<PAGE>

                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C.  20549

                                   FORM 10-Q

                  QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
                    OF THE SECURITIES EXCHANGE ACT OF 1934

(MARK ONE)
(X)  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarter ended June 30, 2001
                          ---------
                                       OR
( )  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _________ to _________


                         COMMISSION FILE NUMBER 1-7516

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

     MASSACHUSETTS                               04-2437166
     (State or other jurisdictions of            (I.R.S. Employer Identification
     incorporation or organization)              Number)

     Ten City Square, Boston, Massachusetts      02129
     (Address of principal executive offices)    (Zip Code)

     Registrant's telephone number,              (617) 241-9200
     including area code

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

Yes   X       No
   -------  -------

As of June 30, 2001, the number of issued and outstanding shares of Common Stock
(excluding 4,926,408 shares held in treasury) and Class B Common Stock are
67,519,693 and 284,891 shares, respectively.
<PAGE>

KEANE, INC. AND SUBSIDIARIES
TABLE OF CONTENTS


Part I - Financial Information

Unaudited Condensed Consolidated Statements of Income for the three months
and six months ended June 30, 2001 and 2000.................................   3

Condensed Consolidated Balance Sheets as of June 30, 2001 (unaudited) and
December 31, 2000...........................................................   4

Unaudited Condensed Consolidated Statements of Cash Flows for six months
ended June 30, 2001 and 2000................................................   5

Notes to Unaudited Condensed Consolidated Financial Statements..............   6

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

Part II - Other Information.................................................  15

Signature Page..............................................................  17

                                       2
<PAGE>

KEANE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

<TABLE>
<CAPTION>
                                                                    (In thousands except per share amounts)
                                                                    Three months ended              SIX MONTHS ENDED
                                                                          JUNE 30,                      JUNE 30,
<S>                                                             <C>                <C>           <C>            <C>
                                                                    2001               2000          2001           2000
Total revenues                                                  $196,995           $221,799      $405,341       $438,007

Salaries, wages and other direct costs                           137,787            155,232       282,936        309,806
Selling, general and administrative expenses                      46,222             52,194        95,549        103,448
Amortization of goodwill and other intangible assets               3,476              2,720         6,938          5,609
                                                                --------           --------      --------       --------
     Operating income                                              9,510             11,653        19,918         19,144

Interest and dividend income                                       1,718              2,163         3,343          4,306
Interest expense                                                      81                146           194            332
Other (income) expenses, net                                        (109)               270        (2,400)           453
                                                                --------           --------      --------       --------

     Income before income taxes                                   11,256             13,400        25,467         22,665

Provision for income taxes                                         4,558              5,425        10,315          9,179
                                                                --------           --------      --------       --------

     Net income                                                 $  6,698           $  7,975        15,152       $ 13,486
                                                                ========           ========      ========       ========

Net income per share (basic)                                        $.10               $.11          $.22           $.19
                                                                ========           ========      ========       ========

Net income per share (diluted)                                      $.10               $.11          $.22           $.19
                                                                ========           ========      ========       ========

Weighted average common shares outstanding (basic)                67,817             70,103        67,947         70,595

Weighted average common shares and common share                   68,815             70,671        68,825         71,216
 equivalents outstanding (diluted)
</TABLE>

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

                                       3
<PAGE>

KEANE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                    (IN THOUSANDS)
                                                                         JUNE 30, 2001         DECEMBER 31, 2000
Assets                                                                    (UNAUDITED)
<S>                                                                      <C>                        <C>
Current:
     Cash and cash equivalents                                            $ 81,827                   $ 53,783
     Marketable securities                                                  77,913                     59,179
     Accounts receivable, net
          Trade                                                            144,130                    164,706
          Other                                                              1,371                      1,428
     Prepaid expenses and deferred taxes                                    18,001                     15,533
                                                                          --------                   --------
          Total current assets                                             323,242                    294,629

Long term investments                                                          250                      2,250
Property and equipment, net                                                 21,124                     24,132
Goodwill, net                                                               72,464                     75,497
Other intangible assets, net                                                38,687                     43,164
Deferred taxes and other assets, net                                        22,334                     23,922
                                                                          --------                   --------
                                                                          $478,101                   $463,594
                                                                          ========                   ========
Liabilities
Current:
     Accounts payable                                                     $ 11,971                   $ 16,820
     Accrued expenses and other liabilities                                 37,995                     26,953
     Accrued compensation                                                   19,218                     17,709
     Notes payable                                                               -                      5,006
     Accrued income taxes                                                    9,110                      9,003
     Unearned income                                                         3,555                      4,611
     Current capital lease obligations                                       1,221                      1,230
                                                                          --------                   --------
          Total current liabilities                                         83,070                     81,332

Deferred income taxes                                                        5,863                      9,205
Long-term portion of capital lease obligations                               1,814                      2,380

Stockholders' Equity
     Common Stock                                                            7,245                      7,245
     Class B Common Stock                                                       28                         28
     Additional paid-in capital                                            115,520                    121,444
     Accumulated other comprehensive income                                 (2,596)                    (4,637)
     Retained earnings                                                     359,126                    343,974
     Less treasury stock                                                   (91,969)                   (97,377)
                                                                          --------                   --------
          Total stockholders' equity                                       387,354                    370,677
                                                                          --------                   --------

                                                                          $478,101                   $463,594
                                                                          ========                   ========
</TABLE>

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

                                       4
<PAGE>

KEANE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                           (IN THOUSANDS)
                                                                                      SIX MONTHS ENDED JUNE 30,
<S>                                                                               <C>                   <C>
Cash flows from operating activities:                                                  2001                  2000
Net income                                                                         $ 15,152              $ 13,486
Adjustments to reconcile net income to net cash provided by operating
 activities:
    Depreciation and amortization                                                    13,243                14,419
    Deferred income taxes                                                            (1,051)               (3,092)
    Provision for doubtful accounts                                                   3,706                (3,732)
    Loss on sale of property and equipment                                               97                 1,095
    Loss on write down of equity investments                                          2,000                   ---
    Gain on sale of business unit                                                    (4,302)                  ---
 Changes in operating assets and liabilities:
     Decrease in accounts receivable                                                 16,927                29,292
   (Increase) decrease in prepaid expenses and other assets                          (3,018)                4,081
     Decrease in accounts payable, accrued expenses,
      and other liabilities, and unearned revenue                                      (734)              (16,698)
    Increase in income taxes payable                                                    624                 4,827
                                                                                   --------              --------
  Net cash provided by operating activities                                          42,644                43,678

CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchase of investments                                                           (50,997)              (14,376)
  Sale of investments                                                                32,263                12,659
  Purchase of property and equipment                                                 (5,645)              (10,706)
  Proceeds from sale of business unit                                                16,087                    48
  Proceeds from the sale of property and equipment                                      172                   ---
  Payment for prior year acquisitions                                                (1,032)                  ---
                                                                                   --------              --------
  Net cash used for investing activities                                             (9,152)              (12,375)

CASH FLOWS FROM FINANCING ACTIVITIES:
  Payments under long term-debt                                                      (5,006)                 (786)
  Principal payments under capital lease obligations                                 (1,242)                 (712)
  Proceeds from issuance of common stock                                              3,529                 1,772
  Repurchase of common stock                                                         (4,045)              (43,934)
                                                                                   --------              --------
  Net cash used for financing activities                                             (6,764)              (43,660)

Effect of exchange rate changes on cash                                               1,316                   ---
Net decrease in cash and cash equivalents                                            28,044               (12,357)
Cash and cash equivalents, beginning of period                                       53,783                53,018
                                                                                   --------              --------
Cash and cash equivalents at end of period                                         $ 81,827              $ 40,661
                                                                                   ========              ========
</TABLE>
   The accompanying notes are an integral part of the consolidated financial
                                  statements.

                                       5
<PAGE>

Keane, Inc. and Subsidiaries
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands except per share amounts)

Note 1.   The accompanying unaudited condensed consolidated financial statements
          have been prepared in accordance with generally accepted accounting
          principals for interim financial information and accordingly, they do
          not include all of the information and footnotes required by generally
          accepted accounting principles for complete financial statements. In
          the opinion of management, all adjustments considered necessary for a
          fair presentation of the results of operations for the interim periods
          reported and of the Company's financial condition as of the date of
          the interim balance sheet have been included. Operating results for
          the six-month period ended June 30, 2001 are not necessarily
          indicative of the results that may be expected for the year ending
          December 31, 2001.

          The balance sheet at December 31, 2000 has been derived from the
          audited financial statements at that date, but does not include all of
          the information and footnotes required by generally accepted
          accounting principles for complete financial statements.

          For further information, refer to the consolidated financial
          statements and footnotes thereto included in the Company's Annual
          Report on Form 10-K for the year ended December 31, 2000.

Note 2.   Computation of earnings per share for the three months and six months
          ended June 30, 2001 and 2000.

<TABLE>
<CAPTION>
                                                        THREE MONTHS ENDED               SIX MONTHS ENDED
                                                             JUNE 30,                        JUNE 30,
<S>                                                   <C>             <C>             <C>             <C>
                                                       2001            2000            2001            2000
Net income                                          $ 6,698         $ 7,975         $15,152         $13,486

Weighted average number of common                    67,817          70,103          67,947          70,595
shares outstanding used in calculation
of basic earnings per share

Incremental shares from the assumed                     998             568             878             621
 exercise of dilutive stock options

Weighted average number of common shares             68,815          70,671          68,825          71,216
 outstanding used in calculation of
 diluted earnings per share

Earnings per share
             Basic                                  $   .10         $   .11         $   .22         $   .19
                                                    =======         =======         =======         =======

             Diluted                                $   .10         $   .11         $   .22         $   .19
                                                    =======         =======         =======         =======
</TABLE>

                                       6
<PAGE>

Keane, Inc. and Subsidiaries
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 3.    The Company offers an integrated mix of end-to-end business
           solutions, such as Business and IT consulting (Plan), software
           development and integration services including e-Solutions (Build),
           and Application Development and Management Outsourcing (Manage).
           During the first six months of 2001 approximately 94% of the
           Company's revenues was derived from these offerings, with the balance
           from the healthcare industry. Effectively, the Company operates in
           one reportable segment.

Note 4.    Total comprehensive income (i.e. net income plus available-for-sale
           securities valuation adjustments and currency translation adjustments
           to stockholders equity) for the second quarter of 2001 was $7.5
           million and $17.2 million year to date, and for the second quarter of
           2000 was $7.0 million and $12.4 million year to date.

Note 5.    In the fourth quarter of 2000, the Company recorded a restructuring
           charge of $8.6 million. Of this charge $1.7 million related to a
           workforce reduction of approximately 200 employees, primarily
           consultants. In addition, the Company performed a review of its
           business strategy and concluded that consolidating some of its branch
           offices was key to its success. As a result of this review, the
           Company wrote off $3.4 million of assets, which became impaired as a
           result of this restructuring action. The total restructuring charge
           included $3.5 million for branch office closings and certain other
           expenditures.

           A summary of first and second quarter activity with respect to the
           restructuring charge is as follows:


                                   Branch Office
                                   Closures and
                     Workforce     Certain Other
                     Reduction     Expenditures    Total
                     ---------     -------------  -------

Balance 12/31/00        $1,405         $4,927      $6,332

Cash Expenditures        1,405            890       2,295

Balance 3/31/01              -          4,037       4,037

Cash Expenditures            -            440         440

Balance 6/30/01         $    0         $3,597      $3,597

                                       7

<PAGE>

Note 6.    In June 1998, the Financial Accounting Standards Board ("FASB")
           issued Statement of Financial Accounting Standards No. 133 (FAS 133),
           "Accounting for Derivative Instruments and Hedging Activities", which
           required adoption in periods beginning after June 15, 1999. FAS 133
           was subsequently amended by Statement of Financial Accounting
           Standards No. 137, "Accounting for Derivative Instruments and Hedging
           Activities- Deferral of the Effective Date of FASB Statement No.
           133", which made FAS 133 effective for fiscal years beginning after
           June 15, 2000. Accordingly, the Company adopted FAS 133 in the first
           quarter of 2001. The adoption of FAS 133 did not have a significant
           impact on the Company's financial position or results of operations.

           In July 2001, the FASB issued FAS NO. 141, "Business Combinations"
           and FAS No. 142,"Goodwill and Other Intangible Assets." FAS 141
           eliminates the pooling-of-interests method of accounting for business
           combinations except for qualifying business combinations that were
           initiated prior to July 2001. FAS 141 further clarifies the criteria
           to recognize intangible assets separately from goodwill. The
           requirements of Statement 141 are effective for any business
           combination accounted for by the purchase method that is completed
           after June 30, 2001.Under FAS 142, goodwill and indefinite lived
           intangible assets are no longer amortized but are reviewed annually
           (or more frequently if impairment indictors arise) for impairment.
           Separable intangible assets that are not deemed to have an indefinite
           life will continue to be amortized over their useful lives. The
           amortization provisions of Statement 142 apply to goodwill and
           intangible assets acquired after July 1, 2001. With respect to
           goodwill and intangible assets acquired prior to July 1, 2001,
           companies are required to adopt Statement 142 in their fiscal year
           beginning after December 15, 2001. Because of the different
           transition dates for goodwill and intangible assets acquired on or
           before June 30, 2001 and those acquired after that date, pre-existing
           goodwill and intangibles will be amortized during this transition
           period until adoption whereas new goodwill and indefinite lived
           intangible assets acquired after June 30, 2001 will not . The Company
           is currently in the process of evaluating the impact of FAS 142 will
           have on its financial position and results of operations.

Note 7.    On February 5, 2001, the Company completed the divestiture of its
           Help Desk operations in return for $15.7 million in cash. As a result
           of this transaction, the Company incurred a one-time gain of
           approximately $4.0 million, which is reflected in the Company's
           consolidated statements of income under the caption "Other (income)
           expense, net".

                                       8
<PAGE>

KEANE, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

The Quarterly Report on Form 10-Q contains forward-looking statements.  For this
purpose, any statements contained herein that are not statements of historical
fact may be deemed to be forward-looking statements.  Without limiting the
foregoing, the words "believes," "anticipates," "plans," "expects," and similar
expressions are intended to identify forward-looking statements.  There are a
number of important factors that could cause the Company's actual results to
differ materially from those indicated by such forward-looking statements.
These factors include, without limitation, those set forth below under the
caption "Certain Factors That May Affect Future Results."

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

The Company's total revenue for the second quarter of 2001 was $197 million
compared to total revenue of $210 million in the second quarter of 2000,
excluding revenue associated with the Company's Help Desk operations, which was
divested during the first quarter of 2001, and business unit closures as a
result of the Company's restructuring efforts last year, or $221.8 million in
the second quarter of 2000 including these businesses.  Keane's revenue in the
second quarter was impacted by a difficult economic environment for IT services.
However, this was partially offset by increased revenue from the Company's
Application Development and Management (ADM) Outsourcing service, which
represented 52% of total revenue during the second quarter of 2000 or $102
million, an increase of 8% from $94.9 million during the second quarter of 2000.

For the second quarter of 2001, total revenue from the Company's Plan Services,
was $19.2 million, down from Plan revenue of $27.4 million for the second
quarter of last year. Plan revenue is primarily comprised of business innovation
consulting delivered via Keane Consulting Group (KCG), the Company's business
consulting arm, and IT consulting services, which are sold and implemented out
of Keane's network of branch offices. Plan revenue for the quarter was impacted
by project deferrals and cancellations in IT consulting projects delivered from
Keane's network of branch offices resulting from a general decrease in spending
on IT consulting projects.  However, KCG experienced both improved sales and
employee utilization for its business innovation consulting services during the
quarter.

Second quarter 2001 revenue from the Company's Build Services was $70.6 million,
down from $81.7 million in the second quarter of 2000.  Build revenue, which
consists primarily of application development and integration business, has also
been affected by the slowdown in demand for IT services in Keane's operations in
both North America and the United Kingdom. However, Keane was able to limit the
impact of this slowdown by continuing to generate substantial Build project
revenue from its existing Global 2000 customer base, public sector Federal and
State governments, and by focusing on high ROI Enterprise Application
Integration projects.

Revenue from the Company's Manage services, which consists primarily of its
flagship ADM Outsourcing service, grew to $107.2 million during the second
quarter of 2001, up 4% from $102.9 million during the second quarter of 2000,
excluding the divested Help Desk operation.  Revenue from the Company's Help
Desk operations was approximately $9.8 million during the second quarter of
2000.

                                       9
<PAGE>

Revenue associated with business unit closures as a result of the Company's
restructuring efforts announced last year represented approximately $2 million
in revenue during second quarter of 2000.  This $2 million has been included in
reported Plan, Build, and Manage revenue for the second quarter of 2000.

Total revenue for the six months ended June 30, 2001 was $400.1 million,
compared with $412.3 million for the first half of 2000, excluding revenue
associated with Keane's divested Help Desk operation and business unit closures
as a result of the Company's restructuring efforts last year, or $405.3 million
for the first half of 2001 versus $438 million in the first half of 2000
including these businesses. Keane's ADM Outsourcing service represented 50% of
revenue during the first half of 2001, and grew to $202.1 million, up 12% from
$180.1 million during the first six months of 2000.

Plan, Build, and Manage revenue for the first half of 2001 was $39.9 million,
$146.7 million, and $218.7 million, respectively, as compared to  $58.9 million,
$161.2 million, and $212.5 million, respectively, during the first half of 2000.
Excluding Help Desk operations, Manage revenue, was $113.5 million for the first
six months of 2001, up 8% from comparable Manage revenue during the first half
of 2000.

This increase in Keane's Manage revenue was driven by the Company's ADM
Outsourcing business, which has not been impacted by the recent slowdown in the
economy and reduction in IT spending patterns, and in fact, has continued to
grow. Based on the increase in ADM Outsourcing bookings and growth of the sales
pipeline during the second quarter, the Company anticipates that this business
will continue to expand.  Although the Company has experienced improved sales
and employee utilization within Keane Consulting Group, which is part of its
Plan business, as of the end of the second quarter, it has observed no
indication of a healthier economic climate or normalized IT spending.  As a
result, Keane anticipates continued softness in its Application Development and
Integration business, which represents a majority of its Build sector.  However,
the Company expects to maintain a substantial stream of revenue from such
business due to its broad range of development and integration services, strong
customer loyalty, and business from the less cyclical public sector.

Salaries, wages and other direct costs for the second quarter of 2001 were
$137.8 million, or 69.9% of total revenue, compared to $155.2 million, or 70.0%
of total revenue, for the second quarter of 2000. The decline in actual
expenditures is a result of the sale of the company's help desk operations and
its restructuring efforts announced last year to bring cost in alignment with
revenue.  As a result, Keane's gross margins for the second quarter of 2001 grew
slightly to 30.1%, up 100 basis points, from 30.0% during the second quarter of
2000.  For the first six months ended June 30, 2001, salaries, wages and other
direct costs were $282.9 million, or 69.8% of total revenue, compared to $309.8
million, or 70.7% of total revenue for the first half of 2000.  As a result,
Keane's gross margins for the first six months of 2001 grew to 30.2%, up 900
basis points, from 29.3% during the first six months of 2000.

Selling, General & Administrative ("SG&A") expense for the second quarter of
2001 was $46.2 million, or 23.5% of total revenue, compared to $52.2 million, or
23.5% of total revenue, for the second quarter last year.  For the first six
months of 2001 SG&A expense was $95.5 million, or 23.6% of total revenue, versus
$103.4 million, or 23.6% of total revenue for the first six months of 2001. The
decline in actual expenditures for both the second quarter and the first six
months of 2001 is a result of the sale of the Company's Help Desk operations and
aggressive control of discretionary spending to bring cost in alignment with

                                      10
<PAGE>

revenue. The Company will seek to continue to aggressively control discretionary
expenditures until economic conditions improve and IT spending patterns become
more positive.

Amortization of goodwill and other intangible assets for the second quarter of
2001 was $3.5 million, or 1.8% of revenue, compared to $2.7 million, or 1.2% of
revenue, in the second quarter of 2000.  For the first six months of 2001,
amortization of goodwill and other intangible assets was $6.9 million, or 1.7%
of total revenue, compared to $5.6 million, or 1.3% of total revenue, for the
first six months of 2000. The increase in amortization for both the second
quarter and the first six months of 2001 was attributable to additional
intangible assets as a result of the Company's acquisitions of Denver Management
Group and Care Computer Systems in July and September of last year.

Interest and dividend income totaled $1.7 million for the second quarter of
2001, compared to $2.2 million for the same period last year. Interest and
dividend income for the first six months of 2001 totaled $3.3 million, compared
to $4.3 million for the same period last year. The decrease in interest and
dividend income was attributable to lower yields from investments.  Interest
expense and other income for the second quarter of 2001 was $30 thousand, as
compared to $ .4 million of expense for the second quarter of 2000. For the
first six months of 2001, interest expense and other income was $2.2 million, as
compared to $ .8 million of expense for the first six months of 2000. This
increase was the result of a gain of $4 million from the sale of Keane's help
desk operation, and the Company's decision to write-off certain equity
investments totaling $2.1 million during the first quarter of 2001.

The Company's effective tax rate was 40.5% for the second quarter and first six
months of 2001 and 2000.

Net income for the second quarter of 2001 was $6.7 million, down 16% from $8
million in net income for the second quarter of 2000, resulting primarily from
decreased spending on IT services. However, net income for the first six months
of 2001 was $15.2. million, up 12% from $13.5 million in net income for the
first six months of 2000. Diluted earnings per share for the second quarter of
2001 was $.10, down slightly from $.11 during the same period a year ago. For
the first six months, diluted earnings per share was $.22, up from $.19 during
the first six months of 2000.

Net cash provided from operations was $20.4 million during the second quarter of
2001, and  $42.6 million during the first six months of 2001, before proceeds
from the sale of the help desk business of $16.1 and the investment of $4
million for the repurchase of Keane shares.  The Company is focused on
continuing to optimize cash flow in order to fund potential mergers and
acquisitions, stock repurchases, and to build long-term "per share" value.

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

The Company's cash and investments at the end of the second quarter increased to
$160.0 million as compared to a balance of $145.6 million at the close of the
first quarter. This increase was primarily attributable to the decrease in
accounts receivable as a result of the Company's efforts to decrease its Days
Sales Outstanding ("DSO"). The Company's DSO at the end of the second quarter
was 72 days compared to the year- end DSO of 77 days. On February 21, 2001, the
Company announced that it had increased the share repurchase authorization under
the Company's July 26, 2000 share repurchase program by an additional one
million shares. The remaining 869,000 shares available for repurchase under

                                      11
<PAGE>

existing authorization brings the total number of shares authorized for
repurchase to 1,869,000 shares as of February 21, 2001. During the first
quarter, the Company purchased 326,200 shares of Common Stock at a cost of
approximately $4.0 million. There were no shares repurchased during the second
quarter. During the quarter the Company paid $.4 million associated with the
fourth quarter restructuring charge. The payments were primarily related to
branch office closures. The Company maintains and has available a $10 million
unsecured demand line of credit with a major Boston bank for operations and
acquisitions opportunities.

Based on the Company's current operating plan, the Company believes that its
cash and cash equivalents on hand, cash flows from operations, and its current
available line of credit will be sufficient to meet its current capital
requirements for at least in the next twelve months.

IMPACT OF INFLATION AND CHANGING PRICES
---------------------------------------

Inflationary increases in costs have not been material in recent years and, to
the extent permitted by competitive pressures, are passed on to clients through
increased billing rates.  Rates charged by the Company are based on the cost of
labor and market conditions within the industry.  The Company was able to
increase its billing rates over its increases in direct labor costs in 1999.
This is due primarily to the Company's increase in strategic services such as
business innovation consulting and e-solutions, in which the high value of
services commands higher rates.

Certain Factors that May Affect Future Results
----------------------------------------------

The following important factors, among others, could cause actual results to
differ materially from those indicated by forward-looking statements made in
this Quarterly Report on Form 10-Q and presented elsewhere by management from
time to time.

Fluctuations in Operating Results.  Keane has experienced and expects to
---------------------------------
continue to experience fluctuations in its quarterly results.  Keane's gross
margins vary based on a variety of factors including employee utilization rates
and the number and type of services performed by Keane during a particular
period.  A variety of factors influence Keane's revenue in a particular quarter,
including:

 .  general economic conditions which may influence investment decisions or cause
   downzing;

 .  the number and requirements of client engagements;

 .  employee utilization rates;

 .  changes in the rates Keane can charge clients for services;

 .  acquisitions; and

 .  other factors, many of which are beyond Keane's control.

A significant portion of Keane's expenses does not vary relative to revenue.  As
a result, if revenue in a particular quarter does not meet expectations, Keane's
operating results could be materially adversely affected, which in turn may have

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<PAGE>

a material adverse impact on the market price of Keane common stock.  In
addition, many of Keane's engagements are terminable without client penalty. An
unanticipated termination of a major project could result in an increase in
underutilized employees and a decrease in revenue and profits.

Risks Relating to Acquisitions.  In the past five years, Keane has grown
------------------------------
significantly through acquisitions.  Since January 1, 1999, Keane has completed
the acquisitions of Emergent Corporation in San Mateo, California, Amherst
Consulting Group, Inc, in Boston, Massachusetts, Advanced Solutions Inc. in New
York, New York, Anstec, Inc. of McLean, Virginia, First Coast Systems, Inc. of
Jacksonville, Florida, Parallax Solutions Limited, of Birmingham, England,
Denver Management Group, of Denver, Colorado and Care Computer Systems, Inc. of
Bellevue, Washington.  Keane's future growth may be based in part on selected
acquisitions. At any given time, Keane may be in various stages of considering
such opportunities.  Keane can provide no assurances that it will be able to
find and identify desirable acquisition targets or that it will be successful in
entering into a definitive agreement with any one target.  Also, even if a
definitive agreement is reached, there is no assurance that any future
acquisition will be completed.

Keane typically anticipates that each acquisition will bring certain benefits,
such as an increase in revenue.  Prior to completing an acquisition, however, it
is difficult to determine if such benefits can actually be realized.
Accordingly, there is a risk that an acquired company may not achieve an
increase in revenue or other benefits for Keane.  In addition, an acquisition
may result in unexpected costs, expenses and liabilities and may be dilutive to
Keane shareholders.  Any of these events could have a material adverse effect on
Keane's business, financial condition and results of operations.

The process of integrating acquired companies into Keane's existing business may
also result in unforeseen difficulties.  Unforeseen operating difficulties may
absorb significant management attention, which Keane might otherwise devote to
its existing business.  Also, the process may require significant financial
resources that Keane might otherwise allocate to other activities, including the
ongoing development or expansion of Keane's existing operations.  Finally,
future acquisition could result in Keane having to incur additional debt and/or
contingent liabilities. All of these possibilities might have a material adverse
effect on Keane's business, financial condition and result of operations.

Dependence on Personnel.  Keane believes that its future success will depend in
-----------------------
large part on its ability to continue to attract and retain highly skilled
technical and management personnel.  The competition for such personnel is
intense.  Keane may not succeed in attracting and retaining the personnel
necessary to develop its business.  If Keane does not, its business, financial
condition and result of operations could be materially adversely affected.

Highly Competitive Market.  The market for Keane's services is highly
-------------------------
competitive.  The technology for custom software services can change rapidly.
The market is fragmented.  Consequently, Keane's competition for client
assignments and experienced personnel varies significantly from city to city and
by the type of service provided.  Some of Keane's competitors are larger and
have greater technical, financial and marketing resources and greater name
recognition in the markets they serve than does Keane.  In addition, clients may
elect to increase their internal information systems resources to satisfy their
custom software development needs.

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<PAGE>

Keane believes that in order to compete successfully in the software services
industry it must be able to:

 .  compete cost-effectively;

 .  develop strong client relationships;

 .  generate recurring revenues;

 .  utilize comprehensive delivery methodologies; and

 .  achieve organizational learning by implementing standard operational
   processes.

In the healthcare software systems market, Keane competes with some companies
that are larger in the healthcare market and have greater financial resources
than Keane.  Keane believes that significant competitive factors in the
healthcare software systems market include size and demonstrated ability to
provide service to targeted healthcare markets.

Keane may not be able to compete successfully against current or future
competitors.  In addition, competitive pressures faced by Keane may materially
adversely affect its business, financial condition and results of operations.

International Operations.  Keane's international operations are subject to
------------------------
political and economic uncertainties, currency exchange rate fluctuations,
foreign exchange restrictions, changes in taxation and other difficulties in
managing operations overseas.  Keane may not be successful in its international
operations.

As a result of these and other factors, the Company's past financial performance
should not be relied on as an indication of future performance.  Keane believes
that period to period comparisons of its financial results are not necessarily
meaningful and it expects that results of operations may fluctuate from period
to period in the future.

Quantitative and Qualitative Disclosures about Market Risk.  The Company does
----------------------------------------------------------
not engage in trading market risk sensitive instruments or purchasing hedging
instruments or other trading instruments that are likely to expose the Company
to market risk, whether interest rate, foreign currency exchange, and commodity
price or equity price risk. The Company has not purchased options or entered
into swaps or forward or futures contracts. The Company's primary market risk
exposure is that of interest rate risk on its investments, which would affect
the carrying value of those investments. Additionally, the Company transacts
business in the United Kingdom and as such has exposure associated with movement
in foreign currency exchange rates.

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<PAGE>

KEANE, INC. AND SUBSIDIARIES

                          Part II - Other Information
--------------------------------------------------------------------------------

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

        The following matters were submitted to a vote of the stockholders at
        the 2001 Annual Meeting of Stockholders of the Company held on May 30,
        2001 (the "Annual Meeting"): (1) fixing the number of directors at seven
        and electing the nominees listed below to the Board of Directors for the
        ensuing year, (2) approving the adoption of the Company's 2001 Stock
        Incentive Plan, (3) approving an amendment to the Company's 1992
        Employee Stock Purchase Plan to increase the number of shares authorized
        for issuance under such plan from 2,550,000 to 4,550,000, and (4)
        ratifying and approving the selection by the Board of Directors of Ernst
        & Young LLP as the Company's independent accountants for the current
        year. The number of shares of Common Stock and Class B Common Stock
        issued, outstanding and eligible to vote as of the record date of April
        2, 2001 was 67,499,400 shares and 284,891 shares, respectively. Each of
        these matters were approved by the requisite vote of the stockholders.
        Set forth below is the number of votes cast for, against or withheld, as
        well as the number of abstentions and broker non-votes as to each such
        matter, including a separate tabulation with respect to each nominee for
        director:

        Proposal #1 - To fix the number of directors at seven and to elect a
        Board of Directors for the ensuing year.


                                FOR           WITHHELD     ABSTAIN    NON-VOTES
        John F. Keane           58,725,520    1,627,024
        Brian T. Keane          59,115,434    1,237,110
        John F. Keane, Jr.      58,870,265    1,482,279
        John F. Rockart         59,688,292      664,252
        Robert A. Shafto        59,688,297      664,247
        Winston R. Hindle, Jr.  59,680,193      672,351
        Philip J. Harkins       58,727,589    1,624,955

        Proposal #2 - To approve the adoption of the Company's 2001 Stock
        Incentive Plan.

                                                                        BROKER
                                FOR           AGAINST     ABSTAIN     NON-VOTES

                                32,863,397   17,364,207    989,617    9,135,323

                                      15
<PAGE>

        Proposal #3 - To approve an amendment to the Company's 1992 Employee
        Stock Purchase Plan to increase the number of shares authorized for
        issuance under such plan from 2,550,000 to 4,550,000.

                                                                       BROKER
                               FOR           AGAINST      ABSTAIN    NON-VOTES

                               48,922,484    1,336,994     957,743   9,135,323

        Proposal #4 - To ratify and approve the selection by the Board of
        Directors of Ernst & Young LLP as the Company's independent accountants
        for the current year.

                                                                       BROKER
                               FOR           AGAINST      ABSTAIN    NON-VOTES

                               59,804,020     456,962       91,561       1


Item 5. Exhibits and Reports on Form 8-K

        (a) Exhibits - 10.1 Amended and Restated Guidance Promissory Note

        (b) Reports on Form 8-K. The Registrant filed no Current Reports on
            Form 8-K during the quarter ended June 30, 2001.

                                      16
<PAGE>

                                 SIGNATURES
--------------------------------------------------------------------------------

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

                                         KEANE, INC.
                                         (Registrant)

          August 7, 2001                  /s/ Brian T. Keane
Date __________________________    ___________________________________
                                      Brian T. Keane
                                      President and Chief Executive Officer


          August 7, 2001                  /s/ John J. Leahy
Date __________________________    ___________________________________
                                      John J. Leahy
                                      Senior Vice President and
                                      Chief Financial Officer
                                      (Principal Financial and Accounting
                                         Officer)


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