<PAGE>
================================================================================

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-Q
       (Mark one)
   [X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                             EXCHANGE ACT OF 1934
                For the quarterly period ended December 31, 1999

                                       or

   [ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OF 15(D) OF THE SECURITIES
                              EXCHANGE ACT OF 1934
              For the transition period from ________ to ________.


                        Commission file number:  O-26886


                      OBJECTIVE SYSTEMS INTEGRATORS, INC.
             (Exact name of registrant as specified in its charter)


                   Delaware                            68-0239619
      (State or other jurisdiction of         (I.R.S. Identification Number)
       incorporation or organization)


                                  101 Park Way
                            Folsom, California 95630
          (Address of principal executive office, including zip code)

                                 (916) 353-2400
              (Registrant's telephone number, including area code)



Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.      Yes       X           No
                                              ---------           _________


  Number of shares of registrant's common stock outstanding as of January 31,
                                2000: 36,145,335

===============================================================================
<PAGE>

                      OBJECTIVE SYSTEMS INTEGRATORS, INC.

                               Table of Contents


<TABLE>
<CAPTION>
                                                                                     Page
                                                                                     ----
<S>                                                                                 <C>
PART I.     FINANCIAL INFORMATION

Item 1.      Condensed Consolidated Financial Statements.........................       1

             Condensed Consolidated Balance Sheets at December 31, 1999
             and June 30, 1999...................................................       1

             Condensed Consolidated Statements of Operations for the three months
             and six months ended December 31, 1999 and 1998.....................       2

             Condensed Consolidated Statements of Cash Flows for the six months
             ended December 31, 1999 and 1998....................................       3

             Notes to Condensed Consolidated Financial Statements................       4

Item 2.      Management's Discussion and Analysis of Financial Condition and
             Results of Operations...............................................       6

Item 3.      Quantitative and Qualitative Disclosure About Market Risk...........      16


PART II.     OTHER INFORMATION

Item 1.      Legal Proceedings...................................................      16

Item 6.      Exhibits and Reports on Form 8-K....................................      16

10.1         Enterprise-Wide License Agreement
10.2         Enterprise-Wide Professional Services Agreement
10.3         Severance Agreement of Jeffrey T. Boone
10.4         Severance Agreement of Philip N. Cardman
10.5         Severance Agreement of Lawrence F. Fiore
10.6         Severance Agreement of Danny D. Line
10.7         Severance Agreement of James T. Disen

SIGNATURE                                                                              17
</TABLE>

                                       i
<PAGE>

PART I.  FINANCIAL INFORMATION

Item 1.    Condensed Consolidated Financial Statements


                      OBJECTIVE SYSTEMS INTEGRATORS, INC.
                     CONDENSED CONSOLIDATED BALANCE SHEETS
                                (in thousands)

<TABLE>
<CAPTION>
                                                                             December 31,          June 30,
                                                                                 1999                1999
                                                                          ----------------    ----------------
                                                                             (unaudited)             (1)
<S>                                                                         <C>                 <C>
ASSETS
Current assets:
  Cash and cash equivalents...............................................        $ 23,593            $ 15,811
  Short-term investments..................................................          16,806              15,771
  Accounts receivable (net of allowance of $2,175 and $1,865).............           8,840              17,251
  Prepaid expenses and other current assets...............................           1,727               1,515
                                                                                 ---------           ---------
     Total current assets.................................................          50,966              50,348
Property and equipment, net...............................................          10,127              11,319
Other assets, net.........................................................           3,431               4,757
                                                                                 ---------           ---------
     Total assets.........................................................        $ 64,524            $ 66,424
                                                                                 =========           =========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable........................................................        $  5,551            $  5,822
  Accrued liabilities.....................................................           6,767               6,662
  Deferred revenue........................................................          12,262              10,078
                                                                                 ---------           ---------
     Total current liabilities............................................          24,580              22,562

Stockholders' equity:
  Common stock............................................................          87,341              86,703
  Accumulated other comprehensive income (loss)...........................            (859)               (917)
  Accumulated deficit.....................................................         (46,538)            (41,924)
                                                                                  --------           ---------
     Total stockholders' equity...........................................          39,944              43,862
                                                                                  --------            --------
     Total liabilities and stockholders' equity...........................        $ 64,524            $ 66,424
                                                                                  ========            ========
</TABLE>

(1) Information in this column derived from OSI's audited consolidated balance
sheet as of June 30, 1999

See notes to condensed consolidated financial statements.

                                       1
<PAGE>

                      OBJECTIVE SYSTEMS INTEGRATORS, INC.
                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                    (in thousands, except per share amounts)
                                  (unaudited)

<TABLE>
<CAPTION>

                                                         Three Months Ended                  Six Months Ended
                                                            December 31,                       December 31,
                                                  ------------------------------     ------------------------------
                                                        1999             1998             1999              1998
                                                  -------------     ------------     ------------     -------------
<S>                                                 <C>               <C>              <C>              <C>
Revenues:
  License.........................................      $ 9,769          $10,258          $14,593           $21,686
  Service and other...............................        7,304            7,325           14,491            13,857
                                                        -------         --------         --------          --------
     Total revenues...............................       17,073           17,583           29,084            35,543
                                                        -------         --------         --------          --------
Cost of revenues:
  License.........................................          464              485            1,039               934
  Service and other...............................        4,193            4,692            8,072             9,362
                                                        -------         --------         --------          --------
     Total cost of revenues.......................        4,657            5,177            9,111            10,296
                                                        -------         --------         --------          --------
Gross profit......................................       12,416           12,406           19,973            25,247
                                                        -------         --------         --------          --------
Operating expenses:
  Sales and marketing.............................        6,852            7,553           12,931            14,685
  Research and development........................        4,174            5,198            8,901             9,927
  General and administrative......................        1,550            1,648            3,092             3,145
                                                        -------         --------
     Total operating expenses.....................       12,576           14,399           24,924            27,757
                                                        -------         --------         --------          --------
Loss from operations..............................         (160)          (1,993)          (4,951)           (2,510)
                                                        -------         --------         --------          --------
Other income, net.................................          330              341              591               980
                                                        -------         --------         --------          --------
Income (loss) before income taxes.................          170           (1,652)          (4,360)           (1,530)
Provision (benefit) for income taxes..............           55             (798)             254              (750)
Net Income (loss).................................      $   115          $  (854)          (4,614)          $  (780)
                                                        =======         ========         ========          ========
Earnings (loss) per share:                              =======         ========         ========          ========
  Basic...........................................      $  0.00          $ (0.02)         $ (0.13)          $ (0.02)
                                                        =======         ========         ========          ========
  Diluted.........................................      $  0.00          $ (0.02)         $ (0.13)          $ (0.02)
                                                        =======         ========         ========          ========
Weighted-average shares outstanding:                    =======         ========         ========          ========
  Basic...........................................       35,807           34,948           35,719            34,878
                                                        =======         ========         ========          ========
  Diluted.........................................       36,736           34,948           35,719            34,878
                                                        =======         ========         ========          ========
</TABLE>

See notes to condensed consolidated financial statements.

                                       2
<PAGE>

                      OBJECTIVE SYSTEMS INTEGRATORS, INC.
                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)
                                  (unaudited)

<TABLE>
<CAPTION>
                                                                                      Six Months Ended
                                                                                        December 31,
                                                                           ------------------------------------
                                                                                  1999                 1998
                                                                           ----------------      --------------
<S>                                                                          <C>                   <C>
Cash flows from operating activities:
   Net loss................................................................         $(4,614)            $  (780)
  Adjustments to reconcile net loss to net cash provided by (used for)
   operating activities:
   Depreciation and amortization...........................................           4,224               3,514
          Deferred income taxes............................................              --                (959)
          Stock compensation expense.......................................              --                 174
   Effect of changes in:
   Accounts receivable.....................................................           8,402              (2,079)
   Prepaid expenses, other current assets and other assets.................            (220)               (158)
   Accounts payable........................................................            (483)               (596)
   Accrued liabilities.....................................................             329              (1,611)
   Deferred revenue........................................................           2,184              (1,494)
                                                                                   --------            --------
   Net cash provided by (used for) operating activities....................           9,822              (3,989)
                                                                                   --------            --------
Cash flows from investing activities:
   Sales (purchases) of short-term investments.............................          (1,036)              1,044
   Purchases of property and equipment.....................................          (1,627)             (2,247)
   Purchases of other assets...............................................             (91)             (1,570)
                                                                                   --------            --------
   Net cash used in investing activities...................................          (2,754)             (2,773)
                                                                                   --------            --------
Cash flows from financing activities:
   Proceeds from issuance of common stock, net.............................             638               1,655
   Purchase of treasury stock..............................................              --              (1,957)
                                                                                   --------            --------
   Net cash provided by (used for) financing activities....................             638                (302)
                                                                                   --------            --------
Effect of exchange rate changes on cash....................................              76                 (42)
                                                                                   --------            --------
   Net increase (decrease) in cash and cash equivalents....................           7,782              (7,106)
Cash and cash equivalents:
   Beginning of the period.................................................          15,811              24,568
                                                                                   --------            --------
   End of the period.......................................................         $23,593             $17,462
                                                                                   ========            ========
</TABLE>

See notes to condensed consolidated financial statements.

                                       3
<PAGE>

                      OBJECTIVE SYSTEMS INTEGRATORS, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (unaudited)

1.  Basis of Presentation

These unaudited, condensed, consolidated financial statements have been prepared
by Objective Systems Integrators, Inc. ("OSI") under the rules and regulations
of the Securities and Exchange Commission.  In accordance with those rules and
regulations, some of the information normally included in financial statements
prepared in accordance with generally accepted accounting principles has been
condensed or omitted.

The information in this report reflects all adjustments that we believe are
necessary to fairly state OSI's financial position, results of operations and
cash flows for the periods presented. These adjustments consist of items that
are of a normally recurring nature.

These financial statements should be read in conjunction with the audited
financial statements and their notes contained in OSI's Annual Report on Form
10-K for the fiscal year ended June 30, 1999. Results for interim periods are
not necessarily indicative of the results expected for the full fiscal year or
for any other period.

2.  Earnings (Loss) Per Share

Basic net income (loss) per share is computed using the weighted average of
common shares outstanding. Diluted net income (loss) per share is computed using
the weighted average number of common and common equivalent shares outstanding
during the period. Common equivalent shares are the incremental common shares
that could be issued (using the treasury stock method) following the exercise of
stock options. Common equivalent shares outstanding are not included in the net
loss per share calculations in loss periods as their inclusion would have the
effect of showing a smaller loss per share.

3.  Comprehensive Income (Loss)

SFAS No. 130, Reporting Comprehensive Income, requires us to report a new,
additional measure of income. "Comprehensive Income" includes gains and losses
from foreign currency translations and unrealized gains and losses on equity
securities. These items were previously excluded from net income and reflected
instead in stockholders' equity. The following table sets forth the calculation
of comprehensive income (loss):

<TABLE>
<CAPTION>
                                                   For the Three Months Ended          For the Six Months Ended
                                                          December 31,                       December 31,
                                                -----------------------------      ------------------------------
(in thousands)                                        1999           1998                1999            1998
                                                -------------  --------------      -------------   --------------
<S>                                               <C>            <C>                 <C>            <C>
Net profit (loss)                                    $ 115          $(854)            $(4,614)          $(780)
Foreign currency translation gains (losses)             84            117                  58             (43)
                                                   -------        -------            --------          ------
Total comprehensive income (loss)                    $ 199          $(737)            $(4,556)          $(823)
                                                   =======        =======            ========          ======
</TABLE>

                                       4
<PAGE>

4.    Accounting for Derivative Instruments and Hedging Activities

In June 1998 the Financial Accounting Standard Board issued SFAS No. 133,
Accounting for Derivative Instruments and Hedging Activities. SFAS No. 133
establishes accounting and reporting standards requiring that every derivative
instrument be recorded in the balance sheet as an asset or liability measured at
its fair value. It requires that changes in a derivative's fair value be
recognized currently in earnings unless specific hedge accounting criteria are
met. It also requires that companies must formally document, designate, and
assess the effectiveness of transactions that receive hedge accounting. SFAS No.
133 is effective for fiscal years beginning after June 15, 2000 and cannot be
applied retroactively. We are continuing to evaluate SFAS No. 133, but do not
expect that it will have a material effect on our financial position or results
of operations.

5.    Segment and Geographic Information

We adopted SFAS No. 131, Disclosures about Segments of an Enterprise and Related
Information, in fiscal 1999. SFAS No. 131 establishes standards for reporting
information in our financial statements about operating segments. Operating
segments are components of an enterprise for which separate financial
information is available that is regularly evaluated by the chief operating
decision maker, or decision making group, in deciding resource allocations and
in assessing performance. Our chief operating decision makers are our Co-Chief
Executive Officers.

We conduct our business in one business segment. For the quarter and six months
ended December 31, 1999 we had one customer that accounted for more than 10% of
our revenues. For the quarter ended December 31, 1998, we had a different
customer that accounted for more than 10% of our total revenues.

The following table presents a summary of geographic information:

<TABLE>
<CAPTION>
                                                    For the Three Months Ended              For the Six Months Ended
                                                           December 31,                           December 31,
                                                ---------------------------------     ----------------------------------
(in thousands)                                         1999            1998                  1999             1998
                                                --------------  -----------------     ---------------  -----------------
<S>                                               <C>             <C>                   <C>              <C>
Revenues:
  United States.................................       $11,533            $ 9,163              $17,622           $19,052
  Europe........................................         2,552              3,563                4,461             5,250
  Asia and Pacific Rim..........................         2,197              1,855                4,895             5,795
  Latin America.................................           481              2,017                1,711             4,461
  Other.........................................           310                985                  395               985
                                                       -------            -------              -------           -------
    Total.......................................       $17,073            $17,583              $29,084           $35,543
                                                       =======            =======              =======           =======

Long-lived assets:
  United States.................................        12,112             16,717               12,112            16,717
  Europe........................................           127                158                  127               158
  Asia and Pacific Rim..........................         1,319              2,201                1,319             2,201
                                                       -------            -------              -------           -------
    Total Consolidated..........................       $13,558            $19,076              $13,558           $19,076
                                                       =======            =======              =======           =======
</TABLE>

                                       5
<PAGE>

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

Forward-Looking Statements

Some of the statements in this Report are "forward-looking statements" as
defined in the Private Securities Litigation Reform Act of 1995. They have been
identified with an asterisk (*). Underlying these statements are a number of
assumptions regarding risks, both known and unknown, which may cause the actual
results of Objective Systems Integrators, Inc. ("OSI") or the communications
industry to differ materially from those that are expressed or implied. These
risks include, but are not limited to, concentration of product and customers;
growth of sales, customer support and development organizations; competition and
technological change in the industry; international licensing; dependence on
third party relationships; risk of product defect; fluctuations of quarterly
results; "Year 2000" issues; and retention of key personnel. Additional
information can be found in Item 1, Notes to Condensed Consolidated Financial
Statements, throughout Item 2, Management's Discussion and Analysis of Financial
Condition and Results of Operations, and in Item 3, Quantitative and Qualitative
Disclosure About Market Risk.

Overview

OSI provides Operation Support Systems ("OSS") framework and application
software that simplifies the integration and management of communications
networks, services, and processes. We were founded in June of 1989 and began
shipments of our NetExpert(TM) product line in August of 1990. In fiscal 1999,
we announced our next-generation products, NetExpert Virtual Service Management
("VSM(TM)"), NetExpert Virtual Process Management ("VPM(TM)), NetExec(TM), and
NetExel(TM) Solution Services applications. These new products reduce deployment
time and reduce the expertise needed for customization of our products. They are
integrated under our NetEx(TM) Unified Management Architecture(TM) ("UMA(TM)")
to provide a blueprint for managing converged services and networks. As of
December 31, 1999, we had directly or indirectly licensed our products to over
250 customers around the world.

Revenue from licenses, service and support of the NetExpert product line has
accounted for substantially all of our revenues since our inception. A typical
NetExpert sale generally includes a combination of license fees, fees for
professional services and fees for customer support and training. We believe
that revenue from the license, service and support of our NetExpert product
line, including VSM and VPM, will account for substantially all of our total
revenue for the foreseeable future.* A significant portion of revenues has been,
and will continue to be, derived from substantial orders placed by large
organizations.* The timing of these orders and their fulfillment has caused, and
may continue to cause, material fluctuations in operating results, particularly
on a quarterly basis.* We believe that our quarterly revenues and operating
results are likely to vary significantly in the future and that period-to-period
comparisons of revenue and results of operations are not necessarily
meaningful.* We also believe that quarterly revenues should not be relied on as
indications of future performance.*

We distribute and sell products to end users in North America primarily through
a direct sales organization. Outside of North America, we sell through systems
integrators, local value-added resellers and, to a lesser extent, an in-region
direct sales force. We intend to enter into additional international markets and
to continue to grow our international operations by expanding our direct sales
force, opening new in-region customer support and sales offices, adding value-
added resellers and pursuing additional strategic relationships.* See further
discussion in the "Results of Operations" section below.

                                       6
<PAGE>

For the second quarter of fiscal 2000, we had a net profit of $0.1 million
compared with a net loss of $0.9 million for the same period in fiscal 1999.
Some of the factors that contributed to this result are described in the
following "Results of Operations" section. We are following a strategy aimed at
meeting the service management, network management and process integration needs
of communications services providers. In fiscal 1998 and 1999, we placed heavy
emphasis on development of a new generation of products that can be integrated
under our Unified Management Architecture. In fiscal 2000, we plan to 1)
continue the launch of our new product line, 2) build stronger sales and
customer interface organizations, and 3) forge new strategic alliances while
strengthening our existing relationships.* While we believe this strategy will
help us gain market share in fiscal 2000 and grow our backlog of orders, we can
give no assurances that this strategy will be successful.* Some orders we
include in our backlog may be cancelled without significant penalty.

Results of Operations

Revenues:

<TABLE>
<CAPTION>
                                         For the three months ended                         For the six months ended
                                                December 31,                                      December  31,
                              ---------------------------------------------     ----------------------------------------------
(in thousands, except
percentages)                       1999            Change           1998             1999            Change            1998

                              ------------     ----------      ------------     ------------     ----------      -------------
<S>                           <C>              <C>             <C>              <C>              <C>             <C>
License.....................     $ 9,769             (5%)         $10,258          $14,593            (33%)          $21,686
Percentage of revenues......          57%                              58%              50%                               61%
Service and other...........     $ 7,304             (0%)         $ 7,325          $14,491              5%           $13,857
Percentage of revenues......          43%                              42%              50%                               39%
Total revenues..............     $17,073             (3%)         $17,583          $29,084            (18%)          $35,543
</TABLE>


Our revenues are derived from license fees and fees for services that complement
our products, including professional services, software support, customer
support and training.  The decrease in total revenues for the three-month and
six-month periods ended December 31, 1999, compared with the three-month and
six-month periods ended December 31, 1998, resulted primarily from the
transition to our new products and delays in entering into contracts for new
orders.  List prices for our products and services did not change significantly
during the comparison periods.  However, we are in the process of instituting a
new pricing model that will provide customers with additional choices when
licensing our software.  This may have a negative impact on future revenues if
our pricing model does not attract sufficient volume.*

License Revenues.  Software licenses have previously been granted and priced on
a per-server basis, although we have granted site, network-wide or enterprise-
wide licenses for larger installations. In future periods, licenses may be
granted on either a per-server basis or other bases.* We generally recognize
license revenues when a noncancellable license agreement has been signed,
product has been shipped, there are no uncertainties surrounding product
acceptance, the fees are fixed and determinable, and collection is probable. We
also recognize revenue under contracts requiring significant customization using
the percentage-of-completion method of contract accounting, based on the ratio
of incurred costs to total estimated costs. Although generally our license
agreements do not provide for a right of return, we maintain reserves for
returns and potential credit losses.

License revenues decreased in absolute dollars and as a percentage of total
revenues for both the three-month and the six-month periods ended December 31,
1999, compared with the three-month and the six-month periods ended December 31,
1998. The Company believes this decrease was due to a reduced number of sales
staff. We embarked on a program to increase the size and competency of our
direct sales force and

                                       7
<PAGE>

to build relationships with current and new distribution channel partners. We
hired additional sales staff during the second fiscal quarter and are currently
in the process of filling the remaining positions. However, given the
significant number of new products we have introduced, the need to train our
sales and support personnel in those products and the relatively short average
tenure of our direct sales force, no assurances can be given that historic
productivity rates per salesman will be achieved in the near term.* Our failure
to do so could have a material, adverse effect on our business, operating
results and financial condition.*

Services and Other Revenues. We recognize revenues for training, consulting and
professional services as the services are performed and acceptance criteria are
met. We offer support contracts to our customers. These contracts provide
telephone support, updates and maintenance of our products during the support
period. Revenues from our support contracts are deferred and recognized ratably
over the term of the support agreement. Payments for support fees are generally
made in advance and are nonrefundable. Services and other revenues remained flat
for the three month period ended December 31, 1999, compared with the three
months ended December 31, 1998. The growth in our service and other revenues in
the six-month period ended December 31, 1999, compared with the six-month period
ended December 31, 1998, is due to an increased level of professional services
and project completion during the current fiscal year.

We expect that our services and other revenues will continue to represent a
significant portion of our total revenues in future periods.*  We anticipate
continued demand for professional services in connection with licenses of our
products, the renewal of existing support contracts and incremental support
revenues attributable to a growing installed product base.*  We also believe
that historic growth rates for services and other revenues should not be relied
on as an indication of future growth rates.*

International Revenues.  Revenues from outside of the United States represented
32% and 48% of total revenues for the three months ended December 31, 1999, and
1998, respectively. Revenues from outside of the United States represented 39%
and 46% of total revenues for the six months ended December 31, 1999, and 1998,
respectively. The decrease in international revenues as a percentage of total
revenues was primarily caused by our receipt during the quarter of a
particularly large order from one North American customer. We do not believe
that the decease is symptomatic of an on-going change in our revenue mix; and we
plan to continue investing in our international operations.* However, given the
economic uncertainties in world markets, we can give no assurances that
continued international investment will remain prudent.*

The European communications market is growing, as privatization in the region
continues to create a more competitive service provider market. We are
continuing to build our European operations in anticipation of the opportunity
for increased business in this market.*

We believe that the weakened economic conditions in the Asia-Pacific region have
had a slightly negative impact on our growth rate over the last two years. We
believe the economic climate has recently improved but there can be no
assurances that the economies in the Asia-Pacific region will fully recover in
the near term or that similar economic problems will not occur in other parts of
the world.*

We expect that international revenues will continue to account for a material
portion of our total revenues in future periods.*  Our international business
involves a number of inherent risks, including longer receivable collection
periods, greater difficulty in collections, fluctuations in the real cost of our
services given changes in relative exchange rates, difficulty in staffing and
managing operations, a longer sales cycle, potentially unstable political and
economic conditions, unexpected changes in regulatory requirements, including a
slowdown in the rate of privatization of telecommunications services, reduced
protection for intellectual property rights, potentially adverse tax
consequences, and tariffs and other trade barriers.  In addition, access to
foreign markets is often difficult due to the

                                       8
<PAGE>

established relationships between government-owned or government-controlled
communications providers and local suppliers of communications products. We
cannot give assurances that we will be able to continue penetrating
international markets successfully. In addition, we cannot give assurances we
will be able to sustain or increase revenue from international licensing and
services or that the factors listed above will not adversely affect our future
international business. Any of these factors could have a material, adverse
effect on our business, operating results and financial condition.*


Cost of Revenues:

<TABLE>
<CAPTION>
                                       For the three months ended                         For the six months ended
                                              December 31,                                      December 31,
                            ---------------------------------------------     ---------------------------------------------
(in thousands, except
 percentages)                    1999            Change           1998             1999            Change           1998
                            ------------     ----------      ------------     ------------     ----------      ------------
<S>                           <C>              <C>             <C>              <C>              <C>             <C>
Cost of license revenues....     $   464             (4%)         $   485          $ 1,039             11%          $   934
Percentage of revenues......           3%                               3%               3%                               3%
Cost of service and other...     $ 4,193            (11%)         $ 4,692          $ 8,072            (14%)         $ 9,362
Percentage of revenues......          24%                              27%              28%                              26%
Total cost of revenues......     $ 4,657            (10%)         $ 5,177          $ 9,111            (12%)         $10,296
Percentage of revenues......          27%                              29%              31%                              29%
Gross profit................     $12,416              0%          $12,406          $19,973            (21%)         $25,247
Percentage of revenues......          73%                              71%              69%                              71%
</TABLE>

Cost of License Revenues.  Cost of license revenues consists primarily of
license fees paid to third-party software vendors and the costs of product media
and duplication, manuals, packaging materials, shipping expenses, amortization
of capitalized software costs, and related labor costs. For the three months
ended December 31, 1999 compared with the three months ended December 31, 1998,
cost of license revenues decreased in actual dollars but represented the same
percentage of revenues for those periods. For the six months ended December 31,
1999 compared with the six months ended December 31, 1998, cost of license
revenues increased due to temporarily higher than normal costs for third-party
software vendors.

Cost of Services and Other Revenues.  Cost of services and other revenues
consists primarily of personnel costs related to the professional services and
maintenance services we provide in connection with our products. It also
includes outside service fees paid to third-party providers of professional
services, related travel costs and overhead. Our cost of service and other
revenues decreased for both the three-month and the six-month periods ended
December 31, 1999, compared with the three-month and six-month periods ended
December 31, 1998. This decrease was due to reduced headcount and associated
personnel and overhead costs. We believe that, in the future, the cost of
service and other revenues may increase in absolute dollars if additional
headcount or outside services are required.*

Gross profit remained flat for the three months ended December 31, 1999 as
compared to the three months ended December 31, 1998.  Gross profit decreased
for the six months ended December 31, 1999 as compared with the six months ended
December 31, 1998, related to decreased license revenues as a percentage of
total revenues.  This was partially offset by decreased costs in our
professional services organization, which had the overall effect of increasing
gross profit for service and other revenues.  We expect to continue maintaining
a gross profit in our professional services segment.*  However, if our costs of
providing services were to increase faster than our services revenues, losses
could occur in the future.*

                                       9
<PAGE>

Operating Expenses:

<TABLE>
<CAPTION>
                                       For the three months ended                         For the six months ended
                                              December 31,                                      December 31,
                            ---------------------------------------------     ---------------------------------------------
(in thousands, except
 percentages)                    1999            Change           1998             1999            Change           1998
                            ------------     ----------      ------------     ------------     ----------      ------------
<S>                           <C>              <C>             <C>              <C>              <C>             <C>
Sales and marketing.........     $ 6,852             (9%)         $ 7,553          $12,931            (12%)         $14,685
Percentage of revenues......          40%                              43%              44%                              41%
Research and development....     $ 4,174            (20%)         $ 5,198          $ 8,901            (10%)         $ 9,927
Percentage of revenues......          25%                              30%              31%                              28%
General and administrative..     $ 1,550             (6%)         $ 1,648          $ 3,092             (2%)         $ 3,145
Percentage of revenues......           9%                               9%              11%                               9%
Total operating expenses....     $12,576            (13%)         $14,399          $24,924            (10%)         $27,757
Percentage of revenues......          74%                              82%              86%                              78%
</TABLE>


Sales and Marketing.  Sales and marketing expenses consist mainly of salaries,
commissions and bonuses for sales and marketing personnel, facilities costs
associated with sales and customer support offices, promotional expenses and
contract administration.  These expenses decreased for the three months ended
December 31, 1999 compared with the three months ended December 31, 1998. Sales
and marketing expenses also decreased for the six months ended December 31,
1999, compared with the six months ended December 31, 1998.  The decrease in
both periods was primarily due to the decrease in sales revenues, which resulted
in reduced commissions.  There was also a reduction in headcount for sales and
marketing, resulting in a decrease in salaries and personnel-related costs.
Marketing costs decreased due to discontinuing the services of various outside
vendors.  We also reduced travel, facilities, telephone and computer-related
expenses during the periods.  We expect that sales and marketing expenses in
future periods will increase both in absolute dollars and as a percentage of
revenues related, in part, to our active hiring program and to agreements with
various partners who are involved in the marketing of our products.*

Research and Development. Research and development expenses consist mainly of
personnel costs for product research, development and quality assurance.
Research and development expenses decreased for the three months ended December
31, 1999 compared with the three months ended December 31, 1998. Headcount and
related expenses, such as travel and computer operations, were reduced. Research
and development expenses also decreased for the six months ended December 31,
1999 compared with the six months ended December 31, 1998. However, this
decrease was offset by the amortization of a $0.6 million expense for purchased
technology in the first quarter of fiscal 2000. We expect that we will continue
committing significant resources to research and development to enhance and
extend our core technology and product lines.* Although we are committed to
controlling expenses in research and development, these expenses may increase in
absolute dollars or as a percentage of total revenues.*

General and Administrative.  General and administrative expenses consist mainly
of personnel costs for finance, human resources, legal affairs and general
management.  Also included are outside legal and accounting fees, corporate
insurance expenses and allowance for doubtful accounts.  General and
administrative expenses remained relatively the same for both the three-month
and six-month periods ended December 31, 1999, compared with the three-month and
six-month periods ended December 31, 1998.  We expect that general and
administrative expenses may increase in the future with the hiring of additional
personnel and possibly increased use of outside services.*  Although we believe
our allowance for doubtful accounts is adequate as of December 31, 1999, we will
continue to

                                       10
<PAGE>

review this allowance and adjust it as needed. This could result in additional
charges to general and administrative expenses.*

Other Income, Net:

<TABLE>
<CAPTION>
                                       For the three months ended                         For the six months ended
                                              December 31,                                      December 31,
                            ---------------------------------------------     ---------------------------------------------
<S>                           <C>              <C>             <C>              <C>              <C>             <C>
(in thousands, except
 percentages)                       1999        Change               1998             1999        Change               1998
                            ------------     ----------      ------------     ------------     ----------      ------------

Other income, net...........       $ 330             (3%)           $ 341            $ 591            (40%)           $ 980
Percentage of revenues......           2%                               2%               2%                               3%
</TABLE>

Other Income, Net.   Other income net consists primarily of interest income,
gain/loss on foreign exchange and miscellaneous bank charges. The decrease in
other income, net was primarily due to the decrease in average levels of cash
and cash equivalents resulting in lower interest income. Other contributing
factors were an increase in the loss associated with foreign currency
fluctuations.


Provision (Benefit) for Income Taxes:

<TABLE>
<CAPTION>
                                      For the three months ended                          For the six months ended
                                             December 31,                                       December 31,
                            -------------------------------------------      ----------------------------------------------
<S>                           <C>             <C>            <C>               <C>               <C>             <C>
(in thousands, except
 percentages)                       1999       Change              1998               1999        Change               1998
                            ------------    ----------     ------------      -------------     ----------      ------------

Provision (benefit) for
 income taxes...............       $  55            NM            $(798)             $ 254             NM             $(750)
Percentage of revenues......           0            NM              (5%)                1%             NM               (2%)
</TABLE>

NM -- Not meaningful

Provision (Benefit) For Income Taxes.  This includes federal, state and foreign
income taxes. The effective tax rate was 48% for the three months ended December
31, 1998 and 49% for the six months ended December 31, 1998. The effective tax
rate for the three months ended December 31, 1998 differs from the federal
statutory rate primarily because of foreign taxes, state taxes and research and
development tax credits. For the three months ended December 31, 1999, the
provision for income taxes represents state and foreign taxes.

Year 2000 Readiness

Many currently installed computer systems and software products are coded to
accept only two digit entries in their date code fields.  As a result, software
that records only the last two digits of a calendar year may not be able to
distinguish whether "00" means 1900 or 2000.  In addition, computer programs may
fail to recognize February 29, 2000, as an exception to the calculation of leap
years that occurs only once every 400 years.  Residual Year 2000 problems may
result in miscalculations, data corruption, system failures or disruption of
operations.

To date, we have not experienced any significant Year 2000 problems with our
internal systems or our customers' systems.  However, we are continuing to
assess the extent to which our systems and products correctly evaluate date
information ("Year 2000-compliant").  We have taken remedial

                                       11
<PAGE>

action whenever we were able to identify any systems and products that were not
Year 2000-compliant and expect that this activity will continue throughout
fiscal 2000.*

Despite our having neither experienced or received reports of customer problems
over the transition to the new calendar year, we can give no assurances that
problems will not occur or that our products will continue to function properly
when integrated with other products, including previously customized OSI
software, third-party software and hardware.  Our customers may still experience
Year 2000 difficulties because of the noncompliance of other products that
interoperate with our products.  If our products are part of a system that is
not able to manage and manipulate data related to the Year 2000, or if residual
Year 2000 problems cause the failure of the technologies, software or systems
necessary to operate our business, we could lose customers, suffer significant
disruptions in our business, lose revenues and incur substantial liabilities and
expenses.  The results could have a material adverse effect on our business.*

We have incurred costs related to our Year 2000 readiness program but have not
maintained separate cost accounting for them.  Our Year 2000 readiness efforts
were undertaken by existing employees, and the associated costs were treated as
normal operating expense.  As of December 31, 1999, we estimate these costs were
approximately $8.0 million. We do not expect to incur significant additional
costs for our Year 2000 readiness program.* This does not include potential
costs related to customer or other claims, or costs related to internal software
and hardware replaced in the normal course of our business.  We believe we have
adequate general corporate funds to pay for any expected costs and expenditures
related to Year 2000 readiness.*

We have provided our customers with limited assurances regarding those of our
products that are Year 2000-compliant.  Except as specifically provided for in
our contracts and other limited, written assurances that we provided, we do not
believe that we are legally responsible for costs that may be incurred by our
customers to ensure the Year 2000 compliance of their software, systems and
operations.*  Our customer agreements typically contain provisions designed to
limit our liability for these types of claims.  However, it is possible that
these provisions will not provide adequate protection from liability under
applicable law or unfavorable judicial decisions.*  Even if we have disclaimed
responsibility for Year 2000 problems, our customers may nevertheless make
claims against all suppliers of the component parts of their operating
environment.*  Any Year 2000 claims, whether with or without merit, could result
in a material adverse effect on our business, financial condition and results of
operations.*

Factors That May Affect Future Results

Quarterly Results.  Our quarterly operating results have varied significantly in
the past and can be expected to vary significantly in the future.*  The
fluctuation in quarterly license revenues is caused by the timing of large
orders by our customers, including global telecommunication providers and new,
emerging communication service providers.  Orders are typically preceded by long
sales cycles and, accordingly, it has been and will continue to be difficult to
predict when they will be received.*  We expect that quarterly license revenues
will continue to vary significantly depending on the timing of our orders.*  The
failure to obtain an order during any given reporting period, for whatever
reason, would have a material adverse effect on our business.

We typically receive a significant portion of our orders, and record the
resulting revenue, in the last month of a quarter, and frequently in the last
weeks or even days of a quarter.  Expense levels are based, in part, on our
expectations of future revenues.  If actual revenues are below expectations,
operating results can be adversely affected.  In particular, because only a
small portion of our expenses vary with revenue, net income may be
disproportionately affected if anticipated revenues are not realized.  We
believe this pattern will continue.*

                                       12
<PAGE>

Our quarterly operating results have also varied and will continue to vary
significantly from quarter to quarter based on factors such as the capital
spending patterns of our customers; changes in our pricing policies or those of
our competitors; increased competition; cancellation of licenses or support
agreements; changes in operating expenses; personnel changes; fluctuation in
product demand; the number, timing and significance of new products and product
enhancements by OSI and by our competitors; our ability to develop, introduce
and market new and enhanced versions of our products in a timely manner; the mix
of direct and indirect sales; our assessment of our allowance for bad debts;
sales returns; and general economic factors, among others.*

Because of these factors, quarterly revenue and operating results have been and
will continue to be difficult to forecast.*

Sales Cycle.  Revenues are also difficult to forecast because the sales cycle,
from initial evaluation to product installation, varies substantially from
customer to customer.  Purchase of an OSS application generally involves a
significant commitment of capital, with the attendant time requirements often
associated with a customer's internal approval procedures.  It also involves the
need to test and accept new technologies that affect crucial operations.  For
these and other reasons, the sales cycle for our products is typically lengthy
and subject to a number of significant risks over which we have little or no
control.

Key Personnel.  Our future success depends, to a significant degree, on the
continuing contributions of key management, sales, professional services,
customer support and product development personnel.*  The loss of, or the
inability to attract and retain, key personnel could adversely affect our
business.*  We have experienced and continue to experience difficulty in
recruiting qualified personnel.  Competition for qualified employees is intense
in the software industry, and there can be no assurance that we will be
successful in attracting and retaining the people we need.  The complex nature
of customers' networks requires that we recruit and hire personnel with
expertise in, and a broad understanding of, the telecommunications industry.
There are only a limited number of qualified personnel available for employment.
Failure to attract and retain key personnel would have a material adverse effect
on our business condition.*

Growth.  To compete effectively and manage future growth, we also need to
improve our internal operational, financial and management information systems,
procedures and controls in a timely manner to accommodate a growing number of
transactions and customers.  Management of future growth also means that we must
expand, train, motivate and manage our workforce.  We can give no assurances
that our personnel, systems, procedures and controls will be adequate to support
existing and future operations.  The failure to improve operational, financial
and management systems, or to expand, train, motivate and manage employees,
could have a material adverse effect on our business.*

Product Defects.  Software products as complex as those we offer are likely to
contain defects when they are introduced or when new versions are released.
Although we are not aware of any material software defects in our products, we
can give no assurances, despite extensive testing both by us and by our
customers, that errors will not be found after commercial licensing begins.
This could result in delayed or lost revenue, loss of market share or failure to
achieve market acceptance.*  Any of these could have a material adverse effect
on our business.

Competition.  Our products are designed for use in an evolving network
operations support and management applications market.  Competition in this
market is intense, with customer consolidation and resulting network operations
convergence, rapidly changing technologies, evolving industry standards,
frequent new product introductions and rapid changes in customer requirements.
Our competitors offer a variety of solutions to address this market.  We believe
that competition has increased and will continue to increase.*  Additionally,
some of our customers regularly evaluate whether to design and develop their own
network operations support and management applications

                                       13
<PAGE>

or to acquire them from outside vendors. There can be no assurance that our
current or potential competitors will not develop products that are comparable
or superior to ours or that they will not be able to adapt more quickly than we
are to new technologies, evolving industry trends or changes in customer
requirements. If we are not able to compete successfully against current and
future competitors, our business will be materially and adversely affected.

International Business. We expect that our international business will continue
to account for a significant portion of total revenues in future periods.*  We
intend to enter into additional international markets and to continue expanding
our operations outside of North America.*  This will require significant
management attention and the expenditure of significant financial resources.*
The result could adversely affect our operating margins if the investments are
not accompanied by sufficient revenue growth.

Historically, our transactions have been primarily in U.S. dollars.  However, as
we further expand our operations outside the United States, transactions in non-
U.S. currencies are likely to increase.*  This will result in a corresponding
increase in our exchange rate risk.  If exchange rates change unfavorably, this
could result in charges to operations.  Although we have tried to reduce the
risk of fluctuations in exchange rates by pricing our products and services in
U.S. dollars whenever possible, we pay our local expenses in local currencies.
We do not engage in hedging transactions with respect to those obligations.
Currency exchange fluctuations in countries where we license our products could
have a material adverse effect on our business by making our pricing
noncompetitive with products priced in local currencies.*

Reseller Relationships.  A key element of our future business strategy is to
develop relationships with leading companies that manufacture and market
telecommunications equipment.  Another key element of that strategy is to expand
our system integrator and value-added reseller channels of distribution.  We are
currently investing, and plan to continue investing, significant resources to
develop these relationships and channels of distribution.*  We can give no
assurances that we will be able to attract additional systems integrators and
resellers that can market our products effectively.  If we are unable to develop
these relationships or if our partners are unable to market our products
effectively, our business operating results and financial condition would be
materially and adversely affected.*

Proprietary Technology.  Our success and ability to compete depends in large
part on our proprietary software technology.  To protect our proprietary rights,
we rely on a combination of various technical measures, as well as trade secret,
copyright and trademark laws.  We also rely on nondisclosure agreements and
other contractual arrangements.  Despite our efforts, unauthorized parties may
attempt to copy our products or to obtain and use our proprietary information.*
We can give no assurances that the steps we have taken will prevent
misappropriation of our technology.  Our precautions may also prove insufficient
to preclude competitors from developing products with functionality or features
that are similar to those in our products.  In addition, effective copyright and
trade secret protection may be unavailable or limited in certain countries
outside the United States.  While we believe that our products and trademarks do
not infringe upon the proprietary rights of third parties, we can give no
assurances that there will not be infringement claims in the future as the
number of products and competitors in our industry increases.  Any such claim,
with or without merit, could be time-consuming, result in costly litigation and
divert the attention of our technical and management personnel.*  This could
result in a material adverse impact on our business.*

Third-Party Software.  Finally, we rely on software licensed from third parties,
including software that is integrated with internally developed software and
used to perform key functions.  We can give no assurances that this software
will continue to be available to us or that, on expiration of our current
agreements, renewals will be on commercially reasonable terms.  Absence of these
licenses could have a material adverse effect on our business.*

                                       14
<PAGE>

Based upon all of the above, we believe that our quarterly revenues and
operating results may vary significantly in the future.*  We also believe that
period-to-period comparisons of results are not necessarily meaningful and
should not be relied on as indications of future performance.*  Further, we
believe that it is likely that our revenue or operating results will be below
the expectations of public market analysts and investors in some future
quarter.*  If this occurs, the price of our Common Stock could be materially,
adversely affected.*

Liquidity and Capital Resources

For the six months ended December 31, 1999, net cash provided by operations was
$9.8 million compared with net cash used for operations of $4.0 million for the
six months ended December 31, 1998. The increased level of cash was primarily
due to the collection of accounts receivable during the quarter. During the
period, net cash used for investing activities remained flat compared to the
six-month period ended December 31, 1998. This resulted from increased purchases
of short-term investments accompanied by a decrease in the purchases of property
and equipment during the six-month period ended December 31, 1999. We currently
expect to make capital expenditures of between $4.0 million and $6.0 million in
the next twelve months, primarily for the purchase of computer equipment and
related software. These purchases will be financed through current working
capital and cash generated from operations.

In September of 1998, our Board of Directors authorized a stock repurchase
program under which we could purchase up to 1,000,000 shares of our common
stock.  As of December 31, 1999, we had repurchased on the open market
approximately 493,300 shares of our common stock at an average purchase price of
$4.47, for a total cost of approximately $2.2 million.  We may continue to
repurchase shares in the future.*

As of December 31, 1999, we had working capital of approximately $26.4 million,
including $40.4 million in cash, cash equivalents and short-term investments.
In addition, we have a $2.5 million unsecured revolving line of credit that
expires in December 2002. Under our line of credit, borrowings bear interest at
either (1) a fluctuating rate equal to the prime lending rate in effect or (2) a
fixed rate that is 2% above the London Inter-Bank Offered Rate.  As of December
31, 1999, we had not borrowed under our line of credit.

Some of our accounts receivable are beyond their payment terms.  We maintain an
allowance for doubtful accounts that we believe is adequate to cover potential
credit losses.*  On December 31, 1999, our reserves for doubtful accounts and
sales returns were $2.2 million.  We believe our present reserves are adequate
to provide for potential credit losses or sales returns.*

We intend to continue growing our operations.*  In the six months ended December
31, 1999, we spent $1.6 million for capital items, principally computer
equipment and leasehold improvements.  We expect that capital expenditures will
continue to be significant in fiscal 2000 and in the future.*

We believe that our cash balances and cash flow from operations are sufficient
to support our working capital requirements for at least the next twelve
months.*  Thereafter, if cash generated from operations cannot satisfy our
working capital requirements, we may need to raise additional funds.  Financing
may not be available or, if it is, may not be obtainable on terms favorable to
us or our stockholders.*  If we raise additional capital by issuing equity or
convertible debt securities, ownership dilution to stockholders will result.  If
funds are unavailable, our business may be adversely affected.


                                      15


<PAGE>
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Interest Rate Risk

Our exposure to market rate risk based on a change in interest rates relates
primarily to our investment portfolio, which consists of cash equivalents and
short-term investments.  Cash equivalents are highly liquid investments with
original maturities of three months or less and are stated at cost.  We do not
believe our exposure to interest rate risk is material for these balances, which
were $10.6 million on December 31, 1999.  The securities in our short-term
investment portfolio are generally classified as available-for-sale.  Short-term
investments were $16.8 million on December 31, 1999.  We do not use derivative
financial investments in our short-term investment portfolio, we place our
investments with high-quality issuers and, by policy, limit our credit exposure
to any one issuer.  We are adverse to principal loss and attempt to ensure the
safety of our investment funds by limiting default, market and reinvestment
risk.  If market interest rates were to change immediately and uniformly by 10%
from the rates in effect on December 31, 1999, the fair value of our cash
equivalents and short-term investments would change by an insignificant amount.

Foreign Currency Exchange Rate Risk

As a global business, we face exposure to adverse movements in foreign currency
exchange rates.  These exposures may change over time as business practices
evolve and they could have a material adverse impact on our business, operating
results and financial position.*  Historically, our primary exposure has related
to local currency expenses in Europe, and the Asia-Pacific region including
Australia.  The functional currencies of our foreign subsidiaries are local.  A
hypothetical 10% change in foreign currency rates would have an insignificant
impact on our business, operating results and financial position.



PART II.  OTHER INFORMATION

Item 1.        Legal Proceedings

From time to time, we may be a party to litigation incident to the ordinary
course of our business.  As of the date of this Report, we do not believe that
there is material litigation pending against OSI.  However, any litigation
involving OSI, whether we are the plaintiff or defendant and regardless of the
outcome, could result in substantial costs and significant diversion of effort
by our technical and management personnel.  In addition, we can give no
assurances that material litigation, either by or against OSI, will not be
necessary to resolve issues that may arise in the future.  Given the
uncertainties of litigation, any litigation could have a material adverse effect
on our business, financial condition or operating results.*

Reference is made to proceedings filed against OSI with the Bureau de
Conciliation in Grasse, France, by Patric R. Olenezak a former employee of OSI,
which is ongoing and previously disclosed in OSI's Quarterly Report on Form 10-Q
for the period ended September 30, 1999.

Item 6.        Exhibits and Reports on Form 8-K

(a)   Exhibits
10.1 Enterprise-Wide License Agreement between Registrant and Adelphia
Communications Corporation dated December 20, 1999.*

10.2 Enterprise-Wide Professional Services Agreement between Registrant and
Adelphia Communications Corporation dated December 20, 1999.

10.3 Severance Agreement of Jeffrey T. Boone.

10.4 Severance Agreement of Philip N. Cardman.

10.5 Severance Agreement of Lawrence F. Fiore.

10.6 Severance Agreement of Danny D. Line.

10.7 Severance Agreement of James T. Olsen.

27.1  Financial Data Schedule

(b)   Reports on Form 8-K

                                       16
<PAGE>

          None.

*  Confidential treatment has been requested with respect to certain portions of
this Exhibit.  Omitted portions have been filed separately with the SEC.


                                   SIGNATURE

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

                                  OBJECTIVE SYSTEMS INTEGRATORS, INC.



Dated:  February 11, 1999         By:           /s/ Lawrence F. Fiore
                                      ------------------------------------------
                                      Lawrence F. Fiore, Chief Financial Officer

                                      (Principal Financial and Accounting
                                      Officer and Duly Authorized Officer)

                                       17