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Financial Highlights
Fiscal Years Ending March 31
SELECTED FINANCIAL DATA /-----------------------------------------------------------------------------
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-----------------------------------------/ 2000 1999 1998 1997 1996
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Operating revenues $ 186,549,000 $ 158,059,000 $ 137,377,000 $ 104,762,000 $ 77,568,000
Operating expenses 137,677,000(1) 126,984,000(1) 109,779,000(1) 81,811,000(1) 65,980,000
Minority interest in net income (15,824,000) (8,073,000) (8,438,000) (1,419,000) 212,000
Net income 23,436,000(1) 13,009,000(1) 7,909,000(1) 13,545,000(1) 6,869,000
Income per share-diluted(2) $1.60(1) $ 0.89(1) $ 0.55(1) $ 0.97(1) $ 0.52
Total assets $ 168,762,000 $ 143,089,000 $ 121,460,000 $ 84,201,000 $ 64,340,000
Current liabilities 67,695,000 51,618,000 47,223,000 32,604,000 27,479,000
Deferred taxes and other liabilities 1,994,000 1,398,000 1,486,000 1,242,000 1,937,000
Minority interest 2,287,000 1,868,000 2,000,000 1,981,000 -
Shareholders' equity $ 96,786,000 $ 88,205,000 $ 70,751,000 $ 48,374,000 $ 34,925,000
Note 1: Operating expenses for 2000 include restructuring charges of $9,024,000 ($.39 per diluted share). Operating expenses for
1999 include charges of $3,990,000 ($.27 per diluted share) for the write-off of goodwill and capitalized software
development costs. Operating expenses for 1998 and 1997 include one-time acquisition related charges of $9,914,000 ($.70
per diluted share) and $1,756,000 ($.07 per diluted share) respectively.
Note 2: All per share amounts reflect a 3-for-2 stock split effective September 1997.
This annual report contains forward-looking statements. For more information identifying those statements and the factors that
could cause actual results to differ, please see the enclosed Form 10-K Part I, Item I, "Risk Factors" and Part II, Item 7,
"Management's Discussion and Analysis of Financial Condition and Results of Operations."
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To Our Stockholders
By any measure, the fiscal year ended March 2000 was a major transition year for
BARRA. Our strong business results in the midst of this transition bear
testimony to the fundamental strength of our franchise. In many ways, we have
now set the stage for what should be the best year in BARRA's history.
We began the year with a strategic review of our business and made several
important decisions aimed at unlocking the value of our core and ventures
businesses. We executed on these decisions with single-minded focus over the
course of the year. The end result of these actions is that we are strongly
positioned to execute on our chosen strategy.
That strategy is twofold:
- In our core business, to maintain our position of market leadership in
providing risk management systems for investment professionals, both for
portfolio risk management and enterprise risk management.
- In our ventures business, to leverage innovative ideas that stem from our core
research and development by working with partners who bring complementary
skills. Our current ventures portfolio has two major successes, Symphony Asset
Management and POSIT, and others in various stages of incubation and
development.
To set the stage for this strategy, early in the year we discontinued certain
single country fixed income products because we believed we were unlikely to
attain our growth and profitability targets in those products. Our fixed income
capabilities are now positioned around a very successful global fixed income
product and broad fixed income coverage for enterprise risk applications.
Around mid-year we transitioned to a new management team and Kamal assumed the
role of chief executive officer with a strong mandate to implement the necessary
changes that would focus BARRA on the most profitable opportunities.
Over the second half of the year we executed on three important decisions.
First, to organize the firm into two lines of business - BARRA Core and BARRA
Ventures.
This important change allows us to focus and create value in each business. We
have defined specific benchmarks
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for each business in order to make that value visible to our shareholders. Our
shareholders will also have noticed that our segment financial reporting is now
aligned to be consistent with this objective.
Second, we refocused BARRA Core on risk management tools for portfolio
management and enterprise risk management. These we believe represent our core
competence, and our goal is to maintain undisputed market leadership in this
business.
Third, we moved to a consolidated global sales and client service organization
that can provide a deeper bench of investment and technology professionals to
support our broad product line. This resulted in the closure of our offices in
Montreal, Paris, Singapore and Westborough.
In the midst of these significant changes, we scored major business wins. We
recorded 65 percent growth in enterprise risk subscription revenues and closed
the largest client contract in our history in the March quarter. Our major Y2K
initiative drew to a successful close in March, and we fully expect to benefit
not only from the expense reduction but increased capacity in our research and
development resources.
BARRA Core revenues for the year increased while headcount was down 20 percent,
leading to significant margin improvement. The last fiscal quarter showed pretax
margins of 19 percent which is great progress towards our stated goal of 20
percent Core margins for this coming year.
With regard to BARRA Ventures, Symphony Asset Management had a spectacular year
in terms of asset growth as well as fund performance. Assets under management
grew 90 percent to $4.2 billion, and Symphony's revenues increased 82 percent to
$47 million. Symphony revenues derived from exceeding performance benchmarks
were the principal reason that BARRA posted an all time record quarter in
December 1999. Our POSIT joint venture with ITG, Inc. continues to deliver
impressive results. Trading volume in the POSIT system set new records last year
and our royalty revenues grew 17 percent over the prior year. With regard to the
other businesses under development in our Ventures portfolio, we do not expect
them to have a material impact on our financial performance in the near term.
These ventures collectively operated at break-even last year and we expect this
year's results to be at least as good as last year.
As we look forward, the unprecedented boom in the asset management industry,
coupled with increased market volatility, places a premium on professional
management of investment risk. BARRA's risk management technology is
acknowledged as the industry standard in
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the institutional investment business. Hence, we expect to be the primary
beneficiary of the strong trend towards risk management as standard practice
across all segments of the asset management industry.
Our world class team of research and data professionals analyze data from more
than 100 sources world-wide and deliver up-to-date risk measures for securities
in all of the major capital markets. We are the only provider of comprehensive
global coverage across asset classes backed by local client support in all of
the world's major financial centers.
Our software applications for portfolio risk management, the BARRA Aegis
System-TM- for equity investors and the BARRA Cosmos System-TM- for fixed
income, have established themselves as market leaders in every major capital
market. We have leveraged our core competence in investment risk technology to
develop an enterprise risk management application, the BARRA TotalRisk
System-TM-, targeted at the large multi-product investment firms. The rapid pace
of consolidation among asset managers continues to create mega investment firms
whose business needs demand an enterprise application such as TotalRisk. We
believe that enterprise risk management will represent a key avenue of growth in
the coming years and reinforce our position as the provider of choice to the
large investment firms.
The last fiscal year has been an important stepping stone towards our next phase
of growth. We would like to express our thanks and deep appreciation to our
clients and employees for their support, confidence and commitment. BARRA is a
unique franchise with a wealth of intellectual capital, talented employees and a
global blue-chip client base. We have all of the ingredients to capitalize on
the opportunities presented by the ongoing changes in the financial services
industry. We know how to lead, how to innovate, and most important, how to
empower our clients to make superior investment decisions.
With our renewed focus, strong execution and a favorable business environment we
are now poised to deliver what we believe will be the best year in BARRA's
twenty-five year history.
/s/ D. Kamal Duggirala /s/ Andrew Rudd
Kamal Duggirala, President and Andrew Rudd, Chairman
Chief Executive Officer
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Continued innovation
The 1990s have seen unprecedented growth and change in the investment management
industry. Estimates now suggest that there are more than $20 trillion in assets
under management world-wide. The explosive growth in assets, rapid integration
of the world's financial markets and major advances in information technology
have created a complex environment for institutional investors. These trends in
the investment environment have resulted in increased demand for proven risk
management systems that enable investment managers to pro-actively manage
investment and business risk. Chief among the priorities for BARRA is continued
innovation -- to find new and advanced ways to deliver risk management
technology enabling investment professionals to make the very best investment
decisions. Over the past 25 years, the world's top financial institutions have
consistently relied on BARRA's risk management systems as integral to their
investment process. We understand the challenges faced by our clients. Our
mission is to provide the most comprehensive set of risk management solutions
available.
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The industry standard
Our research into the world's financial markets and investment products is
recognized throughout the asset management industry for its thought leadership.
This commitment to research helps us develop and enhance our proprietary risk
models which serve as the backbone of our products. These models, combined with
flexible software applications, allow us to deliver the most comprehensive risk
management systems available. For portfolio managers looking to measure and
proactively manage the risks of their investment strategy, we provide a set of
solutions that is unparalleled. BARRA's approach to risk management has become
the industry standard for institutional investing.
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The next generation of risk management systems
In the last few years we have witnessed tremendous growth in our marketplace.
Increased market volatility has caused investment managers to become more aware
of risk. Rapid growth in assets under management coupled with industry
consolidation has created mega investment firms that operate on a global scale.
Not only are there more people within our existing client organizations who
require access to our risk management technology, but the very largest firms
require solutions that will allow them to aggregate and manage investment risk
across the entire firm. For BARRA, these factors have created an opportunity to
develop and deliver the next generation of mission critical risk management
systems. Our enterprise risk management products enable organizations to
implement oversight and quality control over a large-scale investment operation.
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Leveraging core research and development
As an extension of our core business, we partner with organizations who can
leverage our core research and development into new lines of business. Each of
our venture businesses is set up as a separate entrepreneurial entity with BARRA
as a strategic investor. BARRA typically contributes financial and intellectual
capital, data, software and business services to each enterprise. Each venture
is led by a highly motivated management team with a unique core competence.
Several of these ventures are significant contributors to our consolidated
revenues, net income and overall enterprise value.
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increasing
shareholder
value
Symphony Asset Management
BARRA RogersCasey
BARRAStrategic Consulting Group
POSIT-Registered Trademark-
BARRAGlobal Estimates-TM-
BondExpress
Data Downlink
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Financial Highlights
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Corporate Information
Investor Information and Form 10-K
For financial and general information, or to receive,
without charge, a copy of BARRA's filings with the
Securities and Exchange Commission, please contact:
Investor Relations
BARRA, Inc.
2100 Milvia Street
Berkeley, California 94704-1113
Telephone: 510.649.4546
Annual Meeting
BARRA's annual meeting of its stockholders will be
held at:
BARRA, Inc.
2100 Milvia Street
Berkeley, California 94704-1113
on August 3, 2000 at 2:00 P.M.
Auditors
Deloitte & Touche LLP
50 Fremont Street
San Francisco, California 94105
Transfer Agent
Chase Mellon Shareholder Services, LLC
Overpeck Centre
85 Challenger Road
Ridgefield Park, New Jersey 07660
World Wide Web Site
Information on BARRA is also
available on the world wide web at
www.barra.com
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Offices
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BERKELEY (Global Headquarters) EDISON NEW YORK MEXICO CITY
2100 Milvia Street Raritan Plaza One Wall Street Plaza Insurgentes Sur 1796 Piso 8
Berkeley, California 94704 110 Fieldcrest Avenue 88 Pine Street, 2nd Floor Colonia Florida
United States 4th Floor New York, New York 10005 Mexico, D.F. 01030
510.548.5442 Edison, New Jersey 08837 United States Mexico
Fax:510.548.4374 732.346.1700 212.785.9630 5.662.2622
Fax: 732.346.0880 Fax: 212.785.9639 Fax: 5.662.2675
RIO DE JANEIRO London Frankfurt Cape Town
Avenida Luis Carlos Prestes 75 King William Street Goethestra(beta)e 5 1st Floor Colinton House
410 Sala 310 London EC4N 7BE Frankfurt D-60313 Norwich Oval, #1 Oakdale Road
Barra de Tijuca United Kingdom Germany Newlands 7700
Rio de Janeiro CEP 22775-050 020.7283.2255 069.28.17.00 South Africa
Brazil Fax: 020.7220.7555 Fax: 069.28.37.00 21.683.3245
21.430.9515 Fax: 21.683.3267
Fax: 21.430.9587
Hong Kong Tokyo Sydney
Unit C2, 21st Floor 1-18-16 Hamamatsucho, Minato-ku, Level 14
United Centre Sumitomo Hamamatsucho Building 9 Castlereagh Street
95 Queensway 7th Floor Sydney, NSW 2000
Hong Kong Tokyo 105-0013 Japan Australia
2521.3083 81.3.5402.4153 2.9223.9333
Fax: 2537.1375 Fax: 81.3.5402.4154 Fax: 2.9233.1666
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Venture Offices
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BARRA Global Estimates BARRA RogersCasey, Inc. BARRA Strategic Bond Express
BARRAInternational, Ltd. One Parklands Drive Consulting Group Wall Street Plaza
10-12 Young Street Darien, Connecticut 06820 Three Parklands Drive 88 Pine Street
Edinburgh EH2 4JB United States Darien, Connecticut 06820 New York, New York 10005
Scotland 203.656.5900 United States United States
0131.473.7070 Fax: 203.656.2233 203.656.5900 800.373.9478
Fax: 0131.473.7080 www.barrarogerscasey.com Fax: 203.656.2270 Fax: 212.804.1521
www.barra.com www.barrascg.com www.bondexpress.com
DATA DOWNLINK POSIT Symphony Asset Management, LLC
Wall Street Plaza ITG, Inc. 555 California Street, Suite 2975
88 Pine Street 380 Madison Avenue San Francisco, California 94104
New York, New York 10005 New York, New York 10017 United States
United States United States 415.676.4000
212.363.9620 212.444.6300 Fax: 415.676.2480
Fax: 212.363.9630 Fax: 212.444.6295 www.symphonyasset.com
www.datadownlink.com www.itginc.com
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