned account representatives work with
pre-sales product and service consultants who have deep subject
matter expertise in the prospects requirements and the
solutions required to address them. Account representatives
generate and qualify leads, manage the sales process and are
responsible for closing the sale. Pre-sales consultants analyze
requirements, recommend solutions, provide technical information
and demonstrate our software solutions. Subject matter experts
from strategic consulting and product development supplement the
sales team as the sales situation dictates. In addition, our
strategic and software consultants work closely with our sales
teams to identify additional sales opportunities with existing
customers.

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Marketing

We have devoted significant resources and effort
towards building a strong and effective marketing team with the
primary objectives of generating sales leads and ensuring that
the capabilities of our products and services are accurately
represented to our target markets. Our marketing efforts in
North America and Europe are largely focused on the following
initiatives:



| |   |                                                                                                                                                                                                                                                                               
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | proactively generating sales leads based on
	rigorous customer profiling and needs assessments;                                                                                                                                                                               
|
| |  | shaping and articulating our products value
	propositions with respect to our specific software solution
	suites and consulting services through targeted advertising,
	speaking engagements, industry forums and communications with
	industry analysts and consultants; and
|
| |  | further developing our intricate understanding of
	market, regulatory, and customer trends and providing this
	valuable feedback to our sales and product development teams for
	further leverage.                                                                            

We also maintain marketing alliances with vendors
whose products and services are complementary to our product
offerings. For example, our partnership with LODESTAR
Corporation, a provider of retail-oriented software to energy
market participants, allows them and us to market our wholesale
trading and transaction processing software solutions with their
retail load profiling and billing software solutions. We also
have informal alliances and working relationships with most
leading systems integrators and major technology consulting
firms. These companies frequently work with our customers in the
vendor selection process as well as the enterprise-wide
integration projects that may involve our software.

Research and Development

Strong development capabilities are essential to
delivering responsive products to rapidly changing markets,
continually improving the quality and functionality of our
current products, and enhancing our core technology. We believe
that we can best maximize our development capabilities through
small, entrepreneurial development teams focused on specific
product groups. Our teams operate under a structure that
provides an umbrella of common strategy, plans,
technology, standards, methodologies, processes and culture.
Each development team consists of product managers, programmers,
and documentation and quality assurance specialists. Overall
development management consists of the leaders of each
development team, led by our senior development executive. The
team leaders ensure that the development teams operate under a
common approach and work closely with product marketing to
ensure that we develop products that the market demands. They
also manage the integration between products and coordinate
overall product suite quality assurance.

A number of significant new product development
efforts are under way for 2002. These include the development of
a new suite of asset-based trading tools, including new
developments in option modeling of generation assets. We believe
that these tools will find demand on the trading floors of
generation operators who need to integrate trading and hedging
decisions with production scheduling. We are also committed to
maintaining the leadership of existing products by developing
product enhancements that preserve our competitive edge. For
instance, we are upgrading the user interfaces on our energy
risk solutions to JAVA-based technology in order to increase the
speed and flexibility of functionality available to our
customers.

Technology

The strength of our technology is a competitive
advantage and strongly positions us for continued growth. Our
software products are integrated across the energy value chain,
and they have been designed to easily integrate with other
enterprise software systems that are commonly found in the back
offices of energy companies. To facilitate integration with a
variety of architectures, our solution suites provide standard
interfaces to accept trades and prices from other systems and
sources. These interfaces are XML and messaging based, although
we also support other technologies to accommodate legacy
systems. Our products have been integrated with the majority of
third-party software products specific to the energy industry
for trading, physical scheduling, and transportation. The
integrated result is a suite of object-oriented,
high-performance systems that will run on a variety of servers
and databases.

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We are currently developing a next generation
software platform in order to maintain our technology leadership
in competitive energy markets over the long term. We believe
that this platform will be the wholesale energy industrys
first fully integrated suite of web-based, end-to-end
transaction processing management software, and will serve as
the platform for all of our future products. Our next generation
software is built on Java 2 Platform, Enterprise Edition, or
J2EE, -based, messaging-oriented technology infrastructure. Its
fully web-based user interface, modular design, and N-tiered
architecture will provide end-users with complete integration of
transactions and business processes across the wholesale energy
value chain. The first commercial release of this software
platform is expected in late 2002. We will employ a conservative
approach to migrating our current customers, and introducing new
customers, to the new platform as it is released in stages. We
plan to sell and support our existing products for the
foreseeable future.

Customers

We have approximately 300 customers worldwide.
These companies include many of North Americas leading
power and gas marketers, as well as leading electric utilities,
oil and gas producers, merchant power producers, pipelines, and
distribution companies throughout North America and Europe. In
addition to serving these major industry participants, we have
successfully acquired customers in new or niche segments of the
competitive energy industry, including power agencies,
transmission companies, energy services providers,
municipalities, storage operators, and financial institutions.
We believe that the diversity of our customer base demonstrates
the strength and breadth of our software solutions and the
comprehensiveness of our value proposition across energy
commodities, business functions, and traded instruments.

We believe that we are well-positioned to
significantly grow our sales to both existing and new customers.
We believe that most of our existing customers will require
additional software solutions to handle the increasing
operational challenges as well as the new sources of energy risk
they continually face. Given the strength and breadth of our
software solution suite and the frequency of our new product
innovation, we have the opportunity to cross-sell products into
our existing base as our customers face new challenges. Our
direct sales force is therefore trained on all of our product
suites and is focused on cross-selling our products to existing
customers. In addition, we believe that most wholesale energy
market participants, including the more than 4,000 participants
in the United States alone, have a need for advanced and
powerful solutions to their trading, transaction processing, and
risk management activities.

We currently have approximately 300 customers
located primarily in the United States, United Kingdom, Italy,
Spain, Denmark, and France:

Ameren Energy, Inc.

American Electric Power Service Corporation


BP Amoco Corporation


British Energy Plc


Calpine Corporation


Connectiv Resource Partners, Inc.


Conoco Inc.


Consolidated Edison Company of New York, Inc.


Dominion Resources, Inc.


Dynegy Inc.


El Paso Energy Corporation


Elsam


Endesa Servicios


ENI S.p.A.


Exelon Generation


Gaz de France


MidAmerican Energy Company


New York State Electric & Gas Corporation


The Office of Gas and Electricity Markets


Oneok Inc.


PG&E National Energy Group


PP&L Resources, Inc.


Royal Dutch/ Shell Group


RWE Trading Americas Inc.


Sequent Energy Management, L.P.


Tractebel Energy Marketing, Inc.


Information regarding domestic and foreign
revenues is set forth in our consolidated financial statements
at Note 17 and Item 7A and is incorporated herein by
reference.

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Competition

The wholesale energy software market is
relatively young, rapidly evolving, and very competitive. We
expect competition to persist and to intensify as demand for our
products and services continues to grow. We currently face
competition from a number of sources:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Energy Software
	Providers.A number of smaller
	companies offer point solutions targeted specifically to the
	energy industry. These include pure-play startup energy software
	companies and hybrid software and technology consulting firms.
	We compete favorably against these participants as a result of
	our customer base, track record, global presence, and level of
	subject matter expertise and ongoing support that our customers
	demand.                                                                                                                                                                   
|
| |  | In-House
	Development.These in-house
	information technology departments provide custom home-built
	software tailored specifically to the parent corporations
	needs. Initially, this option may appear to be a cost-effective
	approach to providing point or enterprise solutions. However,
	the growing cost of maintaining, supporting, and upgrading these
	custom solutions is an issue for some customers. Moreover,
	although in-house technology teams may be technically very
	capable, we compete favorably against them because we can
	provide our perspective of the best practices in the energy
	industry.
|
| |  | Large Consultancies.These large systems integrators and consultancies build custom
	enterprise solutions. Like the global enterprise software
	companies, they frequently have a strong international presence
	and significant financial resources. They often rely on
	cross-industry technology solutions, which may result in
	expensive and lengthy implementations. We compete favorably
	against them because, instead of relying on cross-industry
	technology solutions, we provide the domain specific
	functionality that our customers demand.                                                                 
|
| |  | Enterprise Software
	Companies.These larger companies have
	the international presence and financial strength to deliver
	large-scale enterprise software solutions. We compete favorably
	against them because we have the detailed subject matter
	expertise required to deliver sophisticated energy trading,
	transaction processing, and risk management solutions, although
	they have the resources to acquire and develop this expertise
	over time.                                                                                                                                                               
|
| |  | Strategic Consulting
	Firms.The principal competitors for
	our strategic consulting services are our customers who have
	internal expertise, as well as strategic consulting firms. We
	compete favorably against these competitors because we are one
	of only a small number of companies that have the depth of
	expertise on the development of competitive markets that leading
	energy participants demand.                                                                                                                                                                                                          

We believe that we compete primarily on the basis
of functionality, expertise, the ability to support larger
enterprises, and price. Our ability to compete successfully
depends on elements both within and outside of our control,
including successful and timely development of new products,
product performance, intellectual property protection obtained
by us and our competitors, customer service, pricing, marketing,
industry trends, and general economic trends.

Intellectual Property

We rely on a combination of copyright, trademark
and trade secret laws, nondisclosure agreements and other
contractual provisions to establish, maintain and protect our
proprietary rights. We have copyright and trade secret rights
for our products, consisting mainly of source code and product
documentation. We attempt to protect our trade secrets and other
proprietary information through agreements with suppliers,
nondisclosure agreements with employees and consultants, and
other security measures.

We rely on outside licensors for technology that
is incorporated into, and is sometimes necessary for the
operation of, our products. However, we believe that we can
obtain replacements from other vendors.

Employees

As of December 31, 2001, we had 503
full-time employees. We believe that our relationship with our
employees is good.

14



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##### 



Item 2.  Properties

Our principal administrative, sales, marketing,
services and research and development facility is located in
leased facilities in New York, New York. In addition, we lease
sales, services and research and development offices in the
following cities: Dallas, Texas; Houston, Texas; Calgary,
Canada; London, England; Cambridge, England; and Kirkland,
Washington. We believe that our facilities are adequate for our
current needs and that suitable additional or substitute space
will be available as needed to accommodate expansion of our
operations.

Item 3.  Legal
Proceedings

From time to time, we are involved in routine
legal matters that arise in the ordinary course of our business.
We currently are not a party to any matters that we believe will
have, individually or in the aggregate, a material adverse
effect on our business, financial condition, or results of
operations.

Item 4.  Submission of
Matters to a Vote of Security Holders

None.

Executive Officers of the Registrant

Our executive officers, and their respective ages
and positions as of February 12, 2002, are as follows:

|                 |  |     |    |          |  |                                                                                      
|---------------- |  | --- | -- | -------- |  | -------------------------------------------------------------------------------------
|Name             |  | Age |    | Position
|                 |  |     |    |         
|David M. Stoner  |  |     | 60 |          |  | President, Chief Executive Officer and Director                                      
|Nigel L. Evans   |  |     | 47 |          |  | Executive Vice President, Head of Global Energy
	Market Strategy and Director        
|Brian J. Scanlan |  |     | 39 |          |  | Executive Vice President, Chief Technology
	Officer and Director                     
|Joseph P. Dwyer  |  |     | 46 |          |  | Executive Vice President, Chief Financial
	Officer, Assistant Secretary and Treasurer
|John A. Andrus   |  |     | 47 |          |  | Executive Vice President and Chief Operating
	Officer                                

David M. Stonerhas
served as our president and chief executive officer and as a
director since October 1998. From April 1997 to October 1998,
Mr. Stoner served as president and chief operating officer at
SS&C Technologies, Inc., a provider of asset management
software to the financial services industry. From August 1995 to
September 1996, Mr. Stoner was president and chief
operating officer of The Dodge Group, Inc., a software company
providing PC-based general ledger systems. From December 1987 to
August 1995, Mr. Stoner served as executive vice president,
worldwide operations at Marcam Corporation, an international
provider of enterprise applications and services.

Nigel L. Evanshas
served as our executive vice president and head of Global Energy
Market Strategy since January 2002 and as a director since May
1998. From November 2000 to January 2002, Dr. Evans served
as our executive vice president and director of European
operations. Dr. Evans served as our senior vice president
and director of European operations from May 1998 to November
2000. From 1985 to May 1998, Dr. Evans served as chairman
and chief executive officer of Caminus Energy Limited, a
European strategic consultancy acquired by us in May 1998.

Brian J. Scanlanhas
served as our executive vice president and chief technology
officer since November 2000 and as a director since May 1998.
Mr. Scanlan served as our senior vice president and chief
technology officer from January 1999 to November 2000. From May
1998 to December 1998, Mr. Scanlan served as president of
Zai*Net Software, L.P., and, from 1987 to May 1998, he served as
president of Zai*Net Software, Inc., a software firm and
predecessor to us.

Joseph P. Dwyerhas
served as our executive vice president and chief financial
officer since July 2001. From April 2001 to July 2001,
Mr. Dwyer served as our senior vice president and chief
financial officer.

15



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##### 



From June 2000 to April 2001, Mr. Dwyer
served as executive vice president and chief financial officer
of ACTV, Inc., a digital media company. From January 1990 to
June 2000, he served as senior vice president, finance, of
Winstar Communications, Inc., a global broadband services
company, and, from January 1988 to January 1990, he was chief
financial officer of Legal Software Solutions, a software
development firm.


John A. Andrushas
served as our executive vice president and chief operating
officer since December 2001. From January 2001 to December 2001,
Mr. Andrus served as our executive vice president, North
American operations, and, from April 1999 to January 2001, he
served as our senior vice president, North American sales. From
April 1997 to March 1999, Mr. Andrus served as vice
president, sales and marketing at JGI, a privately held provider
of enterprise software and supply chain solutions. From November
1992 to April 1997, Mr. Andrus served in various roles,
including vice president, North American sales and operations,
at Marcam Corporation, an international provider of enterprise
applications and services.

Each executive officer serves at the discretion
of our board of directors and holds office until his or her
successor is elected and qualified or until his or her earlier
resignation or removal. There are no family relationships among
any of our directors or executive officers, except that
Lawrence D. Gilson, the chairman of our board of directors,
and David M. Stoner are brothers-in-law.

Part II

Item 5.  Market for
Registrants Common Equity and Related Stockholder
Matters

Our common stock has been traded on the Nasdaq
National Market under the symbol CAMZ since our
initial public offering on January 28, 2000. The following
table sets forth the high and low sales prices of our common
stock as reported on the Nasdaq National Market for the periods
indicated.

|                                           |  |      |       |     |  |   |       | 
|------------------------------------------ |  | ---- | ----- | --- |  | - | ----- | 
|                                           |  | High |       | Low
|                                           |  |      |       |    
|Fiscal Year Ended December 31, 2000:       |  |      |       |     |  |   |       | 
|First Quarter (beginning January 28, 2000) |  | $    | 33.50 |     |  | $ | 16.50 | 
|Second Quarter                             |  |      | 29.00 |     |  |   | 7.56  | 
|Third Quarter                              |  |      | 42.00 |     |  |   | 14.00 | 
|Fourth Quarter                             |  |      | 46.94 |     |  |   | 14.88 | 

|                                     |  |      |       |     |  |   |       | 
|------------------------------------ |  | ---- | ----- | --- |  | - | ----- | 
|                                     |  | High |       | Low
|                                     |  |      |       |    
|Fiscal Year Ended December 31, 2001: |  |      |       |     |  |   |       | 
|First Quarter                        |  | $    | 28.00 |     |  | $ | 17.50 | 
|Second Quarter                       |  |      | 33.75 |     |  |   | 18.88 | 
|Third Quarter                        |  |      | 27.79 |     |  |   | 11.50 | 
|Fourth Quarter                       |  |      | 24.40 |     |  |   | 14.37 | 

On February 4, 2002, the last reported sale
price of our common stock on the Nasdaq National Market was
$18.67 per share. As of the close of business on
December 31, 2001, we had 32 holders of record of our
common stock. Because a significant number of these shares are
held by brokers and other institutions on behalf of
stockholders, we are unable to estimate the total number of
stockholders represented by these holders of record.

We have never declared or paid cash dividends on
our capital stock. Because we currently intend to retain
earnings, if any, to finance our operations, we do not intend to
pay cash dividends on our common stock in the foreseeable
future. Payment of future dividends, if any, will be at the
discretion of our board of directors and will depend on our
earnings and financial condition and such other factors as our
board of directors may consider appropriate at the time. In
addition, provisions of our term credit facility limit our
ability to pay dividends.

16



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##### 



Recent Sales of Unregistered
Securities

On November 20, 2001, we purchased from
Altra Energy Technologies, Inc. all of the capital stock of
Altra Software Services, Inc. (Altra) pursuant to a
stock purchase agreement. The purchase price for the acquisition
consisted of 1,975,000 shares of our common stock and $24,947 in
cash. The purchase price is subject to adjustment, depending on
the final determined value of the tangible net worth, as defined
in the stock purchase agreement, of Altra. Under the terms of a
registration rights agreement with Altra Energy Technologies,
Inc., we are obligated to cause a shelf registration statement
with respect to these shares to become effective no later than
May 19, 2002. This transaction was exempt from the
registration requirements of the Securities Act of 1933 pursuant
to Section 4(2) thereof.

Use of Proceeds

The following information relates to the use of
proceeds from our initial public offering of common stock. The
effective date of our Registration Statement on Form S-1,
commission file number 333-88437, relating to our initial
public offering, was January 27, 2000.

In connection with the offering, the estimated
expenses were as follows (in thousands):

|                                       |  |   |       | 
|-------------------------------------- |  | - | ----- | 
|Underwriting Discounts and Commissions |  | $ | 4,578 | 
|Other Expenses                         |  |   | 1,804 | 
|                                       |  |   |       | 
|Total Expenses                         |  | $ | 6,382 | 
|                                       |  |   |       | 

Payment of expenses were to persons other than:
directors, officers, our general partners or their associates,
persons owning ten percent or more of any class of our equity
securities, or our affiliates.

Our net offering proceeds, after deducting the
total expenses described above, were $59,028 (in thousands).

From the effective date of the Registration
Statement through December 31, 2001, we used the net
proceeds from the offering as follows (in thousands):

|                                         |  |   |        | 
|---------------------------------------- |  | - | ------ | 
|Repayment of Indebtedness                |  | $ | 4,309  | 
|Capital Expenditures                     |  |   | 7,152  | 
|Termination Fee for Consulting Services  |  |   | 1,300  | 
|Lease Termination Fee                    |  |   | 186    | 
|Bonus Payments                           |  |   | 522    | 
|Earn-out Payment to Zak Associates, Inc. |  |   | 355    | 
|Security Deposit on New York Lease       |  |   | 1,739  | 
|Acquisition of Nucleus                   |  |   | 13,676 | 
|Acquisition of DC Systems                |  |   | 184    | 
|Acquisition of Altra                     |  |   | 10,816 | 
|Investments in Marketable Securities     |  |   | 13,096 | 
|Cash Equivalents                         |  |   | 5,693  | 
|                                         |  |   |        | 
|                                         |  | $ | 59,028 | 
|                                         |  |   |        | 

All of the above listed payments were direct or
indirect payments to persons other than: directors, officers,
general partners or their associates, persons owning ten percent
or more of any class of our equity securities, or our
affiliates, except for: (i) the termination fee for
consulting services which was paid to GFI Two LLC, where
our directors Lawrence D. Gilson and Richard K.
Landers are president and a principal, respectively;
(ii) $289 (in thousands) of the bonus payments, which was
paid to Nigel L. Evans, our Executive Vice President, Head
of Global Energy Market Strategy and one of our directors, and
(iii) the earn-out payment to Zak Associates, Inc., which
entity is indirectly owned by Brian J. Scanlan, our Chief
Technology Officer and one of our directors, and his wife.

17



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##### 



Item 6.     Selected
Financial Data

The following selected consolidated financial
data should be read together with our audited consolidated
financial statements and related notes and
Managements Discussion and Analysis of Financial
Condition and Results of Operations, which are included
elsewhere in this annual report. The statement of operations
data for the year ended December 31, 1997 and the
four-month period ended April 30, 1998 and the balance
sheet data at December 31, 1997 are derived from, and are
qualified by reference to, the audited financial statements of
Zai*Net Software, Inc., our predecessor, not included in this
annual report. The consolidated statement of operations data for
the period from our inception on April 29, 1998 through
December 31, 1998 and the consolidated balance sheet data
at December 31, 1998 and 1999 are derived from, and are
qualified by reference to, our audited consolidated financial
statements, not included in this annual report. The consolidated
statement of operations data for the year ended
December 31, 1999 are derived from, and qualified by
reference to, our audited consolidated financial statements,
included elsewhere in this annual report, which have been
audited by PricewaterhouseCoopers LLP, independent accountants.
The consolidated statement of operations data for the years
ended December 31, 2000 and 2001 and the consolidated
balance sheet data at December 31, 2000 and 2001 are
derived from, and qualified by reference to, our audited
consolidated financial statements, included elsewhere in this
annual report, which have been audited by KPMG LLP, independent
accountants.

In the following table, Adjusted
EBITDA is defined as earnings before interest and other
income, income taxes, depreciation, amortization, charges
related to acquired in-process research and development,
non-cash compensation expense, expenses related to our initial
public offering, and loss on office relocation. Pro forma
net income is calculated by excluding from pre-tax loss
the amortization of intangible assets, charges related to
acquired in-process research and development, non-cash
compensation expense, expenses related to our initial public
offering, and loss on office relocation, and providing income
tax expense on pro forma pre-tax earnings. EBITDA is a non-GAAP
measure commonly used by investors and analysts to analyze
companies on the basis of operating performance, leverage and
liquidity. We present Adjusted EBITDA and Pro forma net income,
which are also non-GAAP measures, to enhance the understanding
of our operating results. We believe that each of Adjusted
EBITDA and Pro forma net income is an indicator of our operating
profitability since each excludes items that are not directly
attributable to our ongoing business operations. However, each
of Adjusted EBITDA and Pro forma net income relies upon our
managements judgment to determine which items are directly
attributable to our ongoing business operations and as such is
subjective in nature. Neither Adjusted EBITDA nor Pro forma net
income should be construed as an alternative to net income as an
indicator of our operating performance or as an alternative to
cash flow from operations as a measure of our liquidity. For
information about cash flows or results of operations in
accordance with generally accepted accounting principles, please
see our audited consolidated financial statements and related
notes included elsewhere in this annual report.

18



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##### 



|                                             |                      |                                          |                |             |  |          |       |                            |  |       |         |       |  |       |        |        |  |        |         |        |  |        |        |        |  |        | 
|-------------------------------------------- | -------------------- | ---------------------------------------- | -------------- | ----------- |  | -------- | ----- | -------------------------- |  | ----- | ------- | ----- |  | ----- | ------ | ------ |  | ------ | ------- | ------ |  | ------ | ------ | ------ |  | ------ | 
|                                             |                      |                                          |                |             |  |         
|                                             |                      |                                          |                | Caminus    
|                                             |                      | Zai*Net                                  |                |            
|                                             |                      | (Predecessor)                            |                | Inception   |  |         
|                                             |                      |                                          |                | (April 29,  |  |         
|                                             |                      | Fiscal Year                              |                | Four Months |  | 1998)    |       |                           
|                                             |                      | Ended                                    |                | Ended       |  | through  |       | Fiscal Year Ended Dec. 31,
|                                             |                      | Dec. 31,                                 |                | April 30,   |  | Dec. 31, |       |                           
|                                             |                      | 1997                                     |                | 1998        |  | 1998     |       | 1999                       |  | 2000  |         | 2001 
|                                             |                      |                                          |                |             |  |          |       |                            |  |       |         |      
|                                             |                      |                                         
|                                             |                      | (in thousands, except per share amounts)
|Statement of Operations Data:                |                      |                                          |                |             |  |          |       |                            |  |       |         |       |  |       |        |        |  |        |         |        |  |        |        |       
|                                             |                      | Revenues:                                |                |             |  |          |       |                            |  |       |         |       |  |       |        |        |  |        |         |        |  |        |        |        |  |       
|                                             | Licenses             |                                          | $              | 1,521       |  |          | $     | 1,495                      |  |       | $       | 3,639 |  |       | $      | 12,538 |  |        | $       | 24,573 |  |        | $      | 34,579 | 
|                                             | Software services    |                                          |                | 2,668       |  |          |       | 1,335                      |  |       |         | 3,091 |  |       |        | 7,816  |  |        |         | 18,576 |  |        |        | 32,416 | 
|                                             | Strategic consulting |                                          |                |            |  |          |       |                           |  |       |         | 2,896 |  |       |        | 6,556  |  |        |         | 8,565  |  |        |        | 7,722  | 
|                                             |                      |                                          |                |             |  |          |       |                            |  |       |         |       |  |       |        |        |  |        |         |        |  |        |        |       
|                                             |                      |                                          | Total revenues |             |  | 4,189    |       |                            |  | 2,830 |         |       |  | 9,626 |        |        |  | 26,910 |         |        |  | 51,714 |        |        |  | 74,717 | 
|Gross profit                                 |                      |                                          | 2,858          |             |  |          | 2,095 |                            |  |       | 4,941   |       |  |       | 17,466 |        |  |        | 34,829  |        |  |        | 49,522 |       
|Operating expenses                           |                      |                                          | 2,862          |             |  |          | 1,659 |                            |  |       | 15,074  |       |  |       | 25,202 |        |  |        | 50,288  |        |  |        | 54,341 |       
|                                             |                      |                                          |                |             |  |          |       |                            |  |       |         |       |  |       |        |        |  |        |         |        |  |        |        |       
|Operating income (loss)                      |                      |                                          | (4             | )           |  |          | 436   |                            |  |       | (10,133 | )     |  |       | (7,736 | )      |  |        | (15,459 | )      |  |        | (4,819 | )     
|Other income (expense), net                  |                      |                                          | 17             |             |  |          | 8     |                            |  |       | 97      |       |  |       | (228   | )      |  |        | 2,258   |        |  |        | 2,629  |       
|Provision for income taxes                   |                      |                                          |               |             |  |          | 24    |                            |  |       | 36      |       |  |       | 646    |        |  |        | 2,315   |        |  |        | 3,989  |       
|Minority interest                            |                      |                                          |               |             |  |          |      |                            |  |       | (299    | )     |  |       |       |        |  |        |        |        |  |        |       |       
|                                             |                      |                                          |                |             |  |          |       |                            |  |       |         |       |  |       |        |        |  |        |         |        |  |        |        |       
|Net income (loss)                            |                      | $                                        | 13             |             |  | $        | 420   |                            |  | $     | (10,371 | )     |  | $     | (8,610 | )      |  | $      | (15,516 | )      |  | $      | (6,179 | )     
|                                             |                      |                                          |                |             |  |          |       |                            |  |       |         |       |  |       |        |        |  |        |         |        |  |        |        |       
|Basic and diluted net loss per share         |                      |                                          |                |             |  |          |       |                            |  | $     | (1.41   | )     |  | $     | (1.01  | )      |  | $      | (1.04   | )      |  | $      | (0.38  | )     
|                                             |                      |                                          |                |             |  |          |       |                            |  |       |         |       |  |       |        |        |  |        |         |        |  |        |        |       
|Weighted average shares  basic and
	diluted |                      |                                          |                |             |  |          |       |                            |  |       | 7,361   |       |  |       | 8,514  |        |  |        | 14,925  |        |  |        | 16,059 |       

|                                                |  |                |      |             |  |          |       |                            |  |      |         |      |  |   |         |   |  |   |         |   |  |   |         |  
|----------------------------------------------- |  | -------------- | ---- | ----------- |  | -------- | ----- | -------------------------- |  | ---- | ------- | ---- |  | - | ------- | - |  | - | ------- | - |  | - | ------- | -
|                                                |  |                |      |             |  |         
|                                                |  |                |      | Caminus    
|                                                |  | Zai*Net        |      |            
|                                                |  | (Predecessor)  |      | Inception   |  |         
|                                                |  |                |      | (April 29,  |  |         
|                                                |  | Fiscal Year    |      | Four Months |  | 1998)    |       |                           
|                                                |  | Ended          |      | Ended       |  | through  |       | Fiscal Year Ended Dec. 31,
|                                                |  | Dec. 31,       |      | April 30,   |  | Dec. 31, |       |                           
|                                                |  | 1997           |      | 1998        |  | 1998     |       | 1999                       |  | 2000 |         | 2001
|                                                |  |                |      |             |  |          |       |                            |  |      |         |     
|                                                |  |               
|                                                |  | (in thousands)
|Other Financial Data:                           |  |                |      |             |  |          |       |                            |  |      |         |      |  |   |         |   |  |   |         |   |  |   |         |  
|Adjusted EBITDA                                 |  | $              | 119  |             |  | $        | 482   |                            |  | $    | 355     |      |  | $ | 3,275   |   |  | $ | 10,279  |   |  | $ | 13,818  |  
|Pro forma net income (loss)                     |  |                |      |             |  |          |       |                            |  |      | (122    | )    |  |   | 1,595   |   |  |   | 7,551   |   |  |   | 8,984   |  
|Cash provided by (used in) operating activities |  |                | 401  |             |  |          | 1,054 |                            |  |      | 952     |      |  |   | (1,922  | ) |  |   | 4,095   |   |  |   | 12,658  |  
|Cash used in investing activities               |  |                | (206 | )           |  |          | (100  | )                          |  |      | (10,893 | )    |  |   | (11,128 | ) |  |   | (44,795 | ) |  |   | (10,685 | )
|Cash provided by (used in) financing activities |  |                | (290 | )           |  |          | (3    | )                          |  |      | 12,700  |      |  |   | 10,953  |   |  |   | 57,145  |   |  |   | 16,942  |  

19



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##### 



|                                       |  |                |       |      |  |      |        |      |  |      |        |   |  |   |         |  |  |   |         | 
|-------------------------------------- |  | -------------- | ----- | ---- |  | ---- | ------ | ---- |  | ---- | ------ | - |  | - | ------- |  |  | - | ------- | 
|                                       |  |               
|                                       |  | December 31,  
|                                       |  |               
|                                       |  | 1997           |       | 1998 |  | 1999 |        | 2000 |  | 2001
|                                       |  |                |       |      |  |      |        |      |  |     
|                                       |  |               
|                                       |  | (in thousands)
|Balance Sheet Data:                    |  |                |       |      |  |      |        |      |  |      |        |   |  |   |         |  |  |   |         | 
|Cash, cash equivalents and investments |  | $              | 201   |      |  | $    | 2,771  |      |  | $    | 662    |   |  | $ | 41,664  |  |  | $ | 42,027  | 
|Working capital (deficiency)           |  |                | 24    |      |  |      | (4,651 | )    |  |      | (4,766 | ) |  |   | 33,614  |  |  |   | 32,016  | 
|Total assets                           |  |                | 2,193 |      |  |      | 31,069 |      |  |      | 41,478 |   |  |   | 104,045 |  |  |   | 166,979 | 
|Borrowings under credit facility       |  |                |      |      |  |      |       |      |  |      | 3,050  |   |  |   |        |  |  |   | 15,000  | 
|Stockholders equity                   |  |                | 234   |      |  |      | 17,160 |      |  |      | 25,739 |   |  |   | 87,791  |  |  |   | 117,605 | 

20



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|        |                                                                                       
|------- | --------------------------------------------------------------------------------------
|Item 7. | Managements Discussion And Analysis
	Of Financial Condition And Results Of Operations

The following discussion and analysis of our
financial condition and results of operations should be read in
conjunction with Selected Financial Data and our
audited consolidated financial statements and related notes
appearing elsewhere in this annual report. This discussion and
analysis contains forward-looking statements that involve risks,
uncertainties and assumptions. The actual results may differ
materially from those anticipated in these forward-looking
statements as a result of a number of factors, including but not
limited to those set forth under Certain Factors That May
Affect Our Business and elsewhere in this annual
report.

Overview

We are a leading provider of software solutions
and strategic consulting services that facilitate energy
trading, transaction processing, risk management, and decision
support within the North American and European wholesale energy
markets. We were organized as a limited liability company in
April 1998, and acquired Zai*Net Software, L.P. and Caminus
Limited in May 1998, Positron Energy Consulting in November
1998, DC Systems, Inc. in July 1999, Nucleus Corporation and
Nucleus Energy Consulting Corporation (collectively,
Nucleus) in August 2000, and Altra Software
Services, Inc. (Altra) in November 2001. In February
2000, we closed the initial public offering of 4.1 million
shares of our common stock, realizing net proceeds from the
offering of approximately $59.0 million.

Since our inception, through our acquisitions and
internal growth, we have expanded our organization rapidly,
particularly in marketing, sales, and research and development.
Our full-time employees increased from 184 at December 31,
1999, to 503 at December 31, 2001, and we intend to
continue to increase our number of employees in 2002.

We generate revenues from licensing our software
products, providing related implementation services and support,
and providing strategic consulting services. We generally
license one or more products to our customers, who typically
receive perpetual licenses to use our products for a specified
number of servers and concurrent users. After the initial
license, they may purchase licenses for additional products,
servers and users as needed. In addition, customers typically
purchase professional services from us, including implementation
and training services, and enter into renewable maintenance
contracts that provide for software upgrades and technical
support over a stated term, typically twelve months. Our
strategic consulting practice provides energy market
participants with strategic advice on how to operate in and
profit from competitive energy markets.

Customer payments under our software license
agreements are non-refundable. Payment terms generally require
that a significant portion of the license fee is payable on
delivery of the licensed product with the balance due in
installments.

The companys critical accounting policies
are those that relate to revenue recognition. We recognize
revenue in accordance with the provisions of Statement of
Position No. 97-2, Software Revenue
Recognition, as amended by SOP 98-9,
Modification of SOP 97-2, Software Revenue Recognition
with Respect to Certain Transactions. See Note 2 to
our audited consolidated financial statements included elsewhere
in this annual report.

We sell our products through our direct sales
forces in North America and Europe. Also, our strategic
consulting group, in addition to generating consulting fee
revenue, assists in generating software sales leads.

Our results of operations may experience seasonal
fluctuations as customers and potential customers in our
industry face budgetary pressures to invest in energy software
before year-end. Accordingly, we may tend to report higher
revenues during the fourth quarter of the year and lower
revenues during the first quarter.

Revenues from customers outside the United States
represented 46%, 41% and 35% of our total revenues for the years
ended December 31, 1999, 2000 and 2001, respectively. A
significant portion of our international revenues has
historically been derived from sales of our strategic consulting
services and

21



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##### 



software products in the United Kingdom. We
intend to continue to expand our international operations and
commit significant management time and financial resources to
developing our direct international sales channels.
International revenues may not, however, increase as a
percentage of total revenues.


We were formed as a limited liability company in
April 1998. Until our initial public offering in January 2000,
we were not subject to federal and state income taxes, except
for New York income taxes on limited liability companies. During
January 2000, the limited liability company merged into Caminus
Corporation, a Delaware subchapter C corporation formed in
September 1999. The adjustment to the 1999 income tax provision
reflects the additional tax provision we would have recorded had
we been a subchapter C corporation for 1999.

Due to our acquisition of Nucleus and Altra,
along with the significant changes in our operations, the
fluctuation of financial results, including financial data
expressed as a percentage of revenues for all periods, does not
necessarily provide a meaningful understanding of the expected
future results of our operations. The results of operations of
Nucleus and Altra are included in our consolidated results of
operations beginning August 2000 and December 2001, respectively.

Adjusted EBITDA is defined as
earnings before interest and other income, income taxes,
depreciation, amortization, charges related to acquired
in-process research and development, non-cash compensation
expense, expenses related to our initial public offering, and
loss on office relocation. EBITDA is a non-GAAP measure commonly
used by investors and analysts to analyze companies on the basis
of operating performance, leverage and liquidity. We present
Adjusted EBITDA, which is also a non-GAAP measure, to enhance
the understanding of our operating results. We believe that
Adjusted EBITDA is an indicator of our operating profitability
since it excludes items that are not directly attributable to
our ongoing business operations. However, Adjusted EBITDA relies
upon our managements judgment to determine which items are
directly attributable to our ongoing business operations and as
such is subjective in nature. Adjusted EBITDA should not be
construed as an alternative to net income as an indicator of our
operating performance or as an alternative to cash flow from
operations as a measure of our liquidity. For information about
cash flows or results of operations in accordance with generally
accepted accounting principles, please see our audited
consolidated financial statements and related notes included
elsewhere in this annual report.

Certain reclassifications were made to prior
period amounts to conform to our current period presentation
format, including reclassifying amortization of acquired
technology from operating expenses to cost of revenues.

Results of Operations

The following table sets forth, except for cost
of licenses, cost of software services, and cost of strategic
consulting, which are expressed as a percentage of their related
revenues, and amortization of acquired technology, which is
expressed as a percentage of license revenues, the consolidated
financial information expressed as a percentage of revenues for
the years ended December 31, 1999, 2000 and 2001. The
consolidated financial information for the periods presented are
derived from the audited consolidated financial statements
included elsewhere in this annual report.

22



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##### 



|                            |                                                 |                          |     |      |     |      |     |    |     |  |    |    |     | 
|--------------------------- | ----------------------------------------------- | ------------------------ | --- | ---- | --- | ---- | --- | -- | --- |  | -- | -- | --- | 
|                            |                                                 |                         
|                            |                                                 | Year Ended              
|                            |                                                 | December 31,            
|                            |                                                 |                         
|                            |                                                 | 1999                     |     | 2000 |     | 2001
|                            |                                                 |                          |     |      |     |     
|Revenues:                   |                                                 |                          |     |      |     |      |     |    |     |  |    |   
|                            | Licenses                                        |                          |     | 47   | %   |      |     | 48 | %   |  |    | 46 | %  
|                            | Software services                               |                          |     | 29   |     |      |     | 36 |     |  |    | 44 |    
|                            | Strategic consulting                            |                          |     | 24   |     |      |     | 16 |     |  |    | 10 |    
|                            |                                                 |                          |     |      |     |      |     |    |     |  |    |   
|                            |                                                 | Total revenues           |     |      | 100 |      |     |    | 100 |  |    |    | 100 | 
|Cost of revenues:           |                                                 |                          |     |      |     |      |     |    |     |  |    |   
|                            | Cost of licenses                                |                          |     | 6    |     |      |     | 4  |     |  |    | 3  |    
|                            | Cost of software services                       |                          |     | 60   |     |      |     | 58 |     |  |    | 50 |    
|                            | Cost of strategic consulting                    |                          |     | 45   |     |      |     | 43 |     |  |    | 55 |    
|                            | Amortization of acquired technology             |                          |     | 8    |     |      |     | 6  |     |  |    | 10 |    
|                            |                                                 |                          |     |      |     |      |     |    |     |  |    |   
|                            |                                                 | Gross profit             |     |      | 65  |      |     |    | 67  |  |    |    | 66  | 
|Operating expenses:         |                                                 |                          |     |      |     |      |     |    |     |  |    |   
|                            | Sales and marketing                             |                          |     | 15   |     |      |     | 19 |     |  |    | 15 |    
|                            | Research and development                        |                          |     | 15   |     |      |     | 13 |     |  |    | 18 |    
|                            | General and administrative                      |                          |     | 32   |     |      |     | 21 |     |  |    | 23 |    
|                            | Acquired in-process research and development    |                          |     | 4    |     |      |     |   |     |  |    | 2  |    
|                            | Amortization of intangible assets               |                          |     | 28   |     |      |     | 19 |     |  |    | 15 |    
|                            | Expenses related to our initial public offering |                          |     |     |     |      |     | 24 |     |  |    |   |    
|                            | Loss on office relocation                       |                          |     |     |     |      |     | 1  |     |  |    |   |    
|                            |                                                 |                          |     |      |     |      |     |    |     |  |    |   
|                            |                                                 | Total operating expenses |     |      | 94  |      |     |    | 97  |  |    |    | 73  | 
|Loss from operations        |                                                 |                          | (29 | )    |     |      | (30 | )  |     |  | (7 | ) 
|Other income (expense), net |                                                 |                          | (1  | )    |     |      | 4   |    |     |  | 4  |   
|Provision for income taxes  |                                                 |                          | 2   |      |     |      | 4   |    |     |  | 5  |   
|                            |                                                 |                          |     |      |     |      |     |    |     |  |    |   
|Net loss                    |                                                 |                          | (32 | )%   |     |      | (30 | )% |     |  | (8 | )%
|                            |                                                 |                          |     |      |     |      |     |    |     |  |    |   
|Adjusted EBITDA             |                                                 |                          | 12  | %    |     |      | 20  | %  |     |  | 18 | % 
|                            |                                                 |                          |     |      |     |      |     |    |     |  |    |   

Comparison of the Year Ended December 31,
2000 to the Year Ended December 31, 2001



| |         
| | --------
| | Revenues

Licenses.License
revenues increased $10.0 million, or 41%, from $24.6
million in 2000 to $34.6 million in 2001. This increase was
primarily attributable to increased demand for new and
additional software products from new and existing customers,
larger average transaction sizes, and the expansion of our
domestic and international sales personnel.

Software services.Software services revenues increased by $13.8 million, or
75%, from $18.6 million in 2000 to $32.4 million in
2001. As a percentage of total revenues, software services
increased from 36% in 2000 to 44% in 2001. This increase was due
primarily to the increased licensing activity described above,
which resulted in increased revenues from customer
implementations and maintenance contracts. The greater
percentage increase in software services revenues compared to
the increase in license revenues was in part attributable to the
increase in our base of customers with maintenance contracts, in
addition to 2001 installations of license sales that were made
in 2000. Typically, software services, including implementation
and support services, are provided subsequent to the recognition
of the license revenues.

Strategic
consulting.Strategic consulting
revenues decreased by $0.8 million, or 10%, from
$8.6 million in 2000 to $7.7 million in 2001. We
devoted a significant amount of our strategic consulting

23



---



##### 



resources in 2000 and early 2001 to completing a
large engagement for the British government, to develop the New
Electricity Trading Arrangements (NETA). Following
the completion of the NETA project, we transitioned resources
from the NETA project to other projects, which resulted in lower
revenue for 2001.




| |                 
| | ----------------
| | Cost of Revenues

Cost of licenses.Cost of licenses primarily consists of the software license
costs associated with third-party software that is integrated
into our products. Cost of licenses increased $0.1 million,
or 8%, from $1.0 million in 2000 to $1.1 million in
2001. This increase in cost was due primarily to the higher
level of software licenses sold.

Cost of software
services.Cost of software services
consists primarily of personnel costs associated with providing
implementation services, technical support under maintenance
contracts, and training through our professional services group.
Cost of software services increased $5.6 million, or 52%,
from $10.7 million in 2000 to $16.3 million in 2001.
As a percentage of software services revenue, costs decreased
from 58% in 2000 to 50% in 2001. The increase in costs was due
primarily to the increase in the number of our implementation,
training and technical support personnel necessary to support
our increased number of new installations and our larger
installed customer base. The decrease as a percentage of revenue
is the result of efficiencies achieved through the support of a
larger customer base.

Cost of strategic
consulting.Cost of strategic
consulting consists of personnel costs incurred in providing
professional consulting services. Cost of strategic consulting
increased $0.6 million, or 17%, from $3.6 million in
2000 to $4.3 million in 2001. As a percentage of strategic
consulting revenue, costs increased from 43% in 2000 to 55% in
2001. The increase in costs is due primarily to an increase in
the number of our consultants and related recruiting expenses.
The increase as a percentage of revenue resulted from lower
consultant utilization percentages related to our transition
from the NETA contract, along with the ramp-up of our new
domestic strategic consulting group.

Amortization of acquired
technology.Amortization of acquired
technology represents the amortization of the value placed on
the technology acquired through our acquisitions. Amortization
of acquired technology increased $2.0 million from
$1.6 million in 2000 to $3.6 million in 2001. The
increase in cost was due primarily to our acquisition of Altra
in November 2001.



| |                   
| | ------------------
| | Operating Expenses

Sales and marketing.Sales and marketing expenses consist primarily of sales and
marketing personnel costs, travel expenses, advertising, trade
show expenses and commissions. Sales and marketing expenses
increased $1.7 million, or 17%, from $9.8 million in
2000 to $11.5 million in 2001. As a percentage of revenues,
sales and marketing expenses decreased from 19% in 2000 to 15%
in 2001. The increase in expenses is due to increases in
advertising and promotional expenses, headcount, recruiting
expenses, and travel expenses associated with the hiring of
additional sales and marketing personnel to support the
expansion of our domestic and international sales organizations.

Research and
development.Research and development
expenses consist primarily of personnel costs for product
development personnel and other related direct costs associated
with the development of new products, the enhancement of
existing products, and quality assurance and testing. Research
and development expenses increased $6.7 million, or 102%,
from $6.6 million in 2000 to $13.3 million in 2001. As
a percentage of revenues, research and development expenses
increased from 13% in 2000 to 18% in 2001. The increase in costs
was due primarily to the increased number of personnel and
related expenses associated with the development of new products
and enhancements of existing products.

General and
administrative.General and
administrative expenses consist primarily of personnel costs of
executive, financial, human resource and information services
personnel, as well as facility costs and related office
expenses, and outside professional fees. General and
administrative expenses increased $6.3 million, or 58%,
from $10.9 million in 2000 to $17.2 million in 2001.
As a percentage of revenues, general and administrative expenses
increased from 21% to 23%. The increase in costs was due
primarily to

24



---



##### 



increased staffing required to support our
expanded operations in the United States and internationally,
along with an increase in rent and other expenses related to our
increased consolidated number of employees in 2001 compared to
2000.


Acquired in-process research and
development.Acquired in-process
research and development represents the fair value of the
in-process research and development acquired during our November
2001 purchase of Altra. The Altra acquired in-process research
and development was valued at $1.3 million and was expensed
on the date of the acquisition. Altra had one project in
progress at the time of the acquisition. The project will add
functionality to Altras gas products and is anticipated to
be completed in 2002.

Amortization of intangible
assets.Amortization of intangible
assets represents the amortization of goodwill, which is the
excess of the purchase price over the fair value of the net
assets acquired from our acquisitions, and other intangible
assets, excluding acquired technology. Amortization of
intangible assets increased $0.9 million, or 9%, from
$10.2 million in 2000 to $11.1 million in 2001, due
primarily to our incurring amortization expense related to our
August 2000 acquisition of Nucleus and our
November 2001 acquisition of Altra. This was offset in part
by the completion of amortization of the goodwill recognized
upon our acquisition of Caminus Limited.



| |                     
| | --------------------
| | Loss From Operations

As a result of the variances described above,
operating loss decreased by $10.6 million, from
$15.5 million in 2000 to $4.8 million in 2001.
Operating expenses as a percentage of revenues decreased from
97% in 2000 to 73% in 2001.



| |                            
| | ---------------------------
| | Other Income (Expense), Net

Other income (expense), net increased
$0.4 million, or 16%, from $2.3 million in 2000 to
$2.6 million in 2001. The interest income was primarily
related to the interest earned on the resulting investments from
proceeds from our initial public offering along with gains on
the sale of investments. The decrease in interest rates in 2001
resulted in lower interest income. Other income includes
$0.8 million for the reversal of accrued taxes for
compensation related to our initial public offering that was not
ultimately owed.



| |                           
| | --------------------------
| | Provision for Income Taxes

Our provision for income taxes increased
$1.7 million, or 72%, from $2.3 million in 2000 to
$4.0 million in 2001. This increase was primarily a result
of our increased pretax income in the United Kingdom for 2001.



| |                
| | ---------------
| | Adjusted EBITDA

Adjusted EBITDA as a percentage of revenues was
20% for 2000 and 18% for 2001. Adjusted EBITDA increased
$3.5 million, or 34%, from $10.3 million in 2000 to
$13.8 million in 2001.

Comparison of the Year Ended December 31,
1999 to the Year Ended December 31, 2000



| |         
| | --------
| | Revenues

Licenses.License
revenues represented 47% and 48% of the total revenues for 1999
and 2000, respectively, and increased $12.0 million, or
96%, from $12.5 million in 1999 to $24.6 million in
2000. This increase was primarily attributable to increased
demand for new and additional software licenses from new and
existing customers, larger transaction sizes, and the expansion
of our domestic and international sales personnel.

Software services.Software services revenues represented 29% and 36% of the total
revenues for 1999 and 2000, respectively, and increased by
$10.8 million, or 138%, from $7.8 million in 1999 to
$18.6 million in 2000. This increase was primarily
attributable to the increased licensing activity described
above, which resulted in increased revenues from customer
implementations and maintenance contracts. The

25



---



##### 



greater percentage increase in software services
revenues as compared to the increase in license revenues was
primarily attributable to the increase in the customer base that
has maintenance contracts. Typically, software services,
including implementation and support services, are provided
subsequent to the recognition of the license revenues.


Strategic
consulting.Strategic consulting
revenues represented 24% and 16% of the total revenues for 1999
and 2000, respectively, and increased $2.0 million, or 31%,
from $6.6 million in 1999 to $8.6 million in 2000, and
are primarily derived from the Caminus Limited subsidiary
acquired in May 1998. The increase in absolute dollars was
attributable to an increased number of engagements, which was
partially attributable to an increase in the number of our
consultants.



| |                 
| | ----------------
| | Cost of Revenues

Cost of licenses.Cost of licenses as a percentage of license revenues was 6% and
4% for 1999 and 2000, respectively, and increased
$0.2 million, or 27%, from $0.8 million in 1999 to
$1.0 million in 2000. The increase in absolute dollars was
primarily attributable to the costs of product enhancements
performed by Nucleus subsequent to our August 2000
acquisition of Nucleus and the increase in license revenues.

Cost of software
services.Cost of software services as
a percentage of software services revenues was 60% and 58% for
1999 and 2000, respectively, and increased $6.0 million, or
128%, from $4.7 million in 1999 to $10.7 million in
2000. This increase in absolute dollars was primarily
attributable to the increase in the number of implementations,
training and technical support personnel, including former DC
Systems and Nucleus personnel, and related recruiting expenses,
to support the growth of the implementations and the installed
customer base.

Cost of strategic
consulting.Cost of strategic
consulting as a percentage of strategic consulting revenues was
45% and 43% for 1999 and 2000, respectively, and increased
$0.7 million, or 25%, from $2.9 million in 1999 to
$3.6 million in 2000. This increase in absolute dollars was
principally attributable to an increase in the number of our
consultants, including the formation of our strategic consulting
practice in the United States, and related recruiting expenses,
to support the growth in revenues.

Amortization of acquired
technology.Amortization of acquired
technology increased $0.5 million from $1.1 million in
1999 to $1.6 million in 2000. The increase in cost was due
primarily to our acquisition of Nucleus in August 2000.



| |                   
| | ------------------
| | Operating Expenses

Sales and marketing.Sales and marketing expenses as a percentage of revenues were
15% and 19% for 1999 and 2000, respectively, and increased
$5.7 million, or 139%, from $4.1 million in 1999 to
$9.8 million in 2000. This increase was primarily due to an
increase in headcount, recruiting expenses and promotional and
travel expenses associated with the hiring of additional sales
and marketing personnel to support the expansion of our domestic
and international sales organizations.

Research and
development.Research and development
expenses as a percentage of revenues were 15% and 13% for 1999
and 2000, respectively, and increased $2.7 million, or 68%,
from $3.9 million in 1999 to $6.6 million in 2000.
This increase in absolute dollars was primarily due to an
increased hiring of personnel and to other expenses associated
with the development of new products and enhancements of
existing products.

General and
administrative.General and
administrative expenses as a percentage of revenues were 32% and
21% for 1999 and 2000, respectively, and increased
$2.2 million, or 25%, from $8.7 million in 1999 to
$10.9 million in 2000. This increase in absolute dollars
was primarily due to increased staffing required to support our
expanded operations in the United States and internationally.

Acquired in-process research and
development.Acquired in-process
research and development as a percentage of revenues was 4% for
1999, or $1.0 million. Acquired in-process research and
development represents the fair value of the in-process research
and development acquired during our 1999 purchase of

26



---



##### 



DC Systems. In the opinion of management, the
acquired in-process research and development had not yet reached
technological feasibility and had no alternative future uses.
Accordingly, such amount was expensed on the date of the
acquisition. DC Systems had one major project in progress at the
time of the acquisition. This project added functionality to
Plant*Master, and was completed in the third quarter of 2000.


Amortization of intangible
assets.Amortization of intangibles as
a percentage of revenues was 28% and 19% for 1999 and 2000,
respectively, and increased $2.7 million, or 35%, from
$7.5 million in 1999 to $10.2 million in 2000. The
increase in absolute dollars was primarily attributable to our
incurring amortization expense related to our Nucleus
acquisition in August 2000 and a full year of amortization
related to our DC Systems acquisition.

Expenses related to our initial public
offering.As a result of our initial
public offering in January 2000, certain transactions
occurred that resulted in significant charges in the first
quarter of 2000. These transactions included the earning of an
option granted to the former shareholders of Caminus Energy
Limited, which resulted in a charge of approximately
$7.0 million including taxes, a payment of approximately
$0.5 million for a special one-time bonus to the former
shareholders of Caminus Energy Limited, a payment of
$1.3 million for a termination fee to GFI Two LLC, a
principal stockholder, to cancel its consulting and advisory
agreement, and the granting of shares and the forgiveness of a
loan to our president and chief executive officer, which
resulted in a charge of approximately $3.6 million.

Loss on office
relocation.The loss on office
relocation primarily represents the cost of disposing of the
furniture and leasehold improvements from our old corporate
headquarters, net of the proceeds received from the sale. Total
loss on office relocation as a percentage of 2000 revenues was
1% and totaled $0.5 million.

Loss From Operations

As a result of the variances described above,
operating loss increased by $7.7 million, or 100%, from
$7.7 million in 1999 to $15.5 million in 2000.
Operating expenses as a percentage of revenues was 94% and 97%
for 1999 and 2000, respectively.



| |                            
| | ---------------------------
| | Other Income (Expense), Net

Other income (expense), net increased $2.5
million from other expense, net of $0.2 million in 1999 to other
income, net of $2.3 million in 2000 due primarily to interest
income earned on the investment of the proceeds from our initial
public offering in January 2000.



| |                           
| | --------------------------
| | Provision for Income Taxes

Our provision for income taxes for 1999 was
$0.6 million and related primarily to foreign income taxes.
If we had been a subchapter C corporation, our provision
for income taxes would have been $0.5 million for 1999. In
January 2000, we were reorganized as a subchapter C
corporation. Accordingly, in 2000, we paid income taxes instead
of passing income through to our stockholders. We recorded a tax
provision of $2.3 million for the 2000 period that
primarily consists of foreign income taxes.



| |                
| | ---------------
| | Adjusted EBITDA

Adjusted EBITDA as a percentage of revenues were
12% and 20% for 1999 and 2000, respectively. Adjusted EBITDA
increased $7.0 million, or 214%, from $3.3 million in
1999 to $10.3 million in 2000.

Selected Quarterly Results of
Operations

The following tables represent certain unaudited
consolidated statement of operations information for each
quarter in the years ended December 31, 2000 and 2001, as
well as such information expressed as a percentage of total
revenues for the periods indicated. The information was derived
from unaudited financial statements and has been prepared on the
same basis as our audited consolidated financial statements and,
in the opinion of management, includes all adjustments, which
consist of normal recurring adjustments, that we

27



---



##### 



consider necessary for the fair presentation of
such information when read in conjunction with our audited
consolidated financial statements and related notes appearing
elsewhere in this annual report. We believe that
quarter-to-quarter comparisons of financial results should not
be relied upon as an indication of future performance, and
operating results may fluctuate from quarter to quarter in the
future. See Certain Factors that May Affect Our
Business, and our audited consolidated financial
statements and related notes included elsewhere in this annual
report. We expect that our results of operations will fluctuate,
and the price of our common stock could fall if quarterly
results are lower than the expectations of securities analysts.




|                                                      |                |                                          |         |          |  |           |        |          |  |           |        |          |  |           |        |          |  |   |        |        |  |   |        |        |  |   |        |        |  |   |        |        | 
|----------------------------------------------------- | -------------- | ---------------------------------------- | ------- | -------- |  | --------- | ------ | -------- |  | --------- | ------ | -------- |  | --------- | ------ | -------- |  | - | ------ | ------ |  | - | ------ | ------ |  | - | ------ | ------ |  | - | ------ | ------ | 
|                                                      |                |                                         
|                                                      |                | Quarter Ended                           
|                                                      |                |                                         
|                                                      |                | March 31,                                |         | June 30, |  | Sept. 30, |        | Dec. 31, |  | March 31, |        | June 30, |  | Sept. 30, |        | Dec. 31,
|                                                      |                | 2000                                     |         | 2000     |  | 2000      |        | 2000     |  | 2001      |        | 2001     |  | 2001      |        | 2001    
|                                                      |                |                                          |         |          |  |           |        |          |  |           |        |          |  |           |        |         
|                                                      |                |                                         
|                                                      |                | (In thousands, except per share amounts)
|Statement of Operations Data:                         |                |                                          |         |          |  |           |        |          |  |           |        |          |  |           |        |          |  |   |        |        |  |   |        |        |  |   |        |        |  |   |        |       
|Revenues:                                             |                |                                          |         |          |  |           |        |          |  |           |        |          |  |           |        |          |  |   |        |        |  |   |        |        |  |   |        |        |  |   |        |       
|Licenses                                              |                | $                                        | 4,073   |          |  | $         | 4,649  |          |  | $         | 7,045  |          |  | $         | 8,806  |          |  | $ | 6,366  |        |  | $ | 7,498  |        |  | $ | 5,558  |        |  | $ | 15,157 |       
|Software services                                     |                |                                          | 2,710   |          |  |           | 4,375  |          |  |           | 5,397  |          |  |           | 6,094  |          |  |   | 7,553  |        |  |   | 8,353  |        |  |   | 7,786  |        |  |   | 8,724  |       
|Strategic consulting                                  |                |                                          | 1,737   |          |  |           | 2,183  |          |  |           | 2,275  |          |  |           | 2,370  |          |  |   | 2,476  |        |  |   | 1,887  |        |  |   | 1,812  |        |  |   | 1,547  |       
|                                                      |                |                                          |         |          |  |           |        |          |  |           |        |          |  |           |        |          |  |   |        |        |  |   |        |        |  |   |        |        |  |   |        |       
|                                                      | Total revenues |                                          |         | 8,520    |  |           |        | 11,207   |  |           |        | 14,717   |  |           |        | 17,270   |  |   |        | 16,395 |  |   |        | 17,738 |  |   |        | 15,156 |  |   |        | 25,428 | 
|Gross profit                                          |                |                                          | 5,342   |          |  |           | 7,975  |          |  |           | 9,859  |          |  |           | 11,653 |          |  |   | 10,425 |        |  |   | 12,120 |        |  |   | 9,137  |        |  |   | 17,840 |       
|Operating expenses                                    |                |                                          | 19,747  |          |  |           | 8,522  |          |  |           | 10,185 |          |  |           | 11,834 |          |  |   | 12,754 |        |  |   | 12,823 |        |  |   | 12,068 |        |  |   | 16,696 |       
|                                                      |                |                                          |         |          |  |           |        |          |  |           |        |          |  |           |        |          |  |   |        |        |  |   |        |        |  |   |        |        |  |   |        |       
|Operating income (loss)                               |                |                                          | (14,405 | )        |  |           | (547   | )        |  |           | (326   | )        |  |           | (181   | )        |  |   | (2,329 | )      |  |   | (703   | )      |  |   | (2,931 | )      |  |   | 1,144  |       
|Other income, net                                     |                |                                          | 413     |          |  |           | 715    |          |  |           | 668    |          |  |           | 462    |          |  |   | 533    |        |  |   | 694    |        |  |   | 496    |        |  |   | 906    |       
|Provision for income taxes                            |                |                                          | 21      |          |  |           | 754    |          |  |           | 711    |          |  |           | 829    |          |  |   | 627    |        |  |   | 938    |        |  |   | 690    |        |  |   | 1,734  |       
|                                                      |                |                                          |         |          |  |           |        |          |  |           |        |          |  |           |        |          |  |   |        |        |  |   |        |        |  |   |        |        |  |   |        |       
|Net income (loss)                                     |                | $                                        | (14,013 | )        |  | $         | (586   | )        |  | $         | (369   | )        |  | $         | (548   | )        |  | $ | (2,423 | )      |  | $ | (947   | )      |  | $ | (3,125 | )      |  | $ | 316    |       
|                                                      |                |                                          |         |          |  |           |        |          |  |           |        |          |  |           |        |          |  |   |        |        |  |   |        |        |  |   |        |        |  |   |        |       
|Basic and diluted net income (loss) per
	common share |                | $                                        | (1.05   | )        |  | $         | (0.04  | )        |  | $         | (0.02  | )        |  | $         | (0.03  | )        |  | $ | (0.15  | )      |  | $ | (0.06  | )      |  | $ | (0.20  | )      |  | $ | 0.02   |       
|                                                      |                |                                          |         |          |  |           |        |          |  |           |        |          |  |           |        |          |  |   |        |        |  |   |        |        |  |   |        |        |  |   |        |       
|Weighted average outstanding shares 
	basic          |                |                                          | 13,380  |          |  |           | 15,261 |          |  |           | 15,397 |          |  |           | 15,660 |          |  |   | 15,725 |        |  |   | 15,798 |        |  |   | 15,902 |        |  |   | 16,810 |       
|Weighted average outstanding shares  diluted         |                |                                          | 13,380  |          |  |           | 15,261 |          |  |           | 15,397 |          |  |           | 15,660 |          |  |   | 15,725 |        |  |   | 15,798 |        |  |   | 15,902 |        |  |   | 16,965 |       

|                              |                |               |      |          |  |           |    |          |  |           |    |          |  |           |    |          |  |  |     |     |  |  |    |     |  |  |     |     |  |  |    |     | 
|----------------------------- | -------------- | ------------- | ---- | -------- |  | --------- | -- | -------- |  | --------- | -- | -------- |  | --------- | -- | -------- |  |  | --- | --- |  |  | -- | --- |  |  | --- | --- |  |  | -- | --- | 
|                              |                |              
|                              |                | Quarter Ended
|                              |                |              
|                              |                | March 31,     |      | June 30, |  | Sept. 30, |    | Dec. 31, |  | March 31, |    | June 30, |  | Sept. 30, |    | Dec. 31,
|                              |                | 2000          |      | 2000     |  | 2000      |    | 2000     |  | 2001      |    | 2001     |  | 2001      |    | 2001    
|                              |                |               |      |          |  |           |    |          |  |           |    |          |  |           |    |         
|Statement of Operations Data: |                |               |      |          |  |           |    |          |  |           |    |          |  |           |    |          |  |  |     |     |  |  |    |     |  |  |     |     |  |  |    |    
|Revenues:                     |                |               |      |          |  |           |    |          |  |           |    |          |  |           |    |          |  |  |     |     |  |  |    |     |  |  |     |     |  |  |    |    
|Licenses                      |                |               | 48   | %        |  |           | 41 | %        |  |           | 48 | %        |  |           | 51 | %        |  |  | 39  | %   |  |  | 42 | %   |  |  | 37  | %   |  |  | 60 | %  
|Software services             |                |               | 32   |          |  |           | 39 |          |  |           | 37 |          |  |           | 35 |          |  |  | 46  |     |  |  | 47 |     |  |  | 51  |     |  |  | 34 |    
|Strategic consulting          |                |               | 20   |          |  |           | 20 |          |  |           | 15 |          |  |           | 14 |          |  |  | 15  |     |  |  | 11 |     |  |  | 12  |     |  |  | 6  |    
|                              |                |               |      |          |  |           |    |          |  |           |    |          |  |           |    |          |  |  |     |     |  |  |    |     |  |  |     |     |  |  |    |    
|                              | Total revenues |               |      | 100      |  |           |    | 100      |  |           |    | 100      |  |           |    | 100      |  |  |     | 100 |  |  |    | 100 |  |  |     | 100 |  |  |    | 100 | 
|Gross profit                  |                |               | 63   |          |  |           | 71 |          |  |           | 67 |          |  |           | 67 |          |  |  | 64  |     |  |  | 68 |     |  |  | 60  |     |  |  | 70 |    
|Operating expenses            |                |               | 232  |          |  |           | 76 |          |  |           | 69 |          |  |           | 69 |          |  |  | 78  |     |  |  | 72 |     |  |  | 80  |     |  |  | 66 |    
|                              |                |               |      |          |  |           |    |          |  |           |    |          |  |           |    |          |  |  |     |     |  |  |    |     |  |  |     |     |  |  |    |    
|Operating income (loss)       |                |               | (169 | )        |  |           | (5 | )        |  |           | (2 | )        |  |           | (1 | )        |  |  | (14 | )   |  |  | (4 | )   |  |  | (19 | )   |  |  | 4  |    
|Other income, net             |                |               | 5    |          |  |           | 6  |          |  |           | 5  |          |  |           | 3  |          |  |  | 3   |     |  |  | 4  |     |  |  | 3   |     |  |  | 4  |    
|Provision for income taxes    |                |               |     |          |  |           | 7  |          |  |           | 5  |          |  |           | 5  |          |  |  | 4   |     |  |  | 5  |     |  |  | 5   |     |  |  | 7  |    
|                              |                |               |      |          |  |           |    |          |  |           |    |          |  |           |    |          |  |  |     |     |  |  |    |     |  |  |     |     |  |  |    |    
|Net income (loss)             |                |               | (164 | )%       |  |           | (5 | )%       |  |           | (3 | )%       |  |           | (3 | )%       |  |  | (15 | )%  |  |  | (5 | )%  |  |  | (21 | )%  |  |  | 1  | %  
|                              |                |               |      |          |  |           |    |          |  |           |    |          |  |           |    |          |  |  |     |     |  |  |    |     |  |  |     |     |  |  |    |    

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Liquidity and Capital Resources

We have historically funded our operations and
acquisitions and met our capital expenditure requirements
primarily from the proceeds of equity financings, borrowings,
and, more recently, cash flow from operations. Our cash, cash
equivalents and investments increased by $0.4 million from
$41.7 million at December 31, 2000 to
$42.0 million at December 31, 2001. Our working
capital decreased by $1.6 million from $33.6 million
at December 31, 2000 to $32.0 million at
December 31, 2001.

Our highly liquid assets consist of cash, cash
equivalents and investments in short-term marketable securities.
For the year ended December 31, 2001, our highly liquid
assets increased by $12.8 million, or 43%, from
$29.3 million at December 31, 2000 to
$42.0 million at December 31, 2001.

Net cash provided by operating activities for the
year ended December 31, 2001 was $12.7 million. Net
cash provided by operating activities primarily resulted from
the fact that results of operations included non-cash
depreciation and amortization of $16.7 million, which more
than offset our net loss of $6.2 million.

Our cash flow used in investing activities of
$10.7 million was primarily due to the cash used in the
purchase of Altra of $25.8 million, and $2.7 million
of capital expenditures for computer and communications
equipment, purchased software, office equipment, furniture,
fixtures and leasehold improvements partially offset by the net
proceeds of sales of investments in marketable securities of
$18.0 million.

Net cash provided by financing activities during
the year ended December 31, 2001 was $16.9 million, which
included $1.9 million received from the sale of common
stock in connection with our employee stock purchase plan and
the exercise of stock options. In addition, in November 2001, we
entered into a term loan for $15.0 million under a credit
agreement to partially finance our acquisition of Altra. The
term loan bears interest at 10% for the first year, which
increases to 12.5% and 15% during the second year, and is due on
October 31, 2003.

We expect that our working capital needs will
continue to grow as we execute our growth strategy. We believe
that our cash, cash equivalents and investments, and cash
anticipated to be generated from future operations will be
sufficient to meet our anticipated expenditure requirements for
the foreseeable future. In the event we engage in acquisitions
in the future, however, we may be required to raise additional
equity capital or to incur indebtedness to fund the purchase
price for such acquisitions. We are not currently a party to any
agreement or arrangement for any potential acquisition.

New Accounting Pronouncements

In July 2001, the Financial Accounting Standards
Board (the FASB) issued Statement of Financial
Accounting Standards (SFAS) No. 141,
Business Combinations, and SFAS No. 142,
Goodwill and Other Intangible Assets. SFAS 141
requires that the purchase method of accounting be used for all
business combinations initiated after June 30, 2001, as
well as all purchase method business combinations completed
after June 30, 2001. SFAS 141 also specifies criteria
that intangible assets acquired in a purchase method business
combination must meet to be recognized and reported apart from
goodwill, noting that any purchase price allocable to an
assembled workforce may not be accounted for separately.
SFAS 142 will require that goodwill and intangible assets
with indefinite useful lives no longer be amortized, but instead
tested for impairment at least annually in accordance with the
provisions of SFAS 142. SFAS 142 will also require
that intangible assets with definite useful lives be amortized
over their respective estimated useful lives to their estimated
residual values, and reviewed for impairment in accordance with
SFAS No. 121, Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed
Of.

We adopted the provisions of SFAS 141, effective
July 1, 2001, and will adopt the provisions of
SFAS 142, effective January 1, 2002. Furthermore, any
goodwill and any intangible asset determined to have an
indefinite useful life that are acquired in a purchase business
combination completed after June 30, 2001 will not be
amortized, but will continue to be evaluated for impairment in
accordance with the appropriate pre-SFAS 142 accounting
literature. Goodwill and intangible assets acquired in business
combinations completed before July 1, 2001 will continue to
be amortized prior to the adoption of SFAS 142.

29



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Upon adoption of SFAS 142, we will evaluate
our existing intangible assets and goodwill that were acquired
in prior purchase business combinations, and will make any
necessary reclassifications in order to conform with the new
criteria in SFAS 141 for recognition apart from goodwill.
Upon adoption of SFAS 142, we will be required to reassess
the useful lives and residual values of all intangible assets
acquired in purchase business combinations, and make any
necessary amortization period adjustments by the end of the
first quarter of 2002. In addition, to the extent an intangible
asset is identified as having an indefinite useful life, we will
be required to test the intangible asset for impairment in
accordance with the provisions of SFAS 142 within the first
interim period. Any impairment loss will be measured as of the
date of adoption and recognized as the cumulative effect of a
change in accounting principle in the first quarter of 2002.

In connection with the transitional goodwill
impairment evaluation, SFAS 142 will require us to perform
an assessment of whether there is an indication that goodwill is
impaired as of the date of adoption. To accomplish this, we must
identify our reporting units and determine the carrying value of
each reporting unit by assigning the assets and liabilities,
including the existing goodwill and intangible assets, to those
reporting units as of the date of adoption. We will then have up
to six months from the date of adoption to determine the fair
value of each reporting unit and to compare it to the reporting
units carrying amount. To the extent a reporting
units carrying amount exceeds its fair value, an
indication exists that the reporting units goodwill may be
impaired, and we must perform the second step of the
transitional impairment test. In the second step, we must
compare the implied fair value of the reporting units
goodwill, determined by allocating the reporting units
fair value to all of our assets (recognized and unrecognized)
and liabilities in a manner similar to a purchase price
allocation in accordance with SFAS 141, to its carrying amount,
both of which would be measured as of the date of adoption. This
second step is required to be completed as soon as possible, but
no later than the end of the year of adoption. Any transitional
impairment loss will be recognized as the cumulative effect of a
change in accounting principle in our statement of operations.

As of the date of adoption, we expect to have
unamortized goodwill in the amount of $58.0 million and
unamortized identifiable intangible assets in the amount of
$33.4 million, all of which will be subject to the
transition provisions of SFAS 141 and SFAS 142.
Amortization expense related to goodwill was $8.7 million
and $9.3 million for the years ended December 31, 2000
and 2001, respectively.

On October 3, 2001, the FASB issued SFAS
No. 144, Accounting for the Impairment or Disposal of
Long-Lived Assets, which addresses financial accounting
and reporting for the impairment or disposal of long-lived
assets. While SFAS 144 supersedes SFAS No. 121,
Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed of, it retains many of
the fundamental provisions of SFAS 121.

SFAS 144 also supersedes the accounting and
reporting provisions of Accounting Principles Board
(APB) Opinion No. 30, Reporting the
Results of Operations  Reporting the Effects of
Disposal of a Segment of a Business, and Extraordinary, Unusual
and Infrequently Occurring Events and Transactions, for
the disposal of a segment of a business. However, it retains the
requirement in APB Opinion No. 30 to report separately
discontinued operations and extends that reporting to a
component of an entity that either has been disposed of (by
sale, abandonment, or in a distribution to owners) or is
classified as held for sale. By broadening the presentation of
discontinued operations to include more disposal transactions,
the FASB has enhanced the ability of a companys management
to provide information that helps financial statement users to
assess the effects of a disposal transaction on the ongoing
operations of such company. We believe that the adoption of
SFAS 144 will not have a material impact on our
consolidated financial position, results of operations, or cash
flows.

Certain Factors That May Affect Our
Business

Our quarterly operating results may fluctuate
substantially, which may adversely affect our business and the
market price of our common stock, particularly if our quarterly
results are lower than the expectations of securities
analysts.

Our revenues and results of operations have
fluctuated in the past and may vary from quarter to quarter in
the future. These fluctuations may adversely affect our
business, financial condition, and the market price

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of our common stock particularly if our quarterly
results fall below the expectations of securities analysts. A
number of factors, many of which are outside our control, may
cause variations in our quarterly revenues and operating
results, including:




| |   |                                                                                                                                                                           
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | changes in demand for our software solutions and
	strategic consulting services;                                                                                          
|
| |  | the length of our sales cycle, and the timing and
	recognition of sales of our products and services, including the
	timing and recognition of significant product orders;
|
| |  | unexpected delays in the development and
	introduction of new products and services;                                                                                      
|
| |  | increased expenses, whether related to sales and
	marketing, software development or other corporate activities;                                                          
|
| |  | changes in the rapidly evolving market for
	products and services in the energy industry;                                                                                 
|
| |  | the mix of our revenue during any period,
	particularly with respect to the breakdown between software
	license and services revenues;                                    
|
| |  | the hiring, retention and utilization of
	personnel;                                                                                                                      
|
| |  | costs related to the integration of people,
	operations and products from previously acquired businesses and
	technologies and from future acquisitions, if any; and      
|
| |  | general economic conditions.                                                                                                                                              

Accordingly, we believe that quarter-to-quarter
comparisons of our results of operations are not necessarily
meaningful. You should not rely on our historical quarterly
results as an indication of our future performance.

Our sales cycle may be subject to seasonality,
which could result in fluctuations in the market price of our
common stock.

We may experience seasonality in the sales of our
software. For instance, many of our current and potential
customers in the energy industry face budgetary pressures to
invest in energy software before the end of each fiscal year. As
a result, we may tend to report higher revenues during the
fourth quarter of our fiscal year and lower revenues during the
first quarter of our fiscal year. These seasonal variations in
our sales may lead to fluctuations in our quarterly operating
results, which in turn may lead to volatility in the market
price of our common stock.

Substantial competition could reduce our
market share and materially adversely affect our financial
performance.

The market for products and services in the
energy industry is very competitive, and we expect competition
to intensify in the future. We currently face competition from a
variety of sources, including energy software providers,
in-house development, large consultancies, enterprise software
companies and providers of strategic consulting services.

Some of our current and potential competitors
have longer operating histories, greater name recognition,
greater resources, and a higher number of established customer
relationships than we have. Many of these competitors also have
extensive knowledge of our industry. As a result of these
factors, some of our competitors may be able to adapt more
quickly to new or emerging technologies and changes in customer
requirements or may be able to devote greater resources to the
marketing and sale of their products. If we are not able to
compete effectively, our business, results of operations, and
financial condition could be materially adversely affected.

We may not be able to successfully manage the
expansion of our operations.

We have experienced, and are currently
experiencing, a period of significant growth. We cannot assure
you that we will not experience difficulties managing our growth
in the future. Future growth may place

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increased demands on our management, financial
and operational resources. In addition, as part of our growth,
we will need to expand, train and manage our employee base and
maintain close coordination within our organization. If we are
unable to manage our growth effectively, our business, results
of operations, and financial condition could be materially
adversely affected.


Our future results may be harmed by economic,
political, regulatory and other risks associated with
international sales and operations.

Because we sell and market our products
worldwide, our business is subject to risks associated with
doing business internationally. We anticipate that revenues from
international operations will represent an increasing portion of
our total revenues going forward. Accordingly, our future
results could be harmed by a variety of factors, including:



| |   |                                                                                                                                                          
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the need to comply with the laws and regulations
	of different countries;                                                                                
|
| |  | difficulties in enforcing contractual obligations
	and intellectual property rights in some countries;                                                   
|
| |  | difficulties and costs of staffing and managing
	foreign operations;                                                                                     
|
| |  | fluctuations in currency exchange rates and the
	imposition of exchange or price controls or other restrictions
	on the conversion of foreign currencies;
|
| |  | difficulties in collecting international accounts
	receivable and the existence of potentially longer payment
	cycles;                                   
|
| |  | the impact of possible recessions in economies
	outside the United States; and                                                                           
|
| |  | political and economic instability, including
	instability related to terrorist attacks in the United States
	and abroad.                                

If we are unable to minimize the risks associated
with international sales and operations, our business, results
of operations, and financial condition could be materially
adversely affected, which could cause our stock price to decline.

We may pursue strategic acquisitions, which
could have an adverse impact on our business if
unsuccessful.

We may from time to time acquire or invest in
complementary companies, products or technologies. For instance,
in November 2001, we acquired Altra Software Services, Inc. From
time to time, we may evaluate other acquisition opportunities
that could provide us with additional product or services
offerings or additional industry expertise. These acquisitions,
if any, may result in difficulties for us in assimilating
acquired operations and products, and could result in the
diversion of our capital and our managements attention
from other business issues and opportunities. For instance, the
integration of acquired companies may result in problems related
to the integration of technology and management teams. We may
not be able to successfully integrate operations, personnel or
products that we have acquired or may acquire in the future. If
we fail to successfully integrate our recent acquisitions and
any future acquisitions, our business, results of operations,
and financial condition could be materially adversely affected.
In addition, our acquisitions may not be successful in achieving
our desired strategic objectives, which would also cause our
business to suffer. Acquisitions also may present other risks,
such as exposing our company to potential unknown liabilities
associated with acquired businesses.

The pro forma financial information included
in this annual report may not be representative of our results
as a combined company.

The pro forma financial information included in
this annual report combines our operating results with those of
Nucleus Corporation and Nucleus Energy Consulting Corporation,
companies we acquired in August 2000, and Altra Software
Services, Inc., a company we acquired in November 2001. This
information may not reflect what our results of operations would
have been had we been a combined entity during the periods

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presented, or what our results of operations will
be in the future. The pro forma financial information does not
reflect many significant changes that have occurred or may occur
in our operational arrangements as a combined entity.
Accordingly, you should not rely on our pro forma financial
information as an indication of our future operating results or
financial performance.


If we fail to adapt to rapid changes in the
energy market, our existing products could become
obsolete.

The market for our products is marked by rapid
technological changes, frequent new product introductions,
uncertain product life cycles, changes in customer demands, and
evolving industry standards and regulations. We may not be able
to successfully develop and market new products or product
enhancements that comply with present or emerging technology
standards. Also, any new regulations or technology standards
could increase our cost of doing business.

New products based on new technologies or new
industry standards could render our existing products obsolete
and unmarketable. To succeed, we will need to enhance our
current products and develop new products on a timely basis to
keep pace with developments related to the energy market and to
satisfy the increasingly sophisticated requirements of our
customers. Software addressing the trading, transaction
processing, and risk management of energy assets is complex and
can be expensive to develop, and new products and product
enhancements can require long development and testing periods.
Any delays in developing and releasing new or enhanced products
could cause us to lose revenue opportunities and customers.

Our software products may contain errors,
which could damage our reputation, decrease market acceptance of
our products, cause us to lose customers and revenue, and result
in liability to us.

Despite internal testing and testing by third
parties, complex software products such as ours often contain
errors or defects, particularly when first introduced or when
new versions or enhancements are released. Serious defects or
errors could result in lost revenues or a delay in market
acceptance.

Because our customers use our products for
critical business applications, errors, defects or other
performance problems could result in damage to our customers.
Although our license agreements typically contain provisions
designed to limit our exposure to potential liability claims,
these provisions could be invalidated by unfavorable judicial
decisions or by federal, state, local or foreign laws or
regulations. If a claim against us was successful, we might be
required to incur significant expense and to pay substantial
damages. Even if we were to prevail, the accompanying publicity
could adversely affect the demand for our products.

We may be unable to adequately protect our
intellectual property rights, which could result in the use of
our technology by competitors or other third parties.

Our success depends in large part upon our
proprietary technologies. We rely upon a combination of
copyright and trade secret protection, confidentiality and
nondisclosure agreements, and licensing arrangements to
establish and protect our intellectual property rights. We seek
to prevent disclosure of our trade secrets through a number of
means, including requiring those individuals with access to our
proprietary information to enter into nondisclosure agreements
with us and restricting access to our source code. Trade secret
and copyright laws, under which we seek to protect our software,
documentation, and other proprietary materials, provide only
limited protection. Despite these efforts to protect our
proprietary rights, unauthorized parties may be successful in
copying or otherwise obtaining and using our software. In
addition, other parties may breach confidentiality agreements or
other protective contracts that we have entered into with them,
and we may not be able to enforce our rights in these
circumstances. Any actions taken by us to enforce our
intellectual property rights could result in significant expense
to us as well as the diversion of management time and other
resources.

33



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##### 



In addition, detecting infringement and
misappropriation of intellectual property can be difficult, and
there can be no assurance that we would detect any infringement
or misappropriation of our proprietary rights. Even if we are
able to detect infringement or misappropriation of our
proprietary rights, litigation to enforce our rights could cause
us to divert significant financial and other resources from our
business operations, and may not ultimately be successful.
Moreover, we license our software internationally, and the laws
of some foreign countries may not protect our proprietary rights
to the same extent as do the laws of the United States.

If we are unable to rely on licenses of
intellectual property from third parties, our ability to conduct
our business could be harmed.

We rely on third-party licensors for technology
that is incorporated into, and is necessary for the operation
of, some elements of our software. Our success will depend in
part on our continued ability to have access to such
technologies that are or may become important to the
functionality of our products. We cannot assure you, however,
that such licenses will be available in the future on favorable
terms or at all.

We could become subject to claims of
infringement of third-party intellectual property rights, which
could limit our ability to conduct our business.

There has been a substantial amount of litigation
in the software industry regarding intellectual property rights.
It is possible that, in the future, third parties may claim that
our products infringe upon their intellectual property. Energy
software product developers may increasingly become subject to
infringement claims as the number of products and competitors in
the energy software industry grows and the functionality of
products from different software developers overlaps. Parties
making infringement claims may be able to obtain an injunction
against us, which could prevent us from selling our products in
the United States or in foreign countries. Any such injunction
could significantly harm our business. Moreover, any
infringement claims, with or without merit, could be time
consuming, result in costly litigation, divert managements
attention, cause product shipment delays, force us to redesign
or cease selling products or services that incorporate the
challenged intellectual property, or require us to enter into
royalty or licensing agreements, which may not be available on
reasonable terms or at all. Such royalty or license agreements,
if required, may not be available on terms acceptable to us or
at all, which could materially adversely affect our business.
Even if we ultimately are able to enter into royalty or license
agreements, these agreements may require us to make payments
that may adversely affect our results of operations. In
addition, we may be obligated to indemnify customers against
claims that we infringe upon intellectual property rights of
third parties.

We will need to recruit, train and retain
sufficient qualified personnel in order to successfully expand
our business.

Our future success will depend to a significant
extent on our ability to recruit and retain highly qualified
technical, sales and marketing, and other personnel. If we do
not attract and retain such personnel, we may not be able to
expand our business. Competition for qualified personnel is
intense in the energy industry. There are a limited number of
people with the appropriate combination of skills needed to
provide the services that our customers demand. We expect
competition for qualified personnel to remain intense, and we
may not succeed in attracting or retaining sufficient personnel.
In addition, newly hired employees generally require substantial
training, which requires significant resources and management
attention. Even if we invest significant resources to recruit,
train and retain qualified personnel, we may not be successful
in our efforts.

We may seek additional financing in the
future, which could be difficult to obtain and which could
dilute your ownership interest or the value of your
shares.

We intend to continue to invest in the
development of new products and enhancements to our existing
products. We believe that our current cash and investment
balances, together with cash generated from our operations, will
be sufficient to meet our operating and capital requirements for
the foreseeable future. However, from time to time, we may seek
to raise additional funds through public or private financing,
or other arrangements. Obtaining additional financing will be
subject to a number of factors, including market

34



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##### 



conditions, our operating performance, and
investor sentiment. These factors may make the timing, amount,
terms and conditions of additional financing unattractive for
us. If we are unable to raise capital to fund our operations, we
may not be able to successfully grow our business.


If we raise additional funds through the sale of
equity or convertible debt securities, your percentage ownership
will be reduced. In addition, these transactions may dilute the
value of our outstanding stock. We also may issue securities
that have rights, preferences and privileges senior to our
common stock.

Terrorist attacks or acts of war may seriously
harm our business.

Terrorist attacks or acts of war may cause damage
or disruption to our company, our employees, our facilities and
our customers, which could significantly impact our revenues,
costs and expenses, and financial condition. The terrorist
attacks that took place in the United States on
September 11, 2001 were unprecedented events that have
created many economic and political uncertainties, some of which
may materially adversely affect our business, results of
operations, and financial condition. The long-term effects on
our company of the September 11, 2001 attacks are unknown.
The potential for future terrorist attacks, the national and
international responses to terrorist attacks, and other acts of
war or hostility have created many economic and political
uncertainties, which could materially adversely affect our
business, results of operations, and financial condition in ways
that we currently cannot predict.

Our performance will depend on the continued
growth in demand for wholesale energy trading, transaction
processing, and risk management products and services.

Our future success will depend on the continued
growth in demand for wholesale energy trading, transaction
processing, and risk management products and services, which is
difficult to predict. If demand for these products and services
does not continue to grow or grows more slowly than expected,
demand for our software and services will be reduced. Utilities,
energy service providers and other businesses, such as
commercial or industrial customers, may be slow to adapt to
changes in the energy marketplace or may be satisfied with
existing services and solutions. This could result in less
demand for our software and services than we currently expect.
Because a substantial portion of our operating expenses is fixed
in the short term, any unanticipated reduction in demand for our
software and services would negatively impact our operating
results. Even if there is significant market acceptance of
wholesale energy trading, transaction processing, and risk
management products and services, we may incur substantial
expenses adapting our software and services to changing needs.

The global energy industry is subject to
extensive and varied governmental regulations, and, as a result,
our business may be adversely affected if we are unable to
successfully develop software and services that address numerous
and changing regulatory regimes.

Although the global energy industry is becoming
increasingly deregulated, it is still subject to extensive and
varied local, regional and national regulation. These
regulations affect all energy industry participants, including
utilities, producers, energy marketers, processors, storage
operators, distributors, marketers and pipelines. If we are
unable to design and develop software solutions and strategic
consulting services that address the numerous and changing
regulatory requirements or we fail to alter our software and
services rapidly enough, our customers or potential customers
may not purchase our software and services.

In addition, it is difficult to predict the
extent to which the global energy industry will continue to
become deregulated. The recent bankruptcy filing of Enron
Corporation, formerly one of the energy industrys largest
traders and market makers, has resulted in numerous government
and private inquiries and investigations into Enrons
business and the energy industry in general. The impact of such
inquiries and investigations cannot be determined at this time.
Any changes to the laws and regulations to which companies in
the energy industry are subject may materially adversely affect
our business, results of operations, and financial condition.

35



---



##### 



Our financial success is closely linked to the
health of the energy industry.

We currently derive substantially all of our
revenues from licensing our software and providing strategic
consulting services to participants in the energy industry. Our
customers include a number of organizations in the energy
industry, and the success of these customers is linked to the
health of the energy industry. Accordingly, the success of our
business, in turn, depends on the continued health of the energy
industry. Moreover, because of the capital expenditures required
in connection with investing in our software and services, we
believe that demand for our software and services could be
affected by fluctuations, disruptions, instability or downturns
in the energy market, which may cause current and potential
customers to leave the energy industry or delay, cancel or
reduce any planned expenditures for our software solutions and
strategic consulting services.

Enron Corporations recent bankruptcy
filing could adversely affect the health of the energy
industry.

We currently cannot determine the full impact on
the energy industry of Enron Corporations recent
bankruptcy filing. Prior to its bankruptcy, Enron was a dominant
participant in the energy industry, and therefore its financial
difficulties may have a significant impact on the energy
industry, including:



| |   |                                                                                                         
| | - | --------------------------------------------------------------------------------------------------------
| |  | serving as a possible catalyst for changes to the
	regulatory regimes governing the energy industry; and
|
| |  | resulting in losses to companies in the energy
	industry due to their credit exposure to Enron.         

We cannot assure you that any such effects will
not harm our business. For instance, some of our current and
potential customers may have credit exposure to Enron through
various contractual arrangements, such as energy commodity and
derivative trading contracts. To the extent that any of our
current or potential customers are adversely affected as a
result of their credit exposure to Enron, they may reduce their
current and future capital expenditures, which could reduce our
revenues.

Our stock price has been and may remain
volatile.

The market price of our common stock has been in
the past, and may in the future be, subject to wide fluctuations
in response to factors such as:



| |   |                                                                                                                                                  
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------
| |  | variations in quarterly operating results;                                                                                                       
|
| |  | announcements, by us or our competitors, of
	significant contracts, acquisitions, strategic partnerships,
	joint ventures or capital commitments;
|
| |  | changes in recommendations or financial estimates
	by securities analysts;                                                                       
|
| |  | loss or addition of major customers;                                                                                                             
|
| |  | conditions and trends in the energy industry; and                                                                                                
|
| |  | general conditions in the economy or the
	financial markets.                                                                                     

In addition, in recent years, the stock market
has experienced significant price and volume fluctuations, which
are often unrelated to the performance or condition of
particular companies. Such broad market fluctuations could
adversely affect the market price of our common stock. Following
periods of volatility in the market price of a particular
companys securities, securities class action litigation
has often been brought against a company. If we become subject
to this kind of litigation in the future, it could result in
substantial litigation costs, damages awards against us, and the
diversion of our managements attention and resources.

36



---



##### 



Provisions in our charter documents and
Delaware law may prevent or delay acquisition of us.

Our certificate of incorporation and bylaws and
Delaware law contain provisions that could make it harder for a
third party to acquire us without the consent of our board of
directors. These provisions include those that:



| |   |                                                                                                                                                                       
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | provide for a classified board of directors with
	staggered, three-year terms;                                                                                        
|
| |  | limit the persons who may call special meetings
	of stockholders;                                                                                                     
|
| |  | prohibit stockholder action by written consent;
	and                                                                                                                  
|
| |  | establish advance notice requirements for
	nominations for election to the board of directors or for
	proposing matters that can be presented at stockholder meetings.

Delaware law also imposes some restrictions on
mergers and other business combinations between us and any
holder of 15% or more of our outstanding common stock. These
provisions apply even if the offer may be considered beneficial
by some stockholders.

Because a small number of stockholders own a
significant percentage of our common stock, they significantly
influence major corporate decisions and our other stockholders
may not be able to influence these corporate
decisions.

Our executive officers and directors and their
affiliates beneficially own approximately 38.3% of our
outstanding common stock. If these parties act together, they
can significantly influence the election of all directors and
the approval of actions requiring the approval of a majority of
our stockholders. The interests of our executive officers and
directors and their affiliates could conflict with the interests
of our other stockholders.

Item 7A.     Quantitative
and Qualitative Disclosures About Market Risk

We have no derivative financial instruments. We
invest our cash and cash equivalents in investment-grade, debt
instruments of state and municipal governments and their
agencies and high quality corporate issuers, money market
instruments and bank certificates of deposit. As of
December 31, 2001, we invested the net proceeds from our
initial public offering in similar investment-grade and highly
liquid investments.

Our earnings are affected by fluctuations in the
value of our subsidiaries functional currency as compared
to the currencies of foreign denominated sales and purchases.
The results of operations of our subsidiaries, as reported in
U.S. dollars, may be significantly affected by fluctuations in
the value of the local currencies in which we transact business.
Such amount is recorded upon the translation of the foreign
subsidiaries financial statements into U.S. dollars, and
is dependent upon the various foreign exchange rates and the
magnitude of the foreign subsidiaries financial
statements. At December 31, 2001, our foreign currency
translation adjustment was not material and, for the year ended
December 31, 2001, net foreign currency transaction losses
were insignificant. In addition to the direct effects of changes
in exchange rates, which are a changed dollar value of the
resulting sales and related expenses, changes in exchange rates
also affect the volume of sales or the foreign currency sales
price as competitors products become more or less
attractive.

For the year ended December 31, 2001,
approximately 30% of our revenues and 20% of our operating
expenses were denominated in British pounds. Historically, the
effect of fluctuations in currency exchange rates has not had a
material impact on our operations. Our exposure to fluctuations
in currency exchange rates will increase as we expand our
international operations. We conduct our European operations in
the United Kingdom and the countries of the European Union which
are part of the European Monetary Union. There is a single
currency within certain countries of the European Union, known
as the euro, and one organization, the European Central Bank is
responsible for setting European monetary policy. We have
reviewed the impact the euro has on our business and whether
this will give rise to a need for significant changes in our
commercial operations or treasury management functions. Because
our European transactions

37



---



##### 



are primarily denominated in British pounds and
as yet we have not experienced any significant impact on our
European operations from the fluctuations in the exchange rate
between euro and British pounds, we do not believe that the euro
conversion will have any material effect on our business,
financial condition or results of operations.


Item 8.     Financial
Statements and Supplementary Data

Our financial statements and notes thereto and
the reports of KPMG LLP and PricewaterhouseCoopers LLP,
independent accountants, are set forth in the Index to Financial
Statements at Item 14 and incorporated herein by reference.

Our Selected Quarterly Results of
Operations set forth in Item 7 are incorporated
herein by reference.

Item 9.     Changes
In and Disagreements With Accountants on Accounting and
Financial Disclosure

Not applicable.

PART III

Item 10.     Directors
and Executive Officers of the Registrant

Information called for by Item 10 of
Form 10-K is set forth under the headings Directors
and Nominees and Section 16(a) Beneficial
Ownership Reporting Compliance in our proxy statement for
the 2002 annual meeting of stockholders, which is incorporated
herein by reference, and under the heading Executive
Officers of the Registrant included in Part I and
incorporated herein by reference.

Item 11.     Executive
Compensation

Information called for by Item 11 of
Form 10-K is set forth under the headings Director
Compensation, Executive Compensation,
Compensation Committee Interlocks and Insider
Participation and Certain Relationships and Related
Transactions in our 2002 proxy statement, which is
incorporated herein by reference.

Item 12.     Security
Ownership of Certain Beneficial Owners and
Management

Information called for by Item 12 of
Form 10-K is set forth under the heading Beneficial
Ownership of Common Stock in our 2002 proxy statement,
which is incorporated herein by reference.

Item 13.     Certain
Relationships and Related Transactions

Information called for by Item 13 of
Form 10-K is set forth under the heading Certain
Relationships and Related Transactions in our 2002 proxy
statement, which is incorporated herein by reference.

38



---



##### 



Item 14.     Exhibits,
Financial Statement Schedules, and Reports on
Form 8-K

(a)     The following
documents are filed as part of this Form 10-K:



| |                                                                                                                                                      
| | -----------------------------------------------------------------------------------------------------------------------------------------------------
| | 1.     Financial
	Statements. The following financial statements of Caminus
	Corporation are filed as part of this Form 10-K on the
	pages indicated:

CAMINUS CORPORATION AND SUBSIDIARIES

|                                                                                                      |  |  |     | 
|----------------------------------------------------------------------------------------------------- |  |  | --- | 
|Independent Auditors Report                                                                          |  |  | F-2 | 
|Report of Independent Accountants                                                                     |  |  | F-3 | 
|Consolidated Balance Sheets as of
	December 31, 2001 and 2000                                         |  |  | F-4 | 
|Consolidated Statements of Operations for the
	Years Ended December 31, 2001, 2000 and 1999           |  |  | F-5 | 
|Consolidated Statements of Stockholders
	Equity for the Years Ended December 31, 2001, 2000 and 1999 |  |  | F-6 | 
|Consolidated Statements of Cash Flows for the
	Years Ended December 31, 2001, 2000 and 1999           |  |  | F-7 | 
|Notes to Consolidated Financial Statements                                                            |  |  | F-8 | 



| |                                                                                                                                                                            
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 2.     Schedules are
	omitted because the required information is inapplicable or the
	information is presented in the consolidated financial
	statements or related notes.
|
| | 3.     Exhibits. The
	exhibits listed in the Exhibit Index immediately preceding
	such exhibits are filed as part of this Annual Report on
	Form 10-K.                     

(b)     Reports on
Form 8-K.

During the quarter ended December 31, 2001,
we filed one Current Report on Form 8-K, dated
November 20, 2001. This Form 8-K was filed regarding
our acquisition of Altra Software Services, Inc. pursuant to
Item 2 of Form 8-K. This acquisition was accomplished
by purchasing from Altra Energy Technologies, Inc. all of the
capital stock of Altra Software Services, Inc. pursuant to a
Stock Purchase Agreement, dated as of October 12, 2001, by
and between the Company and Altra Energy Technologies, Inc. No
other reports on Form 8-K were filed by us during the
quarter ended December 31, 2001.

39



---



##### 



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, on the day of
February 12, 2002.



| |                    
| | -------------------
| | CAMINUS CORPORATION



| |     |                    
| | --- | -------------------
| | By: | /s/ DAVID M. STONER

| |                                       
| | --------------------------------------
| |                                       
| | David M. Stoner                       
| | President and Chief Executive
	Officer

Pursuant to the requirements of the Securities
Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the registrant and in the
capacities indicated on the 12th day of February, 2002.

|                                                     |  |                                                                                                                                  |  |                   |  | 
|---------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------- |  | ----------------- |  | 
|                                                     |  |                                                                                                                                  |  |                  
|Signature                                            |  | Title                                                                                                                            |  | Date             
|                                                     |  |                                                                                                                                  |  |                  
|                                                    
|/s/ DAVID M. STONERDavid M. Stoner                   |  | President and Chief Executive Officer (Principal
	Executive Officer) and Director                                                |  | February 12, 2002
|                                                    
|/s/ JOSEPH P. DWYERJoseph P. Dwyer                   |  | Executive Vice President, Chief Financial Officer
	and Treasurer (Principal Financial Officer and Principal
	Accounting Officer) |  | February 12, 2002
|                                                    
|/s/ LAWRENCE D. GILSONLawrence D. Gilson             |  | Chairman of the Board of Directors                                                                                               |  | February 12, 2002
|                                                    
|/s/ NIGEL L. EVANSNigel L. Evans                     |  | Director                                                                                                                         |  | February 12, 2002
|                                                    
|/s/ BRIAN J. SCANLANBrian J. Scanlan                 |  | Director                                                                                                                         |  | February 12, 2002
|                                                    
|/s/ CHRISTOPHER S. BROTHERSChristopher S. Brothers   |  | Director                                                                                                                         |  | February 12, 2002
|                                                    
|/s/ ANTHONY H. BLOOMAnthony H. Bloom                 |  | Director                                                                                                                         |  | February 12, 2002
|                                                    
|/s/ RICHARD K. LANDERSRichard K. Landers             |  | Director                                                                                                                         |  | February 12, 2002
|                                                    
|/s/ CLARE M. J. SPOTTISWOODEClare M. J. Spottiswoode |  | Director                                                                                                                         |  | February 12, 2002

40



---



##### 





INDEX TO CONSOLIDATED FINANCIAL
STATEMENTS


|                                                                                                       |  |      |     | 
|------------------------------------------------------------------------------------------------------ |  | ---- | --- | 
|                                                                                                       |  | Page
|                                                                                                       |  |     
|CAMINUS CORPORATION AND SUBSIDIARIES                                                                   |  |      |     | 
|Independent Auditors Report                                                                           |  |      | F-2 | 
|Report of Independent Accountants                                                                      |  |      | F-3 | 
|Consolidated Balance Sheets as of
	December 31, 2001 and 2000                                          |  |      | F-4 | 
|Consolidated Statements of Operations for the
	Years Ended December 31, 2001, 2000 and 1999            |  |      | F-5 | 
|Consolidated Statements of Stockholders
	Equity for the Years Ended December 31, 2001, 2000
	and 1999 |  |      | F-6 | 
|Consolidated Statements of Cash Flows for the
	Years Ended December 31, 2001, 2000 and 1999            |  |      | F-7 | 
|Notes to Consolidated Financial Statements                                                             |  |      | F-8 | 

F-1



---



##### 





INDEPENDENT AUDITORS REPORT


The Board of Directors and Stockholders

Caminus Corporation


We have audited the accompanying consolidated
balance sheets of Caminus Corporation and Subsidiaries as of
December 31, 2001 and 2000 and the related consolidated
statements of operations, stockholders equity and cash
flows for the years then ended. These consolidated financial
statements are the responsibility of the Companys
management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.

We conducted our audits in accordance with
auditing standards generally accepted in the United States of
America. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.

In our opinion, the consolidated financial
statements referred to above present fairly, in all material
respects, the financial position of Caminus Corporation and
Subsidiaries as of December 31, 2001 and 2000 and the
results of their operations and their cash flows for the years
then ended, in conformity with accounting principles generally
accepted in the United States of America.



| |                 
| | ----------------
| | /s/     KPMG LLP

New York, New York

February 6, 2002


F-2



---



##### 





REPORT OF INDEPENDENT ACCOUNTANTS


To the Board of Directors and Stockholders

of Caminus Corporation


In our opinion, the accompanying consolidated
statement of operations, consolidated statement of
stockholders equity and consolidated statement of cash
flows present fairly, in all material respects, the results of
operations and cash flows of Caminus Corporation and its
subsidiaries (the Company) for the year ended
December 31, 1999, in conformity with accounting principles
generally accepted in the United States of America. These
financial statements are the responsibility of the
Companys management; our responsibility is to express an
opinion on these financial statements based on our audit. We
conducted our audit of these statements in accordance with
auditing standards generally accepted in the United States of
America which require that we plan and perform the audits to
obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by
management, and evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable
basis for our opinion.



| |                               
| | ------------------------------
| | /s/ PRICEWATERHOUSECOOPERS LLP

New York, New York

February 22, 2000


F-3



---



##### 



CAMINUS CORPORATION AND SUBSIDIARIES



CONSOLIDATED BALANCE SHEETS


|                                      |                                                                                                                                                                                                                          |                                            |        |         |         |  |        |         |         | 
|------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ------------------------------------------ | ------ | ------- | ------- |  | ------ | ------- | ------- | 
|                                      |                                                                                                                                                                                                                          |                                           
|                                      |                                                                                                                                                                                                                          | December 31,                              
|                                      |                                                                                                                                                                                                                          |                                           
|                                      |                                                                                                                                                                                                                          | 2001                                       |        | 2000   
|                                      |                                                                                                                                                                                                                          |                                            |        |        
|                                      |                                                                                                                                                                                                                          |                                           
|                                      |                                                                                                                                                                                                                          | (in thousands, except per                 
|                                      |                                                                                                                                                                                                                          | share data)                               
|ASSETS                               
|Current assets:                       |                                                                                                                                                                                                                          |                                            |        |         |         |  |        |        
|                                      | Cash and cash equivalents                                                                                                                                                                                                |                                            | $      | 35,387  |         |  | $      | 16,883  |        
|                                      | Investments in short-term marketable securities                                                                                                                                                                          |                                            |        | 6,640   |         |  |        | 12,368  |        
|                                      | Accounts receivable, net                                                                                                                                                                                                 |                                            |        | 22,002  |         |  |        | 16,322  |        
|                                      | Deferred taxes                                                                                                                                                                                                           |                                            |        |        |         |  |        | 1,288   |        
|                                      | Prepaid expenses and other current assets                                                                                                                                                                                |                                            |        | 2,361   |         |  |        | 3,007   |        
|                                      |                                                                                                                                                                                                                          |                                            |        |         |         |  |        |        
|                                      |                                                                                                                                                                                                                          | Total current assets                       |        |         | 66,390  |  |        |         | 49,868  | 
|                                      |                                                                                                                                                                                                                          |                                            |        |         |         |  |        |        
|Other assets:                         |                                                                                                                                                                                                                          |                                            |        |         |         |  |        |        
|                                      | Investments in long-term marketable securities                                                                                                                                                                           |                                            |        |        |         |  |        | 12,413  |        
|                                      | Fixed assets, net                                                                                                                                                                                                        |                                            |        | 7,173   |         |  |        | 4,890   |        
|                                      | Acquired technology, net                                                                                                                                                                                                 |                                            |        | 18,441  |         |  |        | 4,445   |        
|                                      | Other intangibles, net                                                                                                                                                                                                   |                                            |        | 14,936  |         |  |        | 5,505   |        
|                                      | Goodwill, net                                                                                                                                                                                                            |                                            |        | 58,045  |         |  |        | 25,165  |        
|                                      | Other assets                                                                                                                                                                                                             |                                            |        | 1,994   |         |  |        | 1,759   |        
|                                      |                                                                                                                                                                                                                          |                                            |        |         |         |  |        |        
|                                      |                                                                                                                                                                                                                          | Total assets                               |        | $       | 166,979 |  |        | $       | 104,045 | 
|                                      |                                                                                                                                                                                                                          |                                            |        |         |         |  |        |        
|LIABILITIES AND STOCKHOLDERS
	EQUITY
|Current liabilities:                  |                                                                                                                                                                                                                          |                                            |        |         |         |  |        |        
|                                      | Accounts payable                                                                                                                                                                                                         |                                            | $      | 4,108   |         |  | $      | 1,692   |        
|                                      | Accrued liabilities                                                                                                                                                                                                      |                                            |        | 16,044  |         |  |        | 8,121   |        
|                                      | Income taxes payable                                                                                                                                                                                                     |                                            |        | 1,515   |         |  |        | 2,273   |        
|                                      | Payable to related parties                                                                                                                                                                                               |                                            |        |        |         |  |        | 100     |        
|                                      | Deferred revenue                                                                                                                                                                                                         |                                            |        | 12,707  |         |  |        | 4,068   |        
|                                      |                                                                                                                                                                                                                          |                                            |        |         |         |  |        |        
|                                      |                                                                                                                                                                                                                          | Total current liabilities                  |        |         | 34,374  |  |        |         | 16,254  | 
|Long-term debt                        |                                                                                                                                                                                                                          |                                            | 15,000 |         |         |  |       |        
|                                      |                                                                                                                                                                                                                          |                                            |        |         |         |  |        |        
|Total liabilities                     |                                                                                                                                                                                                                          |                                            | 49,374 |         |         |  | 16,254 |        
|                                      |                                                                                                                                                                                                                          |                                            |        |         |         |  |        |        
|Commitments and contingencies         |                                                                                                                                                                                                                          |                                            |       |         |         |  |       |        
|Stockholders equity:                 |                                                                                                                                                                                                                          |                                            |        |         |         |  |        |        
|                                      | Common stock, par value $0.01 per share, 50,000
	shares authorized; 19,663 shares issued and
	17,901 shares outstanding at December 31, 2001, 17,453
	shares issued and 15,691 shares outstanding at
	December 31, 2000. |                                            |        | 197     |         |  |        | 174     |        
|                                      | Additional paid-in capital                                                                                                                                                                                               |                                            |        | 164,131 |         |  |        | 127,092 |        
|                                      | Treasury stock, 1,762 shares at cost                                                                                                                                                                                     |                                            |        | (4,911  | )       |  |        | (4,911  | )      
|                                      | Deferred compensation                                                                                                                                                                                                    |                                            |        | (677    | )       |  |        | (128    | )      
|                                      | Accumulated deficit                                                                                                                                                                                                      |                                            |        | (40,676 | )       |  |        | (34,497 | )      
|                                      | Accumulated other comprehensive income (loss)                                                                                                                                                                            |                                            |        | (459    | )       |  |        | 61      |        
|                                      |                                                                                                                                                                                                                          |                                            |        |         |         |  |        |        
|                                      |                                                                                                                                                                                                                          | Total stockholders equity                 |        |         | 117,605 |  |        |         | 87,791  | 
|                                      |                                                                                                                                                                                                                          |                                            |        |         |         |  |        |        
|                                      |                                                                                                                                                                                                                          | Total liabilities and stockholders equity |        | $       | 166,979 |  |        | $       | 104,045 | 
|                                      |                                                                                                                                                                                                                          |                                            |        |         |         |  |        |        

The accompanying notes are an integral part of
these consolidated financial statements.

F-4



---



##### 



CAMINUS CORPORATION AND SUBSIDIARIES



CONSOLIDATED STATEMENTS OF
OPERATIONS


|                                                                                |                                                 |                                       |        |        |        |      |         |        |        |   |        |        |        |  
|------------------------------------------------------------------------------- | ----------------------------------------------- | ------------------------------------- | ------ | ------ | ------ | ---- | ------- | ------ | ------ | - | ------ | ------ | ------ | -
|                                                                                |                                                 |                                      
|                                                                                |                                                 | Year Ended December 31,              
|                                                                                |                                                 |                                      
|                                                                                |                                                 | 2001                                  |        | 2000   |        | 1999
|                                                                                |                                                 |                                       |        |        |        |     
|                                                                                |                                                 |                                      
|                                                                                |                                                 | (in thousands, except per share data)
|Revenues:                                                                       |                                                 |                                       |        |        |        |      |         |        |        |   |        |       
|                                                                                | Licenses                                        |                                       | $      | 34,579 |        |      | $       | 24,573 |        |   | $      | 12,538 |       
|                                                                                | Software services                               |                                       |        | 32,416 |        |      |         | 18,576 |        |   |        | 7,816  |       
|                                                                                | Strategic consulting                            |                                       |        | 7,722  |        |      |         | 8,565  |        |   |        | 6,556  |       
|                                                                                |                                                 |                                       |        |        |        |      |         |        |        |   |        |       
|                                                                                |                                                 | Total revenues                        |        |        | 74,717 |      |         |        | 51,714 |   |        |        | 26,910 |  
|Cost of revenues:                                                               |                                                 |                                       |        |        |        |      |         |        |        |   |        |       
|                                                                                | Cost of licenses                                |                                       |        | 1,053  |        |      |         | 978    |        |   |        | 769    |       
|                                                                                | Cost of software services                       |                                       |        | 16,293 |        |      |         | 10,698 |        |   |        | 4,695  |       
|                                                                                | Cost of strategic consulting                    |                                       |        | 4,268  |        |      |         | 3,643  |        |   |        | 2,923  |       
|                                                                                | Amortization of acquired technology             |                                       |        | 3,581  |        |      |         | 1,566  |        |   |        | 1,057  |       
|                                                                                |                                                 |                                       |        |        |        |      |         |        |        |   |        |       
|                                                                                |                                                 | Total cost of revenues                |        |        | 25,195 |      |         |        | 16,885 |   |        |        | 9,444  |  
|                                                                                |                                                 |                                       |        |        |        |      |         |        |        |   |        |       
|                                                                                |                                                 | Gross profit                          |        |        | 49,522 |      |         |        | 34,829 |   |        |        | 17,466 |  
|Operating expenses:                                                             |                                                 |                                       |        |        |        |      |         |        |        |   |        |       
|                                                                                | Sales and marketing                             |                                       |        | 11,488 |        |      |         | 9,836  |        |   |        | 4,110  |       
|                                                                                | Research and development                        |                                       |        | 13,336 |        |      |         | 6,601  |        |   |        | 3,929  |       
|                                                                                | General and administrative                      |                                       |        | 17,154 |        |      |         | 10,852 |        |   |        | 8,660  |       
|                                                                                | Acquired in-process research and development    |                                       |        | 1,300  |        |      |         |       |        |   |        | 1,000  |       
|                                                                                | Amortization of intangible assets               |                                       |        | 11,063 |        |      |         | 10,156 |        |   |        | 7,503  |       
|                                                                                | Expenses related to our initial public offering |                                       |        |       |        |      |         | 12,335 |        |   |        |       |       
|                                                                                | Loss on office relocation                       |                                       |        |       |        |      |         | 508    |        |   |        |       |       
|                                                                                |                                                 |                                       |        |        |        |      |         |        |        |   |        |       
|                                                                                |                                                 | Total operating expenses              |        |        | 54,341 |      |         |        | 50,288 |   |        |        | 25,202 |  
|                                                                                |                                                 |                                       |        |        |        |      |         |        |        |   |        |       
|Loss from operations                                                            |                                                 |                                       | (4,819 | )      |        |      | (15,459 | )      |        |   | (7,736 | )     
|Other income (expense):                                                         |                                                 |                                       |        |        |        |      |         |        |        |   |        |       
|                                                                                | Interest income                                 |                                       |        | 1,934  |        |      |         | 2,346  |        |   |        | 66     |       
|                                                                                | Interest expense                                |                                       |        | (173   | )      |      |         | (89    | )      |   |        | (296   | )     
|                                                                                | Other income                                    |                                       |        | 868    |        |      |         | 1      |        |   |        | 2      |       
|                                                                                |                                                 |                                       |        |        |        |      |         |        |        |   |        |       
|                                                                                |                                                 | Total other income (expense)          |        |        | 2,629  |      |         |        | 2,258  |   |        |        | (228   | )
|                                                                                |                                                 |                                       |        |        |        |      |         |        |        |   |        |       
|Loss before provision for income
	taxes                                         |                                                 |                                       | (2,190 | )      |        |      | (13,201 | )      |        |   | (7,964 | )     
|Provision for income taxes                                                      |                                                 |                                       | 3,989  |        |        |      | 2,315   |        |        |   | 646    |       
|                                                                                |                                                 |                                       |        |        |        |      |         |        |        |   |        |       
|Net loss                                                                        |                                                 | $                                     | (6,179 | )      |        | $    | (15,516 | )      |        | $ | (8,610 | )     
|                                                                                |                                                 |                                       |        |        |        |      |         |        |        |   |        |       
|Basic and diluted net loss per share                                            |                                                 | $                                     | (0.38  | )      |        | $    | (1.04   | )      |        | $ | (1.01  | )     
|                                                                                |                                                 |                                       |        |        |        |      |         |        |        |   |        |       
|Weighted average shares used in computing basic
	and diluted net loss per share |                                                 |                                       | 16,059 |        |        |      | 14,925  |        |        |   | 8,514  |       
|Pro forma (unaudited):                                                          |                                                 |                                       |        |        |        |      |         |        |        |   |        |       
|                                                                                | Loss before provision for income taxes          |                                       |        |        |        |      |         |        |        |   | $      | (7,964 | )     
|                                                                                | Pro forma income tax benefit                    |                                       |        |        |        |      |         |        |        |   |        | 190    |       
|                                                                                |                                                 |                                       |        |        |        |      |         |        |        |   |        |       
|                                                                                | Pro forma net loss                              |                                       |        |        |        |      |         |        |        |   | $      | (7,774 | )     
|                                                                                |                                                 |                                       |        |        |        |      |         |        |        |   |        |       
|                                                                                | Pro forma basic and diluted net loss per share  |                                       |        |        |        |      |         |        |        |   | $      | (0.91  | )     
|                                                                                |                                                 |                                       |        |        |        |      |         |        |        |   |        |       

The accompanying notes are an integral part of
these consolidated financial statements.

F-5



---



##### 



CAMINUS CORPORATION AND SUBSIDIARIES



CONSOLIDATED STATEMENTS OF STOCKHOLDERS
EQUITY


|                                                                               |  |                |        |        |  |            |     |          |  |               |         |              |  |   |        |   |  |   |        |   |  |   |        |  
|------------------------------------------------------------------------------ |  | -------------- | ------ | ------ |  | ---------- | --- | -------- |  | ------------- | ------- | ------------ |  | - | ------ | - |  | - | ------ | - |  | - | ------ | -
|                                                                               |  | Number of      |        |        |  | Additional |     |          |  |               |         |             
|                                                                               |  | Outstanding    |        | Common |  | Paid-in    |     | Treasury |  | Subscriptions |         | Deferred    
|                                                                               |  | Shares         |        | Stock  |  | Capital    |     | Stock    |  | Receivable    |         | Compensation
|                                                                               |  |                |        |        |  |            |     |          |  |               |         |             
|                                                                               |  |               
|                                                                               |  | (in thousands)
|Balance at December 31, 1998                                                   |  |                | 7,967  |        |  | $          | 97  |          |  | $             | 37,071  |              |  | $ | (4,911 | ) |  | $ | (4,739 | ) |  | $ |       |  
|Receipt of membership subscription receivable                                  |  |                |        |        |  |            |     |          |  |               |         |              |  |   |        |   |  |   | 1,832  |   |  |   |        |  
|Issuance of additional shares                                                  |  |                | 1,029  |        |  |            | 10  |          |  |               | 12,329  |              |  |   |        |   |  |   |        |   |  |   |        |  
|Issuance of shares in connection with the
	acquisition of DC Systems           |  |                | 243    |        |  |            | 2   |          |  |               | 2,998   |              |  |   |        |   |  |   |        |   |  |   |        |  
|Issuance of shares to former owners of Positron                                |  |                | 57     |        |  |            | 1   |          |  |               | 803     |              |  |   |        |   |  |   |        |   |  |   |        |  
|Reacquisition of stock option                                                  |  |                |        |        |  |            |     |          |  |               | (250    | )            |  |   |        |   |  |   |        |   |  |   |        |  
|Distribution to stockholders                                                   |  |                |        |        |  |            |     |          |  |               | (680    | )            |  |   |        |   |  |   |        |   |  |   |        |  
|Issuance of stock options below fair market value                              |  |                |        |        |  |            |     |          |  |               | 399     |              |  |   |        |   |  |   |        |   |  |   | (399   | )
|Amortization of unearned compensation                                          |  |                |        |        |  |            |     |          |  |               |         |              |  |   |        |   |  |   |        |   |  |   | 164    |  
|Net loss                                                                       |  |                |        |        |  |            |     |          |  |               |         |              |  |   |        |   |  |   |        |   |  |   |        |  
|Translation adjustment                                                         |  |                |        |        |  |            |     |          |  |               |         |              |  |   |        |   |  |   |        |   |  |   |        |  
|                                                                               |  |                |        |        |  |            |     |          |  |               |         |              |  |   |        |   |  |   |        |   |  |   |        |  
|Balance at December 31, 1999                                                   |  |                | 9,296  |        |  |            | 110 |          |  |               | 52,670  |              |  |   | (4,911 | ) |  |   | (2,907 | ) |  |   | (235   | )
|                                                                               |  |                |        |        |  |            |     |          |  |               |         |              |  |   |        |   |  |   |        |   |  |   |        |  
|Forgiveness of subscription receivable                                         |  |                |        |        |  |            |     |          |  |               |         |              |  |   |        |   |  |   | 1,000  |   |  |   |        |  
|Issuance of shares for our initial public offering                             |  |                | 4,088  |        |  |            | 41  |          |  |               | 58,987  |              |  |   |        |   |  |   |        |   |  |   |        |  
|Issuance of shares to related parties                                          |  |                | 1,521  |        |  |            | 15  |          |  |               | 8,726   |              |  |   |        |   |  |   |        |   |  |   |        |  
|Receipt of subscription receivables                                            |  |                |        |        |  |            |     |          |  |               |         |              |  |   |        |   |  |   | 2,018  |   |  |   |        |  
|Issuance of stock options below fair market value                              |  |                |        |        |  |            |     |          |  |               | 60      |              |  |   |        |   |  |   |        |   |  |   | (60    | )
|Amortization of deferred compensation                                          |  |                |        |        |  |            |     |          |  |               |         |              |  |   |        |   |  |   |        |   |  |   | 167    |  
|Unrealized gain on marketable securities                                       |  |                |        |        |  |            |     |          |  |               |         |              |  |   |        |   |  |   |        |   |  |   |        |  
|Issuance of shares related to employee stock
	purchase plan                    |  |                | 33     |        |  |            |     |          |  |               | 451     |              |  |   |        |   |  |   |        |   |  |   |        |  
|Issuance of shares for acquisition of Nucleus                                  |  |                | 261    |        |  |            | 3   |          |  |               | 3,754   |              |  |   |        |   |  |   |        |   |  |   |        |  
|Stock option exercises                                                         |  |                | 492    |        |  |            | 5   |          |  |               | 2,444   |              |  |   |        |   |  |   | (111   | ) |  |   |        |  
|Net loss                                                                       |  |                |        |        |  |            |     |          |  |               |         |              |  |   |        |   |  |   |        |   |  |   |        |  
|Translation adjustment                                                         |  |                |        |        |  |            |     |          |  |               |         |              |  |   |        |   |  |   |        |   |  |   |        |  
|                                                                               |  |                |        |        |  |            |     |          |  |               |         |              |  |   |        |   |  |   |        |   |  |   |        |  
|Balance at December 31, 2000                                                   |  |                | 15,691 |        |  |            | 174 |          |  |               | 127,092 |              |  |   | (4,911 | ) |  |   |       |   |  |   | (128   | )
|                                                                               |  |                |        |        |  |            |     |          |  |               |         |              |  |   |        |   |  |   |        |   |  |   |        |  
|Issuance of shares for Altra Software acquisition                              |  |                | 1,975  |        |  |            | 20  |          |  |               | 33,871  |              |  |   |        |   |  |   |        |   |  |   |        |  
|Issuance of stock options                                                      |  |                |        |        |  |            |     |          |  |               | 1,229   |              |  |   |        |   |  |   |        |   |  |   | (1,229 | )
|Amortization of deferred compensation                                          |  |                |        |        |  |            |     |          |  |               |         |              |  |   |        |   |  |   |        |   |  |   | 680    |  
|Reclassification of unrealized gain to realized
	gain on marketable securities |  |                |        |        |  |            |     |          |  |               |         |              |  |   |        |   |  |   |        |   |  |   |        |  
|Issuance of shares related to employee stock
	purchase plan                    |  |                | 49     |        |  |            |     |          |  |               | 842     |              |  |   |        |   |  |   |        |   |  |   |        |  
|Stock option exercises                                                         |  |                | 186    |        |  |            | 3   |          |  |               | 1,097   |              |  |   |        |   |  |   |        |   |  |   |        |  
|Net loss                                                                       |  |                |        |        |  |            |     |          |  |               |         |              |  |   |        |   |  |   |        |   |  |   |        |  
|Translation adjustment                                                         |  |                |        |        |  |            |     |          |  |               |         |              |  |   |        |   |  |   |        |   |  |   |        |  
|                                                                               |  |                |        |        |  |            |     |          |  |               |         |              |  |   |        |   |  |   |        |   |  |   |        |  
|Balance at December 31, 2001                                                   |  |                | 17,901 |        |  | $          | 197 |          |  | $             | 164,131 |              |  | $ | (4,911 | ) |  | $ |       |   |  | $ | (677   | )
|                                                                               |  |                |        |        |  |            |     |          |  |               |         |              |  |   |        |   |  |   |        |   |  |   |        |  

[Additional columns below]

[Continued from above table, first column(s) repeated]

|                                                                               |  |                |         |               |  |               |      |               |  |   |         |   |  |   |         |  
|------------------------------------------------------------------------------ |  | -------------- | ------- | ------------- |  | ------------- | ---- | ------------- |  | - | ------- | - |  | - | ------- | -
|                                                                               |  |                |         | Accumulated   |  |               |      |              
|                                                                               |  |                |         | Other         |  | Total         |      |              
|                                                                               |  | Accumulated    |         | Comprehensive |  | Stockholders |      | Comprehensive
|                                                                               |  | Deficit        |         | Income (Loss) |  | Equity        |      | Loss         
|                                                                               |  |                |         |               |  |               |      |              
|                                                                               |  |               
|                                                                               |  | (in thousands)
|Balance at December 31, 1998                                                   |  | $              | (10,371 | )             |  | $             | 13   |               |  | $ | 17,160  |   |  |   |         |  
|Receipt of membership subscription receivable                                  |  |                |         |               |  |               |      |               |  |   | 1,832   |   |  |   |         |  
|Issuance of additional shares                                                  |  |                |         |               |  |               |      |               |  |   | 12,339  |   |  |   |         |  
|Issuance of shares in connection with the
	acquisition of DC Systems           |  |                |         |               |  |               |      |               |  |   | 3,000   |   |  |   |         |  
|Issuance of shares to former owners of Positron                                |  |                |         |               |  |               |      |               |  |   | 804     |   |  |   |         |  
|Reacquisition of stock option                                                  |  |                |         |               |  |               |      |               |  |   | (250    | ) |  |   |         |  
|Distribution to stockholders                                                   |  |                |         |               |  |               |      |               |  |   | (680    | ) |  |   |         |  
|Issuance of stock options below fair market value                              |  |                |         |               |  |               |      |               |  |   |        |   |  |   |         |  
|Amortization of unearned compensation                                          |  |                |         |               |  |               |      |               |  |   | 164     |   |  |   |         |  
|Net loss                                                                       |  |                | (8,610  | )             |  |               |      |               |  |   | (8,610  | ) |  | $ | (8,610  | )
|Translation adjustment                                                         |  |                |         |               |  |               | (20  | )             |  |   | (20     | ) |  |   | (20     | )
|                                                                               |  |                |         |               |  |               |      |               |  |   |         |   |  |   |         |  
|Balance at December 31, 1999                                                   |  |                | (18,981 | )             |  |               | (7   | )             |  |   | 25,739  |   |  | $ | (8,630  | )
|                                                                               |  |                |         |               |  |               |      |               |  |   |         |   |  |   |         |  
|Forgiveness of subscription receivable                                         |  |                |         |               |  |               |      |               |  |   | 1,000   |   |  |   |         |  
|Issuance of shares for our initial public offering                             |  |                |         |               |  |               |      |               |  |   | 59,028  |   |  |   |         |  
|Issuance of shares to related parties                                          |  |                |         |               |  |               |      |               |  |   | 8,741   |   |  |   |         |  
|Receipt of subscription receivables                                            |  |                |         |               |  |               |      |               |  |   | 2,018   |   |  |   |         |  
|Issuance of stock options below fair market value                              |  |                |         |               |  |               |      |               |  |   |        |   |  |   |         |  
|Amortization of deferred compensation                                          |  |                |         |               |  |               |      |               |  |   | 167     |   |  |   |         |  
|Unrealized gain on marketable securities                                       |  |                |         |               |  |               | 183  |               |  |   | 183     |   |  | $ | 183     |  
|Issuance of shares related to employee stock
	purchase plan                    |  |                |         |               |  |               |      |               |  |   | 451     |   |  |   |         |  
|Issuance of shares for acquisition of Nucleus                                  |  |                |         |               |  |               |      |               |  |   | 3,757   |   |  |   |         |  
|Stock option exercises                                                         |  |                |         |               |  |               |      |               |  |   | 2,338   |   |  |   |         |  
|Net loss                                                                       |  |                | (15,516 | )             |  |               |      |               |  |   | (15,516 | ) |  |   | (15,516 | )
|Translation adjustment                                                         |  |                |         |               |  |               | (115 | )             |  |   | (115    | ) |  |   | (115    | )
|                                                                               |  |                |         |               |  |               |      |               |  |   |         |   |  |   |         |  
|Balance at December 31, 2000                                                   |  |                | (34,497 | )             |  |               | 61   |               |  |   | 87,791  |   |  | $ | (15,448 | )
|                                                                               |  |                |         |               |  |               |      |               |  |   |         |   |  |   |         |  
|Issuance of shares for Altra Software acquisition                              |  |                |         |               |  |               |      |               |  |   | 33,891  |   |  |   |         |  
|Issuance of stock options                                                      |  |                |         |               |  |               |      |               |  |   |        |   |  |   |         |  
|Amortization of deferred compensation                                          |  |                |         |               |  |               |      |               |  |   | 680     |   |  |   |         |  
|Reclassification of unrealized gain to realized
	gain on marketable securities |  |                |         |               |  |               | (183 | )             |  |   | (183    | ) |  | $ | (183    | )
|Issuance of shares related to employee stock
	purchase plan                    |  |                |         |               |  |               |      |               |  |   | 842     |   |  |   |         |  
|Stock option exercises                                                         |  |                |         |               |  |               |      |               |  |   | 1,100   |   |  |   |         |  
|Net loss                                                                       |  |                | (6,179  | )             |  |               |      |               |  |   | (6,179  | ) |  |   | (6,179  | )
|Translation adjustment                                                         |  |                |         |               |  |               | (337 | )             |  |   | (337    | ) |  |   | (337    | )
|                                                                               |  |                |         |               |  |               |      |               |  |   |         |   |  |   |         |  
|Balance at December 31, 2001                                                   |  | $              | (40,676 | )             |  | $             | (459 | )             |  | $ | 117,605 |   |  | $ | (6,699  | )
|                                                                               |  |                |         |               |  |               |      |               |  |   |         |   |  |   |         |  

The accompanying notes are an integral part of
these consolidated financial statements.

F-6



---



##### 



CAMINUS CORPORATION AND SUBSIDIARIES



CONSOLIDATED STATEMENTS OF CASH
FLOWS


|                                                      |                                                                                            |                                                                              |                                           |         |        |        |         |         |        |        |         |        |       |        |  
|----------------------------------------------------- | ------------------------------------------------------------------------------------------ | ---------------------------------------------------------------------------- | ----------------------------------------- | ------- | ------ | ------ | ------- | ------- | ------ | ------ | ------- | ------ | ----- | ------ | -
|                                                      |                                                                                            |                                                                             
|                                                      |                                                                                            | Year Ended December 31,                                                     
|                                                      |                                                                                            |                                                                             
|                                                      |                                                                                            | 2001                                                                         |                                           | 2000    |        | 1999  
|                                                      |                                                                                            |                                                                              |                                           |         |        |       
|                                                      |                                                                                            |                                                                             
|                                                      |                                                                                            | (in thousands)                                                              
|Cash flows from operating
	activities:                |                                                                                            |                                                                              |                                           |         |        |        |         |         |        |        |         |       
|                                                      | Net loss                                                                                   |                                                                              | $                                         | (6,179  | )      |        | $       | (15,516 | )      |        | $       | (8,610 | )    
|                                                      | Adjustments to reconcile net loss to net cash
	provided by (used in) operating activities: |                                                                              |                                           |         |        |        |         |         |        |        |         |        |      
|                                                      |                                                                                            | Depreciation and amortization                                                |                                           |         | 16,657 |        |         |         | 12,728 |        |         |        | 9,043 |       
|                                                      |                                                                                            | Acquired in-process research and development                                 |                                           |         | 1,300  |        |         |         |       |        |         |        | 1,000 |       
|                                                      |                                                                                            | Deferred taxes                                                               |                                           |         | 1,288  |        |         |         | (146   | )      |         |        | (199  | )     
|                                                      |                                                                                            | Non-cash compensation expense                                                |                                           |         | 680    |        |         |         | 167    |        |         |        | 968   |       
|                                                      |                                                                                            | Non-cash expenses related to our initial public
	offering                    |                                           |         |       |        |         |         | 9,741  |        |         |        |      |       
|                                                      |                                                                                            | Write-off of property and equipment related to
	office relocation            |                                           |         |       |        |         |         | 322    |        |         |        |      |       
|                                                      |                                                                                            | Bad debt expense                                                             |                                           |         | 473    |        |         |         | 138    |        |         |        | 75    |       
|                                                      |                                                                                            | Changes in operating assets and liabilities net
	of effects of acquisitions: |                                           |         |        |        |         |         |        |        |         |        |       |       
|                                                      |                                                                                            |                                                                              | Accounts receivable                       |         |        | (1,846 | )       |         |        | (8,185 | )       |        |       | (3,998 | )
|                                                      |                                                                                            |                                                                              | Prepaid expenses and other current assets |         |        | 1,490  |         |         |        | 199    |         |        |       | (907   | )
|                                                      |                                                                                            |                                                                              | Accounts payable                          |         |        | (1,348 | )       |         |        | 311    |         |        |       | (430   | )
|                                                      |                                                                                            |                                                                              | Accrued liabilities                       |         |        | 1,578  |         |         |        | 2,407  |         |        |       | 2,830  |  
|                                                      |                                                                                            |                                                                              | Income taxes payable                      |         |        | 42     |         |         |        | 1,585  |         |        |       | 382    |  
|                                                      |                                                                                            |                                                                              | Deferred revenue                          |         |        | (1,295 | )       |         |        | 346    |         |        |       | (2,633 | )
|                                                      |                                                                                            |                                                                              | Payable to related parties                |         |        |       |         |         |        |       |         |        |       | 637    |  
|                                                      |                                                                                            |                                                                              | Other                                     |         |        | (182   | )       |         |        | (2     | )       |        |       | (80    | )
|                                                      |                                                                                            |                                                                              |                                           |         |        |        |         |         |        |        |         |       
|Net cash provided by (used in) operating
	activities  |                                                                                            |                                                                              | 12,658                                    |         |        |        | 4,095   |         |        |        | (1,922  | )     
|                                                      |                                                                                            |                                                                              |                                           |         |        |        |         |         |        |        |         |       
|Cash flows from investing
	activities:                |                                                                                            |                                                                              |                                           |         |        |        |         |         |        |        |         |       
|                                                      | Purchases of marketable securities                                                         |                                                                              |                                           | (25,052 | )      |        |         | (40,831 | )      |        |         |       |      
|                                                      | Proceeds from sales of marketable securities                                               |                                                                              |                                           | 43,010  |        |        |         | 14,023  |        |        |         |       |      
|                                                      | Purchases of fixed assets                                                                  |                                                                              |                                           | (2,735  | )      |        |         | (4,348  | )      |        |         | (1,209 | )    
|                                                      | Proceeds from sale of furniture and leasehold
	improvements                                |                                                                              |                                           |        |        |        |         | 129     |        |        |         |       |      
|                                                      | Acquisition of Nucleus                                                                     |                                                                              |                                           | (92     | )      |        |         | (13,584 | )      |        |         |       |      
|                                                      | Acquisition of Altra, net of cash acquired                                                 |                                                                              |                                           | (25,816 | )      |        |         |        |        |        |         |       |      
|                                                      | Acquisition of DCS, net of cash acquired                                                   |                                                                              |                                           |        |        |        |         | (184    | )      |        |         | (9,919 | )    
|                                                      |                                                                                            |                                                                              |                                           |         |        |        |         |         |        |        |         |       
|Net cash provided by (used in) investing
	activities  |                                                                                            |                                                                              | (10,685                                   | )       |        |        | (44,795 | )       |        |        | (11,128 | )     
|                                                      |                                                                                            |                                                                              |                                           |         |        |        |         |         |        |        |         |       
|Cash flows from financing
	activities:                |                                                                                            |                                                                              |                                           |         |        |        |         |         |        |        |         |       
|                                                      | Proceeds from the issuance of common stock, net                                            |                                                                              |                                           |        |        |        |         | 59,028  |        |        |         | 12,339 |      
|                                                      | Cash received for stock options exercised                                                  |                                                                              |                                           | 1,100   |        |        |         | 2,338   |        |        |         |       |      
|                                                      | Cash received for stock issued under employee
	stock purchase plan                         |                                                                              |                                           | 842     |        |        |         | 451     |        |        |         |       |      
|                                                      | Payments of obligation to affiliate                                                        |                                                                              |                                           |        |        |        |         | (1,000  | )      |        |         | (4,000 | )    
|                                                      | Payments of obligation to stockholders                                                     |                                                                              |                                           |        |        |        |         | (2,188  | )      |        |         | (2,188 | )    
|                                                      | Proceeds from borrowings under credit facility                                             |                                                                              |                                           | 15,000  |        |        |         |        |        |        |         | 3,050  |      
|                                                      | Repayment of borrowings under credit facility                                              |                                                                              |                                           |        |        |        |         | (3,050  | )      |        |         |       |      
|                                                      | Payment of distribution to the former
	shareholders of Caminus LLC                         |                                                                              |                                           |        |        |        |         | (452    | )      |        |         | (80    | )    
|                                                      | Cash received for subscriptions receivable                                                 |                                                                              |                                           |        |        |        |         | 2,018   |        |        |         | 1,832  |      
|                                                      |                                                                                            |                                                                              |                                           |         |        |        |         |         |        |        |         |       
|Net cash provided by financing activities             |                                                                                            |                                                                              | 16,942                                    |         |        |        | 57,145  |         |        |        | 10,953  |       
|                                                      |                                                                                            |                                                                              |                                           |         |        |        |         |         |        |        |         |       
|Effect of exchange rates on cash flows                |                                                                                            |                                                                              | (411                                      | )       |        |        | (224    | )       |        |        | (12     | )     
|                                                      |                                                                                            |                                                                              |                                           |         |        |        |         |         |        |        |         |       
|Net increase (decrease) in cash and cash
	equivalents |                                                                                            |                                                                              | 18,504                                    |         |        |        | 16,221  |         |        |        | (2,109  | )     
|Cash and cash equivalents, beginning of year          |                                                                                            |                                                                              | 16,883                                    |         |        |        | 662     |         |        |        | 2,771   |       
|                                                      |                                                                                            |                                                                              |                                           |         |        |        |         |         |        |        |         |       
|Cash and cash equivalents, end of
	year               |                                                                                            | $                                                                            | 35,387                                    |         |        | $      | 16,883  |         |        | $      | 662     |       
|                                                      |                                                                                            |                                                                              |                                           |         |        |        |         |         |        |        |         |       

The accompanying notes are an integral part of
these consolidated financial statements.

F-7



---



##### 



CAMINUS CORPORATION AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS


(in thousands, except per share
information)


1.     Business and
Organization



| |                                     
| | ------------------------------------
| | Nature and formation of the business

Caminus Corporation (Caminus or the
Company) was incorporated in Delaware in September
1999. Caminus was formed to succeed Caminus LLC as the parent
organization for the subsidiaries formerly held by Caminus LLC.

Caminus is a leading provider of software and
strategic consulting services that facilitate energy trading,
transaction processing, risk management, and decision support
within the wholesale energy markets. The Companys
integrated software solutions, which cover all functional areas
across the energy value chain and handle all major energy
commodities and financial instruments, enable energy companies
to more efficiently and profitably trade energy, streamline
transaction management, manage complex risk scenarios, and make
optimal operational decisions. The Companys software can
be used by any entity that buys, sells, trades, or takes a
position in energy. Caminus serves customers in every segment of
the wholesale energy industry, including traders, marketers,
generators, producers, gatherers, processors, pipelines,
utilities, distribution companies, and public agencies.

Caminus LLC was originally organized as a
Delaware limited liability company on April 29, 1998
(Inception) by an investor group for the purpose of
acquiring equity interests in and managing the business affairs
of Caminus Energy Limited (CEL) and Zai*Net
Software, L.P. (Zai*Net or ZNLP). In
conjunction with the formation of the Company and as
consideration for the identification of the acquired entities,
an option, with an anti-dilution provision, to acquire a 10%
interest in Caminus LLC was granted to a member of the investor
group. This option was valued at $1,648 using the Black-Scholes
option pricing model and was accounted for as part of the
purchase price of ZNLP and CEL. Any additional grants made under
the anti-dilution provision were made at the current market
price. In connection with the Companys initial public
offering (IPO) this option was exercised, which
resulted in the issuance of 975 shares of common stock to a
related party.



| |                         
| | ------------------------
| | Recapitalization and IPO

On January 27, 2000, the Company sold 4,088
shares of common stock in its IPO, realizing net proceeds of
approximately $59,028. The accompanying financial statements
reflect the recapitalization on January 27, 2000 of Caminus
LLC as a corporation, and the conversion of each membership
interest in the limited liability company into .095238 of one
share of common stock of the corporation. This transaction
affects the legal form only of entities under common control,
and the proportionate ownership interests of the members pre-
and post-merger were preserved.

In connection with the IPO of the Company,
Caminus recapitalized as a C Corporation and therefore is no
longer treated as a limited liability company for tax purposes.
Accordingly, the consolidated statement of operations for 1999
includes pro forma net loss assuming the Company was taxable as
a C Corporation and pro forma net loss per share based on pro
forma net loss divided by the weighted average number of shares
outstanding.

2.     Summary of
Significant Accounting Policies



| |                            
| | ---------------------------
| | Principles of consolidation

The accompanying consolidated financial
statements include the accounts of Caminus Corporation and its
subsidiaries. All intercompany transactions and balances have
been eliminated.

F-8



---



##### 





| |                    
| | -------------------
| | Revenue recognition

The Company generates revenues from licensing its
software products, providing related implementation services and
support and providing strategic consulting services. The Company
follows the provisions of Statement of Position
(SOP) No. 97-2, Software Revenue
Recognition, as amended by SOP 98-9,
Modification of SOP 97-2, Software Revenue
Recognition, with Respect to Certain Transactions. Under
SOP No. 97-2, if the license agreement does not provide for
significant customization of or enhancements to the software,
software license revenues are recognized when a license
agreement is executed, the product has been delivered, all
significant obligations are fulfilled, the fee is fixed or
determinable and collectibility is probable. For those license
agreements where customer acceptance is required and it is not
probable, license revenues are recognized when the software has
been accepted. For those license agreements where the licensee
requires significant enhancements or customization to adapt the
software to the unique specifications of the customer or the
service elements of the arrangement are considered essential to
the functionality of the software products, both the license
revenues and services revenues are recognized using contract
accounting. If acceptance of the software and related software
services is probable, the percentage of completion method is
used to recognize revenue for those types of license agreements,
where progress towards completion is measured by comparing
software services hours incurred to estimated total hours for
each software license agreement. If acceptance of the software
and related software services is not probable, then the
completed contract method is used and license revenues are
recognized only when the Companys obligations under the
license agreement are completed and the software has been
accepted. Accordingly, for these contracts, payments received
and software license costs are deferred until the Companys
obligations under the license agreement are completed.
Anticipated losses, if any, on uncompleted contracts are
recognized in the period in which such losses are determined.
Maintenance and support revenues associated with new product
licenses and renewals are deferred and recognized ratably over
the contract period. Software services revenues, not required to
be recognized using contract accounting, and strategic
consulting revenues are typically billed on a time and materials
basis and are recognized as such services are performed.



| |                             
| | ----------------------------
| | Foreign currency translation

The Companys foreign subsidiaries maintain
their accounting records in the local currency, which is their
functional currency. The assets and liabilities are translated
into U.S. dollars based on exchange rates at the end of the
respective reporting periods and the effect of the foreign
currency translation is reflected as a component of
stockholders equity. Income and expense items are
translated at an average exchange rate during the period.
Transaction gains and losses are included in the determination
of the results from operations.



| |                           
| | --------------------------
| | Software development costs

Capitalization of software development costs
begins upon establishment of technological feasibility of the
product. After technological feasibility is established,
material software development costs are capitalized. The
capitalized cost is then amortized on a straight-line basis over
the estimated product life, or on the ratio of current revenues
to total projected product revenues, whichever is greater. To
date, the period between achieving technological feasibility,
which the Company has defined as establishment of a working
model, which typically occurs when beta testing commences, and
the general release of such software has been short, and
software development costs qualifying for capitalization have
been insignificant. Accordingly, the Company has not capitalized
any software development costs through December 31, 2001.



| |                          
| | -------------------------
| | Cash and cash equivalents

Cash equivalents consist of short-term, highly
liquid investments with original maturities at the time of
purchase of three months or less.

F-9



---



##### 





| |                                     
| | ------------------------------------
| | Investments in marketable securities

Investments are recorded at fair value and
classified as available-for-sale. Unrealized gains and losses,
net of taxes, on securities classified as available-for-sale are
carried as a separate component of stockholders equity.
Management determines the appropriate classification of its
investments in debt securities at the time of purchase and
reevaluates such determination at each balance sheet date. At
December 31, 2001 and 2000 the Company recorded cumulative
unrealized gains of $0 and $183 on investments classified as
available for sale. Realized gains and losses and permanent
declines in value on available-for-sale securities are reported
in other income or expense as incurred.



| |                    
| | -------------------
| | Accounts receivable

Accounts receivable, net consist of the following:

|                                |  |              |        |      |  |   |        |  
|------------------------------- |  | ------------ | ------ | ---- |  | - | ------ | -
|                                |  |             
|                                |  | Year Ended  
|                                |  | December 31,
|                                |  |             
|                                |  | 2001         |        | 2000
|                                |  |              |        |     
|Trade                           |  | $            | 21,377 |      |  | $ | 14,705 |  
|Unbilled                        |  |              | 1,207  |      |  |   | 2,059  |  
|Allowance for doubtful accounts |  |              | (582   | )    |  |   | (442   | )
|                                |  |              |        |      |  |   |        |  
|                                |  | $            | 22,002 |      |  | $ | 16,322 |  
|                                |  |              |        |      |  |   |        |  

Unbilled receivables arise as revenues are
recognized under the percentage-of-completion method, but are
not contractually billable until specified dates or milestones
are achieved, which are expected to occur within one year. All
amounts included in unbilled receivables are related to
long-term contracts and are reduced by appropriate progress
billings.

Activity in the allowance for doubtful accounts
is as follows:

|                           |            |              |     |      |   |      |     |     |  |   |     |    | 
|-------------------------- | ---------- | ------------ | --- | ---- | - | ---- | --- | --- |  | - | --- | -- | 
|                           |            |             
|                           |            | Year Ended  
|                           |            | December 31,
|                           |            |             
|                           |            | 2001         |     | 2000 |   | 1999
|                           |            |              |     |      |   |     
|Balance, beginning of year |            | $            | 442 |      |   | $    | 304 |     |  | $ | 229 |   
|                           | Provision  |              |     | 473  |   |      |     | 138 |  |   |     | 75 | 
|                           | Write-offs |              |     | (333 | ) |      |     |    |  |   |     |   | 
|                           |            |              |     |      |   |      |     |     |  |   |     |   
|Balance, end of year       |            | $            | 582 |      |   | $    | 442 |     |  | $ | 304 |   
|                           |            |              |     |      |   |      |     |     |  |   |     |   



| |             
| | ------------
| | Fixed assets

Fixed assets are recorded at cost. Depreciation
is calculated using the straight-line method over the estimated
useful life of the related asset, which generally ranges from
three to seven years. Leasehold improvements are amortized using
the straight-line method over the lesser of the remaining lease
term or the estimated useful lives of the related assets.



| |                                                           
| | ----------------------------------------------------------
| | Goodwill, acquired technology and other
	intangible assets

Goodwill and other intangible assets are
amortized on a straight-line basis over the estimated future
periods to be benefited. Acquired technology is amortized in
cost of revenues on a straight-line basis over the estimated
product life, generally three years, or on the ratio of current
revenues to total projected product revenues, whichever is
greater.

Goodwill and other intangible assets are reviewed
for impairment quarterly or whenever events or changes in
circumstances indicate that the carrying amount of an asset may
not be recoverable. Recoverability of assets to be held and used
is measured by a comparison of the carrying amount of the assets
to future

F-10



---



##### 



undiscounted cash flows of the businesses
acquired. If the assets are considered to be impaired, the
impairment to be recognized is measured by the amount by which
the carrying amount of the assets exceeds the fair value of the
assets. Through December 31, 2001, no impairment has
occurred. This analysis is performed according to the asset
groupings established at the time of the acquisition and at the
enterprise level.




| |             
| | ------------
| | 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 respective tax bases.
Deferred tax assets and liabilities are measured using enacted
tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered
or settled. The effect on deferred tax assets and liabilities of
a change in tax rates is recognized in income in the period that
includes the enactment date.

Through January 27, 2000, the Company was
taxed as a partnership for federal and state tax purposes. There
were no entity level income taxes imposed by jurisdictions in
which the Company conducted its business and, therefore, the
financial statements through that date do not reflect any
federal or state income tax expense. The profit or loss is
deemed passed through to the stockholders and they are obligated
to report such profit or loss on their own tax returns in the
relevant jurisdictions. Prior to the IPO in January 2000, the
Company converted to a C Corporation and thereafter became
subject to federal, state and local income taxes.

The Company has a wholly owned subsidiary located
in the United Kingdom. As such, the entity is liable for income
taxes to the Inland Revenue. Prior to January 27, 2000, for
U.S. purposes, an election was made to include the foreign
income and expenses in the U.S. tax returns. Therefore, the
Company was liable for U.K. taxes and foreign tax credits were
passed through to the stockholders.

New York City, one of the local jurisdictions in
which the Company conducts its business, imposes an
Unincorporated Business Tax at a rate of 4%, on unincorporated
entities, such as the Company through January 27, 2000.
This tax is reduced to the extent any stockholder is itself
subject to New York City income tax. In addition, this tax is
imposed only on the portion of taxable income allocable to New
York City as per certain allocation factors (i.e., receipts,
payroll and property).

The tax expense recorded in the financial
statements for 1999 reflects foreign income taxes and the New
York City Unincorporated Business Tax on the Companys
allocable portion of the taxable income.



| |                                    
| | -----------------------------------
| | Fair value of financial instruments

The Companys financial instruments consist
primarily of cash and cash equivalents, investments in
marketable securities, accounts receivable, accounts payable,
accrued liabilities and debt. The carrying amount of these
instruments, excluding debt, approximates fair value due to the
relatively short period of time to maturity for these
instruments. The carrying amount of the debt at
December 31, 2001 approximates fair value as the debt was
incurred near December 31, 2001.



| |                          
| | -------------------------
| | Earnings (loss) per share

Basic loss per share is computed based upon the
weighted average number of shares of common stock outstanding
and diluted loss per share is computed based upon the weighted
average number of shares of common stock outstanding increased
by dilutive common stock options. The calculation of diluted net
loss per share excludes options as the effect would be
antidilutive.

At December 31, 2001, 2000, and 1999,
outstanding options to purchase 2,423, 1,142, and 942,
respectively, with exercise prices ranging from $2.31 to $29.63,
$2.31 to $29.63, and $2.31 to $13.97, respectively, as well as
contingently issuable options at December 31, 1999 to
purchase 1,978 shares, with exercise prices ranging from $1.89
to $6.51 were excluded from the calculation of diluted loss per
share as the effect would have been anti-dilutive.

F-11



---



##### 





| |                                         
| | ----------------------------------------
| | Accounting for stock-based
	compensation

The Company follows Statement of Financial
Accounting Standards (SFAS) No. 123,
Accounting for Stock-Based Compensation. As
permitted by this statement, the Company continues to apply
Accounting Principles Board Opinion No. 25,
Accounting for Stock Issued to Employees,
(APB 25) to account for its stock-based
employee compensation arrangements.



| |                  
| | -----------------
| | Long-lived assets

The Company reviews long-lived assets, such as
fixed assets and certain identifiable intangibles to be held and
used or disposed of, for impairment whenever events or changes
in circumstances indicate that the carrying amount of an asset
may not be recoverable. If the sum of the expected cash flows,
undiscounted and without interest, is less than the carrying
amount of the asset, an impairment loss is recognized as the
amount by which the carrying amount of the asset exceeds its
fair value.



| |                 
| | ----------------
| | Use of estimates

The accompanying consolidated financial
statements are prepared in conformity with generally accepted
accounting principles which require management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting period. Actual
results could differ from those estimates.



| |                              
| | -----------------------------
| | New accounting pronouncements

In July 2001, the FASB issued statement
No. 141, Business Combinations, and Statement
No. 142, Goodwill and Other Intangible Assets.
Statement 141 requires that the purchase method of accounting be
used for all business combinations initiated after June 30,
2001, as well as all purchase method business combinations
completed after June 30, 2001. Statement 141 also
specifies criteria that intangible assets acquired in a purchase
method business combination must meet to be recognized and
reported apart from goodwill, noting that any purchase price
allocable to an assembled workforce may not be accounted for
separately. Statement 142 requires that goodwill and intangible
assets with indefinite useful lives no longer be amortized, but
instead tested for impairment at least annually in accordance
with the provisions of Statement 142. Statement 142
also requires that intangible assets with definite useful lives
be amortized over their respective estimated useful lives to
their estimated residual values, and reviewed for impairment in
accordance with SFAS No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be
Disposed Of.

The Company adopted the provisions of Statement
141 effective July 1, 2001, and will adopt Statement 142
effective January 1, 2002. Furthermore, any goodwill and
any intangible asset determined to have an indefinite useful
life that are acquired in a purchase business combination
completed after June 30, 2001 will not be amortized, but
will continue to be evaluated for impairment in accordance with
the appropriate pre-Statement 142 accounting literature.
Goodwill and intangible assets acquired in business combinations
completed before July 1, 2001 will continue to be amortized
prior to the adoption of Statement 142.

Upon adoption of Statement 142, the Company
will evaluate its existing intangible assets and goodwill that
were acquired in prior purchase business combinations, and will
make any necessary reclassifications in order to conform with
the new criteria in Statement 141 for recognition of
intangible assets apart from goodwill. In adopting
Statement 142, the Company is required to reassess the
useful lives and residual values of all intangible assets
acquired in purchase business combinations, and make any
necessary amortization period adjustments by the end of the
first quarter of 2002. In addition, to the extent an intangible
asset is identified as having an indefinite useful life, the
Company will be required to test the intangible asset for
impairment in accordance with the provisions of
Statement 142 within the first interim period. Any
impairment loss will be measured as of the date of adoption and
recognized as the cumulative effect of a change in accounting
principle in the first quarter of 2002.

F-12



---



##### 



In connection with the transitional goodwill
impairment evaluation, Statement 142 requires the Company
to perform an assessment of whether there is an indication that
goodwill is impaired as of the date of adoption. To accomplish
this the Company must identify its reporting units and determine
the carrying value of each reporting unit by assigning the
assets and liabilities, including the existing goodwill and
intangible assets, to those reporting units as of the date of
adoption. The Company will then have up to six months from the
date of adoption to determine the fair value of each reporting
unit and compare it to the reporting units carrying
amount. To the extent a reporting units carrying amount
exceeds its fair value, an indication exists that the reporting
units goodwill may be impaired and the Company must
perform the second step of the transitional impairment test. In
the second step, the Company must compare the implied fair value
of the reporting units goodwill, determined by allocating
the reporting units fair value to all of it assets
(recognized and unrecognized) and liabilities in a manner
similar to a purchase price allocation in accordance with
Statement 141, to its carrying amount, both of which would
be measured as of the date of adoption. This second step is
required to be completed as soon as possible, but no later than
the end of the year of adoption. Any transitional impairment
loss will be recognized as the cumulative effect of a change in
accounting principle in the Companys statement of
operations.

As of the date of adoption, the Company expects
to have unamortized goodwill in the amount of $58,045 and
unamortized identifiable intangible assets in the amount of
$33,377, all of which will be subject to the transition
provisions of Statements 141 and 142. Amortization expense
related to goodwill was $9,312 and $8,681 for the years ended
December 31, 2001 and 2000, respectively. Because of the
extensive effort needed to comply with adopting Statements 141
and 142, it is not practicable to reasonably estimate the impact
of adopting these Statements on the Companys financial
statements at the date of this report, including whether any
transitional impairment losses will be required to be recognized
as the cumulative effect of a change in accounting principle.

On October 3, 2001, the FASB issued
Statement No. 144, Accounting for the Impairment or
Disposal of Long-Lived Assets, which addresses financial
accounting and reporting for the impairment or disposal of
long-lived assets. While Statement 144 supersedes
Statement 121, Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed
Of, it retains many of the fundamental provisions of
Statement 121.

Statement 144 also supersedes the accounting
and reporting provisions of Accounting Principles Board
(APB) Opinion No. 30, Reporting the
Results of Operations  Reporting the Effects of
Disposal of a Segment of a Business, and Extraordinary, Unusual
and Infrequently Occurring Events and Transactions, for
the disposal of a segment of a business. However, it retains the
requirement in APB 30 to report separately discontinued
operations and extends that reporting to a component of an
entity that either has been disposed of (by sale, abandonment,
or in a distribution to owners) or is classified as held for
sale. By broadening the presentation of discontinued operations
to include more disposal transactions, the FASB has enhanced the
ability of a companys management to provide information
that helps financial statement users to assess the effects of a
disposal transaction on the ongoing operations of such company.
We believe that the adoption of Statement 144 will not have
a material impact on our consolidated financial position,
results of operations, or cash flows.



| |                  
| | -----------------
| | Reclassifications

Certain reclassifications were made to prior
period amounts to conform to the current period presentation
format, including reclassifying amortization of acquired
technology from operating expenses to cost of revenues.

3.     IPO-Related
Expenses

As a result of the Companys IPO in January
2000, certain transactions occurred which resulted in
significant charges in the first quarter of 2000. These
transactions include the earning of 386 shares of common stock
that were contingently issuable upon an IPO to the former
shareholders of Caminus Energy Limited, which resulted in a
charge of $6,950 (including $772 of taxes), a payment of
approximately $522 for

F-13



---



##### 



a special one-time bonus to the former
shareholders of Caminus Energy Limited, payment of a $1,300
termination fee to GFI Two LLC, a principal stockholder, to
cancel its consulting and advisory agreement and the granting of
160 shares and the forgiveness of a $1,000 loan, recorded as a
subscription receivable, to the Companys President and
Chief Executive Officer, which resulted in a charge of $3,563.
The $772 for taxes related to the earning of shares by the
former shareholders of Caminus Energy Limited was not ultimately
owed. The reversal of the accrued taxes was included in other
income in 2001.


4.     Acquisitions



| |                              
| | -----------------------------
| | Altra Software Services, Inc.

On November 20, 2001, Caminus completed its
acquisition of Altra Software Services, Inc.
(Altra), a provider of software solutions to the
energy industry, by purchasing all of the capital stock of
Altra. As a result of the acquisition, the Company combined
Caminus historical strength in software for the financial
and risk management of power with Altras expertise in
software for management of physical logistics and transactions
in the gas markets to create a strong suite of integrated
applications for the growing number of participants in both gas
and electricity. The combination also provides the Company with
significant cross-selling opportunities to existing customers.

The purchase price of $60,794 consisted of
$24,947 in cash, the issuance of 1,975 shares of common stock
with a fair value of $33,891 and approximately $1,956 of other
direct acquisition costs including liabilities for severance.
The value of the common shares issued was determined based on
the average market price of the Companys common stock over
the three-day period before and after the terms of the
acquisition were agreed to and announced. The purchase price is
subject to adjustment, depending on the final determined value
of the tangible net worth, as defined, of Altra, as more fully
described in the Stock Purchase Agreement. As a result, 994 of
the shares of common stock issued in the acquisition are being
held in escrow pending the final determination of the purchase
price, and the resolution of certain contingencies. The cash
portion of the purchase price was paid for in part from the
proceeds of a $15,000 Term Credit Agreement (Note 10),
dated as of November 20, 2001, between the Company and Blue
Ridge Investments, LLC, and in part from Caminus cash and
cash equivalents. The shares issued are subject to certain
registration rights. A summary of the allocation of the
acquisition purchase price is as follows:

|                                                     |  |   |         |  
|---------------------------------------------------- |  | - | ------- | -
|Fair value of current assets assumed                 |  | $ | 6,428   |  
|Fair value of property, plant and equipment
	assumed |  |   | 1,519   |  
|Fair value of current liabilities assumed            |  |   | (19,195 | )
|Acquired in-process research and development         |  |   | 1,300   |  
|Acquired technology                                  |  |   | 17,659  |  
|Other identifiable intangible assets                 |  |   | 11,100  |  
|Goodwill                                             |  |   | 41,983  |  
|                                                     |  |   |         |  
|                                                     |  | $ | 60,794  |  
|                                                     |  |   |         |  

The acquisition was accounted for under the
purchase method of accounting. Altras results of
operations are included in the statement of operations from
December 1, 2001. The fair value assigned to intangible
assets acquired was based on an independent appraisal. Acquired
technology represents the fair value of applications and
technologies existing at the date of acquisition. The fair value
of the acquired technology of $12,500 was determined based on
the future discounted cash flows method, which will be amortized
on a straight line basis over the estimated product life, or the
ratio of current revenue to total projected product revenue,
whichever is greater. For customer contracts where deferred
revenue was recorded representing the cash received prior to the
acquisition date, the Company recorded $5,159 of additional
acquired technology under the gross method, which will be
amortized as the related revenue is recognized. Other intangible
assets represent the fair value of customer relationships.
Goodwill is the only asset not subject to amortization, although
it will be deductible for tax purposes over fifteen years.

F-14



---



##### 



Acquired in-process research and development
(IPR&D) represents the fair value of the project
under development at the date of acquisition. The allocation of
$1,300 to IPR&D represents the estimated fair value related
to an incomplete project based on risk-adjusted cash flows. At
the date of the acquisition, the project associated with the
IPR&D efforts had not yet reached technological feasibility
and had no alternative future uses. Accordingly, these costs
were expensed upon acquisition. At the acquisition date, Altra
was conducting development associated with the next generation
of its gas marketing product. The project under development, at
the valuation date, is expected to address the functional
limitations of the existing product and to meet the needs of a
changing energy market environment.

At the acquisition date, Altra was approximately
50% complete with the IPR&D project. Estimated future
development costs totaled $2,500 at the time of acquisition.
Altra anticipates that research and development related to this
project will be completed in the first half of 2002, after which
Altra expects to begin generating economic benefits from the
value of the completed IPR&D.



| |                                                               
| | --------------------------------------------------------------
| | Nucleus Corporation and Nucleus Energy
	Consulting Corporation

On August 30, 2000, the Company acquired
substantially all of the assets and assumed certain liabilities
of Nucleus Corporation and Nucleus Energy Consulting Corporation
(collectively, Nucleus), a provider of software
solutions to the energy industry. The purchase price of $17,606
consisted of $13,584 in cash, the issuance of 261 shares of
common stock with a fair value of $3,757 and approximately $265
of other direct acquisition costs. A summary of the allocation
of the acquisition purchase price is as follows:

|                                                                     |  |   |        |  
|-------------------------------------------------------------------- |  | - | ------ | -
|Fair value of net liabilities assumed (excluding
	intangible assets) |  | $ | (391   | )
|Acquired technology                                                  |  |   | 2,960  |  
|Other identifiable intangible assets                                 |  |   | 3,007  |  
|Goodwill                                                             |  |   | 12,030 |  
|                                                                     |  |   |        |  
|                                                                     |  | $ | 17,606 |  
|                                                                     |  |   |        |  

The acquisition was accounted for under the
purchase method of accounting. The fair value assigned to
intangible assets acquired was based on an independent
appraisal. Acquired technology represents the fair value of
applications and technologies existing at the date of
acquisition. Other intangible assets represent the fair value of
other acquired intangible assets including primarily customer
lists, a covenant not to compete and work force in place.



| |                       
| | ----------------------
| | Caminus Energy Limited

In 1998, the Company acquired Caminus Energy
Limited (CEL), a consulting and professional
services organization, which provides services and research to
companies in the energy market sector. In connection with the
acquisition, the Company granted options to purchase 481 shares
to two officers of CEL (289 and 192 shares) for $3.12 per share.
These options were exercisable only in the event of a sale or
public offering, compliance with a service agreement and
achievement of certain internal rates of return. The number of
shares that ultimately vested and became exercisable was
contingent upon all of these conditions. No amounts were
recorded for these options through December 31, 1999, as
the conditions under which they would vest were not met as of
December 31, 1999. However, upon consummation of the IPO in
2000, the Company recorded a $6,950 compensation-related charge
for the excess of the fair value of common shares issued over
the exercise price, including applicable taxes of $772, for the
exercise of these options. As the options were exercised on a
cashless basis, the exercise resulted in the issuance of 386
shares of common stock.



| |                           
| | --------------------------
| | Positron Energy Consulting

On November 13, 1998, the Company acquired
Positron Energy Consulting (Positron). The Company
paid $152 in cash for certain assets and liabilities of
Positron. The acquisition was accounted for using the purchase
method of accounting and the excess of the purchase price over
the fair value of the net assets

F-15



---



##### 



acquired was recorded as goodwill. Also in
connection with the acquisition, restricted shares of common
stock of the Company were granted to three employees/principals
of Positron. The restrictions lapsed only upon the resolution of
contingencies identified in the purchase agreement.


In November 1999, the Companys managing
committee determined that all of the contingencies identified in
the purchase agreement were satisfied. Accordingly, the
restrictions on the shares were lifted and the three
employees/principals of Positron received 57 unrestricted
shares. The Company recorded a compensation charge in November
1999 of approximately $0.8 million related to the issuance
of these shares.



| |                 
| | ----------------
| | DC Systems, Inc.

On July 31, 1999, Caminus acquired DC
Systems, Inc. (DCS), a provider of software
solutions to the gas industry. The Company paid $10,000 in cash,
and issued 242 shares of common stock valued at $3,000. In
connection with this transaction, Caminus incurred approximately
$500 of other direct acquisition costs. A summary of the
allocation of the purchase price is as follows:

|                                                                     |  |   |        |  
|-------------------------------------------------------------------- |  | - | ------ | -
|Fair value of net liabilities assumed (excluding
	intangible assets) |  | $ | (954   | )
|Acquired in-process research and development                         |  |   | 1,000  |  
|Acquired technology                                                  |  |   | 1,800  |  
|Other identifiable intangible assets                                 |  |   | 3,030  |  
|Goodwill                                                             |  |   | 8,624  |  
|                                                                     |  |   |        |  
|                                                                     |  | $ | 13,500 |  
|                                                                     |  |   |        |  

The fair value assigned to intangible assets
acquired was based on an appraisal of the purchased in-process
technology, acquired technology, and other intangible assets. Of
the acquired intangible assets, $1,000 represents the value of
acquired in-process research and development (IPR&D) that
had not yet reached technological feasibility and had no
alternative future use. Accordingly, this amount was immediately
expensed in the consolidated statement of operations upon
acquisition.

The value assigned to IPR&D was determined by
identifying research projects in areas for which technological
feasibility had not been established. The value was determined
by estimating the costs to develop the IPR&D into
commercially viable products, estimating the resulting net cash
flows from such projects, and discounting the net cash flows
back to their present value.

In estimating the net discounted cash flows from
such projects, no material changes from historical pricing,
margins and expense levels were anticipated. The most
significant and uncertain assumptions included completion of the
products in process on schedule, expectations about revenue
growth and eventual replacement of these products with new
products over a three to four year period. No residual cash
flows of the Company were assumed to relate to IPR&D. The
discount rate of 25% included a factor that takes into account
the uncertainty surrounding the successful development of the
IPR&D. Additionally, consideration was given to the stage of
completion of each research and development project at the date
of acquisition.

The acquired IPR&D included the Plant*Master
and other products. The Company estimated that these products
were approximately 50% complete at the date of acquisition based
on costs incurred through the date of acquisition as compared to
total estimated expenditures over the products development
cycle. Estimated future development costs totaled approximately
$600 at the time of acquisition. The Company released these
products during 2000.

Acquired technology represents the fair value of
applications and technologies existing at the date of
acquisition. Other intangible assets represent the fair value of
other acquired intangible assets including primarily customer
lists and work force in place. Goodwill represents the excess of
the purchase price over the fair value of identifiable tangible
and intangible assets acquired.

In July 1999, DCS declared a dividend to the
existing shareholders to cover the estimated tax liability
associated with the sale of DCS to the Company. This dividend
amounted to $184 and was paid during 2000.

F-16



---



##### 





| |                                           
| | ------------------------------------------
| | Unaudited Pro Forma Financial
	Information

The above acquisitions were accounted for using
the purchase method of accounting. Had the acquisitions of Altra
and Nucleus occurred on January 1, 2000 the unaudited pro
forma revenues, net loss and basic and diluted net loss per
share for the years ended December 31, 2001 and 2000 would
have been: $100,308 and $83,003; $19,603 and $43,888; and $1.10
and $2.57, respectively. The per share amounts were based on a
weighted average number of shares outstanding of 17,817 and
17,074 for 2001 and 2000, respectively. These results, which
give effect to certain adjustments, including the amortization
of Nucleus goodwill and other intangible assets, interest
expense, provision for income taxes and additional shares
outstanding are not necessarily indicative of results that would
have occurred had the acquisitions been consummated on
January 1, 2000 or that may be obtained in the future.

5. Investments in Marketable
Securities

The Company invests its excess cash in
investment-grade debt instruments of state and municipal
governments and their agencies and high quality corporate
issuers. All instruments with maturities at the time of purchase
greater than three months and maturities less than twelve months
from the balance sheet date are considered short-term
investments, and those with maturities greater than twelve
months from the balance sheet date are considered long-term
investments.

The Companys marketable securities are
classified as available-for-sale and are reported at fair value,
with unrealized gains and losses, net of tax, recorded in
stockholders equity.

|                               |  |                   |       |                   |  |            |   |       |  |           |   |            |  |            |       |       |  |   |        |  |  |   |     |  |  |   |   |  |  |   |        | 
|------------------------------ |  | ----------------- | ----- | ----------------- |  | ---------- | - | ----- |  | --------- | - | ---------- |  | ---------- | ----- | ----- |  | - | ------ |  |  | - | --- |  |  | - | - |  |  | - | ------ | 
|                               |  |                   |       |                  
|                               |  | December 31, 2001 |       | December 31, 2000
|                               |  |                   |       |                  
|                               |  | Gross             |       | Gross             |  | Gross      |   |       |  | Gross     |   | Gross      |  | Gross      |       |      
|                               |  | Amortized         |       | Unrealized        |  | Unrealized |   | Fair  |  | Amortized |   | Unrealized |  | Unrealized |       | Fair 
|                               |  | Costs             |       | Gains             |  | Losses     |   | Value |  | Costs     |   | Gains      |  | Losses     |       | Value
|                               |  |                   |       |                   |  |            |   |       |  |           |   |            |  |            |       |      
|Taxable auction securities     |  | $                 | 5,638 |                   |  | $          |  |       |  | $         |  |            |  | $          | 5,638 |       |  | $ |       |  |  | $ |    |  |  | $ |  |  |  | $ |       | 
|Non taxable auction securities |  |                   | 1,002 |                   |  |            |  |       |  |           |  |            |  |            | 1,002 |       |  |   |       |  |  |   |    |  |  |   |  |  |  |   |       | 
|Municipal bonds                |  |                   |      |                   |  |            |  |       |  |           |  |            |  |            |      |       |  |   | 16,778 |  |  |   | 107 |  |  |   |  |  |  |   | 16,885 | 
|Corporate debt securities      |  |                   |      |                   |  |            |  |       |  |           |  |            |  |            |      |       |  |   | 7,820  |  |  |   | 76  |  |  |   |  |  |  |   | 7,896  | 
|                               |  |                   |       |                   |  |            |   |       |  |           |   |            |  |            |       |       |  |   |        |  |  |   |     |  |  |   |   |  |  |   |        | 
|                               |  | $                 | 6,640 |                   |  | $          |  |       |  | $         |  |            |  | $          | 6,640 |       |  | $ | 24,598 |  |  | $ | 183 |  |  | $ |  |  |  | $ | 24,781 | 
|                               |  |                   |       |                   |  |            |   |       |  |           |   |            |  |            |       |       |  |   |        |  |  |   |     |  |  |   |   |  |  |   |        | 

The contractual maturities of available-for-sale
debt securities are as follows:

|                                     |  |              |       |      |  |   |        | 
|------------------------------------ |  | ------------ | ----- | ---- |  | - | ------ | 
|                                     |  |             
|                                     |  | December 31,
|                                     |  |             
|                                     |  | 2001         |       | 2000
|                                     |  |              |       |     
|Due within one year                  |  | $            | 6,640 |      |  | $ | 12,368 | 
|Due after one year through two years |  |              |      |      |  |   | 12,413 | 
|                                     |  |              |       |      |  |   |        | 
|                                     |  | $            | 6,640 |      |  | $ | 24,781 | 
|                                     |  |              |       |      |  |   |        | 

F-17



---



##### 



6.     Fixed
Assets

Fixed assets consist of the following:

|                                                 |  |              |        |      |  |   |        |  
|------------------------------------------------ |  | ------------ | ------ | ---- |  | - | ------ | -
|                                                 |  |             
|                                                 |  | December 31,
|                                                 |  |             
|                                                 |  | 2001         |        | 2000
|                                                 |  |              |        |     
|Computer hardware, software and office equipment |  | $            | 7,064  |      |  | $ | 3,737  |  
|Furniture, fixtures and leasehold improvements   |  |              | 3,611  |      |  |   | 2,642  |  
|                                                 |  |              |        |      |  |   |        |  
|                                                 |  |              | 10,675 |      |  |   | 6,379  |  
|Less accumulated depreciation and amortization   |  |              | (3,502 | )    |  |   | (1,489 | )
|                                                 |  |              |        |      |  |   |        |  
|                                                 |  | $            | 7,173  |      |  | $ | 4,890  |  
|                                                 |  |              |        |      |  |   |        |  

Depreciation expense for the years ended
December 31, 2001, 2000 and 1999 amounted to $2,013,
$1,006, and $468, respectively.

In December 2000, the Company relocated its
headquarter offices in New York City resulting in a disposal and
write-off of furniture, fixtures, and leasehold improvements
with a net book value of $451.

7.     Intangible
Assets

The intangible assets arising from acquisition
transactions are as follows:

|                              |  |              |         |      |  |   |         |  
|----------------------------- |  | ------------ | ------- | ---- |  | - | ------- | -
|                              |  |             
|                              |  | December 31,
|                              |  |             
|                              |  | 2001         |         | 2000
|                              |  |              |         |     
|Acquired technology           |  | $            | 25,026  |      |  | $ | 7,367   |  
|Goodwill                      |  |              | 84,583  |      |  |   | 42,391  |  
|Other intangible assets       |  |              | 19,167  |      |  |   | 8,067   |  
|                              |  |              |         |      |  |   |         |  
|                              |  |              | 128,776 |      |  |   | 57,825  |  
|Less accumulated amortization |  |              | (37,354 | )    |  |   | (22,710 | )
|                              |  |              |         |      |  |   |         |  
|                              |  | $            | 91,422  |      |  | $ | 35,115  |  
|                              |  |              |         |      |  |   |         |  

The average life of acquired technology and other
intangible assets is three and five years, respectively.
Goodwill amounting to $42,100 is not subject to amortization.
Effective January 1, 2002 none of the Companys
goodwill will be subject to amortization. Amortization expense
for acquired technology for the years ended December 31,
2001, 2000 and 1999 amounted to $3,581, $1,566, and $1,057,
respectively. Amortization expense for goodwill for the years
ended December 31, 2001, 2000 and 1999 amounted to $9,312,
$8,681, and $6,671, respectively. Amortization expense for other
intangible assets for the years ended December 31, 2001,
2000 and 1999 amounted to $1,751, $1,475, and $846, respectively.

F-18



---



##### 



8.     Accrued
Liabilities

Accrued liabilities consist of the following:

|                                             |  |              |        |      |  |   |       | 
|-------------------------------------------- |  | ------------ | ------ | ---- |  | - | ----- | 
|                                             |  |             
|                                             |  | December 31,
|                                             |  |             
|                                             |  | 2001         |        | 2000
|                                             |  |              |        |     
|Accrued bonuses and commissions              |  | $            | 8,903  |      |  | $ | 4,990 | 
|Accrued professional fees                    |  |              | 2,137  |      |  |   | 584   | 
|Accrued rent                                 |  |              | 620    |      |  |   | 549   | 
|Accrued contingent acquisition consideration |  |              | 1,856  |      |  |   |      | 
|Accrued royalties                            |  |              | 859    |      |  |   | 80    | 
|Other accrued expenses                       |  |              | 1,669  |      |  |   | 1,918 | 
|                                             |  |              |        |      |  |   |       | 
|                                             |  | $            | 16,044 |      |  | $ | 8,121 | 
|                                             |  |              |        |      |  |   |       | 

Accrued contingent acquisition consideration
relates to an acquisition by Altra of United Information, Inc.,
prior to Caminus acquisition of Altra. The amounts owed
are based upon specified percentages of revenue from the
acquired products through December 31, 2002.

9.     Deferred
Revenue

Deferred revenue consists of the following:

|                             |  |              |        |      |  |   |       | 
|---------------------------- |  | ------------ | ------ | ---- |  | - | ----- | 
|                             |  |             
|                             |  | December 31,
|                             |  |             
|                             |  | 2001         |        | 2000
|                             |  |              |        |     
|Deferred license revenue     |  | $            | 3,966  |      |  | $ | 541   | 
|Deferred maintenance revenue |  |              | 7,922  |      |  |   | 3,325 | 
|Deferred consulting revenue  |  |              | 819    |      |  |   | 202   | 
|                             |  |              |        |      |  |   |       | 
|                             |  | $            | 12,707 |      |  | $ | 4,068 | 
|                             |  |              |        |      |  |   |       | 

Deferred revenue consists of cash received from
customers in advance of revenue recognition.

10.     Credit
Facility

On November 20, 2001, the Company entered
into a credit agreement with Blue Ridge Investments, LLC, an
affiliate of Banc of America Securities, LLC, for a $15,000 term
loan to partially finance the acquisition of Altra. The loan is
due October 31, 2003 and bears interest at 10% for the
first year, 12.5% from months 13 through 18 and 15%
thereafter. Additionally, the credit agreement requires that the
term loan be repaid immediately from the proceeds of a public
offering of the Companys securities, to the extent such
offering occurs prior to the due date of the loan or for any
acquisition or merger of the Company in which at least 25% of
the assets or common stock of the Company are acquired by or
merged with another company. As of December 31, 2001, the
amount outstanding under this credit agreement was $15,000.

On June 23, 1999, the Company entered into a
credit agreement with Fleet Bank (Fleet), pursuant
to which the Company could borrow up to $5,000 under a revolving
loan and a working capital loan. Pursuant to the agreement, the
Company was required to repay the facilities in full upon the
event of a public offering of common stock. Accordingly, the
Company repaid all amounts outstanding under the loan in
February 2000 and the facility was terminated.

Credit facilities under the agreement bore
interest at either Fleets reference rate, generally
equivalent to prime rate, or LIBOR plus an applicable margin
(may vary between 2.5% and 3% depending on certain ratios of the
Company as defined in the agreement). The applicable borrowing
rate at December 31, 1999 was 8.5%.

F-19



---



##### 



11.     Income
Taxes

The provision for income taxes consists of the
following:

|                           |                         |                              |       |       |       |   |       |       |       | 
|-------------------------- | ----------------------- | ---------------------------- | ----- | ----- | ----- | - | ----- | ----- | ----- | 
|                           |                         |                             
|                           |                         | Year Ended                  
|                           |                         | December 31,                
|                           |                         |                             
|                           |                         | 2001                         |       | 2000 
|                           |                         |                              |       |      
|Current tax provision      |                         |                              |       |       |       |   |       |      
|                           | Foreign taxes           |                              | $     | 2,471 |       |   | $     | 2,315 |      
|                           | State and city          |                              |       | 230   |       |   |       |      |      
|                           |                         |                              |       |       |       |   |       |      
|                           |                         | Total current tax provision  |       |       | 2,701 |   |       |       | 2,315 | 
|                           |                         |                              |       |       |       |   |       |      
|Deferred tax provision     |                         |                              |       |       |       |   |       |      
|                           | Foreign                 |                              |       |      |       |   |       |      |      
|                           | Federal, state and city |                              |       | 1,288 |       |   |       |      |      
|                           |                         |                              |       |       |       |   |       |      
|                           |                         | Total deferred tax provision |       |       | 1,288 |   |       |       |      | 
|                           |                         |                              |       |       |       |   |       |      
|Provision for income taxes |                         | $                            | 3,989 |       |       | $ | 2,315 |      
|                           |                         |                              |       |       |       |   |       |      

The provision for income taxes differs from
income tax expense at the statutory U.S. Federal income tax
rate for the following reasons:

|                                                        |  |              |       |      |  |   |        |  
|------------------------------------------------------- |  | ------------ | ----- | ---- |  | - | ------ | -
|                                                        |  |             
|                                                        |  | Year Ended  
|                                                        |  | December 31,
|                                                        |  |             
|                                                        |  | 2001         |       | 2000
|                                                        |  |              |       |     
|Income taxes at statutory U.S. Federal income tax
	rate |  | $            | (745  | )    |  | $ | (4,488 | )
|Local income taxes, net of Federal income tax
	benefit  |  |              | 151   |      |  |   |       |  
|Tax-exempt investment income                            |  |              | (214  | )    |  |   | (122   | )
|Loss allocable to Caminus LLC                           |  |              |      |      |  |   | 394    |  
|Non-deductible IPO-related expenses                     |  |              |      |      |  |   | 2,540  |  
|Other non-deductible expenses                           |  |              | 1,232 |      |  |   | 1,504  |  
|Foreign tax rate differential                           |  |              | (206  | )    |  |   | (430   | )
|Increase in valuation allowance, net                    |  |              | 3,771 |      |  |   | 3,206  |  
|Other                                                   |  |              |      |      |  |   | (289   | )
|                                                        |  |              |       |      |  |   |        |  
|Provision for income taxes, at effective rate           |  | $            | 3,989 |      |  | $ | 2,315  |  
|                                                        |  |              |       |      |  |   |        |  

F-20



---



##### 



The tax effects of temporary differences that
give rise to the net deferred tax assets as of December 31,
2001 and 2000 are as follows:

|                                         |  |              |        |      |  |   |       | 
|---------------------------------------- |  | ------------ | ------ | ---- |  | - | ----- | 
|                                         |  |             
|                                         |  | Year Ended  
|                                         |  | December 31,
|                                         |  |             
|                                         |  | 2001         |        | 2000
|                                         |  |              |        |     
|Goodwill amortization                    |  | $            | 3,342  |      |  | $ | 2,246 | 
|Other intangible assets amortization     |  |              | 3,526  |      |  |   | 794   | 
|Deferred revenue                         |  |              | 177    |      |  |   | 179   | 
|Federal net operating loss carryforwards |  |              | 4,196  |      |  |   | 1,275 | 
|Tax credit carryforwards                 |  |              | 458    |      |  |   |      | 
|Other                                    |  |              | (177   | )    |  |   |      | 
|                                         |  |              |        |      |  |   |       | 
|                                         |  |              | 11,522 |      |  |   | 4,494 | 
|Less: valuation allowance                |  |              | 11,522 |      |  |   | 3,206 | 
|                                         |  |              |        |      |  |   |       | 
|                                         |  | $            |       |      |  | $ | 1,288 | 
|                                         |  |              |        |      |  |   |       | 

As of December 31, 2001, the Company has a
U.S. tax net operating loss carryforward of approximately
$10,750 expiring in 2020. At December 31, 2001, the Company
provided a valuation allowance of $11,522 against its net
deferred tax assets due to the uncertainty of realization of
these assets. If the entire deferred tax asset were realized,
$2,083 would be allocated to paid-in-capital with the remainder
reducing income tax expense.

12.     401(k)
Savings Plan

The Company sponsors the Caminus Corporation
401(k) Savings Plan (the Plan). All domestic
employees of the Company are eligible to participate in the Plan
upon completion of six months of service with the Company.
Eligible employees may contribute up to 15% of their annual
compensation to the Plan on a pre-tax basis. Participant
contributions to the Plan are fully vested. In addition, under
the terms of the Plan, the Company, at its discretion, may match
all or a portion of a participants contribution to the
Plan up to a maximum contribution of $1,000 per participant. The
Company matching contribution is determined at calendar year end
and is payable only to those participants employed on that day.
Participants become vested in Company matching contributions to
the Plan at the rate of 20% per year of service with the
Company. For the years ended December 31, 2001, 2000, and
1999, the Company elected to match 100% of participant
contributions up to a maximum of $1,000 per participant. The
401(k) expense for the years ended December 31, 2001, 2000
and 1999 totaled $162, $95 and $82, respectively.

13.     Stock Option
and Purchase Plans

In May 1998, ZNLP established its stock option
plan (the ZNLP Plan). Upon closing of the purchase
of the remaining 29% of ZNLP by the Company on December 31,
1998, Caminus canceled the options outstanding under the ZNLP
Plan and issued to the employees options to purchase shares of
Caminus common stock. In February 1999, the Board of Directors
approved the adoption of the ZNLP Plan for all eligible Caminus
employees (the 1998 Plan). In September 1999, the
Company established a new stock option plan (the 1999
Plan). In August 2000, the Company granted 210 options at
an exercise price of $14.38 outside of any plan of which 105
were canceled in 2001. In May 2001, the Company granted an
additional 160 options at an exercise price of $24.71 outside of
any plan. In May 2001, the Company established a new
non-qualified stock option plan (the 2001 Plan). All
future grants will be made under the 2001 Plan and the 1999
Plan. The 1998 Plan, the 1999 Plan, and the 2001 Plan provide
for the issuance of stock options to key employees, directors
and consultants of the Company. Under the terms of the plans,
incentive stock options are granted to purchase common stock in
the Company at a price not less than 100% of the fair market
value on the date of grant. The options generally vest over a
period of four years and are exercisable for a period of ten
years from the date of grant. Under the 1998 Plan, the Company
reserved 818

F-21



---



##### 



shares of common stock. The Company has reserved
1,219 shares of common stock for issuance under the 1999
Plan, 717 of which were approved by shareholders in 2001. The
Company has reserved 700 shares under the 2001 Plan.


The following table summarizes the Companys
option plan activity under the 2001 Plan:

|                              |  |                     |   |               |  |                |     |             |  |                |       |  |  |  |   |  |  |   |   | 
|----------------------------- |  | ------------------- | - | ------------- |  | -------------- | --- | ----------- |  | -------------- | ----- |  |  |  | - |  |  | - | - | 
|                              |  |                     |   |               |  |                |     |            
|                              |  | Shares Under Option |   | Weighted      |  |                |     | Weighted   
|                              |  |                     |   | Average       |  | Options        |     | Average    
|                              |  | Incentive           |   | Non-Incentive |  | Exercise Price |     | Exercisable |  | Exercise Price
|                              |  |                     |   |               |  |                |     |             |  |               
|Outstanding December 31, 2000 |  |                     |  |               |  |                |    |             |  | $              |      |  |  |  |  |  |  | $ |  | 
|Granted                       |  |                     |  |               |  |                | 696 |             |  |                | 19.47 |  |  |  |   |  |  |   |   | 
|Exercised                     |  |                     |  |               |  |                |    |             |  |                |      |  |  |  |   |  |  |   |   | 
|Cancelled                     |  |                     |  |               |  |                | (20 | )           |  |                | 17.30 |  |  |  |   |  |  |   |   | 
|                              |  |                     |   |               |  |                |     |             |  |                |       |  |  |  |   |  |  |   |   | 
|Outstanding December 31, 2001 |  |                     |  |               |  |                | 676 |             |  | $              | 19.53 |  |  |  |  |  |  | $ |  | 
|                              |  |                     |   |               |  |                |     |             |  |                |       |  |  |  |   |  |  |   |   | 

The following table summarizes information about
stock options outstanding under the 2001 Plan at
December 31, 2001:

|                |               |             |  |                          |     |                |  |  |     |  |  |   |       | 
|--------------- | ------------- | ----------- |  | ------------------------ | --- | -------------- |  |  | --- |  |  | - | ----- | 
|                |               |             |  | Options Outstanding      |     |               
|                |               |             |  |                          |     |               
|                |               |             |  | Weighted Average         |     | Weighted      
|Range of        |               | Number      |  | Remaining                |     | Average       
|Exercise Prices |               | Outstanding |  | Contractual Life (Years) |     | Exercise Price
|                |               |             |  |                          |     |               
|$               | 17.30  24.71 |             |  |                          | 676 |                |  |  | 9.7 |  |  | $ | 19.53 | 
|                |               |             |  |                          |     |                |  |  |     |  |  |   |       | 

At December 31, 2001, options to purchase
24 shares were available for grant under the 2001 Plan.

The following table summarizes the Companys
option plan activity under the 1999 Plan:

|                              |  |                     |      |               |  |                |     |             |  |                |       |  |  |  |     |  |  |   |       | 
|----------------------------- |  | ------------------- | ---- | ------------- |  | -------------- | --- | ----------- |  | -------------- | ----- |  |  |  | --- |  |  | - | ----- | 
|                              |  |                     |      |               |  |                |     |            
|                              |  | Shares Under Option |      | Weighted      |  |                |     | Weighted   
|                              |  |                     |      | Average       |  | Options        |     | Average    
|                              |  | Incentive           |      | Non-Incentive |  | Exercise Price |     | Exercisable |  | Exercise Price
|                              |  |                     |      |               |  |                |     |             |  |               
|Outstanding December 31, 1999 |  |                     |     |               |  |                |    |             |  | $              |      |  |  |  |     |  |  |   |       | 
|Granted                       |  |                     | 579  |               |  |                | 34  |             |  |                | 17.33 |  |  |  |     |  |  |   |       | 
|Exercised                     |  |                     |     |               |  |                |    |             |  |                |      |  |  |  |     |  |  |   |       | 
|Cancelled                     |  |                     | (29  | )             |  |                |    |             |  |                | 12.99 |  |  |  |     |  |  |   |       | 
|                              |  |                     |      |               |  |                |     |             |  |                |       |  |  |  |     |  |  |   |       | 
|Outstanding December 31, 2000 |  |                     | 550  |               |  |                | 34  |             |  |                | 17.54 |  |  |  |    |  |  | $ |      | 
|Granted                       |  |                     | 267  |               |  |                | 447 |             |  |                | 23.25 |  |  |  |     |  |  |   |       | 
|Exercised                     |  |                     | (14  | )             |  |                | (2  | )           |  |                | 13.10 |  |  |  |     |  |  |   |       | 
|Cancelled                     |  |                     | (131 | )             |  |                | (5  | )           |  |                | 18.65 |  |  |  |     |  |  |   |       | 
|                              |  |                     |      |               |  |                |     |             |  |                |       |  |  |  |     |  |  |   |       | 
|Outstanding December 31, 2001 |  |                     | 672  |               |  |                | 474 |             |  | $              | 21.11 |  |  |  | 160 |  |  | $ | 17.06 | 
|                              |  |                     |      |               |  |                |     |             |  |                |       |  |  |  |     |  |  |   |       | 

F-22



---



##### 



The following table summarizes information about
stock options outstanding under the 1999 Plan at
December 31, 2001:

|         |               |             |  |                          |       |                |  |  |     |  |  |   |       | 
|-------- | ------------- | ----------- |  | ------------------------ | ----- | -------------- |  |  | --- |  |  | - | ----- | 
|         |               |             |  | Options Outstanding      |       |               
|         |               |             |  |                          |       |               
|Range of |               |             |  | Weighted Average         |       | Weighted      
|Exercise |               | Number      |  | Remaining                |       | Average       
|Prices   |               | Outstanding |  | Contractual Life (Years) |       | Exercise Price
|         |               |             |  |                          |       |               
|$        | 11.50  17.00 |             |  |                          | 322   |                |  |  | 8.2 |  |  | $ | 14.04 | 
|$        | 17.85  24.71 |             |  |                          | 721   |                |  |  | 9.3 |  |  |   | 23.07 | 
|$        | 28.50  29.63 |             |  |                          | 104   |                |  |  | 8.8 |  |  |   | 29.49 | 
|         |               |             |  |                          |       |                |  |  |     |  |  |   |       | 
|         |               |             |  |                          | 1,146 |                |  |  |     |  |  | $ | 21.11 | 
|         |               |             |  |                          |       |                |  |  |     |  |  |   |       | 

At December 31, 2001, options to purchase 57
shares were available for grant under the 1999 Plan.

The following table summarizes the Companys
option plan activity under the 1998 Plan:

|                              |  |                     |      |               |  |                |   |             |  |                |       |  |  |  |     |  |  |   |      | 
|----------------------------- |  | ------------------- | ---- | ------------- |  | -------------- | - | ----------- |  | -------------- | ----- |  |  |  | --- |  |  | - | ---- | 
|                              |  |                     |      |               |  |                |   |            
|                              |  | Shares Under Option |      | Weighted      |  |                |   | Weighted   
|                              |  |                     |      | Average       |  | Options        |   | Average    
|                              |  | Incentive           |      | Non-Incentive |  | Exercise Price |   | Exercisable |  | Exercise Price
|                              |  |                     |      |               |  |                |   |             |  |               
|Outstanding December 31, 1998 |  |                     | 605  |               |  |                |  |             |  | $              | 2.74  |  |  |  |    |  |  | $ |     | 
|Granted                       |  |                     | 392  |               |  |                |  |             |  |                | 7.29  |  |  |  |     |  |  |   |      | 
|Exercised                     |  |                     |     |               |  |                |  |             |  |                |      |  |  |  |     |  |  |   |      | 
|Cancelled                     |  |                     | (55  | )             |  |                |  |             |  |                | 2.97  |  |  |  |     |  |  |   |      | 
|                              |  |                     |      |               |  |                |   |             |  |                |       |  |  |  |     |  |  |   |      | 
|Outstanding December 31, 1999 |  |                     | 942  |               |  |                |  |             |  |                | 4.62  |  |  |  | 202 |  |  | $ | 2.76 | 
|                              |  |                     |      |               |  |                |   |             |  |                |       |  |  |  |     |  |  |   |      | 
|Granted                       |  |                     | 9    |               |  |                |  |             |  |                | 13.97 |  |  |  |     |  |  |   |      | 
|Exercised                     |  |                     | (215 | )             |  |                |  |             |  |                | 3.25  |  |  |  |     |  |  |   |      | 
|Cancelled                     |  |                     | (178 | )             |  |                |  |             |  |                | 3.87  |  |  |  |     |  |  |   |      | 
|                              |  |                     |      |               |  |                |   |             |  |                |       |  |  |  |     |  |  |   |      | 
|Outstanding December 31, 2000 |  |                     | 558  |               |  |                |  |             |  |                | 5.55  |  |  |  | 108 |  |  | $ | 6.17 | 
|                              |  |                     |      |               |  |                |   |             |  |                |       |  |  |  |     |  |  |   |      | 
|Granted                       |  |                     |     |               |  |                |  |             |  |                |      |  |  |  |     |  |  |   |      | 
|Exercised                     |  |                     | (170 | )             |  |                |  |             |  |                | 5.39  |  |  |  |     |  |  |   |      | 
|Cancelled                     |  |                     | (52  | )             |  |                |  |             |  |                | 4.98  |  |  |  |     |  |  |   |      | 
|                              |  |                     |      |               |  |                |   |             |  |                |       |  |  |  |     |  |  |   |      | 
|Outstanding December 31, 2001 |  |                     | 336  |               |  |                |  |             |  | $              | 5.38  |  |  |  | 215 |  |  | $ | 4.70 | 
|                              |  |                     |      |               |  |                |   |             |  |                |       |  |  |  |     |  |  |   |      | 

F-23



---



##### 



The following table summarizes information about
stock options outstanding under the 1998 Plan at
December 31, 2001:

|         |              |             |  |                          |     |                |  |  |     |  |  |   |       | 
|-------- | ------------ | ----------- |  | ------------------------ | --- | -------------- |  |  | --- |  |  | - | ----- | 
|         |              |             |  | Options Outstanding      |     |               
|         |              |             |  |                          |     |               
|Range of |              |             |  | Weighted Average         |     | Weighted      
|Exercise |              | Number      |  | Remaining                |     | Average       
|Prices   |              | Outstanding |  | Contractual Life (Years) |     | Exercise Price
|         |              |             |  |                          |     |               
|$        | 2.31         |             |  |                          | 141 |                |  |  | 6.0 |  |  | $ | 2.31  | 
|$        | 4.62  5.78  |             |  |                          | 128 |                |  |  | 7.0 |  |  |   | 5.56  | 
|$        | 9.03  11.13 |             |  |                          | 52  |                |  |  | 7.5 |  |  |   | 10.89 | 
|$        | 13.97        |             |  |                          | 15  |                |  |  | 8.0 |  |  |   | 13.97 | 
|         |              |             |  |                          |     |                |  |  |     |  |  |   |       | 
|         |              |             |  |                          | 336 |                |  |  |     |  |  | $ | 5.38  | 
|         |              |             |  |                          |     |                |  |  |     |  |  |   |       | 

An option that was granted outside of any of the
Companys option plans in 1998 was exercised in February
2000, which resulted in the issuance of 277 shares of common
stock.

The Company applies APB 25 and related
interpretations in accounting for its plans and other
stock-based compensation issued to employees. On May 2,
2001, the shareholders authorized an additional 717 shares
to be available for grant under the 1999 Plan. The Company had
previously granted, subject to shareholder approval,
approximately 182 options with exercise prices ranging from
$20.13 to $29.63. The closing price of the Companys stock
on May 2, 2001 was $31.15. As a result in May 2001, the Company
recorded deferred compensation of approximately $1,229, which
will be amortized over the four-year vesting period of the
options. The related non-cash compensation expense for 2001 was
$639. In addition, for the years ended December 31, 2001,
2000 and 1999, the Company recognized $41, $167 and $164 of
compensation expense, respectively, associated with options
granted to employees with exercise prices below fair market
value on the date of grant.

Had compensation cost for the Companys
option plans been determined based upon the fair value at the
grant date for awards under the plans consistent with the
methodology prescribed under SFAS 123, the Companys
net loss would have been increased by approximately $2,042, $635
and $315 for the years ended December 31, 2001, 2000 and
1999, respectively. This additional compensation expense would
have resulted in a net loss and net loss per share of $8,221 and
$0.51, $16,151 and $1.08, and $8,925 and $1.05 for the years
ended December 31, 2001, 2000 and 1999, respectively. The
fair values of options granted to employees have been determined
on the date of the respective grant using the Black-Scholes
option pricing model incorporating the following weighted
average assumptions: (1) risk-free interest rate of 3.26%
to 4.51% for 2001, 5.75% to 5.94% for 2000, and 4.88% to 6.20%
for 1999; (2) dividend yield of 0.00%; (3) expected life of
five years; and (4) volatility of 60% for 2001, 2000 and
1999.

The pro forma effects above may not be
representative of the effects on future years because options
vest over several years and new grants generally are made each
year.

Effective September 30, 1999, the Company
adopted an employee stock purchase plan to provide employees who
meet eligibility requirements an opportunity to purchase shares
of its common stock through payroll deductions of up to 10% of
eligible compensation. Bi-annually, participant account balances
are used to purchase shares of stock at 85% of the fair market
value of shares on the exercise date or the offering date. The
plan remains in effect unless terminated by the Board of
Directors. A total of 595 shares are available for purchase
under the plan. In 2001 and 2000, 49 and 33 shares were
purchased under the plan for $842 and $451, respectively.

14.     Commitments
and Contingencies

The Company leases office space under long-term
leases in New York, New York; London, England; Cambridge,
England; Dallas, Texas; Calgary, Canada; Kirkland, Washington;
and Houston, Texas.

F-24



---



##### 



Future minimum annual lease commitments are as
follows:

|           |  |   |        | 
|---------- |  | - | ------ | 
|2002       |  |   | 3,124  | 
|2003       |  |   | 3,180  | 
|2004       |  |   | 2,732  | 
|2005       |  |   | 1,876  | 
|2006       |  |   | 1,844  | 
|Thereafter |  |   | 6,478  | 
|           |  |   |        | 
|           |  | $ | 19,234 | 
|           |  |   |        | 

Rent expense for the years ended
December 31, 2001, 2000 and 1999 was $2,863, $2,232, and
$1,009, respectively.

From time to time, in the ordinary course of
business, the Company is subject to legal proceedings. While it
is not possible to determine the ultimate outcome of such
matters, it is managements opinion that the resolution of
any pending issues will not have a material adverse effect on
the financial position, results of operations or cash flows of
the Company.

15.     Related Party
Transactions

On October 21, 1998, in connection with his
employment with the Company, the Chief Executive Officer
(CEO) was loaned $1,000 by the Company in order to
acquire shares of common stock. The loan bore interest at a rate
of 9%, and all accrued and unpaid interest was payable upon
maturity in October 2008. In addition, on October 21, 1998,
the Company loaned the CEO $100. The loan bore interest at a
rate of 9%. The $100 loan was repaid, including interest, in
November 1999. In connection with the CEOs employment
agreement, if certain performance criteria and other conditions
were met, the CEO would receive a bonus based on forgiveness of
the entire outstanding amount of the $1,000 loan plus accrued
interest as well as additional shares of common stock. Such
amounts were earned upon the IPO and resulted in a compensation
related charge in the quarter ended March 31, 2000 of
$3,563.

During 2000 and 1999, Caminus made distributions
of $452 and $80, respectively, to its shareholders, for the
estimated tax associated with the former LLCs taxable
income.

On September 1, 1998, in connection with his
employment with the Company, an employee was loaned $75 by the
Company to acquire a portion of his shares of common stock. The
loan bore interest at a rate of 9% and was repaid in April 2000.

Upon the IPO closing in February 2000, the
Company paid two officers of the Company (former shareholders of
CEL) a special bonus of $476.

As outlined in the former LLC Agreement, the
Company was required to pay to GFI Energy Ventures
(GFI), a shareholder of the Company, an annual
management fee as consideration for financial, tax and general
and administrative services. This fee was calculated as 1% of
the shareholders aggregate adjusted capital contribution. Total
management fees incurred for the year ended December 31,
1999 were approximately $377. In November 1999, the Company
agreed to terminate its advisory arrangement with GFI effective
as of the IPO closing in February 2000. As consideration, the
Company paid GFI $1,300 from the net proceeds of the initial
public offering.

16.     Concentration
of Credit Risk

Financial instruments, which potentially subject
the Company to concentrations of credit risk consist principally
of trade accounts receivable. The Company controls this risk
through credit approvals, customer limits and monitoring
procedures. Additionally, the Company can limit the amount of
maintenance and support provided to its customers in the event
of non-payment. During the years ended December 31, 2001,
2000 and 1999, there were no customers who represented more than
10% of consolidated revenues. At

F-25



---



##### 



December 31, 2001 and 2000, the combined
balances of three and four customers represented 26% and 29% of
accounts receivable, net, respectively.


17.     Segment
Reporting

The Company has three reportable segments:
software, strategic consulting and corporate. Software comprises
the licensing of the Companys software products and the
related implementation and maintenance services. Strategic
consulting provides energy market participants with professional
advice regarding where and how to compete in their respective
markets. Corporate includes general overhead and administrative
expenses not directly related to the operating segments,
including rent and facility costs. Items recorded in the
consolidated financial statements for purchase accounting, such
as goodwill, intangible assets and related amortization, have
been pushed down to the respective segments for segment
reporting purposes. In evaluating financial performance,
management uses earnings before interest and other income,
income taxes, depreciation and amortization, IPO-related
expenses and non-cash compensation expense (Adjusted
EBITDA) as the measure of a segments profit or loss.

The accounting policies of the reportable
segments are the same as those described in Note 2. There
are no inter-segment revenues or expenses between the three
reportable segments.

The following tables illustrate the financial
results of the three reportable segments:

|                           |                      |                     |         |           |        |                     |        |       |       |                     |         |           |   |           |         |        |        |          |        |           |        |           |        |       |       |  |         |   |   |  |         |        |        |  |        |        |        |  |        |       |       |  |        |   |   |  |        |        |        | 
|-------------------------- | -------------------- | ------------------- | ------- | --------- | ------ | ------------------- | ------ | ----- | ----- | ------------------- | ------- | --------- | - | --------- | ------- | ------ | ------ | -------- | ------ | --------- | ------ | --------- | ------ | ----- | ----- |  | ------- | - | - |  | ------- | ------ | ------ |  | ------ | ------ | ------ |  | ------ | ----- | ----- |  | ------ | - | - |  | ------ | ------ | ------ | 
|                           |                      |                     |         |           |        |                     |        |       |       |                     |         |          
|                           |                      | As of or Year Ended |         |           |        | As of or Year Ended |        |       |       | As of or Year Ended |         |          
|                           |                      | December 31, 2001   |         |           |        | December 31, 2000   |        |       |       | December 31, 1999   |         |          
|                           |                      |                     |         |           |        |                     |        |       |       |                     |         |          
|                           |                      | Software            |         | Strategic |        | Corporate           |        | Total |       | Software            |         | Strategic |   | Corporate |         | Total  |        | Software |        | Strategic |        | Corporate |        | Total
|                           |                      |                     |         |           |        |                     |        |       |       |                     |         |           |   |           |         |        |        |          |        |           |        |           |        |      
|Revenues:                  |                      |                     |         |           |        |                     |        |       |       |                     |         |           |   |           |         |        |        |          |        |           |        |           |        |       |       |  |         |   |   |  |         |        |        |  |        |        |        |  |        |       |       |  |        |   |   |  |        |       
|                           | License              |                     |         | 34,579    |        |                     |        |      |       |                     |         |          |   |           |         | 34,579 |        |          |        | 24,573    |        |           |        |      |       |  |         |  |   |  |         | 24,573 |        |  |        | 12,538 |        |  |        |      |       |  |        |  |   |  |        | 12,538 |       
|                           | Software services    |                     |         | 32,416    |        |                     |        |      |       |                     |         |          |   |           |         | 32,416 |        |          |        | 18,576    |        |           |        |      |       |  |         |  |   |  |         | 18,576 |        |  |        | 7,816  |        |  |        |      |       |  |        |  |   |  |        | 7,816  |       
|                           | Strategic consulting |                     |         |          |        |                     |        | 7,722 |       |                     |         |          |   |           |         | 7,722  |        |          |        |          |        |           |        | 8,565 |       |  |         |  |   |  |         | 8,565  |        |  |        |       |        |  |        | 6,556 |       |  |        |  |   |  |        | 6,556  |       
|                           |                      |                     |         |           |        |                     |        |       |       |                     |         |           |   |           |         |        |        |          |        |           |        |           |        |       |       |  |         |   |   |  |         |        |        |  |        |        |        |  |        |       |       |  |        |   |   |  |        |       
|                           |                      | Total revenues      |         |           | 66,995 |                     |        |       | 7,722 |                     |         |           |  |           |         |        | 74,717 |          |        |           | 43,149 |           |        |       | 8,565 |  |         |   |  |  |         |        | 51,714 |  |        |        | 20,354 |  |        |       | 6,556 |  |        |   |  |  |        |        | 26,910 | 
|Adjusted EBITDA            |                      |                     | 25,092  |           |        |                     | 3,239  |       |       |                     | (14,513 | )         |   |           | 13,818  |        |        |          | 15,018 |           |        |           | 4,666  |       |       |  | (9,405  | ) |   |  | 10,279  |        |        |  | 6,855  |        |        |  | 3,633  |       |       |  | (7,213 | ) |   |  | 3,275  |       
|Non-cash compensation      |                      |                     |        |           |        |                     |       |       |       |                     | (680    | )         |   |           | (680    | )      |        |          |       |           |        |           |       |       |       |  | (167    | ) |   |  | (167    | )      |        |  |       |        |        |  |       |       |       |  | (968   | ) |   |  | (968   | )     
|Acquired IPR&D             |                      |                     |        |           |        |                     |       |       |       |                     | (1,300  | )         |   |           | (1,300  | )      |        |          |       |           |        |           |       |       |       |  |        |   |   |  |        |        |        |  |       |        |        |  |       |       |       |  | (1,000 | ) |   |  | (1,000 | )     
|Loss on office relocation  |                      |                     |        |           |        |                     |       |       |       |                     |        |           |   |           |        |        |        |          |       |           |        |           |       |       |       |  | (508    | ) |   |  | (508    | )      |        |  |       |        |        |  |       |       |       |  |       |   |   |  |       |       
|IPO-related expenses       |                      |                     |        |           |        |                     |       |       |       |                     |        |           |   |           |        |        |        |          |       |           |        |           |       |       |       |  | (12,335 | ) |   |  | (12,335 | )      |        |  |       |        |        |  |       |       |       |  |       |   |   |  |       |       
|                           |                      |                     |         |           |        |                     |        |       |       |                     |         |           |   |           |         |        |        |          |        |           |        |           |        |       |       |  |         |   |   |  |         |        |        |  |        |        |        |  |        |       |       |  |        |   |   |  |        |       
|                           |                      |                     | 25,092  |           |        |                     | 3,239  |       |       |                     | (16,493 | )         |   |           | 11,838  |        |        |          | 15,018 |           |        |           | 4,666  |       |       |  | (22,415 | ) |   |  | (2,731  | )      |        |  | 6,855  |        |        |  | 3,633  |       |       |  | (9,181 | ) |   |  | 1,307  |       
|Amortization/ depreciation |                      |                     | (13,953 | )         |        |                     | (691   | )     |       |                     | (2,013  | )         |   |           | (16,657 | )      |        |          | (9,649 | )         |        |           | (2,073 | )     |       |  | (1,006  | ) |   |  | (12,728 | )      |        |  | (6,487 | )      |        |  | (2,073 | )     |       |  | (483   | ) |   |  | (9,043 | )     
|                           |                      |                     |         |           |        |                     |        |       |       |                     |         |           |   |           |         |        |        |          |        |           |        |           |        |       |       |  |         |   |   |  |         |        |        |  |        |        |        |  |        |       |       |  |        |   |   |  |        |       
|Operating income (loss)    |                      |                     | 11,139  |           |        |                     | 2,548  |       |       |                     | (18,506 | )         |   |           | (4,819  | )      |        |          | 5,369  |           |        |           | 2,593  |       |       |  | (23,421 | ) |   |  | (15,459 | )      |        |  | 368    |        |        |  | 1,560  |       |       |  | (9,664 | ) |   |  | (7,736 | )     
|Total assets               |                      |                     | 152,884 |           |        |                     | 10,353 |       |       |                     | 3,742   |           |   |           | 166,979 |        |        |          | 64,798 |           |        |           | 8,295  |       |       |  | 30,952  |   |   |  | 104,045 |        |        |  | 33,990 |        |        |  | 4,922  |       |       |  | 2,566  |   |   |  | 41,478 |       

Geographic information for the Company, for the
years ended December 31, 2001, 2000 and 1999 is summarized
in the table below. The Companys international revenues
were derived primarily from Europe and the Companys
international long-lived assets at December 31, 2001, 2000,
and 1999 resided primarily in the United Kingdom.

|          |               |                         |        |        |  |      |        |        |  |   |        |        | 
|--------- | ------------- | ----------------------- | ------ | ------ |  | ---- | ------ | ------ |  | - | ------ | ------ | 
|          |               |                        
|          |               | Year Ended December 31,
|          |               |                        
|          |               | 2001                    |        | 2000   |  | 1999
|          |               |                         |        |        |  |     
|Revenues: |               |                         |        |        |  |      |        |        |  |   |        |       
|          | United States |                         | $      | 48,297 |  |      | $      | 30,733 |  |   | $      | 14,644 | 
|          | International |                         |        | 26,420 |  |      |        | 20,981 |  |   |        | 12,266 | 
|          |               |                         |        |        |  |      |        |        |  |   |        |       
|          |               | $                       | 74,717 |        |  | $    | 51,714 |        |  | $ | 26,910 |       
|          |               |                         |        |        |  |      |        |        |  |   |        |       

F-26



---



##### 



|                                                      |               |                    |         |        |  |      |        |        |  |   |        |        | 
|----------------------------------------------------- | ------------- | ------------------ | ------- | ------ |  | ---- | ------ | ------ |  | - | ------ | ------ | 
|                                                      |               |                   
|                                                      |               | As of December 31,
|                                                      |               |                   
|                                                      |               | 2001               |         | 2000   |  | 1999
|                                                      |               |                    |         |        |  |     
|Long-lived assets (includes all non-current
	assets): |               |                    |         |        |  |      |        |        |  |   |        |       
|                                                      | United States |                    | $       | 99,261 |  |      | $      | 51,721 |  |   | $      | 27,335 | 
|                                                      | International |                    |         | 1,328  |  |      |        | 2,456  |  |   |        | 3,170  | 
|                                                      |               |                    |         |        |  |      |        |        |  |   |        |       
|                                                      |               | $                  | 100,589 |        |  | $    | 54,177 |        |  | $ | 30,505 |       
|                                                      |               |                    |         |        |  |      |        |        |  |   |        |       

18.     Supplemental
Cash Flow Information

|                                                                                       |  |                         |        |      |  |      |       |  |  |   |       | 
|-------------------------------------------------------------------------------------- |  | ----------------------- | ------ | ---- |  | ---- | ----- |  |  | - | ----- | 
|                                                                                       |  |                        
|                                                                                       |  | Year Ended December 31,
|                                                                                       |  |                        
|                                                                                       |  | 2001                    |        | 2000 |  | 1999
|                                                                                       |  |                         |        |      |  |     
|Unrealized gain on available for sale securities                                       |  | $                       |       |      |  | $    | 183   |  |  | $ |      | 
|Reclassification of unrealized gain to realized
	gain on available for sale securities |  |                         | (183   | )    |  |      |      |  |  |   |      | 
|Issuance of equity in connection with the
	acquisition of Altra                        |  |                         | 33,891 |      |  |      |      |  |  |   |      | 
|Issuance of equity in connection with the
	acquisition of Nucleus                      |  |                         |       |      |  |      | 3,757 |  |  |   |      | 
|Accrual of SS&C option buyback                                                         |  |                         |       |      |  |      |      |  |  |   | 250   | 
|Issuance of equity in connection with the
	acquisition of DC Systems                   |  |                         |       |      |  |      |      |  |  |   | 3,000 | 
|Interest paid                                                                          |  |                         |       |      |  |      | 27    |  |  |   | 285   | 
|Income taxes paid                                                                      |  |                         | 2,594  |      |  |      | 1,226 |  |  |   |      | 

19.     Quarterly
Financial Data (unaudited)

The following table sets forth certain quarterly
financial information for fiscal 2001:

|                                              |  |               |        |          |  |           |        |          |  |       |        |   |  |   |        |  |  |   |        |  
|--------------------------------------------- |  | ------------- | ------ | -------- |  | --------- | ------ | -------- |  | ----- | ------ | - |  | - | ------ |  |  | - | ------ | -
|                                              |  |              
|                                              |  | Quarter Ended
|                                              |  |              
|                                              |  | March 31,     |        | June 30, |  | Sept. 30, |        | Dec. 31, |  |      
|                                              |  | 2001          |        | 2001     |  | 2001      |        | 2001     |  | Total
|                                              |  |               |        |          |  |           |        |          |  |      
|Revenues                                      |  | $             | 16,395 |          |  | $         | 17,738 |          |  | $     | 15,156 |   |  | $ | 25,428 |  |  | $ | 74,717 |  
|Gross profit                                  |  |               | 10,425 |          |  |           | 12,120 |          |  |       | 9,137  |   |  |   | 17,840 |  |  |   | 49,522 |  
|Net income (loss)                             |  |               | (2,423 | )        |  |           | (947   | )        |  |       | (3,125 | ) |  |   | 316    |  |  |   | (6,179 | )
|Basic and diluted net income (loss) per share |  |               | (0.15  | )        |  |           | (0.06  | )        |  |       | (0.20  | ) |  |   | 0.02   |  |  |   | (0.38  | )

The following table sets forth certain quarterly
financial information for fiscal 2000:

|                                     |  |               |         |          |  |           |        |          |  |       |        |   |  |   |        |   |  |   |         |  
|------------------------------------ |  | ------------- | ------- | -------- |  | --------- | ------ | -------- |  | ----- | ------ | - |  | - | ------ | - |  | - | ------- | -
|                                     |  |              
|                                     |  | Quarter Ended
|                                     |  |              
|                                     |  | March 31,     |         | June 30, |  | Sept. 30, |        | Dec. 31, |  |      
|                                     |  | 2000          |         | 2000     |  | 2000      |        | 2000     |  | Total
|                                     |  |               |         |          |  |           |        |          |  |      
|Revenues                             |  | $             | 8,520   |          |  | $         | 11,207 |          |  | $     | 14,717 |   |  | $ | 17,270 |   |  | $ | 51,714  |  
|Gross profit                         |  |               | 5,342   |          |  |           | 7,975  |          |  |       | 9,859  |   |  |   | 11,653 |   |  |   | 34,829  |  
|Net loss                             |  |               | (14,013 | )        |  |           | (586   | )        |  |       | (369   | ) |  |   | (548   | ) |  |   | (15,516 | )
|Basic and diluted net loss per share |  |               | (1.05   | )        |  |           | (0.04  | )        |  |       | (0.02  | ) |  |   | (0.03  | ) |  |   | (1.04   | )

The sum of the quarterly per share amounts do not
always equal the annual amount reported, as per share amounts
are computed independently for each quarter and for the twelve
months based on the weighted average common and common
equivalent shares outstanding in each such period. In 2000, the
annual loss per share was also impacted by the issuance of a
significant number of shares in the Companys IPO.

20.     Subsequent
Events

On February 12, 2002, the Board of Directors
authorized an increase of 350 shares in the 2001 Plan from 700
shares to 1,050 shares. In addition, the Board of Directors
authorized an increase of 200 shares in the 1999 Plan from 1,219
to 1,419, subject to shareholder approval.

F-27



---



##### 



EXHIBIT INDEX

|        |       |             |  |                                                                                                                                                                                                                                                                                                                  
|------- | ----- | ----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |       |            
|No.     |       | Description
|        |       |            
|        | 2.1   |             |  | Merger Agreement among the Registrant, Caminus
	LLC and Caminus Merger LLC, dated December 17, 1999.
	(Incorporated herein by reference to the Registrants
	Registration Statement on Form S-1 (File
	No. 333-88437))                                                                                           
|        | 2.2   |             |  | Purchase Agreement by and among Zai*Net Software,
	Inc., Zai*Net Software, L.P., GFI Caminus LLC and Brian J.
	Scanlan, dated May 12, 1998. (Incorporated herein by reference
	to the Registrants Registration Statement on Form S-1
	(File No. 333-88437))                                                     
|        | 2.3   |             |  | Stock Purchase Agreement by and among GFI Caminus
	LLC, Caminus Energy Limited,
	Dr. Nigel L. Evans, Ph.D. and Dr. Michael B.
	Morrison, Ph.D., dated May 12, 1998. (Incorporated herein
	by reference to the Registrants Registration Statement on
	Form S-1 (File No. 333-88437))                             
|        | 2.4   |             |  | Purchase Agreement by and between Zai*Net
	Software, L.P. and Corwin Joy, an individual, doing business as
	Positron Energy Consulting, dated November 13, 1998.
	(Incorporated herein by reference to the Registrants
	Registration Statement on Form S-1 (File
	No. 333-88437))                               
|        | 2.5   |             |  | Agreement of Merger by and between Caminus LLC
	and Zai*Net Software, L.P., dated February 26, 1999.
	(Incorporated herein by reference to the Registrants
	Registration Statement on Form S-1 (File
	No. 333-88437))                                                                                           
|        | 2.6   |             |  | Purchase Agreement by and among DC Systems, Inc.,
	Caminus LLC, Caminus/ DC Acquisition Corp., and the Shareholders
	(as defined in the agreement) dated July 31, 1999.
	(Incorporated herein by reference to the Registrants
	Registration Statement on Form S-1 (File
	No. 333-88437))                        
|        | 2.7   |             |  | Nucleus Purchase Agreement by and among the
	Registrant, Nucleus Corporation, Nucleus Energy Consulting
	Corporation, David C. Meyers, and John H. Gerold, dated
	August 30, 2000. (Incorporated herein by reference to the
	Registrants Current Report on Form 8-K (File
	No. 000-28085) dated August 30, 2000)
|        | 2.8   |             |  | Stock Purchase Agreement, dated as of
	October 12, 2001, by and between the Registrant and Altra
	Energy Technologies, Inc. (Incorporated herein by reference to
	the Registrants Current Report on Form 8-K (File
	No. 000-28085) dated November 20, 2001)                                                     
|        | 2.9   |             |  | Registration Rights Agreement, dated as of
	November 20, 2001, by and between the Registrant and Altra
	Energy Technologies, Inc. (Incorporated herein by reference to
	the Registrants Current Report on Form 8-K (File
	No. 000-28085) dated November 20, 2001)                                               
|        | 3.1   |             |  | Certificate of Incorporation of the Registrant.
	(Incorporated herein by reference to the Registrants
	Registration Statement on Form S-1 (File
	No. 333-88437))                                                                                                                                                
|        | 3.2   |             |  | Amended and Restated Bylaws of the Registrant.
	(Incorporated herein by reference to the Registrants
	Annual Report on Form 10-K (File No. 000-28085) for
	the year ended December 31, 2000)                                                                                                                    
|        | 4.1   |             |  | Specimen certificate for shares of Common Stock,
	$0.01 par value per share, of the Registrant. (Incorporated
	herein by reference to the Registrants Registration
	Statement on Form S-1 (File
	No. 333-88437))                                                                                                
|        | 10.1# |             |  | 1998 Stock Incentive Plan. (Incorporated herein
	by reference to the Registrants Registration Statement on
	Form S-1 (File No. 333-88437))                                                                                                                                                                      
|        | 10.2# |             |  | 1999 Stock Incentive Plan, as amended.
	(Incorporated herein by reference to the Registrants
	Quarterly Report on Form 10-Q (File No. 000-28085) for
	the fiscal quarter ended June 30, 2001)                                                                                                                   
|        | 10.3# |             |  | Form of Certificate of Stock Option Grant.
	(Incorporated herein by reference to the Registrants
	Quarterly Report on Form 10-Q (File No. 000-28085) for
	the fiscal quarter ended June 30, 2001)                                                                                                               
|        | 10.4# |             |  | Form of Incentive Stock Option Agreement, as
	amended, granted under the 1999 Stock Incentive Plan.
	(Incorporated herein by reference to the Registrants
	Quarterly Report on Form 10-Q (File
	No. 000-28085) for the fiscal quarter ended June 30,
	2001)                                                     



---



##### 



|        |        |             |  |                                                                                                                                                                                                                                                                                                                                                                                                                      
|------- | ------ | ----------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |        |            
|No.     |        | Description
|        |        |            
|        | 10.5#  |             |  | Form of Nonstatutory Stock Option Agreement, as
	amended, granted under the 1999 Stock Incentive Plan.
	(Incorporated herein by reference to the Registrants
	Quarterly Report on Form 10-Q (File No. 000-28085) for
	the fiscal quarter ended June 30, 2001)                                                                                                                                                       
|        | 10.6#  |             |  | Employment Letter between the Registrant and
	Joseph P. Dwyer, dated April 10, 2001. (Incorporated herein
	by reference to the Registrants Quarterly Report on
	Form 10-Q (File No. 000-28085) for the fiscal quarter
	ended June 30, 2001) (Confidential treatment has been
	requested as to certain portions, which portions have been
	omitted and filed separately with the Securities and Exchange
	Commission)
|        | 10.7#  |             |  | Nonstatutory Stock Option Agreement between the
	Registrant and Joseph P. Dwyer, dated May 7, 2001.
	(Incorporated herein by reference to the Registrants
	Quarterly Report on Form 10-Q (File No. 000-28085) for
	the fiscal quarter ended June 30, 2001)                                                                                                                                                          
|        | 10.8#  |             |  | 1999 Employee Stock Purchase Plan, as amended.                                                                                                                                                                                                                                                                                                                                                                       
|        | 10.9   |             |  | Limited Liability Company Agreement of GFI
	Caminus LLC, dated May 12, 1998. (Incorporated herein by
	reference to the Registrants Registration Statement on
	Form S-1 (File No. 333-88437))                                                                                                                                                                                                                        
|        | 10.10  |             |  | Assignment and Assumption Agreement by and among
	Zai*Net Software, Inc., Zai*Net Software, L.P. and Brian J.
	Scanlan, dated May 12, 1998. (Incorporated herein by
	reference to the Registrants Registration Statement on
	Form S-1 (File No. 333-88437))                                                                                                                                                         
|        | 10.11  |             |  | Second Assignment and Assumption Agreement by and
	between Zai*Net Software, Inc. and Rooney Software, L.L.C.,
	dated May 12, 1998. (Incorporated herein by reference to
	the Registrants Registration Statement on Form S-1
	(File No. 333-88437))                                                                                                                                                                 
|        | 10.12  |             |  | Conversion Agreement and Amendment of Purchase
	Agreement by and among Caminus Energy Ventures LLC, Zak
	Associates, Inc., Zai*Net Software, L.P., Brian Scanlan and
	Rooney Software, L.L.C., dated December 31, 1998.
	(Incorporated herein by reference to the Registrants
	Registration Statement on Form S-1 (File No. 333-88437))                                                                             
|        | 10.13# |             |  | Employment Agreement by and between David M.
	Stoner and Caminus Energy Ventures LLC, dated October 21,
	1998. (Incorporated herein by reference to the Registrants
	Registration Statement on Form S-1 (File No. 333-88437))                                                                                                                                                                                       
|        | 10.14# |             |  | Service Agreement by and between Dr. Nigel
	L. Evans and Caminus Energy Limited, dated May 12, 1998.
	(Incorporated herein by reference to the Registrants
	Registration Statement on Form S-1 (File
	No. 333-88437))                                                                                                                                                                                               
|        | 10.15# |             |  | Covenant Not to Compete by and among
	Dr. Nigel L. Evans, Dr. Michael B. Morrison and Caminus
	Energy Limited, dated May 12, 1998. (Incorporated herein by
	reference to the Registrants Registration Statement on
	Form S-1 (File No. 333-88437))                                                                                                                                                                  
|        | 10.16# |             |  | Amendment No. 1 to Employment Agreement
	between Dr. Nigel Evans and Caminus Limited, dated
	January 14, 2000. (Incorporated herein by reference to the
	Registrants Registration Statement on Form S-1 (File
	No. 333-88437))                                                                                                                                                                                      
|        | 10.17# |             |  | Employment Agreement by and between Brian J.
	Scanlan and Zai*Net Software, L.P., dated May 12, 1998.
	(Incorporated herein by reference to the Registrants
	Registration Statement on Form S-1 (File
	No. 333-88437))                                                                                                                                                                                              
|        | 10.18# |             |  | Amendment No. 1 to Employment Agreement
	between Brian Scanlan and Caminus LLC, dated November 8,
	1999. (Incorporated herein by reference to the Registrants
	Registration Statement on Form S-1 (File
	No. 333-88437))                                                                                                                                                                                            
|        | 10.19# |             |  | Covenant Not to Compete by and between Brian J.
	Scanlan and Zai*Net Software, L.P., dated May 12, 1998.
	(Incorporated herein by reference to the Registrants
	Registration Statement on Form S-1 (File
	No. 333-88437))                                                                                                                                                                                           
|        | 10.20  |             |  | Agreement by and between Caminus LLC and GFI Two
	LLC, dated January 21, 2000. (Incorporated herein by
	reference to the Registrants Registration Statement on
	Form S-1 (File No. 333-88437))                                                                                                                                                                                                                      



---



##### 



|        |       |             |  |                                                                                                                                                                                                                                                                                                                                                                      
|------- | ----- | ----------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |       |            
|No.     |       | Description
|        |       |            
|        | 10.21 |             |  | Exchange Agreement between the Registrant and OCM
	Caminus Investment, Inc., dated January 21, 2000.
	(Incorporated herein by reference to the Registrants
	Registration Statement on Form S-1 (File
	No. 333-88437))                                                                                                                                               
|        | 10.22 |             |  | Amendment to Limited Liability Company Agreement
	among Caminus LLC and certain members of Caminus LLC, dated
	January 19, 2000. (Incorporated herein by reference to the
	Registrants Registration Statement on Form S-1 (File
	No. 333-88437))                                                                                                                    
|        | 10.23 |             |  | Termination Agreement between the Registrant and
	David M. Stoner dated August 3, 2000. (Incorporated herein
	by reference to the Registrants Quarterly Report on
	Form 10-Q (File No. 000-28085) for the fiscal quarter
	ended September 30, 2000)                                                                                                                 
|        | 10.24 |             |  | Registration Rights Agreement, dated as of
	August 30, 2000, by and among the Registrant, Nucleus
	Corporation and Nucleus Energy Consulting Corporation.
	(Incorporated herein by reference to the Registrants
	Current Report on Form 8-K (File No. 000-28085) dated
	August 30, 2000)                                                                            
|        | 10.25 |             |  | Escrow Agreement, dated as of August 30,
	2000, by and among the Registrant, Nucleus Corporation, Nucleus
	Energy Consulting Corporation, David C. Meyers, John H. Gerold
	and State Street Bank and Trust Company of California N.A.
	(Incorporated herein by reference to the Registrants
	Current Report on Form 8-K (File No. 000-28085) dated
	August 30, 2000)
|        | 10.26 |             |  | Lease Agreement between the Registrant and
	Advance Magazine Publishers Inc. dated September 13, 2000.
	(Incorporated herein by reference to the Registrants
	Quarterly Report on Form 10-Q (File No. 000-28085) for
	the fiscal quarter ended September 30, 2000)                                                                                                  
|        | 10.27 |             |  | Escrow Agreement, dated as of November 20,
	2001, by and among the Registrant, Altra Energy and
	JP Morgan Chase Bank, as escrow agent. (Incorporated herein
	by reference to the Registrants Current Report on
	Form 8-K (File No. 000-28085) dated November 20,
	2001)                                                                                            
|        | 10.28 |             |  | Term Credit Agreement, dated as of
	November 20, 2001, by and between the Registrant and Blue
	Ridge Investments, LLC. (Incorporated herein by reference to the
	Registrants Current Report on Form 8-K (File
	No. 000-28085) dated November 20, 2001)                                                                                                              
|        | 21.1  |             |  | Subsidiaries of the Registrant                                                                                                                                                                                                                                                                                                                                       
|        | 23.1  |             |  | Consent of KPMG LLP                                                                                                                                                                                                                                                                                                                                                  
|        | 23.2  |             |  | Consent of PricewaterhouseCoopers LLP                                                                                                                                                                                                                                                                                                                                



---



|  |                                                                                                                               
|- | ------------------------------------------------------------------------------------------------------------------------------
|# | Management contract or compensatory plan or
	arrangement filed in response to Item 14(a)(3) of the
	instructions to Form 10-K.