AsTable of February 3, 2005, the Registrant had outstanding 57,394,969 shares of Common Stock, $.001 par value. Contents

6 Table of Contents

StatementTable 123(R) permits public companies to adopt its requirements using one of two methods: (1) a “modified prospective” method in which compensation cost is recognized beginning with the effective date (a) based on the requirements of Statement 123(R) for all share-based payments granted after the effective date and (b) based on the requirements of Statement 123 for all awards granted to employees prior to the effective date of Statement 123(R) that remain unvested on the effective date, and (2) a “modified retrospective” method which includes the requirements of the modified prospective method described above, but also permits entities to restate based on the amounts previously recognized under Statement 123 for purposes of pro forma Contents

8.Table Restrictedof Cash Contents

InTable 2002, the Company received an inquiry from the federal government requesting documents and employee interviews related to certain Department of Energy facilities with which the Company does business. The Company was made aware that this inquiry was the result of a qui tam complaint against the Company in the United States District Court of Virginia (Case No. CA01-1260-A) relating to its billing practices at these facilities. The Company has settled this matter with the federal government and the relator. Under the terms of this settlement the Company paid the federal government $500,000 and relator’s counsel $45,000 in July 2004. The settlement was provided for by the Company at March 31, 2004. The court has dismissed this action with prejudice. There was no factual finding or adjudication of wrongdoing by the Company as part of the settlement. Contents

12.Table Goodwillof and Acquisition-Related Intangible Assets Contents

TheTable Company accounts for software development costs in accordance with SFAS No. 86, “Accounting for the Costs of Computer Software to be Sold, Leased or Otherwise Marketed”, whereby costs for the development of new software products and substantial enhancements to existing software products are expensed as incurred until technological feasibility has been established, at which time any additional costs are capitalized. With the one exception noted in the following paragraph, software development costs incurred subsequent to the establishment of technological feasibility have not been significant, and all software development costs have been charged to research and development expense as incurred. Contents

Overview Table of Contents

RevenueTable from consulting and implementation services is, in general, time and material based and recognized as the work is performed. Delays in project implementation will result in delays in revenue recognition. Some professional consulting services involve fixed-price and/or fixed-time arrangements and are recognized using contract accounting, which requires the accurate estimation of the cost, scope and duration of each engagement. Revenue for these projects is recognized on the percentage-of-completion method, with progress-to-completion measured by using specific milestones, usually labor unit inputs, with revisions to estimates reflected in the period in which changes become known. Project losses are provided for in their entirety in the period they become known, without regard to the percentage-of-completion. If the Company does not accurately estimate the resources required or the scope of work to be performed, or does not manage its projects properly within the planned periods of time or satisfy its obligations under the contracts, then future consulting margins on these projects may be negatively affected or losses on existing contracts may need to be recognized. Although the Company has a good history of successful services performance, occasional deviations from the significant estimates required for larger services engagements, particularly those with fixed-price arrangements, have caused volatility in the Company’s financial results. Contents

TheTable acquisitions of Indus Utility Systems, Inc. (“IUS”), formerly SCT Utility Systems, Inc., in March 2003 and Wishbone Systems, Inc. (“Wishbone”) in January 2004 resulted in the recording of goodwill, which represents the excess of the purchase price over the fair value of assets acquired, as well as other definite-lived intangible assets. Contents

SalesTable and marketing: Sales and marketing expenses include personnel costs, sales commissions, and the costs of advertising, public relations, and participation in industry conferences and trade shows. The reduction in sales and marketing expenses for the three months ended December 31, 2004 from the same period in the prior year is attributable to the elimination of certain sales and marketing positions as part of the Company’s restructuring plan implemented in August 2004 and its continued efforts toward cost containment and better allocations of resources. These reductions are partially offset by tiered sales commissions associated with greater sales of software licenses in fiscal 2005. Contents

21 Table of Contents

22 Table of Contents

ResearchTable and development: Research and development expenses include personnel and related costs, primarily internal and offshore, third party consultant fees and computer processing costs, all directly attributable to the development of new software application products and enhancements to existing products. The reduction in research and development expenses for the nine months ended December 31, 2004 from the same period of the prior year is attributable to the combined effects of two principal actions: (1) the elimination of personnel dedicated to less strategic product lines; and (2) better utilization of offshore research and development resources in India. Total research and development expenditures have been reduced by approximately $8.3 million from the same period of the prior year, when considering the $4.0 million decline in expenses and the $4.3 million of software development costs capitalized in the nine months ended December 31, 2003 for the development of the double-byte character-enabled version of our Asset Suite. Contents

DuringTable theof nine months ended December 31, 2004: Contents

TheTable Company believes that its existing cash, cash equivalents and marketable securities, together with anticipated cash flows from operations, will be sufficient to meet its cash requirements for at least the next 12 months. In the nine months ended December 31, 2004, the Company implemented business restructuring plans with cumulative charges to operations of $11.4 million, which the Company believes should help to improve its cash flow from operations over time. However, the Company is prepared to adjust its usage of cash and cash equivalents, as called for by its internal business plans, to align with actual business conditions. Contents

IfTable weof are unable to achieve consistent profitability and positive operating cash flow in the near future, our business and long-term prospects may be harmed. Contents

OverallTable demand for our Asset Suite and Customer Suite solutions in general may grow slowly or decrease in upcoming quarters and years because of unfavorable general economic conditions, decreased spending by companies in need of our solutions or otherwise. This may reflect the capital spending environment generally, a saturation of the market for asset management and customer management software generally, as well as deregulation and retrenchments affecting the way companies purchase our software. To the extent that there is a slowdown in the overall market for our solutions, our business, results of operations and financial condition are likely to be materially adversely affected. Contents

WeTable have taken charges for restructuring of $10.2 million in 2001, $8.2 million in 2002, $2.2 million in the three-month transition period ended March 31, 2003, $44,000 in the fiscal year ended March 31, 2004 and $11.4 million in the nine months ended December 31, 2004. There can be no assurance that additional charges for restructuring expenses will not be required in future periods. Significant future restructuring charges could cause financial results to be unfavorable. Contents

ChangesTable to our business and customer base have placed a strain on management and operations. Previous expansion had resulted in substantial growth in the number of our employees, the scope of our operating and financial systems and the geographic area of our operations, resulting in increased responsibility for management personnel. Our restructuring activities in recent years and our acquisitions of IUS and Wishbone have placed additional demands on management. In connection with our restructuring activities and our acquisitions, we will be required to effectively manage our operations, improve our financial and management controls, reporting systems and procedures on a timely basis and to train and manage our employee work force. There can be no assurance that we will be able to effectively manage our operations and failure to do so would have a material adverse effect on our business, operating results and financial condition. Contents

eachTable other.of Any channel conflicts that develop may have a material adverse effect on our relationships with systems integrators or hurt our ability to attract new systems integrators to market our products. Contents

WeTable mayof not be successful in avoiding claims that we infringe other’s proprietary rights. Contents

ProvisionsTable of our Amended and Restated Certificate of Incorporation and By-Laws, as well as provisions of Delaware law, could discourage, delay or prevent an acquisition or other change in control of Indus, even if a change in control would be beneficial to our stockholders. These provisions could also discourage proxy contests and make it more difficult for our stockholders to elect directors and take other corporate actions. As a result, these provisions could limit the price that investors are willing to pay in the future for shares of our common stock. These provisions might also discourage a potential acquisition proposal or tender offer, even if the acquisition proposal or tender offer is at a price above the then current market price for our common stock. Contents

TheTable Company held its annual meeting of stockholders on October 25, 2004. Information relating to the matters submitted to a vote of stockholders at such meeting was reported in our Quarterly Report on Form 10-Q for the second quarter ended September 30, 2004. Contents

TheTable followingof exhibits are filed or furnished herewith or are incorporated by reference. Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)


þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~December~~June 3130, ~~2004~~2005


o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 0-22993

INDUS INTERNATIONAL, INC.

(Exact name of Registrant as specified in its charter)


Delaware (State or other jurisdiction of incorporation or organization)		94-3273443 (I.R.S. Employer Identification No.)

3301 Windy Ridge Parkway, Atlanta, Georgia (Address of principal executive offices)		30339 (Zip code)

(770) 952-8444
(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant: (~~770~~1) ~~952-8444~~has filed all reports required to be filed by Section 13 or 15(~~Registrant’s~~d) ~~telephone~~of ~~number,~~the ~~including~~Securities ~~area~~Exchange ~~code~~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 þ No o

Indicate by check mark whether the ~~Registrant~~registrant ~~(1) has~~is ~~filed~~an ~~all~~accelerated ~~reports~~filer ~~required~~(as todefined bein ~~filed by Section~~Rule 1312b-2 ~~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~~Yes ~~(2) has~~þ ~~been~~No ~~subject~~o ~~to such filing requirements for the past 90 days. Yes þ Noo~~

~~Indicate~~As byof ~~check~~August 4, ~~mark whether~~ 2005, the ~~registrant~~Registrant ishad anoutstanding ~~accelerated~~57,005,970 ~~filer~~shares ~~(as~~of ~~defined~~Common inStock, ~~Rule 12b-2 of~~$.001 ~~the~~par ~~Exchange Act)~~value. ~~Yes þ~~ ~~Noo~~

TABLE OF CONTENTS

	Page
Part I: Financial Information
Item 1. Financial Statements (Unaudited):
Condensed Consolidated Balance Sheets – December 31, 2004 and March 31, 2004		3
Condensed Consolidated Balance Sheets — June 30, 2005 and March 31, 2005		3
Condensed Consolidated Statements of Operations – three and nine months ended December 31, 2004 and 2003		4
Condensed Consolidated Statements of Operations — three months ended June 30, 2005 and 2004		4
Condensed Consolidated Statements of Cash Flows – nine months ended December 31, 2004 and 2003		5
Condensed Consolidated Statements of Cash Flows — three months ended June 30, 2005 and 2004		5
Notes to Condensed Consolidated Financial Statements		6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		1413
Item 3. Quantitative and Qualitative Disclosures about Market Risks		3431
Item 4. Controls and Procedures		3431
Part II: Other Information
Item 1. Legal Proceedings		3532
Item 2. Changes in Securities and Use of Proceeds		35
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		32
Item 3. Defaults upon Senior Securities		35
Item 3. Defaults Upon Senior Securities		32
Item 4. Submission of Matters to a Vote of Security Holders		3532
Item 5. Other Information		3532
Item 6. Exhibits		3532
Signature		3734
EX-10.1 MANAGEMENT COUNCIL INCENTIVE COMPENSATION PLAN AND AGREEMENT
EX-10.2 EXECUTIVE INCENTIVE COMPENSATION PLAN AND AGREEMENT
EX-10.3 FORM OF OPTION AGREEMENT UNDER THE 2004 INDUS INTERNATIONAL, INC. LONG-TERM INCENTIVE PLAN
EX-10.4 FORM OF RESTRICTED STOCK CERTIFICATE UNDER THE 2004 INDUS INTERNATIONAL, INC. LONG TERM INCENTIVE PLAN
EX-10.5 EMPLOYMENT AGREEMENT DATED AS OF JANUARY 28, 2005, BETWEEN JOSEPH TRINO AND INDUS INTERNATIONAL, INC.
EX-31.1 SECTION 302 CERTIFICATION OF THE CEO
EX-31.2 SECTION 302 CERTIFICATION OF THE CFO
EX-32.1 SECTION 906 CERTIFICATION OF THE CEO
EX-32.2 SECTION 906 CERTIFICATION OF THE CFO

PART I: FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

INDUS INTERNATIONAL, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

	December 31, 2004			March 31, 2004
	June 30, 2005			March 31, 2005
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	2229,~~112~~421		$	3127,~~081~~779
Restricted cash		~~517~~81			70194
Billed accounts receivable, net of allowance for doubtful accounts of $703 at December 31, 2004 and $912 at March 31, 2004		25,906			21,201
Billed accounts receivable, net of allowance for doubtful accounts of $576 at June 30, 2005 and $562 at March 31, 2005		11,695			17,225
Unbilled accounts receivable		76,~~996~~107			912,~~074~~240
Other current assets		3,~~805~~700			3,~~069~~672
Total current assets		6051,~~336~~004			6461,~~495~~110
Property and equipment, net		29,~~642~~649			3230,~~919~~755
Capitalized software, net		54,~~327~~701			75,~~689~~014
Goodwill		7,442			67,~~956~~442
Acquired intangible assets, net		1110,~~002~~167			1210,~~562~~536
Restricted cash, non-current		5,~~833~~823			5,~~492~~821
Other assets		~~832~~520			~~1,560~~427
Total assets	$	~~120~~109,~~414~~306		$	~~131~~121,~~673~~105
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of note payable	$	767		$	767
Current portion of notes payable	$	767		$	767
Accounts payable		52,~~018~~846			64,~~806~~208
Accrued liabilities		1814,~~928~~525			1719,~~671~~213
Deferred revenue		3527,~~493~~071			3833,~~257~~239
Total current liabilities		6045,~~206~~209			6357,~~501~~427
Income tax payable		3,~~460~~096			43,~~389~~137
Note payable, net of current portion		9,~~721~~338			109,~~299~~530
Other liabilities		9,~~207~~720			610,~~608~~598
Stockholders’ equity:
Common stock		58			5758
Additional paid-in capital		~~164~~165,~~986~~924			~~164~~165,~~431~~280
Treasury stock		(4,681	)		(4,681	)
Deferred compensation		(5309	)		~~(50~~—	)
Accumulated deficit		(~~123~~119,~~591~~709	)		(~~113~~121,~~981~~322	)
Accumulated other comprehensive income		~~1,053~~660			1,~~100~~078
Total stockholders’ equity		3741,~~820~~943			4640,~~876~~413
Total liabilities and stockholders’ equity	$	~~120~~109,~~414~~306		$	~~131~~121,~~673~~105

See accompanying notes.

INDUS INTERNATIONAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

(Unaudited)

	Three Months Ended						~~Nine Months Ended~~
	December 31,						December 31,
	June 30,
	2004			2003			2004			2003
	2005			2004
Revenue:
				(As restated -
Software license fees	$	7,041		$	2,992		$	23,016		$	17,071
				see Note 1)
Services:
Revenue:
Support, outsourcing and hosting		14,153			15,281			44,267			44,342
Software licence fees	$	6,603		$	9,433
Consulting, training and other		12,477			16,084			37,506			45,175
Services:
Total services		26,630			31,365			81,773			89,517
Support, outsourcing and hosting		14,285			14,794
Total revenue		33,671			34,357			104,789			106,588
Consulting, training and other		12,733			14,325
Cost of revenue:
Total services		27,018			29,119
Software license fees		598			63			3,248			441
Total revenue		33,621			38,552
Services:
Cost of revenue:
Support, outsourcing and hosting		3,882			4,868			13,320			15,523
Software licence fees		680			2,069
Consulting, training and other		9,465			11,081			29,455			33,626
Services:
Total services		13,347			15,949			42,775			49,149
Support, outsourcing and hosting		3,452			4,994
Total cost of revenue		13,945			16,012			46,023			49,590
Consulting, training and other		9,291			10,568
Gross margin		19,726			18,345			58,766			56,998
Total services		12,743			15,562
Operating expenses:
Total cost of revenue		13,423			17,631
Research and development		7,191			7,944			23,287			27,258
Gross margin		20,198			20,921
Sales and marketing		7,496			8,468			22,469			25,662
Operating expenses:
General and administrative		3,724			5,004			11,083			15,529
Research and development		7,836			8,703
Restructuring expenses		(991	)		11			11,404			34
Sales and marketing		6,942			8,018
Total operating expenses		17,420			21,427			68,243			68,483
General and administrative		3,804			3,587
Income (loss) from operations		2,306			(3,082	)		(9,477	)		(11,485	)
Restructuring expenses		43			9,601
Interest and other income (expense), net		60			(87	)		(53	)		(578	)
Total operating expenses		18,625			29,909
Income (loss) before income taxes		2,366			(3,169	)		(9,530	)		(12,063	)
Income (loss) from operations		1,573			(8,988	)
Provision (benefit) for income taxes		(140	)		33			80			626
Interest and other income		56			83
Net income (loss)	$	2,506		$	(3,202	)	$	(9,610	)	$	(12,689	)
Income (loss) before income taxes		1,629			(8,905	)
Earnings (loss) per share:
Provision for income taxes		16			103
Basic	$	0.04		$	(0.06	)	$	(0.17	)	$	(0.27	)
Net income (loss)	$	1,613		$	(9,008	)
Diluted	$	0.04		$	(0.06	)	$	(0.17	)	$	(0.27	)
Net income (loss) per share:
Shares used in computing per share data:
Basic	$	0.03		$	(0.16	)
Basic		57,285			51,915			57,195			47,659
Diluted	$	0.03		$	(0.16	)
Diluted		57,827			51,915			57,195			47,659
Shares used in computing per share data:
Basic		57,624			57,063
Diluted		58,816			57,063

See accompanying notes.

INDUS INTERNATIONAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	Nine Months Ended
	Three Months Ended
	December 31,
	June 30,
	2004			2003
	2005			2004
				(As restated -
				see Note 1)
Cash flows from operating activities:
Net loss	$	(9,610	)	$	(12,689	)
Net income (loss)	$	1,613		$	(9,008	)
Adjustments to reconcile net loss to net cash used in operating activities:
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization		92,~~857~~367			84,~~248~~380
Changes in operating assets and liabilities:
Billed accounts receivable		(45,~~472~~279	)		~~(400~~3,341	)
Unbilled accounts receivable		16,~~142~~053			~~6,742~~(969	)
Other current assets		(~~662~~320	)		~~624~~(1,737	)
Other accrued liabilities		3(5,~~537~~348	)		(46,~~548~~927	)
Deferred revenue		(26,~~992~~035	)		(86,~~390~~815	)
Other operating assets and liabilities		(1,~~989~~246	)		5(1,~~084~~092	)
Net cash used in operating activities		(5,189	)		(5,329	)
Net cash provided by (used in) operating activities		2,363			(4,973	)
Cash flows from investing activities:
Purchase of marketable securities		—			(1,949	)
Increase (decrease) in restricted cash		103			(1,198	)
Sale of marketable securities		—			2,706
Acquisition of business		—			(443	)
Increase in restricted cash		(782	)		(97	)
Capitalized software		—			(3	)
Acquisition of business		(487	)		(6,938	)
Acquisition of property and equipment		(538	)		(668	)
Capitalized software		(3	)		(5,076	)
Net cash used in investing activities		(435	)		(2,312	)
Acquisition of property and equipment		(2,275	)		(2,971	)
Net cash used in investing activities		(3,547	)		(14,325	)
Cash flows from financing activities:
Proceeds from issuance of note payable		—			11,254
Payments of note payable and capital leases		(307	)		(200	)
Payments of note payable and capital leases		(765	)		(202	)
Proceeds from issuance of common stock		335			226
Proceeds from issuance of common stock		551			274
Net cash provided by financing activities		28			26
Net cash (used in) provided by financing activities		(214	)		11,326
Effect of exchange rate differences on cash		(314	)		(262	)
Effect of exchange rate differences on cash		(19	)		1,580
Net increase (decrease) in cash and cash equivalents		1,642			(7,521	)
Net decrease in cash and cash equivalents		(8,969	)		(6,748	)
Cash and cash equivalents at beginning of period		27,779			31,081
Cash and cash equivalents at beginning of period		31,081			32,667
Cash and cash equivalents at end of period	$	29,421		$	23,560
Cash and cash equivalents at end of period	$	22,112		$	25,919

See accompanying notes.

INDUS INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Basis of Presentation

The accompanying unaudited condensed consolidated financial information has been prepared by management in accordance with U.S. generally accepted accounting principles for interim financial information and pursuant to the instructions to Form 10-Q and Article 10 of Regulation S-X. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles have been condensed or omitted pursuant to the Securities and Exchange Commission’s (“SEC”) rules and regulations. In the opinion of management, these condensed consolidated financial statements contain all normal adjustments considered necessary for a fair presentation of the financial position at ~~December~~June 3130, ~~2004~~2005, the results of operations for the three ~~and nine~~-month periods ended ~~December~~June 3130, ~~2004~~2005 and ~~2003~~2004 and changes in cash flows for the ~~nine~~three-month periods ended ~~December~~June 3130, ~~2004~~2005 and ~~2003~~2004. The condensed, consolidated balance sheet at March 31, ~~2004~~2005 has been derived from the audited consolidated financial statements at that date.

These condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements for the year ended March 31, ~~2004~~2005 that are included in the Company’s ~~2004~~2005 Annual Report on Form 10-K as filed with the SEC. The consolidated results of operations for the three ~~and nine~~ months ended ~~December~~June 3130, ~~2004~~2005 are not necessarily indicative of the results to be expected for any subsequent quarter or period, or for the entire fiscal year ending March 31, ~~2005~~ 2006.

In connection with the preparation of its financial statements for the fiscal year ended March 31, 2005, the Company conducted a review of its accounting for leases and leasehold improvements and identified errors in prior reported periods related to its (1) accounting for scheduled rent escalations, (2) accounting for lease incentives (in the form of tenant improvement reimbursements) and (3) amortization of leasehold improvements. ~~Restructuring~~Items ~~Expenses~~(1) and (2), which account for the majority of the errors, relate to operating leases for office facilities entered into by the Company in 2000. As a result, the Company restated previously issued financial statements for the fiscal years ended December 31, 2000 through March 31, 2004, including the three-month transition period ended March 31, 2003, as well as the interim periods during fiscal 2005, to correct the Company’s historical accounting practices for leases and leasehold improvements. All interim periods during such time are affected by the restatements. Accordingly, the Company’s financial statements for the three months ended June 30, 2004 have been restated to correct for the errors in leases and leasehold improvements and are included in the accompanying condensed consolidated financial statements. For the three months ended June 30, 2004, these corrections in the aggregate reduced the Company’s previously reported net loss by $0.9 million, or $0.01 per share.

~~The Company recorded a restructuring credit of $1~~2.~~0 million~~ ~~and~~Restructuring ~~restructuring costs of $11.4~~Expenses ~~million for the three and nine months ended December 31, 2004, respectively.~~

InThe ~~the nine months ended December 31, 2004, the~~ Company recorded ~~net~~ restructuring ~~charges~~costs of $11.4 million for revisions to accounting estimates from prior business restructurings and for additional restructuring charges related to office and business consolidations and employee severance. Revisions to the Company’s expected sublease income for two unoccupied floors in San Francisco comprised $0.4 million of this expense43,000 inclusive of the $1.0 million benefit recorded in the quarter ended December 31, 2004 to reduce a lease reserve based on an agreement entered into in October 2004 to sublease a portion of the respective office space. Further consolidation of office space in San Francisco and ~~Atlanta resulted in~~ $79.86 million ~~in new restructuring charges~~ for the ~~nine~~ ~~months ended December 31, 2004. This consolidation included vacating~~ three ~~floors~~months ~~in Atlanta~~ended ~~and one additional floor in San Francisco. The remaining $3.2~~June ~~million in restructuring expense is associated with the elimination of approximately 140 positions~~30, ~~including~~2005 ~~the transfer of certain functions to the company-owned office buildings in Columbia, SC~~ and ~~the outsourcing of some development functions to India. At December 31,~~ 2004, $6respectively.~~8 million remains in the restructuring~~ accrual for this initiative and is related to employee severance and excess lease costs associated with subleasing the Company’s vacated office space in Atlanta and San Francisco. These restructuring charges have been recorded in accordance with SFAS No. 146, “Accounting for Costs Associated with Exit or Disposal Activities” and SFAS No. 112, “Employer’s Accounting for Postemployment Benefits.”

~~Between~~In ~~January 1,~~the ~~2000~~three ~~and~~months ~~March~~ended June 3130, 2004, the Company recorded ~~restructuring charges totaling~~ $229.76 million ~~relating~~for additional restructuring charges related to ~~two~~office ~~restructuring~~and ~~initiatives:~~business ~~(1) the~~consolidations ~~relocation~~and ofemployee ~~the~~severance, ~~Company’s~~and for ~~headquarters~~revisions to accounting estimates from prior business restructurings. Further consolidation of office space in San Francisco, CA toand Atlanta, GA ~~and~~resulted ~~(2)~~in $6.9 ~~the~~million ~~suspension~~ of the ~~United~~restructuring ~~Kingdom~~charges ~~Ministry~~for ofthe ~~Defense~~three ~~(“MoD”)~~months ~~project.~~ended ~~At December~~June 3130, 2004~~, $7~~.~~7 million~~ ~~remains~~This consolidation included vacating three floors in Atlanta ~~the~~and one additional floor in San Francisco. The elimination of approximately 70 positions, ~~restructuring~~including ~~accrual~~the ~~for~~transfer ~~these~~of ~~initiatives~~certain functions to the Company-owned office buildings in Columbia, ~~all~~SC and the outsourcing of ~~which~~some isdevelopment ~~related~~functions to ~~excess~~India, resulted ~~lease~~in ~~costs~~$1.3 million of the restructuring charges. The remaining $1.4 million of the ~~associated~~restructuring ~~with~~charges ~~subleasing~~resulted from revisions to the Company’s ~~vacated~~assumptions ~~office~~for ~~space~~expected sublease income from two unoccupied floors in San Francisco. At June 30, ~~Dallas~~2005, ~~and Pittsburgh~~a total of $5.3 million remains in the current and long-term restructuring accruals for these initiatives and relates

~~The restructuring accruals remaining as of December 31, 2004 are included in the Condensed~~6 Consolidated Financial Statements in “Accrued liabilities” for amounts due within one year and “Other liabilities” for amounts due after one year. The following is a summary of activity in the restructuring accruals for the nine months ended December 31, 2004 (in thousands):

~~Table~~to employee ofseverance ~~Contents~~and excess lease costs associated with subleasing the Company’s vacated office space in Atlanta and San Francisco. These restructuring charges have been recorded in accordance with SFAS No. 146, “Accounting for Costs Associated with Exit or Disposal Activities” and SFAS No. 112, “Employer’s Accounting for Postemployment Benefits.”

Between January 1, 2000 and March 31, 2004, the Company ~~headquarters~~recorded restructuring charges totaling $22.7 million relating to two restructuring initiatives: (1) the relocation of the Company’s headquarters from San Francisco to Atlanta and (2) the suspension of the United Kingdom Ministry of Defense (“MoD”) project. ~~suspension:~~At June 30, 2005, $6.3 million remains in the restructuring accrual for these initiatives, all of which is related to excess lease costs associated with subleasing the Company’s vacated office space in San Francisco, Dallas, TX and Pittsburgh, PA.

	Facilities
Balance at March 31, 2004	$	9,277
Payments in Q1 2005		(727	)
Accruals in Q1 2005		11
Adjustments in Q1 2005		1,268
Balance at June 30, 2004		9,829
Payments in Q2 2005		(736	)
Accruals in Q2 2005		14
Adjustments in Q2 2005		—
Balance at September 30, 2004	$	9,107
Payments in Q3 2005		(736	)
Accruals in Q3 2005		9
Adjustments in Q3 2005		(656	)
Balance at December 31, 2004	$	7,724
Office and business consolidation:
	Severance and
	Related Costs			Facilities			Total
Balance at March 31, 2004	$	—		$	—		$	—
Payments in Q1 2005		(664	)		—			(664	)
Accruals in Q1 2005		1,314			7,773			9,087
Adjustments in Q1 2005		—			—			—
Balance at June 30, 2004		650			7,773			8,423
Payments in Q2 2005		(976	)		(621	)		(1,597	)
Accruals in Q2 2005		1,840			42			1,882
Adjustments in Q2 2005		—			—			—
Balance at September 30, 2004	$	1,514		$	7,194		$	8,708
Payments in Q3 2005		(761	)		(795	)		(1,556	)
Accruals in Q3 2005		—			38			38
Adjustments in Q3 2005		(6	)		(376	)		(382	)
Balance at December 31, 2004	$	747		$	6,061		$	6,808

Should rental conditions in the Company’s Atlanta location deteriorate to the point where the remaining redundant office space is not leased, the Company could incur additional charges totaling approximately $6.6 million over the remaining period of fiscal years 2006 through 2012. Should rental conditions improve, it is possible that higher than anticipated sublease income will be generated. Any required increase or decrease in this accrual will be reflected in the period in which the evaluation indicates that a change is necessary.

3.The ~~Earnings~~restructuring ~~(Loss)~~accruals ~~per~~remaining ~~Share~~as of June 30, 2005 are included in the Condensed Consolidated Financial Statements in “Accrued liabilities” for amounts due within one year and “Other liabilities” for amounts due after one year.

~~Basic~~Below ~~earnings (loss) per share~~ is ~~computed~~an ~~using~~analysis ~~net income (loss) and the weighted average number~~ of ~~common shares outstanding during each period. Diluted earnings (loss) per share is computed using net income (loss) and~~ the ~~weighted average number of~~ outstanding ~~common~~restructuring ~~shares~~accruals ~~and dilutive common stock equivalents~~ (~~“common~~in ~~stock equivalents”~~thousands) ~~during each period.~~:

AsCompany ofheadquarters ~~December 31,~~relocation ~~2004~~ and ~~2003,~~MoD ~~stock~~project ~~options and warrants to purchase an aggregate of 10.6~~suspension: million and 10.4 million shares, respectively, were outstanding. The warrants expired in June 2004. The 8% Convertible Notes issued in March 2003 to fund the acquisition of Indus Utility Systems, Inc. (“IUS”), formerly SCT Utility Systems, Inc., were converted into 9,751,859 shares of common stock in July 2003.

The calculations of the weighted average number of shares outstanding for the three and nine months ended December 31, 2004 and 2003 are as follows (in thousands):


	Facilities
Balance at March 31, 2005	$	7,036

Payments in Q1 2006		(696	)
Accruals in Q1 2006		9
Adjustments in Q1 2006		—

Balance at June 30, 2005	$	6,349

7Office and business consolidation:


	Severance and
	Related Costs			Facilities			Total
Balance at March 31, 2005	$	308		$	5,582		$	5,890

Payments in Q1 2006		(158	)		(492	)		(650	)
Accruals in Q1 2006		—			34			34
Adjustments in Q1 2006		—			—			—

Balance at June 30, 2005	$	150		$	5,124		$	5,274

	Three Months Ended				Three Months Ended
	December 31, 2004				December 31, 2003
	Basic		Diluted		Basic		Diluted
	(in thousands)				(in thousands)
Weighted average shares outstanding		57,285		57,285		51,915		51,915
Effect of common stock equivalents		—		542		—		—
		57,285		57,827		51,915		51,915

3. Earnings (Loss) per Share

	Nine Months Ended				Nine Months Ended
	December 31, 2004				December 31, 2003
	Basic		Diluted		Basic		Diluted
	(in thousands)				(in thousands)
Weighted average shares outstanding		57,195		57,195		47,659		47,659
Effect of common stock equivalents		—		—		—		—
		57,195		57,195		47,659		47,659

Basic earnings (loss) per share is computed using net income (loss) and the weighted average number of common shares outstanding during each period. Diluted earnings (loss) per share is computed using net income (loss) and the weighted average number of outstanding common shares and dilutive common stock equivalents (“common stock equivalents”) during each period.

4As of June 30, 2005 and 2004, stock options to purchase an aggregate of 11.0 million ~~Comprehensive~~and ~~Income~~11.1 million ~~(Loss)~~shares, respectively, were outstanding.

~~Comprehensive~~The ~~income~~calculations ~~(loss) includes~~of ~~net~~the ~~income~~weighted ~~(loss),~~average ~~foreign~~number ~~currency~~of ~~translation~~shares ~~adjustments and~~outstanding ~~unrealized~~for ~~gains~~the ~~and~~three ~~losses~~months onended June 30, ~~securities~~2005 ~~investments~~and ~~that~~2004 are ~~excluded~~as ~~from~~follows ~~net income~~ (~~loss) and reflected~~ in ~~stockholders’ equity.~~thousands):

~~The following table sets forth the calculation of comprehensive income (loss) for the three and~~7 ~~nine months ended December 31, 2004 and 2003, respectively (in thousands):~~

	Three Months Ended					Nine Months Ended
	December 31,					December 31,
	2004		2003			2004			2003
Net income (loss)	$	2,506	$	(3,202	)	$	(9,610	)	$	(12,689	)
Other comprehensive income (loss)
Unrealized loss on investments		—		(69	)		—			(70	)
Foreign currency translation adjustment		39		558			(47	)		1,527
Total other comprehensive income (loss)		39		489			(47	)		1,457
Comprehensive income (loss)	$	2,545	$	(2,713	)	$	(9,657	)	$	(11,232	)

5. Stock-Based Compensation


	Three Months Ended				Three Months Ended
	June 30, 2005				June 30, 2004
	Basic		Diluted		Basic		Diluted
	(in thousands)				(in thousands)
Weighted average shares outstanding		57,624		57,624		57,063		57,063
Effect of common stock equivalents		—		1,192		—		—

		57,624		58,816		57,063		57,063

~~As currently permitted under SFAS No~~4. ~~123,~~ ~~“Accounting~~Comprehensive ~~for~~Income ~~Stock-Based Compensation”, as amended by~~(Loss) SFAS No. 148, “Accounting for Stock-Based Compensation — Transition and Disclosure”, the Company accounts for stock-based compensation in accordance with Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees”, and accordingly recognizes no compensation expense for the stock option grants as long as the exercise price is equal to or greater than the fair value of the shares at the date of grant.

~~For~~Comprehensive ~~purposes~~income ~~of pro forma disclosures, as required by SFAS No.~~(loss) ~~123,~~includes ~~which~~net ~~also~~income ~~requires that the pro forma information be determined as if the Company had accounted for its employee stock option grants under the fair value method required by SFAS No.~~(loss) ~~123,~~and ~~the~~foreign ~~estimated~~currency ~~fair~~translation ~~value of the~~adjustments ~~options~~that isare ~~amortized~~excluded tofrom ~~expense over the options’ vesting period. The Company’s pro forma~~ net income (loss) ~~including pro forma compensation expense, net of tax for the three~~ and ~~nine~~reflected ~~months ended December 31, 2004 and 2003, respectively, is as follows (~~in ~~thousands,~~stockholders’ ~~except per share~~equity. ~~amounts):~~

8The following table sets forth the calculation of comprehensive income (loss) for the three months ended June 30, 2005 and 2004 (in thousands):


	Three Months Ended
	June 30,
	2005			2004
				(As restated -
				see Note 1)
Net income (loss)	$	1,613		$	(9,008	)
Other comprehensive income (loss), net of taxes:
Foreign currency translation adjustment, net of taxes		(418	)		(194	)

Comprehensive income (loss)	$	1,195		$	(9,202	)

	Three Months Ended						Nine Months Ended
	December 31,						December 31,
	2004			2003			2004			2003
Net income (loss) as reported	$	2,506		$	(3,202	)	$	(9,610	)	$	(12,689	)
Add: Total stock-based compensation expense determined under the intrinsic value method		8			8			36			21
Deduct: Total stock-based compensation expense determined under fair-value based method for all awards		(1,105	)		(1,322	)		(3,673	)		(2,832	)
Pro forma net income (loss)	$	1,409		$	(4,516	)	$	(13,247	)	$	(15,500	)
Earnings (loss) per share:
Basic:
As reported	$	0.04		$	(0.06	)	$	(0.17	)	$	(0.27	)
Pro forma	$	0.02		$	(0.09	)	$	(0.23	)	$	(0.33	)
Diluted:
As reported	$	0.04		$	(0.06	)	$	(0.17	)	$	(0.27	)
Pro forma	$	0.02		$	(0.09	)	$	(0.23	)	$	(0.33	)
Shares used in computing per share data:
Basic		57,285			51,915			57,195			47,659
Diluted		57,483			51,915			57,195			47,659

5. Stock-Based Compensation

6As currently permitted under SFAS No. 123, ~~Recent~~“Accounting for Stock-Based Compensation”, as amended by SFAS No. 148, “Accounting ~~Pronouncements~~for Stock-Based Compensation — Transition and Disclosure”, the Company accounts for stock-based compensation in accordance with Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees”, and accordingly recognizes no compensation expense for the stock option grants as long as the exercise price is equal to or greater than the fair value of the shares at the date of grant.

InThe ~~January 2003,~~Company ~~the~~presently ~~Financial~~has ~~Accounting~~two ~~Standards~~forms ~~Board~~of ~~(“FASB”)~~compensatory ~~issued~~stock-based ~~and~~compensation: ~~subsequently~~restricted ~~revised~~stock ingrants ~~December 2003,~~and ~~FIN~~performance-based Nostock options. ~~46,~~ ~~“Consolidation~~Compensation ofexpense ~~Variable~~for ~~Interest~~the ~~Entities”,~~restricted ~~which~~stock ~~clarifies the~~grants ~~consolidation~~is ~~accounting~~equal ~~guidance~~to ofthe ~~Accounting~~market ~~Research~~value ~~Bulletin~~at ~~No. 51,~~the ~~“Consolidated~~date ~~Financial Statements”,~~of togrant ~~certain~~and ~~entities~~is incharged ~~which~~to ~~equity~~earnings ~~investors~~on doa ~~not~~straight-line basis ~~have~~over the ~~characteristics~~three-year period of ~~a controlling~~restriction. ~~financial~~Compensation ~~interest~~expense orfor dothe ~~not~~performance-based options ~~have~~is ~~sufficient~~recorded ~~equity~~as atthe ~~risk~~excess ~~for~~of the ~~entities~~quoted tomarket ~~finance their~~price ~~activities~~of ~~without~~the ~~additional~~Company’s ~~subordinated~~stock ~~financial~~over ~~support~~the ~~from other parties. Such~~option ~~entities~~price ~~are~~at ~~known~~the asend ~~variable~~of ~~interest~~each ~~entities~~reporting ~~(“VIE”)~~period. ~~The~~At ~~Company’s~~each ~~adoption~~reporting ofperiod ~~FIN~~end, 46an ~~had~~assessment nois made ~~impact~~regarding on the ~~Company’s~~probability ~~financial~~of ~~position~~meeting ~~and~~the ~~results~~performance ofcriteria, ~~operations~~which asin aturn ~~result~~will ofdetermine ~~such adoption.~~the ~~The~~compensation ~~Company~~expense ~~had~~for ~~no VIEs during~~ the ~~nine months ended December 31, 2004~~period.

OnFor ~~December 16,~~purposes ~~2004~~of pro forma disclosures, ~~the~~as ~~FASB~~required ~~issued~~by ~~Statement~~SFAS No. 123 ~~(revised 2004)~~, ~~“Share-Based Payment”,~~ which isalso arequires ~~revision~~that ofthe pro ~~FASB~~forma ~~Statement~~information ~~No. 123,~~be ~~“Accounting~~determined ~~for~~as ~~Stock-Based~~if ~~Compensation”. Statement~~the ~~123(R)~~Company ~~supersedes~~had ~~APB~~accounted ~~Opinion~~for ~~No. 25,~~its ~~“Accounting~~employee ~~for~~stock ~~Stock~~option grants ~~Issued~~under tothe ~~Employees”,~~fair ~~and amends~~value ~~FASB~~method ~~Statement~~required by SFAS No. 95123, ~~“Statement~~the ofestimated ~~Cash~~fair ~~Flows”.~~value ~~Generally,~~of the ~~approach in Statement~~ ~~123(R)~~options is ~~similar~~amortized to ~~the~~expense ~~approach~~over ~~described~~the inoptions’ ~~Statement~~vesting ~~123~~period. ~~However,~~The ~~Statement~~Company’s ~~123(R)~~pro ~~requires~~forma net ~~all~~income ~~share-based~~(loss) including ~~payments~~pro toforma ~~employees~~compensation expense, ~~including~~net ~~grants~~ of ~~employee~~tax ~~stock~~for ~~options,~~the tothree bemonths ~~recognized~~ended June in30, ~~the~~2005 ~~income~~and ~~statement~~2004 ~~based~~is onas ~~their~~follows ~~fair~~(in ~~values.~~thousands, ~~Pro~~except ~~forma~~per ~~disclosure~~share ~~is no longer an~~amounts): ~~alternative.~~

~~Statement 123(R) must be adopted in the first interim or annual period beginning after June 15,~~8 2005, irrespective of the entity’s fiscal year. Early adoption will be permitted in periods in which financial statements have not yet been issued. The Company expects to adopt Statement 123(R) during its second quarter in fiscal 2006.


	Three Months Ended
	June 30,
	2005			2004
				(As restated -
				see Note 1)
Net income (loss) as reported	$	1,613		$	(9,008	)

Add: Total stock-based compensation expense determined under the intrinsic value method		—			27

Deduct: Total stock-based compensation expense determined under fair-value based method for all awards		(868	)		(975	)

Pro forma net income (loss	$	745		$	(9,956	)


Earnings (loss) per share:
Basic:
As reported	$	0.03		$	(0.16	)

Pro forma	$	0.01		$	(0.17	)


Diluted:
As reported	$	0.03		$	(0.16	)

Pro forma	$	0.01		$	(0.17	)


Shares used in computing per share data:
Basic		57,624			57,063

Diluted		58,457			57,063

~~Table~~6. ofRecent ~~Contents~~Accounting Pronouncements

~~disclosures~~On ~~either~~December 16, 2004, the FASB issued Statement No. 123 (arevised 2004), “Share-Based Payment”, which is a revision of FASB Statement No. ~~all~~123, ~~prior~~“Accounting ~~periods~~for ~~presented~~Stock-Based orCompensation”. Statement 123(bR) supersedes APB Opinion No. ~~prior~~25, ~~periods~~“Accounting offor Stock Issued to Employees”, and ~~the~~amends ~~year~~FASB Statement No. 95, “Statement of ~~adoption~~Cash Flows”. ~~The~~Generally, ~~Company~~the ~~has~~approach ~~not~~in ~~yet~~Statement 123(R) ~~determined~~is ~~which~~similar ~~method~~to itthe ~~will~~approach ~~adopt~~described in Statement 123. However, Statement 123(R) requires all share-based payments to employees, including grants of employee stock options, to be recognized in the income statement based on their fair values. Pro forma disclosure is no longer an alternative.

~~As permitted by~~ Statement 123, the Company currently accounts for share-based payments to employees using APB Opinion No. 25’s intrinsic value method and, as such, generally recognizes no compensation expense cost for employee stock options. Accordingly, the adoption of Statement 123(R)’s ~~fair~~must value method will have a significant impact on the Company’s results of operations, although it will have no impact on the Company’s overall financial position. The impact of adoption of Statement 123(R) cannot be ~~predicted at this time because it will depend on levels of share-based payments granted in the future. However, had the Company~~ adopted ~~Statement~~no ~~123(R)~~later ~~in prior~~than ~~periods,~~ the ~~impact~~beginning of ~~that standard would have approximated~~ the ~~impact~~first offiscal ~~Statement~~year ~~123 as~~beginning ~~described~~after in the disclosure of pro forma net income and earnings per share in Note 5 to the Company’s consolidated financial statements. Statement 123(R) also requires the benefits of tax deductions in excess of recognized compensation cost to be reported as a financing cash flowJune 15, ~~rather~~ ~~than as an operating cash flow as required under current literature~~2005. ~~This~~Early ~~requirement~~adoption will ~~reduce~~ ~~net~~be ~~operating~~permitted ~~cash flows and increase net financing cash flows~~ in periods ~~after adoption. However,~~ in ~~the~~which ~~case~~financial ~~of the Company, the existence of its net operating loss carryforward will~~statements ~~preclude~~have ~~recognition~~not ofyet ~~the~~been ~~tax benefit until the deduction can be used to offset current taxes payable~~issued. The Company ~~cannot~~expects ~~estimate~~to ~~what~~adopt ~~the~~Statement ~~tax~~123(R) ~~amounts~~during ~~will~~its befirst quarter in ~~the~~fiscal ~~future or when they will be recognized, because they depend on, among other things, when the net operating loss carryforwards will expire and when employees exercise stock options~~2007.

7.Statement ~~Income~~123(R) ~~Taxes~~permits public companies to adopt its requirements using one of two methods: (1) a “modified prospective” method in which compensation cost is recognized beginning with the effective date (a) based on the requirements of Statement 123(R) for all share-based payments granted after the effective date and (b) based on the requirements of Statement 123 for all awards granted to employees prior to the effective date of Statement 123(R) that remain unvested on the effective date, and (2) a “modified retrospective” method which includes the requirements of the modified prospective method described above, but also permits entities to restate based on the amounts previously recognized under Statement 123 for purposes of pro forma disclosures either (a) all prior periods presented or (b) prior periods of the year of adoption. The Company has not yet determined which method it will adopt.

~~The provisions for income taxes for the three and nine months ended December 31, 2004 and 2003 are~~9 attributable to the withholding of income taxes on revenues generated from foreign countries and a tax benefit recognized upon resolution of an international income tax issue. At December 31, 2004, the Company had net operating losses, totaling approximately $67.5 million, inclusive of losses for the nine months ended December 31, 2004, to carry forward which, subject to certain limitations, may be used to offset future income through 2025.

~~The~~As permitted by Statement 123, the Company ~~maintained~~currently ~~cash~~accounts ~~deposits~~for ofshare-based ~~approximately~~payments $6to employees using APB Opinion No.4 ~~million~~25’s atintrinsic ~~December 31,~~value ~~2004~~method and, ~~$5.6 million~~as ~~at March 31~~such, ~~2004~~generally inrecognizes ~~support~~no compensation ofexpense ~~standby~~cost ~~letters~~for ofemployee ~~credit,~~stock ~~collateral~~options. ~~for~~Accordingly, athe ~~mortgage~~adoption ~~and~~of aStatement ~~bank~~123(R)’s ~~guarantee.~~fair ~~The~~value ~~letters~~method ofwill ~~credit~~have ~~require~~a significant impact on the Company’s toresults ~~maintain~~of ~~corresponding compensating~~operations, ~~balances~~although ~~equal~~it towill ~~the~~have ~~amounts~~no ofimpact on the ~~letters~~Company’s ofoverall ~~credit~~financial position. The ~~compensating~~impact ~~balances~~of adoption ~~are~~of ~~classified as~~Statement ~~restricted~~123(R) ~~cash~~cannot be predicted at ~~December 31,~~this ~~2004~~time ~~and~~because ~~March 31,~~it ~~2004.~~will Adepend ~~total~~on levels of share-based ~~$4.6 million~~payments granted in ~~restricted cash~~the ~~should~~future. beHowever, ~~released~~had the Company adopted Statement 123(R) in prior ~~increments~~periods, the impact of ~~$2.3 million~~that ~~each~~standard inwould ~~both~~have ~~July 2006~~approximated ~~and~~the ~~May 2008,~~impact ~~relative~~of Statement 123 as todescribed in the ~~expiration~~disclosure of ~~letters~~pro offorma ~~credit~~net ~~supporting~~income aand ~~performance~~earnings ~~bond~~per ~~and~~share ~~the~~in Note 5 to the Company’s ~~leased~~consolidated financial statements. Statement 123(R) also requires the benefits of tax ~~facilities~~deductions in ~~San~~excess ~~Francisco,~~of ~~CA,~~recognized ~~respectively.~~compensation Ofcost ~~the~~to ~~remaining~~be ~~amount~~reported as a financing cash flow, rather $0than as an operating cash flow as required under current literature.~~3 million~~ ~~should~~This berequirement will ~~released~~reduce ~~ratably~~net ~~through~~operating ~~June 2005.~~cash Atflows ~~both~~and ~~dates~~increase ~~there~~net ~~was~~financing acash $0flows in periods after adoption.~~6 million~~ However, ~~certificate~~in the case of ~~deposit~~the Company, the existence of its net operating loss carryforward will ~~used~~preclude asrecognition ~~collateral~~of ~~for~~the tax benefit until the ~~Company’s~~deduction ~~mortgage~~can ~~note~~be used to offset current taxes payable. onThe ~~its~~Company ~~Columbia,~~cannot SCestimate ~~property,~~what ~~which~~the tax amounts will be in the future or when they will be ~~released~~recognized, inbecause ~~April 2008~~they depend on, among other things, when the net operating loss carryforwards will expire and when employees exercise stock options.

97. ~~Segment~~Income ~~Information and Geographic Data~~Taxes

The ~~Company~~provision ~~operates~~for inincome ~~one~~taxes ~~reportable~~for ~~segment,~~the ~~service~~three ~~delivery~~months ~~management~~ended ~~(“SDM”)~~June 30, ~~and~~2004 ~~sells software~~is ~~and~~attributable ~~services~~to ~~offerings~~the withholding toof ~~enable~~income ~~the~~taxes ~~three~~on ~~principal~~revenues ~~components~~generated offrom ~~SDM:~~foreign ~~asset~~countries. ~~management~~At June 30, 2005, the ~~customer~~Company ~~management~~had ~~and~~net ~~field~~operating ~~service~~losses ~~management.~~totaling ~~Neither~~approximately ~~the~~$67.0 million, ~~acquisition~~inclusive of ~~IUS~~results ~~nor~~for the ~~acquisition~~three ofmonths ~~Wishbone~~ended ~~Systems~~June 30, ~~Inc.~~2005, ~~(“Wishbone”)~~to ~~resulted~~carry inforward awhich, ~~new~~subject ~~business~~to ~~segment~~certain ~~for~~limitations ~~the~~as ~~Company.~~discussed ~~The~~below, ~~Company~~may ~~manages~~be ~~its~~used ~~business~~to byoffset ~~geographic~~future ~~areas~~income for U.S. federal income tax purposes through 2026.

~~Geographic~~The ~~revenue~~Company ~~information~~has ~~for~~determined, upon the ~~three~~advice and ~~nine-month~~initial ~~periods~~diligence ~~ended~~of ~~December 31,~~its ~~2004~~tax ~~and~~experts, that ~~2003~~utilization of these net operating losses is ~~based~~in onall ~~customer~~likelihood ~~location,~~subject ~~and~~to isannual ~~shown~~limitations due to a greater than 50 percent change in ~~thousands.~~the InCompany’s ~~prior~~ownership ~~periods,~~during ~~geographic~~a three-year period that ended ~~revenue~~in ~~information~~fiscal ~~has~~year ~~been~~2005, ~~shown~~under bythe ~~selling~~“change ~~location.~~in ~~The~~ownership” ~~Company~~provisions ~~believes~~of ~~that~~Section 382 ~~providing~~of ~~this~~the Internal ~~data~~Revenue byCode ~~customer~~and ~~location~~similar ~~aligns~~state ~~more~~provisions. ~~closely~~These ~~with~~annual ~~the~~limitations ~~way~~would reduce the ~~business~~amount isof ~~managed~~tax benefits available to offset taxable income in future years. ~~Prior~~These ~~period~~limitations may also result in ~~data~~the ~~have~~expiration ~~been~~of ~~restated~~a toportion ~~reflect~~of ~~this~~the ~~revision~~available net operating losses before utilization. Determination ~~Long-lived~~of ~~asset~~the ~~information~~annual limitations is ~~based~~a oncomplex ~~the~~process and is presently being calculated by ~~physical~~tax ~~location~~experts ofengaged by the ~~assets~~Company.

108. Restricted Cash

~~Table~~At June 30, 2005, the Company maintained cash deposits of ~~Contents~~approximately $5.9 million in support of standby letters of credit, collateral for a mortgage and a bank guarantee. These deposits are classified as restricted cash, of which $81,000 is included in current assets and the balance of $5.8 million in non-current assets. The letters of credit require the Company to maintain corresponding compensating balances up to the amounts of the letters of credit. A total of $4.6 million in restricted cash should be released in increments of $2.3 million each in both July 2006 and May 2008, relative to the expiration of letters of credit supporting a performance bond and the Company’s leased facilities in San Francisco, CA, respectively. At both dates there was a $0.6 million certificate of deposit, used as collateral for the Company’s $10.1 million mortgage note payable on its Columbia, SC property, which will be released in April 2008.

	Three Months Ended				Nine Months Ended
	December 31,				December 31,
	2004		2003		2004		2003
Revenue (based on customer location):
North America	$	27,977	$	27,614	$	80,523	$	87,791
Europe, Middle East and Africa		4,429		5,123		14,208		14,255
Asia Pacific, including Japan		1,265		1,620		10,058		4,542
Total consolidated revenue	$	33,671	$	34,357	$	104,789	$	106,588

9. Segment Information and Geographic Data

~~Total~~The ~~long-lived~~Company ~~assets~~operates ~~outside~~in ~~North~~one ~~America~~reportable ~~were~~segment, ~~approximately~~service ~~$0.5 million~~delivery ~~and~~management ~~$0.7 million~~(“SDM”) asand sells software and services offerings to enable the three principal components of ~~December 31~~SDM: asset management, customer ~~2004~~management and ~~March 31~~field service management. Neither the acquisition of Indus Utility Systems, ~~2004~~Inc. (“IUS”) nor the acquisition of Wishbone Systems, ~~respectively~~Inc. (“Wishbone”) resulted in a new business segment for the Company. The Company manages its business by geographic areas.

10Geographic revenue information for the three-month periods ended June 30, 2005 and 2004 is based on customer location, and is shown in thousands. ~~Litigation~~In prior periods, geographic revenue information has been shown by selling location. The Company believes that providing this data by customer location aligns more closely with the way the business is managed. Prior period data have been restated to reflect this revision. Long-lived asset information is based on the physical location of the assets.

~~In February 2003, Integral Energy Australia brought a claim against IUS (which was then known as~~10 SCT Utility Systems, Inc.) in the Supreme Court of New South Wales, Australia, relating to the implementation of IUS software. On March 5, 2003, the Company acquired IUS from Systems and Computer Technology Corporation (“SCT”) and subsequently merged IUS into the Company. The Company is now the defendant in this lawsuit. The amount of damages asserted against the Company is not determinable. Pursuant to the terms of the Purchase Agreement among the Company and SCT and its affiliates, SCT and those affiliates of SCT that were a party to the Purchase Agreement agreed to defend the Company against the claims in this suit and to indemnify the Company from all losses relating thereto.

From time to time, the Company is involved in other legal proceedings incidental to the conduct of its business. The outcome of these claims cannot be predicted with certainty. The Company intends to defend itself vigorously in these actions. However, any settlement or judgment may have a material adverse effect on the Company’s results of operations in the period in which such settlement or judgment is paid or payment becomes probable. The Company does not believe that, individually or in aggregate, the legal matters to which it is currently a party are likely to have a material adverse effect on its results of operations or financial condition.


	Three Months Ended
	June 30,
	2005		2004
Revenue (based on customer location):
North America	$	27,418	$	26,070
Europe, Middle East and Africa		4,404		4,815
Asia Pacific, including Japan		1,799		7,667

Total consolidated revenue	$	33,621	$	38,552

11. Guarantees and Indemnifications


	June 30,		March 31,
	2005		2005
Long-lived assets:
North America	$	29,056	$	30,286
Others		593		469

Total consolidated long-lived assets	$	29,649	$	30,755

~~The Company accounts for guarantees and indemnifications in accordance with Financial Interpretation No~~10. ~~45,~~ ~~“Guarantor’s Accounting and Disclosure Requirements for Guarantees,~~Litigation ~~including Indirect Guarantees of Indebtedness of Others.”~~

~~License~~In ~~and~~February 2003, ~~hosting~~Integral ~~agreements~~Energy ~~with~~Australia ~~customers~~brought ~~generally~~a ~~contain~~claim ~~infringement~~against ~~indemnity~~IUS ~~provisions. Under~~(which ~~these~~was ~~agreements,~~then ~~the~~known ~~Company~~as SCT ~~agrees~~Utility ~~to indemnify~~Systems, ~~defend~~Inc.) ~~and~~in ~~hold~~the ~~harmless~~Supreme ~~the~~Court ~~customer~~of ~~in connection~~New ~~with~~South ~~patent~~Wales, ~~copyright~~Australia, ~~trademark~~relating ~~or trade secret infringement claims made by third parties with respect~~ to the implementation ~~customer’s authorized use~~ of ~~our~~IUS ~~products and services~~software. ~~The~~On ~~indemnity provisions~~March 5, ~~generally~~2003, ~~provide for~~ the Company toacquired ~~control~~IUS ~~defense~~from ~~and~~Systems ~~settlement~~ and ~~cover costs and~~ ~~damages~~Computer ~~finally~~Technology ~~awarded~~Corporation ~~against~~(“SCT”) ~~the~~and ~~customer.~~subsequently ~~The~~merged ~~indemnity~~IUS ~~provisions~~into ~~also generally provide that if~~ the Company’s. ~~products~~The ~~infringe, or in the~~ Company~~’s opinion it~~ is ~~likely~~now ~~that~~the ~~they~~defendant ~~will~~in ~~be found~~this tolawsuit. ~~infringe,~~The onamount ~~the rights~~ of adamages ~~third-party~~asserted ~~Indus~~against ~~will,~~the atCompany ~~its~~is ~~option and expense, procure~~not ~~the~~determinable. ~~right~~Pursuant to ~~use~~ the ~~infringing~~terms ~~product,~~of ~~modify~~ the ~~product~~Purchase soAgreement itamong ~~is no longer infringing, or return~~ the ~~product~~Company ~~for~~and aSCT ~~partial~~and ~~refund~~its affiliates, ~~that~~SCT ~~reflects~~and ~~the~~those ~~reasonable~~affiliates ~~value~~ of ~~prior~~SCT ~~use.~~that ~~The Company~~were ~~has~~a ~~not~~party ~~previously incurred costs~~ to ~~settle~~the ~~claims~~Purchase orAgreement ~~pay~~agreed ~~awards under these~~to ~~indemnification~~defend ~~obligations.~~the ~~The~~ Company ~~accounts~~against ~~for~~the ~~these~~claims ~~indemnity obligations~~ in ~~accordance with~~this ~~SFAS~~suit ~~No. 5, “Accounting for Contingencies,”~~ and ~~records~~to aindemnify ~~liability~~the ~~for these obligations when a loss is probable and reasonably estimable. The~~ Company ~~has~~from ~~not~~all ~~recorded any liabilities for~~losses ~~these~~relating ~~arrangements as of December 31, 2004~~thereto.

11From time to time, the Company is involved in other legal proceedings incidental to the conduct of its business. The outcome of these claims cannot be predicted with certainty. The Company intends to defend itself vigorously in these actions. However, any settlement or judgment may have a material adverse effect on the Company’s results of operations in the period in which such settlement or judgment is paid or payment becomes probable. The Company does not believe that, individually or in aggregate, the legal matters to which it is currently a party are likely to have a material adverse effect on its results of operations or financial condition.

~~Table~~11. ofGuarantees ~~Contents~~and Indemnifications

~~Services~~The ~~agreements~~Company ~~with~~accounts ~~customers may also contain indemnity provisions~~ for ~~death,~~guarantees personal injury or property damage caused by the Company’s personnel or contractors in the course of performing services to customers. Under these agreements, the Company generally agrees to indemnify, defend and ~~hold~~indemnifications ~~harmless the customer~~ in ~~connection~~accordance with ~~death, personal injury and property damage claims~~Financial ~~made~~Interpretation ~~by third parties with respect to actions of the Company’s personnel or contractors~~No. 45, ~~These indemnity provisions generally provide for the Company~~“Guarantor’s ~~control~~Accounting ~~of defense~~ and ~~settlement~~Disclosure ~~and cover~~Requirements ~~costs~~for ~~and damages finally awarded against the customer. The indemnity obligations contained~~Guarantees, inincluding ~~services~~Indirect ~~agreements~~Guarantees ~~generally have no specified expiration date and no specified monetary limitation on the amount~~ of ~~award~~Indebtedness ~~covered. The Company has not previously incurred costs to settle claims or pay awards under these indemnification obligations and estimates the fair value~~ of ~~these potential obligations to be nominal~~Others. ~~Accordingly, no liabilities have been recorded for these~~” ~~agreements as of December 31, 2004.~~

~~Some~~License ~~services~~and hosting agreements ~~require~~with customers generally contain infringement indemnity provisions. Under these agreements, the Company agrees to ~~maintain~~indemnify, ~~performance~~defend ~~bonds~~and ashold ~~security~~harmless ~~for~~ the customer in ~~performance~~connection ofwith ~~the~~patent, ~~Company’s~~copyright, ~~obligations~~trademark ~~under~~or ~~those~~trade ~~agreements.~~secret ~~Some~~infringement ofclaims ~~the~~made ~~performance~~by ~~bonds~~third ~~require~~parties ~~cash~~with respect to bethe ~~restricted~~customer’s asauthorized ~~collateral~~use of our products and services. The ~~obligations~~indemnity provisions generally provide for the Company to ~~maintain~~control ~~these~~defense ~~bonds~~and ~~typically expire~~settlement ~~either~~and atcover acosts ~~date~~and damages ~~specified~~finally inawarded against the ~~applicable~~customer. ~~contract~~The orindemnity ~~upon~~provisions ~~the~~also ~~performance~~generally ofprovide ~~the~~that if the Company’s ~~obligations.~~products ~~Due~~infringe, toor in the Company’s ~~historical~~opinion ~~experience~~it ofis ~~successful~~likely ~~software~~that they will be ~~implementations~~found to infringe, on the rights of a third-party, the Company ~~has~~will, at its option and expense, procure the right to use the infringing product, modify the product so it is no ~~significant~~longer ~~history~~infringing, or return the product for a partial refund that reflects the reasonable value of ~~payment~~prior use. The Company has not previously incurred costs to settle claims or pay awards under these indemnification ~~types~~obligations. ofThe ~~bonds~~Company accounts for these indemnity obligations in accordance with SFAS No. 5, ~~The~~“Accounting for Contingencies,” and records a liability for these obligations when a loss is probable and reasonably estimable. The Company has not recorded any liabilities for these arrangements as of ~~December~~June 3130, ~~2004~~2005.

~~The Company generally warrants that its software products will perform in all material respects in~~11 accordance with its standard published specifications in effect at the time of delivery of the licensed products to the customer for six months to a year, depending upon the software license. Additionally, contracts generally warrant that services will be performed consistent with generally accepted industry standards or, in some instances, specific service levels through completion of the agreed upon services. If necessary, provision will be made for the estimated cost of product and service warranties based on specific warranty claims and claim history. There has been no significant recurring expense under these product or service warranties.

~~Goodwill,~~Services ~~which~~agreements ~~represents~~with ~~the~~customers ~~excess~~may ofalso ~~purchase~~contain ~~price~~indemnity ~~over~~provisions ~~fair~~for ~~value~~death, ofpersonal ~~net assets acquired,~~injury ~~increased~~or byproperty ~~$486,000~~damage ~~during~~caused by the ~~nine~~Company’s ~~months~~personnel ~~ended~~or ~~December 31,~~contractors ~~2004.~~in ~~The~~the ~~Company~~course ~~recorded~~of anperforming ~~increase~~services to ~~the~~customers. ~~purchase~~Under ~~price~~these ofagreements, ~~Wishbone for~~ the ~~costs~~Company togenerally ~~relocate~~agrees ~~certain Wishbone employees~~ to ~~Atlanta,~~ GAindemnify, asdefend and ~~planned~~hold ~~with~~harmless the ~~acquisition.~~customer ~~Goodwill~~in isconnection ~~not~~with ~~amortized~~death, ~~but~~personal isinjury ~~subject~~and toproperty damage claims ~~impairment~~made ~~testing~~by ~~criteria.~~third ~~For~~parties ~~purposes~~with ofrespect ~~its~~to ~~impairment~~actions ~~testing,~~of the Company’s ~~considers~~personnel ~~itself to~~or becontractors. aThese indemnity ~~single~~provisions ~~reporting~~generally ~~unit~~provide ~~and~~for ~~assesses~~the ~~goodwill~~Company’s ~~impairment~~control onof andefense ~~enterprise-wide~~and ~~level.~~settlement ~~The~~and ~~Company~~cover ~~evaluates~~costs ~~the~~and ~~carrying~~damages ~~value~~finally ofawarded ~~goodwill~~against ~~annually~~the ascustomer. ofThe ~~December 31~~indemnity ~~and~~obligations ~~between annual~~contained ~~evaluations~~in ifservices ~~events~~agreements ~~occur~~generally orhave ~~circumstances~~no ~~change~~specified ~~that~~expiration ~~would~~date ~~more~~and ~~likely~~no ~~than~~specified ~~not~~monetary limitation ~~reduce~~on the ~~fair value~~amount of ~~the~~award ~~asset below its carrying amount~~covered. The Company has ~~recorded~~not ~~goodwill~~previously ofincurred ~~$0.4 million~~costs to settle ~~associated~~claims ~~with~~or ~~the~~pay ~~acquisition~~awards ofunder ~~IUS~~these ~~and~~indemnification ~~$7.0 million~~obligations ~~associated~~and ~~with~~estimates the ~~acquisition~~fair value of these ~~Wishbone~~potential obligations to be nominal. NoAccordingly, ~~impairment~~no ~~losses~~liabilities have been recorded ~~through~~for ~~December~~these agreements as of June 3130, ~~2004~~2005.

~~Acquisition-related~~Some ~~intangible~~services ~~assets~~agreements ~~are~~require ~~stated~~the atCompany ~~cost~~to ~~less~~maintain ~~accumulated~~performance ~~amortization,~~bonds ~~and~~as ~~include values~~security for ~~developed~~the performance ~~technology,~~of ~~customer~~the ~~base,~~Company’s ~~contracts~~obligations ~~and~~under ~~trade~~those ~~names~~agreements. ~~Acquired~~Some ~~technology is being amortized over the greater~~ of the ~~amount~~performance ~~computed~~bonds require ~~using~~cash ~~(a) the~~to ~~ratio~~be ~~that~~restricted ~~current~~as ~~gross revenues~~collateral. ~~for~~The aobligations ~~product bear~~ to ~~the~~maintain ~~total~~these ofbonds ~~current~~typically expire ~~and~~either ~~anticipated~~at ~~future~~a ~~gross~~date ~~revenues~~specified ~~for~~in ~~that product or (b)~~ the ~~straight-line~~applicable ~~method~~contract ~~over~~or upon the ~~remaining~~performance ~~estimated economic life~~ of the ~~product~~ ~~including~~Company’s ~~the period being reported on~~obligations. ~~Other~~Due ~~intangible~~to ~~assets~~the ~~are~~Company’s ~~being~~historical ~~amortized~~experience ~~on a straight-line basis over a period~~ of ~~two~~successful ~~to fifteen years. Total amortization expense for~~software ~~intangible assets was $520~~implementations,~~000~~ ~~and $451,000 for~~ the ~~three~~Company ~~months~~has ~~ended~~no ~~December 31,~~significant ~~2004~~history ~~and~~of ~~2003, respectively,~~payment ~~and~~under ~~was~~these ~~$1.6 million~~types ~~and~~of $1bonds.~~4 million~~ ~~for the nine months ended December 31, 2004 and~~The ~~2003,~~Company ~~respectively,~~has ~~and~~not isrecorded ~~included~~any inliabilities ~~general~~for ~~and~~these ~~administrative~~arrangements ~~expense~~as ~~in the accompanying Condensed Consolidated Statements~~ of ~~Operations~~June 30, 2005.

12The Company generally warrants that its software products will perform in all material respects in accordance with its standard published specifications in effect at the time of delivery of the licensed products to the customer for six months to a year, depending upon the software license. Additionally, contracts generally warrant that services will be performed consistent with generally accepted industry standards or, in some instances, specific service levels through completion of the agreed upon services. If necessary, provision will be made for the estimated cost of product and service warranties based on specific warranty claims and claim history. There has been no significant recurring expense under these product or service warranties.

~~Table~~12. ofGoodwill ~~Contents~~and Acquisition-Related Intangible Assets

~~Acquisition-related~~Goodwill ~~intangible~~represents the excess of purchase price over fair value of net assets ~~consist~~acquired. Goodwill is not amortized, but is subject to impairment testing criteria. For purposes of its impairment testing, the ~~following~~Company ~~(in~~considers ~~thousands):~~itself to be a single reporting unit and assesses goodwill impairment on an enterprise-wide level. The Company evaluates the carrying value of goodwill annually as of December 31 and between annual evaluations if events occur or circumstances change that would more likely than not reduce the fair value of the asset below its carrying amount. The Company has recorded goodwill of $0.4 million associated with the acquisition of IUS and $7.0 million associated with the acquisition of Wishbone. No impairment losses have been recorded through June 30, 2005.

	December 31,
	2004
Acquired trademarks	$	730
Acquired technology		2,870
Acquired contracts and customer base		10,920
Total acquired intangible assets		14,520
Less accumulated amortization		(3,518	)
Net intangible assets	$	11,002

Acquisition-related intangible assets are stated at cost less accumulated amortization, and include values for developed technology, customer base, contracts and trade names. Acquired technology is being amortized over the greater of the amount computed using (a) the ratio that current gross revenues for a product bear to the total of current and anticipated future gross revenues for that product or (b) the straight-line method over the remaining estimated economic life of the product including the period being reported on. Other intangible assets are being amortized on a straight-line basis over a period of two to fifteen years. Total amortization expense for intangible assets was $369,000 and $520,000 for the three months ended June 30, 2005 and 2004, respectively, and is included in general and administrative expense in the accompanying condensed consolidated statements of operations.

~~The remaining weighted~~Acquisition-~~average~~related ~~amortization period on all acquired~~ intangible assets ~~is approximately~~consist ~~ten years. Trademarks and technology have a remaining weighted-average amortization period~~ of ~~approximately~~the ~~three~~following years and contracts and customer base have a remaining weighted-average amortization period of approximately twelve years. The Company expects future amortization expense from acquired intangible assets as of December 31, 2004 to be as follows (in thousands):

2005 (remainder of fiscal year)	$	466
	June 30,
2006		1,470
	2005
2007		1,432
Acquired trademarks	$	730
2008		1,383
Acquired technology		2,870
2009		814
Acquired contracts and customer base		10,920
Thereafter		5,437
Total acquired intangible assets		14,520
	$	11,002
Less accumulated amortization		(4,353	)
Net intangible assets	$	10,167

~~13. Software Development Costs~~12

The ~~Company~~remaining ~~capitalized~~weighted-average ~~$7.7 million~~amortization ofperiod ~~development~~on ~~costs~~all ~~related~~acquired tointangible ~~the~~assets ~~internationalization of~~is ~~one~~approximately often ~~its products to Asian markets through March 31, 2004~~years. ~~The~~Trademarks ~~product became generally available for sale during the three months ended June 30, 2004,~~ and ~~the~~technology ~~related~~have ~~capitalized software~~a ~~development~~remaining ~~costs~~weighted-average ~~became subject to~~ amortization~~. In accordance with the provisions of~~ ~~SFAS~~period ~~No. 86, amortization is determined as the greater~~ of ~~the~~approximately ~~amount~~three ~~computed~~years ~~using~~and ~~(a) the~~contracts ~~ratio that current gross revenues for the product bear to the total of current~~ and ~~anticipated~~customer ~~future gross~~base ~~revenues~~have ~~for~~a ~~that product or (b) the straight-line method over the~~ remaining ~~economic life of~~ ~~the~~weighted-average ~~product~~amortization ~~including the~~ period ~~being~~of ~~reported~~approximately ontwelve years. ~~Amortization~~The ~~expense~~Company ofexpects ~~$313,000 and $2.4~~future ~~million~~amortization ~~was~~expense ~~recorded~~from inacquired ~~the~~intangible ~~three~~assets ~~and~~as ~~nine~~of ~~months ended December~~June 3130, ~~2004,~~2005 ~~respectively,~~to ~~and~~be ~~is included~~as infollows ~~“Cost of revenue: Software license fees”~~ (in ~~the accompanying Condensed Consolidated~~ ~~Statements of Operations.~~thousands):

14. Subsequent Event-Stockholder Protection Rights Plan


2006 (remainder of fiscal year)	$	1,101
2007		1,432
2008		1,383
2009		814
2010		657
Thereafter		4,780

	$	10,167

~~On January 25, 2005, the Board of Directors approved a Stockholder Protection Rights Plan (“Rights Plan”)~~13. ~~Under~~Software ~~the~~Development ~~Rights Plan, a dividend of one right (“Right”) for each outstanding share of~~Costs common stock was distributed to stockholders of record at the close of business on February 4, 2005. The Rights will be exercisable only if a person or group acquires beneficial ownership of 20% or more of the Company’s common stock or commences a tender or exchange offer to acquire 20% or more of the Company’s common stock. If either event occurs, each Right would entitle its holder (other than the person or group that exceeded the threshold) to purchase, at the exercise price of $17.00, a number of shares of Indus common stock having a market value equal to twice such exercise price. Also, if Indus were to be acquired in a merger or other business combination initiated by a person or group that had acquired 20% or more of the Company’s outstanding stock, each Right would entitle its holder (other than the person or group that exceeded the threshold) to purchase, at such exercise price, a number of common shares in the acquiring company having a market value equal to twice such exercise price. Upon being distributed, the Rights will automatically attach to and trade with all shares of Indus common stock. The Rights will not trade separately from the

13The Company accounts for software development costs in accordance with SFAS No. 86, “Accounting for the Costs of Computer Software to be Sold, Leased or Otherwise Marketed”, whereby costs for the development of new software products and substantial enhancements to existing software products are expensed as incurred until technological feasibility has been established, at which time any additional costs are capitalized. With the one exception noted in the following paragraph, software development costs incurred subsequent to the establishment of technological feasibility have not been significant, and all software development costs have been charged to research and development expense as incurred.

~~Table~~The Company capitalized $7.7 million of ~~Contents~~development costs related to the internationalization of its Asset Suite product to Asian markets through March 31, 2004. The product became generally available for sale during the three months ended June 30, 2004, and the related capitalized software development costs became subject to amortization. In accordance with the provisions of SFAS No. 86, amortization is determined as the greater of the amount computed using (a) the ratio that current gross revenues for the product bear to the total of current and anticipated future gross revenues for that product or (b) the straight-line method over the remaining economic life of the product including the period being reported on. Amortization expense of $313,000 and $1.7 million was recorded in the three months ended June 30, 2005 and 2004, respectively, and is included in “Cost of revenue: Software license fees” in the accompanying condensed consolidated statements of operations.

~~common~~ITEM ~~stock unless and until they become exercisable~~2. ~~The~~MANAGEMENT’S ~~Board~~DISCUSSION ofAND ~~Directors~~ANALYSIS ofOF ~~the~~FINANCIAL ~~Company~~CONDITION ~~may~~AND ~~redeem~~RESULTS ~~the~~OF ~~Rights at~~OPERATIONS ~~any time prior to the time at which the rights became exercisable. Unless earlier redeemed or exchanged by the Board of Directors, the Rights will expire on January 25, 2015.~~

~~ITEM~~Forward 2.Looking ~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~Statements

~~Forward~~In ~~Looking~~addition ~~Statements~~to historical information, this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements are not based on historical facts, but rather reflect management’s current expectations concerning future results and events. These forward-looking statements generally can be identified by the use of phrases and expressions such as “believe,” “expect,” “anticipate,” “intend,” “plan,” “foresee,” “likely,” “will” or other similar words or phrases. These statements, which speak only as of the date given, are subject to certain risks and uncertainties that could cause actual results to differ materially from our historical experience and our expectations or projections. These risks include, but are not limited to, projected growth in the emerging service delivery management market, market acceptance of our service delivery management strategy, current market conditions for our products and services, the capital spending environment generally, our ability to achieve growth in our Asset Suite, Customer Suite and Service Suite offerings, market acceptance and the success of our new products and enhancements and upgrades to our existing products, the success of our product development strategy, our competitive position, the ability to establish and retain partnership arrangements, our ability to develop our indirect sales channels, changes in our executive management team, uncertainty relating to and the management of personnel changes, risks related to international operations, including our ability to succeed in Japan, timely development and introduction of new products, releases and product enhancements, heightened security and war or terrorist acts in countries of the world that affect our business, and other risks identified in the section of this Report entitled “Factors Affecting Future Performance,” beginning on page 22. Readers are

~~In addition to historical information, this “Management’s Discussion and Analysis of Financial~~13 Condition and Results of Operations” (“MD&A”) may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements are not based on historical facts, but rather reflect management’s current expectations concerning future results and events. These forward-looking statements generally can be identified by the use of phrases and expressions such as “believe,” “expect,” “anticipate,” “intend,” “plan,” “foresee,” “likely,” “will” or other similar words or phrases. These statements, which speak only as of the date given, are subject to certain risks and uncertainties that could cause actual results to differ materially from our historical experience and our expectations or projections. These risks include, but are not limited to, projected growth in the emerging service delivery management market, market acceptance of our service delivery management strategy, current market conditions for our products and services, the capital spending environment generally, our ability to achieve growth in our Asset Suite, Customer Suite and Service Suite offerings, market acceptance and the success of our new products and enhancements and upgrades to our existing products, the success of our product development strategy, our competitive position, the ability to establish and retain partnership arrangements, our ability to develop our indirect sales channels, the successful integration of acquired companies, changes in our executive management team, uncertainty relating to and the management of personnel changes, the ability to realize the anticipated benefits of our recent restructurings, timely development and introduction of new products, releases and product enhancements, heightened security and war or terrorist acts in countries of the world that affect our business, and other risks identified in the section of this Report entitled “Factors Affecting Future Performance,” beginning on page 27. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management’s opinions only as of the date hereof. The Company undertakes no obligation to revise or publicly release the results of any revision to these forward-looking statements.

~~Indus~~cautioned ~~International,~~not ~~Inc.~~to ~~(the~~place ~~“Company”~~undue orreliance ~~“Indus”)~~on ~~develops,~~these ~~licenses,~~forward-looking ~~implements~~statements, ~~supports, and~~which ~~hosts~~reflect ~~service delivery~~ management’s ~~(“SDM”)~~opinions ~~solutions,~~only ~~which~~as ~~help clients in a broad array~~ of ~~industries~~ ~~optimize~~ the ~~management~~date ofhereof. ~~their~~The ~~customers,~~Company ~~assets,~~undertakes ~~workforce,~~no ~~spare~~obligation ~~parts inventory, tools and documentation in order~~ to ~~maximize performance and customer satisfaction while reducing~~ ~~operating~~revise ~~expenses.~~or ~~Historically,~~publicly ~~our~~release ~~solutions~~the ~~have~~results ~~been focused on asset management. Through our acquisitions~~ of ~~best-in-class~~any ~~customer~~revision ~~management software in March 2003 and field service management software in January 2004, we believe that we are the first company~~ to ~~offer~~these ~~comprehensive suites of world~~forward-~~class~~looking ~~customer, asset, and field service management solutions, which we market and sell as our SDM solutions~~statements.

~~Indus’ solutions are comprised of three distinct suites: Customer Suite, Asset Suite, and Service~~Overview Suite. Customer Suite provides the functionality for energy and utility customers to optimize customer-facing activities, encompassing call center, customer information tracking, billing, and accounts receivable functions. Asset Suite supports organizations’ operations and maintenance workforce, inventory management and procurement professionals, safety and compliance engineers, and other decision-making personnel affected by asset care decisions throughout the enterprise. Service Suite provides resource optimization enabling customers to dispatch resources with all the required tools, information, and parts at the promised time, optimizing schedules based on customer or asset demands, travel times, service level agreements, technician skills requirements, and internal costs. Other complementary solutions include mobile computing, enterprise asset integration tools, sophisticated search capabilities, data warehousing products, and integration to leading ERP products for financial and human resources functions.

~~Our~~Indus International, Inc. (the “Company” or “Indus”) develops, licenses, implements, supports, and hosts service delivery management (“SDM”) solutions, ~~also~~which ~~include~~help ~~consulting~~clients in a broad array of industries optimize the management of their customers, ~~training~~assets, ~~and~~workforce, ~~educational~~spare ~~services~~parts inventory, tools and documentation in order to maximize performance and customer ~~support~~satisfaction while reducing operating expenses. Historically, our solutions have been focused on asset management. Through our ~~hosting~~acquisitions of best-in-class customer management software in March 2003 and ~~outsourcing~~field ~~services~~service management software in January 2004, ~~offered~~we asbelieve ~~part~~that ofwe are the ~~Indus~~first ~~Service~~company ~~Select~~to ~~program. Service~~offer ~~Select~~comprehensive ~~offerings~~suites ~~include~~of ~~comprehensive~~world-class ~~implementation~~customer, ~~programs~~asset, ~~strategic~~and ~~consulting~~field service management solutions, ~~training~~which we market and ~~education~~ sell as our SDM solutions. By strategy, we have marketed and ~~three-tiered~~sold our customer ~~maintenance~~ and field ~~support~~service ~~plans~~management products into our existing customer base concurrently with our efforts to penetrate new vertical markets.

~~Critical~~Indus’ ~~Accounting~~solutions ~~Policies~~are comprised of three distinct suites: Customer Suite, Asset Suite and Service Suite. Customer Suite provides the functionality for energy and utility customers to optimize customer-facing activities, encompassing call center, customer information tracking, billing, and accounts receivable functions. Asset Suite supports organizations’ operations and maintenance workforce, inventory management and procurement professionals, safety and compliance engineers, and other decision-making personnel affected by asset care decisions throughout the enterprise. Service Suite provides resource optimization enabling customers to dispatch resources with all the required tools, information, and parts at the promised time, optimizing schedules based on customer or asset demands, travel times, service level agreements, technician skills requirements, and internal costs. Other complementary solutions include mobile computing, enterprise asset integration tools, sophisticated search capabilities, data warehousing products, and integration to leading ERP products for financial and human resources functions.

14Our SDM solutions also include consulting, training and educational services, and customer support, hosting and outsourcing services, offered as part of the Indus Service Select program. Service Select offerings include comprehensive implementation programs, strategic consulting, training and education solutions, and three-tiered customer maintenance and support plans.

~~Table~~Critical ofAccounting ~~Contents~~Policies

Management’s discussion and analysis of its financial condition and results of operations are based upon the Company’s consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities. On an on-going basis, the Company evaluates its estimates, including those related to revenue recognition, accounts receivable and allowance for doubtful accounts, valuation of goodwill and intangibles and restructuring. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

The Company has identified the following policies as critical to the Company’s business operations and the understanding of the Company’s results of operations. Senior management has discussed the development and selection of these policies and the disclosures below with the Audit Committee of the Board of Directors. For a detailed discussion of the application of these and other accounting policies, see the Notes to Consolidated Financial Statements contained within the Company’s ~~2004~~2005 Annual Report on Form 10-K, as filed with the SEC.

Revenue Recognition:

The Company’s revenue arises from two sources: (a) the sale of licenses to use our software products, and (b) the delivery of customer support, outsourcing, hosting, implementation, consulting, training and education services related to our software products. Revenue recognition rules for software companies are very complex, often subject to interpretation, and continue to evolve. Very specific and detailed guidelines in measuring revenue are followed by the Company; however, certain judgments ~~affect the application of the Company’s revenue policy. On occasion,~~ the Company is unable to recognize software license revenue in the period an order is received due to the complexities of the applicable accounting standards, the judgments involved and contractual provisions in response to customer demands. Delays in the timing and amount of revenue recognition for software license fees have caused volatility in the Company’s financial results.

~~Software license fee revenue is recognized when a non-cancelable license agreement becomes~~14 effective as evidenced by a signed contract, product delivery, a fixed or determinable license fee and probability of collection. If the license fee is not fixed or determinable, revenue is recognized as payments become due from the customer. In arrangements that include rights to multiple software products and/or services, the total arrangement fee is allocated among each of the deliverables using the residual method, under which revenue is allocated to undelivered elements based on vendor-specific objective evidence (“VSOE”) of fair value of such undelivered elements and the residual amounts of revenue are allocated to delivered elements. Elements included in multiple element arrangements may consist of software products, maintenance (which includes customer support services and unspecified upgrades), hosting and consulting services. VSOE is based on the price generally charged when an element is sold separately or, in the case of an element not yet sold separately, the price established by authorized management, if it is probable that the price, once established, will not change when the element is sold separately. If VSOE does not exist for an undelivered element, the total arrangement fee will be taken to revenue over the life of the contract.

~~Revenue~~affect ~~from~~the ~~customer~~application ~~support~~of ~~services~~the Company’s revenue policy. On occasion, the Company is ~~recognized~~unable ~~ratably~~to ~~over~~recognize software license revenue in the ~~term~~period an agreement is signed due to the complexities of the ~~support~~applicable ~~contract~~accounting standards, the judgments involved and ~~typically~~contractual ~~one~~provisions ~~year.~~in ~~Revenue~~response ~~from~~to ~~outsourcing~~customer ~~and~~demands. ~~hosting~~Delays ~~services~~in isthe ~~recognized~~timing ~~based~~and ~~upon contractually~~amount ~~agreed~~of ~~upon~~revenue recognition ~~rates~~for ~~per~~software ~~user~~license orfees ~~service,~~have ~~over~~caused avolatility ~~contractually~~in ~~defined~~the ~~time~~Company’s ~~period~~financial results.

~~Accounts~~Software ~~Receivable~~license fee revenue is recognized when a non-cancelable license arrangement becomes effective as evidenced by a signed contract, product delivery, a fixed or determinable license fee and ~~Allowance~~probability ~~for~~of ~~Doubtful~~collection. ~~Accounts:~~If the license fee is not fixed or determinable, revenue is recognized as payments become due from the customer. In arrangements that include rights to multiple software products and/or services, the total arrangement fee is allocated among each of the deliverables using the residual method, under which revenue is allocated to undelivered elements based on vendor-specific objective evidence (“VSOE”) of fair value of such undelivered elements and the residual amounts of revenue are allocated to delivered elements. Elements included in multiple element arrangements may consist of software products, maintenance (which includes customer support services and unspecified upgrades), hosting and consulting services. VSOE is based on the price generally charged when an element is sold separately or, in the case of an element not yet sold separately, the price established by authorized management, if it is probable that the price, once established, will not change when the element is sold separately. If VSOE does not exist for an undelivered element, the total arrangement fee will be taken to revenue over the life of the contract.

15Revenue from consulting and implementation services is, in general, time and material based and recognized as the work is performed. Delays in project implementation will result in delays in revenue recognition. Some consulting and implementation services involve fixed-price and/or fixed-time arrangements and are recognized using contract accounting, which requires the accurate estimation of the cost, scope and duration of each engagement. Revenue for these projects is recognized on the percentage-of-completion method, with progress-to-completion measured by using specific milestones, usually labor unit inputs, with revisions to estimates reflected in the period in which changes become known. Project losses are provided for in their entirety in the period they become known, without regard to the percentage-of-completion. If the Company does not accurately estimate the resources required or the scope of work to be performed, or does not manage its projects properly within the planned periods of time or satisfy its obligations under the contracts, then future consulting margins on these projects may be negatively affected or losses on existing contracts may need to be recognized. Although the Company has a good history of successful services performance, occasional deviations from the significant estimates required for larger services engagements, particularly those with fixed-price arrangements, have caused volatility in the Company’s financial results.

~~Table~~Revenue from customer support services is recognized ratably over the term of ~~Contents~~the support contract, typically one year. Revenue from outsourcing and hosting services is recognized based upon contractually agreed upon rates per user or service, over a contractually defined time period.

~~The~~Accounts ~~Company~~Receivable maintains an allowance for doubtful accounts for estimated accounts receivable losses resulting from the inability or failure of its customers to make required payments. This allowance is formula-based, supplemented by an evaluation of specific accounts where there may be collectibility risk. If the methodology the Company uses to calculate this allowance does not properly reflect future collections, revenue could be overstated or understated. On an ongoing basis, the Company evaluates the collectibility of accounts receivable based upon historical collections and anAllowance assessment of the collectibility of specific accounts. The Company evaluates the collectibility of specific accounts using a combination of factors, including the age of the outstanding balance(s), evaluation of the account’s financial condition, recent payment history, and discussions with the Company’s account executive for ~~the~~Doubtful ~~specific customer. Based upon this~~Accounts: evaluation of collectibility, any increase or decrease required in the allowance for doubtful accounts is reflected in the period in which the evaluation indicates that a change is necessary. If the financial condition of the Company’s customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required. The allowance for doubtful accounts was $703,000 as of December 31, 2004 and $912,000 as of March 31, 2004. The decrease is attributable to improved collections of aged accounts receivable during the nine months ended December 31, 2004.

The Company ~~generates~~maintains aan ~~significant~~allowance ~~portion~~for ofdoubtful ~~revenues~~accounts ~~and~~for ~~corresponding~~estimated accounts receivable ~~from~~losses ~~sales~~resulting tofrom the ~~utility~~inability ~~industry.~~or Asfailure of ~~December 31,~~its ~~2004~~customers to make required payments. This allowance is formula-based, ~~approximately~~supplemented ~~$19~~by an evaluation of specific accounts where there may be collectibility risk.~~0 million~~ If the methodology the Company uses to calculate this allowance does not properly reflect future collections, revenue could be overstated or 71understated.~~0%,~~ ofOn an ongoing basis, the Company’s ~~gross~~evaluates ~~billed~~the collectibility of accounts receivable ~~were~~based ~~attributable~~upon tohistorical collections ~~software~~and ~~license~~an ~~fees~~assessment ~~and services~~of ~~sales~~the tocollectibility ~~utility~~of ~~customers~~specific accounts. InThe ~~determining~~Company evaluates the collectibility of specific accounts using a combination of factors, including the age of the outstanding balance(s), evaluation of the account’s financial condition, recent payment history, and discussions with the Company’s ~~allowance~~account executive for ~~doubtful~~the ~~accounts~~specific customer. Based upon this evaluation of collectibility, any increase or decrease required in the allowance for doubtful accounts is reflected in the ~~Company~~period ~~has~~in ~~considered~~which the evaluation indicates that a change is necessary. If the financial condition of the ~~utility~~Company’s ~~industry~~customers aswere ato ~~whole~~deteriorate, asresulting ~~well~~in an asimpairment of their ability to make payments, additional allowances may be required. The ~~the~~allowance ~~financial~~for ~~condition~~doubtful accounts was $576,000 as of ~~individual~~June 30, ~~utility~~2005 ~~customers~~and $562,000 as of March 31, 2005.

~~Revenue~~The ~~from~~Company ~~sales~~generates ~~denominated~~a insignificant ~~currencies~~portion ~~other~~of ~~than~~revenues ~~the~~and ~~U.S.~~corresponding ~~Dollar~~accounts ~~resulted~~receivable ~~in approximately~~from ~~$2.9 million~~sales ofto the ~~Company’s~~utility ~~December 31,~~industry. ~~2004~~As ~~gross~~of ~~billed~~June 30, ~~accounts receivable~~2005, ~~of which~~ approximately $16.56 million, ~~were~~or ~~denominated in British Pounds~~54. ~~Historically~~1%, ~~the~~of ~~foreign currency~~the ~~gains~~Company’s ~~and~~gross ~~losses~~billed onaccounts ~~these~~receivable ~~receivables~~were ~~have~~attributable ~~not~~to ~~been~~software ~~significant,~~license fees and ~~the Company has determined~~services ~~that~~sales ~~foreign~~to ~~currency~~utility ~~derivative~~customers. ~~products~~In ~~are~~determining ~~not required to hedge~~ the Company’s ~~exposure.~~allowance Iffor ~~the value~~doubtful ofaccounts, the Company ~~U.S.~~has ~~Dollar~~considered ~~significantly increased versus one or more foreign currencies,~~ the ~~U.S. Dollar~~financial ~~equivalents~~condition ~~received~~of ~~from~~ the ~~Company’s~~utility ~~customers~~industry ~~could~~as bea ~~significantly~~whole, ~~less~~as ~~than~~well as the ~~December 31,~~financial ~~2004~~condition ~~reported~~of ~~amount~~individual utility customers.

~~Valuation of Intangible Assets and Goodwill:~~15

~~Under~~Revenue ~~present~~from ~~accounting~~sales ~~rules~~denominated ~~(SFAS~~in ~~No. 142),~~currencies ~~goodwill~~other isthan nothe ~~longer~~U.S. ~~subject~~Dollar toresulted ~~amortization;~~in approximately ~~instead~~$3.4 million itof isthe ~~subject~~Company’s toJune 30, ~~impairment~~2005 ~~testing~~gross ~~criteria~~billed ataccounts ~~least~~receivable, ~~annually.~~of ~~Other acquired~~which ~~definite-lived~~approximately ~~intangible~~$1.5 million ~~assets~~were ~~are~~denominated ~~being~~in ~~amortized~~Euros ~~over~~and ~~their~~$1.4 million ~~estimated~~were ~~useful~~denominated ~~lives.~~in ~~For~~British ~~purposes~~Pounds. ofHistorically, ~~its~~foreign ~~goodwill~~currency ~~impairment~~gains ~~testing,~~and ~~the~~losses ~~Company~~on ~~considers~~these ~~itself~~receivables tohave benot ~~a single reporting~~been ~~unit~~significant, and ~~assesses~~the ~~goodwill~~Company ~~impairment~~has ondetermined anthat ~~enterprise-wide~~foreign ~~level.~~currency ~~The~~derivative ~~impairment~~products ~~test~~are isnot ~~therefore~~required ~~performed~~to onhedge ~~a consolidated basis and compares~~ the Company’s ~~market capitalization (reporting unit fair value) to its outstanding equity (reporting unit carrying value)~~exposure. ~~In accordance~~If ~~with~~ the ~~recommended~~value ~~provisions~~ of ~~SFAS~~the NoU. ~~142,~~S. ~~the~~Dollar ~~Company~~significantly ~~utilizes~~increased versus ~~its~~one ~~closing~~or ~~stock price~~more asforeign ~~reported~~currencies, on the ~~Nasdaq~~U.S. ~~National~~Dollar ~~Market~~equivalents onreceived ~~the~~from ~~date of~~ the ~~impairment~~Company’s customers ~~test~~invoiced in ~~order~~those ~~to compute~~currencies ~~market~~could ~~capitalization.~~be ~~The~~significantly ~~Company~~less ~~has~~than ~~designated~~the ~~December~~June 3130, as2005 ~~the annual date for~~reported ~~impairment testing~~amount.

~~The~~Valuation ~~Company performed its annual impairment test as~~ of ~~December 31,~~Intangible ~~2004~~Assets and ~~concluded that no~~Goodwill: impairment of goodwill existed since the fair value of the Company’s reporting unit exceeded its carrying value. No events have occurred, nor circumstances changed, subsequent to December 31, 2004 that would reduce the Company’s fair value below its carrying value. The Company will continue to test for impairment on an annual basis or on an interim basis if circumstances change that would indicate the possibility of impairment. The impairment review may require an analysis of future projections and assumptions about the Company’s operating performance. If such a review indicates that the assets are impaired, an expense would be recorded for the amount of the impairment, and the corresponding impaired assets would be reduced in carrying value. Differences in the identification of reporting units and the use of valuation techniques can result in materially different evaluations of impairment.

16The acquisitions of Indus Utility Systems, Inc. (“IUS”), formerly SCT Utility Systems, Inc., in March 2003 and Wishbone Systems, Inc. (“Wishbone”) in January 2004 resulted in the recording of goodwill, which represents the excess of the purchase price over the fair value of assets acquired, as well as other definite-lived intangible assets.

~~Table~~Under present accounting rules (SFAS No. 142), goodwill is no longer subject to amortization; instead it is subject to impairment testing criteria at least annually. Other acquired definite-lived intangible assets are being amortized over their estimated useful lives. For purposes of ~~Contents~~its goodwill impairment testing, the Company considers itself to be a single reporting unit and assesses goodwill impairment on an enterprise-wide level. The impairment test is therefore performed on a consolidated basis and compares the Company’s market capitalization (reporting unit fair value) to its outstanding equity (reporting unit carrying value). In accordance with the recommended provisions of SFAS No. 142, the Company utilizes its closing stock price as reported on the NASDAQ National Market on the date of the impairment test in order to compute market capitalization. The Company has designated December 31 as the annual date for impairment testing.

~~Restructuring:~~The Company performed its annual impairment test as of December 31, 2004 and concluded that no impairment of goodwill existed since the fair value of the Company’s reporting unit exceeded its carrying value. No events have occurred, nor circumstances changed, subsequent to December 31, 2004 that would reduce the Company’s fair value below its carrying value. The Company will continue to test for impairment on an annual basis or on an interim basis if circumstances change that would indicate the possibility of impairment. The impairment review may require an analysis of future projections and assumptions about the Company’s operating performance. If such a review indicates that the assets are impaired, an expense would be recorded for the amount of the impairment, and the corresponding impaired assets would be reduced in carrying value. Differences in the identification of reporting units and the use of valuation techniques can result in materially different evaluations of impairment.

~~In the nine months ended December 31, 2004, the Company recorded net restructuring charges of $11.4~~Restructuring: million for revisions to accounting estimates from prior business restructurings and for additional restructuring charges related to office and business consolidations and employee severance. Revisions to the Company’s expected sublease income for two unoccupied floors in San Francisco comprised $0.4 million of this expense, inclusive of the $1.0 million benefit recorded in the quarter ended December 31, 2004 to reduce a lease reserve based on an agreement entered into in October 2004 to sublease a portion of the respective office space. Further consolidation of office space in San Francisco and Atlanta resulted in $7.8 million in new restructuring charges for the nine months ended December 31, 2004. This consolidation included vacating three floors in Atlanta and one additional floor in San Francisco. The remaining $3.2 million in restructuring expense is associated with the elimination of approximately 140 positions, including the transfer of certain functions to the company-owned office buildings in Columbia, SC and the outsourcing of some development functions to India. At December 31, 2004, $6.8 million remains in the restructuring accrual for this initiative and is related to employee severance and excess lease costs associated with subleasing the Company’s vacated office space in Atlanta and San Francisco. These restructuring charges have been recorded in accordance with SFAS No. 146, “Accounting for Costs Associated with Exit or Disposal Activities” and SFAS No. 112, “Employer’s Accounting for Postemployment Benefits.”

~~Between~~The ~~January 1, 2000 and March 31, 2004, the~~ Company recorded restructuring ~~charges~~costs ~~totaling $22.7 million relating to two restructuring initiatives: (1) the relocation~~ of ~~the Company’s headquarters from San Francisco~~$43,000 ~~CA to Atlanta, GA~~ and ~~(2) the suspension of the United Kingdom Ministry of Defense (“MoD”) project. At December 31, 2004,~~ $79.76 million ~~remains~~for in the ~~restructuring~~ ~~accrual~~three ~~for~~months ~~these initiatives~~ended June 30, ~~all~~2005 ofand ~~which is related to excess lease costs associated with subleasing the Company’s vacated office space in San Francisco~~2004, ~~Dallas and Pittsburgh~~respectively.

~~Should~~In ~~rental~~the ~~conditions~~three inmonths ended June 30, 2004, the Company’s ~~Atlanta~~recorded ~~location~~$9.6 million ~~deteriorate~~for additional restructuring charges related to ~~the~~office ~~point~~and ~~where~~business ~~the~~consolidations and employee severance, and for ~~remaining~~revisions ~~redundant~~to accounting estimates from prior business restructurings. Further consolidation of office space isin ~~not~~San ~~leased~~Francisco, CA and Atlanta, GA resulted in $6.9 million of the restructuring ~~Company~~charges ~~could~~for ~~incur~~the three months ended June 30, 2004. This consolidation included vacating three floors in Atlanta and one additional ~~charges~~floor ~~totaling~~in San Francisco. The elimination of approximately 70 positions, including the transfer of certain functions to the company-owned office buildings in Columbia, SC and the outsourcing of some development functions to India, resulted in $61.63 million ~~over~~of the ~~remaining~~restructuring ~~period~~charges. ofThe ~~fiscal~~remaining ~~years~~$1.4 million ~~2005~~of ~~through~~the ~~2012.~~restructuring ~~Should~~charges ~~rental~~resulted ~~conditions~~from ~~improve,~~revisions itto isthe ~~possible~~Company’s ~~that~~assumptions ~~higher~~for ~~than~~expected ~~anticipated~~ sublease income ~~will~~from betwo ~~generated~~unoccupied floors in San Francisco. ~~Any~~At ~~required~~June 30, ~~increase~~2005, ora ~~decrease~~total of $5.3 million remains in ~~this~~the current ~~accrual~~and ~~will~~long-term berestructuring ~~reflected~~accruals infor these initiatives and relates to employee severance and excess lease costs associated with subleasing the ~~period~~Company’s vacated office space in ~~which~~Atlanta ~~the~~and ~~evaluation~~San ~~indicates~~Francisco. ~~that~~These arestructuring ~~change~~charges ishave ~~necessary~~been recorded in accordance with SFAS No. 146, “Accounting for Costs Associated with Exit or Disposal Activities” and SFAS No. 112, “Employer’s Accounting for Postemployment Benefits.”

~~The~~Between ~~restructuring~~January 1, ~~accruals~~2000 ~~remaining~~and ~~as of December~~March 31, 2004, ~~are~~the ~~included~~Company inrecorded ~~the~~restructuring ~~Condensed~~charges totaling ~~Consolidated~~$22.7 million ~~Financial~~relating ~~Statements~~to intwo ~~“Accrued~~restructuring ~~liabilities”~~initiatives: ~~for~~(1) the ~~amounts~~relocation ~~due~~of ~~within~~the ~~one~~Company’s headquarters ~~year~~from San Francisco to Atlanta and (2) the suspension of the United Kingdom Ministry of ~~“Other~~Defense ~~liabilities~~(“MoD”) ~~for~~project. ~~amounts~~At ~~due~~June 30, ~~after~~2005, ~~one year~~$6.3 million remains in the

1716

~~Consolidated~~restructuring ~~Results~~accrual for these initiatives, all of ~~Operations~~which is related to excess lease costs associated with subleasing the Company’s vacated office space in San Francisco, Dallas, TX and Pittsburgh, PA.

~~Three~~Should ~~Months~~rental ~~Ended~~conditions ~~December 31,~~in ~~2004~~the ~~Compared~~Company’s Atlanta location deteriorate to ~~Three~~the ~~Months~~point ~~Ended~~where ~~December 31~~the remaining redundant office space is not leased, ~~2003~~the Company could incur additional charges totaling approximately $6.6 million over the remaining period of fiscal years 2006 through 2012. Should rental conditions improve, it is possible that higher than anticipated sublease income will be generated. Any required increase or decrease in this accrual will be reflected in the period in which the evaluation indicates that a change is necessary.

~~Revenue~~The restructuring accruals remaining as of June 30, 2005 are included in the Condensed Consolidated Financial Statements in “Accrued liabilities” for amounts due within one year and “Other liabilities” for amounts due after one year.

	Three Months Ended						%
	12/31/2004			12/31/2003			Change
	(Unaudited)
	(In thousands)
Software license fees	$	7,041		$	2,992			135.3	%
Percentage of total revenue		20.9	%		8.7	%
Support, outsourcing and hosting		14,153			15,281			(7.4	%)
Percentage of total revenue		42.0	%		44.5	%
Consulting, training and other		12,477			16,084			(22.4	%)
Percentage of total revenue		37.1	%		46.8	%
Total revenue	$	33,671		$	34,357

Consolidated Results of Operations

~~The~~Restatement ~~Company’s revenue arises from two sources: (a) the sale~~ of ~~licenses~~Financial ~~to use our software~~Statements products, and (b) the delivery of customer support, outsourcing, hosting, implementation, consulting, training and education services related to our software products. Customer support, outsourcing and hosting services are typically sold under agreements lasting one or more years, the revenue from which is recognized, in most cases, ratably over the periods covered by the agreements.

~~Software~~In ~~license~~connection ~~fees:~~with ~~Software~~the ~~license~~preparation ~~fees~~of ~~increased~~its ~~135.3%~~financial tostatements ~~$7.0 million~~for in the ~~three~~fiscal ~~months~~ year ended ~~December~~March 31, 2005, ~~2004.~~the ~~The~~Company ~~increase~~conducted ina ~~software~~review ~~license~~of ~~fees~~its isaccounting ~~attributable~~for leases and leasehold improvements and identified errors in prior reported periods related to ~~better~~its ~~sales~~(1) accounting for scheduled rent ~~execution~~escalations, (2) accounting for lease incentives (in the form of tenant improvement reimbursements) and ~~sales~~(3) amortization of ~~additional~~leasehold ~~Indus~~improvements. ~~products~~Items (1) and (2), ~~including~~which ~~Service~~account ~~Suite~~for the majority of the errors, ~~primarily~~relate to operating leases for office facilities entered into ~~its existing~~by ~~customer~~the ~~base~~Company in 2000. ~~Service~~As ~~Suite~~a ~~was~~result, ~~acquired~~the inCompany restated previously issued financial statements for the ~~January~~fiscal years ended December 31, 2000 through March 31, 2004, ~~acquisition~~including ofthe ~~Wishbone~~three-month transition period ~~and~~ended March 31, ~~therefore~~2003, ~~was~~as ~~not~~well ~~available~~as ~~for~~the ~~sale~~interim inperiods during fiscal 2005, to correct the ~~third~~Company’s historical ~~quarter~~accounting ofpractices ~~fiscal~~for ~~2004~~leases and leasehold improvements. ~~The~~All interim periods during such time are affected by the restatements. Accordingly, the Company’s financial statements for ~~continues~~the tothree ~~prudently~~months ~~expand~~ended ~~its~~June 30, ~~sales~~2004 ~~efforts~~have inbeen restated to correct for the ~~Eastern~~errors ~~Europe~~in leases and leasehold ~~Asia-Pacific~~improvements ~~regions~~and ofare included in the accompanying condensed consolidated financial statements. For the ~~world;~~three ~~geographic~~months ~~markets~~ended ~~that~~June 30, 2004, these corrections in the aggregate reduced the Company’s ~~believes~~previously ~~provide~~reported ~~opportunities~~net ~~for~~loss ~~growth~~by $0.9 million, or $0.01 per share.

~~Support,~~Three ~~outsourcing~~Months ~~and~~Ended ~~hosting: Support~~June 30, ~~outsourcing~~2005 ~~and~~Compared ~~hosting revenue decreased 7.4%~~ to ~~$14.2 million~~Three inMonths ~~the~~Ended ~~three months ended December~~June 3130, 2004~~. Effective October 15, 2004, the Company did~~ not renew a non-strategic outsourcing contract which provided recurring revenues of approximately $1.0 million per quarter. The absence of this contract is the principal reason for the decline in support, outsourcing and hosting revenue during the quarter ended December 31, 2004. Renewals of customer support revenues for the current fiscal year remain over 90%, reflecting limited customer losses and some adjustments to accommodate various customer considerations.

~~Consulting, training and other: Consulting, training and other revenue decreased 22.4% to $12.5~~Revenue million in the three months ended December 31, 2004. The same quarter in the prior year reflected more engagements for such services and better utilization of billable personnel. The Company has initiated a strategic program to better and more frequently utilize third party systems integrators and certified business partners in its delivery of consulting, training and other services in order to provide greater business scalability and the potential introduction into more opportunities for sales of its software products. Over time, this strategy will likely yield less consulting, training and other services as a percentage of overall revenues for Indus.


	Three Months Ended						%
	6/30/2005			6/30/2004			Change
				(As restated)
	(Unaudited)
	(In thousands)
Software license fees	$	6,603		$	9,433			(30.0	%)
Percentage of total revenue		19.6	%		24.5	%

Support, outsourcing and hosting		14,285			14,794			(3.4	%)
Percentage of total revenue		42.5	%		38.4	%

Consulting, training and other		12,733			14,325			(11.1	%)
Percentage of total revenue		37.9	%		37.1	%


Total revenue	$	33,621		$	38,552

~~Table~~The Company’s revenue arises from two sources: (a) the sale of ~~Contents~~licenses to use our software products, and (b) the delivery of customer support, outsourcing, hosting, implementation, consulting, training and education services related to our software

~~Cost of Revenue~~17

	Three Months Ended						%
	12/31/2004			12/31/2003			Change
	(Unaudited)
	(In thousands)
Cost of software license fees	$	598		$	63			849.2	%
Percentage of software license revenue		8.5	%		2.1	%
Cost of support, outsourcing and hosting		3,882			4,868			(20.3	%)
Percentage of support, outsourcing and hosting revenue		27.4	%		31.9	%
Cost of consulting, training and other		9,465			11,081			(14.6	%)
Percentage of consulting, training and other revenue		75.9	%		68.9	%
Total cost of revenue	$	13,945		$	16,012

~~Cost~~products. ofCustomer ~~revenue~~support, outsourcing ~~consists~~and ofhosting ~~(i) amortization~~services ofare ~~the~~typically ~~costs~~sold ~~associated~~under ~~with~~agreements ~~internally~~lasting ~~developed software,~~one ~~(ii) amounts~~or ~~paid~~more toyears, ~~third parties for inclusion of their products in~~ the ~~Company’s~~ ~~software,~~revenue ~~(iii) personnel,~~from ~~data~~which ~~maintenance~~is ~~and related costs for customer support~~recognized, ~~hosting~~in ~~and outsourcing~~most ~~services~~cases, ~~and~~ratably ~~(iv) personnel~~over ~~and~~the ~~related~~periods ~~costs~~covered ~~for~~by ~~consulting and training services~~the agreements.

~~Cost~~Software oflicense ~~software~~fees: Software license fees: ~~The~~decreased ~~increase~~30% to $6.6 million in ~~cost~~the three months ended June 30, 2005. Greater than $5.0 million of software license ~~fees~~fee inrevenue for the three ~~months~~month period ended ~~December~~June 3130, 2004 is attributable to ~~amortization~~the recognition of ~~$0.3 million~~license fees under a contract executed in ~~capitalized~~March 2003 ~~software~~with Tokyo Electric Power Company (“TEPCO”). The TEPCO license fee, ~~development~~originally ~~costs~~classified ~~related~~as todeferred arevenue beginning with the quarter ended March 31, 2003, was recognized as revenue after delivery of and acceptance by TEPCO of the double-byte character-enabled version of ~~our~~ Asset Suite, ~~made~~ which became generally available for sale in April 2004. The ~~There~~first ~~was~~quarter noof ~~corresponding~~fiscal ~~amortization~~2006 indid not include the ~~three~~recognition of a significant amount of license ~~months~~fees ~~ended~~previously ~~December 31,~~classified ~~2003~~as deferred revenue. ~~Higher~~Sales ~~costs~~of ~~for~~Asset ~~third~~Suite ~~party~~into ~~software~~our ~~included~~core ~~with~~markets, which have proved healthy, comprise the ~~Company’s~~significant portion of our software license fees. Sales of ~~products~~Service ~~accounted~~Suite ~~for~~continue to grow from an expanding pipeline of opportunities following acquisition of the ~~remainder~~product in January 2004.

~~Cost~~Support, ofoutsourcing ~~services~~and ~~revenue~~hosting: ~~— customer support~~Support, outsourcing and hosting: ~~The~~revenue ~~decrease~~decreased in3.4% ~~cost~~to of$14.3 ~~customer~~million ~~support~~in the three months ended June 30, 2005. In October 2004, the Company did not renew a non-strategic outsourcing ~~and~~contract ~~hosting~~with ~~services~~a ismunicipality ~~attributable~~which toprovided ~~two~~recurring ~~factors:~~revenues (of approximately $1).0 ~~the efficiencies~~million ~~gained~~per ~~through~~quarter. ~~consolidation~~The absence of ~~the~~this ~~Company’s~~contract ~~North~~is ~~American~~the ~~customer~~principal ~~support~~reason for ~~operations~~the decline in ~~Columbia~~support, SCoutsourcing asand ~~part~~hosting ofrevenue during the ~~Company’s~~quarter ~~business~~ended ~~restructuring~~March 31, ~~plan~~2005. Renewals ~~implemented~~of ~~during the~~customer ~~first~~support ~~quarter~~revenues offor the current fiscal ~~2005;~~year remain near 90%, reflecting limited customer losses and ~~(2) the~~some ~~elimination~~adjustments ofto ~~personnel~~accommodate ~~associated~~various ~~with~~customer ~~the~~considerations. ~~non-strategic~~Overall ~~outsourcing~~maintenance ~~contract~~revenues ~~that~~continue ~~was~~to ~~not~~grow ~~renewed~~with ~~during~~sales ~~the~~of ~~quarter,~~additional ascustomer ~~noted~~support ~~above~~agreements along with new sales of software.

~~Cost of services revenue — consulting~~Consulting, training and other: ~~Cost of consulting~~Consulting, training and other ~~services~~ revenue decreased 11.1% to $12.7 million in the three months ended ~~December~~June 3130, ~~2004~~2005. ~~due~~The tosame ~~staffing~~quarter ~~reductions~~in ~~called~~the prior year reflected more engagements for such services and a significant engagement to implement Customer Suite in a major utility, which typically requires more services from the Company’s. ~~strategic~~In ~~resource~~fiscal ~~allocation~~2005, ~~plans.~~the AsCompany initiated a ~~percentage~~strategic ofprogram ~~revenue,~~to ~~cost~~better ofand more frequently collaborate with third party systems integrators and certified business partners in its delivery of consulting, training and other services ~~revenue~~in ~~increased~~order ~~due~~ to ~~lower~~provide ~~utilization~~greater ofbusiness ~~personnel~~scalability ~~on staff.~~and ~~The~~the ~~Company’s~~potential ~~ongoing~~introduction ~~strategic~~into ~~resource~~more opportunities ~~plans~~for ~~call~~sales ~~for~~of ~~more~~its ~~efficient~~software ~~use~~products. ofOver ~~personnel~~time, this strategy may yield less ~~both~~consulting, ~~internal~~training and ~~external~~other services as a percentage of overall revenues for the Company.

19Cost of Revenue


	Three Months Ended						%
	6/30/2005			6/30/2004			Change
				(As restated)
	(Unaudited)
	(In thousands)
Cost of software license fees	$	680		$	2,069			(67.1	%)
Percentage of software license revenue		10.3	%		21.9	%

Cost of support, outsourcing and hosting		3,452			4,994			(30.9	%)
Percentage of support, outsourcing and hosting revenue		24.2	%		33.8	%

Cost of consulting, training and other		9,291			10,568			(12.1	%)
Percentage of consulting, training and other revenue		73.0	%		73.8	%


Total cost of revenue	$	13,423		$	17,631

~~Operating~~Cost ~~Expenses~~of revenue consists of (i) amortization of the costs associated with internally developed software, (ii) amounts paid to third parties for inclusion of their products in the Company’s software, (iii) personnel, data maintenance and related costs for customer support, hosting and outsourcing services, and (iv) personnel and related costs for consulting and training services.

	Three Months Ended						%
	12/31/2004			12/31/2003			Change
	(Unaudited)
	(In thousands)
Research and development	$	7,191		$	7,944			(9.5	%)
Percentage of total revenue		21.4	%		23.1	%
Sales and marketing		7,496			8,468			(11.5	%)
Percentage of total revenue		22.3	%		24.6	%
General and administrative		3,724			5,004			(25.6	%)
Percentage of total revenue		11.1	%		14.6	%
Restructuring expense		(991	)		11			>1000	%
Percentage of total revenue		(2.9	%)		0.0	%
Total operating expense	$	17,420		$	21,427

Cost of software license fees: The decrease in cost of software license fees in the three months ended June 30, 2005 is attributable to less amortization of capitalized software development costs related to a double-byte character-enabled version of

~~Research and development: Research and development expenses include personnel and related costs,~~18 primarily internal and offshore, third party consultant fees and computer processing costs, all directly attributable to the development of new software products and enhancements to existing products. The reduction in research and development expenses for the three months ended December 31, 2004 from the same period of the prior year is attributable to the combined effects of two principal actions: (1) the elimination of personnel dedicated to less strategic product lines; and (2) better utilization of offshore research and development resources in India. Total research and development expenditures have been reduced by approximately $2.4 million from the same period of the prior year, when considering the $0.7 million decline in expenses and the $1.7 million of software development costs capitalized in the three months ended December 31, 2003 for the development of the double-byte character-enabled version of our Asset Suite.

~~General~~our ~~and~~Asset ~~administrative:~~Suite. ~~General~~Amortization ~~and~~expense ~~administrative~~was $0.3 million ~~expenses~~for ~~include~~the ~~personnel~~three ~~and~~months ~~other~~ended ~~costs of the Company’s finance~~June 30, ~~legal~~2005, ~~human~~as ~~resources~~compared ~~and~~to ~~administrative operations. The~~ $1.37 million ~~reduction~~ ~~in general and administrative expenses~~ for the three months ended ~~December~~June 3130, 2004. ~~from the~~More ~~same~~amortization ~~period~~expense ofwas ~~the~~recorded ~~prior~~in ~~year~~the isfirst ~~attributable~~quarter ~~to consolidation~~ of ~~certain previously~~last ~~decentralized~~year ~~accounting~~due ~~and~~to ~~administrative~~the ~~functions~~substantially ~~into~~greater ~~the~~amount ~~Company’s~~of ~~headquarters~~software inlicense ~~Atlanta, GA~~fees ~~and~~recognized ~~continued~~from ~~cost~~the double-byte ~~containment~~character-enabled ~~programs~~product.

~~Restructuring~~Cost ~~expenses~~of services revenue — customer support, outsourcing and hosting: The ~~Company~~decrease ~~recorded~~in acost ~~$1.0 million~~of customer ~~benefit~~support, outsourcing and hosting services in the three months ended ~~December~~ June 3130, ~~2004~~2005 is attributable to ~~reduce~~two afactors: ~~lease~~(1) the ~~reserve~~efficiencies ~~based~~gained onthrough anconsolidation ~~agreement~~of ~~entered~~the ~~into in October 2004 to~~Company’s ~~sublease~~North ~~two~~American ~~previously~~customer ~~vacated~~support ~~floors~~operations in ~~San Francisco~~Columbia, ~~CA.~~South ~~The~~Carolina ~~Company~~as ~~could~~part ~~incur~~of ~~additional~~the Company’s ~~increases~~business orrestructuring ~~decreases~~plan toimplemented ~~its~~during ~~existing accruals in~~ the ~~event~~first ~~that~~quarter ~~the~~of ~~underlying~~fiscal ~~assumptions~~2005; ~~used to~~and ~~develop~~ (2) the elimination ~~Company’s~~of ~~estimates~~personnel ofassociated ~~excess~~with ~~lease~~the ~~costs~~non-strategic ~~change,~~outsourcing ~~such~~contract asthat ~~the~~was ~~timing~~not renewed ~~and~~during the ~~amount of~~quarter, ~~any~~as ~~sublease~~noted ~~income~~above.

20Cost of services revenue — consulting, training and other: Cost of consulting, training and other services decreased in the three months ended June 30, 2005 due to staffing reductions within our professional services organization to more closely align our resources with our business plans and forecasts. The Company’s ongoing strategic resource plans call for more efficient use of personnel, both internal and external, in the delivery of consulting, training and other services.

~~Table~~Operating ~~of Contents~~Expenses

Interest Expense, Other Income (Expense) and Provision (benefit) for Income Taxes


	Three Months Ended						%
	6/30/2005			6/30/2004			Change
				(As restated)
	(Unaudited)
	(In thousands)
Research and development	$	7,836		$	8,703			(10.0	%)
Percentage of total revenue		23.3	%		22.6	%

Sales and marketing		6,942			8,018			(13.4	%)
Percentage of total revenue		20.6	%		20.8	%

General and administrative		3,804			3,587			6.0	%
Percentage of total revenue		11.3	%		9.3	%

Restructuring expense		43			9,601			(99.6	%)
Percentage of total revenue		0.1	%		24.9	%


Total operating expense	$	18,625		$	29,909

	Three Months Ended						%
	12/31/2004			12/31/2003			Change
	(Unaudited)
	(In thousands)
Interest expense, net	$	(138	)	$	(133	)		3.8	%
Percentage of total revenue		(0.4	%)		(0.4	%)
Other income, net		198			46			330.4	%
Percentage of total revenue		0.6	%		0.1	%
Provision (benefit) for income taxes		(140	)		33			(524.2	%)
Percentage of total revenue		(0.4	%)		0.1	%

Research and development: Research and development expenses include personnel and related costs, primarily internal and offshore, third party consultant fees and computer processing costs, all directly attributable to the development of new software products and enhancements to existing products. The reduction in research and development expenses for the three months ended June 30, 2005 from the same period of the prior year is attributable to an overall reduction in research and development personnel and the consolidation of our legacy asset management products into Indus Asset Suite. We continue to utilize research and development resources in India to supplement our research and development efforts.

~~Interest~~Sales ~~expense,~~and ~~net~~marketing: ~~Interest~~Sales ~~expense~~and marketing expenses include personnel costs, ~~net~~sales ~~arises~~commissions, ~~from~~and the ~~interest~~costs ~~expense~~of onadvertising, apublic ~~mortgage~~relations, ~~note~~and participation in industry conferences and trade ~~payable~~shows. The reduction in sales and ~~interest~~marketing ~~income~~expenses ~~generated~~for the three months ended June 30, 2005 from the same period in the prior year is attributable to lower variable expenses on lower software revenue, the elimination of certain sales and marketing positions as part of the Company’s restructuring ~~invested~~plan ~~cash~~implemented ~~balances~~in August 2004 and the Company’s continued efforts toward cost containment and better allocation of resources.

~~Other~~General ~~income,~~and ~~net~~administrative: ~~Other~~General ~~income,~~and ~~net~~administrative isexpenses ~~primarily~~include ~~attributable~~personnel toand ~~foreign~~other ~~exchange gains or losses.~~costs ~~Foreign~~of ~~exchange~~the ~~gains~~Company’s ~~were~~finance, ~~$182~~legal,~~000~~ inhuman ~~the~~resources ~~three~~and ~~months~~administrative ~~ended~~operations. ~~December~~The $0.2 ~~31,~~million increase ~~2004~~in asgeneral ~~compared~~and ~~to foreign~~administrative ~~exchange~~expenses ~~gains~~for ofthe ~~$14~~three months ended June 30,~~000~~ ~~for~~2005 ~~the~~from the same period of ~~2003.~~the ~~This~~prior ~~variance~~year ~~reflects~~is ~~changes~~principally ~~in relative~~attributable ~~values~~to ofincreased ~~currencies~~costs inassociated ~~which~~with the Company’s ~~non~~Sarbanes-~~U.S. subsidiaries do business and~~Oxley ~~revaluation~~compliance ofplans ~~certain balances between the parent company~~ and ~~its~~other ~~non-U.S.~~governance ~~subsidiaries~~activities.

~~Provision (benefit) for income taxes: Income taxes include federal, state and foreign income taxes. The~~19 benefit for income taxes for the three months ended December 31, 2004 is attributable to the withholding of income taxes on revenues generated in foreign countries offset by a $249,000 tax benefit recognized upon resolution of an international income tax issue. As of December 31, 2004, the Company had significant net operating losses to carry forward to offset taxable income that may arise in the future, subject to certain limitations.

~~Table~~Restructuring expenses: The Company recorded $43,000 in restructuring costs in the three months ended June 30, 2005, which reflects quarterly accretion on the longer-term obligations incurred as part of ~~Contents~~prior business restructuring activities. The Company recorded a $9.6 million restructuring charge in the three months ended June 30, 2004. The restructuring charge includes two principal components, all incurred in conjunction with the Company’s continued efforts to more closely align its resources with its strategic plans: (1) $8.3 million associated with the abandonment of redundant office space and revisions to the Company’s estimates of the costs of previously abandoned office space in San Francisco, California and the Company’s headquarters in Atlanta, Georgia and (2) $1.3 million of severance costs associated with the elimination of approximately 70 positions worldwide, necessitated by more extensive use of offshore development resources in India and consolidation of certain other business functions. The Company could incur additional increases or decreases to its existing accruals in the event that the underlying assumptions used to develop the Company’s estimates of excess lease costs change, such as the timing and the amount of any sublease income.

~~Nine~~Interest ~~Months Ended December 31~~Expense, ~~2004~~Other ~~Compared~~Income toand ~~Nine~~Provision ~~Months~~for ~~Ended~~Income ~~December 31, 2003~~Taxes

Revenue


	Three Months Ended						%
	6/30/2005			6/30/2004			Change
				(As restated)
	(Unaudited)
	(In thousands)
Interest expense, net	$	(20	)	$	(110	)		(81.8	%)
Percentage of total revenue		(0.1	%)		(0.3	%)

Other income, net		76			193			(60.6	%)
Percentage of total revenue		0.2	%		0.5	%

Provision for income taxes		16			103			(84.5	%)
Percentage of total revenue		0.0	%		0.3	%

	Nine Months Ended						%
	12/31/2004			12/31/2003			Change
	(Unaudited)
	(In thousands)
Software license fees	$	23,016		$	17,071			34.8	%
Percentage of total revenue		22.0	%		16.0	%
Support, outsourcing and hosting		44,267			44,342			(0.2	%)
Percentage of total revenue		42.2	%		41.6	%
Consulting, training and other		37,506			45,175			(17.0	%)
Percentage of total revenue		35.8	%		42.4	%
Total revenue	$	104,789		$	106,588

Interest expense, net: Interest expense, net arises from interest expense on a mortgage note payable partially offset by interest income generated from the Company’s invested cash balances, which are higher in 2005.

~~Software~~Other ~~license~~income, ~~fees~~net: ~~Software~~Other ~~license fees increased 34.8% to $23.0 million in the nine months ended December 31~~income, ~~2004.~~net ~~The increase~~ is ~~principally~~primarily attributable to ~~better~~foreign ~~sales~~exchange ~~execution~~gains ~~and~~or losses. ~~sales~~Foreign ofexchange ~~additional~~gains ~~Indus~~were ~~products~~$62,000 ~~including Service Suite, primarily into its existing customer base. Service Suite was acquired~~ in the ~~fourth~~three ~~quarter~~months ofended ~~fiscal~~June 30, ~~2004~~2005 ~~with~~as ~~the~~compared ~~acquisition~~to offoreign ~~Wishbone.~~exchange Ingains ~~the first quarter~~ of ~~fiscal 2005 Indus recognized a greater than~~ $~~5.0 million~~176,000 ~~license fee~~for ~~from Tokyo Electric Power Company (“TEPCO”) after product acceptance by TEPCO and upon delivery of~~ the ~~double-byte~~same ~~character-enabled~~period ~~version~~ of ~~our Asset Suite product in April~~ 2004. This ~~TEPCO license~~variance ~~fee~~reflects ~~had~~changes ~~been~~in ~~classified as deferred revenue beginning with~~ the ~~quarter ended March 31,~~ ~~2003.~~relative ~~For~~values ~~comparison purposes, approximately $5.0 million~~ of ~~software~~foreign ~~license~~currencies ~~fees~~in ~~recognized~~which in the ~~first~~Company ~~quarter~~does ofbusiness ~~fiscal~~against ~~2004,~~the ~~previously~~U.S. ~~classified as deferred revenue, was attributable to a single customer~~dollar.

~~Support,~~Provision ~~outsourcing~~(benefit) for ~~and~~income ~~hosting~~taxes: ~~Support,~~Income ~~outsourcing~~taxes ~~and~~include ~~hosting revenue~~federal, ~~from~~state aand ~~collective~~foreign income ~~view,~~taxes. ~~remained~~Income ~~approximately~~taxes ~~flat~~recorded ~~for~~in the ~~nine~~three ~~month~~months ~~periods~~ ended ~~December~~June 3130, ~~2004~~2005 and ~~2003.~~2004 represent taxes on ~~Outsourcing~~income ~~revenue~~sourced ~~decreased~~in byforeign $1jurisdictions.9 As of June ~~million~~30, in2005, the ~~first~~Company ~~nine~~has ~~months~~significant ofnet operating ~~fiscal~~losses ~~2005~~to ~~with~~carry forward to offset taxable income that may arise in the future. However, ~~absence~~the ofCompany ~~revenues~~has ~~associated~~determined, ~~with~~upon ~~two~~the ~~contracts~~advice and initial diligence of its tax experts, ~~one~~that utilization of ~~which~~the ~~was~~net ~~not~~operating ~~renewed~~losses is in ~~October 2004,~~all ~~as discussed~~likelihood ~~above,~~subject ~~and~~to ~~the~~annual ~~other~~limitations ofdue ~~which~~to ~~concluded~~a greater than 50 percent change in the ~~quarter~~Company’s ownership during a three-year period that ended ~~September 30~~in fiscal year 2005, ~~2003. Increases~~under the “change in ~~revenue~~ownership” ~~from~~provisions ~~sales~~of Section 382 of ~~customer~~the ~~support~~Internal ~~agreements~~Revenue Code onand asimilar ~~growing~~state ~~installed~~provisions. ~~based~~These ~~and organic~~annual ~~growth~~limitations ~~from~~would ~~existing~~reduce ~~hosting~~the ~~agreements~~amount of tax benefits available to offset ~~the~~taxable ~~decrease~~income in ~~outsourcing~~future ~~revenue~~years. These limitations may also result in the ~~Renewals~~expiration of ~~customer~~a ~~support~~portion ~~revenues~~of ~~for~~the available net operating losses before utilization. Determination of the ~~current~~annual ~~fiscal~~limitations ~~year~~is ~~remain~~a ~~over~~complex ~~90%,~~process ~~reflecting~~and is presently being calculated by tax experts ~~limited~~engaged ~~customer~~by the Company. The Company has considered the potential effects of any such limitations on the utilization of these net operating losses ~~and~~in ~~some~~its ~~adjustments~~financial earnings forecasts provided to the ~~accommodate~~public ~~various~~for ~~customer~~the ~~considerations~~fiscal year ending March 31, 2006.

~~Consulting, training and other: Consulting, training and other services revenue decreased 17.0% to~~20 $37.5 million in the nine months ended December 31, 2004. The same period in the prior year reflected more engagements for such services and better utilization of billable personnel. The Company has initiated a strategic program to better and more frequently utilize third party systems integrators and certified business partners in its delivery of consulting, training and other services in order to provide greater business scalability and the potential introduction into more opportunities for sales of its software products. Over time, this strategy will likely yield less consulting, training and other services as a percentage of overall revenues for Indus.

~~Table~~Liquidity ofand ~~Contents~~Capital Resources

~~Cost~~As of ~~Revenue~~June 30, 2005, the Company’s principal sources of liquidity consisted of approximately $29.4 million in cash and cash equivalents and $5.9 million in short and long-term restricted cash. The Company generated $2.4 million of cash flow from operations for the three months ended June 30, 2005 and increased cash and cash equivalents by $1.6 million as of June 30, 2005 over March 31, 2005.

	Nine Months Ended						%
	12/31/2004			12/31/2003			Change
	(Unaudited)
	(In thousands)
Cost of software license fees	$	3,248		$	441			636.5	%
Percentage of software license revenue		14.1	%		2.6	%
Cost of support, outsourcing and hosting		13,320			15,523			(14.2	%)
Percentage of support, outsourcing and hosting revenue		30.1	%		35.0	%
Cost of consulting, training and other		29,455			33,626			(12.4	%)
Percentage of consulting, training and other revenue		78.5	%		74.4	%
Total cost of revenue	$	46,023		$	49,590

During the three months ended June 30, 2005:

~~Cost~~• Cash of ~~software~~$2.4 ~~license~~million ~~fees:~~was provided by operating activities. Operating income of $1.6 million plus favorable collections of outstanding accounts receivable is the principal source of cash during the three months ending June 30, 2005. The ~~increase~~Company generated operating income in ~~cost~~the first quarter of ~~software~~fiscal ~~license~~2006 ~~fees~~and the third and fourth quarters of fiscal 2005 largely through better execution on its business plans and realization of the financial benefits from the Company’s restructuring activities in the ~~nine~~first ~~months ended~~half ~~December~~ of fiscal 2005. Days sales outstanding (DSO) declined from 70 days at March 31, ~~2004~~2005 isto ~~due~~49 days at June 30, 2005. The cash from favorable collections was reduced by seasonally higher payments associated with sales incentive plans, management bonuses, etc. tied to ~~amortization~~prior offiscal year performance, and $21.4 3 million of payments on obligations from prior restructuring activities. Quarterly renewals of annual customer support agreements are lowest in ~~capitalized~~our ~~software~~June ~~development costs~~and March quarters as compared to ~~create~~customer asupport ~~double-byte~~revenue ~~character-enabled~~recognized, ~~Japanese~~thereby ~~version~~having the effect of ~~our~~lowering ~~Asset~~the ~~Suite,~~DSO ~~made~~calculation ~~generally available~~and ~~for~~reducing ~~sale~~the inCompany’s ~~April 2004~~deferred revenue balance as of quarter end. ~~There~~We ~~was~~would noanticipate ~~such~~DSO ~~amortization~~to increase in ~~the~~our ~~nine~~September ~~months~~and ~~ended~~ December 31 quarters as quarterly renewals of annual customer support agreements are higher as compared to customer support revenue recognized, ~~2003.~~thereby ~~Higher~~having ~~costs~~the ~~for~~effect ~~third~~of ~~party~~increasing ~~software~~the ~~included~~DSO calculation and increasing the Company’s deferred revenue balance as of quarter end. The timing of cash collections associated with renewals of annual customer support agreements is significant to the Company’s ~~products~~quarterly ~~accounted~~cash flows. • Cash of $0.4 million was used in investing activities for capital expenditures of $0.5 million, offset by the ~~remainder~~release of $0. 1 million from restricted cash. Capital expenditures consist principally of purchases of computers, equipment and technology, which have been reduced to a level to ensure consistency in operations and customer success. • Cash related to financing activities includes debt payments of $0.3 million and proceeds from stock option exercises of $0.3 million.

~~Cost~~Commitments ofUnder ~~services~~Prior ~~revenue~~Restructuring ~~— customer support, outsourcing and hosting~~Activities: ~~The decrease in cost of~~ customer support, outsourcing and hosting services is attributable to two factors: (1) the efficiencies gained through consolidation of the Company’s North American customer support operations in Columbia, SC as part of the Company’s business restructuring plan implemented during the first quarter of fiscal 2005; and (2) the elimination of personnel associated with the non-strategic outsourcing contract that was not renewed in October 2004, as discussed above.

~~Cost~~During ofthe ~~services~~three ~~revenue~~months —ended ~~consulting~~June 30, ~~training~~2005, ~~and~~the ~~other:~~Company ~~Cost~~disbursed of$1.3 million ~~consulting,~~in ~~training~~payments ~~and other~~on ~~services~~obligations ~~decreased~~from inprior ~~the~~restructuring ~~nine~~activities. ~~months~~Future ~~ended~~payments ~~December 31,~~for ~~2004,~~these asprior ~~compared~~restructuring activities are projected to ~~the~~be ~~same~~$3.6 million ~~period~~for of the ~~prior~~remainder ~~year~~of fiscal 2006, ~~due~~$5.7 million toover ~~staffing~~the fiscal ~~reductions~~years ~~called~~2007-2008, ~~for~~and in$2.3 million over the ~~Company’s~~fiscal ~~strategic~~years ~~resource allocation~~2009-2012, ~~plans.~~for Asan aaggregate ~~percentage~~total of $11.6 million. ~~revenue,~~Should ~~cost~~rental ofconditions ~~consulting,~~in ~~training~~the ~~and~~Company’s ~~other~~Atlanta ~~services revenue~~location ~~increased~~deteriorate ~~due~~ to ~~lower~~the ~~utilization~~point where ofthe ~~personnel~~remaining onredundant ~~staff.~~office ~~The~~space is not leased, the Company’s ~~ongoing~~will ~~strategic~~be liable for an ~~resource~~aggregate ~~plans~~additional ~~call~~$6.6 million ~~for~~in ~~more~~payments ~~efficient~~beginning ~~use~~in ofthe ~~existing~~second ~~personnel,~~half ~~both~~of ~~internal~~fiscal year 2006 and continuing ~~external~~through fiscal 2012.

23Restricted Cash:

~~Operating~~The ~~Expenses~~Company maintains performance bonds, directly and indirectly, in accordance with certain customer contracts, some of which are collateralized by letters of credit supported by restricted cash, as noted above. Although the Company believes, based on its extensive historical experience of successful software implementations, that the likelihood of payment under these

	Nine Months Ended						%
	12/31/2004			12/31/2003			Change
	(Unaudited)
	(In thousands)
Research and development	$	23,287		$	27,258			(14.6	%)
Percentage of total revenue		22.2	%		25.6	%
Sales and marketing		22,469			25,662			(12.4	%)
Percentage of total revenue		21.4	%		24.1	%
General and administrative		11,083			15,529			(28.6	%)
Percentage of total revenue		10.6	%		14.6	%
Restructuring expense		11,404			34			>1000	%
Percentage of total revenue		10.9	%		0.0	%
Total operating expense	$	68,243		$	68,483

~~Sales~~bonds ~~and~~is ~~marketing: Sales and marketing expenses include personnel costs~~remote, ~~sales commissions, and~~ ~~the~~a ~~costs~~failed ofimplementation ~~advertising,~~or ~~public~~a ~~relations,~~significant ~~and~~software ~~participation~~malfunction inleading ~~industry~~to ~~conferences~~payment ~~and~~under ~~trade shows.~~one ~~The~~or ~~reduction in sales and marketing expenses for the nine months ended December 31, 2004~~more ~~from the same period~~ of ~~the~~these ~~prior~~bonds ~~year~~could isadversely ~~attributable~~affect ~~to elimination of certain sales and marketing positions as part of~~ the Company’s ~~restructuring plans and its continued efforts toward cost containment and better allocations of resources~~liquidity.

~~General~~Acquisition ~~and administrative~~financing: ~~General and administrative expenses include personnel and other costs~~ of the Company’s finance, legal, human resources and administrative operations. The $4.4 million reduction in general and administrative expenses for the nine months ended December 31, 2004 from the same period of the prior year is attributable to consolidation of previously decentralized accounting and administrative functions into the Company’s headquarters in Atlanta, GA and continued cost containment programs.

~~Restructuring~~The ~~expenses:~~purchase Inprice of the ~~nine~~March 2003 ~~months~~IUS ~~ended~~acquisition ~~December~~approximated $35.8 31million, ~~2004,~~which the Company ~~recorded net~~ ~~restructuring~~financed ~~charges~~with ofapproximately $1124.48 million ~~for revisions to accounting estimates~~ from ~~prior~~a ~~business restructurings~~private ~~and~~placement ~~for~~of ~~additional restructuring charges related to office and business consolidations and employee severance. Revisions to~~ the Company’s ~~expected~~common ~~sublease income for two~~stock ~~unoccupied~~and ~~floors~~convertible innotes ~~San~~and ~~Francisco~~a ~~comprised~~ $010.40 million ofpromissory ~~this~~note. ~~expense,~~The ~~inclusive of the~~ $110.0 million ~~benefit~~promissory ~~recorded~~note was paid in ~~the~~full ~~quarter~~on ~~ended December~~September 315, ~~2004~~2003 towith ~~reduce~~the aproceeds ~~lease~~from ~~reserve based on~~ an ~~agreement entered into in October 2004 to sublease a portion of the respective office space. Further consolidation of office space in San Francisco and Atlanta resulted in~~ $711.85 million innote ~~new restructuring~~secured ~~charges~~by ~~for~~certain real ~~the~~property ~~nine~~located ~~months~~in ~~ended December 31~~Columbia, ~~2004~~SC. This ~~consolidation~~note ~~included vacating~~bears ~~three~~interest ~~floors~~at inan ~~Atlanta~~annual ~~and~~rate ~~one~~of ~~additional floor in San Francisco~~6.5% ~~The~~and ~~remaining $3.2~~is ~~million~~payable in ~~restructuring~~monthly ~~expense~~installments isof ~~associated~~principal ~~with~~and ~~the~~interest ~~elimination~~(determined ofon ~~approximately~~a ~~140~~15-year ~~positions,~~amortization) ~~including~~through ~~the~~October 1, ~~transfer~~2008, ofat ~~certain~~which ~~functions~~time to the ~~company-owned~~remaining ~~office~~principal ~~buildings~~balance ~~in Columbia, SC and the outsourcing~~ of ~~some development functions to India. At December 31, 2004,~~ $67.87 million ~~remains~~ ~~in the restructuring accrual for this initiative and~~ is ~~related~~due ~~to employee severance~~ and ~~excess lease costs associated with subleasing the Company’s vacated office space in Atlanta and San Francisco~~payable. The Company ~~could~~may ~~incur~~extend ~~future~~the ~~increases~~maturity ordate ~~decreases~~at ~~to its existing accruals in the event~~ that ~~the underlying~~time ~~assumptions~~for ~~used~~one toadditional ~~develop~~five ~~the~~year ~~Company’s estimates of excess lease costs, such as the~~term ~~timing~~at ~~and~~a ~~the~~variable ~~amount~~rate of ~~any sublease income change~~interest.

24On January 21, 2004, the Company acquired Wishbone for $7.2 million (inclusive of the $0.5 million purchase price adjustment for employee relocations recorded in the second quarter of fiscal 2005) plus the assumption of $1.0 million in Wishbone debt, which was repaid concurrent with the acquisition. The acquisition was financed from the Company’s available cash balance. Shortly thereafter, on February 9, 2004, the Company completed a private placement offering of 5.0 million shares of the Company’s common stock, at a price per share of $3.10 per share. Net proceeds from this offering were used to replenish cash used in the acquisition of Wishbone and for general working capital.

~~Table~~Cash ~~of Contents~~Analysis:

~~Interest~~The ~~Expense~~Company believes that its existing cash, ~~Other~~cash ~~Income~~equivalents ~~(Expense)~~and marketable securities, together with anticipated cash flows from operations, will be sufficient to meet its cash requirements for at least the next 12 months. However, the Company is prepared to adjust its usage of cash and ~~Provision~~cash equivalents, as called for ~~Income~~by ~~Taxes~~its internal business plans, to align with actual business conditions.

	Nine Months Ended						%
	12/31/2004			12/31/2003			Change
	(Unaudited)
	(In thousands)
Interest expense, net	$	(380	)	$	(499	)		(23.8	%)
Percentage of total revenue		(0.4	%)		(0.5	%)
Other income (expense), net		327			(79	)		513.9	%
Percentage of total revenue		0.3	%		(0.1	%)
Provision for income taxes		80			626			(87.2	%)
Percentage of total revenue		0.1	%		0.6	%

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, continued operating losses, presently unexpected uses of cash and the factors discussed under the section below, “Factors Affecting Future Performance”.

~~Interest~~Factors ~~expense,~~Affecting ~~net:~~Future ~~Interest expense, net arises from debt financing and debt incurred with the~~Performance acquisition of IUS in March 2003 and interest income generated from the Company’s invested cash balances. Interest expense, net for the nine months ended December 31, 2004 declined due to less debt outstanding, as the convertible notes to finance the IUS acquisition were converted to equity in the second quarter of fiscal 2004. Interest income has declined due to less cash available for investment.

~~Other~~Our ~~income~~operating ~~(expense),~~results ~~net:~~have ~~Other~~fluctuated ~~income (expense), net is primarily attributable to foreign exchange gains or losses. Foreign exchange gains were $293,000~~ in the ~~nine~~past ~~months~~and ~~ended~~may ~~December 31,~~continue ~~2004 as compared~~ to ~~foreign~~fluctuate ~~exchange~~significantly ~~losses of $129,000 for the same period of 2003. This~~from ~~variance~~quarter-to-quarter ~~reflects~~which ~~changes~~could innegatively ~~the~~affect ~~relative~~our ~~values~~results of ~~currencies~~operations ~~in which the Company’s non-U.S. subsidiaries do business~~ and ~~revaluation~~our ofstock ~~certain balances between the parent company and its non-U~~price.~~S. subsidiaries.~~

~~Provision~~Our ~~for~~operating ~~income~~results ~~taxes:~~have ~~Income~~fluctuated ~~taxes~~in ~~include~~the ~~federal~~past, ~~state~~ and ~~foreign~~our ~~income~~results ~~taxes.~~may ~~The provisions~~fluctuate ~~for~~significantly ~~income~~in the ~~taxes~~future. ~~for~~Our ~~the~~operating ~~nine~~results ~~months~~may ~~ended~~fluctuate ~~December 31,~~from ~~2004~~quarter-to-quarter and ~~2003~~may ~~are~~be ~~attributable~~negatively toaffected ~~the~~as ~~withholding of income taxes on revenues generated in foreign countries offset by~~ a ~~$249,000 tax~~result ~~benefit recognized upon resolution~~ of ana ~~international~~number ~~income tax issue As~~ of ~~December 31~~factors, ~~2004,~~ ~~the Company had significant net operating losses to carry forward to offset taxable income~~including: ~~that may arise in the future, subject to certain limitations.~~

~~Liquidity~~• the variable size and ~~Capital~~timing ~~Resources~~ of individual license transactions and services engagements; • delays in maintenance renewals or non-renewals or cancellation of maintenance services; • changes in the proportion of revenues attributable to license fees, hosting fees and services; • successful completion of customer funded development; • changes in the level of operating expenses; • our success in, and costs associated with, developing, introducing and marketing new products; • delays associated with product development, including the development and introduction of new products and new releases of existing products; • the development and introduction of new operating systems and/or technological changes in computer systems that require additional development efforts; • software defects and other product quality problems and the costs associated with solving those problems; and

~~As of December 31, 2004, the Company’s principal sources of liquidity consisted of approximately $~~22~~.1 million in cash and cash equivalents and $6.4 million in short and long-term restricted cash.~~ The Company generated $3.8 million of cash flow from operations for the three months ended December 31, 2004 and increased cash and cash equivalents by $3.7 million as of December 31, 2004 over September 30, 2004.

• ~~Cash~~personnel of $5.2 million was used in operating activities. The outflows of cash can be stratified into two categories: (1) cash payments associated with the Company’s business restructurings and other items and (2) cash activity associated with day-to-day business activities. Relative to the former categorychanges, inincluding ~~the~~changes ~~nine months ended December 31, 2004 the Company made cash payments of $6.0 million~~ in ~~settlement~~our ~~of current and prior business restructuring obligations and $0~~management.5 million in settlement of an outstanding claim by the Department of Energy. Relative to the latter category, in the nine months ended December 31, 2004 the Company generated $1.3 million of cash from day-to-day business activities. The Company’s days sales outstanding (DSO) was 93 days at December 31, 2004, up 11 days from September 30, 2004 and 24 days from March 31, 2004. The increase over September 30, 2004 is attributable to approximately $2.0 million in aged accounts receivable from two customers subsequently collected in January 2005 and seasonal renewals of customer support agreements. DSO of 69 days at March 31, 2004 reflected favorable collections experience. DSO of 93 days at December 31, 2004 compares reasonably to DSO of 90 days at December 31, 2003, particularly considering subsequent collections in January 2005.

25Changes in operating expenses or variations in the timing of recognition of specific revenues resulting from any of these factors 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 our business or results of operations. Accordingly, we believe that period-to-period comparisons of results of operations are not necessarily meaningful and should not be relied upon as an indication of future performance.

~~Table~~If ofwe ~~Contents~~are unable to maintain consistent profitability and positive operating cash flow in future quarters, our business and long-term prospects may be harmed.

	•	Cash of $3.5 million was used in investing activities, including the restriction of $0.8 million in cash to support additional standby letters of credit, $2.3 million in capital expenditures and $0.5 million in purchase price adjustments associated with the acquisition of Wishbone. Capital expenditures consist of amounts to build-out consolidated office space in the Company’s headquarters in Atlanta, GA and purchases of computers and equipment to ensure consistency in operations and customer success.
	•	Cash of $0.2 million was used in financing activities. Debt payments of $0.8 million exceeded proceeds from stock option exercises of $0.6 million.

We generated net losses of $12.0 million and $6.1 million in the fiscal years ended March 31, 2004 and 2005, respectively, and used cash of $3.4 million and provided cash of $1.3 million in operating activities during the same periods. We were profitable and cash flow positive in the third and fourth quarters of fiscal 2005 and the first quarter of fiscal 2006. However, if we are unable to maintain consistent profitability and positive cash flow from operations in future quarters it will negatively affect our capacity to implement our business strategy and may require us to take actions in the short-term that will impair the long-term prospects of our business. If we are unable to maintain consistent profitability and positive cash flow from operations in future quarters it may also result in liquidity problems and impair our ability to finance our continuing business operations on terms that are acceptable to us. Further, we may need to enter into financing transactions that are dilutive to our stockholders’ equity ownership in our company.

~~Restricted~~If ~~Cash:~~the market for service delivery management solutions and our Service Suite solution does not grow as anticipated or if our service delivery management solutions are not accepted in the market, we may not be able to grow our business.

AtGiven ~~December 31, 2004,~~ the ~~Company~~saturation ~~maintained cash deposits totaling approximately $6.4 million in support~~ of ~~eight~~the ~~standby~~market ~~letters of credit, collateral~~ for aasset ~~mortgage~~management and acustomer ~~bank~~management ~~guarantee.~~software ~~The~~generally, ~~letters~~we ofhave ~~credit~~broadened ~~require~~our ~~the~~product ~~Company~~offerings to ~~maintain~~include ~~corresponding~~our ~~compensating~~Service ~~balances~~Suite ~~equal~~in order to ~~the amounts~~compete ofin the service ~~letters~~delivery ofmanagement ~~credit~~market. The ~~compensating~~market ~~balances~~for ~~are~~service ~~classified~~delivery asmanagement ~~restricted~~solutions ~~cash at~~in ~~December 31~~general, ~~2004~~ and ~~March 31,~~our ~~2004.~~Service ASuite ~~total~~solution ~~of $4.6 million~~ in ~~restricted~~particular, ~~cash~~are ~~should~~emerging ~~be released~~markets ~~in increments of $2.3 million each in both July 2006~~ and ~~May 2008,~~may ~~relative~~not toevolve ~~the~~as ~~expiration~~we ofanticipate ~~letters~~they ofwill. ~~credit~~If ~~supporting a performance bond and the Company~~customers’s ~~leased~~demands ~~facilities~~ in ~~San~~these ~~Francisco,~~emerging ~~CA,~~markets ~~respectively.~~do Ofnot ~~the~~grow ~~remaining~~as anticipated ~~amount,~~or ~~$0.3 million~~if ~~should~~our beservice ~~released ratably~~delivery ~~through~~management ~~June 2005.~~solution Aand ~~$0.6 million~~Service ~~certificate~~Suite ofsolutions ~~deposit,~~are ~~used~~not accepted asin ~~collateral for~~ the ~~Company’s~~ ~~mortgage~~market ~~note~~place, ~~payable~~then onwe ~~its~~may ~~Columbia,~~not SCbe ~~property,~~able ~~will~~to begrow ~~released~~our ~~in April 2008~~business.

~~The~~If ~~Company~~the ~~maintains~~market ~~performance~~does ~~bonds,~~not ~~directly~~accept ~~and~~our ~~indirectly,~~new inproducts ~~accordance~~and ~~with~~enhancements ~~certain customer~~or ~~contracts,~~upgrades ~~some~~to ofour ~~which are collateralized by letters of credit supported by restricted~~existing ~~cash,~~products ~~as noted above. Although the Company believes, based on its extensive historical experience of successful software implementations,~~ that ~~the~~we ~~likelihood~~launch offrom ~~payment~~time ~~under~~to ~~these bonds is remote~~time, a ~~failed~~our ~~implementation~~operating orresults aand ~~significant~~financial ~~software~~condition ~~malfunction~~would ~~leading to payment under one or more~~be ofmaterially ~~these bonds could~~ adversely ~~affect the Company’s liquidity~~affected.

~~Acquisition~~From ~~financing:~~time to time, we may acquire new products, launch new products, and release enhancements or upgrades to existing products. For example, in December 2004, we released a new product called the Indus Asset Suite, which incorporates the key capabilities of our legacy PassPort and InsiteEE product lines. The Indus Asset Suite includes the Indus Foundation Architecture, or IFA, our new services-oriented architecture, and a new user interface. In January 2004, we acquired our Service Suite software from Wishbone, which forms a part of our service delivery management solution. There can be no assurance that these or any other new or enhanced products will be sold successfully or that they can achieve market acceptance. Our future success with these products and other next generation products will depend on our ability to accurately determine the functionality and features required by our customers, as well as the ability to enhance our products and deliver them in a timely manner. We cannot predict the present and future size of the potential market for our next generation of products, and we may incur substantial costs to enhance and modify our products and services in order to meet the demands of this potential market.

~~The~~Demand ~~purchase~~for ~~price~~our ofAsset ~~the~~Suite ~~March 2003 IUS acquisition approximated $35.8 million, which the Company financed with approximately $24.8 million from a private placement of the Company’s common stock~~ and ~~convertible~~Customer ~~notes~~Suite ~~and~~products amay ~~$10.0 million~~grow ~~promissory~~slowly ~~note.~~or ~~The~~decrease ~~$10.0 million promissory note was paid~~ in ~~full on September 5, 2003 with the proceeds from an $11.5 million note secured by certain~~upcoming ~~real property located in Columbia~~quarters, ~~SC.~~which ~~This~~may ~~note~~impair ~~bears~~our ~~interest~~business ~~at an annual rate of 6.5%~~ and ~~is payable~~could inmaterially ~~monthly~~adversely ~~installments~~affect ofour ~~principal~~results ~~and interest (determined on a 15-year amortization)~~of ~~through~~operations ~~October 1, 2008, at which time the remaining principal balance of $7.7 million is due~~ and ~~payable.~~ ~~The~~financial ~~Company may extend the maturity date at that time for one additional five year term at a variable rate of interest~~condition.

OnOverall ~~January 21,~~demand ~~2004,~~for ~~the~~our ~~Company~~Asset ~~acquired~~Suite ~~Wishbone~~and ~~for~~Customer ~~$7.2 million~~Suite ~~(inclusive~~products ofin ~~the~~general ~~$0.5 million purchase~~may ~~price~~grow ~~adjustment~~slowly ~~for~~or decrease ~~employee~~in ~~relocations~~upcoming ~~recorded~~quarters inand ~~the~~years ~~second~~because ~~quarter~~ of ~~fiscal~~unfavorable ~~2005) plus~~general ~~the~~economic ~~assumption~~conditions, decreased ofspending ~~$1.0 million~~by companies in ~~Wishbone~~need ~~debt,~~of ~~which~~our ~~was~~products ~~repaid~~or ~~concurrent~~other ~~with~~reasons. This may reflect the ~~acquisition.~~capital ~~The~~spending ~~acquisition~~environment ~~was~~generally, ~~financed~~a ~~from~~saturation of the ~~Company’s~~market ~~available~~for ~~cash~~asset ~~balance.~~management ~~Shortly~~and ~~thereafter,~~customer onmanagement ~~February 9,~~software ~~2004~~generally, ~~the~~as ~~Company~~well ~~completed~~as aderegulation ~~private~~and ~~placement~~retrenchments ~~offering~~affecting ofthe ~~5.0 million~~way ~~shares~~companies ofpurchase ~~the~~our ~~Company’s~~software. ~~common~~To ~~stock,~~the atextent athat ~~price~~there ~~per~~is ~~share~~a ofslowdown ~~$3.10~~in ~~per~~the ~~share.~~overall ~~Net~~market ~~proceeds from~~for ~~this~~our ~~offering~~products, ~~were~~our ~~used~~business, toresults ~~replenish~~of ~~cash~~operations ~~used~~and infinancial ~~the~~condition ~~acquisition~~are oflikely ~~Wishbone~~to ~~and for general~~be ~~working~~materially ~~capital~~adversely affected.

~~Cash Analysis:~~23

If we are not able to license software to more new customers not currently using our software, our business and long-term prospects could be harmed.................................................................................................................................................................................................................................................................

26During fiscal 2005 a substantial portion of our software license sales were to existing customers. This has been part of our strategy to license our service delivery management solutions to our installed base of customers. However, in the future we believe we will need to grow the percentage our software license sales that are made to new customers because those sales typically generate more new services revenue. If we are not able to grow our software license sales to new customers, it will impair our ability to grow our business and maintain consistent profitability.

~~Table~~Our ofability ~~Contents~~to use our net operating loss carryforwards to reduce future consolidated taxable income are likely to be subject to annual limitations under U.S. tax rules, which could have a negative effect on financial results in future periods.

~~The~~As ~~foregoing~~of ~~statement~~June 30, ~~regarding~~2005, ~~the~~we ~~Company’s~~had ~~expectations~~net operating loss carryforwards of approximately $67 million available for ~~continued~~federal ~~liquidity~~income istax apurposes. Such carryforwards may be used to reduce consolidated taxable ~~forward-looking~~income, ~~statement~~if any, ~~and~~in ~~actual~~future ~~results~~years. ~~may~~These ~~differ~~net ~~materially~~operating ~~depending~~loss oncarryforwards abegin ~~variety~~to ofexpire in the ~~factors~~year 2020. We have determined, ~~including~~upon ~~variable~~the ~~operating~~advice ~~results~~and initial diligence of our tax experts, ~~continued~~that utilization of these net operating ~~losses,~~loss ~~presently~~carryforwards ~~unexpected~~is likely to be subject to annual limitations ~~uses~~under the provisions of ~~cash~~Section 382 ~~and~~of the ~~factors~~Internal ~~discussed~~Revenue ~~under~~Code due to changes in our ownership. Our tax experts have not completed the ~~section~~analysis ~~below~~required by U.S. tax rules to determine what these annual limitations are likely to be. These annual limitations, ~~“Factors~~depending ~~Affecting~~on ~~Future~~what they turn out to ~~Performance”~~be, could hinder our ability to utilize all of net operating loss carryforwards before they expire. In addition, these annual limitations could reduce the amount of these benefits that would be available to offset future taxable income in future years, which could have a negative effect on financial results in future years, largely after fiscal 2006.

~~Factors~~If ~~Affecting~~we ~~Future~~experience ~~Performance~~delays in product development or the introduction of new products or new versions of existing products, our business and sales will be negatively affected.

~~Our~~We ~~operating~~have, ~~results~~in the past, experienced delays in product development that have ~~fluctuated~~negatively affected our relationships with existing customers and have resulted in ~~the~~lost ~~past~~sales of our products and ~~may~~services to ~~continue~~existing and prospective customers and our failure to ~~fluctuate~~recover ~~significantly~~our ~~from~~product development costs. In ~~quarter-~~addition, delays in product development can, in some instances, delay the recognition of deferred software license revenue. There can be no assurance that we will not experience delays in connection with our current product development or future development activities. If we are unable to~~-quarter~~ ~~which~~develop ~~could~~and ~~negatively~~introduce ~~affect~~new products, or enhancements to existing products, in a timely manner in response to changing market conditions or customer requirements, our business, operating results ofand ~~operations~~financial condition will be materially and adversely affected. Because we have limited resources, we must effectively manage and properly allocate and prioritize our ~~stock~~product ~~price~~development efforts and our 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.

~~Our~~Delays ~~operating results have fluctuated~~ in ~~the past, and~~ our ~~results~~performance ~~may~~of ~~fluctuate~~software ~~significantly~~implementation ~~in the~~and ~~future.~~other ~~Our~~consulting ~~operating~~projects ~~results~~ may ~~fluctuate from quarter-to-quarter and may be~~ negatively ~~affected~~affect asour ~~a result of a number of factors, including:~~business.

•Following license sales to new customers, our consulting services may be engaged to assist in the implementation ~~variable~~of ~~size~~our products and ~~timing~~their ofextended ~~individual~~solutions. ~~license~~Implementation ~~transactions~~may involve a lengthy process, including customer training and ~~services~~consultation. ~~engagements;~~In •addition, ~~delays~~we inare ~~maintenance~~often ~~renewals~~engaged orby ~~non-renewals~~our existing customers for other lengthy consulting projects. A successful implementation or ~~cancellation~~other consulting ofproject ~~maintenance~~requires ~~services;~~a •close ~~changes~~working relationship between us, the customer and, if applicable, third-party consultants and systems integrators who assist in the ~~proportion~~process. ofThese factors ~~revenues~~may ~~attributable~~increase tothe ~~license~~costs ~~fees~~associated with completion of any given consulting project, ~~hosting~~increase the ~~fees~~risks ~~and~~of ~~services;~~collection •of ~~successful~~amounts ~~completion~~due during implementation or other consulting projects, and increase risks of ~~customer~~cancellation ~~funded~~or ~~development;~~delay •of ~~changes~~such projects. Delays in the ~~level~~completion of ~~operating~~a ~~expenses;~~product implementation •or ~~our~~with ~~success~~any ~~in,~~other ~~and~~consulting ~~costs~~project may require that the revenues associated with, such ~~developing~~implementation or project be recognized over a longer period than originally anticipated, ~~introducing~~or may result in disputes with customers regarding performance by us and ~~marketing~~payment ~~new~~by ~~products;~~the •customers. Such delays ~~associated~~have ~~with~~caused, ~~product~~and ~~development,~~may ~~including~~in the ~~development~~future ~~and~~cause, ~~introduction~~material offluctuations ~~new~~in ~~products~~our operating results. Similarly, customers typically may cancel implementation and ~~new~~other ~~releases~~services ofprojects ~~existing~~at any ~~products;~~time •without ~~the~~significant ~~development~~penalty, and ~~introduction~~any ofsuch ~~new~~cancellations ~~operating~~could ~~systems~~have ~~and/~~a material adverse effect on our business or ~~technological~~results ~~changes~~of inoperations. ~~computer~~Because ~~systems~~our ~~that~~expenses ~~require~~are ~~additional~~relatively ~~development~~fixed, ~~efforts;~~a small •variation ~~software~~in ~~defects~~the ~~and~~timing ~~other~~of ~~product~~recognition ~~quality~~of ~~problems~~specific ~~and~~revenues ~~the~~can ~~costs~~cause ~~associated~~significant ~~with~~variations in ~~solving~~operating ~~those~~results ~~problems;~~from quarter-to-quarter and •may ~~personnel~~in ~~changes,~~some ~~including~~further ~~changes~~quarter result in losses or have a material adverse effect on our ~~management~~business or results of operations.

~~Changes in operating expenses or variations in the timing of recognition of specific revenues~~24 resulting from any of these factors 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 our business or results of operations.

We ~~generated~~have aexperienced ~~net~~significant ~~loss~~change ~~of $9.6 million~~ in ~~the~~our ~~nine~~executive ~~months~~management ~~ended~~team ~~December 31, 2004~~ and ~~used~~our ~~cash~~board of ~~$5.2 million~~ ~~in operating activities during the same period. For the fiscal year ended March 31,~~directors ~~2004, we generated a net loss of $12.0 million~~ and ~~used cash of approximately $3.8 million in operating activities during~~ the ~~same~~current ~~period.~~executive Ifmanagement weteam ~~are unable to achieve~~ and ~~maintain consistent profitability and positive cash flow from operations in~~ the ~~near~~board ~~future~~have itonly ~~will~~recently ~~negatively affect~~begun ~~our capacity~~ to ~~implement~~work ~~our business strategy and may require us to take actions in the short-term that will impair the long-term prospects of our business~~together. ~~If we are unable to achieve~~ and maintain consistent profitability and positive cash flow from operations in the near future it may also result in liquidity problems and impair our ability to finance our continuing business operations on terms that are acceptable to us. Further, we may need to enter into financing transactions that are dilutive to our stockholders’ equity ownership in our company.

IfWe ~~the~~have ~~market~~experienced ~~for~~significant ~~service~~change ~~delivery~~in our executive management ~~solutions~~team ~~does~~and our board of directors. Thomas Williams has resigned as Chief Financial Officer effective August 12, 2005 and his successor has not ~~grow~~been named. Gregory Dukat was promoted to Chief Executive Officer and John Gregg was promoted to Executive Vice President of Field Operations in February 2004. We appointed Joseph Trino as ~~anticipated~~Executive orVice ifPresident of Corporate Strategy in January 2005. Furthermore, we have experienced significant change in our board of directors as five of our ~~service~~current ~~delivery~~eight ~~management~~board ~~solutions~~members ~~are~~have ~~not~~been ~~accepted~~on the board fourteen months or less, including Kenneth Lawrence, who just joined the Board in July 2005. The current executive management team and the board ~~market~~of directors have only recently begun to work together, weand they may be unable to integrate and work effectively as a team. Further change is anticipated at the management level and on the board as the Company intends to hire a replacement for Mr. Williams as Chief Financial Officer and Douglas Massingill, one of the three directors that has been on the board more than 14 months, has indicated that he will not stand for reelection at our annual meeting of stockholders in October 2005. There are no assurances that we will be able to ~~grow~~motivate and retain the current executive management team or that they will be able to work together effectively with the new Chief Financial Officer. There are also no assurances that there will not be further turnover on our ~~business~~board of directors. If we lose any member of our executive management team or they are unable to work together effectively with the new Chief Financial Officer, or if there is further board turnover, our business, operations and financial results could be adversely affected.

~~The~~Our ~~market~~success ~~for~~depends ~~service~~upon ~~delivery management solutions is an emerging market. If customers’ demand in this emerging market does not grow as anticipated or if~~ our ~~service~~ability ~~delivery~~to ~~management~~attract ~~solution is~~and ~~not~~retain ~~accepted~~key ~~in the market place, then we may not be able to grow our business~~personnel.

IfOur future success depends, in significant part, upon the ~~market~~continued ~~does~~service ~~not~~of ~~accept~~our key technical, sales and senior management personnel, as well as our ability to attract and retain new ~~products~~personnel. Competition for qualified sales, consulting, technical and ~~enhancements~~other personnel is intense, and there can be no assurance that we will be able to attract, assimilate or ~~upgrades~~retain additional highly qualified employees in the future. Our ability to ~~our~~attract, ~~existing~~assimilate and retain key personnel may ~~products~~be adversely impacted by the fact that we ~~launch~~reduced ~~from~~our ~~time~~work force by approximately 28% during the fiscal year ended March 31, 2005. If we are unable to ~~time~~offer competitive salaries and bonuses, our key sales, consulting, technical and senior management personnel may be unwilling to continue service for us, and it may be difficult for us to attract new personnel. If we are unable to hire and retain personnel, particularly in senior management positions, our business, operating results and financial condition ~~would~~will be materially adversely affected. The loss of any of our key sales, consulting, technical and senior management personnel, particularly if lost to competitors, could impair our ability to grow business. Further additions of new personnel and departures of existing personnel, particularly in key positions, can be disruptive and have a material adverse effect on our business, operating results and financial condition.

~~From~~Our ~~time~~failure to ~~time,~~realize ~~we acquire new products, launch new products, and release enhancements or upgrades to existing products. For example, in December 2004, we released a new product called~~ the ~~Indus~~ ~~Asset~~expected ~~Suite,~~benefits ~~which incorporates the key capabilities~~ of our ~~legacy~~recent ~~PassPort and InsiteEE product lines. In January 2004~~restructurings, weincluding ~~acquired our~~anticipated ~~Service~~cost ~~Suite software from Wishbone~~savings, ~~which~~could ~~forms~~result ain ~~part~~unfavorable offinancial ~~our service delivery management offering~~results. ~~There can be no assurance that any of our new or~~

27Over the last several years we have undertaken several internal restructuring initiatives. For example, in the fiscal year ended March 31, 2005, the Company restructured business activities by eliminating approximately 140 positions and consolidating office space in Atlanta, GA and San Francisco, CA, wherein certain functions were transferred from these locations to Company-owned office buildings in Columbia, SC. These types of internal restructurings have operational risks, including reduced productivity and lack of focus as we terminate some employees and assign new tasks and provide training to other employees. In addition, there can be no assurance that we will achieve the anticipated cost savings from these restructurings and any failure to achieve the anticipated cost savings could cause our financial results to fall short of expectations and adversely affect our financial position.

~~Table~~We have taken net charges for restructuring of ~~Contents~~$10.2 million in 2001, $8.2 million in 2002, $2.2 million in the three-month transition period ended March 31, 2003, $44,000 in the fiscal year ended March 31, 2004, $10.4 million in the fiscal year ended March 31, 2005 and $43,000 in the three months ended June 30, 2005. There can be no assurance that additional charges for restructuring expenses will not be required in future periods. Significant future restructuring charges could cause financial results to be unfavorable. In addition, assumptions underlying certain of these restructuring charges may need to be revised from time to time for a variety of reason, including, for example, changes in market conditions and the timing of and estimated sublease income as to the subleasing of leased property in areas where we have consolidated office space. Any such revised assumptions could cause adjustments to our prior restructuring charges, which could have unfavorable financial results.

~~enhanced~~Our ~~products~~business ~~will~~may besuffer ~~sold~~from ~~successfully~~risks orassociated ~~that they can achieve market acceptance. Our future success~~ with ~~these~~growth ~~products and~~through ~~other next generation product offerings will depend on our ability to accurately determine the functionality and features required by our customers~~acquisitions, asshould ~~well~~they ~~as the ability to enhance our products and deliver them in a timely manner~~occur. ~~We cannot predict the present and future size of the~~ ~~potential market for our next generation of products, and we may incur substantial costs to enhance and modify our products and services in order to meet the demands of this potential market.~~

~~Demand for our Asset Suite and Customer Suite solutions may grow slowly or decrease in upcoming~~25 ~~quarters, which may impair our business and could materially adversely affect our results of operations and financial condition.~~

IfIn werecent ~~experience~~years ~~delays~~we inhave ~~product~~acquired ~~development~~IUS orand ~~the~~Wishbone ~~introduction~~and ofwe ~~new~~evaluate ~~products~~acquisition oropportunities ~~new versions~~from oftime ~~existing~~to ~~products,~~time. ~~our~~All ~~business~~acquisitions ~~and~~involve ~~sales~~specific ~~will~~risks. beSome ~~negatively~~of ~~affected.~~these risks include:

We• ~~have, in~~ the ~~past,~~assumption ~~experienced~~of ~~delays~~unanticipated inliabilities ~~product development that have negatively affected our relationships with existing customers~~ and ~~have~~contingencies; ~~resulted~~• indiversion ~~lost sales~~ of our ~~products~~management’s ~~and~~attention; ~~services to~~• ~~existing~~inability ~~and prospective customers and our failure~~ to ~~recover~~achieve ~~our~~market ~~product~~acceptance ~~development~~of ~~costs. There~~acquired ~~can be no assurance that we will not experience further delays in connection with our current product development or future development activities. If we are 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, our business, operating results~~ and ~~financial~~• ~~condition will~~possible bereduction ~~materially~~of ~~and adversely affected. Because we have limited resources, we must effectively manage and properly allocate and prioritize~~ our ~~product~~reported ~~development~~asset ~~efforts~~values and ~~our~~earnings ~~porting~~because 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. of:

~~Delays~~• ingoodwill ~~implementation~~impairment; • increased interest costs; • issuances of ~~our~~additional ~~software~~securities or ~~the~~debt; ~~performance~~and of• ~~our~~difficulties ~~services~~in ~~may~~integrating ~~negatively~~acquired ~~affect our~~businesses ~~business~~and assets.

~~Following~~As ~~license sales to new customers, the implementation of our products and their extended solutions generally involves a lengthy process, including customer training and consultation. In addition,~~ we ~~are~~grow ~~often engaged by our existing customers for other lengthy services projects. A successful implementation or other services project requires a close working relationship between us, the customer~~ and, ifattempt ~~applicable,~~to ~~third-party~~integrate ~~consultants and systems integrators who assist in the process. These factors may increase the costs associated with completion of~~ any ~~given~~business ~~sale, increase the risks of collection of amounts due during implementation or other services projects,~~ and ~~increase~~assets ~~risks of cancellation or delay of such projects. Delays in the completion of a product implementation or with any other services project may require~~ that ~~the~~we ~~revenues associated with such implementation or project be recognized over a longer period than originally anticipated, or~~ may ~~result in disputes with customers regarding performance by us and payment by the customers. Such delays have caused~~acquire, ~~and~~we may in the future cause, material fluctuations in our operating results. Similarly, customers may typically cancel implementation and other services projects at any time without penalty, and any such cancellations could have a material adverse effect on our business or results of operations. Because our expenses are relatively fixed, a small variation in the timing of recognition of specific revenues can ~~cause~~give ~~significant variations in operating~~no ~~results~~assurance ~~from~~that ~~quarter-to-quarter~~we ~~and~~will ~~may~~be inable ~~some further quarter result in losses or have a material~~to: ~~adverse effect on our business or results of operations.~~

We• ~~have~~properly ~~experienced~~maintain ~~significant~~and ~~change~~take inadvantage ~~our~~of ~~executive~~the ~~management~~business ~~team~~or value of any acquired business and ~~the~~assets; ~~current~~• ~~executive management~~identify ~~team~~suitable ~~has~~acquisition ~~only~~candidates; ~~begun~~• tocomplete ~~work~~any ~~together~~additional acquisitions; or • integrate any acquired businesses or assets into our operations.

WeThe ~~have~~strain ~~experienced~~on ~~significant change in~~ our ~~executive~~ management ~~team.~~may Innegatively ~~February 2004, Gregory~~affect ~~Dukat~~our ~~was~~business ~~promoted to Chief Executive Officer~~ and ~~John~~our ~~Gregg~~ability ~~was promoted~~ to ~~Executive~~execute ~~Vice President of Field Operations. In June 2004, we appointed Thomas Williams as~~ our ~~new Chief~~ ~~Financial~~business ~~Officer~~strategy. ~~In July 2004, we hired Dave Henderson as our Vice President of Global~~ Professional Services. In September 2004, Thomas Madison ceased to be an executive officer of the Company, although he will continue as Chairman of the Board in a non-employee capacity. In January 2005, we appointed Joseph Trino as an Executive Vice President. The current executive management team has only recently begun to work together, and they may be unable to integrate and work effectively as a team. There are no assurances that we will be able to motivate and retain the current executive management team or that they will be able to work together effectively. If we lose any

28Changes to our business and customer base have placed a strain on management and operations. Previous expansion, including through acquisition, had resulted in substantial growth in the number of our employees, the scope of our operating and financial systems and the geographic area of our operations, resulting in increased responsibility for management personnel. Our restructuring activities in recent years and our acquisitions of IUS and Wishbone have placed additional demands on management. In connection with our restructuring activities and our acquisitions, we will be required to effectively manage our operations, improve our financial and management controls, reporting systems and procedures on a timely basis and to train and manage our employee work force. There can be no assurance that we will be able to effectively manage our operations and failure to do so would have a material adverse effect on our business, operating results and financial condition.

~~Table~~The ofmarket ~~Contents~~for our products is highly competitive, and we may be unable to maintain or increase our market share.

~~member~~Our success depends, in part, on our ability to develop more advanced products more quickly and less expensively than our existing and potential competitors and to educate potential customers on the benefits of licensing our ~~executive~~products. ~~management~~Some ~~team~~of orour ~~they~~competitors ~~are~~have ~~unable~~substantially greater financial, technical, sales, marketing and other resources, as well as greater name recognition and a larger customer base than us, which may allow them to ~~work~~introduce ~~together~~products ~~effectively~~with more features, greater functionality and lower prices than our ~~business~~products. These competitors could also bundle existing or new products with other, ~~operations~~more established products in order to effectively compete with us. The service delivery management market is very fragmented and consolidation by a competitor ~~financial~~with greater resources is a possible occurrence. If a trend emerges such that customers decide to consolidate their information technology systems and eliminate standalone “best-of-breed” application software, our revenues, margins and results ~~could~~of operations and financial condition may be adversely affected.

~~Our~~Increased ~~success~~competition ~~depends~~is ~~upon~~likely ~~our~~to ~~ability~~result toin ~~attract~~price reductions, reduced gross margins and ~~retain~~loss ~~key~~of sales ~~personnel~~volume, any of which could materially and adversely affect our business, operating results, and financial condition. Any material reduction in the price of our products would negatively affect our gross revenues and could have a material adverse effect on our business, operating results, and financial condition. There can be no assurance that we will be able to compete successfully against current and future competitors, and if we fail to do so we may be unable to maintain or increase our market share.

~~Our~~If ~~future~~we ~~success~~don’t ~~depends,~~respond ~~in significant part, upon the continued service of our key technical, sales and senior management personnel, as well as our ability~~ to ~~attract~~rapid ~~and~~technological ~~retain~~change ~~new personnel. Competition for qualified sales, technical~~ and ~~other~~evolving ~~personnel~~industry ~~is intense~~standards, ~~and there can be no assurance that~~ we will be ~~able to attract, assimilate or retain additional highly qualified~~ employees in the future. Our ability to attract, assimilate and retain key personnel may be adversely impacted by the fact that we have reduced our work force by approximately 26% in the nine months ended December 31, 2004. If we are unable to ~~offer~~compete ~~competitive salaries and bonuses, our key technical, sales and senior management personnel may be unwilling to continue service for us, and it may be difficult for us to attract new personnel~~effectively. ~~If we were unable to hire and retain~~ personnel, particularly in senior management positions, our business, operating results and financial condition would be materially adversely affected. Further additions of new personnel and departures of existing personnel, particularly in key positions, can be disruptive and have a material adverse effect on our business, operating results and financial condition.

~~Our~~The ~~failure~~industries toin ~~realize~~which ~~the~~we ~~expected~~participate ~~benefits~~are ofcharacterized ~~our~~by ~~recent~~rapid ~~restructurings~~technological change, ~~including anticipated~~evolving ~~cost~~industry ~~savings,~~standards ~~could~~in ~~result~~computer hardware and software technology, changes in ~~unfavorable~~customer ~~financial~~requirements and ~~results~~frequent new product introductions and enhancements. The introduction of products embodying new technologies, the emergence of new standards or changes in

~~Over the last several years we have undertaken several internal restructuring initiatives. For~~26 example, in the nine months ended December 31, 2004, the Company restructured business activities by eliminating approximately 140 positions and consolidating office space in Atlanta, GA and San Francisco, CA, wherein certain functions were transferred from these locations to company-owned office buildings in Columbia, SC. These types of internal restructurings have operational risks, including reduced productivity and lack of focus as we terminate some employees and assign new tasks and provide training to other employees. In addition, there can be no assurance that we will achieve the anticipated cost savings from these restructurings and any failure to achieve the anticipated cost savings could cause our financial results to fall short of expectations and adversely affect our financial position.

~~Our~~customer ~~business~~requirements ~~may~~could ~~suffer~~render our ~~from~~existing ~~risks~~products ~~associated~~obsolete ~~with~~and ~~growth~~unmarketable. As a result, our success will depend in part upon our ability to enhance our existing software products, expand our products through ~~acquisitions~~development or acquisition, ~~should~~and ~~they~~introduce ~~occur~~new products that keep pace with technological developments, satisfy increasingly sophisticated customer requirements and achieve customer acceptance. For example, in January 2005 Indus announced the release of IFA, a common architectural platform for all our applications. IFA is a convergent technology strategy that provides common tools across all Indus suites to deliver a common interface and software platform. There can be no assurance that the IFA, or any future enhancements to existing products, or any new products developed or acquired by us will achieve customer acceptance or will adequately address the changing needs of the marketplace. There can also be no assurance that we will be successful in developing, acquiring and marketing new products or enhancements to our existing products that incorporate new technology on a timely basis.

InOur ~~recent~~growth ~~years~~is wedependent, ~~have~~in ~~acquired~~part, ~~IUS~~upon ~~and~~the ~~Wishbone~~successful ~~and~~development weof ~~evaluate~~our ~~acquisition~~indirect ~~opportunities~~sales ~~from time to time~~channels. ~~All acquisitions involve specific risks. Some of these risks include:~~

•We believe that our future growth will depend, in part, on developing and maintaining successful strategic relationships or partnerships with systems integrators and other technology companies. One of our strategies is to continue to increase the ~~assumption~~proportion of ~~unanticipated~~customers ~~liabilities~~served through these indirect channels. If we are not able to successfully partner with other technology companies and qualified ~~contingencies;~~systems •integrators ~~diversion~~it could adversely affect our results of operations. Because lower unit prices are often charged on sales made through indirect channels, increased indirect sales could reduce our ~~management’s~~average ~~attention;~~selling •prices ~~inability~~and toresult ~~achieve~~in ~~market~~lower ~~acceptance~~gross margins. As indirect sales increase, our direct contact with our customer base could decrease, and we may have more difficulty accurately forecasting sales, evaluating customer satisfaction and recognizing emerging customer requirements. In addition, sales of ~~acquired~~our products; through indirect channels may reduce our service revenues, as the third-party systems integrators reselling our products provide these services. Further, when third-party integrators install our products and •train ~~possible~~customers ~~reduction~~to use our products, it could result in incorrect product installation, failure to properly train the customer, or general failure of an integrator to satisfy the customer, which could have a negative effect on our relationship ~~reported~~with ~~asset~~the ~~values~~integrator and ~~earnings~~the ~~because~~customer. Such problems could damage our reputation and the reputation of: our products and services. In addition, we may face additional competition from these systems integrators and third-party software providers who develop, acquire or market products competitive with our products.

•Our ~~goodwill~~strategy ~~impairment;~~of •marketing ~~increased~~our ~~interest~~products ~~costs;~~directly •to ~~issuances~~customers ofand ~~additional~~indirectly ~~securities~~through orsystems integrators ~~debt;~~ and •other ~~difficulties~~technology companies may result in ~~integrating~~distribution ~~acquired~~channel ~~businesses~~conflicts. Our direct sales efforts may compete with those of our indirect channels and, ~~assets~~to the extent different systems integrators target the same customers, systems integrators may also come into conflict with each other. Any channel conflicts that develop may have a material adverse effect on our relationships with systems integrators or hurt our ability to attract new systems integrators to market our products.

AsIf we ~~grow~~fail ~~and attempt~~ to ~~integrate~~comply ~~any~~with ~~business~~laws ~~and~~or ~~assets~~government ~~that~~regulations, we may ~~acquire,~~be wesubject ~~can~~to ~~give~~penalties ~~no assurance~~and ~~that we will be able to:~~fines.

•We ~~properly~~are ~~maintain~~not directly subject to regulation by any governmental agency, other than regulations applicable to businesses generally, and ~~take~~there ~~advantage~~are ofcurrently few laws or regulations addressing the products ~~business~~and services we provide. We do, however, license our products and provide services, from time to time, to the government, government agencies, government contractors and other customers that are in industries regulated by the government. As a result, our operations, as they relate to our relationships with governmental entities and customers in regulated industries, are governed by certain laws and regulations. These laws and regulations are subject to change without notice to us. In some instances, compliance with these laws and regulations may be difficult or ~~value~~costly, which ofmay ~~any~~negatively ~~acquired~~affect our business and ~~assets;~~results •of ~~identify~~operations. ~~suitable~~In ~~acquisition~~addition, ~~candidates;~~if •we ~~complete~~fail ~~any~~to comply ~~additional~~with ~~acquisitions;~~these orlaws •and ~~integrate~~regulations, ~~any~~we ~~acquired~~may ~~businesses~~be orsubject ~~assets~~to ~~into~~significant penalties and fines that could materially negatively affect our business, results of operations and financial position.

~~The~~If ~~strain~~we onare ~~our~~not ~~management~~successful in Japan we may ~~negatively~~not ~~affect~~be ~~our~~able ~~business~~to grow revenue and ~~our~~it ~~ability~~could tohave ~~execute~~a ~~our~~negative ~~business~~effect ~~strategy~~on our operating results and financial condition.

29We have made significant investments in the Japanese market as part of our license arrangements with TEPCO, Electric Power Development Company, and Shikoku Electric Company. These investments include resources to localize our asset management products for Japan and establishing a regional office in Tokyo. We cannot be sure that we will succeed in Japan due to the cost and difficulty we have encountered localizing our products in Japan, the cost of maintaining operations in Japan, and cultural differences in the conduct of business, including higher customer expectations and demands. Also, TEPCO is a significant source of revenue and referrals for new customers in Japan. If we are not able to maintain a good customer

~~Table of Contents~~27

~~The~~relationship ~~market~~with ~~for~~TEPCO, ~~our~~it ~~products~~will isimpact ~~highly~~our ~~competitive,~~revenue in Japan and our ability to grow license sales in Japan. If we are not successful in Japan we may not be ~~unable~~able to ~~maintain~~grow orour ~~increase~~revenue, which could have a negative effect on our operating results and ~~market~~financial ~~share~~condition.

~~Our~~If ~~success~~we ~~depends,~~are inunable ~~part, on our ability~~ to ~~develop~~expand ~~more advanced products more quickly and less expensively than~~ our ~~existing~~international ~~and~~operations, ~~potential competitors and to educate potential customers on the benefits of licensing~~ our ~~products.~~operating ~~Some~~results ~~of our competitors have substantially greater financial, technical, sales, marketing~~ and ~~other resources, as well as greater name recognition and~~financial acondition ~~larger~~could ~~customer~~be ~~base~~materially ~~than us, which may allow them to introduce products with more features, greater functionality~~ and ~~lower~~adversely ~~prices than our products~~affected. ~~These competitors could also bundle~~ ~~existing or new products with other, more established products in order to effectively compete with us.~~

~~Increased~~International ~~competition~~revenue is(from ~~likely~~sales tooutside ~~result~~the inUnited ~~price~~States) ~~reductions,~~accounted ~~reduced~~for ~~gross~~approximately ~~margins~~24% ~~and loss~~ of ~~sales~~total ~~volume,~~revenue ~~any~~for ofthe ~~which~~fiscal ~~could~~year ~~materially~~ended March 31, 2005, and ~~adversely~~21% ~~affect~~of ~~our~~total ~~business,~~revenue ~~operating~~for ~~results,~~the three ~~and~~months ~~financial~~ended ~~condition~~June 30, 2005. ~~Any~~We ~~material~~maintain ~~reduction~~an operational presence and have established support offices in the ~~price~~United ofKingdom, ~~our~~Australia, ~~products~~France ~~would~~and ~~negatively affect~~Japan. ~~our~~We ~~gross~~expect ~~revenues~~international ~~and~~sales ~~could~~to continue ~~have~~to be a material ~~adverse~~component ~~effect~~of on our business,. ~~operating results~~However, ~~and~~there ~~financial condition. There~~ can be no assurance that we will be able to ~~compete successfully~~maintain ~~against~~or ~~current~~increase ~~and~~international ~~future~~market ~~competitors~~demand for our products. In addition, international ~~and~~expansion ifmay werequire ~~fail~~us to doestablish soadditional weforeign operations and hire additional personnel. This may berequire significant management attention and financial resources and could adversely affect our operating margins. To the extent we are unable to expand foreign ~~maintain~~operations orin ~~increase~~a timely manner, our ~~market~~growth, ~~share~~if any, in international sales will be limited, and our business, operating results and financial condition could be materially and adversely affected.

IfThe wesuccess ~~don’t~~of ~~respond~~our tointernational ~~rapid~~operations ~~technological~~is ~~change~~subject ~~and evolving industry standards, we will be unable~~ to ~~compete~~many ~~effectively~~uncertainties.

~~The~~Our ~~industries~~international inbusiness ~~which~~involves we participate are 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 our existing products obsolete and unmarketable. As a ~~result,~~number our success will depend in part upon our ability to enhance our existing software solutions, expand our products offerings through development or acquisition, and introduce new products that keep pace with technological developments, satisfy increasingly sophisticated customer requirements and achieve customer acceptance. There can be no assurance that any future enhancements to existing products or new products developed or acquired by us will achieve customer acceptance or will adequately address the changing needs of ~~the marketplace. There can also be no assurance that we will be successful in developing~~risks, ~~acquiring and marketing new products or enhancements to our existing products that~~including: ~~incorporate new technology on a timely basis.~~

~~Our~~• ~~growth~~costs isand ~~dependent,~~other difficulties in ~~part,~~producing ~~upon~~and ~~the~~gaining ~~successful~~acceptance ~~development~~of localized versions of our ~~indirect~~products; ~~sales~~• ~~channels~~cultural differences in the conduct of business; • difficulties in staffing and managing foreign operations; • unfavorable exchange rate fluctuations; • longer accounts receivable payment cycles; • greater difficulty in accounts receivable collection; • seasonality due to the annual slow-down in European business activity during the third calendar quarter; • unexpected changes in regulatory requirements and withholding taxes that restrict the repatriation of earnings; • tariffs and other trade barriers; • the burden of complying with a wide variety of foreign laws; and • negative effects relating to hostilities, war or terrorist acts.

WeTo ~~believe~~the ~~that~~extent ~~our~~profit ~~future~~is ~~growth~~generated ~~will depend, in part, on developing and maintaining successful strategic relationships~~ or ~~partnerships~~losses ~~with~~are ~~systems~~incurred ~~integrators~~in ~~and~~foreign ~~other~~countries, ~~technology companies. One of~~ our ~~strategies~~effective ~~is to continue to increase the proportion of customers served through these~~income ~~indirect~~tax ~~channels.~~rate ~~Our~~may ~~inability~~be tomaterially ~~partner with other technology companies~~ and ~~qualified systems integrators could~~ adversely ~~affect our results of operations~~affected. ~~Because~~In ~~lower~~some ~~unit prices are often charged on sales made through indirect channels~~markets, ~~increased~~localization ~~indirect~~of ~~sales could reduce~~ our ~~average~~products ~~selling~~will ~~prices~~be ~~and~~essential ~~result~~to inachieve ~~lower~~market ~~gross margins~~penetration. AsWe ~~indirect sales increase, our direct contact with our customer base could decrease, and we~~ may ~~have~~incur ~~more~~substantial ~~difficulty~~costs ~~accurately forecasting sales, evaluating customer satisfaction~~ and ~~recognizing~~ ~~emerging customer requirements. In addition, sales of our products through indirect~~experience ~~channels~~delays ~~may~~in ~~reduce~~localizing our ~~service revenues, as the third-party systems integrators reselling our~~ products ~~provide these services. Further~~, ~~when third-party integrators install our products~~ and ~~train~~ ~~customers~~there tocan ~~use~~be ~~our~~no ~~products,~~assurance itthat ~~could~~any ~~result~~localized ~~in incorrect~~ product ~~installation, failure to~~will ~~properly~~ever ~~train~~generate ~~the~~significant ~~customer,~~revenues. orThere ~~general~~can ~~failure~~be ofno anassurance ~~integrator~~that toany ~~satisfy~~of the ~~customer,~~factors ~~which~~described ~~could~~herein will not have a ~~negative~~material adverse effect on our ~~relationship~~future ~~with~~international ~~the~~sales ~~integrator~~ and ~~the customer. Such~~operations ~~problems could damage our reputation~~ and, ~~the~~consequently, ~~reputation of~~ our ~~products and services. In addition~~business, we ~~may~~operating ~~face~~results ~~additional competition from these systems integrators~~ and ~~third-party~~financial ~~software providers who develop, acquire or market products competitive with our products~~condition.

~~Our~~We ~~strategy~~have ofonly ~~marketing~~limited ~~our~~protection ~~products~~of ~~directly~~our toproprietary ~~customers~~rights and ~~indirectly through systems integrators and other~~ technology ~~companies may result in distribution channel conflicts~~. ~~Our~~ ~~direct sales efforts may compete with those of our indirect channels and, to the extent different systems integrators target the same customers, systems integrators may also come into conflict with~~

30Our success is heavily dependent upon our proprietary technology. We rely on a combination of the protections provided under applicable copyright, trademark and trade secret laws, confidentiality procedures and license arrangements to establish and protect our proprietary rights. As part of our confidentiality procedures, we generally enter into non-disclosure agreements with our employees, distributors and corporate partners, and license agreements with respect to our software, documentation and other proprietary information. Despite these precautions, it may be possible for unauthorized third parties to copy certain portions of our products or to reverse engineer or obtain and use information that we regard as proprietary, to use our products or technology without authorization, or to develop similar technology independently. Moreover, the laws of some countries do not protect our proprietary rights to the same extent as do the laws of the United States. Furthermore, we have no patents and existing copyright laws afford only limited protection. We license source code for certain of our products and providing such source code may increase the likelihood of misappropriation or other misuses of our intellectual property. Policing the unauthorized use of our products is difficult, and litigation may be necessary in the future to enforce our intellectual property rights, to protect our trade secrets or to determine the validity and scope of the proprietary rights of others. Litigation could

~~Table of Contents~~28

Ifresult wein ~~fail~~substantial costs toand ~~comply~~diversion ~~with~~of ~~laws~~resources orand ~~government~~could ~~regulations~~negatively impact our future operating results. Accordingly, there can be no assurance that we ~~may~~will be ~~subject~~able to ~~penalties~~protect ~~and~~our ~~fines.~~proprietary software against unauthorized third-party copying or use, which could adversely affect our competitive position.

We ~~are~~may not ~~directly~~be ~~subject~~successful toin ~~regulation~~avoiding byclaims ~~any~~that ~~governmental agency, other than regulations applicable to businesses generally, and there are currently few laws or regulations addressing the products and services~~ we ~~provide.~~infringe ~~We do, however, license our products and provide services, from time to time, to the government, government agencies, and government contractors and to~~ other ~~customers~~’s ~~that~~proprietary ~~are in industries regulated by the government~~rights. ~~As a result, our operations, as they~~ relate to our relationships with governmental entities and customers in regulated industries, are governed by certain laws and regulations. These laws and regulations are subject to change without notice to us. In some instances, compliance with these laws and regulations may be difficult or costly, which may negatively affect our business and results of operations. In addition, if we fail to comply with these laws and regulations, we may be subject to significant penalties and fines that could materially negatively affect our business, results of operations and financial position.

IfWe we are ~~unable~~not toaware ~~expand~~that any of our ~~international~~products ~~operations~~infringe the proprietary rights of third parties. There can be no assurance, however, that a third-party will not assert that our ~~operating~~technology ~~results~~violates ~~and~~its patents ~~financial~~or other proprietary rights in the future. Any such claims, with or without merit, can be ~~condition~~time consuming and expensive to defend or could require us to enter into royalty and license agreements. Such royalty or license agreements, if required, may not be ~~materially~~available on terms acceptable to us or at all, which could have a material adverse effect upon our business, operating results and ~~adversely~~financial ~~affected~~condition.

~~International~~As ~~revenue~~a ~~(from~~result ~~sales outside the United States) accounted for approximately 21%~~ of ~~total~~ ~~revenue~~our ~~for~~lengthy ~~the~~sales ~~fiscal~~cycle ~~year ended March 31, 2004,~~ and ~~26% of total revenue for~~ the ~~nine months~~large ~~ended~~size December 31, 2004. We maintain an operational presence and have established support offices in the United Kingdom, Canada, Australia, France and Japan. We expect international sales to continue to be a material component of our ~~business.~~typical ~~However,~~orders ~~there~~from ~~can~~new ~~be no assurance that we will be able to maintain or increase international market demand for our products. In addition~~customers, ~~international~~any ~~expansion~~delays may require us to establish additional foreign operations and hire additional personnel. This may require significant management attention and financial resources and could adversely affect our operating margins. To the extent we ~~are~~experience ~~unable to expand foreign operations in a timely manner, our growth, if any, in international sales~~ will beaffect ~~limited, and~~ our ~~business,~~ operating results ~~and financial condition could be materially and adversely affected~~.

The ~~success~~purchase of our ~~international~~software ~~operations~~products, isparticularly ~~subject~~the toAsset ~~many~~Suite ~~uncertainties~~and the Customer Suite, generally involves a significant commitment of capital over a long period of time by a customer. There are inherent risks of delays frequently associated with large capital expenditures procedures within an organization, such as budgetary constraints and internal approval reviews. During the sales process, we 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 we will have no control. Any such delays in the execution of orders have caused, and may in the future cause, material fluctuations in our operating results.

~~Our~~Product ~~international~~liability ~~business~~claims ~~involves~~made aby ~~number~~our ofcustomers, ~~risks~~whether successful or not, ~~including:~~could be expensive and could harm our business.

•The ~~lack~~sale ofand ~~acceptance~~support of ~~localized~~our products; •may ~~cultural~~entail ~~differences in~~ the ~~conduct~~risk of ~~business;~~product •liability ~~unfavorable~~claims. ~~exchange~~Our ~~rate~~license agreements ~~fluctuations;~~typically •contain ~~longer~~provisions ~~accounts~~designed ~~receivable~~to ~~payment~~limit ~~cycles;~~exposure •to ~~greater~~potential ~~difficulty~~product inliability claims. ~~accounts~~It ~~receivable~~is ~~collection;~~possible, •however, ~~seasonality~~that ~~due to~~ the ~~annual~~limitation ~~slow-down~~of inliability ~~European~~provisions ~~business~~contained ~~activity~~in ~~during~~such license ~~the~~agreements ~~third~~may ~~calendar~~not ~~quarter;~~be •effective ~~unexpected~~as ~~changes~~a inresult ~~regulatory~~of ~~requirements~~federal, ~~and~~state ~~withholding~~or ~~taxes~~local ~~that~~laws ~~restrict~~or ~~the~~ordinances or ~~repatriation~~unfavorable ofjudicial ~~earnings;~~decisions. •A ~~tariffs~~successful ~~and~~product ~~other~~liability ~~trade~~claim ~~barriers;~~brought •against ~~the~~us relating ~~burden~~to ofour ~~complying~~product ~~with~~or athird-party software ~~wide~~embedded ~~variety~~in ofour ~~foreign~~products ~~laws;~~could ~~and~~have •a ~~negative~~material ~~effects~~adverse ~~relating~~effect toupon ~~hostilities~~our business, ~~war~~operating results orand ~~terrorist~~financial ~~acts~~condition.

ToWe ~~the~~maintain ~~extent~~performance ~~profit is generated or losses are incurred in foreign countries~~bonds, ~~our~~directly ~~effective income tax rate may be materially~~ and ~~adversely affected. In some markets~~indirectly, ~~localization~~in ofaccordance ~~our~~with ~~products will~~certain ~~be essential to achieve market penetration. We may incur substantial costs and experience~~customer ~~delays in localizing our products~~contracts, ~~and~~some ~~there~~of ~~can~~which beare nocollateralized ~~assurance~~by ~~that~~letters ~~any~~of ~~localized~~credit ~~product~~supported ~~will ever~~by ~~generate~~restricted ~~significant revenues~~cash. ~~There can be no assurance that any of the factors described~~A ~~herein~~failed ~~will~~implementation ~~not~~or ~~have~~ a ~~material~~significant ~~adverse~~software ~~effect~~malfunction onleading ~~our~~to ~~future~~payment ~~international~~under ~~sales~~one ~~and~~or ~~operations~~more of ~~and,~~these ~~consequently~~bonds, ~~our~~could ~~business,~~adversely ~~operating~~affect ~~results~~our ~~and financial condition~~liquidity.

WeAnti-takeover ~~have~~provisions ~~only~~in ~~limited~~our ~~protection~~charter documents and Delaware law could prevent or delay a change in control of ~~our~~Indus, ~~proprietary~~even ~~rights~~if ~~and~~a ~~technology~~change of control would be beneficial to our stockholders.

~~Our~~Provisions ~~success~~of isour ~~heavily~~Amended ~~dependent~~and ~~upon~~Restated ~~our~~Certificate ~~proprietary~~of ~~technology.~~Incorporation Weand ~~rely~~By-Laws, onas awell ~~combination~~as provisions of ~~the protections~~Delaware ~~provided~~law, ~~under~~could ~~applicable copyright~~discourage, ~~trademark~~delay ~~and~~or ~~trade~~prevent ~~secret~~an ~~laws,~~acquisition ~~confidentiality~~or other change in ~~procedures~~control ~~and~~of ~~license~~Indus, ~~arrangements~~even toif ~~establish~~a ~~and~~change ~~protect~~in ~~our~~control ~~proprietary~~would ~~rights.~~be Asbeneficial ~~part~~to of our ~~confidentiality~~stockholders. ~~procedures,~~These provisions wecould ~~generally~~also ~~enter~~discourage ~~into~~proxy ~~non-disclosure~~contests ~~agreements~~and ~~with~~make it more difficult for our stockholders to ~~employees,~~elect ~~distributors~~directors and take other corporate ~~partners~~actions. As a result, ~~and~~these ~~license~~provisions ~~agreements~~could ~~with~~limit ~~respect~~the price that investors are willing to pay in the future for shares of our common stock. These ~~software,~~provisions ~~documentation~~might ~~and~~also ~~other~~discourage ~~proprietary~~a ~~information.~~potential ~~Despite~~acquisition ~~these~~proposal ~~precautions~~or tender offer, iteven ~~may~~if bethe ~~possible~~acquisition ~~for~~proposal ~~unauthorized~~or ~~third~~tender ~~parties~~offer tois ~~copy~~at ~~certain~~a price above the then current market price for our common stock.

31These provisions include:

~~Table~~• authorization of ~~Contents~~a stockholder rights plan or “poison pill” to deter a takeover attempt; • authorization of “blank check” preferred stock that our board of directors could issue to thwart a takeover attempt; • limitations on the ability of stockholders to call special meetings of stockholders; • limitations on stockholder action by written consent; and

~~portions of our products or to reverse engineer or obtain and use information that we regard as proprietary, to use our products or~~29 technology without authorization, or to develop similar technology independently. Moreover, the laws of some countries do not protect our proprietary rights to the same extent as do the laws of the United States. Furthermore, we have no patents and existing copyright laws afford only limited protection. We license source code for certain of our products and providing such source code may increase the likelihood of misappropriation or other misuses of our intellectual property. Accordingly, there can be no assurance that we will be able to protect our proprietary software against unauthorized third-party copying or use, which could adversely affect our competitive position.

We• ~~are~~advance ~~not~~notice ~~aware~~requirements ~~that~~for ~~any~~nominations offor ~~our~~election ~~products,~~to ~~including~~our ~~the~~board ~~products we acquired in the IUS and Wishbone acquisitions, infringe the proprietary rights~~ of ~~third~~directors ~~parties.~~or ~~There~~for ~~can~~proposing bematters ~~no assurance, however,~~ that ~~a third-party will not assert that our technology violates its patents or other proprietary rights in the future. Any such claims, with or without merit,~~ can be ~~time consuming~~acted ~~and~~upon ~~expensive~~by tostockholders ~~defend or could require us to enter into royalty and license agreements. Such royalty or license agreements, if required, may not be available on terms acceptable to us or~~ at ~~all,~~stockholder ~~which could have a material adverse effect upon our business, operating results and financial condition~~meetings.

AsIn aaddition, ~~result~~we are subject to certain provisions of the Delaware General Corporation Law, which limit our ~~lengthy~~ability ~~sales~~to ~~cycle~~enter ~~and~~into ~~the~~business ~~large~~combination ~~size~~transactions ofwith 15% or greater stockholders that our ~~typical~~board ~~orders~~of ~~from~~directors ~~new~~has ~~customers,~~not approved. These provisions and other similar provisions make ~~any~~it ~~delays~~more wedifficult ~~experience~~for ~~will~~a ~~affect~~third ~~our~~party ~~operating~~to ~~results~~acquire us without negotiation with the board of directors. These provisions may apply even if some stockholders may consider the transaction beneficial.

~~The~~Failure ~~purchase~~to ofmaintain ~~our~~effective software products by a customer generally involves a significant commitment of capital over a long period of time, with the risk of delays frequently associated with large capital expenditures procedures within an organization, such as budgetary constraints and internal ~~approval~~ ~~review.~~controls ~~During~~could ~~the~~have ~~sales process, we may devote significant time and resources to~~ a ~~prospective~~ ~~customer,~~material ~~including~~adverse ~~costs~~effect ~~associated~~on ~~with multiple site visits, product demonstrations~~our ~~and feasibility studies~~business, ~~and~~operating ~~experience~~results ~~significant delays over which we will have no control. Any such delays in the execution of orders have caused,~~ and ~~may~~stock ~~in the future cause, material fluctuations in our operating results~~price.

~~Customer~~We ~~claims~~have evaluated and will continue to evaluate our internal control procedures in order to satisfy the requirements of Section 404 of the Sarbanes-Oxley Act, ~~whether~~which ~~successful~~requires an annual management assessment of the design and effectiveness of our internal controls over financial reporting and a report by our Independent Registered Public Accounting Firm addressing this assessment. If we fail to maintain the adequacy of our internal controls, as such standards are modified, supplemented or amended from time to time, we may not be able to ensure that we can conclude on an ongoing basis that we have effective internal controls over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act. Moreover, effective internal controls, particularly those related to revenue recognition, are necessary for us to produce reliable financial reports and are important to helping prevent financial fraud. If we cannot provide reliable financial reports or prevent fraud, our business and operating results could be ~~expensive~~harmed, investors could lose confidence in our reported financial information, and ~~could~~the ~~harm~~trading price of our stock ~~business~~could drop significantly.

~~The~~OTHER ~~sale and support of our products may entail the risk of product liability claims. Our license~~RISKS agreements 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 us relating to our product or third-party software embedded in our products could have a material adverse effect upon our business, operating results and financial condition.

WeThe ~~maintain~~foregoing ~~performance~~is ~~bonds,~~not ~~directly~~a ~~and~~complete ~~indirectly~~description of all risks relevant to our future performance, inand the ~~accordance~~foregoing should be read and understood together with ~~certain~~and ~~customer contracts,~~in ~~some~~the context of similar discussions which ~~are~~may ~~collateralized~~be bycontained ~~letters~~in ofthe ~~credit~~documents ~~supported~~that bywe ~~restricted~~file ~~cash~~with the SEC in the future. AWe undertake no ~~failed~~obligation ~~implementation~~to orrelease apublicly ~~significant~~any ~~software~~revision ~~malfunction~~to ~~leading~~the foregoing or any update to ~~payment~~any ~~under~~forward-looking statements ~~one~~to reflect events or ~~more~~circumstances after the date of ~~these~~ ~~bonds,~~such ~~could~~statements ~~adversely~~or ~~affect~~to ~~our~~reflect ~~liquidity~~the occurrence of anticipated or unanticipated events.

~~Anti-takeover provisions in our charter documents and Delaware law could prevent or delay a change~~30 ~~in control of Indus, even if a change of control would be beneficial to our stockholders.~~

~~These~~ITEM ~~provisions~~3. ~~include:~~QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS

•The ~~authorization~~Company ofdid anot ~~stockholder~~experience ~~rights~~any ~~plan~~material orchanges ~~“poison~~in ~~pill”~~market torisk ~~deter~~in ~~a takeover attempt; • authorization of “blank check” preferred stock that our board of directors could issue to thwart a takeover attempt; • limitations on~~ the ~~ability~~first ofquarter ~~stockholders to call special meetings~~ of ~~stockholders; • limitations on stockholder action by written consent; and~~fiscal 2006.

32ITEM 4. CONTROLS AND PROCEDURES

~~Table~~The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company’s reports under the Securities Exchange Act of 1934, ~~Contents~~as amended (the Exchange Act), is recorded, processed and reported on an accurate and timely basis, and that such information is accumulated and communicated to management, including the Company’s Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures. The design of any system of disclosure controls and procedures is based in part upon certain assumptions, and there can be no assurance that any disclosure controls and procedures will succeed in achieving their stated goals under all potential conditions.

•As ~~advance~~described ~~notice~~in ~~requirements~~Note 1 to the Condensed Consolidated Financial Statements, entitled Basis of Presentation, and as more fully described in Item 9A of the Company’s Annual Report on Form 10-K for ~~nominations~~the fiscal year ended March 31, 2005, management reviewed the Company’s accounting practices for ~~election~~operating leases and leasehold improvements as a result of views expressed by the office of the Chief Accountant of the Securities and Exchange Commission in a February 7, 2005 letter to ~~our~~the American ~~board~~Institute of ~~directors~~Certified orPublic Accountants, regarding certain operating lease accounting issues and their applicability under generally accepted accounting principles, and concluded that the Company’s previously established accounting practices for ~~proposing~~operating ~~matters~~leases entered into in 2000 with scheduled escalating rental payments, tenant allowances and leasehold improvements were incorrect Accordingly, it was determined to restate certain of the Company’s previously issued financial statements to reflect the correction in the Company’s accounting practices in these areas. As a result of this restatement, the Company concluded that ~~can~~it behad ~~acted~~a ~~upon~~material weakness in controls over the selection and monitoring of its accounting practices used in its accounting for leases and leasehold improvements as of March 31, 2005. Due to this material weakness in controls, the Company’s Chief Executive Officer and Chief Financial Officer concluded that solely as a result of the foregoing lease accounting matter, the Company’s disclosure controls and procedures were not effective as of the end of the fiscal year covered by ~~stockholders~~its atAnnual ~~stockholder~~Report ~~meetings~~on Form 10-K for the year ended March 31, 2005.

InSubsequent ~~addition, we are subject~~ to ~~certain~~March 31, ~~provisions of the Delaware General Corporation Law~~2005, ~~which limit our ability~~ to ~~enter~~remediate ~~into~~the ~~business~~above ~~combination~~referenced ~~transactions~~material ~~with~~weakness ~~15%~~in orthe ~~greater stockholders~~Company’s ~~that~~internal ~~our~~control ~~board~~over offinancial ~~directors~~reporting ~~has~~and ~~not~~the ~~approved.~~ineffectiveness ~~These~~of ~~provisions~~its ~~and~~disclosure ~~other~~controls ~~similar provisions make~~and itprocedures, ~~more~~the ~~difficult~~Company ~~for~~corrected aits ~~third~~method ~~party~~of toaccounting ~~acquire~~for usoperating ~~without~~leases, ~~negotiation~~tenant ~~with the board of directors.~~allowances ~~These~~and ~~provisions~~leasehold ~~may apply even if some stockholders may consider the transaction beneficial~~improvements.

~~Failure~~In toconnection ~~achieve~~with ~~and~~the ~~maintain~~preparation ~~effective~~of ~~internal~~this ~~controls~~Quarterly ~~over~~Report ~~financial~~on ~~reporting~~Form ~~could~~10-Q, ~~have~~as aof the end of the ~~material~~fiscal ~~adverse~~period ~~effect~~covered by this Quarterly Report on ~~our~~Form ~~business~~10-Q (June 30, ~~operating~~2005), ~~results~~the Company performed an evaluation, under the supervision and ~~stock~~with ~~price~~the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based on this evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that, as a result of the remediation of the material weakness described above, the Company’s disclosure controls and procedures were effective as of the end of the fiscal period covered by this Quarterly Report on Form 10-Q (June 30, 2005).

WeOther ~~are~~than in the ~~process~~remediation of ~~documenting and testing our internal control procedures in order to satisfy~~ the ~~requirements~~material ofweakness ~~Section 404~~discussed ~~of the Sarbanes-Oxley Act~~above, ~~which~~there ~~requires~~have annot ~~annual~~been any ~~management~~changes ~~assessment~~in ~~of the design and effectiveness of our~~ internal ~~controls~~control over financial reporting ~~and~~(as asuch ~~report~~term byis ~~our~~defined ~~independent~~in ~~auditors~~Rules 13a-15(f) and ~~addressing~~15d-15(f) ~~this~~under ~~assessment. During~~ the ~~course~~Exchange ~~of our~~Act) ~~testing~~during wethe ~~may~~fiscal ~~identify~~quarter ~~deficiencies~~to ~~or weaknesses~~ which wethis ~~may~~report ~~not~~relates bethat ~~able~~have tomaterially ~~remediate prior to our fiscal year end. In addition~~affected, ifor ~~we fail to achieve and maintain the adequacy of our internal controls, as such standards~~ are ~~modified,~~reasonably ~~supplemented~~likely ~~or amended from time~~ to ~~time~~materially affect, ~~we may not be able to ensure that we can conclude on an ongoing basis that we have effective~~ internal controls over financial reporting ~~in accordance with Section 404 of the Sarbanes Oxley Act~~. ~~Moreover, effective internal controls, particularly those related to revenue~~ recognition, are necessary for us to produce reliable financial reports and are important to helping prevent financial fraud. If we cannot provide reliable financial reports or prevent fraud, our business and operating results could be harmed, investors could lose confidence in our reported financial information, and the trading price of our stock could drop significantly.

3331

~~ITEM~~PART 3.II: ~~QUANTITATIVE~~OTHER ~~AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS~~INFORMATION

~~The~~ITEM ~~Company~~1. ~~did~~LEGAL ~~not experience any material changes in market risk in the third quarter of fiscal~~PROCEEDINGS ~~2005.~~

~~ITEM~~In 4February 2003, Integral Energy Australia brought a claim against IUS (which was then known as SCT Utility Systems, Inc.) ~~CONTROLS~~in ~~AND~~the ~~PROCEDURES~~Supreme Court of New South Wales, Australia, relating to the implementation of IUS software. On March 5, 2003, the Company acquired IUS from Systems and Computer Technology Corporation (“SCT”) and subsequently merged IUS into the Company. The Company is now the defendant in this lawsuit. The amount of damages asserted against the Company is not determinable. Pursuant to the terms of the Purchase Agreement among the Company and SCT and its affiliates, SCT and those affiliates of SCT that were a party to the Purchase Agreement agreed to defend the Company against the claims in this suit and to indemnify the Company from all losses relating thereto.

WeFrom ~~carried~~time ~~out~~to ~~an evaluation~~time, ~~under~~ the ~~supervision~~Company ~~and~~is ~~with~~involved ~~the~~in ~~participation~~other oflegal ~~management, including~~proceedings ~~the~~incidental ~~Chief~~to ~~Executive Officer and~~ the ~~Chief~~conduct ~~Financial Officer,~~ of its ~~the~~business. ~~effectiveness~~The outcome of ~~the design~~these ~~and~~claims ~~operation~~cannot ofbe ~~our~~predicted ~~disclosure~~with ~~controls~~certainty. ~~and~~The ~~procedures~~Company ~~pursuant~~ intends to ~~Exchange~~defend ~~Act~~itself ~~Rule 13a-15.~~vigorously ~~Based~~in ~~upon~~these ~~the~~actions. ~~foregoing~~However, ~~the~~any ~~Chief~~settlement ~~Executive~~or ~~Officer~~judgment ~~along~~may ~~with~~have ~~the Chief Financial~~a ~~Officer~~material ~~concluded~~adverse ~~that,~~effect ason of the ~~end~~Company’s results of ~~the~~operations ~~period~~in ~~covered by this report,~~ the ~~Company~~period ~~maintains disclosure controls and procedures that were effective~~ in ~~ensuring~~which ~~that information required to be~~such ~~disclosed~~settlement inor ~~our~~judgment ~~Exchange~~is ~~Act~~paid ~~reports~~or ispayment ~~recorded,~~becomes ~~processed,~~probable. ~~summarized~~The ~~and~~Company ~~reported~~does ~~within~~not ~~the~~believe that, ~~time~~individually ~~periods~~or ~~specified~~ in aggregate, the ~~Commission’s~~legal ~~rules~~matters ~~and~~to ~~forms,~~which ~~and~~it ~~that~~is ~~such~~currently ~~information~~a ~~is accumulated~~party ~~and~~are ~~communicated~~likely to ~~management, including the Chief Executive Officer and Chief~~have ~~Financial~~a ~~Officer,~~material asadverse ~~appropriate,~~effect toon ~~allow~~its ~~timely~~results ~~decisions~~of ~~regarding~~operations ~~required~~or ~~disclosure~~financial condition.

~~There~~ITEM ~~have~~2. ~~not~~UNREGISTERED ~~been~~SALES ~~any~~OF ~~changes~~EQUITY inSECURITIES ~~our~~AND ~~internal~~USE ~~control~~OF ~~over financial reporting that occurred~~PROCEEDS ~~during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.~~

34 None.

~~Table~~ITEM of3. ~~Contents~~DEFAULTS UPON SENIOR SECURITIES

~~PART II: OTHER INFORMATION~~ None.

ITEM 14. ~~LEGAL~~SUBMISSION ~~PROCEEDINGS~~OF MATTERS TO A VOTE OF SECURITY HOLDERS

~~In February 2003, Integral Energy Australia brought a claim against IUS (which was then known as SCT Utility Systems, Inc~~ None.~~) in the Supreme Court of New South Wales, Australia, relating to the~~ implementation of IUS software. On March 5, 2003, the Company acquired IUS from Systems and Computer Technology Corporation (“SCT”) and subsequently merged IUS into the Company. The Company is now the defendant in this lawsuit. The amount of damages asserted against the Company is not determinable. Pursuant to the terms of the Purchase Agreement among the Company and SCT and its affiliates, SCT and those affiliates of SCT that were a party to the Purchase Agreement agreed to defend the Company against the claims in this suit and to indemnify the Company from all losses relating thereto.

~~From~~ITEM ~~time to time, the Company is involved in other legal proceedings incidental to the conduct of its business~~5. ~~The~~OTHER ~~outcome of these claims cannot be predicted with certainty. The Company intends~~INFORMATION to defend itself vigorously in these actions. However, any settlement or judgment may have a material adverse effect on the Company’s results of operations in the period in which such settlement or judgment is paid or payment becomes probable. The Company does not believe that, individually or in aggregate, the legal matters to which it is currently a party are likely to have a material adverse effect on its results of operations or financial condition.

~~ITEM 2~~ None. ~~CHANGES IN SECURITIES AND USE OF PROCEEDS~~

~~None~~ITEM 6. EXHIBITS

~~ITEM~~The 3.following ~~DEFAULTS~~exhibits ~~UPON~~are ~~SENIOR~~filed ~~SECURITIES~~or furnished herewith or are incorporated by reference.

None.


Exhibit
Number		Description
10.1		Indus International, Inc. Board Compensation Policy (incorporated by reference to Exhibit 10.1 to the Form 8-K filed with the Commission July 28, 2005)

31.1		Rule 13a-14(a)/15d-14(a) Certification of CEO

31.2		Rule 13a-14(a)/15d-14(a) Certification of CFO

32.1		Section 1350 Certification of CEO *

~~ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS~~32

ITEM 5. OTHER INFORMATION

~~None~~* This exhibit is furnished to the Securities and Exchange Commission and is not deemed to be filed with the Securities and Exchange Commission as part of this report.

~~ITEM 6. EXHIBITS~~33

Exhibit

Number

Description

Section 1350 Certification of CFO *

Exhibit
Number		Description
10.1		Management Council Incentive Compensation Plan and Form of Agreement+
10.2		Executive Incentive Compensation Plan and Form of Agreement+
10.3		Form of Award Certificate for Stock Option under the 2004 Indus International, Inc. Long-Term Incentive Plan
10.4		Form of Award Certificate for Restricted Stock under the 2004 Indus International, Inc. Long-Term Incentive Plan
10.5		Employment Agreement dated as of January 28, 2005, between Joseph Trino and Indus International, Inc.
31.1		Rule 13a-14(a)/15d-14(a) Certification of CEO

SIGNATURE

35 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: August 8, 2005

		/s/ Thomas W. Williams

		Thomas W. Williams
		Executive Vice President and Chief Financial Officer
		(Principal Financial & Accounting Officer)

Exhibit
Number		Description
31.2		Rule 13a-14(a)/15d-14(a) Certification of CFO
32.1		Section 1350 Certification of CEO *
32.2		Section 1350 Certification of CFO *
+		Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment.
*		This exhibit is furnished to the Securities and Exchange Commission and is not deemed to be filed with the Securities and Exchange Commission as part of this report.

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.

		INDUS INTERNATIONAL, INC.
		(Registrant)
Date: February 7, 2005
		/s/ Thomas W. Williams
		Thomas W. Williams Executive Vice President and Chief Financial Officer (Principal Financial & Accounting Officer)

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