ROSS SYSTEMS INC/CA
10-Q, 2000-11-14
PREPACKAGED SOFTWARE
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                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                   FORM 10-Q

(MARK ONE)

<TABLE>
<C>        <S>
   /X/     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
           SECURITIES EXCHANGE ACT OF 1934
</TABLE>

               FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2000,
                                       OR

<TABLE>
<C>        <S>
   / /     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
           SECURITIES EXCHANGE ACT OF 1934
</TABLE>

                         COMMISSION FILE NUMBER 0-19092

                               ROSS SYSTEMS, INC.

             (Exact name of registrant as specified in its charter)

<TABLE>
<S>                                            <C>
               DELAWARE                                     94-2170198
    (State or other jurisdiction of                       (IRS Employer
    incorporation or organization)                     Identification No.)

        TWO CONCOURSE PARKWAY,                                30328
      SUITE 800, ATLANTA, GEORGIA                           (zip code)
    (Address of principal executive
               offices)
</TABLE>

                                 (770) 351-9600
              (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 / /

    Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:

<TABLE>
<CAPTION>
                                                                OUTSTANDING
                    CLASS                                    OCTOBER 31, 2000
                    -----                                    ----------------
<S>                                            <C>
       Common stock, $0.001 par value                           25,118,532
</TABLE>

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<PAGE>
                               ROSS SYSTEMS, INC.
                         QUARTERLY REPORT ON FORM 10-Q
                        QUARTER ENDED SEPTEMBER 30, 2000

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                 PAGE NO.
                                                                                                 --------
<S>                     <C>        <C>                                                           <C>
PART I.  FINANCIAL INFORMATION

                        Item 1.    Financial Statements........................................      1

                                   Condensed Consolidated Balance Sheets September 30, 2000 and
                                   June 30, 2000...............................................      1

                                   Condensed Consolidated Statements of Operations Three months
                                   ended September 30, 2000 and 1999...........................      2

                                   Condensed Consolidated Statements of Cash Flows Three months
                                   ended September 30, 2000 and 1999...........................      3

                                   Management's Discussion and Analysis of Financial Condition
                        Item 2.    and Results of Operations...................................     11

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

PART II.  OTHER INFORMATION

                        Item 2.    Changes in Securities.......................................     17

                        Item 6.    Exhibits and Reports on Form 8-K............................     17

SIGNATURE......................................................................................     19
</TABLE>
<PAGE>
                         PART I.  FINANCIAL INFORMATION

                      ROSS SYSTEMS, INC. AND SUBSIDIARIES
                     CONDENSED CONSOLIDATED BALANCE SHEETS
                   (IN THOUSANDS, EXCEPT SHARE RELATED DATA)

ITEM 1.  FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                              SEPTEMBER 30,   JUNE 30,
                                                                  2000          2000
                                                              -------------   ---------
                                                                              (AUDITED)
<S>                                                           <C>             <C>
ASSETS
Current assets:
  Cash and cash equivalents.................................    $  1,055      $  2,010
  Accounts receivable, less allowance for doubtful
    accounts................................................      15,443        21,927
  Prepaids and other current assets.........................       1,899         1,501
                                                                --------      --------
    Total current assets....................................      18,397        25,438

Property and equipment,net..................................       2,748         3,009
Computer software costs, net................................      33,109        32,637
Other assets................................................       2,996         3,211
                                                                --------      --------
    Total assets............................................    $ 57,250      $ 64,295
                                                                ========      ========

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
  Current installments of debt..............................    $ 10,367      $ 10,148
  Accounts payable..........................................       7,708         6,949
  Accrued expenses..........................................       4,479         5,459
  Income taxes payable......................................         198           248
  Deferred revenues.........................................      14,691        17,974
                                                                --------      --------
    Total current liabilities...............................      37,443        40,778
                                                                --------      --------
Long-term debt, less current installments...................       1,798         2,627
                                                                --------      --------
Shareholders' equity:
  Common stock, $.001 par value; 35,000,000 shares
    authorized, 24,434,416 and 23,804,191 shares issued and
    outstanding at September 30, 2000 and
    June 30, 2000, respectively. Preferred stock, no par
    value; 5,000,000 shares authorized, 0 outstanding.......          24            24
  Additional paid-in capital................................      86,316        85,780
  Accumulated deficit.......................................     (67,228)      (63,034)
  Accumulated comprehensive deficit.........................      (1,103)       (1,880)
                                                                --------      --------
    Total shareholders' equity..............................      18,009        20,890
                                                                --------      --------
    Total liabilities and shareholders' equity..............    $ 57,250      $ 64,295
                                                                ========      ========
</TABLE>

  The accompanying notes are an integral part of these condensed consolidated
                                balance sheets.

                                       1
<PAGE>
                      ROSS SYSTEMS, INC. AND SUBSIDIARIES
                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                     (IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
                                                              THREE MONTHS ENDED
                                                                 SEPTEMBER 30,
                                                              -------------------
                                                                2000       1999
                                                              --------   --------
<S>                                                           <C>        <C>
Revenues:
  Software product licenses.................................  $ 2,417    $ 5,970
  Consulting and other services.............................    4,967     10,201
  Maintenance...............................................    6,768      7,092
                                                              -------    -------
    Total revenues..........................................   14,152     23,263
                                                              -------    -------
Operating expenses:
  Costs of software product licenses........................      483      1,001
  Costs of consulting, maintenance and other services.......    6,518     11,030
  Sales and marketing.......................................    5,043      5,214
  Product development.......................................    3,045      2,454
  General and administrative................................    1,537      1,998
  Provision for uncollectible accounts......................      552        401
  Amortization of other assets..............................      225        260
  Non-recurring costs.......................................      790          0
                                                              -------    -------
    Total operating expenses................................   18,193     22,358
                                                              -------    -------
Operating earnings (loss)...................................   (4,041)       905
  Other expenses, net.......................................     (337)      (351)
                                                              -------    -------
Earnings before taxes.......................................   (4,378)       554
  Income tax expense (benefit)..............................     (183)       208
                                                              -------    -------
Net earnings (loss).........................................  $(4,195)   $   346
                                                              =======    =======
Net earnings per common share--basic........................  $ (0.17)   $  0.02
                                                              =======    =======
Net earnings per common share--diluted......................  $ (0.17)   $  0.02
                                                              =======    =======
Shares used in per share computation--basic.................   24,119     22,973
                                                              =======    =======
Shares used in per share computation--diluted...............   24,119     23,532
                                                              =======    =======
</TABLE>

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

                                       2
<PAGE>
                      ROSS SYSTEMS, INC. AND SUBSIDIARIES
                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                           (IN THOUSANDS) (UNAUDITED)

<TABLE>
<CAPTION>
                                                                 SEPTEMBER 30,
                                                              -------------------
                                                                2000       1999
                                                              --------   --------
<S>                                                           <C>        <C>
Cash flows from operating activities:
  Net earnings (loss).......................................  $(4,195)   $   346
  Adjustments to reconcile net earnings (loss) to net cash
    provided by
    operating activities:
    Depreciation and amortization of property and
      equipment.............................................      416        663
    Amortization of computer software costs.................    1,751      1,861
    Amortization of other assets............................      225        260
    Provision for uncollectible accounts....................      552        401
    Changes in operating assets and liabilities, net of
      acquisitions:
      Accounts receivable...................................    6,293      1,342
      Prepaids and other current assets.....................     (374)       628
      Income taxes payable / recoverable....................      (47)       (40)
      Accounts payable......................................      805     (1,461)
      Accrued expenses......................................     (920)      (273)
      Deferred revenues.....................................   (3,083)    (1,698)
                                                              -------    -------
      Net cash provided by operating activities.............    1,423      2,029
                                                              -------    -------
Cash flows from investing activities:
    Purchases of property and equipment.....................      (48)      (223)
    Computer software costs capitalized.....................   (2,223)    (3,002)
    Other...................................................     (116)       105
                                                              -------    -------
      Net cash used for investing activities................   (2,387)    (3,120)
                                                              -------    -------
Cash flows from financing activities:
    Net line of credit activity.............................      363     (1,979)
    Capital lease payments..................................     (437)      (110)
                                                              -------    -------
      Net cash used for financing activities................      (74)    (2,089)
                                                              -------    -------
Effect of exchange rate changes on cash.....................       83        105
                                                              =======    =======
Net decrease in cash and cash equivalents...................     (955)    (3,075)

Cash and cash equivalents at beginning of period............    2,010      6,294
                                                              -------    -------
Cash and cash equivalents at end of period..................  $ 1,055    $ 3,219
                                                              =======    =======
Noncash investing and financing activities:

Conversion of convertible debentures........................  $   600    $   822
                                                              =======    =======
</TABLE>

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

                                       3
<PAGE>
                      ROSS SYSTEMS, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

A)  BASIS OF PRESENTATION/GOING CONCERN

    The accompanying unaudited condensed consolidated financial statements of
Ross Systems, Inc. (the "Company") reflect all adjustments of a normal recurring
nature which are, in the opinion of management, necessary to present a fair
statement of its financial position as of September 30, 2000, and the results of
its operations and cash flows for the interim periods presented. The Company's
results of operations for the three months ended September 30, 2000 are not
necessarily indicative of the results to be expected for the full year.

    These unaudited condensed consolidated financial statements have been
prepared in accordance with the instructions for Form 10-Q and, therefore,
certain information and footnote disclosures normally contained in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. These financial statements should be read in
conjunction with the Consolidated Financial Statements and notes thereto
included in the Company's Annual Report to Stockholders on Form 10-K for the
fiscal year ended June 30, 2000 filed with the Securities and Exchange
Commission on October 13, 2000.

    Certain fiscal 2000 amounts have been reclassified to conform to the fiscal
2001 financial statement presentation.

    The accompanying condensed consolidated financial statements have been
prepared assuming that the Company will continue as a going concern, which
contemplates the realization of assets and the liquidation of liabilities in the
normal course of business. These condensed consolidated financial statements do
not include any adjustments that might result from the outcome of this
uncertainty.

B)  PRINCIPLES OF CONSOLIDATION

    The accompanying financial statements include accounts of the Company and
its wholly owned subsidiaries. All significant intercompany balances and
transactions have been eliminated.

C)  CAPITALIZED COMPUTER SOFTWARE COSTS AND OTHER ASSETS

    It is the Company's policy to follow paragraph 8 of SFAS 86, "Accounting for
the Costs of Computer Software to be Sold, Leased, or Otherwise Marketed" in the
computation of annual amortization expense of software costs. The straight-line
method has historically yielded the greatest annual expense when compared to the
ratio of current gross revenues to current and anticipated future gross
revenues. Accordingly, the straight-line method is generally used to amortize
previously capitalized software costs.

    It is the Company's policy to assess all its long-lived assets and
intangible assets for impairment whenever events or changes in circumstances
indicate that the carrying amount of the assets may not be recoverable.
Impairment losses, if applicable, would be calculated as the difference between
the carrying value of the asset and the sum of anticipated future undiscounted
cash flows. The calculation would be performed on an individual item basis.

D)  ACCOUNTS RECEIVABLE

    As of the dates shown, accounts receivable consisted of the following (in
thousands):

<TABLE>
<CAPTION>
                                                  SEPTEMBER 30, 2000   JUNE 30, 2000
                                                  ------------------   -------------
<S>                                               <C>                  <C>
Trade accounts receivable.......................        $18,844           $25,498
Less allowance for doubtful accounts and
  returns.......................................         (3,401)           (3,571)
                                                        -------           -------
                                                        $15,443           $21,927
                                                        =======           =======
</TABLE>

                                       4
<PAGE>
                      ROSS SYSTEMS, INC. AND SUBSIDIARIES

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

E)  PROPERTY AND EQUIPMENT

    As of the dates shown, property and equipment consisted of the following (in
thousands):

<TABLE>
<CAPTION>
                                                  SEPTEMBER 30, 2000   JUNE 30, 2000
                                                  ------------------   -------------
<S>                                               <C>                  <C>
Computer equipment..............................       $ 13,138          $ 13,113
Furniture and fixtures..........................          3,009             3,007
Leasehold improvements..........................          1,832             1,705
                                                       --------          --------
                                                         17,979            17,825
Less accumulated depreciation and
  amortization..................................        (15,231)          (14,816)
                                                       --------          --------
                                                       $  2,748          $  3,009
                                                       ========          ========
</TABLE>

F)  CONVERTIBLE DEBT

    On February 6, 1998, the Company closed a private placement of up to
$10,000,000 of convertible subordinated debentures to certain institutional
investors (the "Investors") pursuant to Regulation D promulgated under the
Securities Act of 1933, as amended. The investors invested $6,000,000 on
February 6, 1998 and $4,000,000 on June 11, 1998. As of September 30, 2000, the
remaining balance after conversions and redemptions is $1,333,000. The material
agreements between the Company and each Investor have been filed as exhibits to
the Current Report on Form 8-K filed with the Securities and Exchange Commission
by the Company on February 12, 1998. The salient points of the convertible
subordinated debenture agreement are as follows:

    INTEREST:  The interest rate is four percent per annum for the first six
months after the original issuance date of the convertible debenture and six
percent per annum thereafter, subject to increases (up to the legal maximum
rate) if the Company is in default under the convertible debenture. Accrued
interest is due and payable in shares of the Company's Common Stock
semi-annually on the last day of June and December of each year. The value for
such shares of Common Stock is the average of the two lowest closing bid prices
for the Company's Common Stock as reported by the Bloomberg Service for the
thirty trading days immediately before the interest payment date.

    CONVERSION PRICE:  The conversion price for the convertible debentures is
(P + I) divided by the Conversion Date Market Price where P equals the
outstanding principal amount of the convertible debenture submitted for
conversion, I equals accrued but unpaid interest as of the conversion date and
Conversion Date Market Price equals the lesser of the maximum conversion price
(as defined below) or 101% of the average of the two lowest closing bid prices
for the Company's Common Stock as reported by the Bloomberg Service for the
thirty trading days immediately before the conversion date. The maximum
conversion price is (i) until December 31, 1998, $7.00 subject to a downward
adjustment if the Company issues shares in a private placement financing
transaction at a per share price less than $7.00 and (ii) commencing January 1,
1999, 115% of the average closing bid price of the Common Stock as reported by
the Bloomberg Service over the 1998 calendar year. A portion of the convertible
debentures issued in June 1998 were redeemed by the Company.

                                       5
<PAGE>
                      ROSS SYSTEMS, INC. AND SUBSIDIARIES

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

G)  COMPREHENSIVE INCOME

    The Company adopted Statement of Financial Accounting Standards (SFAS)
No. 130, "Reporting Comprehensive Income" as of July 1, 1998. SFAS 130 requires
disclosure of total non-stockholder changes in equity in interim periods and
additional disclosures of the components of non-stockholder changes on an annual
basis. Total non-stockholder changes in equity include all changes in equity
during a period except those resulting from investments by and distributions to
stockholders. The components of comprehensive income (loss) for the three months
ended September 30, 2000 and 1999 were as follows (in thousands):

<TABLE>
<CAPTION>
                                                                 THREE MONTHS
                                                                     ENDED
                                                                 SEPTEMBER 30,
                                                              -------------------
                                                                2000       1999
                                                              --------   --------
<S>                                                           <C>        <C>
Net earnings (loss).........................................  $(4,195)     $346
Foreign currency translation adjustments....................      770       (64)
                                                              -------      ----
Total comprehensive income (loss)...........................  $(3,425)     $282
                                                              =======      ====
</TABLE>

H)  NET EARNINGS (LOSS) PER COMMON AND COMMON EQUIVALENT SHARE

    Basic earnings (loss) per common share are computed by dividing net earnings
or net loss by the weighted average number of common shares outstanding during
the period. Diluted earnings per common and common equivalent share is computed
by dividing net earnings by the weighted average number of common and common
equivalent shares outstanding during the period. Common stock equivalents are
not considered in the calculation of net loss per share when their effect would
be antidilutive.

    The following is a reconciliation of the numerators of diluted earnings per
share, (in thousands):

<TABLE>
<CAPTION>
                                                                 THREE MONTHS
                                                                     ENDED
                                                                 SEPTEMBER 30,
                                                              -------------------
                                                                2000       1999
                                                              --------   --------
<S>                                                           <C>        <C>
Net earnings (loss).........................................  $(4,195)     $346
Payment in kind interest on convertible debentures..........        0        44
                                                              -------      ----
Numerator for diluted calculation...........................  $(4,195)     $390
                                                              =======      ====
</TABLE>

    When the Company is profitable, the only difference between the denominator
for basic and diluted net earnings per share is the effect of common stock
equivalents. In periods of a loss, the denominator does not change because it
would be anti-dilutive.

I)  OTHER MATTERS

    On September 1, 1998, the Board of Directors of the Company approved a
Preferred Shares Rights Agreement dated September 4, 1998, whereby the Board has
declared a dividend distribution of one Preferred Shares Purchase Right (the
"Rights") on each outstanding share of the Company's Common Stock. Each Right
will entitle stockholders to buy 1/1000th of a share of the Company's Series B
Participating Preferred Stock at an exercise price of $21.75. The Rights will
become exercisable following the tenth day after a person or group announces the
acquisition of 15% or more of the Company's Common Stock or announces
commencement of a tender offer the consummation of which would result in

                                       6
<PAGE>
                      ROSS SYSTEMS, INC. AND SUBSIDIARIES

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

I)  OTHER MATTERS (CONTINUED)
ownership by the person or group of 15% or more of the Common Stock. The Company
will be entitled to redeem the Rights at $.01 per Right at any time on or before
the tenth day following acquisition by a person or group of 15% or more of the
Company's Common Stock.

    On September 18, 1998 the Board of Directors of the Company approved an
adjustment to the exercise price for certain outstanding stock options held by
all current employees, which have an exercise price of $3.00 and above. In
consideration for this repricing offer, officers of the Company participating in
the option repricing were required to forfeit 10% of the shares subject to each
option being repriced, while non-officer employees participating in the option
repricing are subject to a one year limitation on the exercisability of repriced
options subject to certain exceptions. The one year limitation on ability to
exercise expired on September 28, 1999. The revised exercise price was
established by reference to the closing price of the Company's Common Stock on
September 28, 1998, which was approximately $2.59. Approximately 90 employees
participated in the repricing with approximately 1,336,000 options being
repriced. Of the stock options repriced, options to purchase approximately
831,000 shares were held by executive officers of the Company.

    On January 7, 1999, the Company entered into employment agreements with each
of J. Patrick Tinley, the Company's former President and Chief Operating Officer
and member of the Board of Directors, and Dennis V. Vohs, the Company's former
Chairman of the Board of Directors and Chief Executive Officer (the Employment
Agreements). In addition to a salary and benefits, each employment agreement
provides the employee with a continuation of salary and benefits for a
twenty-four month period immediately following the employee's termination of
employment by the Company "without cause" (as that term is defined in the
Employment Agreement). In addition, if within the first nine months following a
"change of control" of the Company the employee terminates his employment of the
surviving corporation for "good reason" or the surviving corporation terminates
the employee's employment for any reason other than "cause" or "disability" (as
each of these terms in quotes is defined in the Employment Agreements), the
employee shall then be entitled to a continuation of then applicable salary for
the twenty-four month period immediately following the termination date and all
unvested stock options and similar rights shall become vested and exercisable.
Mr. Tinley's and Mr. Vohs Employment Agreements have been filed as Exhibit 10.3
and Exhibit 10.4, respectively to the Company's Annual Report on Form 10-K for
the fiscal year 2000, Filed October 13, 2000.

    On September 17, 1999, the Company entered into an employment agreement with
Robert B. Webster, the Chief Financial Officer and Secretary of the Company. In
addition to a salary and benefits, the employment agreement provides the
employee with a continuation of salary and benefits for a twelve-month period
immediately following the employee's termination of employment by the Company
"without cause" (as that term is defined in the Employment Agreement). In
addition, if within the first nine months following a "change of control" of the
Company the employee terminates his employment of the surviving corporation for
"good reason" or the surviving corporation terminates the employee's employment
for any reason other than "cause" or "disability" (as each of these terms in
quotes is defined in the Employment Agreements), the employee shall then be
entitled to a continuation of then applicable salary for the twelve month period
immediately following the termination date and all unvested stock options and
similar rights shall become vested and exercisable. Mr. Webster's Employment
Agreement has been filed as Exhibit 10.5 to the Company's Annual Report on
Form 10-K for the fiscal year 2000, filed October 13, 2000.

    On September 12, 2000, the Company announced a strategic restructuring aimed
at reducing costs and improving efficiencies. Under the restructuring, the
Company reduced 125 positions across the

                                       7
<PAGE>
                      ROSS SYSTEMS, INC. AND SUBSIDIARIES

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

I)  OTHER MATTERS (CONTINUED)
company as well as accelerated efforts to eliminate unneeded office space,
improve productivity through the use of technology and focus on increased
revenues through the use of distributors. Cost savings associated with the
restructuring are expected to be $12,000,000 on an annualized basis. As a result
of these actions, during the first quarter of fiscal year 2001, the Company
recorded a $790,000 expense to cover the liability arising from associated
employee separation costs. The costs were accrued in accordance with EITF Issue
94-3, "Liability Recognition for Certain Employee Terminations, Benefits and
Other Costs to Exit an Activity". At September 30, 2000, $286,000 of the
liability remained and will be paid in fiscal 2001.

    During the third quarter of fiscal year 2000, the Company recorded a
$1,145,000 expense to cover the liability arising from severance costs
associated with 19 employees employed in sales, marketing, services, and product
development in North America and Europe. The costs were accrued in accordance
with EITF Issue 94-3, "Liability Recognition for Certain Employee Terminations,
Benefits and Other Costs to Exit an Activity". At September 30, 2000, $121,000
of the liability remained and will be paid in fiscal 2001.

J)  SUBSEQUENT EVENT

    On October 24, 2000 the Company entered into a plan to cease all direct
sales, service and support activities in France as a result of a pattern of
significant and sustained losses. The termination and other costs of this action
cannot be reasonably estimated at this time, management does not anticipate that
the resolution of this uncertainty will have a material adverse affect on the
Company.

K)  NEW ACCOUNTING PRONOUNCEMENTS

    In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 130 "Reporting Comprehensive Income"
("Statement 130") and Statement of Financial Accounting Standards No. 131
"Disclosures About Segments of an Enterprise and Related Information"
("Statement 131"). Statement 130 establishes standards for the reporting and
display of comprehensive income and its components in a full set of
general-purpose financial statements. Statement 131 requires that a public
business enterprise report financial and descriptive information about its
reportable operating segments. Generally, financial information is required to
be reported on the basis that it is used internally for evaluating segment
performance and deciding how to allocate resources to segments. Both statements
have been adopted for the Company's 1999 fiscal year. Disclosures pursuant to
Statement 130 are included under the note regarding Comprehensive Income, above.
Disclosures pursuant to Statement 131 are included under the note regarding
Geographic Segment Information below.

    In December 1997, the American Institute of Certified Public Accountants
issued Statement of Position No. 97-2 "Software Revenue Recognition" ("SOP
97-2"). SOP 97-2 provides guidance on applying generally accepted accounting
principles in recognizing revenue on software transactions. The requirements of
SOP 97-2 have been effective for transactions entered into in the Company's
fiscal year 1999 and the financial statements contained herein have been
prepared in accordance with the requirements of SOP 97-2.

    In June, 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133 "Accounting for Derivative Instruments
and Hedging Activities" ("Statement 133"). Statement 133 establishes accounting
and reporting standards for derivative instruments including certain derivative
instruments embedded in other contracts, (collectively referred to as
derivatives) and for

                                       8
<PAGE>
                      ROSS SYSTEMS, INC. AND SUBSIDIARIES

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

K)  NEW ACCOUNTING PRONOUNCEMENTS (CONTINUED)
hedging activities. Statement 133 is required to be adopted for the Company's
fiscal year 2001. The Company does not anticipate that Statement 133 will have a
significant impact on its financial statements or financial statement
disclosures.

    In 1999, the staff of the Securities and Exchange Commission ("SEC") issued
Staff Accounting Bulletin ("SAB") No. 101, "Revenue Recognition in Financial
Statements." SAB No. 101 summarizes the SEC staff's views in applying generally
accepted accounting principles to the recognition of revenues. The Company is
currently reviewing its revenue recognition policy and does not expect the
adoption of SAB No. 101 to have a material impact on its consolidated results of
operations, financial position, or cash flows.

L)  GEOGRAPHIC SEGMENT INFORMATION

    The Company has adopted the Financial Accounting Standards Board's statement
of Financial Accounting Standards No. 131, or SFAS 131, "Disclosures about
Segments of an Enterprise and Related Information," effective for fiscal years
beginning after December 15, 1997. SFAS 131 supersedes Statement of Financial
Accounting standards No. 14, or SFAS 14, "Financial Reporting for Segments of a
Business Enterprise". SFAS 131 changes current practice under SFAS 14 by
establishing a new framework on which to base segment reporting and also
requires interim reporting of segment information.

    The Company markets its products and related services primarily in North
America, Europe and Asia and primarily measures its business performance based
upon geographic results of operations. Selected balance sheet and income
statement information pertaining to the various significant geographic areas of
operation are as follows:

    As of and for the quarter ended September 30, 2000:

<TABLE>
<CAPTION>
                                                               NET INCOME     DEPRECIATION       CAPITAL
                                     GROSS ASSETS   REVENUE      (LOSS)     AND AMORTIZATION   EXPENDITURES
                                     ------------   --------   ----------   ----------------   ------------
<S>                                  <C>            <C>        <C>          <C>                <C>
Belgium............................    $   162      $   211     $  (200)          $  5              $ 0
Netherlands........................        619          504         (75)            11                0
France.............................      1,787          362        (497)            14                0
Germany............................        143          200          35              0                0
Spain..............................      3,188          634        (302)            37                6
United Kingdom.....................      2,540        1,046        (532)            35                5
North America......................     48,811       11,195      (2,624)           314               37
                                       -------      -------     -------           ----              ---
Total..............................    $57,250      $14,152     $(4,195)          $416              $48
                                       =======      =======     =======           ====              ===
</TABLE>

                                       9
<PAGE>
                      ROSS SYSTEMS, INC. AND SUBSIDIARIES

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

L)  GEOGRAPHIC SEGMENT INFORMATION (CONTINUED)
    As of and for the fiscal quarter ended September 30, 1999:

<TABLE>
<CAPTION>
                                                               NET INCOME     DEPRECIATION       CAPITAL
                                     GROSS ASSETS   REVENUE      (LOSS)     AND AMORTIZATION   EXPENDITURES
                                     ------------   --------   ----------   ----------------   ------------
<S>                                  <C>            <C>        <C>          <C>                <C>
Belgium............................    $   441      $   248     $  (321)          $ 14             $  2
Netherlands........................      1,384          919           2             10                0
France.............................      4,182        1,220        (659)            17               10
Germany............................        312          292         (21)             0                0
Spain..............................      4,710        1,535        (331)            49                8
United Kingdom.....................      3,912        1,840        (493)            46               16
North America......................     63,060       17,209       2,169            527              187
                                       -------      -------     -------           ----             ----
Total..............................    $78,001      $23,263     $   346           $663             $223
                                       =======      =======     =======           ====             ====
</TABLE>

                                       10
<PAGE>
ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

OVERVIEW

VARIABILITY OF QUARTERLY RESULTS

    The Company's software product license revenues can fluctuate from quarter
to quarter depending upon, among other things, such factors as overall trends in
the United States and international economies, new product introductions by the
Company, hardware vendors and other software vendors, and customer buying
patterns. Because the Company typically ships software products within a short
period after orders are received, and therefore maintains a relatively small
backlog, any weakening in customer demand can have an almost immediate adverse
impact on revenues and operating results. Moreover, a substantial portion of the
revenues for each quarter is attributable to a limited number of sales and tends
to be realized in the latter part of the quarter. Thus, even short delays or
deferrals of sales near the end of a quarter can cause substantial fluctuations
in quarterly revenues and operating results. Finally, certain agreements signed
during a quarter may not meet the Company's revenue recognition criteria
resulting in deferral of such revenue to future periods. Because the Company's
operating expenses are based on anticipated revenue levels and a high percentage
of the Company's expenses are relatively fixed, a small variation in the timing
of the recognition of specific revenues can cause significant variation in
operating results from quarter to quarter.

BUSINESS SUMMARY

DESCRIPTION OF BUSINESS

    The Company believes that it is a leading supplier of enterprise-wide
business systems and related services to companies installing internet-enabled
e-business software products, in particular in the process manufacturing
markets. Customers are primarily medium-sized companies (with annual sales of
$50 million to $2 billion) upgrading internal systems to improve profitability
through the availability of timely and accurate information, or to modernize
their management information systems operations in order to reduce costs and
provide business-to-business (B2B) linkage with suppliers and customers. The
Company licenses its products to customers through a direct sales force in North
America and Western Europe as well as independent distributors in 24 other
markets worldwide. Since the Company's inception in 1988, the Company has
licensed software products to an installed base of over 3,400 customers
worldwide.

    The Company has developed a series of products designed for the Internet
environment which allow users to access and manipulate data from their personal
computers using a portal for functional personalization of the user's desktop.
These products incorporate an integrated, modular, feature-rich and
user-friendly operating environment. The integration of these products allows
the sharing of data between application products with a common user interface
while integrating frequently visited Web sites and other software tools. The
Company's open systems applications function in a relational database management
system ("RDBMS") environment that provides for a high degree of data
availability and integrity. Additionally, because the Company's iRenaissance
financial, manufacturing and distribution applications were developed with the
GEMBASE fourth generation language ("4GL"), the Company believes they are easily
modified and expanded. GEMBASE is a programming environment that delivers a
central data dictionary, complete screen painting, editing and debugging
capabilities, and links to several popular RDBMSs. GEMBASE itself is written in
the C programming language to facilitate portability across multiple hardware
and RDBMS platforms. Because the iRenaissance financial, manufacturing and
distribution products were developed in GEMBASE, customers often find it easy to
customize their own applications.

    The Company offers a comprehensive Enterprise Resource Planning ("ERP")
solution with functionality specifically tailored to the unique formula and
specifications-based requirements of process

                                       11
<PAGE>
manufacturers, including food and beverage, consumer packaged goods,
pharmaceutical and biotechnology, chemical, primary metals, and pulp and paper
companies. The Company believes that this native functionality is superior to
the alternative presented by many of the Company's competitors, which is to
adapt systems designed primarily for the discrete manufacturing sector. The
product may be deployed in a thin client mode to permit the greatest performance
advantage for companies using remote communications over the internet.

    In fiscal 2000, the Company formed Resynt, a subsidiary focused on
e-commerce. Resynt's internet applications and services include a wide range of
e-commerce business-to-business (B2B) features and technology to connect
traditional ERP (enterprise resource planning) systems over the internet to
customers and suppliers, thereby tightly linking trading partner supply chains
to achieve sustainable competitive advantage. These applications are designed to
allow companies the ability to leverage the technology of the Internet in order
to automate business processes and effectively manage business resources

RESULTS OF OPERATIONS

REVENUES

    Total revenues for the quarter ended September 30, 2000 decreased 39% to
$14,152,000 from $23,263,000 in the same quarter of fiscal 2000. Software
product license revenues decreased 60%, while consulting and other services
revenues decreased 51%, and maintenance revenues decreased 5% from the same
quarter of the prior year.

    Software product license revenues were $2,417,000 during the quarter ended
September 30, 2000, a decrease of $3,553,000, or 60%, from the same quarter in
fiscal 2000. The Company experienced a decrease over the same quarter of fiscal
2000 in the North American market of approximately $835,000, or 59%. This North
American decrease relates to a decrease of approximately $816,000 in U.S.
revenues and $19,000 in Canadian revenues due to a fewer number of contracts
recorded during the quarter than in the same quarter of the prior year. The
Company experienced a net decrease of $2,718,000, or 71%, in the European, Asian
and Pacific Rim ("International") markets over the same quarter in fiscal 1999.
The Asia/ Pacific Rim markets experienced a $1,149,000, or 56% decrease in
revenues from the same quarter in the prior year due largely to a fewer number
of contracts closed. European revenues decreased $1,569,000 or 89% over the same
quarter in the prior year. This was due largely to decreases in Spain of
$715,000, UK of $483,000, France $270,000 and Benelux of $101,000. The company
believes that global decreases in software product licenses are principally the
result of an industry-wide slowdown in customer's willingness to purchase fully
integrated ERP software in favor of similar but modular internet enabled
enterprise systems and business to business internet applications.

    Consulting and other services revenues for the first quarter of fiscal 2001
decreased 51% to $4,968,000 from $10,201,000 in the same quarter of fiscal 2000.
Revenues from consulting and other services (which are typically recognized as
performed) are generally correlated with software product license revenues
(which are typically recognized upon delivery), therefore, service revenues
fluctuate based upon related fluctuations in software product revenue. For the
quarter ended September 30, 2000, North American services revenues decreased by
$3,833,000, or 51%, over the same quarter in the prior year. International
services revenues decreased $1,399,000, or 52% over the same quarter in the
prior year. These decreases in consulting and other service revenues are
attributable to lower software product licensing activity during the previous
quarters.

    Maintenance revenues for the first quarter decreased by $450,000, or 5% in
fiscal 2001 versus the same quarter in the prior year. As compared to the same
quarter of the previous fiscal year, maintenance revenues decreased $133,000, or
1% in North America and decreased in international markets by $269,000, or 15%.
Decreases are principally attributable to lower software licensing activity
during fiscal 2000, as well as non-renewals by customers with older
installations. Maintenance contracts sold by third

                                       12
<PAGE>
party distributors are included by the Company in software product license
revenues because the Company has no support obligations to any of the
distributors' customers.

    International revenues as a percentage of total revenues for the first
quarter of fiscal 2001 decreased to 27% from 36% for the same quarter in fiscal
2000. International revenues decreased $4,387,000 or 53% over the same quarter
in the prior year. The aggregate first quarter decrease in international
revenues over the same quarter of fiscal 2000 is 71% for software licenses, 52%
for consulting services and 15% for maintenance revenue.

    North American revenues comprised 73% of the first quarter 2001 total
revenues up from 64% in the same quarter of the prior year. North American
revenues decreased 32% over the same quarter of the previous fiscal year. The
aggregate decrease of $4,723,000 is comprised of a 39% decrease in software
licenses, a decrease of 51% for consulting services and a 1% decrease in
maintenance revenues. Revenue decreases are due to a reduction in the number of
software agreements entered into during the current and previous periods.

OPERATING EXPENSES

    Costs of software product licenses include expenses related to royalties
paid to third parties and product documentation and packaging. Third party
royalty expenses will vary from quarter to quarter based on the number of third
party products being sold by the Company. Major third party products sold by the
Company include Oracle databases and other optional software including
implementation, reporting, and productivity tools. Costs of software product
licenses for the first quarter of fiscal 2001 decreased by 52% to $483,000 from
$1,001,000 in the first quarter of fiscal 2000. As a percentage of software
product license revenue, the costs of software product licenses increased to 20%
in the first quarter of fiscal 2001 compared to 17% in the same quarter of
fiscal 2000. The increase in costs for software product licenses for the quarter
was primarily due to the greater mix of third party products sold in fiscal 2001
compared to the prior year.

    Costs of consulting, maintenance and other services include expenses related
to consulting and training personnel, personnel providing customer support
pursuant to maintenance agreements, and other costs of sales. The Company also
uses outside consultants to supplement Company personnel in meeting peak
customer consulting demands. Costs of consulting, maintenance and other services
decreased by 41% to $6,518,000 in the first quarter of fiscal 2001, as compared
to $11,030,000 in the first quarter of fiscal 2000. The decrease in these costs
for the three month period relates to the Company's decreased services activity
resulting from slowed software sales activity mentioned earlier. As a result of
decreased services demand, the services and consulting organization required
fewer headcount and realized lower spending in the first quarter of fiscal 2001
compared to the first quarter of fiscal 2000. The following cost categories
summarize the amounts of decreased spending: 3rd party consulting ($1,822,000),
employee expenses including salaries and travel ($2,091,000) and supplies,
administrative, facility and other miscellaneous costs of ($599,000). The
Company's gross profit margin resulting from consulting, maintenance and other
services revenues for the first quarter of fiscal 2001 was 44%, up from 36% in
the same quarter of fiscal 2000. The improvement in the gross profit margin for
the three month period was due largely to decreased use of third party
consultants and lower spending across the services organization.

    Sales and marketing expenses for the quarter ended September 30, 2000 were
essentially flat with the same quarter of the prior year, totaling $5,043,000 in
the first quarter of fiscal 2001 compared to $5,214,000 in the first quarter of
fiscal 2000.

                                       13
<PAGE>
    Product development (research and development) expenses increased by 24%, to
$3,045,000 in the first quarter of fiscal 2001 from $2,454,000 in the same
quarter of the prior year. The following table summarizes product development
expenditures (in thousands):

<TABLE>
<CAPTION>
                                                            THREE MONTHS ENDED
                                                               SEPTEMBER 30,
                                                            -------------------
                                                              2000       1999
                                                            --------   --------
<S>                                                         <C>        <C>
Gross Expenditures for Product Development................  $ 3,517    $ 3,595
Less: Expenses capitalized................................   (2,223)    (3,002)
Plus: Amortization of previously capitalized amounts......    1,751      1,861
                                                            -------    -------
Total Product Development Expenses........................  $ 3,045    $ 2,454
                                                            =======    =======
</TABLE>

    As a percentage of total revenues, product development expenditures for the
three-month period ended September 30, 2000 increased over expenditures in the
same period of the prior year as a result of the lower revenue earned in the
first quarter of fiscal 2001. Product development expenditures on a dollar basis
was essentially flat with the year-ago quarter. Product development costs that
were capitalized decreased by $779,000 from the year ago period as a result of
more projects being completed during the period preceeding the first quarter of
fiscal Q1 2001 compared to the year earlier period. Product development
expenditures during fiscal 2001 have focused on new internet enabled modules and
continued enhancements to the underlying technology of released products and
developing new web enabled products The Company did not experience additional
expenditures related to the Y2K compliance of its products after December 1999.

    General and administrative expenses for the quarter ended September 30, 2001
decreased by 23%, to $1,537,000 from $1,998,000 in the same quarter of the prior
year. The major reasons for the decrease in these expenses from the same period
in the prior year was due to decreased spending on employee expenses including
salaries and travel expenses of $428,000.

    In the three month period ended September 30, 2000, the Company recorded a
provision for doubtful accounts of $552,000, as compared to $401,000 recorded in
the first quarter of fiscal 2000. The fiscal 2001 and 2000 provisions consisted
primarily of specific customer accounts identified as being potentially
uncollectible. These provisions represent management's best estimate of the
doubtful accounts for each period.

    Amortization of other assets decreased to $225,000 in the first quarter of
fiscal 2001 from $260,000 in the same quarter of the prior year. This
amortization relates to the purchase of the Company in 1988 and its subsequent
acquisitions of other products and companies. The decrease is attributable to
previously purchased products and companies becoming fully amortized.

    Non-recurring costs reported in the three month period ended September 30,
2000 relate to a strategic restructuring announced by the Company on
September 12, 2000. Under the restructuring, the Company reduced 125 positions
across the company as well as accelerated efforts to eliminate unneeded office
space, improve productivity through the use of technology and focus on increased
revenues through the use of distributors. As a result of these actions, during
the first quarter of fiscal year 2001, the Company recorded a $790,000 expense
to cover the liability arising from associated employee separation costs.

SUBSEQUENT EVENT

    On October 24, 2000 the Company entered into a plan to cease all direct
sales, service and support activities in France as a result of a pattern of
significant and sustained losses. The termination and other costs of this action
cannot be reasonably estimated at this time, management does not anticipate that
the resolution of this uncertainty will have a material adverse affect on the
Company.

                                       14
<PAGE>
OTHER EXPENSE, NET

    Other expense for the quarter ended September 30, 2000 was $337,000, as
compared to $351,000 in the same quarter of fiscal 2000. These amounts primarily
consisted of interest expense related to borrowings under the Company's existing
line of credit facility.

INCOME TAX EXPENSE

    During the first quarter of fiscal 2001, the Company recorded an income tax
benefit of $183,000 compared with an income tax expense of $208,000 recorded
during the same quarter in fiscal 2000. The net tax benefit recorded in the
first quarter of fiscal 2001 relates to certain tax refunds that have been
approved by associated tax jurisdictions. The fiscal 2000 tax expenses relates
to withholding taxes in certain foreign jurisdictions where the Company had
either no available net operating losses or had to pay treaty-based taxes.

LIQUIDITY AND CAPITAL RESOURCES

    In the first three months of fiscal 2001, net cash provided by operating
activities decreased $606,000 compared to the same period of the prior year. An
aggregate net decrease in the non-cash charges for depreciation, amortization
and provisions for bad debt of $241,000 and an aggregate decrease in the
combined cash effect of prepaids and other current assets, taxes payable,
accrued expenses and deferred revenues of $3,042,000 and by decreased Company
earnings of $4,541,000 were offset by cash provided by decreased accounts
receivable and increased accounts payable totaling $7,218,000. The increase in
accounts payable is a function of the timing of the business cycle. The
decreased receivables portfolio was a result of slowed software and services
volumes and continued focus on maximizing collection efforts

    In the first three months of fiscal 2001, the Company required $2,387,000
for investing activities versus $3,120,000 over the same period of the prior
year, a decrease of $733,000. Investment in property and equipment decreased by
$175,000 over the same period of the prior year as a result of the Company's
cash conservation efforts and declining headcount. Investments in capitalized
computer software costs decreased by $779,000 due to lower development headcount
during fiscal 2001 as well as the impact of of more projects being completed
during the period preceeding the first quarter of fiscal Q1 2001 compared to the
year earlier period. Other investment items increased by $221,000. The Company
financed its continuing operations for the three months ended September 30, 2000
through cash generated from operations and available credit facilities.

    Cash flows from financing activities increased by $2,015,000 versus the same
three-month period of the prior fiscal year. Repayments of amounts previously
borrowed under the Company's line of credit resulted in a decrease in cash of
$2,342,000. Capital lease payments utilized an incremental $327,000 of cash
versus the same quarter of the prior year.

    At September 30, 2000 the Company had $1,055,000 of cash and cash
equivalents. The Company also has a revolving credit facility with an
asset-based lender with a maximum credit line of $15,000,000, a maturity date of
December 31, 2000, and an interest rate equal to the Prime Rate plus 2%.
Borrowings under the credit facility are collateralized by substantially all
assets of the Company. At September 30, 2000, the Company had $9,474,000
outstanding against the $15,000,000 revolving credit facility, and based on
eligible accounts receivable at September 30, 2000, the Company's cash and
remaining borrowing capacity under the revolving credit facility totaled
approximately $1,349,000.

    The Company's ability to meet its cash requirements for operations and
recurring capital expenditures will depend upon funds expected to be generated
from operations and amounts available under its line of credit facility.
However, the Company will be required to seek additional financing. The Company
is negotiating alternatives to raise additional funds through public or private
financing or other arrangements. The Company cannot assure you that additional
funding will be available on favorable

                                       15
<PAGE>
terms. Furthermore, any additional equity financing may be dilutive to
stockholders, and debt financing, if available, may involve restrictive
covenants. The Company's failure to raise capital when needed may harm its
business and operating results. See note 1 to the consolidated financial
statements, "Basis of Presentation/Going Concern.

YEAR 2000 IMPLICATIONS

    The Year 2000 issue arises because certain electronic data processing
systems use two digits rather than four to define the applicable year which may
preclude proper date recognition after December 31, 1999.

    The Company expended approximately $350,000 related to year 2000
preparedness of its internal systems. Management of the Company believes that
the preparations were adequate, and there have been no year 2000 related
problems in the Company's internal systems between December 31, 1999 and the
date of filing of this Report on Form 10-Q. Further, management believes that
the more recent versions of its product were developed as year 2000 compliant
while older versions of its product were brought into year 2000 compliance
through updates provided in conjunction with customer's ongoing maintenance
contracts. Management believes that its product design was adequate, and
management has not been made aware of any year 2000 processing problems in the
Company's products between December 31, 1999 and the date of the filing of this
Report on Form 10-Q.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

    FOREIGN EXCHANGE:  The company has a world-wide presence and as such
maintains offices and derives revenues from sources overseas. For the first
quarter of fiscal 2001, international revenues as a percentage of total revenues
was approximately 27%. The company's international business is subject to
typical risks of an international business, including, but not limited to:
differing economic conditions, changes in political climates, differing tax
structures, other regulations and restrictions, and foreign exchange rate
volatility. Accordingly, the Company's future results could be materially
adversely impacted by changes in these or other factors. The effect of foreign
exchange rate fluctuations on the Company in the first three months of fiscal
2001 was not material.

    INTEREST RATES:  The Company's exposure to interest rates relates primarily
to the Company's cash equivalents and certain debt obligations. The company
invests in financial instruments with original maturities of three months or
less. Any interest earned on these investments is recorded as interest income on
the Company's statement of operations. Because of the short maturity of our
investments, a near-term change in interest rates would not materially effect
our financial position, results of operations, or cash flows. Certain of the
Company's debt obligations include a variable rate of interest. A significant,
near term change in interest rates could materially effect our financial
position, results of operations or cash flows.

                                       16
<PAGE>
                          PART II.  OTHER INFORMATION

ITEM 2.  CHANGES IN SECURITIES

    During the first quarter of fiscal 2001, the Investors converted an
aggregate principal amount of $600,000 plus accrued interest through the date of
conversion into 629,925 shares of the Company's Common Stock through several
transactions which were priced and executed in accordance with the convertible
debenture agreement.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits:

    The Exhibits listed on the accompanying Index to Exhibits are filed as part
of, or incorporated by reference into, this Report.

<TABLE>
<C>                     <S>
         3.1            Certificate of Incorporation of the Registrant, as
                        amended(1)

         3.2            Bylaws of the Registrant(1)

         4.3            Form of the subordinated debenture agreement due February 6,
                        2003 issued by the Registrant to each Investor(3)

         4.4            Registration rights agreement between the Registrant and
                        each Investor(3)

        10.1            Preferred Shares Rights Agreement, dated as of September 4,
                        1998 between the Registrant and BankBoston, N.A.(2)

        10.2A           Extension Agreement and Amendment to Loan Documents dated
                        March 21, 1997 between Registrant and Coast Business Credit,
                        a division of Southern Pacific Thrift and Loan
                        Association(4)

        10.2B           Extension Agreement and Amendment to Loan Documents dated
                        August 18, 1995 between Registrant and CoastFed Business
                        Credit Corporation ("Coast")(4)

        10.2C           First Amendment to Loan and Security Agreement dated June
                        30, 1995 between Registrant and Coast(4)

        10.2D           Loan and Security Agreement dated October 11, 1994 between
                        Registrant and Coast(4)

        10.3            Employment Agreement, dated as of January 7, 1999, between
                        Mr. Patrick Tinley and the Registrant(5)

        10.4            Employment Agreement, dated as of January 7, 1999, between
                        Mr. Dennis Vohs and the Registrant(5)

        10.5            Employment Agreement, dated as of September 17, 1999,
                        between Mr. Robert Webster and the Registrant(6)

        27.1            Financial Data Schedule
</TABLE>

------------------------

(1) Incorporated by reference to the exhibit filed with the Registrant's Current
    Report on Form 8-K filed July 24, 1998.

(2) Incorporated by reference to the exhibit filed with the Registrant's
    Registration Statement on Form 8-A filed September 4, 1998.

(3) Incorporated by reference to the exhibit filed with the Registrant's Current
    Report on form 8-K filed February 12, 1998.

(4) Incorporated by reference to the exhibit filed with the Registrant's
    Registration Statement on Form 10-K/A filed April 30, 1998.

                                       17
<PAGE>
(5) Incorporated by reference to the exhibit filed with the Registrant's Current
    Report on Form 10-Q filed May 17,. 1999.

(6) Incorporated by reference to the exhibit filed with the Registrant's Current
    Report on Form 10-K filed September 28, 1999.

(b) Reports on Form 8-K

ITEMS 1, 4 AND 5 HAVE BEEN OMITTED, AS THEY ARE NOT APPLICABLE.

                                       18
<PAGE>
                                   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.

<TABLE>
<S>                                                   <C>
                                                      ROSS SYSTEMS, INC.

Date: November 14, 2000                                            /s/ ROBERT B. WEBSTER
                                                      ------------------------------------------------
                                                                      Robert B Webster
                                                           EXECUTIVE VICE PRESIDENT, FINANCE AND
                                                         ADMINISTRATION AND CHIEF FINANCIAL OFFICER
                                                      (PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER AND
                                                                  DULY AUTHORIZED OFFICER)
</TABLE>

                                       19
<PAGE>
                               ROSS SYSTEMS, INC.
                               INDEX TO EXHIBITS

<TABLE>
<CAPTION>
       EXHIBIT
         NO.            DESCRIPTION
       -------          -----------
<S>                     <C>
 27.1                   Financial Data Schedule
</TABLE>

                                       20


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