This Management's Discussion and Analysis of Financial Condition and Results of Operations and other parts of this Form 10-Q contain forward-looking statements that involve risks and uncertainties. All forward- looking statements included in this document are based on information available to the Company on the date hereof, and the Company assumes no obligation to update any such forward-looking statements. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including those set forth in "Factors Affecting Future Results."

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

                                             Percent of Total Revenues

                                        Three Months Ended  Nine Months Ended
                                          September 30,        September 30,
                                       ------------------- -------------------
                                         1999       1998     1999       1998
                                       (Restated)          (Restated)
                                       --------- --------- --------- ---------

Revenues:
     Software license fees ...........     10.7%     25.9%     13.3%     27.7%
     Services and maintenance ........     89.3%     74.1%     86.7%     72.3%
                                       --------- --------- --------- ---------
         Total revenues ..............    100.0%    100.0%    100.0%    100.0%
Cost of revenues .....................     52.3%     51.6%     51.6%     54.8%
                                       --------- --------- --------- ---------
Gross margin..........................     47.7%     48.4%     48.4%     45.2%
                                       --------- --------- --------- ---------
Operating expenses:
     Research and development ........     19.4%     16.2%     17.9%     15.8%
     Sales and marketing .............     15.8%     17.4%     15.5%     15.2%
     General and administrative ......     10.8%      8.8%      9.2%      8.0%
                                       --------- --------- --------- ---------
         Total operating expenses ....     46.0%     42.4%     42.7%     39.0%
                                       --------- --------- --------- ---------
Income from operations ...............      1.7%      6.0%      5.7%      6.2%
Other income, net.....................      2.6%    (0.4%)     28.3%    (0.4%)
                                       --------- --------- --------- ---------
Income before income taxes ...........      4.3%      5.6%     34.0%      5.8%
Provision for income taxes ...........      1.8%      0.0%     12.5%      0.3%
                                       --------- --------- --------- ---------
Net income ...........................      2.5%      5.6%     21.5%      5.5%
                                       ========= ========= ========= =========

Revenues. Total revenues decreased 9% to $45.8 million in the quarter ended September 30, 1999 from $50.3 million in 1998. In the first nine months of 1999, total revenues increased 1% to $142.4 million from $140.6 million in 1998. As most of the Company's contracts are denominated in U.S. dollars, foreign currency fluctuations have not materially impacted its consolidated results of operations.

Revenues from software license fees decreased by 62% to $4.9 million in the quarter ended September 30, 1999 from $13.0 million in 1998. In the first nine months of 1999, license fees decreased by 51% to $19.0 million from $39.0 million in 1998. Reduced software license fee revenues were due primarily to a general industry slowdown in purchases of large scale enterprise applications leading up to the Year 2000, as well as the reengineering of the Company's North American sales organization.

Revenues from services and maintenance increased by 10% to $40.9 million in the quarter ended September 30, 1999 from $37.3 million in 1998. In the first nine months of 1999, services and maintenance revenues increased 21% to $123.5 million from $101.7 million in 1998. The services and maintenance revenues growth resulted primarily from new consulting and implementation projects for existing customers. Services and maintenance as a percentage of revenue were 89% and 74% for the quarters ended September 30, 1999 and 1998, respectively, and 87% and 72% for the nine months ended September 30, 1999 and 1998, respectively.

The Company does not believe that the revenue growth in services and maintenance experienced in the first nine months of 1999 is necessarily indicative of revenue growth that may occur in future periods.

Cost of Revenues. Cost of revenues consists primarily of (i) personnel and related costs for implementation and consulting services (including account executive personnel), (ii) training and customer support services and (iii) license 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 compared with the relatively high personnel costs associated with providing implementation, maintenance, consulting and training services.

Cost of revenues decreased 8% to $24.0 million in the quarter ended September 30, 1999 from $26.0 million in 1998. In the first nine months of 1999, cost of revenues decreased 5% to $73.5 million from $77.0 million in 1998. This resulted in the gross margin of 48% for the each of the quarters ended September 30, 1999 and 1998, and increasing to 48% for the nine months ended September 30, 1999 from 45% for the same period in 1998. The year-to-date gross margin improvement was due principally to the increased utilization of personnel for services and maintenance.

Research and Development. Research and development expenses consist primarily of: (i) personnel and related costs, (ii) computer timeshare costs and (iii) third party consultant fees directly attributable to the development of new software application products and enhancements to existing products.

Research and development expenses increased 9% to $8.9 million in the quarter ended September 30, 1999 from $8.2 million in 1998, and increased 15% to $25.6 million in the nine months ended September 30, 1999 from $22.3 million for the same period in 1998 as the Company continued to develop integration products and increase functionality to its products. As a percentage of total revenues, research and development expenses were 19% and 16% for the quarters ended September 30, 1999 and 1998, respectively, and 18% and 16% for the nine months ended September 30, 1999 and 1998, respectively. The Company believes that a significant level of investment in research and development is essential to remain competitive. The amount of research and development in absolute dollars for a particular period may vary depending on the projects in progress. To date, the Company has expensed all software development costs because development costs incurred subsequent to the establishment of technological feasibility have not been material.

Sales and Marketing. Sales and marketing expenses decreased 18% to $7.2 million in the quarter ended September 30, 1999 from $8.8 million in 1998. In the first nine months of 1999, sales and marketing expenses increased 3% to $22.1 million from $21.4 million in 1998. As a percentage of total revenues, sales and marketing expenses were 16% and 17% for the quarter ended September 30, 1999 and 1998, respectively, and 16% and 15% for the nine months ended September 30, 1999 and 1998, respectively. The decrease in sales and marketing expenses for the three-month period was primarily related to reduced headcount and lower commissions due to reduced software license fees. The increase in sales and marketing expense for the nine-month period was primarily related to advertising and promotional costs for strategic alliance programs and telemarketing expenses.

General and Administrative. General and administrative expenses increased 13% to $4.9 million in the three months ended September 30, 1999 from $4.4 million in 1998 and increased 17% to $13.1 million in the nine months ended September 30, 1999 from $11.2 million in 1998. As a percentage of total revenues, general and administrative expenses were 11% and 9% for the quarter ended September 30, 1999 and 1998, respectively, and 9% and 8% for the nine months ended September 30, 1999 and 1998, respectively. The increase in general and administrative expenses resulted primarily from a change in management personnel, excess facility costs and additional allowances for doubtful accounts.

Interest and Other Income (Expense). Interest and other income (expense) increased to $1.1 million in the three months ended September 30, 1999 from ($0.2) million in 1998 and increased to $40.3 million in the nine months ended September 30, 1999 from ($0.6) million in 1998 primarily due to the $38.2 million gain on the sale of the Company's investment in TenFold Corporation in May 1999, and investment income earned from cash received on the TenFold transaction.

Provision for Income Taxes. Income tax expense of $0.8 million represented an estimate for federal, state and foreign taxes for the quarter ended September 30, 1999. There was no income tax expense in the comparable period in 1998 primarily due to the benefit from the utilization of net operating loss carryovers obtained as a result of the merger with TSW International, Inc. The Company's effective tax rate is 37% for the nine months ended September 30, 1999 and differs from the statutory rate primarily due to utilization of net operating loss carryovers, research and engineering credits and foreign tax credits.

As of September 30, 1999, the Company's principal sources of liquidity consisted of approximately $15.2 million in cash and cash equivalents, $63.7 million in marketable securities and an available revolving bank line of credit of up to $15 million. The revolving credit facility expires on July 31, 2001. Borrowings under the line of credit bear interest at the prime rate or LIBOR rate plus 1.00% and are available under the line of credit based on a percentage of eligible accounts receivables. No borrowings were outstanding under the line of credit as of September 30, 1999.

In the nine months ended September 30, 1999, cash, cash equivalents and marketable securities increased 103% to $78.9 million from $38.8 million at December 31, 1998. This was primarily due to a net increase in cash of approximately $46.2 million provided by the sale of the Company's investment in TenFold Corporation, approximately $17.1 million from operations and $3.0 million from the issuance of common stock. The purchase of property and equipment used cash of approximately $3.8 million. Financing activities used cash of $20.8 million to pay down the balance of borrowings under the Company's line of credit and obligations under capital leases and $2.0 million to repurchase the Company's common stock.

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

The Company believes that its existing cash, cash equivalents and marketable securities, together with anticipated cash flows from operations and available bank borrowings, will be sufficient to meet its cash requirements for at least 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.

The Year 2000 Issue is the result of computer programs being written using two digits rather than four to define the applicable year. Any of the Company's computer programs or hardware that have date-sensitive software or embedded chips may recognize a date using "00" as the year 1900 rather than the year 2000. This could result in a system failure or miscalculations causing disruptions of operations, including, among other things, a temporary inability to process transactions, send invoices, or engage in similar normal business activities.

The Company's plan to resolve the Year 2000 Issue involves the continuing effort in the following four phases: assessment, remediation, testing, and implementation. To date, the Company has made progress in identifying all systems that could be significantly affected by the Year 2000, or Y2K, and have identified areas that require Y2K testing services. The completed assessment could indicate that most of the Company's significant information technology systems will be affected, particularly the general ledger, project accounting and billing systems. In addition, the Company is in the process of gathering information about the Year 2000 compliance status of its significant suppliers and subcontractors and will continue to monitor their compliance.

Status of Progress in Becoming Year 2000 Compatible: The Company has a formal Year 2000 Program focusing on four key areas: 1) Information Technology, addressing internal software and business systems; 2) the Company's Products; 3) Third Party, addressing the preparedness of non-IT suppliers; 4) the Company's Facilities. For each readiness area, based on a phased approach, the Company is performing a worldwide risk assessment, remediating and conducting testing, implementing solutions, and communicating with employees, suppliers and customers to raise awareness of the Year 2000 problem. Full time Y2K project personnel manage the Year 2000 Program.

Information Technology Program: The Company is continuing its assessment of internal applications and computer hardware. The program is addressing not only the supplier's year 2000 product integrity but also assesses the supplier's ability to provide product and services. Hardware assessment includes workstations, servers, telecommunication equipment and other items. The assessment of major applications, servers and networks is complete. Presently, 100% of the major applications have been verified compatible. Furthermore, 98% of the servers and networks that required action have been addressed and 95% of the operating systems have been certified. All remediated systems are expected to be fully tested and implemented by November 15, 1999.

The Company has inventoried over 400 key suppliers of goods and services to the Company and has either mailed surveys or captured their Y2K Disclosure information off the web. Presently, we have confirmed approximately 99% of the suppliers are Y2K compatible. The Company intends to disqualify potentially non- compliant sources and re-qualify alternative sources to help mitigate potential business disruptions.

Product Readiness Program: Based on our testing all supported products are Y2K compatible. Our ongoing program focuses on identifying and resolving any new Year 2000 issues arising in the Company's currently supported products. It encompasses a number of activities including product testing, evaluation, product engineering and quality assurance. This process will continue through 1999 and into the Year 2000 as needed.

Third Party Program: The Company has completed the survey of its significant 3rd party service providers. The key vendors included the Company's banking, insurance and investment partners. The Company has received and reviewed all of their Y2K disclosure information and confirmed they are Year 2000 compatible. To date, the Company is not aware of any external agent with a Year 2000 issue that would materially impact the Company's results of operations, liquidity, or capital resources. However, the Company has no means of ensuring that external agents will be Year 2000 ready. There may be certain third parties, such as utilities, telecommunication companies or material vendors, where alternate arrangements or sources are limited or unavailable. The inability of external agents to complete their Year 2000 resolution process in a timely fashion could materially impact the Company. The effect of non-compliance by external agents is not determinable.

Contingency Plans: The Company currently has a contingency plan in place for product support. We are currently finalizing contingency plans for our IT and infrastructure areas. There can be no assurances that the Company will be able to develop a contingency plan that will adequately address issues that may arise that may arise in the year 2000. Failure by the Company to develop and implement, if necessary, an appropriate contingency plan could have a material impact on the operations of the Company.

Costs: The Company will utilize both internal and external resources to reprogram, or replace, test, and implement the software and operating equipment for Year 2000 modifications. The total cost of the Year 2000 project is currently estimated at an amount up to $2.5 million and will be funded through operating cash flows. To date, the Company has incurred approximately $1.9 million, related to all phases of the Year 2000 project. The remaining costs are expected to be incurred during the next quarter. The Company is continuing its assessment and refining its cost estimates. There can be no assurance, however, that there will not be a delay in, or increased costs associated with the programs described in this section.

Summary: Management of the Company believes it has an effective program in place to resolve the Year 2000 issue in a timely manner. As noted above, the Company has not completed all the necessary phases of the Year 2000 program. In the event that the Company does not complete any additional phases, the Company may have difficulty in processing customer invoices or payments. In addition, disruptions in the economy generally resulting from Year 2000 issues could also materially adversely affect the Company. The Company could be subject to litigation for computer systems product failure, for example, equipment shutdown or failure to properly date business records. The amount of potential liability and lost revenue cannot be reasonably estimated at this time.

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 their 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) their success in and costs associated with developing and introducing new products, including the necessary software and technology for its eBusiness initiatives, (viii) product life cycles, (ix) variability in new licenses obtained, (x) changes in the proportion of revenues attributable to license 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, and (xiv) 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) development and introduction of new operating systems that require additional development efforts, including any eBusiness initiatives, (ii) 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) quality control of products sold; (x) changes in demand for the Company's products and services, including any eBusiness initiatives, (xi) market acceptance of new products and product enhancements, including any eBusiness 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) mix of products sold, (xviii) acquisition costs; and (xix) general economic conditions.

In September 1999, the Company announced its eBusiness initiatives, including myindus.com, which is focused on next generation internet 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 myindus.com achieves market acceptance. The Company's future success in the eBusiness market may 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 procurement market is an emerging market that may undergo rapid technological change. The Company can not 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.

The Company's business has grown in recent periods, with total revenues increasing from $143.0 million in 1996 to $177.0 million in 1997 and $195.5 million in 1998. The growth of the Company's business and expansion of customer base has 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.

In the future, the Company will be required to continue 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 such growth. 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 has recently hired a Senior Vice President of Sales and there can be no assurance that this executive can assimilate into and adequately motivate the sales department. 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 this 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.

The enterprise asset management (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 best-of-breed 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, the Company competes primarily with other EAM software vendors such as Mincom Corp., Project Software & Development, Inc. (PSDI), 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 or other activities. The Company also faces competition from systems developed by the internal MIS departments of large organizations.

The Company competes with businesses that are intensely competitive and adaptable to rapidly evolving markets. In order to remain competitive, the Company must continually enhance its baseline software and integration products and develop new products in a timely fashion. Management believes that the principal competitive factors in the Company's businesses will be product performance and functionality, adaptability to new trends driven by technology and customer requirements, cost of internal product development as compared with cost of purchase of products supplied by outside vendors, cost of ongoing maintenance, and time-to-market. Many of the Company's competitors will have substantially greater financial, technical, sales, marketing and other resources, as well as greater name recognition and a larger customer base, than the Company. The Company's success will also depend significantly on its ability to develop more advanced products more quickly and less expensively than its existing competitors and potential competitors and to educate potential customers of the benefits of licensing the Company's products rather than developing their own products. The Company's current and future competitors may introduce products with more features, greater functionality and lower prices than the Company's products. These competitors could also bundle existing or new products with other, more established products in order to compete with the Company. In addition, because there are relatively low barriers to entry for the software market, the Company expects additional competition from other established and emerging companies as the enterprise asset management market continues to expand. Increased competition is likely to result in price reductions, reduced gross margins and loss of sales volume, any of which could materially and adversely affect the Company's business, operating results, and financial condition. Any material reduction in the price of the Company's products would negatively affect its gross revenues and could have a material adverse effect on its business, operating results, and financial condition. There can be no assurance that the Company will be able to compete successfully against current and future competitors, and the failure to do so would have a material adverse effect upon the Company's business, operating results, and financial condition.

Overall demand for enterprise software may grow more slowly or actually decrease in upcoming quarters and years. In 1999, a number of major providers of enterprise software have reported revenue growth substantially slower than in previous periods. The Company believes this trend may be a result of organizations devoting information technology resources and budgets towards resolving Year 2000 issues; however it may also 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 51% in the first nine months of 1999 as compared to the same period in 1998. To the extent that the overall slowdown in the market for enterprise software market continues or worsens, the Company's business, results of operations and financial condition are likely to be adversely affected.

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.

International revenue (from sales outside the United States, Canada and Mexico) accounted for approximately 20%, 14% and 13% of total revenues in 1996, 1997 and 1998, respectively. The Company maintains an international operational presence in the United Kingdom, Australia and France. In addition, the Company has established international sales and support offices in Europe and Australia. 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 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 will be generated primarily through its international sales subsidiaries and indirect sales channel partners and are expected to be denominated in local currency, 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 trends, 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 are to this region, 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 decrease and thus, the Company's ability to increase revenues in this region may be negatively impacted.

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 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 the provision of 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 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 claims might require the Company to enter into royalty or license 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.

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.

The Company signed a co-development and implementation agreement valued at more that $60 million in May 1999 and will provide products and services over a three-year period. Due to the size of this project, 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.

Elements of the Company's products, particularly in its EMPAC workflow engine, 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 of EMPAC. While the Company believes that the 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.

Implementation and development of EMPAC software depends on proprietary technology licensed from third parties. Implementation of EMPAC requires the use of the Windows environment licensed from Microsoft Corporation. The introduction and increased market acceptance of operating systems that are incompatible with the Company's products, or the failure of Microsoft's operating systems to achieve continued market acceptance, could adversely affect the market for the Company's products. EMPAC also relies on certain proprietary features of the database management system developed by Oracle. The introduction and increased market acceptance of database management systems that are incompatible with the Company's products, or the failure of Oracle products to achieve continued market acceptance, could adversely affect the market for the Company's products. In addition, certain elements of EMPAC have been developed in PowerBuilder, a client/server development product that has been traditionally database independent. Sybase, Inc. acquired Powersoft Corporation, which licenses PowerBuilder, in 1994. If PowerBuilder does not continue to be database independent, future development of the Company's Windows-based components which operate in conjunction with the Oracle database management system may be adversely affected. Although the Company's strategy has been to develop software products that are minimally dependent on any particular element of the underlying platform, there can be no assurance that the Company will be able to avoid the obsolescence of its products due to rapid technological change and evolving industry standards.

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.

The Company, as well as its predecessor corporations, The Indus Group, Inc. and TSW International, Inc. has made acquisitions in the past. 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. In 1997, The Indus Group, Inc. completed two acquisitions. In 1994 and 1995, TSW International, Inc. concluded a total of three acquisitions of companies, divisions of companies or products. The Company may make additional acquisitions in the future. 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. In addition, future acquisitions by the Company may result in dilutive issuance of equity securities, incurring additional debt, large one-time write-offs and the creation of goodwill or other intangible assets that could result in amortization expense. These factors could have a material adverse effect on the Company's business, operating results and financial condition.

The Company and several of its former officers and/or directors have been named as defendants in six substantially identical securities class action cases filed since February 3, 2000, in the United States District Court, Northern District of California (the Court). The cases subsequently were consolidated. The complaints are brought on behalf of all persons who purchased the Company's 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. The Plaintiffs have not demanded any particular amount in damages.

In August 2000, all parties to the litigation agreed to a settlement. Under the settlement, defendants' insurance carriers will pay plaintiffs $4.3 million. On October 27, 2000 the Court granted preliminary approval of the settlement. The Court has scheduled a January 26, 2001 hearing to consider whether the settlement will be given final approval. The Company also is cooperating with an informal investigation by the Securities and Exchange Commission regarding the restatement.

On or about June 9, 2000, the Company was served with a demand for arbitration by William J. Grabske, the Company's former Chief Executive Officer. The demand seeks enforcement of a purported Settlement Agreement and Mutual Release. The demand seeks severance pay and reimbursement of expenses of approximately $1,000,000 plus interest, options for approximately 200,00 shares of stock in the Company and fees and costs. The parties presently are in the process of selecting arbitrators. The Company will present all available defenses to Mr. Grabske's demand and 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 the litigation, individually or in the aggregate, to which it is currently a party is likely to have a material adverse effect on the results of operations or financial condition.

There have been no material changes in the reported market risks since December 31, 1998.

The Company and several of its former officers and/or directors have been named as defendants in six substantially identical securities class action cases filed since February 3, 2000, in the United States District Court, Northern District of California (the Court). The cases subsequently were consolidated. The complaints are brought on behalf of all persons who purchased the Company's 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. The Plaintiffs have not demanded any particular amount in damages.

In August 2000, all parties to the litigation agreed to a settlement. Under the settlement, defendants' insurance carriers will pay plaintiffs $4.3 million. On October 27, 2000 the Court granted preliminary approval of the settlement. The Court has scheduled a January 26, 2001 hearing to consider whether the settlement will be given final approval. The Company also is cooperating with an informal investigation by the Securities and Exchange Commission regarding the restatement.

On or about June 9, 2000, the Company was served with a demand for arbitration by William J. Grabske, the Company's former Chief Executive Officer. The demand seeks enforcement of a purported Settlement Agreement and Mutual Release. The demand seeks severance pay and reimbursement of expenses of approximately $1,000,000 plus interest, options for approximately 200,00 shares of stock in the Company, and fees and costs. The parties presently are in the process of selecting arbitrators. The Company will present all available defenses to Mr. Grabske's demand and counterclaims.

None.

None.

None.

None.

(a) Exhibits.

27.1 Financial Data Schedule

(b) Reports on Forms 8-K.

None

SIGNATURES

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

	INDUS INTERNATIONAL, INC.

	(Registrant)

Date: November 13, 2000

	By:	/s/ Henry C. Montgomery

	Henry C. Montgomery
	Executive Vice President, Finance and Administration and Chief Financial Officer
	(Principal Financial Officer)

Date: November 13, 2000

	By:	/s/ Roy A. Crumrine

	Roy A. Crumrine
	Vice President, Controller
	(Principal Accounting Officer)