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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 1997

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 For
the Transition period from _______to______

Commission File Number 0-27030

INFINIUM SOFTWARE, INC.
(Exact name of registrant as specified in its charter)

Massachusetts 04-2734036
------------- ----------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)

25 Communications Way, Hyannis, MA 02601
(Address of principal executive offices, including Zip Code)

(508) 778-2000
(Registrant's telephone number, including area code)

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

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 12 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES X NO
--- ---

The number of shares outstanding of the registrant's Common Stock on March 31,
1997 was 11,943,996.

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INFINIUM SOFTWARE, INC.

INDEX

PAGE
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements
Condensed Consolidated Balance Sheet at September 30, 1996
and March 31, 1997...................................... 3

Condensed Consolidated Statement of Operations for the
three and six months ended March 31, 1996 and 1997...... 4

Condensed Consolidated Statement of Cash Flows for the six
months ended March 31, 1996 and 1997.................... 5

Notes to Condensed Consolidated Financial Statements ...... 6

ITEM 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.................................. 9

PART II - OTHER INFORMATION

ITEMS 1.- 3. Not applicable

ITEM 4. Submission of Matters to a Vote of Security Holders.......... 17

ITEM 5. Not applicable

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

SIGNATURES.............................................................. 18

EXHIBIT INDEX........................................................... 19

EXHIBITS................................................................ 20

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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS

INFINIUM SOFTWARE, INC.

CONDENSED CONSOLIDATED BALANCE SHEET
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

SEPTEMBER 30, MARCH 31,
1996 1997
---- ----
(UNAUDITED)

ASSETS
Current assets:
Cash, cash equivalents and marketable securities ............................ $43,337 $39,380
Accounts receivable, less allowance for doubtful accounts of $1,250
and $1,525 at September 30, 1996 and March 31, 1997, respectively .......... 12,354 15,369
Deferred income taxes ....................................................... 2,427 2,716
Prepaid expenses and other current assets ................................... 3,569 4,241
------- -------

Total current assets .................................................. 61,687 61,706
Property and equipment, net ................................................. 6,047 6,109
Capitalized software development costs, net ................................. 6,171 6,419
Goodwill and other intangibles, net ......................................... -- 2,135
Other assets ................................................................ 1,799 1,899
------- -------
Total assets .......................................................... $75,704 $78,268
======= =======

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable ............................................................ $ 4,495 $ 3,769
Accrued expenses ............................................................ 7,300 7,805
Income taxes payable ........................................................ 1,368 1,668
Deferred revenue ............................................................ 24,853 26,642
------- -------
Total current liabilities ............................................. 38,016 39,884

Deferred income taxes
2,038 568
------- -------
Stockholders' equity:
Common stock, $.01 par value; authorized 40,000 shares, issued and
outstanding 11,114 and 11,944 shares at September 30, 1996 and
March 31, 1997, respectively ............................................... 111 119
Additional paid-in capital .................................................. 27,394 32,351
Retained earnings ........................................................... 8,145 5,345
Cumulative translation adjustment ........................................... -- 1
------- -------
Total stockholders' equity ............................................ 35,650 37,816
------- -------
Total liabilities and stockholders' equity ............................ $75,704 $78,268
======= =======

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

INFINIUM SOFTWARE, INC.

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)

THREE MONTHS ENDED SIX MONTHS ENDED
------------------ ----------------
MARCH 31, MARCH 31, MARCH 31, MARCH 31,
1996 1997 1996 1997
---- ---- ---- ----

Revenue:
Software license fees ........................... $ 4,710 $ 5,659 $ 9,512 $10,993
Service revenue ................................. 11,795 14,151 23,314 27,097
------- ------- ------- -------
Total revenue ........................... 16,505 19,810 32,826 38,090
------- ------- ------- -------
Operating costs and expenses:
Cost of software license fees ................... 890 1,013 1,825 2,039
Cost of services ................................ 4,052 5,455 8,104 10,177
Research and development ........................ 3,436 4,035 6,802 7,670
Sales and marketing ............................. 5,782 6,820 11,297 13,108
General and administrative ...................... 1,817 1,848 3,446 3,551
Write-off of in-process research and
development acquired (Note 5) ................. -- 6,846 -- 6,846
------- ------- ------- -------
Total operating costs and expenses ...... 15,977 26,017 31,474 43,391
------- ------- ------- -------

Income (loss) from operations ..................... 528 (6,207) 1,352 (5,301)
Other income, net ................................. 334 469 629 995
------- ------- ------- -------
Income (loss) before provision (benefit)
for income taxes ................................ 862 (5,738) 1,981 (4,306)
Provision (benefit) for income taxes .............. 313 (2,007) 713 (1,506)
------- ------- ------- -------

Net income (loss) ................................. $ 549 $(3,731) $ 1,268 $(2,800)
======= ======= ======= =======
Per share data:
Net income (loss) per share ..................... $ 0.05 $ (0.30) $ 0.12 $ (0.23)
======= ======= ======= =======
Weighted average common and common
equivalent shares outstanding ..................... 11,254 12,456 10,805 12,120
======= ======= ======= =======

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

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INFINIUM SOFTWARE, INC.

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)

SIX MONTHS ENDED
----------------
MARCH 31, MARCH 31,
1996 1997
---- ----

Cash flows from operating activities:

Net income (loss) .................................................. $ 1,268 $ (2,800)
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities
Depreciation and amortization ................................... 2,280 2,832
Allowance for doubtful accounts ................................. 300 210
Deferred income taxes ........................................... 37 (1,759)
Write-off of in-process research and development acquired ....... -- 6,846
Changes in operating assets and liabilities, net of effects
from the acquisition of Time (Open Systems) Limited:
Accounts receivable ......................................... 712 (2,679)
Prepaid expenses and other current assets ................... (1,012) (640)
Other assets ................................................ (136) (100)
Accounts payable ............................................ (146) (999)
Accrued expenses ............................................ 184 (98)
Income taxes payable ........................................ (770) 299
Deferred revenue ............................................ (366) 811
-------- --------
Net cash provided by operating activities ................. 2,351 1,923
-------- --------
Cash flows from investing activities:
Purchase of marketable securities .................................. (29,736) (30,954)
Sale of marketable securities ...................................... 14,253 36,542
Purchase of property and equipment ................................. (1,808) (1,164)
Capitalization of software development costs ....................... (1,696) (1,725)
Acquisition of Time (Open Systems) Limited (Note 5) ................ -- (3,443)
-------- --------
Net cash used for investing activities ..................... (18,987) (744)
-------- --------
Cash flows from financing activities:
Proceeds from initial public offering of common stock .............. 12,827 --
Proceeds from exercise of stock options and employee stock
purchase plan .................................................... 885 451
Proceeds from repayments of notes receivable - stockholders ........ 379 --
-------- --------
Net cash provided by financing activities .................. 14,091 451
-------- --------
Effect of foreign exchange rate changes on cash ...................... -- 1
-------- --------
Net increase (decrease) in cash and cash equivalents ................. (2,545) 1,631

Cash and cash equivalents, beginning of period ....................... 8,161 7,817
-------- --------

Cash and cash equivalents, end of period ............................. $ 5,616 $ 9,448
======== ========

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

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INFINIUM SOFTWARE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)

1. BASIS OF PRESENTATION

The information at March 31, 1996 and 1997 and for the three and six month
periods then ended is unaudited, but includes all adjustments (consisting only
of normal recurring entries) which the Company's management believes to be
necessary for the fair presentation of the financial position, results of
operations, and changes in cash flows for the periods presented. The
accompanying interim financial statements should be read in conjunction with the
financial statements and related notes included in the Company's Annual Report
on Form 10-K for the fiscal year ended September 30, 1996. Certain information
and notes normally included in financial statements prepared in accordance with
generally accepted accounting principles have been condensed or omitted pursuant
to the Securities and Exchange Commission rules and regulations. Interim results
of operations for the three and six month periods ended March 31, 1997 are not
necessarily indicative of operating results for the full fiscal year.

2. FOREIGN CURRENCY TRANSLATION

As a result of economic factors relating to the Company's UK subsidiaries,
the functional currency of the subsidiaries has been redesignated to the British
Pound effective October 1, 1996. Accordingly, the assets and liabilities of the
UK subsidiaries have been translated into the U.S. dollar at the current
exchange rate, equity at the historical rate and income and expense items at an
average exchange rate for the period. Translation adjustments have been reported
as a cumulative translation adjustment within the equity section of the balance
sheet.

All other foreign subsidiaries and branches have retained the U.S. dollar
as their functional currency. Accordingly, monetary assets and liabilities of
these subsidiaries and branches are translated into the U.S. dollar at the
exchange rate in effect at period end and nonmonetary assets and liabilities are
remeasured at historic exchange rates. Income and expenses are remeasured at the
average exchange rate for the period. Translation gains and losses are reflected
in the consolidated statement of income.

3. NET INCOME PER SHARE

Net income per share is determined by dividing net income applicable to
common stock by the weighted average number of common shares and common
equivalent shares outstanding during the period. Common share equivalents are
computed using the treasury stock method and consist of common stock which may
be issuable upon exercise of outstanding common stock options and warrants to
purchase common stock, when dilutive. Fully diluted per share amounts are not
presented as the effect is not material. The computation of the weighted average
number of shares outstanding for the three months ended March 31, 1996 and 1997
is as follows:

THREE MONTHS ENDED SIX MONTHS ENDED
MARCH 31, MARCH 31,
--------- ---------
1996 1997 1996 1997
---- ---- ---- ----

Weighted average common and
common equivalent shares:
Common stock outstanding .......... 9,763 11,901 9,344 11,508
Common stock equivalents .......... 1,491 555 1,461 612
------ ------ ------ ------
11,254 12,456 10,805 12,120
====== ====== ====== ======

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INFINIUM SOFTWARE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT PER SHARE DATA)

3. NET INCOME PER SHARE, CONTINUED

In February, 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128 (SFAS 128), "Earnings per
Share." This Statement establishes and simplifies standards for computing and
presenting earnings per share. SFAS 128 will be effective for the Company's
first quarter of fiscal 1998, and requires restatement of all previously
reported earnings per share data that are presented. Early adoption of this
Statement is not permitted. SFAS 128 replaces primary and fully diluted earnings
per share with basic and diluted earnings per share. The Company expects that
basic earnings per share amounts will be accretive compared to the primary
earnings per share amounts, and diluted earnings per share amounts will not be
materially different from the fully diluted earnings per share amounts.

4. OTHER INCOME, NET

Other income, net consists of the following:

THREE MONTHS ENDED SIX MONTHS ENDED
------------------ ----------------
MARCH 31, MARCH 31, MARCH 31, MARCH 31,
1996 1997 1996 1997
---- ---- ---- ----

Interest income........... $363 $ 490 $ 694 $1,038
Foreign exchange loss..... (29) (21) (65) (43)
---- ----- ----- -----
$334 $ 469 $ 629 $ 995
==== ===== ===== =====

5. ACQUISITION

On January 6, 1997, the Company acquired all of the outstanding capital
stock of Time (Open Systems) Limited ("Time"), a UK-based privately held
software concern which developed and marketed a suite of client/server financial
applications. The transaction was consummated for $2,793 in cash, approximately
770 shares of the Company's common stock which was issued at the closing of the
acquisition and is being held pursuant to an escrow agreement under which the
shares will be released ratably over a three year period and $650 of related
acquisition costs. The value ascribed to the shares issued was $4,514.

The acquisition was accounted for as a purchase. Accordingly, the results
of operations of Time and the fair market values of the acquired assets and
assumed liabilities were included in the Company's financial statements as of
the date of the acquisition. The purchase price was allocated to the acquired
assets and assumed liabilities as follows:

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8

INFINIUM SOFTWARE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT PER SHARE DATA)

5. ACQUISITION, CONTINUED

Accounts receivable $ 546
Other current assets 32
Property and equipment 132
In-process research and development 6,846
Acquired software 312
Assembled workforce 468
Goodwill 1,477
Current liabilities (1,856)
-------
$ 7,957
=======

The amount allocated to in-process research and development was determined
by an independent appraiser and represented technology which had not reached
technological feasibility and had no alternative future use. Accordingly, this
amount of $6,846 was charged to operations at the acquisition date. The amounts
allocated to intangible assets are being amortized on a straight line basis over
their expected useful lives of 2-7 years.

Pro forma statements of operations are not shown as they would not differ
materially from reported results.

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

All statements contained herein that are not historical facts, including
but not limited to, statements regarding anticipated future expense levels and
capital requirements, the Company's future product development and marketing
plans, the Company's ability to obtain debt, equity or other financing, the
Company's ability to generate cash from operations, and the Company's ability to
attract and retain employees, are based on current expectations. These
statements are forward looking in nature and involve a number of risks and
uncertainties, as more fully described under "Factors Affecting Future
Performance." Actual results may differ materially from those described in the
forward-looking statements.

RESULTS OF OPERATIONS

Infinium Software, Inc., ("the Company"), formally known as Software 2000,
Inc., was founded in 1981 and offers a broad range of financial management,
human resource management and materials management business software
applications that run on the IBM AS/400 hardware platform. The Company also
offers a specialized manufacturing system designed to manage process
manufacturing operations. The Company's revenue is derived from two sources:
software license fees and service revenue. Software license fees includes
revenue from noncancellable software license agreements entered into between the
Company and its customers with respect to both the Company's products and third
party products distributed by the Company. Software license fee revenue is
recognized upon shipment of the software and when all significant contractual
obligations have been satisfied. The Company's service revenue is comprised of
software maintenance fees and fees for consulting services. Maintenance fees are
billed separately and are recognized ratably over the period of the maintenance
agreement, which is typically one year. Consulting service revenue is recognized
as the services are performed.

As discussed in Note 5 to the condensed consolidated financial statements,
the Company acquired all of the outstanding capital stock of Time (Open Systems)
Limited ("Time"), a UK-based privately held software concern which developed and
marketed a suite of client/server financial application software products (the
"Time Products") in January 1997. The Company expects to introduce the versions
of the Time Products for the Microsoft NT Server platform in North America and
other international markets in mid-1997, upon the completion of additional
product development. These products, along with the Microsoft NT Server-based
Human Resources Management product line now being developed by the Company, will
form the basis for the Company's planned expansion into the emerging market for
business applications designed for Windows NT servers.

The following table sets forth for the periods indicated the Company's
condensed consolidated statement of operations data expressed as a percentage of
total revenue and the percentage of dollar increase period over period for the
three and six months ended March 31, 1996 and 1997.

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10

THREE MONTHS ENDED MARCH 31, SIX MONTHS ENDED MARCH 31,
---------------------------- --------------------------
% OF TOTAL % OF $ % OF TOTAL % OF $
REVENUE INCREASE REVENUE INCREASE
------- -------- ------- --------
1996 1997 96 TO 97 1996 1997 96 TO 97
---- ---- -------- ---- ---- --------

Revenue:
Software license fees .............. 29% 29% 20% 29% 29% 16%
Service revenue .................... 71 71 20 71 71 16
--- --- ------ --- --- ----

Total revenue ................... 100 100 20 100 100 16
--- --- ------ --- --- ----

Operating costs and expenses:
Cost of software license fees ...... 5 5 14 6 5 12
Cost of services ................... 25 28 35 25 27 26
Research and development ........... 21 20 17 21 20 13
Sales and marketing ................ 35 34 18 34 34 16
General and administrative ......... 11 9 2 11 9 3
Write-off of in-process research
and development acquired ......... -- 35 n/a -- 18 n/a
--- --- ------ --- --- ----

Total operating costs and
expenses .................... 97 131 63 96 114 38
--- --- ------ --- --- ----

Income (loss) from operations ........ 3 (31) (1,276) 4 (14) (492)
--- --- ------ --- --- ----

Other income, net .................... 2 2 40 2 3 58
--- --- ------ --- --- ----

Income (loss) before provision
(benefit) for income taxes ......... 5 (29) (766) 6 (11) (317)
Provision (benefit) for income
taxes .............................. 2 (10) (741) 2 (4) (311)
--- --- ------ --- --- ----
Net income (loss) ................... 3% (19)% (780)% 4% (7)% (321)%
=== === ====== === === ====

Included in operating costs and expenses above, and further discussed in
note 5 to the condensed consolidated financial statements, is a one-time charge
of $6.8 million for the three and six months ended March 31, 1997 as a result of
the write-off of in-process research and development acquired in connection with
the acquisition of Time. On a pro forma basis, exclusive of this one-time
charge, operating costs and expenses would have reported $19.2 million and $36.5
million for the three and six months ended March 31, 1997, respectively,
resulting in a 20% and 16% increase over the same periods a year previous,
respectively, income from operations would have reported $0.6 million and $1.5
million for the three and six months ended March 31, 1997, respectively,
resulting in a 21% and 14% increase over the same periods a year previous,
respectively, and net income would have reported $0.7 million and $1.7 million
for the three and six months ended March 31, 1997, respectively, resulting in an
increase of 31% and 30% over the same periods a year previous, respectively. Net
income per share would have reported an increase of 19% from $0.05 for the
quarter ended March 31, 1996 to $0.06 for the quarter ended March 31, 1997 and a
16% increase from $0.12 for the six months ended March 31, 1996 to $0.14 for the
six months ended March 31, 1997.

QUARTER ENDED MARCH 31, 1996 COMPARED TO QUARTER ENDED MARCH 31, 1997

REVENUE. Total revenue, consisting of software license fees and service
revenue, increased 20%, from $16.5 million for the quarter ended March 31, 1996
to $19.8 million for the quarter ended March 31, 1997.

Software license fee revenue increased 20%, from $4.7 million for the
quarter ended March 31, 1996 to $5.7 million for the quarter ended March 31,
1997. The growth was predominately generated from domestic operations which grew
28% over the same period a year ago. The Asia Pacific region also contributed
with 21% growth over the same period a year ago. The Company believes that the
software license fee growth reflects a continued market acceptance of the
products and the efforts of target marketing into the process manufacturing and
healthcare markets.

Service revenue increased 20%, from $11.8 million for the quarter ended
March 31, 1996 to $14.2 million for the quarter ended March 31, 1997. The
Company's service revenue is comprised of software

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maintenance fees and fees for consulting services. Overall, the increase was
attributable to an increase in the installed base of customers and an increase
in larger consulting service engagements. The following table sets forth a
comparative breakout of the components of service revenue.

THREE MONTHS ENDED MARCH 31,
----------------------------
(IN THOUSANDS) % OF $ INCREASE
---------------
1996 1997 96 TO 97
---- ---- --------

Maintenance fee revenue $ 7,442 $ 8,378 13%
Consulting services revenue 4,353 5,773 33
------- ------- --
Total service revenue $11,795 $14,151 20%
======= ======= ==

COST OF SOFTWARE LICENSE FEES. Cost of software license fees consists
primarily of the cost of product media, manuals, shipping and amortization
expense related to capitalized software development costs. Cost of software
license fees increased 14%, from $0.9 million for the quarter ended March 31,
1996 to $1.0 million for the quarter ended March 31, 1997. Cost of software
license fees as a percentage of software license fee revenue decreased slightly
from 19% for the quarter ended March 31, 1996 to 18% for the quarter ended March
31, 1997. The decrease as a percentage of software license fees is attributed to
continued decreases in documentation-related expenses offset by an increase of
amortization of capitalized software development costs.

COST OF SERVICES. Cost of services consists of costs to provide training,
technical support and implementation consulting services to licensees of
Infinium Software products. Cost of services increased 35%, from $4.1 million
for the quarter ended March 31, 1996 to $5.5 million for the quarter ended March
31, 1997. Cost of services as a percentage of service revenue increased from 34%
for the quarter ended March 31, 1996 to 39% for the quarter ended March 31,
1997. The increase in the dollar amount of such costs and as a percentage of
service revenue resulted primarily from increased staffing and to an increase in
the use of third party consultants for delivery of consulting services in
response to continued growth in the customer base and to the continued demand
for consulting services.

RESEARCH AND DEVELOPMENT. Research and development expenses consist
primarily of engineering personnel costs reduced by capitalized software
development costs and, when applicable, research funding. Research and
development expenses increased 17%, from $3.4 million for the quarter ended
March 31, 1996 to $4.0 million for the quarter ended March 31, 1997. Research
and development spending, defined as research and development expenses before
capitalization of software development costs and, if applicable, research
funding, increased 16%, from $4.3 million for the quarter ended March 31, 1996
to $5.0 million for the quarter ended March 31, 1997. Research and development
spending as a percentage of total revenue was 26% for the quarter ended March
31, 1996 and 25% for the quarter ended March 31, 1997. The increase in research
and development expense and spending was due primarily to increased NT platform
development for the current period. The Company capitalized $0.8 million of
software development costs for each of the quarters ended March 31, 1996 and
1997.

The Company has numerous product development initiatives underway and
anticipates that expenditures in future periods will increase. In addition to
its traditional AS/400 platform efforts, major product initiatives are currently
underway on the Microsoft NT Server platform as a result of the recent
acquisition of Time with respect to financial management applications. The
Company is also making substantial investments to develop a new Human Resources
Management product line designed exclusively for the Microsoft NT Server market.

SALES AND MARKETING. Sales and marketing expenses consist primarily of
salaries, commissions, royalties, travel, promotional expenses, and facilities,
computers and communications costs for direct sales offices. Sales and marketing
expenses increased 18%, from $5.8 million for the quarter ended March 31, 1996
to $6.8 million for the quarter ended March 31, 1997. Sales and marketing
expenses as a percentage

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of total revenue decreased slightly from 35% for the quarter ended March 31,
1996 to 34% for the quarter ended March 31, 1997. The increase in dollar amount
was attributable to increased staffing in the direct sales force and an
expansion of distribution channels in preparation for the launch of the NT
products. The increase was also attributed to the roll-out of the new corporate
identity of Infinium Software from that of Software 2000. Sales and marketing
expenses on an absolute basis and as a percentage of revenue is expected to
continue to increase in the future as a result of these initiatives.

GENERAL AND ADMINISTRATIVE. General and administrative expenses consist
primarily of salaries of executive, administrative, financial and legal
personnel, as well as provisions for doubtful accounts, insurance, investor
relations and outside professional fees. General and administrative expenses was
$1.8 million for the quarters ended March 31, 1996 and 1997. General and
administrative expenses as a percentage of total revenue decreased from 11.0%
for the quarter ended March 31, 1996 to 9% for the quarter ended March 31, 1997.
The decrease as a percent of revenue is attributable to ongoing cost containment
efforts throughout the general and administrative areas.

WRITE-OFF OF IN-PROCESS RESEARCH AND DEVELOPMENT ACQUIRED. As discussed in
Note 5 to the condensed consolidated financial statements, the Company recorded
a one-time charge to operations of $6.8 million for the write-off of in-process
research and development acquired in connection with the acquisition of Time.

PROVISION (BENEFIT) FOR INCOME TAXES. The provisions (benefit) for federal,
state and foreign income taxes were $0.3 million and ($2.0) million for the
quarter ended March 31, 1996 and for the quarter ended March 31, 1997,
respectively. The effective tax rates were 36% for the quarter ended March 31,
1996 and 35.0% for the quarter ended March 31, 1997.

SIX MONTHS ENDED MARCH 31, 1996 COMPARED TO SIX MONTHS ENDED MARCH 31, 1997

REVENUE. Total revenue increased 16%, from $32.8 million for the six months
ended March 31, 1996 to $38.1 million for the six months ended March 31, 1997.
Software license fee revenue increased 16%, from $9.5 million for the six months
ended March 31, 1996 to $11.0 million for the six months ended March 31, 1997.
The software license fee growth reflects a continued market acceptance of the
products and the efforts of target marketing into the process manufacturing and
healthcare markets. Service revenue increased 16%, from $23.3 million for the
six months ended March 31, 1996 to $27.1 million for the six months ended March
31, 1997. The increase was primarily attributable to an increase in the
installed base of customers resulting in an increase in both maintenance revenue
and consulting service revenue.

The following table sets forth a comparative breakout of the components of
service revenue.

SIX MONTHS ENDED MARCH 31,
--------------------------
(IN THOUSANDS) % OF $ INCREASE
---------------
1996 1997 96 TO 97
---- ---- --------

Maintenance fee revenue $14,466 $16,532 14%
Consulting services revenue 8,848 10,565 19
------- ------- --
Total service revenue $23,314 $27,097 16%
======= ======= ==

COST OF SOFTWARE LICENSE FEES. Cost of software license fees increased 12%,
from $1.8 million for the six months ended March 31, 1996 to $2.0 million for
the six months ended March 31, 1997. Cost of software license fees as a
percentage of software license fee revenue remained consistent at 19% for the
six months ended March 31, 1996 and 1997.

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COST OF SERVICES. Cost of services increased 26%, from $8.1 million for the
six months ended March 31, 1996 to $10.2 million for the six months ended March
31, 1997. Cost of services as a percentage of service revenue increased from 35%
for the six months ended March 31, 1996 to 38% for the six months ended March
31, 1997. The increase in the dollar amount of such costs and as a percentage of
service revenue resulted primarily from an increase in the use of third party
consultants for delivery of consulting services into the customer base in
response to continued growth in the customer base and to the continued demand
for consulting services.

RESEARCH AND DEVELOPMENT. Research and development expenses increased 13%,
from $6.8 million for the six months ended March 31, 1996 to $7.7 million for
the six months ended March 31, 1997. Research and development spending, defined
as research and development expenses before capitalization of software
development costs and research funding, increased 13%, from $8.5 million for the
six months ended March 31, 1996 to $9.6 million for the six months ended March
31, 1997. Research and development spending as a percentage of total revenue was
26% for the six months ended March 31, 1996 and 25% for the six months ended
March 31, 1997. The increase in research and development expense and spending
was due primarily to increased NT platform development initiatives during the
current fiscal year. The Company capitalized $1.7 million of software
development costs for each of the six months ended March 31, 1996 and 1997.

SALES AND MARKETING. Sales and marketing expenses increased 16%, from $11.3
million for the six months ended March 31, 1996 to $13.1 million for the six
months ended March 31, 1997. Sales and marketing expenses as a percentage of
total revenue remained consistent at 34% for the six months ended March 31, 1996
and 1997. The increase in dollar amount was attributable to increased staffing
in the direct sales force and an expansion of distribution channels in
preparation for the launch of NT products as well as to the roll-out of the new
corporate identity of Infinium Software from that of Software 2000 during the
second quarter of the current fiscal year.

GENERAL AND ADMINISTRATIVE. General and administrative expenses increased
3%, from $3.4 million for the six months ended March 31, 1996 to $3.6 million
for the six months ended March 31, 1997. General and administrative expenses as
a percentage of total revenue decreased from 11.0% for the six months ended
March 31, 1996 to 9% for the six months ended March 31, 1997. The increase in
dollar amount of general and administrative expenses related primarily to
additional investor relation costs related to operating as a public company
offset somewhat by a decrease in the provision for doubtful accounts.

WRITE-OFF OF RESEARCH AND DEVELOPMENT ACQUIRED. As discussed in Note 5 to
the condensed consolidated financial statements, the Company recorded a one-time
charge to operations of $6.8 million for the write-off of in-process research
and development acquired in connection with the acquisition of Time.

PROVISION (BENEFIT) FOR INCOME TAXES. The provisions (benefit) for federal,
state and foreign income taxes were $0.7 million and ($1.5) million for the six
months ended March 31, 1996 and for the six months ended March 31, 1997,
respectively. The effective tax rates were 36% for the quarter ended March 31,
1996 and 35.0% for the six months ended March 31, 1997.

LIQUIDITY AND CAPITAL RESOURCES

As of March 31, 1997, the Company had cash, cash equivalents and marketable
securities of $39.4 million. During the first six months of fiscal 1997, the
Company used a net $4.0 million of cash, cash equivalents and marketable
securities of which $3.4 million was attributed to the acquisition of Time.
Other uses were to fund software development and to purchase computers and
equipment. The principal sources of cash, cash equivalents and marketable
securities was provided by operating activities and proceeds from the exercise
of stock options under the Company's stock option plans and employee stock
purchase plan. In October, 1996, the Company's $5.0 million working capital
revolving line of credit with a bank expired and the Company

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does not currently plan to negotiate another line. The Company had not made any
borrowings under the facility.

The Company's accounts receivable balance, net of the allowance for
doubtful accounts, was $15.9 million at March 31, 1997 and $12.4 million at
September 30, 1996. Days sales of receivables outstanding ("DSO") was 69 days at
March 31, 1997 compared to 77 days at the end of last quarter. The Company
calculates DSO as accounts receivable, net of allowance for doubtful accounts
divided by the current quarters revenue multiplied by 90. The decrease in DSO
from the prior quarter resulted primarily from collections on accounts
receivable.

Deferred revenue remained consistent at $26.6 million at March 31, 1997 and
December 31, 1996. This was a 7% increase from the $24.9 million at September
30, 1996. The increase in deferred revenue was primarily due to an increase in
deferred license fee revenue and deferred consulting services as a result of
continued growth in the customer base and to the continued demand for consulting
services.

The Company believes that cash, cash equivalents and marketable securities
on hand and cash flows from operations will be sufficient to fund its operations
at least through fiscal 1998. While operating activities may provide cash in
certain periods, to the extent the Company experiences growth in the future, the
Company anticipates that its operating and investing activities may use cash,
and consequently such growth may require the Company to obtain additional
sources of financing. In addition, although there are no current agreements or
negotiations with respect to additional material acquisitions of complementary
businesses, products or technologies, such transactions could, if they were to
occur, require additional sources of financing.

FACTORS AFFECTING FUTURE PERFORMANCE

The Company's quarterly revenue and operating results have varied
significantly in the past and are likely to vary substantially from quarter to
quarter in the future. Such fluctuations may result in volatility in the price
of the Company's Common Stock. Quarterly revenue and operating results may
fluctuate as a result of a variety of factors, including the Company's lengthy
sales cycle, the proportion of revenue attributable to license fees versus
service revenue, changes in the level of operating expenses, demand for the
Company's products, the introduction of new products and product enhancements by
the Company or its competitors, the Company's ability to attract and retain
employees, changes in customer budgets, competitive conditions in the industry
and general economic conditions. Further, the purchase of the Company's products
often involves a significant commitment of capital by its customers with the
attendant delays frequently associated with large capital expenditures and
authorization procedures within an organization. For these and other reasons,
the sales cycles for the Company's products are typically lengthy and subject to
a number of significant risks over which the Company has little or no control.
The Company historically has operated with little software license backlog
because its software products are generally shipped as orders are received. The
Company has often recognized a substantial portion of its revenue in the last
month of the quarter and often in the last week of that month. As a result,
license fees in any quarter are substantially dependent on orders booked and
shipped in the last month or last week of that quarter. Accordingly, a small
variation in the timing of recognition of revenue for specific transactions is
likely to adversely and disproportionately affect the Company's operating
results for a quarter because the Company establishes its expenditure levels on
the basis of its expected future revenue and only a small portion of the
Company's expenses vary with its revenue. Accordingly, the Company believes that
period to period comparisons of results of operations are not necessarily
meaningful and should not be relied upon as indicative of future performance.

The Company's business has experienced and is expected to continue to
experience significant seasonality. In recent years, the Company has had greater
demand for its products in its fourth fiscal quarter and has experienced lower
revenues in its succeeding first and second fiscal quarters. The fluctuations
are caused primarily by customer purchasing patterns and the Company's sales
recognition programs which reward and recognize sales personnel on the basis of
achievement of annual performance

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quotas. Due to the factors set forth in this section, it is likely that in some
future quarter the Company's operating results will be below the expectations of
the Company and public market analysts and investors. In such event, the price
of the Company's Common Stock would likely be materially adversely affected.

The business applications software market is characterized by rapid
technological change, frequent new product introductions, evolving industry
standards and changes in customer demands. The introduction of products
embodying new technologies and the emergence of new industry standards can
render existing products obsolete and unmarketable. The Company's future success
will depend in part on its ability to enhance existing products and services and
to develop and introduce new products and services to meet changing client
requirements. There can be no assurance that the Company will be successful in
developing and marketing product enhancements or new products that respond to
technological change or evolving industry standards, that the Company will not
experience difficulties that could delay or prevent the successful development,
introduction and marketing of these products and enhancements, or that any new
products and product enhancements it may introduce will achieve market
acceptance. In addition, there can be no assurance that the Company will not
encounter product development delays in the future or that, despite testing by
the Company, errors will not be found in new products or product enhancements
after commencement of commercial shipments, resulting in loss of market share,
delay in market acceptance, or warranty claims which could have a material
adverse effect upon the Company's business, operating results and financial
condition.

The majority of the Company's products, maintenance and other services
related thereto, are presently designed for users of IBM AS/400 mid-range
computers. Future revenue from licenses of present products and sales of
services and recurring maintenance revenue are therefore dependent on new sales
and continued widespread use of the AS/400 and the continued support of such
computers by IBM. Because the Company's primary current source of revenue comes
from customers using IBM mid-range computers, a significant shift in the way the
Company's customers use computers may have a material adverse effect on the
Company's business. In addition, because the Company's primary product line
requires the use of IBM's OS/400 operating system, the Company may be required
to adapt those products to any changes made in such operating system in the
future. The Company's inability to adapt to future changes in the OS/400
operating system, or delays in doing so, could have a material adverse effect on
the Company's business, operating results and financial condition.

The Company's development and implementation of new human resources
software applications to run on the Microsoft Windows NT servers involve
significant research and development expenditures and more intense competition
from a larger number of competitors. There can be no assurance that the Company
will be successful in developing and marketing these products or will be able to
compete successfully against current or future competitors.

In addition, the Company recently acquired all of the outstanding
capital stock of Time, a company which had developed a suite of client server
financial application software products. Although the Company expects to
introduce enhanced versions of certain of the Time Products in North America
and other international markets in mid-1997, there can be no assurance that it
will complete the product enhancements necessary for such introductions within
that period.

The business applications software market is highly competitive and rapidly
changing. A number of companies offer products similar to the Company's products
and target the same customers as the Company. The Company believes its ability
to compete depends upon many factors within and outside its control, including
the timely development and introduction of new products and product
enhancements, product functionality, performance, price, reliability, customer
service and support, sales and marketing efforts and product distribution. The
Company believes that competition in its industry is undergoing rapid change and
that the barriers to competition between market segments that have previously
existed are decreasing. Due to the relatively low barriers to entry in the
software market, the Company expects additional competition from other
established and emerging companies as the client/server business

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applications software market continues to develop and expand. Increased
competition may result in price reductions, reduced gross margins and loss of
market share, any of which would have a material adverse effect on the Company's
business, operating results and financial condition. There can be no assurance
that the Company will be able to compete successfully against current or future
competitors or that competitive pressures will not have a material adverse
effect on the Company's business, operating results, and financial condition.

Revenue from customers outside North America represented 8.7% and 10.6% of
the Company's total revenue in fiscal 1995 and fiscal 1996, respectively. The
Company believes that its revenue and future operating results will depend, in
part, on its ability to increase sales in international markets. There can be no
assurance that the Company will be able to maintain or increase its current
level of international revenue. An important part of the Company's strategy is
to expand its indirect marketing channels in international markets. There can be
no assurance that the Company will be able to attract and retain international
distributors and resellers that will be able to market the Company's products
effectively and will be qualified to provide timely and cost-effective customer
support and service. The inability to attract and retain important distributors
and resellers could materially and adversely affect the Company's international
business, operating results and financial condition. Other risks inherent to the
Company's international business activities generally include unexpected changes
in regulatory requirements, tariffs and other trade barriers, costs and
difficulties of localizing products for foreign countries, lack of acceptance of
localized products in foreign countries, longer accounts receivable payment
cycles, difficulty in managing international operations, potentially adverse tax
consequences including restrictions on the repatriation of earnings, the burdens
of complying with a wide variety of foreign laws and economic instability. There
can be no assurance that such factors would not have a material adverse affect
on the Company's future international revenue, and consequently, on the
Company's business, operating results and financial condition.

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PART II - OTHER INFORMATION

Items 1 - 3. Not applicable

Item 4. Submission of Matters to a Vote of Security Holders

(a) The Company's Annual Meeting of Stockholders was held on
Friday, February 14, 1997.
(b) Manuel Correia and Frederick J. Lizza were elected as Class
I directors at the meeting. The terms of office of Robert A.
Pemberton, Robert P. Schechter, Roland Pampel and R. Stephen
Cheheyl as Class II and Class III directors continued after
the meeting.
(c) At the meeting, the stockholders elected the Company's Class
I Directors as follows:

Broker
------
Name For Against Withheld Abstentions Non-votes
- ---- --- ------- -------- ----------- ---------

Correia 10,784,402 17,689
Lizza 10,703,127 98,964

In addition, the stockholders approved the change of the
Company's corporate name to "Infinium Software, Inc."

Broker
------
For Against Withheld Abstentions Non-votes
--- ------- -------- ----------- ---------

10,637,652 57,744 32,795 73,900

Finally, the stockholders ratified the selection of the firm of
Price Waterhouse LLP as auditors for the Company for the fiscal year ending
September 30, 1997.

Broker
------
For Against Withheld Abstentions Non-votes
--- ------- -------- ----------- ---------

10,695,353 91,208 15,530

Item 5. Not applicable

Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 3(i) Articles of Amendment.
Exhibit 3(ii) Third Amended and Restated By-Laws.
Exhibit 4 Stock Certificate.
Exhibit 27 Financial Data Schedule.

(b) Reports on Form 8-K

On January 21, 1997, the Company filed a Current Report on
Form 8-K, Item 9, reporting the Company's acquisition of all
of the issued share capital of Time (Open Systems) Limited,
a corporation formed under the laws of the United Kingdom,
in exchange for $2,793,450 in cash and 769,867 shares of the
Company's Common Stock (the "Company Shares"). The Company
Shares were issued by the Company pursuant to an exemption
from registration provided by Regulation S under the
Securities Act of 1933.

On February 24, 1997, the Company filed a Current Report on
Form 8-K, Item 5, reporting that the stockholders of the
Company approved an amendment to the Restated Articles of
Organization changing the corporate name to Infinium
Software, Inc. from Software 2000, Inc., effective February
18, 1997. In connection with the change in name, the
Company's Nasdaq National Market ticker symbol was changed
to INFM from SFWR.

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SIGNATURES

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

Dated: May 14, 1997

INFINIUM SOFTWARE, INC.
by:

/s/ DANIEL J. KOSSMANN
------------------------
Daniel J. Kossmann
Chief Financial Officer

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INFINIUM SOFTWARE, INC.

EXHIBIT INDEX

EXHIBIT
NUMBER DESCRIPTION PAGE
------ ----------- ----

3(i) Articles of Amendment 20
3(ii) Third Amended and Restated By-Laws 24
4 Stock Certificate 37
27 Financial Data Schedule 38