Table of Contents 1 - Solutions 2 - Financial Highlights 3 - To Our Shareholders 4 - Annual Value 5 - Unique Position 6 - Industry Leaders Validation 7 - Investment Opportunity | E-Bussiness Solutions 8 - Customer Benefits | Competitions 9 - Process Industry Expertise | Internet Affect 10 - Future Growth | Vision for Future 11 - Contact Information Financials Section___________ I - Discuss/Analysis of Financial Condition & Results of Ops II - Consolidated Statements of Operations III - Consolidated Balance Sheets IV - Consolidated Statements of Cash Flows V - Statements of Stockholders’ Equity & Income VI - Notes to Consolidated Financial Statements VI.1 - Operations VI.2 - Significant Account Policies VI.3 - Restructuring and Other Changes VI.4 - Acquiisitions VI.5 - Line of Credit VI.6 - Long-Term Obligations VI.7 - 5¼% Convertible Subordinated Debentures VI.8 - Preffered Stock VI.9 - Common Stock VI.10 - Income Taxes VI.11 - Operating Leases VI.12 - Sale of Installments Receivable VI.13 - Commitments and Contingencies VI.14 - Retirement and Profit Sharing Plants VI.15 - Joint Ventures and Other Investments VI.16 - Accurued Expenses VI.17 - Related Party Transactions VI.18 - Segment and Geographic Information VII - Report of Independent Public Accountants Success Stories Section_____ Success Stories - BP Success Stories - BORDEN Success Stories - ROHM and HAAS Success Stories - DOW Success Stories - UNION CARBIDE Success Stories - PETRO VANTAGE Consolidated Statements of Cash Flows In Thousands Years ended June 30,       1998 1999 2000             Cash flows from operating activities:                   Net income (loss)     $16,211 $(20,795) $(5,428)    Adjustments to reconcile net income (loss) to net cash                    provided by (used in) operating activities                  Depreciation and amortization   14,163 18,336 16,327       Charge for in-process research and development   8,472 —          Deferred income taxes   (2,749) (14,124) (6,201)       Writeoff of assets related to restructuring   — 3,060 —       Changes in assets and liabilities                     Accounts receivable   (23,601) (2,372) (7,977)          Unbilled services   (5,477) 1,186 (5,625)          Prepaid expenses and other current assets      (396) (2,061)    (4,119)          Long-term installments receivable   (10,167) 3,424    4,021          Accounts payable and accrued expenses   14,963 4,577 18,555          Unearned revenue   1,713 4,040 3,831          Deferred revenue   5,744 1,179 3,774             Net cash provided by (used in) operating activities 18,876 (3,550) 28,014 Cash flows from investing activities:                     Purchase of property and leasehold improvements       (19,384) (7,688)    (9,682)    Increase in computer software development costs       (3,900) (2,966) (4,082)    (Increase) decrease in other assets       (3,981) 323 (6,826)    (Increase) decrease in short-term investments       (18,464)    (29,845) 373    (Decrease) increase in other liabilities          (28)    (289)    400    Cash acquired in immaterial poolings       (1,123) — —    Cash used in the purchase of business, net of cash acquired          (9,911)    (1,200)    (2,085)             Net cash used in investing activities (56,791) (41,665) (21,902) Cash flows from financing activities:                     Issuance of common stock under employee stock purchase plans        3,878    4,398    3,860    Issuance of common stock under employee stock ownership plan        478 — —    Exercise of stock options and warrants     7,247 913 7,860    Repurchase of common stock     (2) — —    Proceeds from 5 1/4% convertible subordinated debentures     86,250 — —    Additions to (payments of) long-term debt and capital lease obligations     769 (947) (2,266)    Payment of dividends     (384) (3,957) (444)             Net cash provided by financing activities 98,236 407 9,010 Effect of exchange rate changes on cash and cash equivalents       98 (122) 210 Increase (decrease) in cash and cash equivalents       60,419 (44,930) 15,332 Cash and cash equivalents, beginning of period       18,550 78,969 34,039 Cash and cash equivalents, end of period       $78,969 $34,039 $49,371 Supplemental disclosure of cash flow information:                   Cash paid for income taxes     $1,363 2,985 $806    Cash paid for interest     $245 $4,709 $4,972 Supplemental schedule of noncash investing and financing activities:                   Increase in equipment under capital lease obligations     $2,351 $ — $ —    Increase in additional paid-in capital and decrease in accrued expenses                    relating to the tax benefit of exercise of nonqualified stock options   $6,512 $423 $7,777 Supplemental disclosure of cash flows related to acquisitions:                   The Company acquired certain companies as described in                 Note 4. These acquisitions are summarized as follows:                    Fair value of assets acquired, excluding cash     $11,316 $1,290 $2,360       Payments in connection with the acquisitions, net of cash acquired     (9,911) (1,200) (2,085)             Liabilities assumed $1,405 $90 $275   During the fiscal year 1998, the Company acquired NeuralWare, Inc., the SAST Corporation Limited, Cimtech S.A./ N.V., Contas Process Control S.r.L., Zyqad Limited and Treiber Controls, Inc. During the fiscal year 1999, the Company acquired Syllogistics, Inc. All of these acquisitions were accounted for as poolings of interests. Due to their immateriality to the financial position and results of operations of the Company, the historical financial statements were not restated. The accompanying notes are an integral part of these consolidated financial statements. Table of Contents 1 - Solutions 2 - Financial Highlights 3 - To Our Shareholders 4 - Annual Value 5 - Unique Position 6 - Industry Leaders Validation 7 - Investment Opportunity | E-Bussiness Solutions 8 - Customer Benefits | Competitions 9 - Process Industry Expertise | Internet Affect 10 - Future Growth | Vision for Future 11 - Contact Information Financials Section___________ I - Discuss/Analysis of Financial Condition & Results of Ops II - Consolidated Statements of Operations III - Consolidated Balance Sheets IV - Consolidated Statements of Cash Flows V - Statements of Stockholders’ Equity & Income VI - Notes to Consolidated Financial Statements VI.1 - Operations VI.2 - Significant Account Policies VI.3 - Restructuring and Other Changes VI.4 - Acquiisitions VI.5 - Line of Credit VI.6 - Long-Term Obligations VI.7 - 5¼% Convertible Subordinated Debentures VI.8 - Preffered Stock VI.9 - Common Stock VI.10 - Income Taxes VI.11 - Operating Leases VI.12 - Sale of Installments Receivable VI.13 - Commitments and Contingencies VI.14 - Retirement and Profit Sharing Plants VI.15 - Joint Ventures and Other Investments VI.16 - Accurued Expenses VI.17 - Related Party Transactions VI.18 - Segment and Geographic Information VII - Report of Independent Public Accountants Success Stories Section_____ Success Stories - BP Success Stories - BORDEN Success Stories - ROHM and HAAS Success Stories - DOW Success Stories - UNION CARBIDE Success Stories - PETRO VANTAGE