**UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549**

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**FORM 10-K**

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(MARK ONE)

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

**For the fiscal year ended December 31, 2000**

**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:   0-22993**

**INDUS INTERNATIONAL, INC.**
(Exact name of Registrant as Specified in its Charter)



|**Delaware**                                                   | **94-3273443**                         
|-------------------------------------------------------------- | ---------------------------------------
|(State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification Number)

**60 Spear StreetSan Francisco, California,    94105**(Address of Principal Executive Offices including Zip Code)

**(415) 904-5000**(Registrant's Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act: None

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

**Common Stock, $.001 par value**(Title of Class)

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  [   ]

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.       [   ]

The aggregate market value of the voting stock held by non-affiliates of the
Registrant, based upon the closing sale price of the Common Stock on February 15,
2001 as reported on the Nasdaq National Market, was approximately $51,344,000.
Shares of Common Stock held by each officer and director and by each person who
owns 5% or more of the outstanding Common Stock have been excluded in that such
persons may by deemed to be affiliates.  This determination of affiliate status
is not necessarily a conclusive determination for other purposes.

The number of shares outstanding of the registrant's Common Stock, $.001 par
value was 34,695,394 at February 15, 2001.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Proxy Statement for Registrant's 2001
Annual Meeting of Stockholders to be held May 24, 2001 are incorporated by
reference in Part III hereof, to the extent stated herein.







**INDUS INTERNATIONAL, INC.
                                   FORM 10-K**
                     FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000

**TABLE OF CONTENTS**



|Part I.    |                                                                                       | Page
|---------- | ------------------------------------------------------------------------------------- | ----
|Item 1.    | Description of Business                                                               | 3   
|Item 2.    | Properties                                                                            | 16  
|Item 3.    | Legal Proceedings                                                                     | 16  
|Item 4.    | Submission of Matters to a Vote of Security Holders                                   | 17  
|Part II.   |                                                                                       |     
|Item 5.    | Market for the Registrant's Common Equity and Related Stockholder Matters             | 17  
|Item 6.    | Selected Financial Data                                                               | 17  
|Item 7.    | Management's Discussion and Analysis of Financial Condition and Results of Operations | 19  
|Item 7a.   | Quantitative and Qualitative Disclosures About Market Risks                           | 22  
|Item 8.    | Financial Statements and Supplementary Data                                           | 23  
|Item 9.    | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure  | 44  
|Part III.  |                                                                                       |     
|Item 10.   | Directors and Executive Officers of the Registrant                                    | 44  
|Item 11.   | Executive Compensation                                                                | 44  
|Item 12.   | Security Ownership of Certain Beneficial Owners and Management                        | 44  
|Item 13.   | Certain Relationships and Related Transactions                                        | 44  
|Part IV.   |                                                                                       |     
|Item 14.   | Exhibits, Consolidated Financial Statement Schedules and Reports on Form 8-K          | 45  
|Signatures |                                                                                       | 48  

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THIS DOCUMENT CONTAINS FORWARD-LOOKING STATEMENTS
REGARDING THE COMPANY'S COMPETITIVE PROSPECTS, PRODUCTS, BUSINESS PLANS, AND
EXPECTED FINANCIAL RESULTS. ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE
DISCUSSED IN SUCH FORWARD-LOOKING STATEMENTS, AND STOCKHOLDERS OF INDUS
INTERNATIONAL, INC. (THE "COMPANY") SHOULD CAREFULLY REVIEW THE CAUTIONARY
STATEMENTS SET FORTH IN THIS FORM 10-K, INCLUDING "RISK FACTORS" BEGINNING ON
PAGE 11 HEREOF. THE COMPANY MAY FROM TIME TO TIME MAKE ADDITIONAL WRITTEN AND
ORAL FORWARD-LOOKING STATEMENTS, INCLUDING STATEMENTS CONTAINED IN THE COMPANY'S
FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION AND IN ITS REPORTS TO
STOCKHOLDERS. THE COMPANY DOES NOT UNDERTAKE TO UPDATE ANY FORWARD-LOOKING
STATEMENT THAT MAY BE MADE FROM TIME TO TIME BY OR ON BEHALF OF THE COMPANY.

PART I

ITEM 1. DESCRIPTION OF BUSINESS

General



Markets of primary focus for the Company's products
include utilities, communications, defense, energy resource extraction, and
process industries. As of December 31, 2000, the Company's products were
licensed for use by over 300,000 end users representing 460 customers in 45
countries.

The Indus Solution Series is designed to interoperate with
popular third-party applications that provide best business practices functions
to its customers. Through strategic alliances, the Company works with software
providers, such as Oracle Corporation ("Oracle"), and PeopleSoft, Inc.
("PeopleSoft"), and systems integrators, such as Accenture (formerly Andersen
Consulting), Deloitte Consulting, and PricewaterhouseCoopers to create a
software series that provides seamless interoperability with corporate and
financial applications, expert systems, and certain industry specific systems
that enable the Company's customers to improve operating efficiencies, reduce
costs and comply with governmental regulation.

The software tools comprising the Indus Solution Series
are based on an open client/server architecture featuring a layered and object-oriented
software design that enables customers to use various operating
systems, operate on multiple hardware platforms and interoperate with many
third-party software applications and legacy systems. Proprietary systems
implementation methodology tools and best practice education tools facilitate
rapid and effective deployment and utilization of its EAM applications.

The Company's EAM solutions include consulting services
provided by subject matter experts. This unique approach helps customers
implement advanced EAM maintenance principles, materials management theories,
and other advanced strategies designed to provide a competitive advantage to the
customer. The service package content comprising this business process
improvement solution leverages the knowledge gained from hundreds of customer
implementations, the extensive plant experience of the Company's employees, and
the global experience of its user community.

Regionally located in close proximity to customer sites,
the Company's professional services organization supports the Indus sales
organization. The resulting process provides a high quality information exchange
as customers learn how the Indus Solution Series addresses industry-specific
requirements. The Company also offers global 7 (days a week) x 24 (hours a day)
multilingual customer support. The Company believes this combination of
enterprise software, vertically oriented consulting services and worldwide
customer support enables customers to increase equipment and production
capacity, reduce operating costs, and safeguard the workforce and the
environment.

In September 1999, the Company announced its eBusiness
initiatives, including myindus.com, which are focused on next generation
internet applications, portals and web-based solutions for the EAM market.

Indus, Indus Solution Series, IndusWorld, PassPort
Software Solutions, ABACUS, ABACUS Toolkit, Sextant, PORTAL/G, PORTAL/95,
PORTAL/97, PORTAL/J, ViewPort, Prism Consulting, Enterprise MPAC, Indus
Knowledge Warehouse Curator, AssetWare, AssetCare, myindus.com and
CareNet are trademarks and servicemarks of the Company. All other brand names or
trademarks are the property of their respective holders.

The Company was formed through the combination of The
Indus Group, Inc., a California corporation, and TSW International, Inc., a
Georgia corporation, in August 1997.

Products and Services

The Company offers software products and service
packages that incorporate sophisticated EAM methodologies, extensive subject
matter expertise and advanced technology designed to interoperate seamlessly
with other enterprise business information systems. Marketed as theIndus Solution Series, these business tools support the needs of an
organization's core decision makers in the operations and maintenance workforce,
inventory management and procurement professionals, safety and compliance
engineers, and related disciplines affected by asset care decisions throughout
the enterprise. This customer user group is supported by such Indus software
solutions as: Asset & Work Management Systems, Materials & Procurement
Systems, and Safety & Compliance Systems, which seamlessly integrate to
third party corporate financial systems from Oracle, PeopleSoft, and other
providers. Beyond providing departmental information to affected workgroups
throughout the customer organization, EAM techniques employed by the Company
integrate process control systems from vendors such as Allen-Bradley and Johnson
Controls, optimizing capacity utilization through just-in-time maintenance
management practices. The Indus Solution Series reflects EAM best practices,
including Reliability Centered Maintenance (RCM), Total Productive Maintenance
(TPM), web-based electronic commerce, and handheld mobile units to enable
customers to apply Indus software solutions as a means to achieving a strategic
and competitive advantage.

A proprietary implementation methodology and set of data
content "workbenches" round out the service package offerings available from the
regionally positioned professional services solutions centers throughout the
Americas, Europe, Middle East and Africa and Asia Pacific. Marketed as ABACUS
tools and implementation methodology, ABACUS enables rapid implementation and
configuration of Indus software solutions. Workbenches are a set of software
tools which support application development, data migration and installation
support used by the Company and its customers to develop, install and configure
Indus software solutions. Integration products are also sold to enable Indus
software solutions to interoperate with corporate financial, payroll, human
resources, geographic information systems, outage management, and customer
information applications systems available, and other industry-specific programs
included in the Company's Business Partner Alliance program.

The Indus Solution Series

EAM application business systems comprising the Indus
Solution Series are designed to reflect the requirements of specific vertical
industry functions, and the technical architecture traditionally employed in
these industries. The resultant transaction engines are designed to support
Indus Solution Series products. Functions within the application product lines
have been tailored to encapsulate vertical business processing requirements that
are augmented by subject matter expertise and consulting service packages, which
uniquely position Indus to deliver a total solution across the enterprise.

Indus Solution Series for Utilities, Communications and
Defense Industries

Indus Solution Series for Utilities, Communications
and Defense Industries provide a series of business applications and business
process improvement service packages that meet the needs of both integrated
electric and gas utilities or standalone utility business units including:
nuclear, fossil, and hydroelectric power generating stations; water and
pollution control plants and defense logistics support. The specific needs of
communications companies are also addressed in a related offering for these
firms.

Specific packaged solutions in this series include:

> Indus Solution Series for Nuclear Power  Generation
>                    	Indus Solution Series for Fossil Power Generation
>                    	Indus Solution Series for Hydroelectric Power  Generation
>                    	Indus Solution Series for Energy Distribution and  Delivery
>                    	Indus Solution Series for Energy Transmission and  Substations
>                    	Indus Solution Series for Water and Water Pollution  Control
>                    	Indus Solution Series for Defense Logistics
>                    	Indus Solution Series for Communications

Indus Solution Series for Energy Resource Extraction and
Process Industries

Indus Solution Series for Energy Resource Extraction
and Process Industries provide a set of business applications that meet the
needs of capital-intensive businesses seeking a competitive advantage through
the application of technology. Business applications and subject matter
expertise in the areas of delivering advanced enterprise asset management
strategies across the enterprise have been packaged to meet the needs of
specific vertical industries in the series.

Specific packaged solutions in this series include:

> Indus Solution Series for Chemical, Petrochemical,  Oil, and Gas
>                    	Indus Solution Series for Metals & Mining
>                    	Indus Solution Series for Pulp, Paper and Forest
>                    	Indus Solution Series for Consumer Packaged Goods
>                    	Indus Solution Series for Public Transit
>                    	Indus Solution Series for Facilities Management

Product Architecture and Development Strategy for Indus
Products

Commercial Off-the-shelf Technology. The Company
utilizes industry-standard tools and technologies to develop its products,
enabling Software Solutions comprising this series to evolve along with rapidly
emerging standards and best business practices. The Company's products are
largely platform independent, running on industry-standard UNIX and Windows NT
servers including the IBM RS/6000, HP 9000, Sun SPARCstation and Intel-based
systems. The Company's architecture utilizes the functionality of both Oracle
and IBM's DB2 databases with both text-based and graphical user interfaces.
Commencing with its latest product releases, the Company provides versions of
its client products on the Internet, for both E-Commerce (Extranet) and internal
(Intranet) applications. The Company's "next generation" clients also support a
Windows Explorer navigational ability, which can be accessed from the native
product client as well as the Internet. The Company is also the first EAM vendor
to provide a suite of Mobile Computing modules to support critical field and
warehouse business practices.

Partitioned Application Architecture. The layers
of the Company's application architecture-the user interface, business logic,
data storage, workflow and browser interface-are interoperable but not
interdependent and support an n-tier environment. For example, changes to the
database layer are not dependent on the user interface. The partitioning built
into the Company components minimizes the Company's dependence on third-party
vendors and efficiently utilizes desktop computers, "thin client," servers and
networks. The Company believes this architecture reduces its exposure to the
risks of technology or market shifts that require changes in one or more of the
layers, and enables rapid exploitation of technology advances.

Object-oriented Design and Third-party
Interoperability. The Company develops its products through an object-oriented design and
development methodology by which software "objects" (i.e.,
collections of properties and methods) are used as building blocks to model
real-world business processes. Further, the Company's architecture is designed
to be an open system with Application Program Interfaces ("APIs") that enable
easy interoperability and extension at the application level. The APIs are
available to third party developers to facilitate the integration of Indus
Software Solutions with other client/server applications. The Company believes
object-oriented development has several benefits including software reusability,
which results in decreased development expense and improved software quality,
and component management, which allows customers to implement and upgrade
subsets of the application.

Flexible Network Technology. The Company's
applications can be installed in a network configuration to enable customers to
take full advantage of client/server technology with low cost and low
maintenance "thin clients." Network-centric implementation is attractive to
clients concerned about the acquisition and systems management expense
associated with personal computers. The efficient network architecture inherent
in its Indus products is particularly important to clients with low-bandwidth
networks, prevalent in developing markets, which require the minimization of
network traffic to support advanced client/server applications.

Implementation Methodology and Related Services

Indus software solutions are implemented through the
Company's proprietary ABACUS tools and implementation methodology. ABACUS
consists of software-driven analytical tools, implementation plans and
educational resources that encapsulate the Company's extensive experience in
implementing enterprise management software solutions. ABACUS provides a step-
by-step implementation life cycle framework for all installation, integration,
and education and business review activities. In addition, ABACUS enhances the
ongoing effectiveness of Indus software solutions and assists customers in
improving their business processes.

ABACUS software tools use a time-sensitive and track-oriented approach
to help customers and the Company's business experts,
technical specialists and training professionals implement the Company's
applications. In addition to interactively identifying implementation
procedures, ABACUS contains over 575 "best practice" examples of how such
procedures were performed by other process industry companies, drawn from the
Company's extensive experience in implementing enterprise asset management
software solutions. The Company currently licenses ABACUS software tools in
conjunction with Indus software solutions, which includes the use of the ABACUS
ToolKit, a version of the ABACUS software that allows customers to tailor their
internal project goals and objectives with other corporate initiatives, modify
implementation plans and associated deliverables, supporting specific
project/progress reporting, etc. Versions of ABACUS products have been created
to effectively address the Company's entire product suite, as well as
implementation requirements and best practice selections of interest to specific
vertical industries.

A critical component of the ABACUS implementation is the
partnership between the software provider (the Company) and the customer. At the
outset of the project, the Company assigns a Project Manager or Account
Executive to help ensure a successful, on-schedule implementation. Throughout
the implementation process, the Company's customer's team defines and then
executes a customer-specific, yet time-proven, implementation process that
focuses heavily on critical Business Process Improvement (BPI) and Return on
Investment (ROI) processes to drive current and future customer success. The
Company has also developed alliances with several of the "big five" accounting
firms, and consulting firms, as well as smaller third party implementers and
providers. This ensures that customers with specific requirements can leverage
the value-added services of these firms when implementing the Indus Solution
Series.

Indus Solution Series Workbenches

A series of best practice workbenches assist
information engineers in the development of business application systems and
post-development implementation support. These workbenches include programming
tools, data services workbenches for data load and system interface exercises,
data migration tools, and archiving mechanisms. These productivity tools help
the Company demonstrate rapid development of high quality, highly functional
applications on predictable schedules and within established budgets. The
Company also leverages critical third party components, such as RDBMS, Network,
and Operating system tools, to help customers manage their software both during
implementation and production.

The Company also licenses Indus Solution Series
Workbenches to customers desiring the ability to modify business applications to
suit internal needs and to perform system administration and maintenance over
the application life cycle.

Customer Support, Software Maintenance and Training

In addition to the standardized services offered
through ABACUS, the Company offers systems integration, customer support,
software maintenance and training through its regionally positioned professional
services capability. The Company provides systems integration and customer
support on a time and materials basis. The Company provides software maintenance
for a fixed fee based on the number and types of applications licensed.

To help track and coordinate customer support and service
requirements, the Company has employed a service product marketed as CareNet.
This customer care system, used throughout the global support organization,
provides the customer support team with a consistent approach towards an
interactive help desk, warranty support, and post-implementation services which
are widely used by its customers. Experienced product specialists who have
direct access to product development teams and technology specialists staff the
help desk. A computerized system is used to log, track, close, and analyze all
customer calls.

Indus Education Services and Products, the Company's
training division, designs, manages, and implements comprehensive education and
training solutions for its user community. The Company's training and technical
professionals provide instructional design and courseware development services,
training coordination support, train-the-trainer and end-user programs, and
technical training for customer installations worldwide. In addition, the
Company has developed a comprehensive set of training courseware to educate and
train customers and internal staff. Subjects covered by the courseware range
from application product basics to conducting business process reviews. Open
enrollment training courses are provided at the Company's training centers in
San Francisco, California, Atlanta, Georgia, Dallas, Texas, Pittsburgh,
Pennsylvania and internationally in London, England, Paris, France, and
Brisbane, Australia. In addition, training is also provided at customer sites at
the customer's option. The Company also provides computer-based and web-based
training modules to provide additional value to customers who desire these
training needs. Finally, the Indus Solution Series' online help and wizards,
including its CoPilot tool, help to guide the new user through standard work
processes by providing context-sensitive assistance and pop-up screens.

Customers

The Company provides enterprise management software
solutions to large process industry customers primarily in the energy industry,
continuous process industries, industrial manufacturing and the public sector.
Customer groups within these capital-intensive markets include: electric and gas
utilities, telecommunications providers, petrochemical refineries, mining and
metals, forest products producers, consumer packaged goods manufacturers,
educational systems, and governmental and military institutions.

As of December 31, 2000, the Company products were
licensed for use by over 300,000 end-users representing 460 customers in 45
countries. One customer accounted for 12.2% and 13.2% of Company's total
revenues in 2000 and 1999. No single customer accounted for 10% or more of the
Company's total revenues in 1998.



Sales and Marketing

The corporate marketing function is organized into
vertical business areas, which comprise capital intensive facilities and process
industries targeted by the Company. By segmenting the market into vertical
business areas, the Company can package and deliver its products and service
offerings effectively to the industries it serves. These markets and subsectors
consist of the following:

Utilities, Communications and Defense Industries

Water and pollution control
   Nuclear power generation
   Fossil power generation
   Hydroelectric power generation
   Energy Transmission and substations
   Energy distribution and delivery
   Defense logistics
   Communications

Energy Resource Extraction and Process Industries

Chemical, petrochemical, oil, and gas
   Metals and mining
   Pulp, paper and forest
   Process manufacturing
   Consumer packaged goods
   Public transit
   Facilities management

The Company markets and sells its products and services
in three primary areas of the world: (i) the Americas, with direct sales
representatives in the US, Canada, Argentina and Brazil; (ii) Europe, the Middle
East & Africa, with direct sales representatives in the UK, France and the
United Arab Emirates, and (iii) Asia-Pacific, with direct sales representatives
in Australia and Japan. In addition to these direct marketing and sales
resources, the Company utilizes business partner relationships and channel
partner programs directly and indirectly in other parts of the world. As of
December 31, 2000, the Company's Sales and Marketing organization consisted of
136 employees. The marketing staff is based at the Company's offices in
Atlanta, GA., while the sales organization is decentralized throughout the
three operational centers.

The direct sales cycle begins with the generation of a
sales lead, or the receipt of a request for proposal from a prospect, which is
followed by qualification of the lead, an analysis of the customer's needs,
response to a request for proposal, one or more presentations to the customer
utilizing the special knowledge of the industry vertical pre-sales staff,
customer internal sign-off activities, and contract negotiation and
finalization. While the sales cycle varies depending on the customer, the sales
cycle generally requires from three to nine months.

In support of its sales force, the Company conducts
comprehensive industry-specific vertical marketing programs which include public
relations, trade advertising, industry seminars, trade shows and ongoing
customer communication programs through IndusWorld, the Company's international
user group. In addition, the Company's Account Manager Program provides regional
support and specialized attention for each of its customers. Account Managers
assist in implementing licensed applications over multi-year engagements,
promote licensing of additional applications, and encourage existing customers
to identify and help fund new applications.

Strategic Relationships

Through its alliance and channel partner programs,
the Company intends to continue to develop new products, to keep pace with the
latest technological developments, and to extend its marketing, sales and
support efforts by building synergy between the Company's products and services
and those available from complementary third party providers. The Company has
entered into strategic alliances and other formal and informal relationships
with major software and hardware vendors and with consulting firms, service
providers and systems integrators. Members of the Company's Alliance and Partner
programs assist the Company with sales and support activities and with product
localization in foreign countries.

Indus Alliance Program

The Indus Alliance Program is comprised of third
party providers of complementary software products, which interoperate with
Indus software solutions through integration products to provide additional
license revenues and services to the Company while delivering a broad suite of
enterprise-wide software capabilities. Membership in this program includes
Oracle for corporate financial and human resources systems, PeopleSoft for
corporate financial, human resources and payroll systems, and Nuclear Fuels
Services/Radiation Protection Systems for jointly developed Nuclear Health
Physics Systems marketed as Total Exposure. Other third party integration
alliance partners are currently under consideration by the Company.

Indus Partner Program

The Indus Partner Program consists of three classes
of third party providers including: Indus Service Partners (foreign and
domestic), Indus Solution Series Platform Partners, and partners in the Indus
Extension Program.

Indus Service Partners include third-party
consultants and system integration firms that help deliver the services required
to implement Indus Software Solutions. These recognized firms add specialty
knowledge to assist in training and reengineering services, help provide staff
leveling and supply peak load project resources to the regional operators. These
resources assist in the delivery of ABACUS services on an as-needed basis.
Domestically, implementation partners include: Accenture (formerly Andersen
Consulting), PriceWaterhouseCoopers, Computer Science Corporation, Deloitte
& Touche Consulting Group, Solbourne Group, Cimcorp, and The Application
Group. International implementation partners include Enidata, Euriware, Gulf
Data International, Innova, Maxon Engineering Services, Inc., Eagle
Technologies, International Computers South Africa and PosData.

Indus Series Platform Partners are computer
hardware providers and operating system software providers that help the Company
remain technologically current with evolving releases of software and hardware
upgrades. Cooperative marketing, joint trade show participation, and vendor fair
participation at the Company WORLD EXPO Annual Conference of the User Group are
extended to this cooperative group of vendors. The Company participates in the
Hewlett-Packard Channel Program, Digital Equipment's Business Partner Program,
the IBM Business Partner Program, Sun MicroSystems Alliance Program, as well as
Microsoft's Solution Provider Program and Oracle's Cooperative Applications
Initiative.

The Indus Extension Program is comprised of third
party vendors offering products, which provide value-added product extensions or
specialty services, taking Indus Solution Series data beyond the specified scope
of the Company's application systems. Both specialty hardware and specialty
point solution software vendors are recognized in this program which include
offerings from: Harbinger Corporation (Acquion, Inc.), Commerce One, Inc.,
Dolphin Software, DEI Group, iMedeon, Inc., Intermat, Meridium Corporation,
Primavera, Sqribe Technologies Corporation, Tadcom, and Telxon Corporation. For
industries with distributed assets, integration is provided with AM/FM/GIS
solutions from Intergraph, SHL Vision and Smallworld Corporation.

Research and Development

The Company has a dedicated research, development and
software engineering organization, and regularly releases new products and
enhancements to existing products. Research and development efforts are directed
at increasing product functionality, improving product performance, and
extending the capabilities of the products to interoperate with selected third-
party software products available from alliance partners such as Oracle,
PeopleSoft and others. These efforts include developing new applications that
address new horizontal and vertical functions.

The Company believes that research and development is
most effectively accomplished if customers are involved in the process. Through
direct customer involvement and consensus input from user group oversight
committees, InSight and InFocus, product content is improved and the customer
acceptance of new software deployment significantly increased. In addition, the
interactive development process promotes increased customer awareness of the
technological features of the product and fosters greater product loyalty.

As of December 31, 2000, the Company had 426 employees
engaged in research and development. The Company's research and development
expenses were approximately $30.4 million, $33.8 million and $51.6 million in
1998, 1999 and 2000 respectively. Development costs funded by customers as part
of license and service contracts are included as part of cost of revenues.

Competition

The EAM software solutions business is highly
competitive, constantly changing, and significantly affected by new product and
technology innovations brought about by industry participants. The Company's
competitors include companies in the enterprise, departmental, and point
solutions market segments. At the enterprise solution level, the Company's main
competitor is SAP. The Company counters SAP by offering solution sets that
provide baseline integration to Oracle's corporate financial and human resources
applications and PeopleSoft's corporate financial, payroll, and human resources
applications. In the departmental or plant solutions market for "Tier 1"
customers having annual revenues greater than one billion dollars, the Company
competes primarily with other EAM software vendors such as Mincom Corp., MRO
Software, Inc. (formerly Project Software & Development, Inc.), Marcam,
Walker, and Datastream, Inc. Point solutions vendors such as Severn Trent
Systems, Synercom, and others provide competing software products to industry
sub-sectors such as transmission and distribution of electric power for
utilities. In the future, the Company may also face competition from Oracle,
PeopleSoft and SPL WorldGroup B.V., if these vendors elect to broaden their
solutions to include some components of EAM functionality. In addition, the
Company faces competition from suppliers of custom-developed business
application software that have focused largely on proprietary mainframe- and
microcomputer-based systems with highly customized software, such as the systems
consulting groups of major accounting firms and systems integrators. A host of
Internet-based application vendors, who offer state-of-the-art systems that can
complement the Indus Solution Series, may become competitors in certain cases
where they attempt to extend their solutions to cover the entire range of Supply
Chain Management or other activities. The Company also faces competition from
systems developed by the internal MIS departments of large organizations.

Proprietary Rights and Licensing

The Company relies on a combination of the
protections provided under applicable copyright, trademark and trade secret
laws, as well as on confidentiality procedures and licensing arrangements to
establish and protect its rights in its software. Despite the Company's efforts,
it may be possible for unauthorized third parties to copy certain portions of
the Company's products or to reverse engineer or obtain and use information that
the Company regards as proprietary. In addition, the laws of certain countries
do not protect the Company's proprietary rights to the same extent, as do the
laws of the United States. Furthermore, the Company has no patents, and existing
copyright laws afford only limited protection. Accordingly, there can be no
assurance that the Company will be able to protect its proprietary software
against unauthorized third party copying or use, which could adversely affect
the Company's competitive position.

The Company licenses its applications to customers under
license agreements, which are generally in standard form, although each license
is individually negotiated and may contain variations. The standard form
agreement allows the customer to use the Company's products solely on the
customer's computer equipment for the customer's internal purposes, and the
customer is generally prohibited from sub-licensing or transferring the
applications. The agreements generally provide that the Company's warranty for
its products is limited to correction or replacement of the affected product,
and in most cases the Company's warranty liability may not exceed the licensing
fees from the customer. The Company's form agreement also includes a
confidentiality clause protecting proprietary information relating to the
licensed applications.

The Company's products are generally provided to
customers in object code (machine-readable) format only. From time to time, in
limited circumstances, the Company has licensed source code (human-readable
form) subject to customary protections such as use restrictions and
confidentiality agreements. In addition, customers can be beneficiaries of a
master source code escrow for the applications, pursuant to which the source
code will be released to end users upon the occurrence of certain events, such
as the commencement of bankruptcy or insolvency proceedings by or against the
Company, or certain material breaches of the agreement. The Company has the
right to object to the release of the source code in such circumstances, and to
submit the matter to dispute resolution procedures. In the event of any release
of the source code from escrow, the customer's license is limited to use of the
source code to maintain, support and configure the Company applications.

The Company may from time to time receive notices from
third parties claiming infringement by the Company's products of proprietary
rights of others. As the number of software products in the industry increases
and the functionality of these products further overlap, the Company believes
that software developers may become increasingly subject to infringement claims.
Any such claims, with or without merit, can be time consuming and expensive to
defend or could require the Company to enter into royalty and licensing
agreements. Such agreements, if required, may not be available on terms
acceptable to the Company, or at all.

Employees

As of December 31, 2000, the Company employed 1,016
people, of which 426 were primarily engaged in research and development
activities, 374 in post-sales support and customer project operations, 136 in
sales and marketing, and 80 in administration and finance. None of the Company's
employees is represented by a labor union. The Company has experienced no work
stoppages and believes that its relationship with its employees is
excellent.

The Company's future success depends, in large part, on
the continued service of its key management, sales, product development and
operational personnel and on its ability to attract and retain highly qualified
employees, including management personnel. There can be no assurance that the
Company will be successful in attracting, retaining and motivating key
personnel.



Executive Officers

The executive officers of the Company as of February 15, 2001 were as
follows:

|Name of Nominee     | Age | Principal Occupation                                                           
|------------------- | --- | -------------------------------------------------------------------------------
|Kent O. Hudson	.    | 47  | President and Chief Executive Officer                                          
|Richard H. Beatty	. | 54  | Executive Vice President and Chief Operating Officer, President
of myindus.com 
|J. Michael Highland | 40  | Executive Vice President Finance and Administration and Chief
Financial Officer



Mr. Hudson has served as President and Chief Executive
Officer, and director, of the Company since January 11, 2000. During 1999, he
was a consultant for myindus.com. Since August 1998, he has been and
continues to serve as the President of Trinity Coast, Inc., a management
consulting firm. From July 1997 to September 1998, he was President and Chief
Executive Officer of Strategic Resource Solutions, the non-regulated subsidiary
of Carolina Power and Light. From November 1991 to June 1997, he was Founder and
Chief Executive Officer of Applied Computer Technologies, an EAM software
solution for educational institutions, prior to its acquisition by Carolina
Power and Light.

Mr. Beatty has served as Executive Vice President and
Chief Operating Officer, and director of the Company since January 11, 2000. He
has also served as President of myindus.com since August 1999. From 1996
to August 1999 he was an independent consultant. From 1992 to 1996 he served as
President, Consulting Services for SHL SYSTEMHOUSE. From 1980 to 1992 he was a
Partner at Andersen Consulting.

Mr. Highland has served as Executive Vice President
Finance and Administration and Chief Financial Officer since February 1, 2001.
He served as Chief Operating Officer for Gainor Medical Management, Inc., a
diabetes disease management provider and medical device distributor from 1996 to
1999 and was their Chief Financial Officer from 1995 to 1996. From 1994 to 1995
he was the Chief Financial Officer of Automated Systems Design, Inc., and from
1991 to 1994 he was a manager with Arthur Andersen & Co.

Employment Agreements

All the executive officers of the company have
employment contracts with the Company.





Risk Factors



Volatility of Operating Results

Fluctuating Operating Results. The Company's
operating results have fluctuated in the past, and the Company's results may
fluctuate significantly in the future depending on a number of factors,
including (i) the relatively long sales cycles for its products, (ii) the
variable size and timing of individual license transactions, (iii) changes in
demand for its products and services and market acceptance of new products,
including any eBusiness offerings, (iv) competitive conditions in the industry,
(v) changes in customer budgets, (vi) the timing of the introduction of new
products or product enhancements by each such company or its competitors, (vii)
its success in and costs associated with developing and introducing new
products, including the necessary software and technology for its eBusiness and/or next
generation product initiatives, (viii) product life cycles, (ix)
variability in new licenses obtained, (x) changes in the proportion of revenues
attributable to licensing fees versus services, (xi) changes in the level of
operating expenses, (xii) delay or deferral of customer implementations of their
software, (xiii) software defects and other product quality problems, (xiv)
effect of SEC requirements and AICPA Statements of Position on the Company's
revenue recognition, and (xv) other economic conditions, generally, or in
specific process industry segments. Further, the purchase of the Company's
products generally involves a significant commitment of capital, with the
attendant delays frequently associated with large capital expenditures and
authorization procedures within large organizations. For these and other
reasons, the sales cycles for the Company's products are typically lengthy and
subject to a number of significant risks over which each such company has little
or no control, including customers' budget constraints and internal
authorization reviews. In addition, delays in the completion of a product
implementation may require that the revenues associated with such implementation
be recognized over a longer period than originally anticipated. Such delays in
the implementation or execution of orders have caused, and may in the future
cause, material fluctuations in the Company's operating results. Similarly,
customers may cancel implementation projects at any time without penalty, and
such cancellations could have a material adverse effect on the Company's
business or results of operations. Because the Company's expenses are relatively
fixed, a small variation in the timing of recognition of specific revenues can
cause significant variations in operating results from quarter to quarter and
may in some future quarter result in losses or have a material adverse effect on
the Company's business or results of operations.

Additional factors that may contribute to future
fluctuations in the Company's quarterly operating results include, but are not
limited to: (i) the development and introduction of new operating systems that
require additional development efforts, including any eBusiness initiatives,
(ii) the introduction or enhancement of products by the Company or its
competitors, (iii) changes in demand for the Company's products and services,
(iv) economic conditions in process industry segments, (v) changes in pricing
policies of the Company or its competitors, (vi) increased competition, (vii)
technological changes in computer systems and environments, (viii) the ability
of the Company to timely develop, introduce and market new products, (ix) the
quality control of products sold, (x) changes in demand for the Company's
products and services, including any eBusiness and/or next generation product
initiatives, (xi) market acceptance of new products and product enhancements,
including any eBusiness and/or next generation product offerings, (xii) the
Company's successful completion of customer funded development and
implementation projects, (xiii) the Company's success in expanding its sales and
marketing programs, (xiv) personnel changes including changes in Company
management, (xv) changes in the Company's sales organization, (xvi) foreign
currency exchange rates, (xvii) the mix of products sold, (xviii) acquisition
costs, and (xix) general economic conditions.

New Products; New Markets

In September 1999, the Company announced its
eBusiness initiatives which are focused on next generation internet products,
applications, portals and web-based solutions for the EAM market. There can be
no assurance that the Company's eBusiness offerings will be sold successfully in
the business-to-business eBusiness market or if they can achieve market
acceptance. The Company's future success in the eBusiness market will depend on
its ability to accurately determine the functionality and features required by
its customers, as well as the ability to enhance its eBusiness products and
deliver them in a timely manner.

The internet market is an emerging market that may
undergo rapid technological change. The Company cannot predict the present and
future size of the potential market for its eBusiness products and services. The
Company may incur substantial costs to enhance and modify its products and
services in order to meet the demands of this potential market.

Management and Dependence on Key Personnel

Changes to the Company's business and customer base
have placed a strain on management and operations. Previous expansion had
resulted in substantial growth in the number of its employees, the scope of its
operating and financial systems and the geographic area of its operations,
resulting in increased responsibility for management personnel. The Company
depends on the service of key personnel to manage the Company's business.

In the future, the Company will be required to improve
its financial and management controls, reporting systems and procedures on a
timely basis and to expand, train and manage its employee work force. There can
be no assurance that the Company will be able to effectively manage its
operations. Failure to do so would have a material adverse effect on its
business, operating results and financial condition. Competition for qualified
sales, technical and other personnel is intense, and there can be no assurance
that the Company will be able to attract, assimilate or retain additional highly
qualified employees in the future. The Company continues to experience
significant changes to its senior management. If the Company were unable to hire
and retain personnel, particularly those in key positions, including senior
management, its business, operating results and financial condition would be
materially adversely affected. The Company's future success also depends in
significant part upon the continued service of its key technical, sales and
senior management personnel. The loss of the services of one or more of these
key employees could have a material adverse effect on its business, operating
results and financial condition. Additions of new and departures of existing
personnel, particularly in key positions, can be disruptive and have a material
adverse effect on the Company's business, operating results and financial
condition.

Intense Competition



Possible Decrease in Market Demand

Overall demand for enterprise software may grow more
slowly or actually decrease in upcoming quarters and years. This may reflect a
saturation of the market for enterprise software as well as deregulation and
retrenchment affecting the way companies purchase enterprise software. The
Company has reported a decrease in software licensing fees by 33.8% in 2000 as
compared to 1999. To the extent that a slowdown in the market for enterprise
software market materializes, the Company's business, results of operations and
financial condition are likely to be adversely affected.

Rapid Technological Change; Need to Develop New Products;
Requirement for Frequent Product Transitions

The industries in which the Company participates are
intensely competitive and characterized by rapid technological change, evolving
industry standards in computer hardware and software technology changes in
customer requirements and frequent new product introductions and enhancements.
The introduction of products embodying new technologies, the emergence of new
standards or changes in customer requirements could render the Company's
existing products obsolete and unmarketable. As a result, the Company's success
will depend in part upon its ability to continue to enhance existing products
and expand its products, continue to provide enterprise solutions and develop
and introduce new products that keep pace with technological developments,
satisfy increasingly sophisticated customer requirements and achieve customer
acceptance. Customer requirements include, but are not limited to, product
operability and support across distributed and changing heterogeneous hardware
platforms, operating systems, relational databases and networks. There can be no
assurance that the Company's products will achieve customer acceptance or will
adequately address the changing needs of the marketplace or that the Company
will be successful in developing and marketing enhancements to its existing
products or new products incorporating new technology on a timely basis. The
Company has in the past experienced delays in product development, and there can
be no assurance that the Company will not experience further delays in
connection with its current product development or future development
activities. If the Company is unable to develop and introduce new products, or
enhancements to existing products, in a timely manner in response to changing
market conditions or customer requirements, the Company's business, operating
results and financial condition will be materially and adversely affected.
Because the Company has limited resources, the Company must effectively manage
and properly allocate and prioritize its product development efforts and its
porting efforts relating to newer products and operating systems. There can be
no assurance that these efforts will be successful or, even if successful, that
any resulting products or operating systems will achieve customer
acceptance.

Risks of International Operations

International revenue (from sales outside the
United States, Canada and Mexico) accounted for approximately 13%, 16% and 21%
of total revenues in 1998, 1999 and 2000, respectively. The Company maintains an
operational presence in the United Kingdom, Australia, France, and Japan. In
addition, the Company has established sales and support offices in Europe,
Australia and Japan, and expects international sales to continue to become a
more significant component of its business. International expansion may require
the Company to establish additional foreign operations and hire additional
personnel. This may require significant management attention and financial
resources and could adversely affect the Company's operating margin. To the
extent the Company is unable to effect these additions efficiently and in a
timely manner, its growth, if any, in international sales will be limited, and
its business, operating results and financial condition could be materially and
adversely affected. There can be no assurance that the Company will be able to
maintain or increase international market demand for its products.

The Company's international business will also involve a
number of additional risks, including lack of acceptance of localized products,
cultural differences in the conduct of business, longer accounts receivable
payment cycles, greater difficulty in accounts receivable collection,
seasonality due to the annual slow-down in European business activity during the
Company's third fiscal quarter, unexpected changes in regulatory requirements
and royalty and withholding taxes that restrict the repatriation of earnings,
tariffs and other trade barriers, and the burden of complying with a wide
variety of foreign laws. The Company's international sales are generated
primarily through its international sales subsidiaries and indirect sales
channel partners creating a risk of foreign currency translation gains and
losses. To the extent profit is generated or losses are incurred in foreign
countries, the Company's effective income tax rate may be materially and
adversely affected. In some markets, localization of the Company's products will
be essential to achieve market penetration. The Company may incur substantial
costs and experience delays in localizing its products, and there can be no
assurance that any localized product will ever generate significant revenue.
There can be no assurance that any of the factors described herein will not have
a material adverse effect on the Company's future international sales and
operations and, consequently, its business, operating results and financial
condition.

Recent economic fluctuations, particularly in the Asia-Pacific
marketplace, have caused a heightened awareness of the impact this
portion of the world's economy can have on the overall economy. As the Asia-Pacific market
currently represents almost one-third of the world's buying power
and approximately 3% of the Company's revenues in 1999 and 2000, changes in this
area's economic growth rate may impact suppliers of product into that market.
While the actual magnitude of the business at risk is unknown, it is likely that
capital spending in this market will continue to fluctuate and thus, the
Company's ability to increase revenues in this region may be negatively
impacted.

Dependence on Proprietary Technology; Risks of
Infringement

The Company's success is heavily dependent upon its
proprietary technology. The Company will rely on a combination of the
protections provided under applicable copyright, trademark and trade secret
laws, confidentiality procedures and licensing arrangements, to establish and
protect its proprietary rights. As part of its confidentiality procedures, the
Company will generally enter into non-disclosure agreements with its employees,
distributors and corporate partners, and license agreements with respect to its
software, documentation and other proprietary information. Despite these
precautions, it may be possible for unauthorized third parties to copy certain
portions of the Company's products or to reverse engineer or obtain and use
information that the Company regards as proprietary, to use the Company's
products or technology without authorization, or to develop similar technology
independently. Moreover, the laws of certain countries do not protect the
Company's proprietary rights to the same extent, as do the laws of the United
States. Furthermore, the Company has no patents, and existing copyright laws
afford only limited protection. The Company will make source code available for
certain of its products and providing such source code may increase the
likelihood of misappropriation or other misuses of the Company's intellectual
property. Accordingly, there can be no assurance that the Company will be able
to protect its proprietary software against unauthorized third party copying or
use, which could adversely affect the Company's competitive position.

The Company is not aware that any of its products
infringe the proprietary rights of third parties. There can be no assurance,
however, that a third party will not assert that the Company's technology
violates its patents in the future. As the number of software products in the
industry increases and the functionality of these products further overlap, the
Company believes that software developers may become increasingly subject to
infringement claims. Any such claims, with or without merit, can be time
consuming and expensive to defend or could require the Company to enter into
royalty and licensing agreements. Such royalty or license agreements, if
required, may not be available on terms acceptable to the Company or at all,
which could have a material adverse effect upon the Company's business,
operating results and financial condition.



Lengthy Sales and Implementation Cycle; Large Order Size

The purchase and implementation of the Company's
software solutions by a customer will generally involve a significant commitment
of capital over a long period of time, with the risk of delays frequently
associated with large capital expenditures and implementation procedures within
an organization, such as budgetary constraints and internal approval review.
During the sales process, the Company may devote significant time and resources
to a prospective customer, including costs associated with multiple site visits,
product demonstrations and feasibility studies, and experience significant
delays over which the Company will have no control. In addition, following
license sales, the implementation of the Company's products will involve a
lengthy process, including customer training and consultation. A successful
implementation will require a close working relationship between the Company,
the customer and, if applicable, third party consultants and systems integrators
who assist in the process. These factors may increase the costs associated with
completion of any given sale, and risks of cancellation or delay of such
sales.

Dependence on Licensed Technology from Third Parties

Elements of the Company's products are licensed from
third parties under license agreements. The loss of the Company's right to use
and license such technology could limit the Company's ability to successfully
market certain modules or products. While the Company believes that it would be
able to either license or develop alternatives to such component technologies,
there can be no assurance that the Company would be able to do so, or that such
alternatives would achieve market acceptance or be available on a timely basis.
Failure to obtain the necessary licenses or to develop needed technologies could
have a material adverse effect on the Company's business, operating results and
financial condition.

Risks Associated with British Energy Funded Development
and Implementation

The Company signed a co-development and
implementation agreement with British Energy plc ("British Energy") in May 1999
under which the Company will provide products and services over a three-year
period. Over the term of the agreement, the Company is obligated to install the
Indus Solution Series at each British Energy facility, which currently includes
eight power stations. Due to the size of this project, problems with the
successful and timely completion of the British Energy funded development and
implementation may have a material effect on the future financial results of the
Company.

Risk of Software Defects; Product Liability

The sale and support of the Company's products may
entail the risk of product liability claims. The license agreements of the
Company typically contain provisions designed to limit exposure to potential
product liability claims. It is possible, however, that the limitation of
liability provisions contained in such license agreements may not be effective
as a result of federal, state or local laws or ordinances or unfavorable
judicial decisions. A successful product liability claim brought against the
Company could have a material adverse effect upon the Company's business,
operating results and financial condition.

Effect of Securities and Exchange Commission ("SEC")
Requirements and American Institute of Certified Public Accountants ("AICPA")
Statements of Position on the Company's Revenue Recognition

In October 1997, the AICPA issued Statement of
Position ("SOP") no. 97-2 "Software Revenue Recognition" which superceded SOP
No. 91-1. SOP No. 97-2 was effective for the Company's fiscal year beginning
June 1, 1998, as amended by SOP No. 98-4 and SOP No. 98-9, and provides guidance
on applying generally accepted accounting principles for software recognition
transactions. In December 1999, the SEC issued Staff Accounting Bulletin No. 101
("SAB"), Revenue Recognition in Financial Statements" which provides further
revenue recognition guidance. The accounting profession continues to review
certain provisions of SOP No. 97-2 and SAB 101 with the objective of providing
additional guidance on implementing its provisions. Depending on the outcome of
these reviews and the issuance of implementation guidelines and interpretations,
the Company may be required to change its revenue recognition policies and
business practices, and such changes could have a material adverse impact on the
Company's business, results of operations or financial position.

Past andFuture Acquisitions

The Company, as well as its predecessor corporations,
The Indus Group, Inc. and TSW International, Inc., have made acquisitions in the
past. The Company may make additional acquisitions in the future. Acquisitions
of companies, divisions of companies or products entail numerous risks,
including difficulty in successfully assimilating acquired operations, diversion
of management's attention and loss of key employees of acquired companies.
Products acquired by The Indus Group, Inc. and TSW International, Inc., in the
past, required significant additional development before they could be marketed
and some failed to generate any revenue for The Indus Group, Inc. or TSW
International, Inc. Any problems related to acquisitions, could have a material
adverse effect on the Company's business, operating results and financial
condition.

Pending Litigation

Beginning in February 2000, the Company and several
of its former officers and/or directors were named as defendants in securities
class action cases filed in the United States District Court, Northern District
of California. The complaints were brought on behalf of all persons who
purchased Indus common stock between October 28, 1999, when the Company issued a
press release announcing unaudited financial statements for the third quarter of
1999; through January 27, 2000, when the Company announced its intention to
restate those financial statements. In August 2000, all parties to the
litigation agreed to a settlement. Under the settlement, defendants' insurance
carriers paid $4.3 million. In January 2001, the court granted final approval of
the settlement and entered into a judgement dismissing the litigation with
prejudice. The Company continues to cooperate with the SEC regarding the
restatement.

In June 2000, the Company was served with a demand for
arbitration by William Grabske, the Company's former Chief Executive Officer.
Mr. Grabske seeks enforcement of a purported Settlement Agreement and Mutual
Release. The demand seeks severance pay and reimbursement of expenses of
approximately $1.0 million plus interest, options for approximately 20,000
shares of stock in the Company and fees and costs. The Company has asserted
counterclaims alleging it was fraudulently induced to enter into the Settlement
Agreement and Mutual Release, and setting forth other claims. The parties have
agreed to arbitrate their dispute before Judicial Arbitration and Mediation
Services, Inc. ("JAMS").

In January 2001, the Company was notified of the filing
of a lawsuit by Robert Pocsik, the Company's former Chief Administrative
Officer. The complaint alleges breach of implied contract and of the covenant of
good faith and fair dealing, and defamation. The complaint appears to allege
that plaintiff was wrongfully terminated; and that unnamed representatives of
the Company gave unnamed persons, on unspecific occasions, false reasons for the
termination. The complaint does not allege an amount of damages, other than that
the damages exceed $25,000. If the complaint is served the Company intends to
vigorously contest plaintiff's claims, and to assert counterclaims.

From time to time, the Company is involved in other legal
proceedings incidental to the conduct of its business. While the outcome of
these claims cannot be predicted with certainty, the Company does not believe
that such matters, individually or in the aggregate, to which it is currently a
party are likely to have a material adverse effect on the results of operations
or financial condition.

The Company intends to defend itself vigorously in these
actions. However, any settlement or judgment may have a material adverse effect
on the Company's results of operations in the period in which such settlement or
judgment is paid or payment becomes probable.





ITEM 2. PROPERTIES

Certain information concerning the Company's office space at
December 31, 2000 is set forth below:

|Location                       |  | Principal use                                                                     |  | Square Footage |  | Ownership Interest
|------------------------------ |  | --------------------------------------------------------------------------------- |  | -------------- |  | ------------------
|Domestic Offices:              |  |                                                                                   |  |                |  |                   
|Atlanta, GA                    |  | Regional Operations, Research and Development, Sales and
Marketing, Operations    |  | 107,200        |  | Lease             
|San Francisco, CA              |  | Corporate Headquarters, Research and Development, Sales and
Marketing, Operations |  | 95,323         |  | Lease             
|Pittsburgh, PA                 |  | Regional Operations                                                               |  | 30,821         |  | Lease             
|Dallas, TX                     |  | Regional Operations                                                               |  | 9,041          |  | Lease             
|Lake Oswego, OR                |  | Regional Operations                                                               |  | 5,507          |  | Lease             
|Irvine, CA                     |  | Regional Operations                                                               |  | 2,502          |  | Lease             
|                               |  |                                                                                   |  |                |  |                   
|International Offices:         |  |                                                                                   |  |                |  |                   
|Woking, Surrey, United Kingdom |  | Regional Operations                                                               |  | 10,300         |  | Lease             
|Brisbane, Australia            |  | Regional Operations                                                               |  | 6,695          |  | Lease             
|Paris, France                  |  | Regional Operations                                                               |  | 6,660          |  | Lease             
|Toronto, Canada                |  | Regional Operations                                                               |  | 7,977          |  | Lease             

Management is currently and will continue to
evaluate additional leased facilities to accommodate the anticipated growth in
operations for 2001. The Company owns substantially all of the equipment used in
its facilities.





ITEM 3. LEGAL PROCEEDINGS

Beginning in February 2000, the Company and
several of its former officers and/or directors were named as defendants in
securities class action cases filed in the United States District Court,
Northern District of California. The complaints were brought on behalf of all
persons who purchased Indus common stock between October 28, 1999, when the
Company issued a press release announcing unaudited financial statements for the
third quarter of 1999; through January 27, 2000, when the Company announced its
intention to restate those financial statements. In August 2000, all parties to
the litigation agreed to a settlement. Under the settlement, defendants'
insurance carriers paid $4.3 million. In January 2001, the Court granted final
approval of the settlement and entered into a judgement dismissing the
litigation with prejudice. The Company continues to cooperate with the SEC
regarding the restatement.

In June 2000, the Company was served with a demand for
arbitration by William Grabske, the Company's former Chief Executive Officer.
Mr. Grabske seeks enforcement of a purported Settlement Agreement and Mutual
Release. The demand seeks severance pay and reimbursement of expenses of
approximately $1.0 million plus interest, options for approximately 20,000
shares of stock in the Company and fees and costs. The Company has asserted
counterclaims alleging it was fraudulently induced to enter into the Settlement
Agreement and Mutual Release, and setting forth other claims. The parties have
agreed to arbitrate their dispute before JAMS.

In January 2001, the Company was notified of the filing
of a lawsuit by Robert Pocsik, the Company's former Chief Administrative
Officer. The complaint alleges breach of implied contract and of the covenant of
good faith and fair dealing, and defamation. The complaint appears to allege
that plaintiff was wrongfully terminated; and that unnamed representatives of
the Company gave unnamed persons, on unspecific occasions, false reasons for the
termination. The complaint does not allege an amount of damages, other than that
the damages exceed $25,000. If the complaint is served the Company intends to
vigorously contest plaintiff's claims, and to assert counterclaims.

From time to time, the Company is involved in other legal
proceedings incidental to the conduct of its business. While the outcome of
these claims cannot be predicted with certainty, the Company does not believe
that such matters, individually or in the aggregate, to which it is currently a
party are likely to have a material adverse effect on the results of operations
or financial condition.

The Company intends to defend itself vigorously in these
actions. However, any settlement or judgment may have a material adverse effect
on the Company's results of operations in the period in which the such
settlement or judgment is paid or payment becomes probable.





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

No matters were submitted to a vote of security
holders of the Company during the fourth quarter of the fiscal year ended
December 31, 2000.



PART II



ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS

The Company's common stock, $.001 par value, is
traded on the Nasdaq National Market under the symbol "IINT". The table sets
forth the high and low closing prices of the Company's common stock for the
periods indicated.



|                             | High | Low    
|---------------------------- | ---- | -------
|Year ended December 31, 1999 |      |        
|First Quarter                | $    | 6-5/8  
|Second Quarter               |      | 5-1/2  
|Third Quarter                |      | 5-1/2  
|Fourth Quarter               |      | 12-3/16
|Year ended December 31, 2000 |      |        
|First Quarter                | $    | 13-5/8 
|Second Quarter               |      | 9-5/16 
|Third Quarter                |      | 9-5/16 
|Fourth Quarter               |      | 6-1/1  

The Company anticipates that any future
earnings will be retained to finance the continuing development of its business.
The Company has not declared or paid any cash dividends on its Common Stock and
does not anticipate paying cash dividends in the foreseeable future.

On July 15, 1999, the Company's Board of Directors
approved a stock repurchase program for up to 2,000,000 shares of the Company's
outstanding common stock. The Company is authorized to use available cash to buy
back its shares in open market transactions from time to time, subject to price
and market conditions. No purchases were made in 2000. As of December 31, 2000,
the Company held, as treasury stock, 435,500 shares that had been repurchased at
a cost of $2.2 million under the program.





ITEM 6. SELECTED FINANCIAL DATA

The following selected consolidated financial
data of the Company is qualified by reference to and should be read in
conjunction with the consolidated financial statements and notes thereto and
other financial information included elsewhere herein. During 1997, The Indus
Group, Inc. entered into an Agreement and Plan of Merger and Reorganization with
TSW International, Inc. The merger was consummated on August 25, 1997 and was
accounted for as a pooling of interests. All financial information was restated
to reflect the combined operations of The Indus Group, Inc. and TSW
International, Inc. The summary consolidated balance sheet data as of December
31, 1999 and 2000 and summary consolidated statements of operations data for the
years ended December 31, 1998, 1999, and 2000 are derived from and qualified by
reference to the audited consolidated financial statements of the Company which
are included elsewhere herein. The summary consolidated balance sheet data as of
December 31, 1996, 1997 and 1998 and the summary consolidated statement of
operations for the years ended December 31, 1996 and 1997 are derived from the
audited consolidated financial statements of the Company which are not included
herein.



`Years Ended December 31,
                                                      -------------------------------------------------
                                                          1996      1997      1998      1999      2000
                                                      --------- --------- --------- --------- ---------
                                                              (in thousands, except per share data)
Statement of operations data:
Revenues:
   Software licensing fees...........................  $43,060   $55,958   $55,546   $19,071   $12,622
   Services and maintenance .........................   97,515   119,382   138,956   158,160   131,956
   Other revenue ....................................    2,463     1,694       975     1,274     1,111
                                                      --------- --------- --------- --------- ---------
     Total revenues .................................  143,038   177,034   195,477   178,505   145,689
Cost of revenues (1).................................   63,738    78,575   103,517    98,050    90,880
                                                      --------- --------- --------- --------- ---------
Gross margin ........................................   79,300    98,459    91,960    80,455    54,809
                                                      --------- --------- --------- --------- ---------
Operating expenses:
   Research and  development ........................   23,265    27,664    30,372    33,801    51,607
   Sales and marketing ..............................   26,523    33,568    31,517    31,667    49,348
   General and administrative .......................   14,951    14,991    15,270    18,145    20,944
   Merger and restructuring expenses ................      --     12,083       --        --      2,063
                                                      --------- --------- --------- --------- ---------
     Total operating expenses .......................   64,739    88,306    77,159    83,613   123,962
                                                      --------- --------- --------- --------- ---------
Income (loss) from operations .......................   14,561    10,153    14,801    (3,158)  (69,153)
Gain on sale of investment in TenFold Corporation  ..      --        --        --     38,170       --
Other income (expense) net ..........................   (1,887)   (1,968)     (936)    3,120     3,712
                                                      --------- --------- --------- --------- ---------
Income (loss) before taxes ..........................   12,674     8,185    13,865    38,132   (65,441)
Provision (credit)  for income taxes ................    6,849     6,408       450    14,295    (6,666)
Cumulative effect of deferred income taxes
   provided upon conversion by Indus to C
   Corporation (2) ..................................    6,700       --        --        --        --
                                                      --------- --------- --------- --------- ---------
Income (loss) before extraordinary item .............     (875)    1,777    13,415    23,837   (58,775)
Extraordinary item ..................................      --       (787)      --        --        --
                                                      --------- --------- --------- --------- ---------
Net Income (loss) ...................................    ($875)     $990   $13,415   $23,837  ($58,775)
                                                      ========= ========= ========= ========= =========
Pro forma statement of operations as adjusted:
   Income  before income taxes ......................  $12,674
   Provision  for income taxes (federal, state
      and foreign) (2) ..............................    6,849
                                                      ---------
   Pro forma net income  ............................   $5,825
                                                      =========
Income (loss) per share (computed on pro forma
   net income (loss) in 1996 - basic (3) )...........    $0.22     $0.03     $0.44     $0.74    ($1.72)
                                                      ========= ========= ========= ========= =========
Shares used in computing per share data .............   25,976    28,574    30,717    32,109    34,248
                                                      ========= ========= ========= ========= =========


                                                                          December 31,
                                                      -------------------------------------------------
                                                          1996      1997      1998      1999      2000
                                                      --------- --------- --------- --------- ---------
                                                                          (in thousands)
Balance sheet data:
Working capital .....................................  $43,064   $37,238   $58,609   $95,872   $43,466
Total assets ........................................  117,855   136,725   150,785   168,901   140,732
Short-term debt .....................................   16,951    29,054    21,005       301        71
Long-term debt ......................................    2,126     1,105       257       163        71
Subordinated long-term notes ........................   18,065      --        --        --        --
TSW redeemable preferred stock ......................   18,100      --        --        --        --
Total stockholders' equity ..........................   20,666    70,230    86,075   118,352    68,957`

(1)	Includes a $6.8 million writedown of third party software
available for sale in 2000.

(2)	Prior to January 1, 1996, The Indus Group, Inc. was
not subject to federal corporate income taxation because of its election to be
taxed under the provisions of Subchapter S of the Code. Pro forma net income for
1996 reflects the elimination of a nonrecurring charge for the cumulative effect
of deferred income taxes incurred in the first quarter of 1996 in connection
with the termination of The Indus Group's S Corporation status. See Note 1 to
the Consolidated Financial Statements.

(3)	After $0.03 per share loss from extraordinary item in
1997. Fully diluted per share amounts differ in 1996 ($0.20), 1998 ($0.38) and
1999 ($0.68).







ITEM 7. MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION



The Company has experienced, and may in the future
experience, significant fluctuations in revenues and operating results. The
Company's revenues and operating results in general, and in particular its
revenues from new licenses, are relatively difficult to forecast for a number of
reasons, including: (i) the relatively long sales cycles for the Company's
products, (ii) the variable size and timing of individual license transactions,
(iii) changes in demand for the Company's products and services, (iv)
competitive conditions in the industry, (v) changes in customer budgets, (vi)
the timing of the introduction of new products or product enhancements by the
Company or its competitors, (vii) the Company's success in and costs associated
with developing and introducing new products, (viii) product life cycles, (ix)
changes in the proportion of revenues attributable to license fees versus
services, (x) the percentage of license fees attributable to third party
software, (xi) changes in the level of operating expenses, (xii) delay or
deferral of customer implementations of the Company's software, (xiii) software
defects and other product quality problems, and (xiv) effect of SEC requirements
and AICPA Statements of Position on the Company's revenue recognition, (xv)
other economic conditions generally or in specific industry segments. Further,
the purchase of the Company's products generally involves a significant
commitment of capital, with the attendant delays frequently associated with
large capital expenditures and authorization procedures within large
organizations. For these and other reasons, the sales cycles for the Company's
products are typically lengthy and subject to a number of significant risks over
which the Company has little or no control, including customers' budget
constraints and internal authorization reviews. In addition, delays in the
completion of a product implementation may require that the revenues associated
with such implementation be recognized over a longer period than originally
anticipated. Such delays in the implementation or execution of orders have
caused, and may in the future cause, material fluctuations in the Company's
operating results. Similarly, customers may cancel implementation projects at
any time without penalty, and such cancellation could have a material adverse
effect on the Company's business or results of operations. Because the Company's
expenses are relatively fixed, a small variation in the timing of recognition of
specific revenues can cause significant variations in operating results and may
in some future period result in losses or have a material and adverse effect on
the Company's business or results of operations.



RESULTS OF OPERATIONS

Operating Results

The following table sets forth for the periods indicated
the percentage of total revenues represented by certain line items in the
Company's statements of operations:

`Percentage of Total Revenues
                                                     Years Ended December 31,
                                                --------------------------------
Statement of Operations Data:                        1998       1999       2000
                                                ---------- ---------- ----------
Revenues:
   Software licensing fees ....................      28.4%      10.7%       8.7%
   Services, and maintenance and other ........      71.6%      89.3%      91.3%
                                                ---------- ---------- ----------
     Total revenues ...........................     100.0%     100.0%     100.0%
Cost of revenues (including $6,838 writedown of
   third party software held for sale in 2000).      53.0%      54.9%      62.4%
                                                ---------- ---------- ----------
Gross margin ..................................      47.0%      45.1%      37.6%
                                                ---------- ---------- ----------
Operating expenses:
   Research and development ...................      15.5%      18.9%      35.4%
   Sales and marketing ........................      16.1%      17.7%      33.9%
   General and administrative .................       7.8%      10.2%      14.4%
   Restructuring expenses .....................      --         --          1.4%
                                                ---------- ---------- ----------
     Total operating expenses .................      39.4%      46.8%      85.1%
                                                ---------- ---------- ----------
Income (loss) from operations .................       7.6%     (1.7%)    (47.5%)
Gain on sale of investment in TenFold
  Corporation..................................      --         21.4%      --
Other income (expense) net ....................     (0.5%)       1.7%       2.5%
                                                ---------- ---------- ----------
Income (loss) before income taxes .............       7.1%    (21.4%)    (45.0%)
Provision (credit) for income taxes ...........       0.2%       8.0%     (4.6%)
                                                ---------- ---------- ----------
Net income (loss)..............................       6.9%      13.4%    (40.4%)
                                                ========== ========== ==========`

Revenues.

Cost of Revenues. Cost of revenues consists primarily
of: (i) personnel and related costs for implementation (including account
executive personnel), (ii) training and customer support services and (iii)
sublicense fees to third parties upon the sale of the Company's product
containing such third-party software. Gross margin on license fees is
substantially higher than gross margin on service revenue, reflecting the low
packaging and production costs of software products and third party software
costs compared with the relatively high personnel costs associated with
providing implementation, maintenance, consulting and training services.

Cost of revenues decreased 5.3% from $103.5 million in 1998
to $98.1 million in 1999 and decreased 7.3% to $90.9 million in 2000. As a
percent of total revenue, cost of revenues was 53.0%, 54.9%, and 62.4% for 1998,
1999, and 2000, respectively. The 1999 and 2000 decrease in absolute dollars in
cost of revenues was due principally to the decrease in revenues. However, the
increase in cost of revenues in 2000, as a percent of revenues, was attributable
to a $6.8 million writedown of third party software available for sale.

Research and Development (R&D). Research and
development expenses consist primarily of: (i) personnel and related costs and,
(ii) third party consultant fees directly attributable to the development of new
software application products, enhancements to existing products and the porting
of Indus' products to different platforms.

Research and development expenses increased 11.3% from $30.4
million in 1998 to $33.8 million in 1999 and 52.7% to $51.6 million in 2000, and
represented 15.5%, 18.9%, and 35.4%, respectively, of total revenues in those
years. The increase in research and development expenses reflects the Company's
investment in its incubator for web strategies, products and services-including
the development of eLearning, eComerce and Application Service Provider (ASP)
Solutions. The Company believes that a significant level of investment in
R&D is essential to remain competitive.

Sales and Marketing. Sales and marketing expenses
include personnel costs, sales commissions, and the costs of advertising, public
relations and participation in industry conferences and trade shows. Sales and
marketing expenses increased 0.5% from $31.5 million in 1998 to $31.7 million in
1999 and increased 55.8% to $49.3 million in 2000. As a percent of total
revenues, sales and marketing expenses were 16.1%, 17.7%, and 33.9% for 1998,
1999, and 2000, respectively. The increase in sales and marketing expense in
each year related primarily to expansion of the sales and marketing staff, and
advertising and promotional costs for strategic alliance programs and eBusiness
initiatives.

General and Administrative. General and administrative
expenses include the costs of finance, human resources and administrative
operations. General and administrative expenses increased 18.8% from $15.3
million in 1998 to $18.1 million in 1999 and increased 15.4% to $20.9 million in
2000. These expenses represented 7.8%, 10.3%, and 14.4% of total revenues in
those years, respectively. General and administrative expenses increased as a
percentage of total revenues from 1999 to 2000 due to the decrease in revenue,
the relatively fixed nature of some portions of general and administrative
expenses, changes in management personnel, and the write down of $0.6 million
related to an impaired acquired intangible asset.

Restructuring Expenses. In 2000, the Company recorded
$2.1 million in restructuring costs related to relocation of certain
administrative functions from San Francisco, California to Atlanta, Georgia.
The relocation was approved by the Board of Directors in July 2000. The
restructuring expenses include costs of $0.8 million for severance pay for
approximately 50 affected employees, and $1.3 million for lease termination
costs associated with reducing leased space in San Francisco. As of December 31,
2000 approximately $0.5 million of the $2.1 million had been paid. The Company
anticipates paying the remaining balance in the first and second quarters of
2001 and will incur additional period costs of approximately $0.4 million
related to the relocation during the same period.

Gain on Sale of Investment in TenFold Corporation. In
March 1997, Indus Group, Inc. acquired a 10% interest in TenFold Corporation, a
private software company for approximately $8 million in cash. In May 1999, the
Company sold its interest in TenFold Corporation, which resulted in a $38.2
million gain.

Interest Income and Interest Expense. In 1999 net
interest income was $3.2 million. The change from net interest expense of $1.0
million in 1998 to net interest income of $3.2 million in 1999 was due to
reductions in the Company's borrowings and increases in the Company's cash and
marketable securities. Net interest income increased 19% from $3.2 million in
1999 to $3.7 million in 2000 resulting from an increase in the average monthly
cash balances for 2000 as compared to 1999.

Provision for Income Taxes. The provision for income
taxes of $0.5 million in 1998 and $14.3 million in 1999 include federal, state
and foreign income taxes, and reflect the tax benefits of the utilization of net
operating loss carryovers and other tax credits. The income tax credit of $6.7
million in 2000 relates principally to refundable federal income taxes
previously paid as a result of net operating loss carrybacks. As of December 31,
2000, the Company has foreign net operating loss carryforwards of approximately
$19.6 million which can be carried forward indefinitely. The Company also has
foreign tax credits of approximately $0.9 million which will expire in the years
2001 through 2004 if not utilized. Financial Accounting Standards Board
Statement No. 109 provides for the recognition of deferred tax assets if
realization of the assets is more likely than not. Based upon the weight of
available evidence, which includes historical supporting performance and the
reported cumulative net losses for the most recent three years, the Company has
provided a full valuation allowance against its net deferred tax asset at
December 31, 2000.

Net Income (Loss). The Company reported a net income
of $13.4 million in 1998, net income of $23.8 million in 1999, and net loss of
$58.8 million in 2000. The net loss in 2000, as compared to net income in 1999,
is due to the $38.2 million gain on sale of its investment in TenFold
Corporation in May 1999, reduced revenues in 2000, and an increase in operating
expenses of $40.0 million. The increase in net income in 1999, as compared to
1998, resulted from the $38.2 million gain on sale of its investment in TenFold
Corporation in 1999, partially offset by a reduction in revenues.



Liquidity and Capital Resources

Cash provided by (used in) operations was $24.0 million,
$18.8 million and ($22.4) million in 1998, 1999 and 2000, respectively.
Investing activities, consisting primarily of the purchase and sale of
marketable securities, the acquisition of investments and intangible assets,
proceeds from sale of investment in TenFold, and the acquisition of property and
equipment, used cash of $5.8 million, $9.1 million, and provided cash of $34.5
million, in 1998, 1999 and 2000, respectively. Financing activities in 1998 used
$5.7 million primarily due to repayments under the Company's line of credit.
Financing activities in 1999 used $16.7 million primarily due to purchase of
treasury stock, and repayment of the Company's line of credit, partially offset
by proceeds from exercises of stock options. Financing activities in 2000
provided $9.0 million, primarily due to the exercise of stock options and the
sale of common stock under the employees stock purchase plan.

As of December 31, 2000, the Company's principal sources of
liquidity consisted of approximately $55.1 million in cash, cash equivalents and
marketable securities, and an unsecured revolving bank line of credit of $15.0
million. The revolving credit facility expires July 31, 2001. Borrowings under
the line of credit bear interest at the LIBOR rate plus 1.00%. At December 31,
2000, $2.5 million in standby letters of credit were outstanding under the bank
line of credit.

Cash requirements are expected to continue to increase in
order to fund: (i) personnel and salary costs, (ii) research and development
costs, myindus.com and related development costs, (iii) investment in
additional computer equipment, and facilities, and (iv) working capital
requirements.

The Company's principal commitments at December 31, 2000
consisted of obligations under operating and capital leases for facilities and
computer equipment.

In September
1998, the Company purchased the right, title and interest to the intellectual
property related to radiological recording and tracking software called Total
Exposure for $469,000 which was fully amortized at December 31, 2000.

The Company believes that its existing
cash and marketable securities, together with available bank borrowings, will be
sufficient to meet its cash requirements during the next 12 months. The
foregoing statement regarding the Company's expectations for continued liquidity
is a forward-looking statement, and actual results may differ materially
depending on a variety of factors, including variable operating results or
presently unexpected uses of cash, such as for acquisitions, or to fund
losses.





ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISKS

The Company's cash flow can be exposed to market
risks primarily in the form of changes in interest rates in its short term
borrowings available under its revolving bank line of credit as well as its
investments in certain available-for-sale securities. The Company's cash
management and investment policies restrict investments to highly liquid, low
risk debt instruments. The Company currently does not use interest rate
derivative instruments to manage exposure to interest rate changes. A
hypothetical 100 basis point adverse move (decrease in) interest rates along the
entire interest rate yield curve would adversely affect the net fair value of
all interest sensitive financial instruments by approximately $0.6 million at
December 31, 2000.

We provide our services to customers primarily in the United
States and, to some extent, in Europe, Asia Pacific and elsewhere throughout the
world. As a result, our financial results could be affected by factors such as
changes in foreign currency exchange rates or weak economic conditions in
foreign markets. Sales are primarily made in U.S. Dollars; however, as we
continue to expand our operations, more of our contracts may be denominated in
Australian Dollars, British Pounds, Euros and Japanese Yen. A strengthening of
the U.S. Dollar could make our products less competitive in foreign markets.





ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA



INDUS INTERNATIONAL, INC.

INDEX TO
CONSOLIDATED FINANCIAL STATEMENTS

|                                                                                                          | PAGE
|--------------------------------------------------------------------------------------------------------- | ----
|REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS                                                         | 24  
|CONSOLIDATED BALANCE SHEETS AT DECEMBER 31, 2000 and
1999                                                 | 25  
|CONSOLIDATED STATEMENTS OF OPERATIONS FOR EACH OF THE THREE
YEARS IN THE PERIOD ENDED DECEMBER 31, 2000   | 26  
|CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY FOR THE THREE
YEARS IN THE PERIOD ENDED DECEMBER  31, 2000 | 27  
|CONSOLIDATED STATEMENTS OF CASH FLOWS FOR EACH OF THE THREE
YEARS IN THE PERIOD ENDED DECEMBER 31, 2000   | 28  
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                                                | 29  
|QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)                                                               | 43  

---

REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS



The Board of Directors and Stockholders
                   Indus International, Inc.

We have audited the accompanying consolidated balance
sheets of Indus International, Inc. as of December 31, 1999 and 2000, and the
related consolidated statements of operations, stockholders' equity and cash
flows for each of the three years in the period ended December 31, 2000. Our
audits also included the financial statement schedule listed in the Index at
Item 14(a). These financial statements and the schedule are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements and financial statement schedule based on our
audits.

We conducted our audits in accordance with auditing
standards generally accepted in the United States. 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 consolidated
financial position of Indus International, Inc. as of December 31, 1999 and
2000, and the consolidated results of its operations and its cash flows for each
of the three years in the period ended December 31, 2000, in conformity with
accounting principles generally accepted in the United States. Also, in our
opinion, the related financial statement schedule, when considered in relation
to the basic consolidated financial statements taken as a whole, presents fairly
in all material respects the information set forth therein.

/s/ ERNST & YOUNG LLP

San Francisco, California
                   January 30, 2001

---

**INDUS INTERNATIONAL, INC.

                          CONSOLIDATED BALANCE SHEETS

                               (In thousands)**

`December 31,
                                                          ----------------------
                                                               1999        2000
                                                          ----------  ----------
ASSETS

Current assets:
   Cash and cash equivalents ............................   $16,345     $37,535
   Marketable securities ................................    64,427      17,572
   Billed accounts receivable, net of allowance for
    doubtful accounts of $3,991 and $5,379 at
    December 31, 1999 and 2000, respectively ............    35,432      33,835
   Unbilled accounts receivable .........................    13,735      13,039
   Income tax  receivable ...............................       --        5,983
   Deferred tax assets ..................................     9,512         --
   Other current assets .................................     6,807       7,206
                                                          ----------  ----------
     Total current assets ...............................   146,258     115,170
Property and equipment, net .............................    16,092      22,233
Investments and intangible assets, net ..................     1,894         386
Employee notes receivable ...............................       187          24
Other assets ............................................     4,470       2,919
                                                          ----------  ----------
                                                           $168,901    $140,732
                                                          ==========  ==========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
   Accounts payable .....................................    $5,532      $5,867
   Other accrued liabilities ............................    20,190      24,581
   Current portion of obligations under capital leases ..       301          71
   Deferred revenue .....................................    24,363      41,185
                                                          ----------  ----------
     Total current liabilities ..........................    50,386      71,704


Obligations under capital leases and other liabilities ..       163          71

Commitments and contingencies ...........................

Stockholders' equity:
   Preferred stock ......................................       --          --
   Common stock .........................................        33          35
   Additional paid-in capital ...........................   112,473     121,313
   Treasury stock........................................    (2,181)     (2,181)
   Note receivable from stockholder......................      (548)        (24)
   Deferred compensation.................................      (152)       (104)
   Retained earnings (accumulated deficit)...............    10,564     (48,211)
   Accumulated other comprehensive loss .................    (1,837)     (1,871)
                                                          ----------  ----------
     Total stockholders' equity .........................   118,352      68,957
                                                          ----------  ----------
                                                           $168,901    $140,732
                                                          ==========  ==========`

See accompanying notes.

---

**INDUS INTERNATIONAL, INC.

                      CONSOLIDATED STATEMENTS OF OPERATIONS

                     (In thousands, except per share amounts)**

`Years Ended December 31,
                                                --------------------------------
                                                     1998       1999       2000
                                                ---------- ---------- ----------
Revenues:
   Software licensing fees ....................   $55,546    $19,071    $12,622
   Services and maintenance ...................   138,956    158,160    131,956
   Other revenue ..............................       975      1,274      1,111
                                                ---------- ---------- ----------
     Total revenues ...........................   195,477    178,505    145,689
Cost of revenues (including $6,838 writedown of
   third party software held for sale in 2000).   103,517     98,050     90,880
                                                ---------- ---------- ----------
Gross margin ..................................    91,960     80,455     54,809
                                                ---------- ---------- ----------
Operating expenses:
   Research and development ...................    30,372     33,801     51,607
   Sales and marketing ........................    31,517     31,667     49,348
   General and administrative .................    15,270     18,145     20,944
   Restructuring expenses .....................      --         --        2,063
                                                ---------- ---------- ----------
     Total operating expenses .................    77,159     83,613    123,962
                                                ---------- ---------- ----------
Income (loss) from operations .................    14,801     (3,158)   (69,153)
Gain on sale of investment in TenFold
  Corporation..................................      --       38,170      --
Interest and other income .....................     1,118      3,523      3,784
Interest expense ..............................    (2,054)      (403)       (72)
                                                ---------- ---------- ----------
Income (loss) before income taxes .............    13,865     38,132    (65,441)
Provision (credit) for income taxes ...........       450     14,295     (6,666)
                                                ---------- ---------- ----------
Net income (loss)..............................   $13,415    $23,837   ($58,775)
                                                ========== ========== ==========

Net income (loss) per share:
Basic..........................................     $0.44      $0.74     ($1.72)
                                                ========== ========== ==========
Diluted........................................     $0.38      $0.68     ($1.72)
                                                ========== ========== ==========
Shares used in computing per share data
   Basic ......................................    30,717     32,109     34,248
   Diluted ....................................    35,263     35,274     34,248`

See accompanying notes.

---

**INDUS INTERNATIONAL, INC.

                  CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

                                  (In thousands)**

`Accumu-
                                                                                   Deferred Retained   lated
                                                                                   Compen-  Earnings   Other    Total
                                                 Common Stock   Additional          sation  (Accumu-  Compre-   Stock-
                                              -----------------  Paid-In  Treasury   and      lated   hensive  holders'
                                               Shares   Amount   Capital   Stock    Other   Deficit)    Loss    Equity
                                              -------- -------- --------- -------- -------- --------- -------- --------
Balance at December 31, 1997 ................  29,936      $29   $98,608     $ --    ($262) ($26,688) ($1,457) $70,230
  Exercise of stock options .................   1,507        2     2,750       --       --       --        --    2,752
  Tax benefit from exercise of stock options     --         --       294       --       --       --        --      294
  Sale of common stock under ESPP ...........     174        1       970       --       --       --        --      971
  Note receivable from stockholder...........    --         --       --        --     (492)      --        --     (492)
  Amortization of deferred compensation .....    --         --       --        --       14       --        --       14
  Net income ................................    --         --       --        --       --    13,415       --   13,415
  Unrealized loss on marketable securities ..    --         --       --        --       --       --        (6)      (6)
  Foreign currency translation ..............    --         --       --        --       --       --    (1,103)  (1,103)
                                                                                                               --------
  Comprehensive income ......................    --         --       --        --       --       --        --   12,306
                                              -------- -------- --------- -------- -------- --------- -------- --------
Balance at December 31, 1998 ................  31,617       32   102,622       --     (740)  (13,273)  (2,566)  86,075
  Exercise of stock options .................   1,619        1     5,658       --       --       --        --    5,659
  Tax benefit from exercise of stock options     --         --     3,471       --       --       --        --    3,471
  Sale of common stock under ESPP ...........     191 -     --       722       --       --       --        --      722
  Note receivable from stockholder ..........    --         --       --        --      (56)      --        --      (56)
  Purchase of treasury stock ................    (435)      --       --    (2,181)      --       --        --   (2,181)
  Amortization of deferred compensation .....    --         --       --        --       96       --        --       96
  Net income ................................    --         --       --        --       --    23,837       --   23,837
  Unrealized loss on marketable securities ..    --        --        --        --       --       --        (8)      (8)
  Foreign currency translation ..............    --         --       --        --       --       --       737      737
                                                                                                               --------
  Comprehensive income ......................    --         --       --        --       --       --        --   24,566
                                              -------- -------- --------- -------- -------- --------- -------- --------
Balance at December 31, 1999 ................  32,992       33   112,473   (2,181)    (700)   10,564   (1,837) 118,352
  Exercise of stock options .................   1,485        2     7,899      --        --       --        --    7,901
  Sale of common stock under ESPP ...........     218      --        941      --        --       --        --      941
  Notes receivable from stockholders ........    --        --        --       --       524       --        --      524
  Amortization of deferred compensation......    --        --        --       --        48       --        --       48
  Net loss...................................    --        --        --       --        --   (58,775)      --  (58,775)
  Foreign currency translation ..............    --        --        --       --        --       --       (34)     (34)
                                                                                                               --------
  Comprehensive loss ........................    --        --        --       --        --       --        --  (58,809)
                                              -------- -------- --------- -------- -------- --------- -------- --------
Balance at December 31, 2000 ................  34,695      $35  $121,313  ($2,181)   ($128) ($48,211) ($1,871) $68,957
                                              ======== ======== ========= ======== ======== ========= ======== ========`

See accompanying notes.

---

**INDUS INTERNATIONAL, INC.

                    CONSOLIDATED STATEMENTS OF CASH FLOWS

                               (In thousands)**

`Years Ended December 31,
                                                                          -----------------------------
                                                                              1998      1999      2000
                                                                          --------- --------- ---------
Cash flows from operating activities:
Net income (loss)........................................................  $13,415   $23,837  ($58,775)
Adjustments to reconcile net income
   to net cash used in operating activities:
   Depreciation and amortization ........................................    7,922     7,677     8,472
   Provision for doubtful accounts ......................................    1,604       413     1,388
   Amortization of deferred compensation ................................       14        96        48
   Loss on sale of fixed assets .........................................      (24)    --        --
   Tax benefit from exercise of stock options ...........................      294     3,471     --
   Gain on sale of investment in TenFold Corporation.....................      --    (38,170)    --
   Changes in operating assets and liabilities:
     Billed accounts receivable .........................................  (14,951)   21,076       209
     Unbilled accounts receivable .......................................    8,875     7,739       696
     Income tax  receivable .............................................      --      --       (5,983)
     Other current assets ...............................................      256    (4,576)     (399)
     Other assets .......................................................      (43)     (726)    1,434
     Employee notes receivable ..........................................       94       135       163
     Accounts payable ...................................................    1,052    (3,950)      335
     Deferred income taxes ..............................................     (419)   (9,513)    9,512
     Income taxes payable ...............................................      --      2,361     --
     Other accrued liabilities ..........................................    2,653     1,108     4,391
     Deferred revenue ...................................................    3,826     7,118    16,822
     Foreign currency translation adjustment ............................   (1,103)      737       (34)
     Other ..............................................................      547        (8)     (642)
                                                                          --------- --------- ---------
     Net cash (used in) provided by operating activities.................   24,012    18,825   (22,363)
                                                                          --------- --------- ---------
Cash flows from investing activities:
Purchase of marketable securities .......................................   (8,612) (471,555) (361,567)
Sale of marketable securities ...........................................    9,796   422,724   408,422
Proceeds from sale of investment in TenFold .............................      --     46,178     --
Purchase of investments and intangible assets............................     (628)      --      --
Acquisition of property and equipment ...................................   (6,418)   (6,402)  (12,346)
Other....................................................................       18       --      --
                                                                          --------- --------- ---------
Net cash (used in) provided by investing activities......................   (5,844)   (9,055)   34,509
                                                                          --------- --------- ---------
Cash flows from financing activities:
Net repayment of line of credit .........................................   (7,000)  (19,650)    --
Net repayment of capital leases/notes payable............................   (1,897)   (1,148)     (322)
Net proceeds from issuance of common stock ..............................    3,231     6,381     8,842
Note receivable from stockholder.........................................     --         (56)      524
Purchase of treasury stock...............................................     --      (2,181)    --
                                                                          --------- --------- ---------
Net cash (used in) provided by financing activities......................   (5,666)  (16,654)    9,044
                                                                          --------- --------- ---------
Net increase/(decrease) in cash and cash equivalents.....................   12,502    (6,884)   21,190
Cash and cash equivalents at beginning of period.........................   10,727    23,229    16,345
                                                                          --------- --------- ---------
Cash and cash equivalents at end of period ..............................  $23,229   $16,345   $37,535
                                                                          ========= ========= =========
Supplemental disclosures of cash flow information:
Interest paid ...........................................................   $1,245      $403       $72
                                                                          ========= ========= =========
Income taxes paid .......................................................     $735   $15,812      $729
                                                                          ========= ========= =========
Supplemental schedule of noncash, investing
  and financing activities:
Issuance of common stock in exchange for stockholder note receivable.....     $492      $548     --
                                                                          ========= ========= =========`

See accompanying notes.

---

INDUS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Nature of Business and Significant Accounting Policies

Organization and Business

Business

Indus International, Inc. (the "Company")
develops, markets, implements and supports a proprietary line of Enterprise
Asset Management ("EAM") software and service solutions for capital intensive
industries worldwide. The Company serves as an agent of change for its
customers, who seek to improve their return on investment and efficiencies in
core business functions in the utilities and energy industry, process, discrete
and consumer packaged goods companies, as well as educational, municipal and
transportation authorities worldwide.

Restructuring Expenses

In 2000, the Company recorded $2.1 million in
restructuring costs related to relocation of certain administrative functions
from San Francisco, California to Atlanta, Georgia. This relocation was
approved by the Board of Directors in July 2000 and includes costs of
approximately $0.8 million for severance pay for approximately 50 employees
affected, and approximately $1.3 million for lease termination costs associated
with reducing leased space in San Francisco. As of December 31, 2000
approximately $0.5 million of the $2.1 million was paid. The Company anticipates
paying the remaining balance in the first and second quarters of 2001.

Significant Accounting Policies

Basis of Presentation

The consolidated financial statements include the
accounts of Indus International, Inc. and its subsidiaries (collectively, the
Company). All significant intercompany balances and transactions have been
eliminated

Revenue Recognition

The Company provides its software to customers under
contracts which provide for both software license fees and system implementation
services. The revenues from software license fees are recognized in accordance
with AICPA Statements of Position 97-2, 98-4, and 98-9 relating to software
revenue recognition, when persuasive evidence of arrangement exists, delivery
has occurred, the license fee is fixed or determinable, and collection is
probable. Revenues from system implementation services, which generally are time
and material based, are recognized as direct costs are incurred. When software
is licensed through indirect sales channels, licensing fees are recognized as
revenue when the software is sold by the reseller to an end user customer and
the criteria described above have been met.

Revenue is recognized using contract accounting for
arrangements involving customization or modification of the software or where
software services are considered essential to the functionality of the software.
Revenue from these software arrangements is recognized using the percentage-of-
completion method with progress-to-completion measured using labor cost inputs.
For arrangements that include rights to multiple software products and/or
services, the total arrangement fee is allocated to each of the elements using
the residual method, under which revenue applicable to the undelivered elements
is deferred based on vendor specific objective evidence of fair value and the
residual amount of revenue is allocated to the delivered elements.

Revenue applicable to maintenance and support services is
recognized ratably over the support period.

Unbilled accounts receivable represent amounts related to
revenue which has been recorded either as deferred revenue or earned revenue but
which has not been billed. Generally, unbilled amounts are billed within 60 to
90 days of the sale of product or performance of services.

Deferred revenue represents primarily unearned
maintenance and support fees and unearned license fees for which future
performance obligations remain.

Foreign Currency Translation

The functional currencies of the Company's foreign
subsidiaries are their respective local currencies. The financial statements of
foreign subsidiaries have been translated into U.S. dollars. All balance sheet
accounts have been translated using the exchange rates in effect at the balance
sheet date. Statement of operations amounts have been translated using the
average exchange rate for the year. The gains and losses resulting from the
translation of the accounts of the Company's foreign subsidiaries have been
reported in other comprehensive income.

Concentration of Credit Risk

Financial instruments that the Company is subject to
concentrations of credit risk consist principally of cash and cash equivalents,
short-term investments and trade accounts receivable. The Company invests excess
cash primarily in money market funds and commercial paper, which are highly
liquid securities that bear minimal risk. In addition, the Company has
investment policies and procedures that are reviewed periodically to minimize
credit risk.

The Company's customers are generally large companies in
the utilities and energy industries, process, discreet and consumer packaged
goods companies, as well as industrial manufacturing and the public sector. The
Company performs ongoing credit evaluations and generally does not require
collateral. In addition, the Company routinely assesses the financial strength
of its customers and, as a consequence, believes that its accounts receivable
credit risk exposure is limited.

The Company added approximately $2.1 million in 1998,
$2.5 million in 1999 and $3.1 million in 2000 to its allowance for doubtful
accounts through charges to operations. Total write-offs of uncollectible
amounts were $0.5 million in 1998, $2.1 million in 1999 and $1.7 million in
2000.

One customer accounted for 12.2% and 13.2% of the Company's
total revenues in 2000 and 1999, respectively. No single customer accounted for
10% or more of Company's total revenues in 1998.

Cash Equivalents and Marketable Securities

The Company considers all non-auctionable highly
liquid, low risk debt instruments with a maturity of three months or less from
the date of purchase to be cash equivalents. The Company generally invests its
cash and cash equivalents in money market funds, and commercial paper and
corporate notes.

The Company presently classifies all marketable
securities as available-for-sale investments and carries them at fair market
value. Unrealized holding gains and losses, net of taxes, are included in
accumulated other comprehensive income (loss) within stockholders' equity.

Restricted Cash

Restricted cash of approximately $325,000, included
in other current assets, primarily consists of a certificate of deposit, which
earns interest at approximately 6% per annum and has a maturity date of less
than 12 months. This certificate of deposit is principally used as security for
a letter of credit.

Property and Equipment

Property and equipment is stated at cost. Equipment
under capital leases is stated at lower of fair market value or the present
value of the minimum lease payments at the inception of the lease.

Depreciation on office and computer equipment and
furniture is computed using the straight-line method over estimated useful lives
of four to seven years. Leasehold improvements are amortized using the straight-
line method over the shorter of the related lease term or their estimated useful
lives. Software for internal use are amortized using the straight-line method
over estimated useful lives of four to five years.

Software Development Costs

The Company accounts for software development costs
in accordance with SFAS No. 86, Accounting for the Costs of Computer Software to
be Sold, Leased or Otherwise Marketed, whereby costs for the development of new
software products and substantial enhancements to existing software products are
expensed as incurred until technological feasibility has been established, at
which time any additional costs are capitalized. Technological feasibility is
established upon completion of a working model. Through December 31, 2000,
software development costs incurred subsequent to the establishment of
technological feasibility have not been significant, and all software
development costs have been charged to research and development expense in the
accompanying consolidated statements of operations.

Internal-Use Software

SOP 98-1, Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use requires that entities
capitalize certain costs related to internal use software once certain criteria
have been met. Capitalized internal-use software development costs associated
with the Company's information systems are included in property and equipment
and are amortized on a straight-line basis over three year periods. Amortization
expense recorded in 1998, 1999, and 2000 was approximately $425,000, $595,000,
and $1,111,000 respectively.

Investments and Intangible Assets

In 1997, the Company acquired a convertible preferred
stock interest in TenFold Corporation, a privately held software company in the
development stage, for approximately $8 million in cash. This investment was
sold for cash in May 1999 with a net gain of $38.2 million. Also in 1997, the
Company acquired a management consulting firm for $4.75 million in common stock
and $250,000 in cash. The $5 million acquisition cost is being amortized over a
four-year period, which is consistent with the related employment,
confidentiality and non-competition agreements. In 1998, the Company purchased
the rights; title and interest to the intellectual property related to
radiological recording and tracking software called Total Exposure for $469,000,
which is being amortized over a two and one-half year period.

Advertising Costs

Advertising costs are charged to expense in the
period the costs are incurred. Advertising expense was approximately $222,000,
$659,000, and $919,600 in 1998, 1999 and 2000, respectively.

Income Taxes

Income taxes are computed in accordance with
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes" ("FAS 109") which requires the use of the liability method in accounting
for income taxes. Under FAS 109, deferred tax assets and liabilities are
measured based on differences between the financial reporting and tax bases of
assets and liabilities using enacted tax rates and laws that are expected to be
in effect when the differences are expected to reverse.

Per Share Data



The components of basic and diluted earnings per
share were as follows (in thousands, except per share amounts):

`Years Ended December 31,
                                                --------------------------------
                                                     1998       1999       2000
                                                ---------- ---------- ----------
Net income (loss)..............................   $13,415    $23,837   ($58,775)
                                                ========== ========== ==========

Weighted average shares of common stock
  outstanding .................................    30,717     32,109     34,248
                                                ========== ========== ==========

Basic net income (loss) per share .............     $0.44      $0.74     ($1.72)
                                                ========== ========== ==========
Calculation of shares outstanding for
 computing diluted net (loss) income per share:
  Shares used in computing basic net income
  (loss) per share ............................    30,717     32,109     34,248
  Shares to reflect the effect of the
  assumed exercise of:
    Employee stock options ....................     2,091      1,345      --
    Warrants ..................................     2,455      1,820      --
                                                ---------- ---------- ----------
Shares used in computing diluted net
income (loss) per share .......................    35,263     35,274     34,248
                                                ========== ========== ==========

Diluted net income (loss) per share............     $0.38      $0.68     ($1.72)
                                                ========== ========== ==========`

Use of Estimates

The preparation of the financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates.

Stock Based Compensation



Recent Accounting Pronouncements

The Company adopted Statement of Financial Accounting
Standards No. 130, "Reporting Comprehensive Income" ("SFAS 130") in 1998. Other
comprehensive income (loss) (primarily foreign currency translation effects) and
comprehensive income (loss) are presented in the Consolidated Statement of
Stockholders' Equity.

The Company adopted Statement of Financial Accounting
Standards No. 131, "Disclosures about Segments of an Enterprise and Related
Information" ("SFAS 131") in 1998. SFAS 131 establishes annual and interim
reporting standards for an enterprise's operating segments and related
disclosures about its products, services, geographic areas and major customers.
The Company has identified two reportable segments: the development, marketing,
implementation and support of Enterprise Asset Management (EAM) software, and
the eBusiness initiatives, such as myindus.com.

In June 1998, the Financial Accounting Standards Board
released Statement of Financial Accounting Standards No. 133, "Accounting for
Derivative Instruments and Hedging Activities" ("FAS 133"). FAS 133 establishes
the accounting and reporting standards for derivative instruments, including
certain derivative instruments embedded in other contracts (collectively
referred to as derivatives) and for hedging activities. It requires that an
entity recognize all derivatives as either assets or liabilities in the
statement of financial position and measure those instruments at fair value. In
July 1999, FAS No. 137, "Accounting for Derivative Instruments
and Hedging Activities - Deferral of the Effective Date of FAS Statement
No. 133" ("FAS 137") was issued. FAS 137 deferred the

effective date of FAS 133 until the first fiscal quarter of
fiscal years beginning after June 15, 2000. The adoption of FAS 133 did not have
a material impact to its financial position or results of operations because the
Company currently does not hold derivative instruments or engage in hedging
activities.

AICPA Accounting Standards Executive Committee Statement
of Position 97-2 "Software Revenue Recognition" (SOP 97-2) and Statement of
Position 98-4 "Deferral of the Effective Date of a Provision of SOP 97-2
Software Revenue Recognition" (SOP 98-4) which contain rules for timing of
recognition or software company revenues, particularly as to license fee
revenues where there are multiple elements to be delivered under a contract or
arrangement with a customer, became effective for transactions beginning in
1998. In December 1998, the AICPA issued Statement of Position 98-9
"Modification of SOP 97-2, Software Revenue Recognition, with Respect to Certain
Transactions" (SOP 98-9). SOP 98-9 amends SOP 98-4 to extend the deferral of
application of certain passages of SOP 97-2 provided by SOP 98-4 through fiscal
years beginning after March 15, 1999. Management believes the Company's revenue
recognition policy is in conformity with these accounting pronouncements.



In December 1999, the Securities and Exchange Commission
issued Staff Accounting Bulletin ("SAB") No. 101, Revenue Recognition in
Financial Statements. SAB 101 provides guidance with respect to the
recognition, presentation and disclosure of revenue in financial statements of
all public registrants. The adoption of SAB 101 in 2000 did not have a
significant impact on the Company's results of operations or financial
position.

In March 2000, the FASB issued Interpretation No. 44 (FIN
44), "Accounting for Certain Transactions Involving Stock Compensation - An
Interpretation of APB Opinion 25." FIN clarifies the application of APB Opinion
No. 25 and, among other issues, clarifies the following: the definition of an
employee for the purposes of applying APB Opinion No. 25, the criteria for
determining whether a plan qualifies as a noncompensatory plan, the accounting
consequences of various modifications to the terms of previously fixed stock
options or awards, and the accounting for an exchange of stock compensation
awards in a business combination. FIN 44 is effective July 1, 2000, but certain
conclusions in FIN 44 cover specific events that occurred after either December
15, 1998 or January 12, 2000. The adoption of FIN 44 did not have a significant
impact on the Company's results of operations or financial position.

Segment Information



The following information is presented in accordance with
SFAS No. 131 "Disclosure about Segments of an Enterprise and Related
Information." The Company has identified two reportable segments: the
development, marketing, implementation and support of Enterprise Asset
Management (EAM) software, and the eBusiness initiatives, such as
myindus.com.

For the years ended December 31, 1999 and 2000 the Company
incurred charges to operations of $1.4 million and $18.9 million respectively
for its myindus.com eBusiness initiatives. Of this amount $1.4 million
and $15.3 million was recorded as research and development for the years ended
December 31, 1999 and 2000 respectively. $3.6 million was recorded as sales and
marketing for the year ending December 31, 2000. At December 31, 2000
myindus.com had $2.1 million in identifiable assets. All other revenues,
costs, assets and liabilities are applicable to the EAM segment.

2. Marketable Securities

The following is a summary of marketable securities,
all of which are available for sale (in thousands):

`December 31, 1999
-------------------
Marketable securities..................    $63,764
Certificates of deposit ...............      1,185
Commercial paper and corporate notes ..        663
                                        -----------
                                           $65,612
                                        ===========
Included in:
Cash and cash equivalents .............     $1,185
Marketable securities .................     64,427
                                        -----------
                                           $65,612
                                        ===========

December 31, 2000
-------------------
Money market funds.....................    $17,672
Commercial paper and corporate notes ..      8,953
Auction rate notes ....................     12,970
                                        -----------
                                           $39,595
                                        ===========
Included in:
Cash and cash equivalents .............    $21,825
Marketable securities..................     17,572
Other assets...........................        198
                                        -----------
                                           $39,595
                                        ===========`

At December 31, 1999 and 2000, the gross amortized cost of marketable
securities approximates the estimated fair value. Included in other assets is a
marketable security with a maturity date greater than one year at December 31,
2000.

There have been no significant realized gains or losses
on sales of marketable securities.

3. Property and Equipment

Property and equipment is recorded at cost and
consists of the following (in thousands):

`December 31,
                                                -------------------------
                                                     1999         2000
                                                ------------ ------------
Furniture and fixtures .......................       $5,588       $6,389
Office equipment .............................       30,135       37,342
Leasehold improvements .......................        3,084        3,677
Internally used capitalized software .........        5,150        8,849
                                                ------------ ------------
                                                     43,957       56,257
Less accumulated depreciation and
amortization .................................       27,865       34,024
                                                ------------ ------------
                                                    $16,092      $22,233
                                                ============ ============`

Equipment leased under capital leases is included in property and
equipment. At December 31, 2000 and 1999, equipment under capital leases was
approximately $4.3 million and $4.3 million, respectively, with accumulated
depreciation of $4.1 million and $3.7 million, respectively.

4. Other Accrued Liabilities

Other accrued liabilities consists of the following
(in thousands):

`December 31,
                                                -------------------------
                                                    1999         2000
                                                ------------ ------------
Accrued commissions ..........................       $3,171       $2,166
Accrued payroll and related expenses .........        7,195        7,778
Accrued taxes payable ........................        4,347        2,846
Accrued restructuring expenses ...............           --        1,597
Other ........................................        5,477       10,194
                                                ------------ ------------
                                                    $20,190      $24,581
                                                ============ ============`

5. Lines of Credit

The Company has an unsecured revolving bank line of
credit in the amount of $15.0 million. The revolving credit facility expires on
July 31, 2001. Borrowings bear interest at the LIBOR rate plus 1.00%. There were
no borrowings outstanding under this line of credit at December 31, 2000 or
1999. There were $2.5 million in standby letters of credit outstanding on this
line of at December 31, 2000 and $0.2 million outstanding at December 31, 1999.
The line of credit agreement contains certain affirmative and negative
covenants. The Company was either in compliance with or had received waivers for
each of the financial covenants at December 31, 2000 and 1999.

6. Commitments

The Company leases its office facilities under
various operating lease agreements. The leases require monthly rental payments
in varying amounts through 2011. These leases also require the Company to pay
all property taxes, normal maintenance, and insurance on the leased
facilities.

Total rental expense under these leases (in thousands)
was approximately $6,831, $7,364, and $8,104 for 1998, 1999 and 2000,
respectively. Future minimum lease payments under all non-cancelable operating
leases are as follows (in thousands):

`Operating     Capital
Years Ending December 31,                          Leases       Leases
---------------------------------------         ------------ ------------
     2001 ....................................       $9,998          $82
     2002 ....................................       10,022           74
     2003 ....................................       10,031          --
     2004 ....................................        9,795          --
     2005 ....................................        8,939          --
     Thereafter ..............................       25,759          --
                                                ------------ ------------
Total minimum payments required ..............      $74,544         $156
                                                ============
Less amounts representing interest .........................          14
                                                             ------------
Present value of future lease payments .....................        $142
Less current portion .......................................          71
                                                             ------------
Long term portion ..........................................         $71
                                                             ============`

7. Stockholders' Equity

The following is a summary of the authorized and
issued preferred and common stock:

`December 31,
                                                   -------------------------
                                                       1999         2000
                                                   ------------ ------------

Preferred Stock
  Authorized shares, $.001 par value per share ..   10,000,000   10,000,000
  Shares issued and outstanding .................        --           --

Common Stock
  Authorized shares, $.001 par value per share ..  100,000,000  100,000,000
  Shares issued and outstanding .................   32,991,713   34,695,394`

The Board of Directors is authorized,
subject to any limitations prescribed by Delaware law, to provide for the
issuance of shares of preferred stock in one or more series, to establish from
time to time the number of shares to be included in each such series, to fix the
powers, preferences and rights of the shares of each wholly unissued series and
any qualifications, limitations or restrictions thereon, and to increase or
decrease the number of shares of any such series (but not below the number of
shares of such series then outstanding), without any further vote or action by
the stockholders. The Board of Directors may authorize the issuance of preferred
stock with voting or conversion rights that could adversely affect the voting
power of other rights of the holders of common stock. Thus, the issuance of
preferred stock may have the effect of delaying, deferring or preventing a
change in control of the Company. The Company has no current plan to issue any
shares of preferred stock.

In July 1999, the Company's Board of Directors approved a
stock repurchase program for up to 2,000,000 shares of the Company's outstanding
common stock. The Company is authorized to use available cash to buy back its
shares in open market transactions from time to time, subject to price and
market conditions. As of December 31, 2000, the Company held, as treasury stock,
435,500 shares that had been repurchased at a cost of approximately $2.2 million
under the program.

8. Stock Plans

Stock Option and Benefit Plans

The Company has three stock option plans under which
employees, directors and consultants may be granted rights to purchase common
stock.

1997 Stock Plan

The 1997 Stock Plan provides for the grant of
incentive or nonstatutory stock options to employees, including officers and
directors, and nonstatutory options only to consultants of the Company. A total
of 10,000,000 shares have been reserved for issuance under the Stock Plan. The
incentive stock options will be granted at not less than fair market value of
the stock on the date of grant. The options will generally vest over one to four
years and have a maximum term of ten years.

1997 Director's Option Plan

Each director who is not an employee of the Company
is automatically granted a nonstatutory stock option to purchase 10,000 shares
of common stock of the Company (the "First Option") on the date such person
becomes a director or, if later, on the effective date of the 1997 Director's
Option Plan (the "Director Option Plan"). Thereafter, each such person will
automatically be granted an option to acquire 5,000 shares of the Company's
Common Stock (the "Subsequent Option") upon such outside director's re-election
at each Annual Meeting of Stockholders, provided that on such date such person
has served on the Board of Directors for at least six months. A total of 700,000
shares has been reserved for issuance under the Director Option Plan. Each
option granted under the Director Option Plan will become exercisable as to 25%
of the Shares subject to such option on each anniversary of its date of grant.

1998 Indus International, Inc. Company Share Option
Plan

The 1998 Indus International, Inc. Company Share
Option Plan (the "UK Stock Plan") provides for the grant of stock options to
employees of Indus International, Ltd. (a UK foreign subsidiary of the Company).
A total of 500,000 shares of the Company's common stock have been reserved for
issuance under the Stock Plan. Options were granted in the amounts of 646,125 in
1998, 10,000 in 1999 and 135,235 in 2000. Options of 326,000 in 1998, 131,125 in
1999, and 37,625 were cancelled or expired. No options have been exercised to
date. The stock options will be granted at not less than fair market value of
the stock on the date of grant. The options will generally vest over one to
three years and have a maximum term of three years.

The activity under the 1997 Stock Plan and the 1997 Director's Option
Plan, combined, was as follows:

`Options Outstanding
                                  Shares    -------------------------------
                                 Available    Number
                                   for          of
                                   Grant      Shares       Price Per Share
------------------------------- ----------- ----------- -------------------
Balances at December 31, 1997..  1,704,500   8,356,008    $0.28  -  $25.75
   Shares reserved ............  2,500,000        --
   Options granted ............ (7,744,071)  7,744,071    $3.69  -  $10.38
   Options forfeited ..........  5,511,630  (5,511,630)   $0.67  -  $25.75
   Options exercised ..........       --    (1,506,678)   $0.28  -   $5.34
   Plan shares expired ........   (548,870)       --
                                ----------- -----------
Balances at December 31, 1998..  1,423,189   9,081,771    $0.28  -  $18.15
   Shares reserved ............  2,500,000        --
   Options granted ............ (3,153,000)  3,153,000    $4.13  -   $6.63
   Options forfeited ..........  3,247,490  (3,247,490)   $0.28  -  $16.50
   Options exercised ..........       --    (1,617,776)   $0.28  -   $4.56
   Plan shares expired ........   (294,485)       --
                                ----------- -----------
Balances at December 31, 1999..  3,723,194   7,369,505    $0.28  -  $18.15
   Shares reserved ............    500,000        --
   Options granted ............ (5,643,578)  5,643,578    $1.75  -   $8.06
   Options forfeited ..........  2,227,709  (2,227,709)   $3.38  -  $16.50
   Options exercised ..........       --    (1,477,633)   $0.28  -   $8.50
   Plan shares expired ........   (128,390)       --
                                ----------- -----------
Balances at December 31, 2000..    678,935   9,307,741    $0.28  -  $18.15
                                =========== ===========`

The following table summarizes information about stock
options outstanding as of December 31, 2000.

`Options Vested and
                        Options Outstanding            Exercisable
                 --------------------------------- ---------------------
                              Weighted-
                               Average   Weighted-             Weighted-
                              Remaining   Average               Average
   Range of      Outstanding Contractual Exercise  Exercisable Exercise
 Exercise Prices  in shares     Life       Price    in shares    Price
---------------- ----------- ----------- --------- ----------- ---------
 $0.28 -  $3.93     967,494        7.32     $2.60     477,981     $2.46
 $3.94 -  $3.94   1,513,167        9.78     $3.94      --         $0.00
 $3.95 -  $4.50     569,407        8.62     $4.47     260,592     $4.48
 $4.51 -  $4.56   1,891,585        6.93     $4.56   1,244,981     $4.56
 $4.57 -  $6.88   1,358,688        8.93     $5.77     238,000     $5.48
 $6.89 -  $8.00   1,798,050        9.18     $7.74     331,250     $7.65
 $8.01 - $18.15   1,209,350        8.45     $9.55     326,313    $12.73
                 -----------                       -----------
Total             9,307,741        8.47     $5.69   2,879,117     $5.56
                 ===========                       ===========`

On December 11, 1998, the Company offered
its employees a stock option repricing program that allowed the employees to
exchange on a one for one share basis any options priced above the December 14,
1998 closing price of Indus International, Inc. stock, which was $4.56. As a
result, approximately 4,051,696 options on 4,051,696 shares were surrendered by
eligible employees and exchanged for substitute options. The repriced options
were not exercisable before June 14, 1999.

1997 Employee Stock Purchase Plan

The Company has an employee stock purchase plan under
which 1,000,000 shares of common stock have been reserved for issuance. The plan
allows for eligible employees to purchase stock at 85% of the lower of the fair
market value of the Company's common stock as of the first day of each six-month
offering period or the fair market value of the stock at the end of the offering
period. Purchases are limited to 10% of each employee's compensation and a
maximum of 4,000 shares. Under the plan the Company issued 174,468, 191,019 and
218,151 shares in 1998, 1999 and 2000, respectively, at prices ranging from
$3.73 to $6.97 per share.

Under a prior employee stock purchase plan of The Indus
Group, Inc., 39,101 shares were issued in 1997 at prices ranging from $6.50 to
$25.75 per share.

9. Alternative Method of Valuing Stock Options

For employee stock options granted with exercise
prices at or above the existing market price and without any contingent feature
as to the optionee's ability to exercise (other than the passage of time as a
continuing employee), the Company records no compensation expense.

Pro forma information regarding net income and earnings
per share is required by Statement 123 and has been determined as if the Company
had accounted for its employee stock options under the fair value method of that
Statement. The fair value for these options was estimated at the date of grant
using the Black-Scholes option pricing model with the following weighted-average
assumptions for 1998, 1999 and 2000, respectively: risk free interest rate of
5.14%, 5.32% and 6.12%; dividend yields of 0%; volatility factor of the expected
market price of the Company's common stock of 0.70, 0.65 and 1.39; and a
weighted-average expected life of the option of 5 years.

For purposes of pro forma disclosures, the estimated fair
value of the options is amortized to expense over the options' vesting period.
The Company's pro forma information net income (loss) including pro forma
compensation expense, net of tax for the years ended December 31, 1998, 1999 and
2000, respectively, is as follows (in thousands except for earnings per share
information):

`Year Ended December 31,
                                             -----------------------------
                                                 1998      1999      2000
                                             --------- --------- ---------
Pro forma net income (loss).................  ($6,122)  $19,502  ($71,258)
Pro forma basic net income (loss) per share.   ($0.20)    $0.64    ($2.08)
Pro forma diluted net income (loss)
  per share.................................   ($0.17)    $0.63    ($2.08)`

The weighted average fair value of
options granted in 1998 granted under the UK Stock Plan was $3.58 and under the
remaining plans was $2.70, using these alternative methods of valuation. In
1999, the weighted average fair value of options granted under all plans was
$3.84. In 2000, the weighted average fair value of options granted under all
plans was $4.34.



10. Employee Benefit and Profit-Sharing Plans

The Company has a defined contribution 401(K) plan.
All employees over the age of 18 who have completed at least three months of
service are eligible to participate. Each participant may elect to have amounts
deducted from his or her compensation and contribute to the plan up to 15% of
his or her base salary. All employee contributions are fully vested at the time
the employee becomes an active participant. The Company's matching contribution
were approximately $847,000, $797,000, and $984,000 in 1998, 1999, and 2000,
respectively.

The Company also has a profit sharing plan. All employees
over the age of 18 who have completed at least three months of service are
eligible to participate. Contributions to the plan are at the discretion of the
Board of Directors and are made to eligible employees' individual accounts in
proportion to their base salary. The Company did not contribute to the profit
sharing plan in 1998, 1999, or 2000.

11. Geographic Information

Geographic information is as follows (in
thousands):

`Year Ended December 31,
                                              -----------------------------
                                                  1998      1999      2000
                                              --------- --------- ---------
Net revenues (based on destination)
   United States ............................ $149,282  $121,449  $101,256
   International:
     Europe .................................   19,491    40,130    33,291
     Asia ...................................      233       818     1,387
     Canada .................................   20,491    10,390     5,854
     Australia...............................    5,980     5,718     3,901
                                              --------- --------- ---------
Total International .........................   46,195    57,056    44,433
                                              --------- --------- ---------
   Total consolidated net revenues .......... $195,477  $178,505  $145,689
                                              ========= ========= =========

Income (loss) from operations
   United States ............................  $78,105   $66,153   $43,545
   International:
     Europe .................................   10,179     8,742    10,811
     Asia ...................................     (392)     (135)      272
     Canada .................................   (3,109)    4,086      (756)
     Australia...............................    7,178     1,608       937
Corporate administrative and other expenses .  (77,160)  (83,612) (123,962)
                                              --------- --------- ---------
Total consolidated income (loss)
 from operations ............................  $14,801   ($3,158) ($69,153)
                                              ========= ========= =========
Identifiable assets
   United States ............................ $124,373  $144,276  $110,072
   International:
     Europe .................................   13,261    16,023    22,861
     Asia ...................................      242        60     1,428
     Canada .................................    9,407     4,100     3,433
     Australia...............................    3,502     4,442     2,938
                                              --------- --------- ---------
Total consolidated identifiable assets ...... $150,785  $168,901  $140,732

                                              ========= ========= =========

Net assets
   United States ............................  $68,739  $103,363   $51,951
   International:
     Europe .................................    6,757    10,558    13,085
     Asia ...................................     (138)       45       989
     Canada .................................    8,415     1,652     1,735
     Australia...............................    2,302     2,734     1,197
                                              --------- --------- ---------
Total consolidated net assets ...............  $86,075  $118,352   $68,957
                                              ========= ========= =========`

12. Income Taxes

The provision for income taxes (credits) consists of
the following (in thousands):

`Year Ended December 31,
                                              -----------------------------
                                                  1998      1999      2000
                                              --------- --------- ---------
Current:
   Federal ..................................     $484   $19,301  ($14,794)
   State and foreign ........................      385     4,506    (1,384)
                                              --------- --------- ---------
                                                   869    23,807   (16,178)
                                              --------- --------- ---------

Deferred:
   Federal ..................................      --     (8,384)    8,384
   State and foreign ........................     (419)   (1,128)    1,128
                                              --------- --------- ---------
                                                  (419)   (9,512)    9,512
                                              --------- --------- ---------
                                                  $450   $14,295   ($6,666)
                                              ========= ========= =========`

The effective rate of the provision for
income taxes reconciles to the amount computed by applying the federal statutory
rate to income before provision for income taxes as follows:

`Percentage
                                                  Year Ended December 31,
                                              -----------------------------
                                                  1998      1999      2000
                                              --------- --------- ---------
Federal statutory rate ......................     35.0 %    35.0 %    35.0 %
State taxes, net of federal benefit .........      0.4       3.0       1.4
Foreign taxes ...............................      --        7.3      (5.4)
FSC benefit .................................     (2.1)     (0.9)      --
Research and development credit .............      --       (3.7)      --
Utilization of TSW net operating loss
  carryforwards..............................    (33.6)     (5.0)      --
Reported losses and tax credits not benefited      --        --      (19.3)
Other .......................................      3.5       1.8      (1.2)
                                              --------- --------- ---------
                                                   3.2 %    37.5 %    10.5 %
                                              ========= ========= =========`

Deferred income taxes reflect the tax
effects of temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used for income tax
purposes. Significant components of the net deferred tax assets are as follows
(in thousands):

`December 31,
                                                        -------------------
                                                            1999      2000
                                                        --------- ---------

Accounts receivable allowances ........................   $2,322    $2,297
Tax over book depreciation.............................      396       603
Nondeductible accruals ................................    3,847     6,542
Deferred licensing fee revenue ........................    2,947     2,843
Net operating loss carryforwards ......................      --      2,792
Research and other credit carryforwards ...............      --      3,638
Foreign tax credits and losses ........................    5,182     8,735
                                                        --------- ---------
                                                          14,694    27,450
Valuation allowance ...................................   (5,182)  (27,450)
                                                        --------- ---------
                                                          $9,512        $0
                                                        ========= =========`

The net valuation allowance decreased by
approximately $5.2 million and increased by approximately $1.3 million during
1999 and 1998 respectively. The net valuation allowance increased by
approximately $22.3 million during 2000. Approximately $1.8 million of the
valuation allowance for the deferred tax asset at December 31, 2000 relates to
benefits of stock option deductions which, when recognized, will be directly
allocated to contributed capital.

As of December 31, 2000 the Company had federal net
operating loss carryforwards of approximately $1.7 million. The Company also had
federal research tax credit carryforwards of approximately $4.3 million. The
federal net operating loss and credit carryforwards will expire beginning in the
year 2020, if not utilized. The Company also has foreign net operating loss
carryforwards of approximately $19.6 million which can be carried forward
indefinitely. The Company also has foreign tax credits of approximately $0.9
million which will expire in the years 2001 through 2004 if not utilized.

The utilization of the net operating losses and credits
may be subject to a substantial annual limitation due to the "change in
ownership" provisions of the Internal Revenue Code of 1986 and similar state
provisions. The annual limitations may result in the expiration of net operating
losses and credits before utilization.

13. Litigation

Beginning in February 2000, the Company and several
of its former officers and/or directors were named as defendants in securities
class action cases filed in the United States District Court, Northern District
of California. The complaints were brought on behalf of all persons who
purchased Indus common stock between October 28, 1999, when the Company issued a
press release announcing unaudited financial statements for the third quarter of
1999; through January 27, 2000, when the Company announced its intention to
restate those financial statements. In August 2000, all parties to the
litigation agreed to a settlement. Under the settlement, defendants' insurance
carriers paid $4.3 million. In January 2001, the Court granted final approval of
the settlement and entered into a judgement dismissing the litigation with
prejudice. The Company continues to cooperate with the SEC regarding the
restatement.

In June 2000, the Company was served with a demand for
arbitration by William Grabske, the Company's former Chief Executive Officer.
Mr. Grabske seeks enforcement of a purported Settlement Agreement and Mutual
Release. The demand seeks severance pay and reimbursement of expenses of
approximately  $1.0 million plus interest, options for approximately 20,000
shares of stock in the Company and fees and costs. The Company has  asserted
counterclaims alleging it was fraudulently induced to enter into the
Settlement Agreement and Mutual Release, and setting forth other claims. The
parties have agreed to arbitrate their dispute before JAMS.

In January 2001, the Company was notified of the filing
of a lawsuit by Robert Pocsik, the Company's former Chief Administrative
Officer. The complaint alleges breach of implied contract and of the covenant of
good faith and fair dealing, and defamation. The complaint appears to allege
that plaintiff was wrongfully terminated; and that unnamed representatives of
the Company gave unnamed persons, on unspecific occasions, false reasons for the
termination. The complaint does not allege an amount of damages, other than that
the damages exceed $25,000. If the complaint is served the Company intends to
vigorously contest plaintiff's claims, and to assert counterclaims.

From time to time, the Company is involved in other legal
proceedings incidental to the conduct of its business. While the outcome of
these claims cannot be predicted with certainty, the Company does not believe
that such matters, individually or in the aggregate, to which it is currently a
party are likely to have a material adverse effect on the results of operations
or financial condition.

The Company intends to defend itself vigorously in these
actions. However, any settlement or judgment may have a material adverse effect
on the Company's results of operations in the period in which such settlement or
judgment is paid or payment becomes probable.

---

Quarterly Results of Operations (UNAUDITED)

The
following is a summary of the quarterly results of operations for the years
ended December 31, 2000 and 1999 (in thousands):

|                                                                                                          | Reported
March 31. | Reported
June 30. | Reported
September 30. | Restated
September 30. | Reported
December 31.
|--------------------------------------------------------------------------------------------------------- | ------------------ | ----------------- | ---------------------- | ---------------------- | ---------------------
|2000                                                                                                      |                    |                   |                        |                        |                      
|Total revenues                                                                                            | $31,743            | $32,597           | $36,527                | $-                     | $44,822              
|Cost of revenues (including
$6,200 writedown of third
party software held for sale
in the fourth quarter) | 18,311             | 21,718            | 22,096                 | -                      | 28,755               
|Gross margin                                                                                              | 13,432             | 10,879            | 14,431                 | -                      | 16,067               
|                                                                                                          |                    |                   |                        |                        |                      
|Net income (loss)                                                                                         | (8,622)            | (20,154)          | (16,362)               | -                      | (13,637)             
|                                                                                                          |                    |                   |                        |                        |                      
|Net income (loss) per share                                                                               |                    |                   |                        |                        |                      
|-Basic                                                                                                    | (0.26)             | (0.59)            | (0.47)                 | -                      | (0.39)               
|-Diluted                                                                                                  | (0.26)             | (0.59)            | (0.47)                 | -                      | (0.39)               
|                                                                                                          |                    |                   |                        |                        |                      
|1999                                                                                                      |                    |                   |                        |                        |                      
|Total revenues                                                                                            | $44,977            | $51,681           | $50,880                | $45,784                | $36,063              
|Cost of revenues                                                                                          | 22,636             | 26,930            | 25,292                 | 23,956                 | 24,528               
|Gross margin                                                                                              | 22,341             | 24,751            | 25,588                 | 21,828                 | 11,535               
|                                                                                                          |                    |                   |                        |                        |                      
|Net income (loss)                                                                                         | 2,676              | 26,860            | 3,520                  | 1,139                  | (6,838)              
|                                                                                                          |                    |                   |                        |                        |                      
|Net income (loss) per share                                                                               |                    |                   |                        |                        |                      
|-Basic                                                                                                    | 0.08               | 0.79              | 0.11                   | 0.04                   | (0.21)               
|-Diluted                                                                                                  | 0.08               | 0.79              | 0.10                   | 0.03                   | (0.21)               



ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE

None.



PART III

Certain information required by Part III is omitted
from this Report in that the Registrant will file a definitive proxy statement
pursuant to Regulation 14(a) (the "Proxy Statement") not later that 120 days
after the end of the fiscal year covered by this Report and certain information
included therein is incorporated herein by reference. Only those sections of the
Proxy Statement that specifically address the items set forth herein are
incorporated by reference. Such incorporation does not include the Compensation
Committee Report, the Audit Committee Report, or the Performance Graph included
in the Proxy Statement.



ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The information concerning the Company's
Directors required by this Item is incorporated by reference to the information
contained under the captions "Election of Director-Nominees" and "Compliance
with Section 16(a) of the Securities Exchange Act of 1934" in the Proxy
Statement. The information concerning the Company's officers required by this
Item is included in the Section in Part I hereof entitled "Executive
Officers".



ITEM 11. EXECUTIVE COMPENSATION

The information concerning the Company's
Executive Officers required by this Item is incorporated by reference to the
information contained under the captions "Proposal One - Election of Directors -
Director Compensation and Executive Compensation" in the Proxy Statement.



ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT

The information concerning security ownership
required by this Item is incorporated by reference to the information contained
under the caption "Security Ownership of Management; Principal Stockholders" in
the Proxy Statement.



ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information required by this item is
incorporated by reference to the information contained under the caption
"Certain Relationships and Related Transactions" in the Proxy Statement.



PART IV



ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM
8-K

(a) (1)	Financial Statements

The Financial Statements required by this item, together with
the report of independent auditors, are filed as part of this Form 10-K. See
Index to Consolidated Financial Statements under Item 8.

(2) Financial Statement Schedule

The following financial statement schedule of Indus
International, Inc. for the years ended December 31, 2000, 1999 and 1998 is
filed as part of this Report and should be read in conjunction with the
Consolidated Financial Statements of Indus International, Inc.

Schedule II	Valuation and Qualifying Accounts

Schedules not listed above have been omitted because they are
not applicable or are not required or the information required to be set forth
therein is included in the Consolidated Financial Statements or Notes
thereto.

(3) Exhibits

The following exhibits are filed herewith or incorporated by
reference.

|Exhibit Number | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|-------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2.1            | Agreement and Plan of Merger and Reorganization dated as of June
5, 1997 ("Agreement of Merger"), by and among the Registrant, The Indus Group,
Inc. ("Indus") and TSW International, Inc. ("TSW") (incorporated by reference to
Appendix A-1 to the Joint Proxy Statement/Prospectus filed as part of the
Registration Statement on Form S-4 (Reg. No. 333-33113) filed with the
Securities and Exchange Commission on August 7, 1997 (the "1997 Proxy
Statement"))
|2.2            | First Amendment to Agreement of Merger dated as of July 21, 1997
by and among the Registrant, Indus and TSW (incorporated by reference to
Exhibit 2.2 to the 1997 Proxy Statement)                                                                                                                                                                                                                                                                                  
|2.3            | Form of Agreement of Merger entered into by and among the
Registrant, Indus Sub, Inc. and Indus (incorporated by reference to Appendix A-2
to the 1997 Proxy Statement)                                                                                                                                                                                                                                                                                             
|2.4            | Form of Agreement of Merger entered into by and among the
Registrant, TSW Sub, Inc. and TSW (incorporated by reference to Appendix A-3 to
the 1997 Proxy Statement)                                                                                                                                                                                                                                                                                                 
|3.1            | Registrant's Certificate of Incorporation, as
amended (incorporated by reference to Exhibit 3.1 to the 1997 Proxy
Statement)                                                                                                                                                                                                                                                                                                                                        
|3.2            | Registrant's Bylaws (incorporated by reference to Exhibit
3.2 to the 1997 Proxy Statement)                                                                                                                                                                                                                                                                                                                                                                          
|4.1            | Form of Registration Rights Agreement entered into among the
Registrant, Warburg, Pincus Investors, LP ("Warburg"), Robert W. Felton, Richard
W. MacAlmon, John W. Blend, III and John R. Oltman  (incorporated by
reference to Exhibit 4.1 to the 1997 Proxy Statement)                                                                                                                                                                                            
|4.2            | Nomination Agreement entered into among the Registrant, Warburg
and Robert W. Felton (incorporated by reference to Exhibit 4.6 to the 1997
Proxy Statement)                                                                                                                                                                                                                                                                                                         
|10.1*          | Indus International, Inc. 1997 Stock Plan (incorporated by
reference to Exhibit 10.1 to the 1997 Proxy Statement)                                                                                                                                                                                                                                                                                                                                                   
|10.2*          | Indus International, Inc. 1997 Employee Stock Purchase
Plan (incorporated by reference to Exhibit 10.2 to the 1997 Proxy
Statement)                                                                                                                                                                                                                                                                                                                                 
|10.3*          | Indus International, Inc. 1997 Director Option
Plan (incorporated by reference to Exhibit 10.3 to the 1997 Proxy
Statement)                                                                                                                                                                                                                                                                                                                                         
|10.4           | Amended and Restated Commercial Loan Agreement dated June 30,
1995 between Indus and Sumitomo Bank of California, as amended through December
19, 1995 (incorporated herein by reference to Exhibit 10.9 to the Indus Form S-1)                                                                                                                                                                                                                                     
|10.5           | Third Amendment to Commercial Loan Agreement dated May 29, 1996
between Indus and Sumitomo Bank of California (incorporated herein by reference
to Exhibit 10.1 to the Indus Quarterly Report on Form 10-Q (File No. 0-27806)
filed with the Securities and Exchange Commission on August 13,
1996)                                                                                                                                                                 
|10.6           | Fourth Amendment to Commercial Loan Agreement dated September 6,
1996 between Indus and Sumitomo Bank of California (incorporated herein by
reference to Exhibit 10.1 to the Indus Quarterly Report on Form 10-Q (File No.
0-27806) filed with the Securities and Exchange Commission on November 13,
1996)                                                                                                                                                         
|10.7           | Lease for Indus' San Francisco, CA headquarters dated January
24, 1990, as amended (incorporated herein by reference to Exhibit 10.11 to the
Indus Form S-1)                                                                                                                                                                                                                                                                                                        
|10.8           | Lease for Indus' San Francisco, CA headquarters dated March 3,
2000, as amended                                                                                                                                                                                                                                                                                                                                                                                     
|10.9           | Lease for Indus' Pittsburgh, PA sales office (incorporated
herein by reference to Exhibit 10.12 to Amendment No. 1 to the Company's
Registration Statement on Form S-1 (Reg. No. 33-80574) Filed with the Securities
and Exchange Commission on January 31, 1996)                                                                                                                                                                                                   
|10.10          | Form of Stock Purchase Warrant between TSW and Warburg and
schedule of substantially similar Agreements (incorporated by reference to
Exhibit 10.24 to the 1997 Proxy Statement)                                                                                                                                                                                                                                                                                    
|10.11          | Lease Agreement dated June 8, 1993 between TSW and Cousins
Properties Incorporated, as Amended (incorporated by reference to Exhibit 10.35
to the 1997 Proxy Statement)                                                                                                                                                                                                                                                                                             
|10.12          | Amended and Restated Lease Agreement dated August 1, 2000 with
Cousins Properties Incorporated for Atlanta, GA regional offices                                                                                                                                                                                                                                                                                                                                     
|10.13          | Credit Agreement dated September 2, 1997 (as amended through
First Amendment dated September 16, 1997) with Sumitomo Bank of California and
Union Bank of California, N.A. (incorporated by reference to Exhibit 10.01 to
the Registrant's Quarterly Report on Form 10-Q (File No. 0-22993) filed with the
Securities and Exchange Commission on November 14, 1997)                                                                                                 
|10.14          | Stock Purchase Agreement dated January 13, 1999 between Robert
W. Felton, Warburg Pincus Investors, L.P. and Indus International, Inc.
(incorporated by reference to Exhibit 10.37 to the Registrant's Annual Report on
Form 10-K (File No. 0-22993) filed with the Securities and Exchange Commission
on March 29, 1999)                                                                                                                                           
|10.15*         | Employment Agreement dated January 11, 2000 between the Company
and Kent O. Hudson.                                                                                                                                                                                                                                                                                                                                                                                 
|10.16*         | Employment Agreement dated January 11, 2000 between the Company
and Richard H. Beatty.                                                                                                                                                                                                                                                                                                                                                                              
|10.17*         | Employment Agreement dated January 11, 2000 between the Company
and Onagh M. Ash.                                                                                                                                                                                                                                                                                                                                                                                   
|10.18*         | Employment Agreement dated March 1, 2000 between the Company and
Henry C. Montgomery.                                                                                                                                                                                                                                                                                                                                                                               
|10.19*         | Employment Agreement dated January 1, 2001 between the Company
and J. Michael Highland.                                                                                                                                                                                                                                                                                                                                                                             
|10.20          | Consulting Agreement dated March 17, 1999 between the Company
and Robert W. Felton.                                                                                                                                                                                                                                                                                                                                                                                 
|21.1           | Subsidiaries of Registrant                                                                                                                                                                                                                                                                                                                                                                                                                                          
|23.1           | Consent of Ernst & Young LLP, Independent Auditors                                                                                                                                                                                                                                                                                                                                                                                                                  
|24.1           | Power of Attorney, filed on page 24 of this report                                                                                                                                                                                                                                                                                                                                                                                                                  

___________

*Designates management contract or compensatory plan or arrangement.

(b) Reports on Forms 8-K.

No reports on Form 8-K were filed during the fourth quarter of the
fiscal year ended December 31, 2000.

---



SIGNATURES

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



INDUS INTERNATIONAL, INC.



/s/ Kent O. Hudson

Kent O. Hudson

President and Chief Executive Officer

Date: March 16, 2001



POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENT, that each person whose
signature appears below constitutes and appoints Kent O. Hudson and J. Michael
Highland, jointly and severally, his/her attorneys-in-fact, each with the power
of substitution, for him/her in any and all capacities, to sign any amendments
to this Report on Form 10-K, and to file the same, with exhibits thereto and
other documents in connection therewith with the Securities and Exchange
Commission, hereby ratifying and confirming all that each of said attorneys-in-
fact, or his/her substitute or substitutes may do or cause to be done by virtue
hereof.

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 and on the dates indicated:

|Signature               | Title                                                                           | Date          
|----------------------- | ------------------------------------------------------------------------------- | --------------
|                        |                                                                                 |               
|                        | President and Chief Executive Officer                                           | March 16, 2001
|/s/ Kent O. Hudson      | Principal Executive Officer                                                     |               
|(Kent O. Hudson)        |                                                                                 |               
|                        |                                                                                 |               
|                        | Executive Vice President Finance and Administration and Chief
Financial Officer | March 16, 2001
|/s/ J. Michael Highland | Principal Financial Officer                                                     |               
|(J. Michael Highland)   |                                                                                 |               
|                        |                                                                                 |               
|                        | Vice President, Controller                                                      | March 16, 2001
|/s/ Roy A. Crumrine     | Principal Accounting Officer                                                    |               
|(Roy A. Crumrine)       |                                                                                 |               
|                        |                                                                                 |               
|/s/ Richard D. Beatty   | Executive Vice President and Chief Operating Officer, President
myindus.com     | March 16, 2001
|(Richard D. Beatty)     |                                                                                 |               
|                        |                                                                                 |               
|/s/ Gayle Crowell       | Director                                                                        | March 16, 2001
|(Gayle Crowell)         |                                                                                 |               
|                        |                                                                                 |               
|/s/ Robert W. Felton    | Director                                                                        | March 16, 2001
|(Robert W. Felton)      |                                                                                 |               
|                        |                                                                                 |               
|/s/ William H. Janeway  | Chairman of the Board of Directors                                              | March 16, 2001
|(William H. Janeway)    |                                                                                 |               
|                        |                                                                                 |               
|/s/ Joseph P. Landy     | Director                                                                        | March 16, 2001
|(Joseph P. Landy)       |                                                                                 |               
|                        |                                                                                 |               
|/s/ Jeanne D. Wohlers   | Director                                                                        | March 16, 2001
|(Jeanne D. Wohlers)     |                                                                                 |               

---



EXHIBIT INDEX

|Exhibit Number | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|-------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2.1            | Agreement and Plan of Merger and Reorganization dated as of June
5, 1997 ("Agreement of Merger"), by and among the Registrant, The Indus Group,
Inc. ("Indus") and TSW International, Inc. ("TSW") (incorporated by reference to
Appendix A-1 to the Joint Proxy Statement/Prospectus filed as part of the
Registration Statement on Form S-4 (Reg. No. 333-33113) filed with the
Securities and Exchange Commission on August 7, 1997 (the "1997 Proxy
Statement"))
|2.2            | First Amendment to Agreement of Merger dated as of July 21, 1997
by and among the Registrant, Indus and TSW (incorporated by reference to
Exhibit 2.2 to the 1997 Proxy Statement)                                                                                                                                                                                                                                                                                  
|2.3            | Form of Agreement of Merger entered into by and among the
Registrant, Indus Sub, Inc. and Indus (incorporated by reference to Appendix A-2
to the 1997 Proxy Statement)                                                                                                                                                                                                                                                                                             
|2.4            | Form of Agreement of Merger entered into by and among the
Registrant, TSW Sub, Inc. and TSW (incorporated by reference to Appendix A-3 to
the 1997 Proxy Statement)                                                                                                                                                                                                                                                                                                 
|3.1            | Registrant's Certificate of Incorporation, as
amended (incorporated by reference to Exhibit 3.1 to the 1997 Proxy
Statement)                                                                                                                                                                                                                                                                                                                                        
|3.2            | Registrant's Bylaws (incorporated by reference to Exhibit
3.2 to the 1997 Proxy Statement)                                                                                                                                                                                                                                                                                                                                                                          
|4.1            | Form of Registration Rights Agreement entered into among the
Registrant, Warburg, Pincus Investors, LP ("Warburg"), Robert W. Felton, Richard
W. MacAlmon, John W. Blend, III and John R. Oltman  (incorporated by
reference to Exhibit 4.1 to the 1997 Proxy Statement)                                                                                                                                                                                            
|4.2            | Nomination Agreement entered into among the Registrant, Warburg
and Robert W. Felton (incorporated by reference to Exhibit 4.6 to the 1997
Proxy Statement)                                                                                                                                                                                                                                                                                                         
|10.1*          | Indus International, Inc. 1997 Stock Plan (incorporated by
reference to Exhibit 10.1 to the 1997 Proxy Statement)                                                                                                                                                                                                                                                                                                                                                   
|10.2*          | Indus International, Inc. 1997 Employee Stock Purchase
Plan (incorporated by reference to Exhibit 10.2 to the 1997 Proxy
Statement)                                                                                                                                                                                                                                                                                                                                 
|10.3*          | Indus International, Inc. 1997 Director Option
Plan (incorporated by reference to Exhibit 10.3 to the 1997 Proxy
Statement)                                                                                                                                                                                                                                                                                                                                         
|10.4           | Amended and Restated Commercial Loan Agreement dated June 30,
1995 between Indus and Sumitomo Bank of California, as amended through December
19, 1995 (incorporated herein by reference to Exhibit 10.9 to the Indus Form S-1)                                                                                                                                                                                                                                     
|10.5           | Third Amendment to Commercial Loan Agreement dated May 29, 1996
between Indus and Sumitomo Bank of California (incorporated herein by reference
to Exhibit 10.1 to the Indus Quarterly Report on Form 10-Q (File No. 0-27806)
filed with the Securities and Exchange Commission on August 13,
1996)                                                                                                                                                                 
|10.6           | Fourth Amendment to Commercial Loan Agreement dated September 6,
1996 between Indus and Sumitomo Bank of California (incorporated herein by
reference to Exhibit 10.1 to the Indus Quarterly Report on Form 10-Q (File No.
0-27806) filed with the Securities and Exchange Commission on November 13,
1996)                                                                                                                                                         
|10.7           | Lease for Indus' San Francisco, CA headquarters dated January
24, 1990, as amended (incorporated herein by reference to Exhibit 10.11 to the
Indus Form S-1)                                                                                                                                                                                                                                                                                                        
|10.8           | Lease for Indus' San Francisco, CA headquarters dated March 3,
2000, as amended                                                                                                                                                                                                                                                                                                                                                                                     
|10.9           | Lease for Indus' Pittsburgh, PA sales office (incorporated
herein by reference to Exhibit 10.12 to Amendment No. 1 to the Company's
Registration Statement on Form S-1 (Reg. No. 33-80574) Filed with the Securities
and Exchange Commission on January 31, 1996)                                                                                                                                                                                                   
|10.10          | Form of Stock Purchase Warrant between TSW and Warburg and
schedule of substantially similar Agreements (incorporated by reference to
Exhibit 10.24 to the 1997 Proxy Statement)                                                                                                                                                                                                                                                                                    
|10.11          | Lease Agreement dated June 8, 1993 between TSW and Cousins
Properties Incorporated, as Amended (incorporated by reference to Exhibit 10.35
to the 1997 Proxy Statement)                                                                                                                                                                                                                                                                                             
|10.12          | Amended and Restated Lease Agreement dated August 1, 2000 with
Cousins Properties Incorporated for Atlanta, GA regional offices                                                                                                                                                                                                                                                                                                                                     
|10.13          | Credit Agreement dated September 2, 1997 (as amended through
First Amendment dated September 16, 1997) with Sumitomo Bank of California and
Union Bank of California, N.A. (incorporated by reference to Exhibit 10.01 to
the Registrant's Quarterly Report on Form 10-Q (File No. 0-22993) filed with the
Securities and Exchange Commission on November 14, 1997)                                                                                                 
|10.14          | Stock Purchase Agreement dated January 13, 1999 between Robert
W. Felton, Warburg Pincus Investors, L.P. and Indus International, Inc.
(incorporated by reference to Exhibit 10.37 to the Registrant's Annual Report on
Form 10-K (File No. 0-22993) filed with the Securities and Exchange Commission
on March 29, 1999)                                                                                                                                           
|10.15*         | Employment Agreement dated January 11, 2000 between the Company
and Kent O. Hudson.                                                                                                                                                                                                                                                                                                                                                                                 
|10.16*         | Employment Agreement dated January 11, 2000 between the Company
and Richard H. Beatty.                                                                                                                                                                                                                                                                                                                                                                              
|10.17*         | Employment Agreement dated January 11, 2000 between the Company
and Onagh M. Ash.                                                                                                                                                                                                                                                                                                                                                                                   
|10.18*         | Employment Agreement dated March 1, 2000 between the Company and
Henry C. Montgomery.                                                                                                                                                                                                                                                                                                                                                                               
|10.19*         | Employment Agreement dated January 1, 2001 between the Company
and J. Michael Highland.                                                                                                                                                                                                                                                                                                                                                                             
|10.20          | Consulting Agreement dated March 17, 1999 between the Company
and Robert W. Felton.                                                                                                                                                                                                                                                                                                                                                                                 
|21.1           | Subsidiaries of Registrant                                                                                                                                                                                                                                                                                                                                                                                                                                          
|23.1           | Consent of Ernst & Young LLP, Independent Auditors                                                                                                                                                                                                                                                                                                                                                                                                                  
|24.1           | Power of Attorney, filed on page 24 of this report                                                                                                                                                                                                                                                                                                                                                                                                                  

___________

*Designates management contract or compensatory plan or arrangement.

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Schedule II

**INDUS INTERNATIONAL, INC.
                       VALUATION AND QUALIFYING ACCOUNTS
                                (Amounts in thousands)**

`Balance at Charged to Charges-    Balance
                            Beginning  Costs and     Add       at End
  Year       Description     of Year   Expenses  (Deduct)(1)  of Year
--------- ----------------- ---------- --------- ----------- ----------
  2000    Allowance for
          doubtful accounts    $3,991     3,051      (1,663)    $5,379

  1999    Allowance for
          doubtful accounts    $3,578     2,478      (2,065)    $3,991

  1998    Allowance for
          doubtful accounts    $1,974     2,130        (526)    $3,578`





__________



(1) Uncollectible accounts written off, net of recoveries.

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