<PAGE>   1
 
     As filed with the Securities and Exchange Commission on April 24, 1998
 
                                                      Registration No. 333-
================================================================================
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                            ------------------------
 
                                    FORM S-1
            REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
                            ------------------------
 
                     INTERNATIONAL INTEGRATION INCORPORATED
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
                            ------------------------
 
<TABLE>
<S>                                <C>                                <C>
             DELAWARE                             7371                            04-3169145
 (STATE OR OTHER JURISDICTION OF      (PRIMARY STANDARD INDUSTRIAL             (I.R.S. EMPLOYER
  INCORPORATION OR ORGANIZATION)      CLASSIFICATION CODE NUMBER)           IDENTIFICATION NUMBER)
</TABLE>
 
                            ------------------------
 
                                101 MAIN STREET
                              CAMBRIDGE, MA 02142
                                 (617) 250-2500
                         (ADDRESS AND TELEPHONE NUMBER
                  OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
                            ------------------------
 
                                  MICHAEL PEHL
                      CHIEF EXECUTIVE OFFICER AND CHAIRMAN
                     INTERNATIONAL INTEGRATION INCORPORATED
                                101 MAIN STREET
                              CAMBRIDGE, MA 02142
                                 (617) 250-2500
                          (NAME, ADDRESS AND TELEPHONE
                          NUMBER OF AGENT FOR SERVICE)
                            ------------------------
 
                                   COPIES TO:
 
<TABLE>
<S>                                                 <C>
                PETER B. TARR, ESQ.                                JOHN A. MELTAUS, ESQ.
              JEFFREY A. STEIN, ESQ.                          TESTA, HURWITZ & THIBEAULT, LLP
                 HALE AND DORR LLP                                    125 HIGH STREET
                  60 STATE STREET                               BOSTON, MASSACHUSETTS 02110
            BOSTON, MASSACHUSETTS 02109                          TELEPHONE: (617) 248-7000
             TELEPHONE: (617) 526-6000                           TELECOPY: (617) 248-7100
             TELECOPY: (617) 526-5000
</TABLE>
 
                            ------------------------
 
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:  As soon as
practicable after the effective date hereof.
 
    If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box.  [ ]
 
    If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering.  [ ]
 
    If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration number of the earlier effective registration statement for the same
offering.  [ ]
 
    If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.  [ ]
------------------
 
    If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box.  [ ]
--------------------------------------------------------------------------------
 
                        CALCULATION OF REGISTRATION FEE
================================================================================
 
<TABLE>
<S>                                                <C>                              <C>
-------------------------------------------------------------------------------------------------------------------
                                                          PROPOSED MAXIMUM
TITLE OF EACH CLASS OF                                   AGGREGATE OFFERING                    AMOUNT OF
SECURITIES TO BE REGISTERED                                   PRICE(1)                    REGISTRATION FEE(2)
-------------------------------------------------------------------------------------------------------------------
Common Stock, $0.01 par value....................            $40,250,000                        $12,197
===================================================================================================================
</TABLE>
 
(1) Estimated solely for the purpose of calculating the amount of the
    registration fee pursuant to Rule 457(o) under the Securities Act of 1933.
 
(2) Calculated pursuant to Rule 457(a) based on an estimate of the proposed
    maximum aggregate offering price.
 
    THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
================================================================================
<PAGE>   2
 
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
 
PROSPECTUS (Subject to Completion)
Issued April 24, 1998
 
                                           Shares
 
                                     [LOGO]
                                  COMMON STOCK
 
                            ------------------------
  ALL OF THE SHARES OF COMMON STOCK BEING OFFERED HEREBY ARE BEING SOLD BY THE
COMPANY. PRIOR TO THIS OFFERING, THERE HAS BEEN NO PUBLIC MARKET FOR THE COMMON
STOCK OF THE COMPANY. IT IS CURRENTLY ESTIMATED THAT THE INITIAL PUBLIC OFFERING
PRICE WILL BE BETWEEN $        AND $        PER SHARE. SEE "UNDERWRITERS" FOR A
  DISCUSSION OF THE FACTORS TO BE CONSIDERED IN DETERMINING THE INITIAL PUBLIC
OFFERING PRICE. APPLICATION HAS BEEN MADE TO HAVE THE COMMON STOCK APPROVED FOR
        QUOTATION ON THE NASDAQ NATIONAL MARKET UNDER THE SYMBOL "ICUB."
 
                            ------------------------
 
 THIS OFFERING INVOLVES A HIGH DEGREE OF RISK. SEE "RISK FACTORS" COMMENCING ON
                                 PAGE 5 HEREOF.
 
                            ------------------------
  THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
 EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
   AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
                               CRIMINAL OFFENSE.
                            ------------------------
 
                            PRICE $         A SHARE
                            ------------------------
 
<TABLE>
<CAPTION>
                                                  UNDERWRITING
                                       PRICE TO  DISCOUNTS AND   PROCEEDS TO
                                        PUBLIC   COMMISSIONS(1)   COMPANY(2)
                                       --------  --------------  ------------
<S>                                    <C>       <C>             <C>
Per Share............................     $            $              $
Total(3).............................  $               $              $
</TABLE>
 
------------
    (1) The Company and the Selling Stockholders have agreed to indemnify the
        Underwriters against certain liabilities, including liabilities under
        the Securities Act of 1933, as amended. See "Underwriters."
 
    (2) Before deducting expenses payable by the Company estimated at $950,000.
        The Company has agreed to pay the expenses of the Selling Stockholders,
        other than underwriting discounts and commissions.
 
    (3) The Company and the Selling Stockholders have granted the Underwriters
        an option, exercisable within 30 days of the date hereof, to purchase up
        to an aggregate of         additional Shares at the price to public less
        underwriting discounts and commissions for the purpose of covering
        over-allotments, if any. If the Underwriters exercise such option in
        full, the total price to public, underwriting discounts and commissions,
        proceeds to Company and proceeds to Selling Stockholders will be
        $        , $        , $        and $        , respectively. See
        "Underwriters."
 
                            ------------------------
 
     The Shares are offered, subject to prior sale, when, as and if accepted by
the Underwriters named herein and subject to approval of certain legal matters
by Testa, Hurwitz & Thibeault, LLP, counsel for the Underwriters. It is expected
that delivery of the Shares will be made on or about           , 1998 at the
offices of Morgan Stanley & Co. Incorporated, New York, New York, against
payment therefor in immediately available funds.
                            ------------------------
MORGAN STANLEY DEAN WITTER
                                 BT ALEX. BROWN
                                                                  UBS SECURITIES
 
                  , 1998
<PAGE>   3
 
     NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY, THE SELLING
STOCKHOLDERS OR ANY UNDERWRITER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO
SELL, OR A SOLICITATION OF AN OFFER TO BUY, ANY SECURITIES OTHER THAN THE
REGISTERED SECURITIES TO WHICH IT RELATES OR AN OFFER TO, OR A SOLICITATION OF,
ANY PERSON IN ANY JURISDICTION WHERE SUCH AN OFFER OR SOLICITATION WOULD BE
UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE
HEREOF.
                            ------------------------
 
     UNTIL                , 1998 (25 DAYS AFTER THE COMMENCEMENT OF THIS
OFFERING), ALL DEALERS EFFECTING TRANSACTIONS IN THE COMMON STOCK, WHETHER OR
NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS DELIVERY REQUIREMENT IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER
A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD
ALLOTMENTS OR SUBSCRIPTIONS.
                            ------------------------
 
                               TABLE OF CONTENTS
 
<TABLE>
<CAPTION>
                                             PAGE
                                             ----
<S>                                          <C>
Prospectus Summary.........................    3
Risk Factors...............................    5
The Company................................   13
Use of Proceeds............................   13
Dividend Policy............................   13
Capitalization.............................   14
Dilution...................................   15
Selected Consolidated Financial Data.......   16
Management's Discussion and Analysis of
  Financial Condition and Results of
  Operations...............................   17
Business...................................   23
</TABLE>
 
<TABLE>
<CAPTION>
                                             PAGE
                                             ----
<S>                                          <C>
Management.................................   35
Certain Transactions.......................   45
Principal Stockholders.....................   46
Description of Capital Stock...............   48
Shares Eligible for Future Sale............   51
Underwriters...............................   53
Legal Matters..............................   54
Experts....................................   54
Change in Accountants......................   54
Additional Information.....................   55
Index to Consolidated Financial
  Statements...............................  F-1
</TABLE>
 
                            ------------------------
 
     The Company intends to furnish its stockholders with annual reports
containing audited consolidated financial statements and an opinion thereon
expressed by an independent public accounting firm and with quarterly reports
for the first three quarters of each year containing unaudited consolidated
interim financial information.
                            ------------------------
 
     i-Cube, Transforming the Business World, i-Structure, iMPACT and the i-Cube
logo are service marks of the Company. This Prospectus also includes other
service marks, trademarks and trade names of the Company and of companies other
than the Company.
                            ------------------------
 
     Except as set forth in the consolidated financial statements or as
otherwise indicated herein, all information in this Prospectus (i) assumes no
exercise of the Underwriters' over-allotment option; (ii) assumes the filing
prior to the closing of this offering of the Amended and Restated Certificate of
Incorporation of the Company (the "Restated Certificate of Incorporation")
increasing the authorized shares of Common Stock, and implementing certain
provisions described below under "Description of Capital Stock -- Delaware Law
and Certain Charter and By-Law Provisions; Anti-Takeover Effects," and the
receipt of stockholder approval therefor; and (iii) reflects a three-for-two
split of the Company's Common Stock effected in February 1997. See "Description
of Capital Stock," "Underwriters" and Note 5 of Notes to Consolidated Financial
Statements. As used in this Prospectus, the "Company" and "i-Cube" refer to
International Integration Incorporated and its subsidiaries.
                            ------------------------
 
     CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK.
SPECIFICALLY, THE UNDERWRITERS MAY OVER-ALLOT IN CONNECTION WITH THE OFFERING,
AND MAY BID FOR, AND PURCHASE, SHARES OF THE COMMON STOCK IN THE OPEN MARKET.
FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITERS."
 
                                        2
<PAGE>   4
[ARTWORK PORTRAYING THE COMPANY'S SERVICES. THE TEXT CONTAINED WITHIN THE
ARTWORK IS AS FOLLOWS:

[Introduction]
Transforming the Business World

As the business world changes, legacy systems have limited the ability of many
enterprises to compete. The gap between where they are -- with their existing
inflexible information technology infrastructure -- and where they want to be --
agile enough to rapidly adopt new competitive strategies -- is quickly growing.
i-Cube helps Fortune 1000 and other large enterprises close that gap.

[Section 1:]
The Business Situation:

Businesses today face the constant need to react quickly to changes in their
marketplace.

Deregulation, industry consolidation, globalization of product and vendor
markets, demand for more responsive customer service -- all create a need to
continually develop and implement new strategies rapidly.

A need to overcome the restrictive aspects of legacy systems.

i-Cube helps companies eliminate these constraints, while preserving the
investment they have made in their existing systems.

So applications can respond to the new demands of business.

Can interface with emerging technologies.

Can be better prepared for a future of changing business requirements.
<PAGE>   5
[Case study:]
For McDonnell Douglas (The Boeing Company), i-Cube migrated four legacy systems
into one common client/server-based system that coordinates all contractual
requirements. While the rearchitected system provides screens and functions
familiar to users -- minimizing training costs -- the application now runs on an
open systems framework that supports swift enhancement.

[Section 2:]
The Business Methods:

i-Cube helps some of the largest organizations in the world meet their business
challenges.

With iMPACT, a suite of services including Information Systems Consulting,
Application Implementation Services and Customer Support.

Services designed to help i-Cube customers improve their competitiveness.

Services that incorporate a proven set of software tools, technologies and
methodologies.

The i-Structure.

A set of methodologies and technologies supporting the development and migration
of scalable, multi-tier, client/server applications.

Applications that are independent of the hardware and operating systems on which
they operate.

That are adaptable to future technology or business changes.

That are easily maintainable.

i-Cube uses the i-Structure for constructing large-scale, complex applications
in a rapid, predictable, low-risk manner.
<PAGE>   6
And for migrating legacy applications by deconstructing them and reconstructing
their components into an enhanced, open systems environment.

Providing an application infrastructure with the flexibility customers need to
adapt their IT environments as their businesses evolve.

[GRAPHIC: A stylized depiction of the main lines of service provided by i-Cube,
with separate sections labeled accordingly. Section #1 reads: Information
Systems Consulting -- Solutions Workshops, Application Staging & Planning;
Section #2 reads: Application Implementation Services -- Application Design
(Application Migration, including Rearchitect, Rapid Enhancement Deployment),
Custom Development (Rapid Application Development), and Application Integration;
Section #3 reads: Customer Support -- Skills Enhancement & Empowerment, Rollout
& Transitional Maintenance.]

[CAPTION: i-Cube's Suite of Services]

[Case study:]
For Mercedes-Benz Lease Finanz, i-Cube performed a complete overhaul of the
company's lease finance system to support creative new finance options for
private customers and allow rapid feedback on credit applications to
potential customers. i-Cube helped the company achieve its goal of reducing
finance approval time from two to three days to 15 minutes.

[Section 3:]
The People:

i-Cube believes that the quality of its people will determine the quality of
services it delivers to its clients.

Placing as great a focus on its people as on its technology, i-Cube is committed
to attracting and retaining a team of high-caliber professionals with deep
business and technology experience.

So people, technology and methods work together to deliver results to clients.

It's a culture built on teamwork. The company's investment in its people
includes extensive team-building experiences for all employees. Initial and
ongoing training.
<PAGE>   7
Mentoring. Pay-for-performance. Opportunities for accelerated career
advancement. A flexible work environment. Stock ownership opportunities for all
employees.

The i-Culture.

Helping the company foster teamwork, entrepreneurial values, leadership and a
commitment to client success.

[GRAPHIC: A stylized depiction of the i-Culture as a cube with sides
representing the people, the technology and the methods i-Cube employs to
deliver value to clients.]

[CAPTION: The i-Culture: i-Cube understands the important role its people play
in delivering solutions to clients.]

[Callout:]
The i-Cube Mission
To help clients create business advantage by rapidly revitalizing and
implementing strategic information solutions

i-Culture Values
These values are deeply held principles that govern and guide i-Cube in its
relationships with clients, team members, partners, communities and other
stakeholders.
- Trust and respect
- Integrity
- Commitment
- Teamwork
- A belief that the journey is as important as the destination

i-Culture Vision
Where technical barriers end and business solutions begin. Together, as a team,
 we consistently strive to:
- Deploy brilliant technology
- Thrill our clients
- Do the right things right
We are passionate people having fun!]
<PAGE>   8
 
                               PROSPECTUS SUMMARY
 
     The following summary is qualified in its entirety by the more detailed
information and Consolidated Financial Statements and Notes thereto appearing
elsewhere in this Prospectus.
 
     International Integration Incorporated ("i-Cube" or the "Company") provides
application migration and custom software development services on a fixed-price,
fixed-time basis to Fortune 1000 companies and other large enterprises. The
Company believes that through these services, its customers can cost-effectively
and rapidly improve their competitiveness and narrow the gap between the demands
of their business strategies and the capabilities of their information
technology ("IT") environments. The Company offers a full range of services,
known as iMPACT, including information systems consulting, application
migration, custom software development and customer support.
 
     The Company utilizes its proprietary development methodologies and
technologies, known as i-Structure, to implement large-scale, complex
application migration and custom development projects based on a multi-tier
client/server architecture. i-Structure's proprietary technologies include
transformation tools used to separate legacy applications into their smallest
logical components, methodologies to populate an Application Repository that
contains the components of and critical information about an application, and
runtime tools used to access and integrate application components. i-Structure
provides the Company with a repeatable and consistent development framework,
applicable to both its application migration and custom development projects,
that increases the speed and reduces the risk and cost of the development of
strategic, core business applications. The applications custom developed or
migrated using i-Structure are not dependent on any single hardware provider or
operating system, are adaptable to future technologies and business changes, and
are easily maintainable. In addition, i-Structure enables the Company to migrate
legacy software applications into multi-tier client/server applications,
allowing customers to preserve the core functionality and other benefits of
their legacy applications while eliminating the constraints of legacy system
architectures. The Company believes that i-Structure enhances the productivity
of its IT professionals and the Company's continued investment in i-Structure is
a key component of its growth strategy.
 
     The Company believes that the expertise gained from completing large-scale,
strategic application migration and custom development projects since its
founding in 1992 provides a significant competitive advantage. Recent
engagements include projects for Cooper Cameron Corporation, Daimler-Benz AG,
Hewlett-Packard Company, IBM, McDonnell Douglas Corporation (now part of The
Boeing Company), Rockwell Automation/Reliance Electric, and Wisconsin Power and
Light Company.
 
                                  THE OFFERING
 
<TABLE>
<S>                                                  <C>
Common Stock offered...............................  shares
Common Stock to be outstanding after this
  offering.........................................  shares(1)
Use of proceeds....................................  For general corporate purposes, including
                                                     working capital, capital expenditures and
                                                     potential acquisitions. See "Use of Proceeds."
Proposed Nasdaq National Market symbol.............  ICUB
</TABLE>
 
---------------
(1) Based on shares of Common Stock outstanding as of March 31, 1998. Excludes
    (i) 5,461,782 shares of Common Stock issuable upon exercise of stock options
    outstanding as of March 31, 1998, of which options to purchase 1,657,628
    shares were then exercisable, and (ii) 4,317,984 shares of Common Stock
    reserved for future issuance under the Company's stock plans. See
    "Description of Capital Stock," "Management -- Benefit Plans" and Note 7 of
    Notes to Consolidated Financial Statements.
 
                                        3
<PAGE>   9
 
                      SUMMARY CONSOLIDATED FINANCIAL DATA
                     (IN THOUSANDS, EXCEPT PER SHARE DATA)
 
<TABLE>
<CAPTION>
                                                                                        THREE MONTHS
                                                   YEAR ENDED DECEMBER 31,             ENDED MARCH 31,
                                         -------------------------------------------   ---------------
                                         1993     1994     1995     1996      1997      1997     1998
                                         -----   ------   ------   -------   -------   ------   ------
                                                                                         (UNAUDITED)
<S>                                      <C>     <C>      <C>      <C>       <C>       <C>      <C>
STATEMENT OF INCOME DATA:
Net revenues...........................  $ 833   $2,893   $9,197   $14,479   $26,859   $5,598   $8,828
Operating income.......................    197      792    3,408     2,580     6,694    1,471    2,119
Net income.............................    124      485    2,076     1,615     4,325      929    1,372
Earnings per share(1):
  Basic................................  $ .01   $  .04   $  .17   $   .13   $   .34   $  .07   $  .10
  Diluted..............................  $ .01   $  .04   $  .15   $   .12   $   .29   $  .07   $  .09
Weighted average shares outstanding(1):
  Basic................................  9,353   12,114   12,323    12,425    12,627   12,519   13,244
  Diluted..............................  9,353   12,114   13,465    13,682    15,163   14,256   16,031
</TABLE>
 
<TABLE>
<CAPTION>
                                                                AS OF MARCH 31, 1998
                                                              ------------------------
                                                              ACTUAL    AS ADJUSTED(2)
                                                              -------   --------------
                                                                    (UNAUDITED)
<S>                                                           <C>       <C>
BALANCE SHEET DATA:
Cash and cash equivalents...................................  $ 9,833        $
Working capital.............................................    9,174
Total assets................................................   19,518
Long-term obligations, net of current maturities............      623              623
Total stockholders' equity..................................   11,043
</TABLE>
 
---------------
(1) For an explanation of the determination of the number of shares used in
    computing earnings per share, see Note 6 of Notes to Consolidated Financial
    Statements.
 
(2) Adjusted to give effect to the sale of the           shares of Common Stock
    offered by the Company hereby at an assumed initial public offering price of
    $          per share, after deducting the estimated underwriting discounts
    and commissions and offering expenses payable by the Company and the
    application of the estimated net proceeds therefrom. See "Use of Proceeds"
    and "Capitalization."
 
                                        4
<PAGE>   10
 
                                  RISK FACTORS
 
     In evaluating the Company's business, prospective investors should
carefully consider the following factors in addition to the other information
presented in this Prospectus before purchasing the shares of Common Stock
offered hereby. This Prospectus contains certain statements of a forward-looking
nature relating to future events or the future financial performance of the
Company. Prospective investors are cautioned that such statements are only
predictions and that actual events or results may differ materially. In
evaluating such statements, prospective investors should specifically consider
the various factors identified in this Prospectus, including but not limited to
the matters set forth below, which could cause actual results to differ
materially from those indicated by such forward-looking statements.
 
     Fluctuations in Results of Operations.  The Company's results of operations
have varied significantly in the past and may vary significantly in the future,
on a quarterly and annual basis, as a result of a variety of factors, many of
which are outside the Company's control. These factors include, without
limitation: (i) the timing and size of new contracts; (ii) the Company's ability
to accurately estimate the time and expense associated with providing services
under its customer contracts; (iii) the Company's ability to attract and retain
employees having qualifications and experience appropriate for the Company's
engagements; (iv) employee utilization, the number and type of engagements
performed by the Company during a particular period and the payment terms, other
contractual terms and degree of completion of such engagements; (v) the
Company's ability to execute the large, complex and lengthy engagements
characteristic of the Company's business, including without limitation its
ability to staff and manage the appropriate level of IT professionals; (vi) any
unexpected cancellation or termination of large engagements; (vii) demand for
the Company's services; (viii) the efforts and performance of the Company's
marketing partners; (ix) the costs associated with the opening of new offices;
(x) changes in customer budgets; (xi) the publication of opinions about the
Company and its services, or its competitors or their services, by industry
analysts; (xii) competitive conditions in the industry; and (xiii) general
domestic and international economic conditions. The Company's expense levels are
based, in significant part, on anticipated contract requirements and on other
expectations of future revenues and are relatively fixed in the short term.
Consequently, if revenue levels are below expectations, including without
limitation as a result of an unanticipated delay in or termination of a customer
engagement, expense levels could be disproportionately high as a percentage of
net revenues, and the Company's business, financial condition and results of
operations would be materially adversely affected. See "-- Project and Customer
Concentration," "-- Fixed-Price, Fixed-Time Contracts" and "Business --
Customers."
 
     The Company also believes that the purchase of its services generally
involves a significant commitment of a customer's capital resources. Therefore,
any downturn in a customer's business could have a material adverse effect on
the Company's business, financial condition and results of operations. To the
extent that projects progress faster than expected, results of operations for
subsequent quarters may be materially adversely affected. Due to these and other
factors, the Company's quarterly revenues, expenses and results of operations
could vary significantly in the future. Accordingly, period-to-period
comparisons of operating results are not necessarily meaningful and operating
results for any period should not be relied upon as indications of future
performance. There can be no assurance that the Company will be able to increase
its net revenues or operating income in future periods or be able to sustain its
level of net revenues or operating income or its rate of growth on a quarterly
or annual basis. See "-- Project Risks," "-- Length of Sales Cycle" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
 
     Due to all of the foregoing factors, it is possible that in some future
quarter, the Company's results of operations will be below the expectations of
public market analysts and investors. In such event, the market price of the
Company's Common Stock would likely be materially adversely affected. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
 
     Project and Customer Concentration.  The Company has historically derived,
and may in the future derive, a significant amount of its net revenues from
major engagements with a relatively small number of customers. In each of 1995
and 1996, the Company had three customers which individually accounted for 10%
or more of the Company's net revenues, and in 1997 the following five customers
each accounted for 10% or
 
                                        5
<PAGE>   11
 
more of the Company's net revenues: Salt River Project (29%); IBM (19%);
Daimler-Benz AG (14%); PEMEX/Integrated Trade Systems (11%); and Wisconsin Power
and Light Company (10%). For the first three months of 1998, the following five
customers each accounted for 10% or more of the Company's net revenues: IBM
(23%); PEMEX/Integrated Trade Systems (17%); Salt River Project (16%); Rockwell
Automation/Reliance Electric (11%); and Hewlett-Packard Company (10%). Although
the Company's largest customers have varied from period to period, the Company
anticipates that its results of operations in any given period will continue to
depend to a significant extent upon large contracts with a small number of
customers. The Company has a limited history of obtaining additional projects
from certain of its major customers, and there can be no assurance that any
major customer will not decrease or discontinue its level of business with the
Company following completion of existing projects or during the course of an
engagement, or that the Company will be able to replace on a timely basis any
discontinued business with engagements from new customers. The loss of or a
reduction in the level of services provided to one or more major customers would
have a material adverse effect on the Company's business, financial condition
and results of operations. If a major customer were unable or unwilling to
proceed with a project or to pay the Company for its services on a timely basis,
the Company's business, financial condition and results of operations could be
materially adversely affected. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations," "Business -- Customers" and Note
1 of Notes to Consolidated Financial Statements.
 
     Project Risks.  Many of the Company's projects are large, complex
engagements that are performed by the Company over extended periods of time. The
Company is generally paid for these projects in installments, based on the
achievement of certain milestones. The Company's ability to successfully
complete these projects and to earn the milestone payments is based on factors
within and outside the Company's control, including the Company's ability to
hire and retain the requisite IT professionals, the Company's project management
capabilities, the abilities and cooperation of its customers, changes in project
goals and the Company's technical expertise, and accordingly, there can be no
assurance that the Company will successfully achieve milestone payments on the
timetable projected by the Company, if at all. Furthermore, because of the
significant numbers of IT professionals assigned by the Company to these large
projects, unexpected early terminations of any of such engagements could result
in underutilization of project personnel until such persons can be redeployed to
other projects. Conversely, an unexpected delay in the completion of a major
engagement could result in a delay in the redeployment of project personnel to
new assignments for which the Company is contractually committed to achieve
milestones on a timely basis. For these and other reasons, the failure of the
Company to successfully complete its large engagements within the time frame
projected by the Company could have a material adverse effect on the Company's
business, financial condition and results of operations. In addition, the
Company's failure or inability to meet a customer's expectations in the
performance of its services could give rise to claims against the Company or
damage the Company's reputation and adversely affect its ability to attract new
business.
 
     Fixed-Price, Fixed-Time Contracts.  The Company generally undertakes
projects on a fixed-price, fixed-time basis, and warrants defined project
deliverables as specified in mutually agreed upon statements of work. In making
proposals for fixed-price, fixed-time contracts, the Company relies on its
estimated costs and timing for completing the project. These estimates reflect,
among other factors, judgments as to the efficiencies of the Company's
methodologies, technologies, and IT professionals as applied to the project. Any
increased or unexpected costs or unanticipated delays in connection with the
performance of fixed-price, fixed-time contracts, including delays caused by
factors outside the Company's control, could affect the profitability of these
contracts and have a material adverse effect on the Company's business,
financial condition and results of operations. In the past, the Company has been
required to commit unanticipated additional resources to complete certain
projects, which may have negatively affected the Company's anticipated
profitability on such projects. The Company recognizes that it may experience
similar situations in the future. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
 
     Management of Growth.  The Company has experienced growth in net revenues
and expansion of its operations which have placed, and are expected to continue
to place, significant demands on the Company's managerial, operational and
financial resources. The Company must continue to manage its financial,
operational and management controls, reporting systems and procedures, and
expand, train, manage and
 
                                        6
<PAGE>   12
 
motivate its work force. Given the scale and complexity of the Company's
technology consulting engagements and the Company's expansion of its operations
to date, the Company must continue to improve its ability to timely and
accurately predict and to staff and manage the IT professional resources
required for those engagements. The Company expects to implement an
enterprise-wide accounting and human resources software application in the
second half of 1998 to support its anticipated growth. There can be no assurance
that the Company will be able to implement this new application without
disruption, or that the Company's systems, procedures or controls will otherwise
be adequate to support the Company's expanding operations. In addition, in the
event the Company is required to expand its office facilities, there can be no
assurance that such facilities will be available on acceptable terms, if at all,
or that any expansion or relocation will not have a disruptive effect on the
Company's operations. If the Company's management is unable to manage growth
effectively, the Company's business, financial condition and results of
operations would be materially adversely affected. See "Business -- i-Cube
Culture and Professional Resources" and "Management -- Executive Officers,
Directors and Certain Key Officers."
 
     Competitive Market for IT Professionals.  The Company's success depends to
a significant extent on its ability to attract, train, motivate and retain
highly skilled IT professionals, particularly project managers, software
engineers and other senior technical personnel. There is currently a shortage
of, and significant competition for, software development and other IT
professionals with the advanced technological skills necessary to perform the
services offered by the Company. This shortage has caused wages for such
professionals to increase, which increases operating costs to IT service
providers such as the Company. The Company's ability to maintain existing
engagements and obtain new business therefore depends, in large part, on its
ability to hire and retain additional technical personnel with the IT skills
required to keep pace with continuing changes in information processing
technology, evolving industry standards and changing customer preferences. In
addition, the Company generally incurs substantial costs in recruiting, hiring
and training IT professionals before these employees become productive. There
can be no assurance that the Company will be successful in attracting and
retaining future employees or retaining current employees, or that such
employees will continue to achieve high performance levels. An inability to hire
a sufficient number of qualified employees or an inability to retain employees
could have a material adverse effect on the Company's business, financial
condition and results of operations. In addition, even if the Company is able to
expand its team of highly skilled IT professionals, the resources required to
attract and retain such employees may adversely affect the Company's operating
margins. See "Business -- i-Cube Culture and Professional Resources."
 
     Length of Sales Cycle.  The time between the date of initial contact with a
potential customer and the execution of a contract with that customer is often
lengthy, typically ranging from six weeks for smaller engagements to nine months
or more for the Company's larger engagements, and is subject to delays over
which the Company has little or no control, including customers' budgetary
constraints, customers' internal acceptance reviews, the success and continued
internal support of customers' own development efforts, and the possibility of
cancellation or delay of projects by customers. During such sales cycle, the
Company may expend substantial funds and management resources and yet not obtain
project awards or revenues. See "Business -- Sales and Marketing."
 
     Dependence on Third Party Marketing Relationships.  The Company has
developed and may continue to develop marketing relationships with third parties
that offer products or services that are complementary to those offered by the
Company. The Company currently has joint marketing relationships with Hewlett-
Packard Company and debis Systemhaus, the IT services subsidiary of Daimler-Benz
AG. The Company believes that the customer referrals and partner endorsements
provided by these relationships have contributed significantly to the award of
new business to the Company in the past. To date, these relationships have been
mutually non-exclusive and do not require any minimum level of business or
revenue. There can be no assurance that the Company can successfully maintain
these relationships or establish similar relationships with others. If the
Company's marketing partners were to reduce their efforts on behalf of the
Company, the Company's business, financial condition and results of operations
could be materially adversely affected. See "Business -- Marketing
Relationships."
 
                                        7
<PAGE>   13
 
     Rapid Technological Change; Dependence on Client/Server Architectures.  The
market for the Company's services is characterized by innovation and rapid
technological change, evolving industry standards and changing customer
preferences. Both the needs of potential customers and the technologies
available for meeting those needs can change significantly within a short period
of time. The Company has derived a significant portion of its revenues from
projects based primarily on client/server architectures. These technologies are
continuing to develop and are subject to rapid change. Any factors negatively
affecting the acceptance of such technologies could have a material adverse
effect on the Company's business, financial condition and results of operations.
 
     The Company's future will depend in part on its ability to continually
enhance its services, to develop services that address the needs of its
customers and potential customers, and to continue to improve its i-Structure
methodologies and technologies. There can be no assurance that the Company will
be successful in developing and marketing services that respond to technological
changes, that the Company will enhance its i-Structure methodologies and
technologies on a timely or cost-effective basis, or that the Company's
services, methodologies and technologies will adequately meet the requirements
of the marketplace. The failure of the Company to respond to rapidly changing
technologies could have a material adverse effect on the Company's business,
financial condition and results of operations. See "Business -- Industry
Background," "Business -- Technology" and "Business -- Research and
Development."
 
     Dependence on Key Personnel.  The Company's future success depends to a
significant extent on Michael Pehl, its Chief Executive Officer and Chairman of
the Board of Directors, and its other executive officers and key employees. The
loss of the services of any one or more of these individuals could have a
material adverse effect on the Company's business, financial condition and
results of operations. None of these individuals is contractually obligated to
remain in the employ of the Company for any specified period of time. The
Company does not have, and is not considering securing, key-man life insurance
on any of its executive officers or other key employees.
 
     Highly Competitive Market.  The Company operates in a highly competitive
and rapidly changing market and competes with a variety of organizations that
offer services similar to those offered by the Company. The market includes
participants from a variety of market segments, including other IT service
providers, large accounting and other professional service firms, packaged
software vendors and services groups of computer equipment companies, as well as
the internal IT staffs of its customers and potential customers. Many of these
competitors have significantly greater financial, technical, sales and marketing
resources and greater name recognition than the Company. In addition, there are
relatively low barriers to entry into the market in which the Company competes
and the Company has faced, and expects to continue to face, additional
competition from new entrants into this market. There can be no assurance that
the Company will be able to continue to compete successfully with its existing
competitors or that it will be able to compete successfully with new
competitors. See "Business -- Competition."
 
     Dependence on Proprietary Rights.  The Company's success and its ability to
compete is dependent, in part, upon its proprietary rights, including its rights
in i-Structure methodologies and technologies. The Company relies primarily on a
combination of copyright, trademark and trade secret laws to establish and
protect its proprietary rights. There can be no assurance that such measures
will be adequate to protect the Company's proprietary rights. In addition, the
Company seeks to protect its proprietary rights through the use of
confidentiality agreements with employees, consultants, advisors and others.
There can be no assurance that any such agreements will provide adequate
protection for the Company's proprietary rights in the event of any unauthorized
use or disclosure, that employees of the Company, consultants, advisors or
others will maintain the confidentiality of such proprietary information, or
that such proprietary information will not otherwise become known, or be
independently developed, by competitors.
 
     The Company historically has restricted access to the source codes of its
software tools and other technologies. The Company regards its source codes as
proprietary information, and attempts to protect the confidentiality of these
source codes, some of which are embedded in the developed application and
licensed to the customer for runtime use. In certain cases, the Company has also
licensed the source code version to
 
                                        8
<PAGE>   14
 
customers for internal use, to enable them to maintain their transformed
applications, and in other cases, the Company has entered into arrangements to
make its source code available upon the occurrence of certain events, such as
the bankruptcy or insolvency of the Company or certain material breaches of the
Company's application development contract. In the event of any release of the
source code pursuant to such arrangements, the customer's license is generally
limited to use of the source code for specific purposes. Despite the Company's
precautions, it may be possible for unauthorized parties to copy or otherwise
reverse engineer portions of the Company's software or otherwise obtain and use
information that the Company regards as proprietary.
 
     The Company does not possess any patents or copyright registrations in the
United States or any other jurisdiction. Existing copyright and trade secret
laws only offer limited protection, and the laws of certain countries in which
the Company provides services may not protect the Company's intellectual
property rights to the same extent as the laws of the United States. Certain
provisions of the agreements entered into by the Company, including provisions
protecting against unauthorized use, transfer and disclosure, may be
unenforceable under the laws of certain jurisdictions, and the Company is
required to negotiate limits on these provisions from time to time.
 
     Although the Company believes that its services and technologies do not
infringe on the intellectual property rights of others, there can be no
assurance that infringement claims will not be asserted against the Company in
the future. Such claims, if resolved against the Company, could adversely affect
the Company's reputation, preclude it from offering certain services, and have a
material adverse effect on the Company's business, financial condition and
results of operations. In its agreements with its customers, the Company agrees
to indemnify its customers for any expenses or liabilities resulting from
claimed infringements of patents, trademarks or copyrights of third parties. In
certain instances, the amount of such indemnities may be greater than the
revenues the Company may have received from the customer. There can be no
assurance that third parties will not assert infringement or misappropriation
claims against the Company in the future with respect to current or future
services. Any claims or litigation, with or without merit, could be
time-consuming, result in costly litigation or delays, or require the Company to
enter into royalty or licensing arrangements. Such royalty or licensing
arrangements, if required, may not be available on terms acceptable to the
Company, if at all, which could have a material adverse effect on the Company's
business, financial condition and results of operations. The Company has
received notice from a company located in the Netherlands that it believes that
its rights to use the i-Cube name in the Netherlands, Belgium and Luxembourg are
superior to those of the Company. In the event that the Company agrees with the
claims of such company, or in the event that the Company elects not to challenge
the assertions of such company, the Company may not be able to market its
services in those countries under the i-Cube name.
 
     The Company's business includes the development of custom software in
connection with specific customer engagements. The Company frequently assigns to
its customers the copyright and other intellectual property rights in certain
aspects of the software and documentation developed for these customers.
Although the Company's contracts with its customers provide that it retains the
rights to its intellectual property, there can be no assurance that customers
will not assert rights in, and seek to limit the Company's use of, such
intellectual property.
 
     Contract Liability.  The Company's agreements with its customers typically
contain provisions designed to limit the Company's exposure to claims relating
to the Company's professional services and the applications developed by it.
However, it is possible that the limitation of liability provisions contained in
the Company's agreements may not adequately protect the Company or be effective
under the laws of certain jurisdictions. Although the Company has not
experienced any such liability claims to date, there can be no assurance that
the Company will not be subject to such claims in the future. A liability claim
brought against the Company could have a material adverse effect on the
Company's business, financial condition and results of operations.
 
     Risk of Software Defects.  Software applications as complex as those
developed by the Company frequently contain errors or defects, especially when
first implemented. Any such defects or errors could result
 
                                        9
<PAGE>   15
 
in delayed or lost revenues, adverse customer reaction, negative publicity
regarding the Company and its services and harm to the Company's reputation, or
could require expensive corrections, any of which could have a material adverse
effect on the Company's business, financial condition and results of operations.
 
     Risks Associated with International Operations.  In 1996, 1997 and the
first three months of 1998, net revenues from customers located outside of the
United States accounted for 9%, 14% and 7%, respectively, of the Company's net
revenues in such period. The Company expects that net revenues from
international operations, principally in Europe, may account for an increasingly
significant amount of the Company's net revenues. As a result, the Company is
subject to a number of risks, including, among other things, difficulties
relating to administering its business globally, managing foreign operations
(including the Company's office in Germany), currency fluctuations, restrictions
against the repatriation of earnings, the burdens of complying with a wide
variety of foreign laws, the uncertainty of laws and enforcement in certain
jurisdictions relating to the protection of intellectual property rights and
multiple and possibly overlapping tax structures. Other factors that can
adversely affect international operations are changes in import/export duties
and quotas, introduction of tariff or non-tariff barriers and economic or
political changes in international markets. In addition, a substantial portion
of the Company's operating expenses and capital expenditures relating to the
Company's international operations continue to be denominated in United States
dollars, while the Company anticipates that an increasing amount of its net
revenues will be generated in foreign currencies. As a result, the Company may
be exposed to fluctuations in the foreign exchange rates between the United
States dollar and the currency in which a particular engagement is transacted.
To date, the Company has not sought to hedge the risks associated with
fluctuations in foreign exchange rates. The realization of any of the foregoing
risks could have a material adverse effect on the Company's business, financial
condition and results of operations.
 
     Year 2000 Compliance Issues.  The Company believes that the purchasing
patterns of customers and potential customers may be significantly affected by
Year 2000 issues. Many companies are expending significant resources to correct
or patch their current software systems for Year 2000 compliance. These
expenditures may result in reduced funds available to purchase software services
such as those offered by the Company. Conversely, Year 2000 issues may cause
other companies to accelerate purchases, thereby causing an increase in
short-term demand and a consequent decrease in long-term demand for software
services.
 
     The Company does not believe that it has material exposure to the Year 2000
issue with respect to its own information systems because its existing systems
correctly define the year 2000. Although the Company believes that the
information systems of its major partners and vendors (insofar as they relate to
the Company's business) comply with Year 2000 requirements, there can be no
assurance that the Year 2000 issue will not affect the information systems of
the Company's major partners and vendors as they relate to the Company's
business, or that any such impact of a major partner's or vendor's information
system would not have a material adverse effect on the Company.
 
     Control by Principal Stockholders.  Following this offering, approximately
     % of the outstanding shares of Common Stock of the Company will be held by
Sundar Subramaniam, a founder of the Company, and certain trusts and
partnerships for the benefit of Mr. Subramaniam or members of his family. Prior
to the completion of this offering, all of such shares are held in a voting
trust, for which State Street Bank and Trust Company is acting as trustee. Under
the terms of the voting trust agreement, the trustee has the right to vote the
shares following discussion with certain non-management members of the Board of
Directors, but without consulting the holders of the voting trust certificates,
except with respect to certain specific actions. The voting trust agreement will
terminate upon the closing of this offering. As a result, Mr. Subramaniam and
members of his family will have the ability to substantially influence the
business and affairs of the Company, including the election of the Company's
directors, and to otherwise affect the outcome of certain actions requiring
stockholder approval, including the adoption of amendments to the Company's
Restated Certificate of Incorporation and certain mergers, sales of assets, and
other business acquisitions or dispositions. See "Principal Stockholders."
 
                                       10
<PAGE>   16
 
     No Prior Trading Market; Potential Volatility of Stock Price.  Prior to
this offering, there has been no public market for the Company's Common Stock,
and there can be no assurance that an active trading market will develop or be
sustained after this offering or that the market price of the Common Stock will
not decline below the initial public offering price. The initial public offering
price will be determined solely by negotiations between the Company and the
Representatives of the Underwriters and therefore may not be indicative of
prices that will prevail in the trading market after this offering. The market
price of the Company's Common Stock could be subject to wide fluctuations in
response to, and may be adversely affected by, variations in quarterly results
of operations, changes in earnings estimates by analysts, adverse earnings or
other financial or business announcements by the Company and its customers or
competitors and market conditions in the industry, as well as general economic
conditions. In addition, the stock market has experienced extreme price and
volume fluctuations that have particularly affected the market prices for many
companies' stocks and that often have been unrelated to the operating
performance of such companies. These market fluctuations may adversely affect
the market price of the Company's Common Stock. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations." See "Underwriters"
for a discussion of the factors to be considered in determining the initial
public offering price.
 
     Shares Eligible for Future Sale.  Sales of substantial amounts of shares of
the Company's Common Stock in the public market following this offering could
adversely affect the market price of the Common Stock. In addition to the
            shares offered hereby (          shares if the over-allotment option
is exercised in full), approximately 379,374 additional shares of Common Stock
outstanding as of March 31, 1998, which are not subject to 180-day lock-up
agreements (the "Lock-up Agreements") with the Representatives of the
Underwriters, will be eligible for sale in the public market in accordance with
Rule 144(k) under the Securities Act of 1933, as amended (the "Securities Act"),
on the date of this Prospectus. Upon expiration of the Lock-up Agreements, 180
days after the date of this Prospectus, approximately 12,555,842 additional
shares of Common Stock will be available for sale in the public market, subject
to the provisions of Rule 144 under the Securities Act. At March 31, 1998,
approximately 3,107,837.5 shares of Common Stock were issued or issuable
pursuant to vested options or pursuant to other rights granted under the
Company's stock plans, of which approximately           shares are not subject
to Lock-up Agreements with the Representatives of the Underwriters and will be
eligible for sale in the public market in accordance with Rule 701 under the
Securities Act beginning 90 days after the date of this Prospectus. The Company
intends to file one or more registration statements on Form S-8 under the
Securities Act following the date of this Prospectus to register up to 5,461,782
shares of Common Stock subject to outstanding stock options granted pursuant to
the Company's stock option program as of March 31, 1998, including the 1,657,628
shares of Common Stock subject to options vested as of March 31, 1998, and
4,317,984 shares of Common Stock issuable pursuant to the Company's stock plans.
Such registration statements are expected to become effective upon filing. See
"Shares Eligible for Future Sale" and "Underwriters."
 
     Broad Management Discretion as to Use of Proceeds.  The anticipated net
proceeds of this offering to the Company have not been designated for specific
uses. Therefore, the Company's management will have broad discretion with
respect to the use of the net proceeds of this offering to the Company. See "Use
of Proceeds."
 
     Immediate and Substantial Dilution.  Purchasers of shares of Common Stock
offered hereby will suffer an immediate and substantial dilution in the net
tangible book value per share of the Common Stock from the initial public
offering price. See "Dilution."
 
     Potential Adverse Effects of Anti-Takeover Provisions; Availability of
Preferred Stock for Issuance. Following the closing of this offering, the
Company's Board of Directors will have the authority to issue up to 1,000,000
shares of Preferred Stock without any further vote or action by the
stockholders, and to determine the price, rights, preferences, privileges and
restrictions, including voting rights, of such shares. Since the Preferred Stock
could be issued with voting, liquidation, dividend and other rights superior to
those of the
 
                                       11
<PAGE>   17
 
Common Stock, the rights of the holders of Common Stock will be subject to, and
may be adversely affected by, the rights of the holders of any such Preferred
Stock. The issuance of Preferred Stock, while providing flexibility in
connection with possible acquisitions and other corporate purposes, could have
the effect of making it more difficult for a third party to acquire, or could
discourage a third party from attempting to acquire, a majority of the
outstanding voting stock of the Company. Further, certain provisions of the
Company's Restated Certificate of Incorporation, including provisions that
create a classified Board of Directors, and certain provisions of the Company's
Amended and Restated By-laws and of Delaware law could have the effect of
delaying or preventing a change in control of the Company. See "Description of
Capital Stock -- Delaware Law and Certain Charter and By-Law Provisions;
Anti-Takeover Effects."
 
                                       12
<PAGE>   18
 
                                  THE COMPANY
 
     The Company was incorporated in Massachusetts in 1992 and was
reincorporated in Delaware in 1996. The principal executive offices of the
Company are located at 101 Main Street, Cambridge, Massachusetts 02142. The
Company's telephone number is (617) 250-2500.
 
                                USE OF PROCEEDS
 
     The net proceeds to the Company from the sale of the           shares of
Common Stock offered by the Company hereby are estimated to be approximately
$          ($          if the Underwriters' over-allotment option is exercised
in full), assuming an initial public offering price of $          per share and
after deducting the estimated underwriting discounts and commissions and
offering expenses payable by the Company. The Company expects to use the net
proceeds for general corporate purposes, including working capital and capital
expenditures. A portion of the net proceeds may also be used for the acquisition
of other companies, assets, products and technologies that are complementary to
the Company's business, although the Company has no commitments or agreements
with respect to any such acquisitions, and no portion of the net proceeds has
been allocated for any specific acquisition. Pending such uses, the net proceeds
to the Company from this offering will be invested in investment grade,
interest-bearing securities.
 
                                DIVIDEND POLICY
 
     No cash dividends have ever been declared or paid on the Company's capital
stock and the Company does not anticipate paying any cash dividends on the
Common Stock in the foreseeable future. The Company currently intends to retain
all of its future earnings, if any, for use in the operation of the business. In
addition, the Company's bank facility contains a covenant prohibiting the
payment of cash dividends without the bank's consent. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations --
Liquidity and Capital Resources."
 
                                       13
<PAGE>   19
 
                                 CAPITALIZATION
 
     The following table sets forth the capitalization of the Company at March
31, 1998 (i) on an actual basis, and (ii) as adjusted to reflect the issuance
and sale of the           shares of Common Stock offered by the Company hereby
at an assumed initial public offering price of $          per share, after
deducting the estimated underwriting discounts and commissions and offering
expenses payable by the Company, and the application of the estimated net
proceeds therefrom.
 
<TABLE>
<CAPTION>
                                                                 AS OF MARCH 31, 1998
                                                              --------------------------
                                                               ACTUAL       AS ADJUSTED
                                                              ---------    -------------
                                                              (UNAUDITED, IN THOUSANDS,
                                                              EXCEPT SHARE AND PER SHARE
                                                                        DATA)
<S>                                                           <C>          <C>
Long-term obligations, net of current maturities............   $   623         $  623
Stockholders' equity(1):
  Preferred stock, $0.01 par value; 1,000,000 shares
     authorized; no shares issued or outstanding............        --             --
  Common stock, $0.01 par value; 100,000,000 shares
     authorized; 13,467,233 shares outstanding, actual;
               shares issued and outstanding, as
     adjusted(2)............................................       134
  Additional paid-in capital................................     1,566
  Treasury stock............................................        (8)            (8)
  Note receivable from stockholder..........................      (533)          (533)
  Retained earnings.........................................     9,884          9,884
                                                               -------         ------
     Total stockholders' equity.............................    11,043
                                                               -------         ------
          Total capitalization..............................   $11,666         $
                                                               =======         ======
</TABLE>
 
---------------
(1) Gives effect to the filing of the Restated Certificate of Incorporation of
    the Company prior to the closing of this offering.
 
(2) Excludes (i) 5,461,782 shares of Common Stock issuable upon exercise of
    stock options outstanding as of March 31, 1998, of which options to purchase
    1,657,628 shares were then exercisable, and (ii) 4,317,984 shares of Common
    Stock reserved for future issuance under the Company's stock plans. See
    "Management -- Benefit Plans" and Note 7 of Notes to Consolidated Financial
    Statements.
 
                                       14
<PAGE>   20
 
                                    DILUTION
 
     The net tangible book value of the Company as of March 31, 1998 was
approximately $11,043,000, or $0.82 per share of Common Stock. Net tangible book
value per share is determined by dividing the Company's tangible net worth
(tangible assets less liabilities) by the number of shares of Common Stock
outstanding. After giving effect to the sale of the           shares of Common
Stock offered by the Company hereby (at an assumed initial public offering price
of $          per share and after deducting the estimated underwriting discounts
and commissions and offering expenses payable by the Company), the net tangible
book value of the Company as of March 31, 1998 would have been $          , or
$          per share of Common Stock. This represents an immediate increase in
such net tangible book value of $          per share to existing stockholders
and an immediate dilution of $          per share to new investors. The
following table illustrates the per share dilution:
 
<TABLE>
<S>                                                           <C>         <C>
Assumed initial public offering price per share.............              $
  Net tangible book value per share before this offering....  $
  Increase in net tangible book value per share attributable
     to new investors.......................................
Net tangible book value per share after this offering.......
                                                                          --------
Dilution per share to new investors.........................              $
                                                                          ========
</TABLE>
 
     The following table summarizes, as of March 31, 1998, the difference
between the number of shares of Common Stock purchased from the Company, the
total consideration paid to the Company, and the average price per share paid by
existing stockholders and by new investors (at an assumed initial public
offering price of $          per share before deduction of estimated
underwriting discounts and commissions and offering expenses payable by the
Company):
 
<TABLE>
<CAPTION>
                                 SHARES PURCHASED(1)      TOTAL CONSIDERATION      AVERAGE
                                ---------------------    ---------------------      PRICE
                                  NUMBER      PERCENT      AMOUNT      PERCENT    PER SHARE
                                ----------    -------    ----------    -------    ---------
<S>                             <C>           <C>        <C>           <C>        <C>
Existing stockholders.........  13,467,233          %    $  997,632          %     $  .07
New investors.................
                                ----------     -----     ----------     -----
     Total....................                 100.0%    $              100.0%
                                ==========     =====     ==========     =====
</TABLE>
 
---------------
(1) Sales by the Company and the Selling Stockholders upon the exercise in full
    of the Underwriters' over-allotment option will reduce the number of shares
    of Common Stock held by existing stockholders to           shares, or      %
    of the total number of shares of Common Stock to be outstanding after this
    offering and will increase the number of shares of Common Stock held by new
    investors to           shares, or      % of the total number of shares to be
    outstanding after this offering. See "Principal Stockholders."
 
     The foregoing table assumes no exercise of stock options outstanding at
March 31, 1998. As of March 31, 1998, there were options outstanding to purchase
5,461,782 shares of Common Stock at a weighted average exercise price of $2.45
per share and 4,317,984 shares reserved for future issuance under the Company's
stock plans. To the extent any of these options are exercised, there will be
further dilution to new investors. See "Management -- Benefit Plans" and Note 7
of Notes to Consolidated Financial Statements.
 
                                       15
<PAGE>   21
 
                      SELECTED CONSOLIDATED FINANCIAL DATA
 
     The following selected consolidated financial data should be read in
conjunction with the Company's Consolidated Financial Statements and the Notes
thereto, and with Management's Discussion and Analysis of Financial Condition
and Results of Operations, included elsewhere in this Prospectus. The selected
consolidated statement of income data set forth below for the three years in the
period ended December 31, 1997 and the selected consolidated balance sheet data
at December 31, 1996 and December 31, 1997 are derived from consolidated
financial statements of the Company audited by Coopers & Lybrand L.L.P.,
independent public accountants, which are included elsewhere in this Prospectus.
The selected consolidated statement of income data for the year ended December
31, 1994 and the selected consolidated balance sheet data at December 31, 1994
and 1995 are derived from consolidated financial statements of the Company
audited by Coopers & Lybrand L.L.P. which are not included in this Prospectus.
The selected consolidated statement of income data for the year ended December
31, 1993 and the selected consolidated balance sheet data at December 31, 1993
are derived from audited financial statements of the Company which are not
included in this Prospectus. The selected consolidated financial data for the
three months ended March 31, 1997 and March 31, 1998 are derived from the
Company's unaudited Consolidated Financial Statements included elsewhere in this
Prospectus. The unaudited Consolidated Financial Statements have been prepared
by the Company on a basis consistent with the Company's audited financial
statements and, in the opinion of management, include all adjustments
(consisting only of normal recurring adjustments) necessary for a fair
presentation of the financial position and results of operations for such
periods. Results for the three months ended March 31, 1998 are not necessarily
indicative of the results that may be expected for the year ending December 31,
1998 or any other future period.
 
<TABLE>
<CAPTION>
                                                                                                 THREE MONTHS
                                                           YEAR ENDED DECEMBER 31,             ENDED MARCH 31,
                                                  ------------------------------------------   ----------------
                                                  1993    1994     1995     1996      1997      1997     1998
                                                  ----   ------   ------   -------   -------   ------   -------
                                                                                                 (UNAUDITED)
                                                              (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                               <C>    <C>      <C>      <C>       <C>       <C>      <C>
STATEMENT OF INCOME DATA:
Net revenues....................................  $833   $2,893   $9,197   $14,479   $26,859   $5,598   $ 8,828
Project personnel and software costs............   288    1,372    2,521     5,308    10,385    2,000     3,612
                                                  ----   ------   ------   -------   -------   ------   -------
      Gross profit..............................   545    1,521    6,676     9,171    16,474    3,598     5,216
Operating expenses:
  Selling and marketing.........................    95      329      897     1,580     3,046      630       850
  General and administrative....................   253      400    2,371     5,011     6,734    1,497     2,247
                                                  ----   ------   ------   -------   -------   ------   -------
      Total operating expenses..................   348      729    3,268     6,591     9,780    2,127     3,097
                                                  ----   ------   ------   -------   -------   ------   -------
Operating income................................   197      792    3,408     2,580     6,694    1,471     2,119
Other income, net...............................    --        9       92        85       391       52       130
                                                  ----   ------   ------   -------   -------   ------   -------
      Income before income taxes................   197      801    3,500     2,665     7,085    1,523     2,249
Provision for income taxes......................    73      316    1,424     1,050     2,760      594       877
                                                  ----   ------   ------   -------   -------   ------   -------
      Net income................................  $124   $  485   $2,076   $ 1,615   $ 4,325   $  929   $ 1,372
                                                  ====   ======   ======   =======   =======   ======   =======
Earnings per share(1):
  Basic.........................................  $.01   $  .04   $  .17   $   .13   $   .34   $  .07   $   .10
                                                  ====   ======   ======   =======   =======   ======   =======
  Diluted.......................................  $.01   $  .04   $  .15   $   .12   $   .29   $  .07   $   .09
                                                  ====   ======   ======   =======   =======   ======   =======
Weighted average shares outstanding(1):
  Basic.........................................  9,353  12,114   12,323    12,425    12,627   12,519    13,244
  Diluted.......................................  9,353  12,114   13,465    13,682    15,163   14,256    16,031
</TABLE>
 
<TABLE>
<CAPTION>
                                                                   AS OF DECEMBER 31,                  AS OF
                                                        -----------------------------------------    MARCH 31,
                                                        1993    1994     1995     1996     1997        1998
                                                        ----   ------   ------   ------   -------   -----------
                                                                                                    (UNAUDITED)
                                                                            (IN THOUSANDS)
<S>                                                     <C>    <C>      <C>      <C>      <C>       <C>
BALANCE SHEET DATA:
Cash and cash equivalents.............................  $  6   $1,062   $3,064   $3,889   $10,822     $ 9,833
Working capital.......................................   169      541    2,067    3,855     7,853       9,174
Total assets..........................................   360    1,537    7,656   10,502    21,112      19,518
Long-term obligations, net of current maturities......    59       --       --       --       672         623
Total stockholders' equity............................   132      619    2,695    4,561     9,616      11,043
</TABLE>
 
---------------
(1) For an explanation of the determination of the number of shares used in
    computing earnings per share, see Note 6 of Notes to Consolidated Financial
    Statements.
 
                                       16
<PAGE>   22
 
                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
     The following discussion and analysis should be read in conjunction with
the Company's Consolidated Financial Statements and the Notes thereto included
elsewhere in this Prospectus. The following discussion contains certain trend
analysis and other statements of a forward-looking nature relating to future
events or the future financial performance of the Company. Prospective investors
are cautioned that such statements are only predictions and that actual results
or events may differ materially. In evaluating such statements, prospective
investors should specifically consider the risk factors identified in this
Prospectus, particularly the matters set forth under the caption "Risk Factors,"
which could cause actual results to differ materially from those indicated by
such forward-looking statements.
 
OVERVIEW
 
     The Company provides application migration and custom software development
services on a fixed-price, fixed-time basis to Fortune 1000 companies and other
large enterprises. The Company was founded in 1992 and has been profitable each
year since it began operations in 1993. The Company has financed its operations
principally through cash generated from operations.
 
     The Company derives substantially all of its revenues from technology
consulting services. The Company's services are principally provided on a
fixed-price basis. See "Risk Factors -- Project Risks" and "Risk
Factors -- Fixed-Price, Fixed-Time Contracts." In 1997, 96% of net revenues of
the Company were derived from fixed-price contracts. In developing the
fixed-price of a project, the Company follows a process that assesses the
technical complexity of the project, the nature of the work, the functions to be
performed, the resources required to complete the engagement, and the extent to
which the Company will deploy its internally-developed software tools to deliver
the solution. Net revenues exclude reimbursable expenses charged to customers.
 
     Revenue from fixed-price projects is recognized using
percentage-of-completion accounting, based on the ratio of labor hours incurred
to date as compared to the estimated total labor hours needed to complete the
project. Because the Company's operating results may be adversely affected by
inaccurate estimates of project completion, the Company has a series of project
review processes to help provide accurate project estimates, including a
detailed review at the end of each reporting period to determine project percent
completion. In addition, the Company attempts to mitigate the risks associated
with determining accurate project completion estimates by deferring a portion of
the revenues from certain contracts until the estimate of the time and resources
required for completion can be more accurately determined. The cumulative impact
of any revision in estimates of the time and resources required for completion
and losses on projects in process are reflected in the period in which they
become known. Revenue from maintenance contracts is deferred and recognized
ratably over the contractual periods during which the services are performed.
Revenue related to time and materials engagements is recognized when the
services are performed.
 
     The Company typically receives a substantial advance payment from its
customers upon contract signing, with additional payments required upon the
attainment of project milestones. Deferred revenues consist principally of
amounts billed in advance for the Company's technology consulting contracts that
will be recognized upon performance and amounts received from customers in
excess of revenues recognized to date.
 
     The Company has traditionally depended upon a few major customers for a
majority of its net revenues. During the three months ended March 31, 1998, net
revenues from its five largest customers accounted for 23%, 17%, 16%, 11% and
10%, respectively, of the Company's net revenues. During 1997, net revenues from
the Company's five largest customers accounted for 29%, 19%, 14%, 11% and 10%,
respectively, of the Company's net revenues. Although the Company's strategy is
to broaden its customer base, there can be no assurance that such customer
concentration will actually diminish, and the Company anticipates that its
results of operations in any given period will continue to depend to a
significant extent upon large contracts with a small number of customers. See
"Risk Factors -- Project and Customer Concentration" and Note 1 of Notes to
Consolidated Financial Statements. In 1996, 1997 and the first three months of
1998, net revenues
 
                                       17
<PAGE>   23
 
from customers located outside of the United States accounted for 9%, 14% and
7%, respectively, of the Company's net revenues in such period.
 
     The Company's results of operations are influenced to a significant extent
by its ability to attract, train, motivate and retain highly skilled IT
professionals. As a consequence, the Company's most significant expense is the
cost of hiring and training personnel, wages and related employee costs. The
ability of the Company to manage employee utilization and to contain turnover
and payroll costs will have a significant impact on its profitability. See "Risk
Factors -- Competitive Market for IT Professionals."
 
RESULTS OF OPERATIONS
 
     The following table sets forth certain items included in the Company's
Consolidated Statements of Income as a percentage of net revenues for the
periods indicated:
 
<TABLE>
<CAPTION>
                                                                                  THREE MONTHS
                                                     YEAR ENDED DECEMBER 31,    ENDED MARCH 31,
                                                     -----------------------    ----------------
                                                     1995     1996     1997      1997      1998
                                                     -----    -----    -----    ------    ------
<S>                                                  <C>      <C>      <C>      <C>       <C>
Net revenues.......................................  100.0%   100.0%   100.0%   100.0%    100.0%
Project personnel and software costs...............   27.4     36.7     38.7     35.7      40.9
                                                     -----    -----    -----    -----     -----
          Gross profit.............................   72.6     63.3     61.3     64.3      59.1
Operating expenses:
  Selling and marketing............................    9.7     10.9     11.3     11.3       9.6
  General and administrative.......................   25.8     34.6     25.1     26.7      25.5
                                                     -----    -----    -----    -----     -----
          Total operating expenses.................   35.5     45.5     36.4     38.0      35.1
                                                     -----    -----    -----    -----     -----
Operating income...................................   37.1     17.8     24.9     26.3      24.0
Other income, net..................................    1.0      0.6      1.5      0.9       1.5
                                                     -----    -----    -----    -----     -----
          Income before income taxes...............   38.1     18.4     26.4     27.2      25.5
Provision for income taxes.........................   15.5      7.2     10.3     10.6       9.9
                                                     -----    -----    -----    -----     -----
          Net income...............................   22.6%    11.2%    16.1%    16.6%     15.6%
                                                     =====    =====    =====    =====     =====
</TABLE>
 
THREE MONTHS ENDED MARCH 31, 1997 AND 1998
 
     Net Revenues.  The Company's net revenues increased by $3.2 million, or
57.7%, from $5.6 million in the first three months of 1997 to $8.8 million for
the comparable period in 1998. This increase in net revenues was primarily
attributable to an increased volume of projects from new customers and the
leveraging of existing customer relationships to obtain repeat business.
 
     Project Personnel and Software Costs.  Project personnel and software costs
consist primarily of compensation and related costs of personnel dedicated to
customer assignments and research and development personnel assigned to
developing and enhancing the Company's methodologies and technologies deployed
during the project delivery process. Project personnel and software costs also
include fees paid to subcontractors for work performed in connection with
projects and non-reimbursed project travel expenses. Project personnel and
software costs increased by $1.6 million, or 80.6%, from $2.0 million in the
first three months of 1997 to $3.6 million for the comparable period in 1998. As
a percentage of net revenues, these costs were 35.7% and 40.9%, respectively, in
such periods. The increase in project personnel and software costs in absolute
dollars was primarily attributable to the hiring of additional and more
experienced personnel required to deliver the Company's services and increases
in per person compensation costs. The increase in project personnel and software
costs as a percentage of net revenues was primarily attributable to an increase
in per person compensation. Project personnel headcount increased from 103
employees at March 31, 1997 to 138 employees at March 31, 1998.
 
     Selling and Marketing.  Selling and marketing costs consist primarily of
compensation and related costs of sales and marketing personnel, travel
expenses, and marketing program and promotion costs. Selling and
 
                                       18
<PAGE>   24
 
marketing costs increased by $220,000, or 35.0%, from $630,000 in the first
three months of 1997 to $850,000 for the comparable period in 1998. As a
percentage of net revenues, these costs were 11.3% and 9.6% in the first three
months of 1997 and 1998, respectively. The increase in selling and marketing
costs in absolute dollars was primarily attributable to increased spending on
promotional activities and the hiring of more experienced sales personnel. Sales
and marketing personnel increased from 13 employees at March 31, 1997 to 14
employees at March 31, 1998.
 
     General and Administrative.  General and administrative costs consist
primarily of compensation and related costs of the Company's management and
administrative functions, including finance and accounting, human resources,
internal information technology, and the costs of the Company's facilities and
other general corporate expenses. General and administrative costs increased
$750,000, or 50.1%, from $1.5 million in the first three months of 1997 to $2.2
million for the comparable period in 1998. As a percentage of net revenues,
these costs were 26.7% and 25.5%, respectively, in such periods. The decline in
general and administrative costs as a percentage of net revenues reflected a
decline in administrative staff as a percentage of total staff and more
efficient space utilization of the Company's facilities in the first three
months of 1998. The increase in general and administrative costs in absolute
dollars was primarily attributable to an increase in general and administrative
personnel from 17 at March 31, 1997 to 26 at March 31, 1998. In addition,
expenditures for recruiting and leased equipment contributed to the dollar
increase in general and administrative costs.
 
     Other Income, Net.  Other income, net consists primarily of interest income
from the Company's cash balances and interest expense associated with fixed
asset purchases made under the Company's equipment line of credit and
obligations under capital leases. Other income, net was approximately $52,000
and $130,000 for the first three months of 1997 and 1998, respectively.
 
     Provision for Income Taxes.  The Company's effective rate for Federal and
state income taxes was 39.0% for the first three months of 1997 and 1998.
 
YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997
 
     Net Revenues.  Net revenues increased by $5.3 million, or 57.4%, from $9.2
million in 1995 to $14.5 million in 1996 and increased by $12.4 million, or
85.5%, to $26.9 million in 1997. The increases each year represent an increase
in the number of customer projects from both new and existing customers plus an
increase in the average size of projects. Net revenues from the Company's five
largest customers represented approximately 83.8%, 78.8% and 83.4% of the
Company's net revenues for 1995, 1996 and 1997, respectively.
 
     Project Personnel and Software Costs.  Project personnel and software costs
increased by $2.8 million, or 110.6%, from $2.5 million in 1995 to $5.3 million
in 1996 and by $5.1 million, or 95.6%, to $10.4 million in 1997. As a percentage
of net revenues, project personnel and software costs were 27.4%, 36.7% and
38.7% for 1995, 1996 and 1997, respectively. The increases in project personnel
and software costs in absolute dollars were primarily attributable to an
increase in the number of personnel required to deliver projects and increased
per person compensation costs. The increases in project personnel and software
costs as a percentage of net revenues were primarily attributable to an increase
in compensation on both an absolute and per employee basis. Project personnel
headcount was 65, 87 and 120 at December 31, 1995, 1996 and 1997, respectively.
 
     Selling and Marketing.  Selling and marketing costs increased by $683,000,
or 76.1%, from $897,000 in 1995 to $1.6 million in 1996 and by $1.4 million, or
92.8%, to $3.0 million in 1997. As a percentage of net revenues, selling and
marketing costs were 9.7%, 10.9% and 11.3% in 1995, 1996 and 1997, respectively.
The increased selling and marketing costs reflect the expansion of sales and
marketing personnel from five at December 31, 1995 to nine at December 31, 1996
and to 17 at December 31, 1997. In 1996 and 1997, the Company also increased its
promotional and public relations activities.
 
     General and Administrative.  General and administrative costs increased by
$2.6 million, or 111.3%, from $2.4 million in 1995 to $5.0 million in 1996 and
by $1.7 million, or 34.4%, to $6.7 million in 1997. As a percentage of net
revenues, general and administrative costs were 25.8%, 34.6% and 25.1% for 1995,
1996 and 1997, respectively. The increase in general and administrative costs in
absolute dollars resulted from an increase in general and administrative
personnel from nine employees at December 31, 1995 to 15 employees
 
                                       19
<PAGE>   25
 
at December 31, 1996 and to 21 employees at December 31, 1997. In 1996 and 1997,
the Company hired several new officers including the Chief Executive Officer,
the Chief Financial Officer and the Vice President, Human Resources and added
resources in finance, human resources and information technology to support the
Company's rapid growth. In addition, in 1996, the Company paid a $1.0 million
bonus to Michael Pehl to secure his services as Chairman and Chief Executive
Officer and a $150,000 bonus to Lawrence P. Begley to secure his services as
Chief Financial Officer and Treasurer.
 
     Other Income, Net.  Other income, net consists primarily of interest income
from the Company's cash balances and interest expense associated with fixed
asset purchases made under the Company's equipment line of credit and
obligations under capital leases. Other income, net in 1995, 1996 and 1997 was
approximately $92,000, $85,000 and $391,000, respectively.
 
     Provision for Income Taxes.  The Company's effective rate for Federal and
state income taxes was 40.7%, 39.4%, and 39.0% for 1995, 1996 and 1997,
respectively.
 
QUARTERLY RESULTS OF OPERATIONS
 
     The following tables set forth certain unaudited quarterly financial
information for the five quarters in the period ended March 31, 1998 in dollars
and as a percentage of net revenues. This information is derived from unaudited
consolidated financial statements and has been prepared on the same basis as the
Company's Consolidated Financial Statements which appear elsewhere in this
Prospectus. In the opinion of the Company's management, this information
reflects all adjustments (consisting only of normal recurring adjustments)
necessary for a fair presentation of the information when read in conjunction
with the Company's Consolidated Financial Statements and the Notes thereto. The
results for any quarter are not necessarily indicative of future quarterly
results of operations, and the Company believes that period-to-period
comparisons should not be relied upon as an indication of future performance.
 
<TABLE>
<CAPTION>
                                                                 QUARTER ENDED
                               ----------------------------------------------------------------------------------
                                 MARCH 31,         JUNE 30,      SEPTEMBER 30,     DECEMBER 31,      MARCH 31,
                                    1997             1997             1997             1997             1998
                               --------------   --------------   --------------   --------------   --------------
                                                     (IN THOUSANDS, EXCEPT PERCENTAGE DATA)
<S>                            <C>      <C>     <C>      <C>     <C>      <C>     <C>      <C>     <C>      <C>
STATEMENT OF INCOME DATA:
Net revenues.................  $5,598   100.0%  $6,633   100.0%  $7,093   100.0%  $7,535   100.0%  $8,828   100.0%
Project personnel and
  software costs.............   2,000    35.7    2,474    37.3    2,914    41.1    2,998    39.8    3,612    40.9
                               ------   -----   ------   -----   ------   -----   ------   -----   ------   -----
    Gross profit.............   3,598    64.3    4,159    62.7    4,179    58.9    4,537    60.2    5,216    59.1
Operating expenses:
  Selling and marketing......     630    11.3      808    12.2      770    10.9      838    11.1      850     9.6
  General and
    administrative...........   1,497    26.7    1,672    25.2    1,690    23.8    1,875    24.9    2,247    25.5
                               ------   -----   ------   -----   ------   -----   ------   -----   ------   -----
    Total operating
      expenses...............   2,127    38.0    2,480    37.4    2,460    34.7    2,713    36.0    3,097    35.1
                               ------   -----   ------   -----   ------   -----   ------   -----   ------   -----
Operating income.............   1,471    26.3    1,679    25.3    1,719    24.2    1,824    24.2    2,119    24.0
Other income, net............      52     0.9       76     1.1      115     1.6      148     2.0      130     1.5
                               ------   -----   ------   -----   ------   -----   ------   -----   ------   -----
    Income before income
      taxes..................   1,523    27.2    1,755    26.4    1,834    25.8    1,972    26.2    2,249    25.5
Provision for income taxes...     594    10.6      684    10.3      715    10.1      766    10.2      877     9.9
                               ------   -----   ------   -----   ------   -----   ------   -----   ------   -----
      Net income.............  $  929    16.6%  $1,071    16.1%  $1,119    15.7%  $1,206    16.0%  $1,372    15.6%
                               ======   =====   ======   =====   ======   =====   ======   =====   ======   =====
</TABLE>
 
     The Company's results of operations have varied significantly in the past
and may vary significantly in the future, on a quarterly and annual basis, as a
result of a variety of factors, many of which are outside the Company's control.
See "Risk Factors -- Fluctuations in Results of Operations." The Company
believes that the purchase of its services generally involves a significant
commitment of a customer's capital resources. Therefore, any downturn in a
customer's business could have a material adverse effect on the Company's
business, financial condition and results of operations. To the extent that
projects progress faster than expected, results of operations for subsequent
quarters may be materially adversely affected.
 
                                       20
<PAGE>   26
 
     Although the Company has achieved significant historical quarter-to-quarter
growth in net revenues and income from operations, the Company has no assurance
that this growth rate is sustainable. In addition, throughout 1996 and 1997, the
Company's total number of employees and average per employee compensation
expense has increased each quarter and is expected to continue to increase. As a
result, the Company's gross profit margin has declined. Additionally, the
Company continues to invest in corporate infrastructure and expects to maintain,
as a percentage of net revenues, its spending on selling and marketing expenses
as well as general and administrative expenses. These costs and investments are
expected to cause the Company's operating income margin to decline.
 
     Due to all the foregoing factors, it is possible that in some future
quarter, the Company's results of operations will be below the expectations of
public market analysts and investors. In such event, the market price of the
Company's Common Stock would likely be materially adversely affected.
 
LIQUIDITY AND CAPITAL RESOURCES
 
     Since inception, the Company has funded its operations primarily through
cash provided by operations.
 
     The Company's cash balances were $3.1 million, $3.9 million, $10.8 million
and $9.8 million at December 31, 1995, 1996 and 1997, and at March 31, 1998,
respectively. The Company's working capital was $2.1 million, $3.9 million, $7.9
million and $9.2 million at December 31, 1995, 1996 and 1997, and at March 31,
1998, respectively.
 
     The Company's operating activities provided cash from operations of $3.1
million, $523,000 and $8.2 million in the years ended December 31, 1995, 1996
and 1997, respectively, and used $728,000 for the three-month period ended March
31, 1998. The decrease in cash provided from operations in 1996 as compared to
1995 was due principally to lower net income, an increase in accounts receivable
and a decrease in accrued expenses and accrued income taxes. The increase in
cash provided from operations in 1997 as compared to 1996 was due mainly to an
increase in net income, decreases in accounts receivable and an increase in
accrued expenses. The cash used for operations for the three month period ended
March 31, 1998 was mainly attributable to a decrease in accrued expenses due to
payment of bonuses and a decrease in deferred revenues resulting from the timing
of milestone billings on certain contracts.
 
     The Company used cash of $672,000, $375,000, $1.7 million and $258,000 for
investing activities in the years ended December 1995, 1996 and 1997 and the
three month period ended March 31, 1998, respectively. Cash used for investing
activities in 1995 and 1996 consisted primarily of purchases of property and
equipment, principally computer equipment and software to support the growing
base of employees and required infrastructure. In 1997, in addition to property
and equipment, the Company purchased approximately $540,000 of furniture as part
of its expansion of office facilities in Cambridge, Massachusetts and in the
City of Industry, California. At March 31, 1998, the Company had no significant
commitments for capital expenditures for 1998 but expects to continue to
purchase property and equipment to enhance its corporate infrastructure.
 
     The Company's financing activities used cash of $392,000 in 1995 and
provided cash of $677,000 and $463,000 in 1996 and 1997, respectively, and was
relatively cash neutral for the three month period ended March 31, 1998. The use
of cash in 1995 was due mainly to an increase in an amount due from a related
party. In 1996, cash was provided by the repayment of the amount due from the
related party and the exercise of stock options. In 1997, the Company's
financing activities reflect proceeds from an equipment line of credit, offset
in part by payment on the Company's capital lease transactions entered into
during the period.
 
     The Company maintains a $2.0 million working capital line of credit (the
"Line") with Silicon Valley Bank, which expires in August 1998. The interest
rate on all borrowings under the Line is prime plus  1/2% and will be reduced to
prime upon the closing of this offering. The Line is collateralized by
substantially all of the Company's assets. Under the Line, the Company may
borrow the lesser of $2.0 million or 75% of eligible accounts receivable, as
defined in the agreement. The Company is required to comply with certain
operational and financial covenants under the Line if there are borrowings under
the Line. At December 31, 1995, 1996 and 1997, and at March 31, 1998, the
Company was in compliance with these requirements and no borrowings
 
                                       21
<PAGE>   27
 
have been made under the Line. The Line contains a covenant prohibiting the
payment of cash dividends without the bank's consent.
 
     The Company expects that cash flows from operations will continue to
provide the main source of liquidity for the Company. The Company expects that
existing cash and investment balances, together with the proceeds of this
offering and anticipated cash flows from operations, will be sufficient to meet
the Company's working capital requirements for at least the next 12 months.
 
INFLATION
 
     The Company's most significant costs are the salaries and related benefits
for its IT professionals. Competition for IT professionals with the advanced
technological skills necessary to perform the services offered by the Company
has caused wages to increase at a rate greater than the general rate of
inflation. As with other IT service providers, the Company must adequately
anticipate wage increases. There can be no assurance that the Company will be
able to recover cost increases through increases in the prices that it charges
for its services. See "Risk Factors -- Competitive Market for IT Professionals."
 
THE YEAR 2000 ISSUE
 
     The Company does not believe that it has material exposure to the Year 2000
issue with respect to its own information systems because its existing systems
correctly define the year 2000. Although the Company believes that the
information systems of its major partners and vendors (insofar as they relate to
the Company's business) comply with Year 2000 requirements, there can be no
assurance that the Year 2000 issue will not affect the information systems of
the Company's major partners and vendors as they relate to the Company's
business, or that any such impact of a major partner's or vendor's information
system would not have a material adverse effect on the Company.
 
                                       22
<PAGE>   28
 
                                    BUSINESS
 
     International Integration Incorporated ("i-Cube" or the "Company") provides
application migration and custom software development services on a fixed-price,
fixed-time basis to Fortune 1000 companies and other large enterprises. The
Company believes that through these services, its customers can cost-effectively
and rapidly improve their competitiveness and narrow the gap between the demands
of their business strategies and the capabilities of their IT environments. The
Company offers a full range of iMPACT services including information systems
consulting, application migration, custom software development and customer
support.
 
     The Company utilizes its proprietary development methodologies and
technologies, known as i-Structure, to implement large-scale, complex
application migration and custom development projects based on a multi-tier
client/server architecture. i-Structure's proprietary technologies include
transformation tools used to separate legacy applications into their smallest
logical components, methodologies to populate an Application Repository that
contains the components of and critical information about an application, and
runtime tools used to access and integrate application components. i-Structure
provides the Company with a repeatable and consistent development framework,
applicable to both its application migration and custom development projects,
that increases the speed and reduces the risk and cost of the development of
strategic, core business applications. The applications custom developed or
migrated using i-Structure are not dependent on any single hardware provider or
operating system, are adaptable to future technologies and business changes, and
are easily maintainable. In addition, i-Structure enables the Company to migrate
legacy software applications into multi-tier client/server applications,
allowing customers to preserve the core functionality and other benefits of
their legacy applications while eliminating the constraints of legacy system
architectures. The Company believes that i-Structure enhances the productivity
of its IT professionals and the Company's continued investment in i-Structure is
a key component of its growth strategy.
 
     The Company believes that the expertise gained from completing large-scale,
strategic application migration and custom development projects since its
founding in 1992 provides a significant competitive advantage. Recent
engagements include projects for Cooper Cameron Corporation, Daimler-Benz AG,
Hewlett-Packard Company, IBM, McDonnell Douglas Corporation (now part of The
Boeing Company), Rockwell Automation/Reliance Electric, and Wisconsin Power and
Light Company.
 
INDUSTRY BACKGROUND
 
     Businesses today face the constant need to react quickly to changes in
their marketplace. Factors such as deregulation, industry consolidations, the
globalization of product and vendor markets, the increasing demand for improved
and more responsive customer service and the emergence of the Internet as a
vehicle for commerce have intensified competition and have presented businesses
with the opportunity and the need to continually develop and implement new
strategies on a rapid basis. To meet these challenges, businesses require IT
infrastructures which can be cost-effectively and swiftly developed, deployed
and modified to support their business strategies.
 
     Organizations continue to rely on inflexible legacy software applications
and systems to analyze and process vast amounts of business-critical data and
run core business processes. Furthermore, organizations have invested
significantly in their legacy systems. However, legacy software applications and
systems have significant constraints which limit the ability of organizations to
successfully and rapidly modify their IT infrastructures to support new business
strategies. Because legacy systems are typically based on proprietary
architectures, they are often incapable of incorporating technological
innovations quickly or easily, may be incompatible with other systems across the
enterprise, can be costly, time-consuming and difficult to maintain and modify
and are not easily scalable.
 
     To overcome the restrictive aspects of legacy systems, organizations have
sought to deploy multi-tier client/server applications based on open systems.
These open, client/server applications are not dependent on a particular
vendor's hardware, software or operating system platform, and their multi-tier
structure facilitates modifications and enhances scalability. As a result, such
applications provide organizations with the freedom to choose "best of breed"
technologies without compromising business functionality. In addition, they
provide the organization with the ability to enhance ease-of-use through
graphical user interfaces and seamless
                                       23
<PAGE>   29
 
integration with other applications and data sources on disparate platforms
within and outside the enterprise. These open, multi-tier client/server
applications can be key to increasing an organization's productivity, improving
access to information and decision-making, enhancing customer service,
shortening product development, delivery, and support times and ultimately
creating and sustaining a competitive advantage.
 
     Organizations seeking to implement client/server technologies to replace
their core business legacy applications have traditionally had only two choices:
install a third-party package or develop a new, custom application. Third party
packages, while sometimes less expensive and less risky than the development of
a custom application, are limited in their utility because often, without
extensive modification, they require the organization to adapt its business
practices to meet the business rules embedded in the package and may be limited
for use in a specific technology environment. As a result, organizations often
choose to custom develop applications which are tailored to their business
practices. In order to justify their investment in these custom solutions,
organizations seek to leverage, where possible, their prior investment in their
legacy systems and to minimize the risk, expense and duration of the custom
development process. Organizations want solutions that (i) capture the benefits
of open, multi-tier client/server architectures, (ii) are integrated with other
systems throughout the enterprise, (iii) permit the application to meet changes
in the organization's business strategies and IT infrastructure and (iv)
continue to meet the needs of the organization as it grows.
 
THE I-CUBE SOLUTION
 
     i-Cube provides fixed-price, fixed-time application migration and custom
software development services which enable organizations to align the
capabilities of their IT systems with their business strategies. The Company's
services incorporate its i-Structure methodologies and technologies, which
support the development, either through the migration of the customer's legacy
application or through a custom development process, of open, multi-tier
client/server applications which are flexible, scalable and easily maintainable.
The Company's iMPACT suite of services and i-Structure methodologies and
technologies are designed to address the large-scale, strategic application
projects of its customers. The Company's services are designed to offer
customers the following benefits:
 
     Risk Reduction.  The Company's ability to migrate legacy applications to
client/server architectures reduces the risks inherent in creating and
implementing entirely new solutions. The methodologies and technologies of
i-Structure provide the Company with a repeatable and consistent framework for
the migration process and automate certain critical transformation and
reconfiguration functions, thereby reducing the risk of the development process.
In addition, the Company uses the framework provided by i-Structure for building
custom applications. This consistent development approach is designed to ensure
that the developed application will be easily maintainable by the Company or by
the customer and to reduce the cost of future system redesign.
 
     Cost-Effective, Rapid Delivery.  The Company is able to complete projects
more cost-effectively and rapidly due to the methodologies and technologies of
i-Structure. Through the consistent application of these methodologies and
technologies, the Company's IT professionals increase their efficiency and
leverage knowledge acquired throughout the Company from prior projects. In
addition, the Company offers its services on a fixed-price, fixed-time basis.
The Company believes that fixed-price, fixed-time contracts are favored by
customers because they permit more accurate estimation of development costs and
because customers perceive that such contracts more closely align the Company's
interests with their own, resulting in shorter development cycles.
 
     Preservation and Leverage of Core Functionality.  Many organizations have
made significant investments in their legacy applications which are fundamental
to the operation of their business. The Company's ability to offer complex
application migration services enables its customers to preserve and leverage
the core business functionality, user interfaces and other benefits of the
legacy applications while eliminating the "technology lock" and other
constraints of legacy system architectures.
 
     Adaptability and Flexibility.  The Company's application migration and
custom development processes are designed to separate the application's business
rules from the technology through which the application is displayed. These
processes are based on the construction of essential "building blocks" which are
configured to
                                       24
<PAGE>   30
 
define the business functionality of the application independently of the
application technology, database or graphical user interface utilized.
i-Structure's ability to support a multi-tier client/server architecture allows
the application logic, database and presentation technology of applications
developed by the Company to be logically separated from one another, thereby
resulting in applications that are flexible and adaptable in response to future
technology and business changes and that can be easily modified for future
maintenance.
 
     Scalability.  The Company's i-Structure methodologies and technologies
provide the basis for designing applications that are scalable to meet the
customer's organizational growth as well as increased system deployment
throughout the customer's enterprise. Opportunities for incremental performance
enhancements are incorporated into application design to permit the capabilities
of the system to grow as the customer's business evolves and its IT requirements
change.
 
GROWTH STRATEGY
 
     The Company's objective is to enhance its position as a preferred provider
of application migration and custom software development services to Fortune
1000 companies and other large enterprises. i-Cube's strategy to achieve this
goal includes the following elements:
 
     Expand Market Share.  The Company believes its expertise in providing
large-scale migration and custom client/server development solutions
differentiates it from other IT service providers and is a key competitive
advantage. The Company intends to leverage this competitive advantage to
generate additional business from existing customers, establish new customer
relationships and expand its geographic presence. The Company develops new and
follow-on customer opportunities primarily through its senior executives and
direct sales force, through the efforts of its marketing partners and through
customer referrals. The Company has recently expanded its office in Germany in
order to service existing customers and to further broaden its European sales
opportunities. The Company is accepting smaller engagements which leverage its
application migration and custom development expertise in order to further
expand its base of customer relationships.
 
     Preserve High Performance Culture.  The Company believes that its high
performance culture is a major competitive advantage and a critical factor to
its success. The Company's culture emphasizes teamwork, entrepreneurship, a
passion for client satisfaction and individual responsibility and accountability
at all levels of the organization. The Company's investment in its people
includes extensive team-building exercises for employees, initial and on-going
training, mentoring, pay for performance, opportunities for accelerated career
advancement, a flexible work environment and stock ownership opportunities for
all employees. The Company believes that this emphasis on its culture and its
investment in its employees enables the Company to attract, retain and motivate
high caliber employees in a competitive employment environment.
 
     Invest in i-Structure To Maintain Competitive Advantage.  The Company's
i-Structure methodologies and technologies provide it with a competitive
differentiator in the planning and execution of its engagements. The Company
believes that i-Structure enables it to deliver its services in a rapid,
predictable and low-risk manner while providing the flexibility for customers to
adapt their IT environments as their businesses evolve. The Company has a
research and development team dedicated to enhancing i-Structure methodologies
and technologies and delivering next-generation enhancements. In addition, the
Company enhances i-Structure methodologies through a central knowledge database
that incorporates the Company's experience on prior projects. These efforts are
designed to ensure that i-Structure incorporates the latest technical advances
as well as the knowledge gained from the Company's various customer engagements.
 
     Leverage and Expand Marketing Relationships.  The Company has established
marketing relationships with Hewlett-Packard Company and debis Systemhaus (the
IT services subsidiary of Daimler-Benz AG). These relationships provide the
Company with access to incremental business development opportunities, an
expanded marketing reach and referenceable customer base, increased brand
recognition, and improved competitive positioning in certain sales situations.
The Company considers joint marketing arrangements to be appropriate in
situations where the joint marketing partner's products and services are
complementary to those of the Company and where the partner is committed to
marketing the Company's services in connection with its own product and service
offerings.
 
                                       25
<PAGE>   31
 
SERVICES
 
     The Company's process for delivering its information technology solutions
is based on its iMPACT suite of services, consisting of information systems
consulting, application implementation services and customer support, as
follows:
 
                                    [CHART]
The document here contains a graphic portrayal of the Company's services. The
graphic shows the three categories of the Company's services: information
systems consulting; application implementation services and customer support.
Under the "Information Systems Consulting" heading are two service listings,
entitled "Solutions Workshop" and "Application Staging and Planning (ASAP)",
respectively. An arrow points from the Information Systems Consulting category
to the Application Implementation Services category. Under "Application
Implementation Services" is a box containing the words "Application Design".
Arrows point from the "Application Design" box to boxes entitled "Application
Migration" and "Custom Development", respectively. In the "Application Design"
box are the words: "rearchitect; rapid enhancement deployment", and in the
"Custom Development" box are the words "rapid application development". An arrow
points from each of these two boxes to the box entitled "Application
Integration". An arrow points from the Application Implementation Services"
category to the Customer Support category. Under the Customer Support category
are two boxes entitled "Skills Enhancement and Empowerment"" and "Rollout &
Transitional Maintenance", respectively.
 
Information Systems Consulting
 
     Each of the Company's engagements typically commences with an information
systems consulting phase, which helps the customer and the Company to understand
the customer's business objectives and to determine the technical requirements
of the application development project under consideration. As part of this
process, the Company prepares a detailed analysis of the customer's application
architecture and a fixed-price, fixed-time schedule for either the design alone
or the design and development phases of the project. The extent of the Company's
consulting services generally depends on the complexity of the development
project, and the services offered consist of the following:
 
     Solutions Workshops
 
     The Company's smaller engagements typically commence with brief, structured
scoping sessions that focus on a customer's business needs and the solutions to
address them. The Company and the customer review the functionality of the
customer's legacy applications and weigh the costs and benefits of migrating the
legacy application versus a custom development approach. These sessions, which
typically run from two days to two weeks, are custom-designed and typically
result in the delivery of a proof-of-concept or prototype.
 
     Application Staging and Planning ("ASAP")
 
     The Company's larger engagements typically commence with an intensive
staging and planning session involving the Company and business and technical
representatives of the customer. During the ASAP process, which typically takes
from four to six weeks, the Company assesses the customer's business strategies
and its strategic, core business applications, for purposes of identifying the
areas where the applications fail to match the customer's business objectives.
The Company also reviews important aspects of the applications, including the
architecture, coding standards, interfaces and batch requirements. In situations
where the legacy application generally satisfies the customer's business
requirements, the Company and the customer jointly
 
                                       26
<PAGE>   32
 
determine whether the application is a good candidate for migration or whether a
new application should be custom developed.
 
Application Implementation Services
 
     The Company's implementation services for an engagement typically include a
design phase, a development phase (migration or custom development) and an
integration phase. In the design phase, the Company develops a design of the
customer's application, including the definition and quantification of essential
elements. This design plan encompasses user interfaces, business logic, data
management, security considerations and hardware and software configurations.
The Company and the customer develop a detailed statement of work, including, if
not done as a part of the consulting engagement, a final, fixed-price,
fixed-time timetable for an implementation plan. The development phase involves
the migration of the customer's legacy application to a multi-tier client/server
architecture, or the construction of a new application as a custom development
project, depending on the recommendations of the Company developed during the
consulting phase. Application migration projects often also include custom
development components, to enhance the functionality of the new application
beyond that inherent in the legacy application from which it was migrated. The
Company's implementation services also include the integration of the
application with the customer's IT infrastructure, including other software
applications used by the customer. The implementation phase of the Company's
engagements typically ranges from three to six months for smaller projects to
over a year for larger engagements.
 
     Application Migration
 
     The Company's application migration services consist of the migration of
customers' existing legacy applications, each often containing millions of lines
of code, from technology-specific, legacy system architectures to open,
multi-tier client/server environments. Using i-Structure, the Company analyzes
the legacy application and deconstructs it down to its smallest logical
components, consisting of interface components, data components and business
function components which are then used by the Company as generic "building
blocks" to build a platform-independent solution. Following the migration, the
application can be rapidly enhanced by the Company or the customer through
custom development of additional features. The Company believes that the
migration of existing legacy applications is a cost-effective approach for the
development of large, multi-tier client/server applications in situations where
the customer has made significant investments in a legacy application which
satisfies many of the customer's business requirements.
 
     Custom Development
 
     The Company generally provides custom development services in situations
where the customer's legacy application does not meet its business objectives,
where the customer's application is too fragmented to allow for effective
migration, or where the customer has new business objectives that require the
construction of a new application. The Company's custom development services
utilize the methodologies and technologies of i-Structure to build applications
with an architecture similar to that utilized in the application migration
process, based on generic building blocks. The Company believes that this
consistent, common development framework optimizes the capabilities of a
multi-tier client/server architecture and facilitates the development process
and subsequent application support and expansion.
 
Customer Support
 
     In order to reduce the customer's overall "cost of ownership" of an
application developed by the Company, the Company offers support services that
train the customer's users and IT personnel in the use, maintenance and
enhancement of the developed application. In addition, the Company offers
rollout support, to assist its customers in implementing the application on an
enterprise-wide basis. The Company offers transitional maintenance services,
pursuant to which it offers ongoing support and enhancements for defined periods
of time. From time to time, the Company licenses a portion of its i-Structure
tools to its customers to facilitate their support activities. The Company
believes that its support services are central to its strategy of establishing
and maintaining strong customer relationships and generating repeat business.
The Company's
                                       27
<PAGE>   33
 
support services are generally offered on a fixed-price basis separately from
the Company's implementation services.
 
TECHNOLOGY
 
     The Company has made a significant investment in research and development
resources for the creation and enhancement of the methodologies and technologies
included within i-Structure. These methodologies and technologies support the
development and migration of scalable, multi-tier client/server applications
that are independent of the hardware and operating system on which they operate,
are adaptable to future technologies or business changes, and are easily
maintainable. For the Company's migration engagements, the Company believes that
i-Structure technologies automate a significant portion of the migration tasks,
thereby resulting in a more rapid, cost-effective and risk-reduced
implementation process.
 
     The Company's proprietary technologies consist primarily of (i) the
transformation tools used to separate legacy applications into their smallest
logical components, (ii) its methodologies in populating the Application
Repository, an SQL database containing the components and critical information
about the application, and (iii) runtime tools, which enable the customer to
access and integrate the stored components. In addition, the Company relies on
its own or commonly available third party configuration, development, testing
and system management and administration tools to complete the migration or
custom development process. Other than the transformation tools, which are
relevant only to the Company's migration projects, the Company's methodologies
and technologies apply both to migration projects and to custom development
projects, resulting in a common system architecture regardless of the
implementation approach followed.
 
     The Company utilizes its transformation tools in connection with migration
engagements to analyze the legacy application for purposes of identifying the
application logic, data types, presentation logic and job control language, and
to divide the application into its smallest logical components. These
components, as well as information about the application, are stored in the
Application Repository. For custom development engagements, the Company has
developed filtering tools that enable it to extract and segment information from
a variety of third party development tools, such as PowerBuilder and Visual
Basic, in order to populate the Application Repository.
 
     The components and other application information are then reassembled by
one of the Company's proprietary runtime tools, called the Transaction Router,
which accesses the elements contained in the Application Repository in order to
integrate and implement the business functionality of the application. The
Transaction Router operates independently of the language or application
methodology utilized by the application, and can therefore access and integrate
a wide variety of graphical user interfaces, applications and databases.
 
     i-Structure supports a variety of technology architectures. Customers can
change the presentation tier or support multiple presentation tiers while
keeping the legacy system as a database or application platform, and can
integrate new technologies, either on the client or the server. The Company
believes that the flexibility of applications developed through i-Structure
reduces the risk of the development process and helps customers narrow the gap
between the demands of their business strategies and the capabilities of their
IT environments as new technologies emerge.
 
                                       28
<PAGE>   34
 
CUSTOMER ENGAGEMENTS
 
     Examples of the Company's engagements are set forth below:
 
     MCDONNELL DOUGLAS.  As a government contractor, McDonnell Douglas
Corporation ("MDC"), an aerospace company (now part of The Boeing Company), has
thousands of active contracts, each with its own progress and performance
reporting requirements. MDC's legacy contract management system consisted of
four different applications residing on mainframes using primarily
non-relational databases, each dealing with an individual part of the contract
management process. Each contract management system performed adequately
separately, but the system was inefficient as a whole: contract data and changes
were entered into each system separately, multiple IT teams maintained the
geographically dispersed and functionally distinct systems, and contract billing
was a cumbersome process. Additionally, MDC's internal planning and reporting
needs required full integration of contract information, regardless of the
contract stage.
 
     i-Cube was retained to consolidate MDC's contract management system by
migrating the four legacy applications into a single client/server system. The
Company rearchitected the baseline contract management application from the
mainframe to an open, three-tier client/server environment, removed duplicate
functionality and added new functionality to improve the government billing
process. The Company initiated the project in June 1995 and completed it in
October 1996 with a team averaging eight to ten IT professionals.
 
     The new architecture provides a presentation tier containing graphical user
interfaces for PC and Macintosh clients using ANSI-standard C++ code, along with
reporting tools and client software for Macintosh, Windows 3.11 and Windows NT.
The functionality tier contains core business rules and transaction processing,
transformed from COBOL to ANSI-standard C code and encapsulated using i-Cube's
proprietary tools. In the data tier, an Oracle relational database holds the
business data transformed from DB2 and IMS (a non-relational database). The
rearchitected contract management system provides screens and functions familiar
to users of the legacy application, minimizing training costs, but with the
added benefit that the application now runs on an open systems framework that
supports swift enhancement.
 
     The new system provides users with a single point of entry into the
contract management system and a streamlined process for contract data input.
The common, enterprise-wide application meets MDC's internal planning and
reporting needs for access to consistent and timely contract information. MDC
has been internally enhancing and maintaining the system since the engagement
completion date in 1996.
 
     In addition to the contracts management system, the Company has completed
follow-on engagements to develop a decision support system for manufacturing and
a financial planning system for MDC.
 
     WISCONSIN POWER AND LIGHT.  Wisconsin Power and Light Company ("WPL")
provides natural gas, water and electricity to more than 400,000 customers
spread over 16,000 square miles in central and southern Wisconsin. Due to the
deregulation of the utility industry, WPL anticipated that competition for
customers would force utilities to compete on the basis of service as well as
price. To meet these new strategic challenges, WPL sought to overhaul its
Customer Information and Billing System ("CIS") to make it scalable, as well as
Internet-enabled to support electronic commerce with customers and suppliers.
The legacy CIS had more than 3.5 million lines of code, was increasingly costly
to maintain, and could not be easily enhanced for new services.
 
     WPL selected i-Cube to rearchitect its legacy application. Through the use
of i-Structure, the Company rearchitected the CIS legacy application to a
three-tier client/server architecture in less than six months, with the total
transition project and roll-out into production taking a year and a half from
start to finish. The new architecture provides a presentation tier containing
graphical user interfaces for the PC client, along with reporting tools and
client software for Internet/intranet and Windows NT. The functionality tier
contains core business rules and transaction processing, transformed from COBOL
to ANSI-Standard C code and encapsulated using i-Cube's proprietary tools. In
the data tier, an Oracle relational database holds the business data transformed
from IMS, DB2 and flat files. The rearchitected CIS provides screens and
functions familiar to users of the legacy application, minimizing training
costs, but with the added benefit that the legacy application now runs on an
open-systems framework that supports swift enhancement.
 
                                       29
<PAGE>   35
 
     MERCEDES-BENZ LEASE FINANZ.  In conjunction with the release of its new A
Class automobile model in Europe, Mercedes-Benz Lease Finanz (a subsidiary of
Daimler-Benz AG) decided on a complete overhaul of its Lease Finance system to
support creative new finance options and allow near real-time feedback to
potential private customers on finance and lease applications. Faced with credit
approval times of two to three days on the mainframe, the car maker's objective
was to bring the process down to 15 minutes. Most importantly, it was critical
that the application be fully functional before the A Class started shipping to
dealers, less than 12 months later.
 
     Mercedes-Benz tried to deploy a two-tier client/server system to meet the
challenge to develop a product management system. This first attempt failed
because of inadequate system performance, so debis Systemhaus, Daimler-Benz' IT
services subsidiary, turned to i-Cube to assist in custom developing the FAST
System, a fully integrated three-tier finance application designed to be used by
dealers and customer service representatives in Mercedes-Benz' German call
center. The Company committed to and provided the solution in nine months.
Leveraging i-Structure, i-Cube met the requirement for a highly flexible new
application that was compatible with existing systems and adaptable for planned
changes to hardware and software and future changes in architecture. i-Cube
designed and custom developed a fully integrated and scalable credit application
and approval system which incorporates the existing functionality of the legacy
system as well as new functionality related to creative finance options for
retail buyers. The FAST System automates and integrates all aspects of the
finance application, which includes entering customer data, performing credit
checks, incorporating financial terms, creating required documents and
electronic interfaces to credit bureaus. The new system, which operates over a
wide-area network, has complex interfaces with the dealerships, credit approval,
and enterprise resource planning applications.
 
CUSTOMERS
 
     Organizations to which the Company provided services within the past two
years include the following:
 
<TABLE>
<S>                                     <C>
City of Columbus (Ohio)                 McDonnell Douglas Corporation
Cooper Cameron Corporation              PEMEX/Integrated Trade Systems
                                        Rockwell Automation/Reliance
Daimler-Benz AG                         Electric
debis Systemhaus                        Salt River Project
Hewlett-Packard Company                 Wisconsin Power and Light Company
IBM
</TABLE>
 
     The Company has historically derived, and may in the future derive, a
significant amount of its net revenues from major engagements with a relatively
small number of customers. In each of 1995 and 1996, the Company had three
customers which individually accounted for 10% or more of the Company's net
revenues, and in 1997 the following five customers each accounted for 10% or
more of the Company's net revenues: Salt River Project (29%); IBM (19%);
Daimler-Benz AG (14%); PEMEX/Integrated Trade Systems (11%); and Wisconsin Power
and Light Company (10%). For the first three months of 1998, the following five
customers each accounted for 10% or more of the Company's net revenues: IBM
(23%); PEMEX/Integrated Trade Systems (17%); Salt River Project (16%); Rockwell
Automation/Reliance Electric (11%); and Hewlett-Packard Company (10%).
 
I-CUBE CULTURE AND PROFESSIONAL RESOURCES
 
     The Company believes that its high performance culture is a major
competitive advantage and enables it to attract, retain and motivate high
caliber employees in a competitive employment environment. The Company focuses
on building a culture around a strong values set that governs and guides
relationships with clients, fellow employees, team members, partners, the
community and other stakeholders. The Company's values include trust and
respect, integrity, commitment, teamwork, and the journey. The journey value
recognizes that, while reaching each major milestone in a project is a rewarding
experience for the team, it is equally important that employees feel challenged
and recognized every day. The Company's culture is built on teamwork, an
entrepreneurial spirit and a passion for making clients successful. i-Cube has a
company-wide performance review program, teamwork enhancement programs, and
management and professional develop-
 
                                       30
<PAGE>   36
 
ment courses. Employees are rewarded for performing in accordance with Company
values. The Company's compensation packages include a competitive base salary,
Company and individual performance-driven incentive programs, and a
comprehensive benefits package. This package includes a broad-based incentive
stock option program that enables all employees to participate in the future
performance of the Company.
 
     The Company has an intensive five-week orientation program designed to
provide new IT employees with the technical, professional and consulting skills
required to be successful with the Company. In addition, employees stay abreast
of technological advances and developments through a combination of on-the-job
exposure to relevant technology, selected training programs, peer review and
mentoring by senior personnel.
 
     The Company's career development programs center on providing initial and
ongoing training and performance feedback on a routine basis, and allocating
assignments in accordance with employees' skills and career objectives. In
addition, the Company devotes substantial resources to developing and
continuously improving the project management abilities of its senior IT
professionals. The Company believes that its emphasis on skilled project
management strengthens its competitive position and enhances its ability to
complete fixed-price, fixed-time projects successfully and profitably. See "Risk
Factors -- Management of Growth."
 
     The Company's recruiting methods include advertising in newspapers and
trade magazines, on the Company's web site and through participation in career
fairs and college recruiting events. The Company has established an employee
referral plan which rewards employees with cash or other incentives for
referring applicants who are hired by the Company, and actively involves
employees in screening candidates for new positions. As of March 31, 1998, the
Company employed seven full-time employees and two full-time contract recruiters
dedicated to recruiting IT professionals and managing its human resources.
 
     As of March 31, 1998, the Company had 178 full-time employees, comprising
138 IT professionals, 14 sales and marketing personnel and 26 general and
administrative personnel. The Company's employees are not represented by any
labor union.
 
     The Company believes that there is a shortage of, and significant
competition for, IT professionals and that its future success is highly
dependent upon its ability to attract, train, motivate and retain skilled IT
personnel with the advanced technical skills necessary to perform the services
offered by the Company. See "Risk Factors -- Competitive Market For IT
Professionals."
 
SALES AND MARKETING
 
     The Company's target market is companies within the Fortune 1000 and other
large enterprises. Within this market, the Company targets companies that are
facing competitive pressures as a result of deregulation, industry
consolidations or other reasons, and whose existing IT systems lag their
business requirements.
 
     The Company sells its services through its direct sales force located at
the Company's offices in Cambridge, Massachusetts, City of Industry, California,
and Mannheim, Germany, and through its marketing partners. The Company sells to
customers utilizing a team approach, consisting of members of the Company's
sales function (typically a senior sales executive supported by account
executives) and members of the Company's technical staff. At March 31, 1998, the
Company had eight full-time sales professionals. In addition, the Company
generates leads through its telemarketing staff located at the Company's
headquarters, its marketing partners and through customer referrals.
 
     The Company's business development and marketing activities focus on
generating leads and building market awareness and name recognition for the
Company. The Company has an active public relations program and participates in
industry conferences and trade shows. In addition, the Company seeks to leverage
the sales and marketing activities of its marketing partners.
 
     The Company's Solutions Workshops and Application Staging and Planning
sessions are an integral part of the Company's sales process. These sessions
enable the customer to identify its strategic and information technology goals
and to understand the Company's approach and technical capabilities in helping
the customer to meet them. In addition, these sessions enable the Company to
develop the specifications and
 
                                       31
<PAGE>   37
 
prepare a detailed analysis of the customer's application architecture, and a
fixed-price schedule and plan for the development project.
 
MARKETING RELATIONSHIPS
 
     The Company is party to joint marketing agreements with Hewlett-Packard
Company and with debis Systemhaus, the IT services subsidiary of Daimler-Benz
AG. Under its agreement with the Company, Hewlett-Packard has agreed to provide
a sales and delivery organization focused on identifying, selling and delivering
migration projects during the term of the agreement. The Company has agreed to
assist Hewlett-Packard in selling these migration projects, and to staff an
"application transformation center" where the migration projects are to be
performed. Migration engagements awarded to the Company under the agreement will
generally be provided by the Company under a subcontractor agreement with
Hewlett-Packard. Pursuant to the terms of its agreement with Hewlett-Packard,
the Company is required to deposit its software tools into escrow in certain
circumstances. In the event of certain defaults by the Company, the tools in
escrow are to be released from escrow to enable Hewlett-Packard to fulfill the
Company's obligations under ongoing statements of work. See "Risk
Factors -- Dependence on Proprietary Rights." The agreement between the Company
and Hewlett-Packard commenced in July 1997 and expires in July 1999, subject to
automatic renewal for additional one year terms until terminated by either
party.
 
     The Company's agreement with a subsidiary of debis Systemhaus provides for
joint marketing of the Company's services or products, both within the debis
Systemhaus entities and among entities of the Daimler-Benz AG group of
companies. Marketing efforts are initially focused in Germany but are
subsequently expected to be directed more broadly throughout Europe.
 
     The Company considers joint marketing arrangements to be appropriate in
situations where the joint marketing partner's products or services are
complementary to those of the Company and where the partner is committed to
marketing the Company's services. From time to time, the Company may consider
additional joint marketing relationships, although the Company is not engaged in
any material discussions with respect to any such relationships as of the date
of this Prospectus. See "Risk Factors -- Dependence on Third Party Marketing
Relationships."
 
RESEARCH AND DEVELOPMENT
 
     The Company has made substantial investments in research and development to
maintain and enhance the methodologies and technologies of i-Structure and other
development resources necessary to enable the Company to continue to provide
scalable, technology-independent multi-tier client/server applications meeting
the needs of its customers. The Company's development efforts include market
requirements analysis, tool definition, design specification, coding and testing
and documentation of methodologies. Where appropriate, the Company focuses on
identifying and integrating leading third-party technologies into its
development processes and into applications developed for customers to better
meet customer needs. The Company has a dedicated research and development team,
which is supplemented from time to time by members of the Company's operations
staff. In addition, the Company supports its research and development efforts
with a central knowledge database containing relevant information learned by the
Company's IT professionals in the course of customer engagements. The Company's
research and development expenditures totaled approximately $1.6 million, $3.3
million and $1.1 million in 1996, 1997 and the first three months of 1998,
respectively. These amounts are included as part of project personnel and
software costs in the Company's Statements of Income. See "-- Technology."
 
COMPETITION
 
     The Company operates in a highly competitive and rapidly changing market
and competes with a variety of organizations that offer services similar to
those offered by the Company. The market includes participants from a variety of
market segments, including other IT service providers, large accounting and
other professional service firms, packaged software vendors and services groups
of computer equipment companies, as well as the internal IT staffs of its
customers and potential customers. Many of these competitors have significantly
greater financial, technical, sales and marketing resources and greater name
recognition than the
 
                                       32
<PAGE>   38
 
Company. In addition, there are relatively low barriers to entry into the market
in which the Company competes and the Company has faced, and expects to continue
to face, additional competition from new entrants into this market. There can be
no assurance that the Company will be able to continue to compete successfully
with its existing competitors or that it will be able to compete successfully
with new competitors.
 
     The Company believes that the principal competitive factors in the market
in which it competes include: a willingness to offer fixed-price, fixed-time
projects, expertise in the development of large-scale, multi-tier client/server
applications, the ability to preserve the customer's investment in its legacy
application, the speed with which the application is developed, and the total
"cost of ownership" of the application, including the initial development and
implementation costs as well as ongoing maintenance costs. The Company believes
that it competes effectively in each of these areas. Nevertheless, there can be
no assurance that the Company will be able to compete successfully against
current and future competitors, and the failure to do so would have a material
adverse effect upon the Company's business, financial condition and results of
operations.
 
INTELLECTUAL PROPERTY
 
     The Company's success and its ability to compete is dependent, in part,
upon its proprietary rights, including its rights in i-Structure methodologies
and technologies. The Company relies primarily on a combination of copyright,
trademark and trade secret laws to establish and protect its proprietary rights.
There can be no assurance that such measures will be adequate to protect the
Company's proprietary rights. In addition, the Company seeks to protect its
proprietary rights through the use of confidentiality agreements with employees,
consultants, advisors and others. There can be no assurance that any such
agreements will provide adequate protection for the Company's proprietary rights
in the event of any unauthorized use or disclosure, that employees of the
Company, consultants, advisors or others will maintain the confidentiality of
such proprietary information, or that such proprietary information will not
otherwise become known, or be independently developed, by competitors.
 
     The Company historically has restricted access to the source codes of its
software tools and other technologies. The Company regards its source codes as
proprietary information, and attempts to protect the confidentiality of these
source codes, some of which are embedded in the developed application and
licensed to the customer for runtime use. In certain cases, the Company has also
licensed the source code version to customers for internal use, to enable them
to maintain their transformed applications, and in other cases, the Company has
entered into arrangements to make its source code available upon the occurrence
of certain events, such as the bankruptcy or insolvency of the Company or
certain material breaches of the Company's application development contract. In
the event of any release of the source code pursuant to such arrangements, the
customer's license is generally limited to use of the source code for specific
purposes. Despite the Company's precautions, it may be possible for unauthorized
parties to copy or otherwise reverse engineer portions of the Company's software
or otherwise obtain and use information that the Company regards as proprietary.
 
     The Company does not possess any patents or copyright registrations in the
United States or any other jurisdiction. Existing copyright and trade secret
laws only offer limited protection, and the laws of certain countries in which
the Company provides services may not protect the Company's intellectual
property rights to the same extent as the laws of the United States. Certain
provisions of the agreements entered into by the Company, including provisions
protecting against unauthorized use, transfer and disclosure, may be
unenforceable under the laws of certain jurisdictions, and the Company is
required to negotiate limits on these provisions from time to time.
 
     The Company's competitive position may be affected by its ability to
protect its proprietary information. However, because the IT industry is
characterized by rapid technological change, the Company believes that patent,
trademark, copyright and other legal protections are less significant to the
Company's success than other factors such as the knowledge, ability and
experience of the Company's personnel, the development of new services, customer
service and ongoing support.
 
     The Company's business includes the development of custom software in
connection with specific customer engagements. The Company frequently assigns to
its customers the copyright and other intellectual
                                       33
<PAGE>   39
 
property rights in certain aspects of the software and documentation developed
for these customers. Although the Company's contracts with its customers provide
that the Company retains the rights to its intellectual property, there can be
no assurance that customers will not assert rights in, and seek to limit the
Company's use of, such intellectual property.
 
     The Company has received notice from a company located in the Netherlands
that it believes that its rights to use the i-Cube name in the Netherlands,
Belgium and Luxembourg are superior to those of the Company. See "Risk
Factors -- Dependence on Proprietary Rights."
 
MANAGEMENT INFORMATION SYSTEMS
 
     The Company has invested significantly in its information technology and
management information systems in order to build a scalable environment. The
Company has an enterprise-wide groupware application that is utilized for global
e-mail and calendaring, knowledge management discussion databases, and forms
databases. The Company's United States offices are linked via a high-speed
network, and the Company expects to establish a similar connection with its
German office prior to the end of 1998. Many of the Company's human resource
administrative functions are managed on-line, including job requisitions and
approvals, performance reviews, training course registration, employee handbook
distribution and tuition reimbursement approvals. The Company expects to
implement an enterprise-wide accounting and human resources software application
in the second half of 1998 to support its anticipated growth. See "Risk
Factors -- Management of Growth."
 
FACILITIES
 
     The Company's headquarters are located in approximately 46,700 square feet
of leased office space in Cambridge, Massachusetts. This facility is used by the
Company's senior management and its administrative, human resources and sales
and marketing personnel and serves as the Company's principal transformation and
development facility. The lease term extends to November 2001 with a five-year
renewal at the option of the Company. In addition, the Company leases
approximately 5,800 square feet of office space in City of Industry, California,
and plans to lease approximately 4,000 square feet in Mannheim, Germany, in
which it will house the Company's European operations. The Company believes that
its facilities will be adequate to meet its needs for approximately the next 12
months.
 
LEGAL PROCEEDINGS
 
     The Company is not currently a party to any material legal proceedings.
 
                                       34
<PAGE>   40
 
                                   MANAGEMENT
 
EXECUTIVE OFFICERS, DIRECTORS AND CERTAIN KEY OFFICERS
 
     The executive officers, directors and certain key officers of the Company
and their ages as of March 31, 1998 are as follows:
 
<TABLE>
<CAPTION>
                   NAME                     AGE                         POSITION
                   ----                     ---                         --------
<S>                                         <C>    <C>
EXECUTIVE OFFICERS AND DIRECTORS
Michael Pehl..............................  36     Chief Executive Officer and Chairman of the Board
                                                   of Directors
Madhav Anand..............................  31     President, Co-Founder and Director
Lawrence P. Begley........................  42     Executive Vice President, Chief Financial Officer,
                                                     Treasurer and Director
Jane Callanan.............................  42     Vice President, Human Resources
Karl-Heinz Dette..........................  46     Vice President and General Manager, European
                                                     Operations
Timothy D. Eager..........................  39     Chief Technology Officer
James K. McCann...........................  41     Vice President, Operations
Thomas J. Meredith(1).....................  47     Director
Joseph M. Tucci(2)........................  50     Director
Gregory S. Young(1).......................  41     Director
John A. Young(2)..........................  65     Director
Patrick J. Zilvitis(2)....................  55     Director
OTHER KEY OFFICERS
Maria A. Cirino...........................  34     Vice President, Sales and Marketing
Yannis Doganis............................  33     Vice President and Co-Founder
Patricia M. Gilligan......................  46     Vice President, Eastern Region Operations
Robert M. Lapides.........................  41     Vice President, Global Business Development
Gary C. Mekikian..........................  34     Vice President
Michael A. Morin..........................  44     Vice President
</TABLE>
 
---------------
(1) Member of the Audit Committee.
(2) Member of the Compensation Committee.
 
     Michael Pehl has served as Chief Executive Officer since June 1996. He was
elected Chairman of the Board of Directors of the Company in July 1996. From
March 1994 to May 1996, Mr. Pehl was Chief Executive Officer of Deloitte &
Touche Consulting Group/ICS, the global SAP and Baan package implementation
group of Deloitte Touche Tohmatsu International, a global accounting and
consulting firm. From January 1991 until March 1994, Mr. Pehl was Chief
Executive Officer of ICS, a systems implementation firm that he founded and sold
to Deloitte & Touche in 1994. Prior to founding ICS, Mr. Pehl was employed by
SAP AG and SAP America from July 1986 to December 1990 where he held various
positions in the consulting and development organizations. Mr. Pehl was a member
of the SAP AG team that relocated to the United States in 1987 and established
SAP America.
 
     Madhav Anand co-founded the Company and has served as a Director since
inception. Since January 1993, Mr. Anand has served as President of the Company.
From April 1992 to December 1992, Mr. Anand was a project manager at Sapient
Corporation, an IT consulting firm. From May 1989 to April 1992, Mr. Anand was
an associate director for Cambridge Technology Partners, an IT consulting firm.
 
     Lawrence P. Begley joined the Company in October 1996 as Chief Financial
Officer, Treasurer and a Director and became Executive Vice President in April
1998. From August 1988 to October 1996, Mr. Begley was employed by The Boston
Consulting Group ("BCG"), an international management consulting firm.
 
                                       35
<PAGE>   41
 
From August 1988 until December 1990, Mr. Begley was Director of Finance and
Corporate Controller of BCG. From December 1990 to October 1996, he was Chief
Financial Officer and Treasurer of BCG.
 
     Jane Callanan joined the Company in March 1997 as Vice President, Human
Resources. From May 1993 to January 1997, Ms. Callanan was Vice President of
Human Resources at Shiva Corporation, a provider of remote access and
internetworking technology to Fortune 1000 companies. From July 1990 to March
1993, Ms. Callanan was Vice President of Human Resources at Cambridge Technology
Partners, an IT consulting firm.
 
     Karl-Heinz Dette joined the Company in April 1998 as Vice President and
General Manager, European Operations. From July 1987 to March 1998, Mr. Dette
was employed by SAP AG where he held a variety of senior management positions
including Global Alliance Manager for Oracle and Siemens Nixdorf.
 
     Timothy D. Eager joined the Company in September 1994 as Chief Technology
Officer. From November 1983 to August 1994, Mr. Eager was employed by
Hewlett-Packard Company. Mr. Eager held several positions at Hewlett-Packard
including Senior Consultant, Project Manager and Senior Systems Engineer.
 
     James K. McCann joined the Company in June 1997 as Vice President,
Operations. From September 1974 until May 1997, Mr. McCann was employed by
Northrop Grumman, an international aerospace and defense electronics firm. From
June 1993 to May 1997, Mr. McCann was Vice President, Information Services at
Northrop Grumman. Prior to June 1993, Mr. McCann held several positions at
Northrop Grumman including Director, Information Technology Management,
Director, Information Technology Aircraft Division, and Program Director, B-2
Program Office.
 
     Thomas J. Meredith has served as a Director of the Company since March
1998. Since November 1992, Mr. Meredith has been the Chief Financial Officer of
Dell Computer. In September 1995, Mr. Meredith was named Senior Vice President,
Finance and Information Systems of Dell Computer and retained the position of
Chief Financial Officer of Dell Computer. In July 1996, Mr. Meredith's title was
changed to Senior Vice President and Chief Financial Officer of Dell Computer.
Mr. Meredith is a director of i2 Technologies Inc.
 
     Joseph M. Tucci has served as a Director of the Company since May 1995.
Since January 1993, he has been the President and Chief Executive Officer of
Wang Global (formerly Wang Laboratories, Inc.), and has been its Chairman of the
Board of Directors since October 1993.
 
     Gregory S. Young has served as a Director of the Company since August 1995.
Since 1990, Mr. Young has been President of Teton Capital Management, a private
capital investment firm. Mr. Young is the son of John A. Young.
 
     John A. Young has served as a Director of the Company since August 1995.
Mr. Young was the Chief Executive Officer and President of Hewlett-Packard
Company from 1978 to 1992. Mr. Young is a director of SmithKline Beecham p.l.c.,
Lucent Technologies, Chevron Corp., Novell, Inc., Wells Fargo Bank & Co.,
Affymetrix, Inc. and Shaman Pharmaceuticals, Inc. Mr. Young is the father of
Gregory S. Young.
 
     Patrick J. Zilvitis has served as a Director of the Company since December
1997. Since November 1992, Mr. Zilvitis has been the Vice President, Corporate
Information Technology and Chief Information Officer of The Gillette Company.
 
     Other key officers of the Company include:
 
     Maria A. Cirino joined the Company in July 1997 as a Vice President in the
sales organization. In February 1998, she also assumed responsibility for
marketing. From January 1993 to June 1997, Ms. Cirino was employed by Shiva
Corporation, a provider of remote access and internetworking technology to
Fortune 1000 companies. Ms. Cirino held several positions at Shiva including
Vice President, Internet Business Group and Vice President of Sales, Americas.
From January 1991 to January 1993, Ms. Cirino was employed by Lotus Development
Corporation as Group Manager, Word Processing Division and Channel Marketing
Manager.
 
     Yannis Doganis joined the Company as a co-founder in March 1993. Since June
1997, he has served as Vice President, Client Solutions Group. From March 1993
to June 1997, Mr. Doganis was Vice President,
                                       36
<PAGE>   42
 
Operations. From October 1991 to March 1993, Mr. Doganis was a project manager
and technical team leader at Cambridge Technology Partners, an IT consulting
firm.
 
     Patricia M. Gilligan joined the Company in June 1997. From June 1997 to
February 1998, Ms. Gilligan was Senior Director, Eastern Region Operations. In
February 1998, Ms. Gilligan became Vice President, Eastern Region Operations.
From December 1992 to June 1997, Ms. Gilligan was employed by Cahners
Publishing, a publishing company. Ms. Gilligan served as Director of
Applications for Cahners from December 1992 until December 1994, when she was
elected Chief Information Officer of Cahners.
 
     Robert M. Lapides joined the Company in May 1997 as Vice President, Global
Business Development. From May 1984 to November 1996, Mr. Lapides was employed
by Liant Software Corporation, a provider of application development and data
access software tools. At Liant Software, Mr. Lapides held a variety of
positions including Senior Vice President, Worldwide Sales, Marketing and
Customer Service, and Vice President and General Manager, Language Products
Business Unit.
 
     Gary C. Mekikian joined the Company in September 1994. From September 1994
to December 1996, Mr. Mekikian served as Vice President, Sales. From December
1996 to February 1998, Mr. Mekikian was Vice President, Western Region
Operations. In March 1998, Mr. Mekikian became a Vice President in the sales
organization. From January 1990 to September 1994, Mr. Mekikian was employed as
Manager, Major Accounts at Hewlett-Packard Company.
 
     Michael A. Morin joined the Company in April 1996 as Northeast Area Sales
Manager. In October 1996, Mr. Morin was promoted to Vice President in the sales
organization. From February 1994 to April 1996, Mr. Morin was employed by i2
Technologies Inc., a provider of intelligent planning and scheduling software
for global supply chain management, as Northeast Regional Manager and Regional
Vice President of Sales. From March 1989 to January 1994, Mr. Morin was employed
by Consilium Incorporated, a supplier of integrated manufacturing execution
software and systems, where Mr. Morin was a regional and district manager.
 
     See "Certain Transactions" and "Principal Stockholders" for certain
information concerning the Company's directors and executive officers.
 
ELECTION OF DIRECTORS
 
     Following this offering, the Board of Directors will be divided into three
classes, each of whose members will serve for a staggered three-year term.
Messrs. Begley and G. Young will serve in the class whose term expires in 1999;
Messrs. Anand, J. Young and Zilvitis will serve in the class whose term expires
in 2000; and Messrs. Meredith, Pehl and Tucci will serve in the class whose term
expires in 2001. Upon the expiration of the term of a class of directors,
directors in such class will be elected for three-year terms at the annual
meeting of stockholders in the year in which such term expires.
 
COMPENSATION OF DIRECTORS
 
     The Company reimburses non-employee directors for reasonable out-of-pocket
expenses incurred in attending meetings of the Board of Directors. Non-employee
directors of the Company will receive stock options under the Company's 1998
Non-Employee Director Stock Option Plan (the "Directors' Plan"). See "-- Benefit
Plans." Since their election to the Board of Directors, the Company has granted
non-qualified options and issued restricted stock to certain of its non-employee
directors in the following aggregate amounts: Mr. Joseph Tucci, 45,000 options
and 37,500 shares of Common Stock; Mr. Gregory S. Young, 82,500 options and
37,500 shares of Common Stock; Mr. John Young, 45,000 options and 37,500 shares
of Common Stock; Mr. Thomas Meredith, 30,000 options; and Mr. Patrick Zilvitis,
30,000 options. No director who is an employee of the Company will receive
separate compensation for services rendered as a director.
 
BOARD COMMITTEES
 
     The Board of Directors has established a Compensation Committee and an
Audit Committee. The Compensation Committee, which consists of Messrs. Tucci, J.
Young and Zilvitis, reviews executive salaries,
                                       37
<PAGE>   43
 
administers any bonus, incentive compensation and stock plans of the Company,
and approves the salaries and other benefits of the executive officers of the
Company. In addition, the Compensation Committee consults with the Company's
management regarding pension and other benefit plans and compensation policies
and practices of the Company.
 
     The Audit Committee, which consists of Messrs. Meredith and G. Young,
reviews the professional services provided by the Company's independent
auditors, the independence of such auditors from management of the Company, the
annual financial statements of the Company and the Company's system of internal
accounting controls. The Audit Committee also reviews such other matters with
respect to the accounting, auditing and financial reporting practices and
procedures of the Company as it may find appropriate or may be brought to its
attention.
 
EXECUTIVE COMPENSATION
 
     The following table sets forth, for the year ended December 31, 1997, the
cash compensation paid and shares underlying options granted to (i) the
Company's Chief Executive Officer and (ii) each of the four other most highly
compensated executive officers who received annual compensation in excess of
$100,000 (collectively, the "Named Executive Officers"):
 
                           SUMMARY COMPENSATION TABLE
 
<TABLE>
<CAPTION>
                                                                        LONG-TERM
                                                                     COMPENSATION(2)
                                                                     ---------------
                                                                         AWARDS
                                                                     ---------------
                                           ANNUAL COMPENSATION(1)      SECURITIES
                                           ----------------------      UNDERLYING        ALL OTHER
                                            SALARY        BONUS        OPTIONS(#)       COMPENSATION
                                           ---------    ---------    ---------------    ------------
<S>                                        <C>          <C>          <C>                <C>
Michael Pehl.............................  $260,000     $130,000         200,000          $  8,771(3)
  Chief Executive Officer and Chairman of
  the Board of Directors
Madhav Anand.............................   150,000       51,060              --                --
  President
Lawrence P. Begley.......................   250,000       96,600              --            10,910(4)
  Executive Vice President, Chief
  Financial Officer, Treasurer and
  Director
Jane Callanan............................   114,818       31,690         225,000            49,000
  Vice President, Human Resources(5)
James K. McCann..........................   116,667       28,175         225,000           100,000
  Vice President, Operations(6)
</TABLE>
 
---------------
 
(1) In accordance with the rules of the Securities and Exchange Commission, the
    compensation set forth in the table does not include medical, group life or
    other benefits which are available to all salaried employees of the Company,
    and certain perquisites and other benefits, securities or property which do
    not exceed the lesser of $50,000 or 10% of the person's salary and bonus
    shown in the table.
 
(2) Represents stock options granted during the fiscal year ended December 31,
    1997. The Company did not grant any restricted or stock appreciation rights
    or make any long term incentive plan payouts during 1997 to its Named
    Executive Officers.
 
(3) Represents life insurance premiums paid on behalf of Mr. Pehl.
 
(4) Represents life and health insurance premiums paid on behalf of Mr. Begley.
 
(5) Ms. Callanan joined the Company in March 1997. Ms. Callanan would have
    earned a total annual salary of $180,000 had she been employed as an
    executive officer of the Company for the entire year ended
 
                                       38
<PAGE>   44
 
    December 31, 1997. Ms. Callanan received a sign-on bonus of $49,000 when she
    joined the Company in March 1997.
 
(6) Mr. McCann joined the Company in June 1997. Mr. McCann would have earned a
    total annual salary of $200,000 had he been employed as an executive officer
    of the Company for the entire year ended December 31, 1997. Mr. McCann
    received a sign-on and relocation bonus of $100,000 when he joined the
    Company in June 1997.
 
     In the table above, columns required by the Regulations of the Securities
and Exchange Commission (the "Commission") have been omitted where no
information was required to be disclosed under those columns.
 
STOCK OPTIONS
 
     The following table contains information concerning the grant of options to
purchase shares of the Company's Common Stock to each of the Named Executive
Officers of the Company during the fiscal year ended December 31, 1997:
 
                       OPTION GRANTS IN LAST FISCAL YEAR
 
<TABLE>
<CAPTION>
                                                                                            POTENTIAL REALIZABLE
                                                INDIVIDUAL GRANTS                             VALUE AT ASSUMED
                        -----------------------------------------------------------------       ANNUAL RATES
                           NUMBER OF      PERCENT OF TOTAL                                  OF STOCK APPRECIATION
                          SECURITIES       OPTIONS GRANTED                                   FOR OPTION TERM(3)
                          UNDERLYING        TO EMPLOYEES      EXERCISE PRICE   EXPIRATION   ---------------------
                        OPTIONS GRANTED   IN FISCAL YEAR(1)    ($/SHARE)(2)       DATE         5%         10%
                        ---------------   -----------------   --------------   ----------   --------   ----------
<S>                     <C>               <C>                 <C>              <C>          <C>        <C>
Michael Pehl..........      200,000(4)          10.4%             $3.00         06/24/07    $377,337   $  956,245
Madhav Anand..........           --               --                 --               --          --           --
Lawrence P. Begley....           --               --                 --               --          --           --
Jane Callanan.........      225,000(5)          11.7               3.00         03/05/07     424,504    1,075,776
James K. McCann.......      225,000(6)          11.7               3.00         06/02/07     424,504    1,075,776
</TABLE>
 
---------------
 
(1) Based on an aggregate of 1,928,700 shares subject to options granted to
    employees of the Company in 1997.
 
(2) All options were granted at or above fair market value as determined by the
    Board of Directors on the date of grant.
 
(3) Amounts reported in these columns represent amounts that may be realized
    upon exercise of options immediately prior to the expiration of their term
    assuming the specified compounded rates of appreciation (5% and 10%) on the
    Company's Common Stock over the term of the options. The potential
    realizable values set forth above do not take into account applicable tax
    and expense payments that may be associated with such option exercises.
    Actual realizable value, if any, will be dependent on the future price of
    the Common Stock on the actual date of exercise, which may be earlier than
    the stated expiration date. The 5% and 10% assumed annualized rates of stock
    price appreciation over the exercise period of the options used in the table
    above are mandated by the rules of the Commission and do not represent the
    Company's estimate or projection of the future price of the Common Stock on
    any date. There is no representation either express or implied that the
    stock price appreciation rates for the Common Stock assumed for purposes of
    this table will actually be achieved.
 
(4) By their terms, such options will become immediately exercisable upon the
    closing of this offering.
 
(5) Such options become exercisable as follows: 37,496 shares on March 5, 1998;
    18,751 shares on September 5, 1998; 18,750 shares on March 5, 1999; 18,751
    shares on September 5, 1999; 18,751 shares on March 5, 2000; 18,750 shares
    on September 5, 2000; 18,751 shares on March 5, 2001; and 75,000 shares on
    March 5, 2004; provided that the options that become exercisable on March 5,
    2004 are subject to immediate vesting if the Company attains certain market
    capitalization thresholds.
 
                                       39
<PAGE>   45
 
(6) Such options become exercisable as follows: 37,496 shares on June 2, 1998;
    18,751 shares on December 2, 1998; 18,750 shares on June 2, 1999; 18,751
    shares on December 2, 1999; 18,751 shares on June 2, 2000; 18,750 shares on
    December 2, 2000; 18,751 shares on June 2, 2001; and 75,000 shares on June
    2, 2004; provided that the options that become exercisable on June 2, 2004
    are subject to immediate vesting if the Company attains certain market
    capitalization thresholds.
 
FISCAL YEAR-END OPTION VALUES
 
     The following table sets forth information for each of the Named Executive
Officers with respect to the value of options outstanding as of December 31,
1997.
 
                    AGGREGATED FISCAL YEAR-END OPTION VALUES
 
<TABLE>
<CAPTION>
                                                           NUMBER OF
                                                     SECURITIES UNDERLYING            VALUE OF UNEXERCISED
                                                     UNEXERCISED OPTIONS AT         IN-THE-MONEY OPTIONS AT
                         SHARES                       DECEMBER 31, 1997(#)          DECEMBER 31, 1997($)(1)
                        ACQUIRED       VALUE      ----------------------------    ----------------------------
        NAME           ON EXERCISE    REALIZED    EXERCISABLE    UNEXERCISABLE    EXERCISABLE    UNEXERCISABLE
        ----           -----------    --------    -----------    -------------    -----------    -------------
<S>                    <C>            <C>         <C>            <C>              <C>            <C>
Michael Pehl.........      --           --          359,689        1,056,811      $1,054,067      $2,995,433
Madhav Anand.........      --           --           75,000           75,000         210,000         210,000
Lawrence P. Begley...      --           --           93,750          431,250         281,250       1,293,750
Jane Callanan........      --           --               --          225,000              --         450,000
James K. McCann......      --           --               --          225,000              --         450,000
</TABLE>
 
---------------
(1) There was no public trading market for the Common Stock as of December 31,
    1997. Accordingly, as permitted by the rules of the Commission, these values
    have been calculated on the basis of the fair market value of the Company's
    Common Stock as of December 31, 1997, of $5.00 per share, as determined by
    the Board of Directors, less the aggregate exercise price.
 
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
 
     During the year ended December 31, 1997, the members of the Compensation
Committee of the Company's Board of Directors were Messrs. Pehl, J. Young and
Tucci. Mr. Pehl has served as Chief Executive Officer of the Company since June
1996. No member of the Compensation Committee serves as a member of the board of
directors or compensation committee of any entity that has one or more executive
officers serving as a member of the Company's Board of Directors or Compensation
Committee. See "Certain Transactions" and "Principal Stockholders."
 
EMPLOYMENT AGREEMENTS
 
     The Company is party to a letter agreement with Michael Pehl, pursuant to
which Mr. Pehl received a $1,000,000 cash signing bonus, $50,000 to pay for
negotiation and relocation expenses and a $4,000,000 life insurance policy
(which will be terminated 91 days after the closing of this offering) as
inducements to join the Company. Under the agreement, Mr. Pehl is entitled to an
annual base salary of not less than $200,000. In addition, the agreement
provides that effective upon his employment, Mr. Pehl was entitled to receive
stock options to purchase 892,500 shares of the Company's Common Stock at an
exercise price of $2.00 per share. The agreement provides for vesting of the
options over a four-year period, subject to acceleration in full upon a change
of control and subject to an acceleration provision that is effective upon the
completion of an initial public offering, as follows: if, at the time of the
Company's initial public offering, less than 50% of Mr. Pehl's options have
vested, then 50% shall immediately vest, with the remaining 50% to vest in four
equal semi-annual installments starting six months after the initial public
offering. More than 50% of Mr. Pehl's options will have vested prior to this
offering. If Mr. Pehl's employment is terminated by the Company for cause, or if
he voluntarily leaves the Company or dies, the options will terminate (provided
that he or his estate may exercise any vested options). If Mr. Pehl's employment
is terminated without cause, the options that have vested as of the date of
termination will remain exercisable until the later of June 30, 1998 or ninety
days after
 
                                       40
<PAGE>   46
 
the date of termination, whereupon they will expire. The agreement also provides
that effective upon his employment, Mr. Pehl was entitled to receive two stock
options, each to purchase 162,000 shares of the Company's Common Stock at an
exercise price of $2.00 per share. The agreement provides for vesting of these
options at the end of seven years from the date of the agreement, subject to the
following acceleration provisions. The first of the options will completely vest
if the Company achieves a total market capitalization of $400 million while Mr.
Pehl is employed by the Company or within six months of the termination of Mr.
Pehl's employment without cause. The second of the options will completely vest
if the Company achieves a total market capitalization of $600 million while Mr.
Pehl is employed by the Company or within six months of the termination of Mr.
Pehl's employment without cause. The agreement provides that Mr. Pehl may
provide advisory services to his former employer, Deloitte & Touche Consulting
Group/ICS, for a maximum of twelve days per year.
 
     The Company is party to a letter agreement with Lawrence P. Begley, dated
August 30, 1996. Pursuant to the agreement, Mr. Begley received a $150,000 cash
signing bonus and a $1,000,000 term life insurance policy as inducements to join
the Company. Under the agreement, Mr. Begley is entitled to an annual base
salary of not less than $250,000. In addition, the agreement provides that
effective upon his employment, Mr. Begley was entitled to receive stock options
to purchase 375,000 shares of the Company's Common Stock at an exercise price of
$2.00 per share. The agreement provides for vesting of the options over a
four-year period, subject to acceleration in full upon a change of control and
subject to an acceleration provision that is effective upon the completion of an
initial public offering, as follows: if, at the time of the Company's initial
public offering, less than 50% of Mr. Begley's options have vested, then 50%
shall immediately vest, with the remaining 50% to vest in four equal semi-annual
installments starting six months after the initial public offering. Less than
50% of Mr. Begley's options will have vested prior to this offering. The
agreement also provides that effective upon his employment, Mr. Begley was
entitled to receive two stock options, each to purchase 75,000 shares of the
Company's Common Stock at an exercise price of $2.00 per share. The agreement
provides for vesting of the options at the end of seven years from the date of
the agreement, subject to the following acceleration provisions. The first of
the options will completely vest if the Company achieves a total market
capitalization of $400 million while Mr. Begley is employed by the Company or
within six months of the termination of Mr. Begley's employment without cause.
The second of the options will completely vest if the Company achieves a total
market capitalization of $600 million while Mr. Begley is employed by the
Company or within six months of the termination of Mr. Begley's employment
without cause. If the Company terminates Mr. Begley's employment without cause
or if Mr. Begley resigns as a result of (i) any reduction in compensation below
$250,000 per year or (ii) a material diminution of his job responsibilities or
position within the Company without his consent within the first thirty-six
months after he commenced employment with the Company, then Mr. Begley will
continue to receive his annual base salary and benefits for the twelve-month
period following the effective date of termination.
 
     The Company is party to a letter agreement with Karl-Heinz Dette dated
December 19, 1997. Pursuant to the agreement, Mr. Dette received a $100,000 cash
signing bonus as an inducement to join the Company. Under the agreement, Mr.
Dette is entitled to an annual base salary of $175,000, an annual bonus of up to
20% of his annual base salary and an additional annual bonus of up to $100,000,
each bonus to be based upon the attainment of certain performance criteria set
by the Board of Directors. The agreement provides that for the first
twelve-month period of Mr. Dette's employment, the Company will guarantee a
minimum performance bonus of $50,000. The agreement also provides that effective
upon his employment, Mr. Dette was entitled to receive stock options to purchase
100,000 shares of the Company's common stock. The agreement provides for vesting
of the options over a four-year period. In the event that the Company ceases to
perform computer and consulting services and Mr. Dette elects to terminate his
employment with the Company, the Company will pay him a lump sum equal to twice
his annual base salary.
 
BENEFIT PLANS
 
  1993 Stock Plan
 
     In March 1993, the Company's Board of Directors approved the 1993 Stock
Plan (the "1993 Stock Plan"), which provided for the grant of options to
purchase, awards of and authorizations to purchase
 
                                       41
<PAGE>   47
 
(collectively, "1993 Plan Stock Rights") Common Stock of the Company to
employees, officers and directors of, and consultants or advisors to, the
Company and its parent and subsidiary corporations who are expected to
contribute to the Company's future growth and success. No grants have been made
under this plan since December 1995 and the plan was terminated by the Company's
Board of Directors in April 1996. 1993 Plan Stock Rights are not transferable by
the grantee except by will or the laws of descent and distribution. Generally,
incentive stock options granted under the 1993 Stock Plan may not be exercised
by an optionee more than two months following the termination of employment, and
such options expire not more than ten years after the date of grant. As of March
31, 1998, options to purchase 915,175 shares had been granted and were
outstanding and unexercised under the 1993 Stock Plan.
 
  1996 Stock Plan
 
     In January 1996, the Company's Board of Directors approved the 1996 Stock
Plan (the "1996 Stock Plan"), which provides for the grant of options to
purchase, awards of and rights to purchase (collectively, "1996 Plan Stock
Rights") shares of Common Stock of the Company to employees, officers and
directors of, and consultants or advisors to, the Company and its parent and
subsidiary corporations who are expected to contribute to the Company's future
growth and success. Upon the adoption of the 1998 Stock Incentive Plan in April
1998, the 1996 Stock Plan was terminated and no further grants will be made
under the 1996 Stock Plan. 1996 Plan Stock Rights are not transferable by the
grantee except by will or the laws of descent and distribution. Generally,
incentive stock options granted under the 1996 Stock Plan may not be exercised
by an optionee more than three months following the termination of employment,
and such options expire not more than ten years after the date of grant. As of
March 31, 1998, options to purchase 4,546,607 shares had been granted and were
outstanding and unexercised under the 1996 Stock Plan.
 
  1998 Stock Incentive Plan
 
     In April 1998, the Company's Board of Directors approved the 1998 Stock
Incentive Plan (the "1998 Stock Incentive Plan"), which provides for the grant
of incentive stock options, non-statutory stock options, stock appreciation
rights, performance shares and awards of restricted stock and unrestricted stock
("Awards"). The aggregate number of shares of Common Stock that may be issued
pursuant to the 1998 Stock Incentive Plan equals 3,785,484 shares plus such
additional number of shares subject to awards granted under the 1996 Stock Plan
or the 1993 Stock Plan that are not actually issued because such options expire
or otherwise result in shares not being issued, or in the case of restricted
stock, are repurchased by the Company pursuant to the terms of the applicable
stock restriction agreement.
 
     The 1998 Stock Incentive Plan is administered by the Board of Directors and
the Compensation Committee. The Board has the authority to grant Awards under
the 1998 Stock Incentive Plan and to accelerate, waive or amend certain
provisions of outstanding Awards. The Board has authorized the Compensation
Committee to administer certain aspects of the 1998 Stock Incentive Plan and has
authorized the Chief Executive Officer of the Company to grant Awards to
non-executive officer employees.
 
     Incentive Stock Options and Nonstatutory Options.  Optionees receive the
right to purchase a specified number of shares of Common Stock at some time in
the future at an exercise price and subject to such terms and conditions as are
specified at the time of the grant. Incentive stock options and options that the
Board or Compensation Committee intends to qualify as performance-based
compensation under Section 162(m) of the Code may not be granted at an exercise
price less than the fair market value of the Common Stock on the date of grant
(or less than 110% of the fair market value in the case of incentive stock
options granted to optionees holding 10% or more of the voting stock of the
Company). All other options may be granted at an exercise price that may be less
than, equal to or greater than the fair market value of the Common Stock on the
date of grant.
 
     Stock Appreciation Rights and Performance Shares.  A stock appreciation
right ("SAR") is based on the value of Common Stock and entitles the SAR holder
to receive consideration to the extent that the fair market value on the date of
exercise of the shares of Common Stock underlying the SAR exceeds the fair
market value of the underlying shares on the date the SAR was granted. A
performance share award entitles the recipient to acquire shares of Common Stock
upon the attainment of specified performance goals.
 
                                       42
<PAGE>   48
 
     Restricted and Unrestricted Stock.  Restricted stock awards entitle
recipients to acquire shares of Common Stock, subject to the right of the
Company to repurchase all or part of such shares at their purchase price from
the recipient in the event that the conditions specified in the applicable stock
award are not satisfied prior to the end of the applicable restriction period
established for such award. The Company may also grant (or sell at a purchase
price not less than 85% of the fair market value on the date of such sale) to
participants shares of Common Stock free of any restrictions under the 1998
Stock Incentive Plan.
 
     All of the employees, officers, directors, consultants and advisors of the
Company who are expected to contribute to the Company's future growth and
success are eligible to participate in the 1998 Stock Incentive Plan.
 
     Section 162(m) of the Code disallows a tax deduction to public companies
for certain compensation in excess of $1 million paid to a company's chief
executive officer or to any of the four other most highly compensated executive
officers. Certain compensation, including "performance-based compensation," is
not included in compensation subject to the $1 million limitation. The 1998
Stock Incentive Plan limits to             the maximum number of shares of
Common Stock with respect to which Awards may be granted to any employee in any
calendar year. This limitation is intended to preserve the tax deductions to the
Company that might otherwise be unavailable under Section 162(m) with respect to
certain Awards.
 
  1998 Non-Employee Directors' Stock Option Plan
 
     In April 1998, the Company's Board of Directors adopted the 1998
Non-Employee Director Stock Option Plan (the "Director Plan"), which provides
for the grant of options to purchase a maximum of 250,000 shares of Common Stock
of the Company to non-employee directors of the Company. The Director Plan is
administered by the Board of Directors.
 
     Under the Director Plan, each director of the Company who is not also an
employee or officer of the Company is granted a nonqualified stock option to
purchase 30,000 shares of Common Stock on the date such person is first elected
to the Board of Directors and each such director is granted a nonqualified stock
option to purchase 7,500 shares of Common Stock on the date of each Annual
Meeting of the Stockholders of the Company commencing with the 1999 Annual
Meeting of Stockholders. The exercise price per share for all options granted
under the Director Plan will be equal to the fair market value of the Common
Stock on the date of grant. The options granted to a director are exercisable in
eight equal semi-annual installments, commencing six months following the date
of grant, provided that the optionee remains a director at such time. The term
of each option is ten years from the date of grant. In addition, the Director
Plan authorizes the Board of Directors to grant additional options to
non-employee directors and to determine the terms applicable to such options.
Notwithstanding the terms of the option grants set forth in the Director Plan,
the Board of Directors has the authority to grant options that are immediately
exercisable subject to the Company's right to repurchase any unvested shares of
stock acquired by the optionee on exercise of an option in the event such
optionee's service as a director terminates for any reason. Except as otherwise
set forth in the option agreement or as determined by the Board of Directors,
options may not be assigned or transferred except by will or by the laws of
descent and distribution and are exercisable to the extent vested only while the
optionee is serving as a director of the Company and within one year after the
optionee ceases to serve as a director of the Company. No options to purchase
shares have been granted to date under the Director Plan. Upon a change in
control of the Company, as defined in the Director Plan, all outstanding options
under the Director Plan will immediately vest.
 
  1998 Employee Stock Purchase Plan
 
     The Company's 1998 Employee Stock Purchase Plan (the "Purchase Plan") was
adopted by the Board of Directors in April 1998. The Purchase Plan authorizes
the issuance of up to a total of 200,000 shares of Common Stock to participating
employees.
 
     All employees of the Company who meet certain conditions, other than
officers of the Company, are eligible to participate in the Purchase Plan.
Employees who would immediately after the grant own 5% or
 
                                       43
<PAGE>   49
 
more of the total combined voting power or value of the stock of the Company or
any subsidiary are not eligible to participate.
 
     On the first day of a designated payroll deduction period (the "Offering
Period"), the Company will grant to each eligible employee who has elected to
participate in the Purchase Plan an option to purchase shares of Common Stock as
follows: the employee may authorize an amount to be deducted by the Company from
such pay during the Offering Period. On the last day of the Offering Period, the
employee is deemed to have exercised the option, at the option exercise price,
to the extent of accumulated payroll deductions. Under the terms of the Purchase
Plan, the option price is an amount equal to 85% of the fair market value per
share of the Common Stock on either the first day or the last day of the
Offering Period, whichever is lower. An employee may purchase, in any one
Offering Period, a number of shares the aggregate purchase price of which is up
to 10% of the employee's compensation for the immediately preceding six-month
period divided by 85% of the market value of a share of Common Stock on the
commencement date of the Offering Period, subject to a limit of $25,000 in fair
market value of stock purchased in any year. The Compensation Committee may, in
its discretion, choose an Offering Period of 12 months or less for each of the
offerings under the Purchase Plan and choose a different Offering Period for
each offering under the Purchase Plan.
 
     If an employee is not a participant on the last day of the Offering Period,
such employee is not entitled to exercise any option, and the amount of such
employee's accumulated payroll deductions will be refunded. An employee's rights
under the Purchase Plan terminate upon voluntary withdrawal from the Purchase
Plan, or when such employee ceases employment for any reason, except that upon
termination of employment because of death, the employee's beneficiary has
certain rights to elect to exercise the option to purchase the shares which the
accumulated payroll deductions in the participant's account would purchase at
the date of death.
 
  401(k) Plan
 
     The Company has a Section 401(k) Retirement Savings Plan (the "401(k)
Plan"). The 401(k) Plan is a tax-qualified plan covering all full-time employees
of the Company. Under the 401(k) Plan, participants may elect to defer a portion
of their eligible compensation, subject to certain limitations. In addition, at
the discretion of the Board of Directors, the Company may make matching
contributions to the 401(k) Plan for all eligible employees. The Company
currently matches 50% of each employee's pre-tax contribution to the plan, with
such matching subject to a limit of 3% of such employee's eligible compensation.
Matching contributions currently vest in increments over a two-year period,
beginning on an employee's date of employment. The Company did not contribute to
the 401(k) Plan during 1995, 1996 or 1997. The Company contributed $32,000 to
the 401(k) Plan during the three months ended March 31, 1998.
 
                                       44
<PAGE>   50
 
                              CERTAIN TRANSACTIONS
 
     In 1995, the Company recognized net revenues of $366,000 for services
provided to a company of which Sundar Subramaniam was a director and significant
shareholder. Mr. Subramaniam is a founder of the Company, and immediately
following this offering, will, together with certain trusts and partnerships for
his benefit and the benefit of his family, own approximately   % of the
outstanding shares of the Common Stock of the Company.
 
     In 1994 and 1995, the Company provided administrative and support services
and subleased a portion of its Cambridge, Massachusetts headquarters to a
company of which Mr. Subramaniam is a director and significant shareholder. The
Company received approximately $31,000 and $102,000 in 1994 and 1995,
respectively, for these services.
 
     In 1996, the Company loaned $60,000 to Timothy D. Eager, the Company's
Chief Technology Officer. Such loan bears interest at 7% per annum, and is
payable on demand. The loan is secured by Mr. Eager's shares of common stock. At
March 31, 1998, the outstanding amount of this loan, including accrued interest,
was $65,249.
 
     In 1996, the Company was paid $317,000 for IT services provided to a
company of which Mr. Subramaniam was a significant shareholder.
 
     In October, 1997, the Company loaned Sundar Subramaniam $533,333, which Mr.
Subramaniam used to exercise options to purchase 400,000 shares of the Common
Stock of the Company. This loan bears interest at 8.5% per annum, and is payable
in full on October 13, 2000. The loan is secured by the shares of Common Stock
acquired upon such exercise. At March 31, 1998, the outstanding amount of this
loan, including accrued interest, was approximately $554,416.
 
     The Company and Sundar Subramaniam, a principal stockholder of the Company,
are parties to a Voting Trust Agreement dated October 13, 1997. The Voting Trust
Agreement will terminate upon the closing of this offering. See "Risk
Factors -- Control by Principal Stockholders" and "Principal Stockholders."
 
                                       45
<PAGE>   51
 
                             PRINCIPAL STOCKHOLDERS
 
     The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock as of March 31, 1998 and as adjusted to
reflect the sale of the shares offered hereby by (i) each person who is known by
the Company to own beneficially more than 5% of the outstanding shares of Common
Stock, (ii) each director and Named Executive Officer of the Company, and (iii)
all directors and executive officers of the Company as a group. Unless otherwise
indicated below, to the knowledge of the Company, all persons listed below have
sole voting and investment power with respect to their shares of Common Stock,
except to the extent authority is shared by spouses under applicable law. The
address of each person below owning beneficially more than 5% of the outstanding
shares of Common Stock is c/o International Integration Incorporated, 101 Main
Street, Cambridge, MA 02142.
 
<TABLE>
<CAPTION>
                                                    SHARES BENEFICIALLY OWNED    SHARES BENEFICIALLY OWNED
                                                     PRIOR TO THE OFFERING(1)     AFTER THE OFFERING(1)(2)
                                                    --------------------------   --------------------------
                       NAME                            NUMBER         PERCENT       NUMBER         PERCENT
                       ----                         -------------    ---------   -------------    ---------
<S>                                                 <C>              <C>         <C>              <C>
Sundar Subramaniam(3).............................     7,155,025       53.1%        7,155,025           %
Madhav Anand(4)...................................     1,848,750       13.6         1,848,750
Edouard Aslanian(5)...............................     1,755,000       13.0         1,755,000
Yannis Doganis....................................     1,755,000       13.0         1,755,000
Gary C. Mekikian(6)...............................       750,000        5.4           750,000
Michael Pehl(7)...................................       658,705.5      4.7         658,705.5
Lawrence P. Begley(8).............................       187,500.5      1.4         187,500.5
Jane Callanan(9)..................................        37,496          *            37,496
James K. McCann...................................            --         --                --         --
Thomas J. Meredith(10)............................        30,000          *            30,000
Gregory S. Young(11)..............................       104,691.5        *         104,691.5
John A. Young.....................................            --         --                --         --
Joseph M. Tucci (12)..............................        65,626          *            65,626
Patrick J. Zilvitis(13)...........................        30,000          *            30,000
All executive officers and directors as a group
  (12 persons)(14)................................     3,142,814.5     21.4%      3,142,814.5           %
</TABLE>
 
---------------
  *  Less than 1% of the outstanding Common Stock.
 
 (1) The number of shares of Common Stock deemed outstanding prior to this
     offering includes: (i) 13,467,233 shares of Common Stock outstanding as of
     March 31, 1998; and (ii) shares issuable pursuant to options held by the
     respective person or group which may be exercised within 60 days after
     March 31, 1998, as set forth below. The number of shares of Common Stock
     deemed outstanding after this offering includes an additional
     shares that are being offered for sale by the Company in this offering.
     Beneficial ownership is determined in accordance with the rules of the
     Securities and Exchange Commission, and includes voting and investment
     power with respect to the shares.
 
 (2) The above table assumes no exercise of the over-allotment option to
     purchase up to an aggregate of             shares of Common Stock from the
     Company and the Selling Stockholders. If the Underwriters exercise their
     over-allotment option in full, the number of shares sold, the number of
     shares beneficially owned and the percentage of ownership after this
     offering for the Selling Stockholders and for all executive officers and
     directors as a group would be as follows: Madhav Anand,   shares sold,
     shares beneficially owned (  %) after this offering; Edouard Aslanian,
     shares sold,   shares beneficially owned (  %) after this offering; Yannis
     Doganis,   shares sold,   shares beneficially owned (  %) after this
     offering; Gary C. Mekikian,   shares sold,   shares beneficially owned
     (  %) after this offering; and all executive officers and directors as a
     group,   shares sold,   shares beneficially owned (  %) after this
     offering. Mr. Aslanian has been an employee of the Company since January
     1993.
 
                                       46
<PAGE>   52
 
 (3) Consists of 5,355,025 shares owned by Mr. Subramaniam and 1,800,000 shares
     owned by the Geneva Trust, of which Mr. Subramaniam and his family are the
     sole beneficiaries, all of which are held in trust by State Street Bank and
     Trust Company, 225 Franklin Street, 3rd Floor, Boston, MA 02110, as
     trustee, under a certain Voting Trust Agreement dated as of October 13,
     1997 among Mr. Subramaniam, State Street Bank and Trust Company, the
     Company, Subramaniam Limited Partnership, a Massachusetts limited
     partnership and Harrington Trust Limited, as trustee of the Geneva Trust.
     The Voting Trust Agreement terminates upon the closing of this offering.
 
 (4) Includes 93,750 shares issuable pursuant to options held by Mr. Anand that
     may be exercised within 60 days after March 31, 1998.
 
 (5) Includes certain shares held by a family limited partnership controlled by
     Mr. Aslanian.
 
 (6) Includes 325,000 shares issuable pursuant to options held by Mr. Mekikian
     that may be exercised within 60 days after March 31, 1998.
 
 (7) Consists of 658,705.5 shares issuable pursuant to options held by Mr. Pehl
     that may be exercised within 60 days after March 31, 1998.
 
 (8) Consists of 187,500.5 shares issuable pursuant to options held by Mr.
     Begley that may be exercised within 60 days after March 31, 1998.
 
 (9) Includes 22,496 shares issuable pursuant to options held by Ms. Callanan
     that may be exercised within 60 days after March 31, 1998.
 
(10) Consists of 30,000 shares acquired after March 31, 1998 on exercise of
     options and held subject to the Company's right to repurchase in the event
     Mr. Meredith's service as a director terminates before vesting dates
     applicable to such options.
 
(11) Includes 42,191 shares issuable pursuant to options held by Mr. Young that
     may be exercised within 60 days after March 31, 1998.
 
(12) Includes 28,126 shares issuable pursuant to options held by Mr. Tucci that
     may be exercised within 60 days after March 31, 1998.
 
(13) Consists of 30,000 shares issuable pursuant to options held by Mr. Zilvitis
     that may be exercised within 60 days after March 31, 1998, subject to the
     Company's right to repurchase in the event Mr. Zilvitis' service as a
     director terminates before vesting dates applicable to such options.
 
(14) Includes 1,182,814 shares issuable pursuant to options that may be
     exercised within 60 days after March 31, 1998.
 
                                       47
<PAGE>   53
 
                          DESCRIPTION OF CAPITAL STOCK
 
     Effective upon the closing of this offering, the authorized capital stock
of the Company will consist of 100,000,000 shares of Common Stock, $.01 par
value per share, and 1,000,000 shares of Preferred Stock, $.01 par value per
share.
 
     The following summary description of the Company's capital stock is not
intended to be complete and is qualified in its entirety by reference to the
provisions of applicable law and to the Company's Amended and Restated
Certificate of Incorporation (the "Restated Certificate of Incorporation") and
Amended and Restated By-laws (the "Restated By-laws"), filed as exhibits to the
Registration Statement of which this Prospectus is a part.
 
COMMON STOCK
 
     As of March 31, 1998, there were 13,467,233 shares of Common Stock
outstanding held by 30 stockholders of record. Based upon the number of shares
outstanding as of that date and giving effect to the issuance of the
shares of Common Stock offered by the Company hereby, there will be
shares of Common Stock outstanding upon the closing of this offering. In
addition, as of March 31, 1998, there were outstanding stock options for the
purchase of a total of 5,461,782 shares of Common Stock.
 
     Holders of Common Stock are entitled to one vote for each share held on all
matters submitted to a vote of stockholders and do not have cumulative voting
rights. Directors are elected by a plurality of the votes of the shares present
in person or by proxy at the meeting and entitled to vote in such election.
Holders of Common Stock are entitled to receive ratably such dividends, if any,
as may be declared by the Board of Directors out of funds legally available
therefor, subject to any preferential dividend rights of outstanding Preferred
Stock. Upon the liquidation, dissolution or winding up of the Company, the
holders of Common Stock are entitled to receive ratably the net assets of the
Company available after the payment of all debts and other liabilities of the
Company, subject to the prior rights of any outstanding Preferred Stock. Holders
of the Common Stock have no preemptive, subscription, redemption or conversion
rights, nor are they entitled to the benefit of any sinking fund. The
outstanding shares of Common Stock are, and the shares offered by the Company in
this offering will be, when issued and paid for, validly issued, fully paid and
nonassessable. The rights, powers, preferences and privileges of holders of
Common Stock are subject to, and may be adversely affected by, the rights of the
holders of shares of any series of Preferred Stock which the Company may
designate and issue in the future.
 
PREFERRED STOCK
 
     The Board of Directors will be authorized, subject to any limitations
prescribed by law, without further stockholder approval, to issue from time to
time up to an aggregate of 1,000,000 shares of Preferred Stock, in one or more
series. Each such series of Preferred Stock shall have such number of shares,
designations, preferences, voting powers, qualifications and special or relative
rights or privileges as shall be determined by the Board of Directors, which may
include, among others, dividend rights, voting rights, redemption and sinking
fund provisions, liquidation preferences, conversion rights and preemptive
rights. There are no shares of Preferred Stock currently outstanding.
 
     The stockholders of the Company have granted the Board of Directors
authority to issue the Preferred Stock and to determine its rights and
preferences in order to eliminate delays associated with a stockholder vote on
specific issuances. The rights of the holders of Common Stock will be subject to
the rights of holders of any Preferred Stock issued in the future. The issuance
of Preferred Stock, while providing desirable flexibility in connection with
possible acquisitions and other corporate purposes, could adversely affect the
voting power or other rights of the holders of Common Stock, and could make it
more difficult for a third party to acquire, or discourage a third party from
attempting to acquire, a majority of the outstanding voting stock of the
Company. The Company has not, to date, issued any shares of such Preferred Stock
and has no present plans to issue any shares of Preferred Stock.
 
                                       48
<PAGE>   54
 
DELAWARE LAW AND CERTAIN CHARTER AND BY-LAW PROVISIONS; ANTI-TAKEOVER EFFECTS
 
     The Company is subject to the provisions of Section 203 of the General
Corporation Law of Delaware. Section 203 prohibits a publicly-held Delaware
corporation from engaging in a "business combination" with an "interested
stockholder" for a period of three years after the date of the transaction in
which the person became an interested stockholder, unless the business
combination is approved in a prescribed manner. A "business combination"
includes mergers, asset sales and other transactions resulting in a financial
benefit to the interested stockholder. Subject to certain exceptions, an
"interested stockholder" is a person who, together with affiliates and
associates, owns, or within three years did own, 15% or more of the
corporation's voting stock.
 
     The Restated Certificate of Incorporation provides for the division of the
Board of Directors into three classes as nearly equal in size as possible with
staggered three-year terms. See "Management -- Election of Directors." In
addition, the Restated Certificate of Incorporation provides that directors may
be removed only for cause by the affirmative vote of the holders of 75% of the
shares of capital stock of the Company entitled to vote. Under the Restated
Certificate of Incorporation, any vacancy on the Board of Directors, however
occurring, including a vacancy resulting from an enlargement of the Board, may
only be filled by vote of a majority of the directors then in office. The
classification of the Board of Directors and the limitations on the removal of
directors and filling of vacancies could have the effect of making it more
difficult for a third party to acquire, or of discouraging a third party from
attempting to acquire, control of the Company.
 
     The Restated Certificate of Incorporation also provides that after the
closing of this offering, any action required or permitted to be taken by the
stockholders of the Company at an annual meeting or special meeting of
stockholders may only be taken if it is properly brought before such meeting and
may not be taken by written action in lieu of a meeting. The Restated
Certificate of Incorporation further provides that special meetings of the
stockholders may only be called by the Chairman of the Board of Directors. Under
the Restated By-laws, in order for any matter to be considered "properly
brought" before a meeting, a stockholder must comply with certain requirements
regarding advance notice to the Company. The foregoing provisions could have the
effect of delaying until the next stockholders meeting stockholder actions which
are favored by the holders of a majority of the outstanding voting securities of
the Company. These provisions may also discourage another person or entity from
making a tender offer for the Company's Common Stock, because such person or
entity, even if it acquired a majority of the outstanding voting securities of
the Company, would be able to take action as a stockholder (such as electing new
directors or approving a merger) only at a duly called stockholders meeting, and
not by written consent.
 
     The General Corporation Law of Delaware provides generally that the
affirmative vote of a majority of the shares entitled to vote on any matter is
required to amend a corporation's certificate of incorporation or by-laws,
unless a corporation's certificate of incorporation or by-laws, as the case may
be, requires a greater percentage. The Restated Certificate of Incorporation
requires the affirmative vote of the holders of at least 75% of the shares of
capital stock of the Company issued and outstanding and entitled to vote to
amend or repeal any of the foregoing provisions of the Restated Certificate of
Incorporation. The Restated By-laws also may be amended or repealed by a
majority vote of the Board of Directors subject to any limitations set forth in
the Restated By-laws and amendment by stockholders of provisions described above
requires the affirmative vote of the holders of at least 75% of the shares of
capital stock of the Company issued and outstanding and entitled to vote. The
75% stockholder vote would be in addition to any separate class vote that might
in the future be required pursuant to the terms of any series Preferred Stock
that might be outstanding at the time any such amendments are submitted to
stockholders.
 
LIMITATION OF LIABILITY AND INDEMNIFICATION
 
     The Restated Certificate of Incorporation provides that the directors and
officers of the Company shall be indemnified by the Company to the fullest
extent authorized by Delaware law, as it now exists or may in the future be
amended, against all expenses and liabilities reasonably incurred in connection
with their service for or on behalf of the Company. In addition, the Restated
Certificate of Incorporation provides that the directors of the Company will not
be personally liable for monetary damages to the Company for breaches of their
fiduciary duty as directors, unless they violated their duty of loyalty to the
Company or its stockholders, acted
 
                                       49
<PAGE>   55
 
in bad faith, knowingly or intentionally violated the law, authorized illegal
dividends or redemptions or derived an improper personal benefit from their
action as directors.
 
TRANSFER AGENT AND REGISTRAR
 
     The transfer agent and registrar for the Common Stock is Boston EquiServe
Limited Partnership.
 
                                       50
<PAGE>   56
 
                        SHARES ELIGIBLE FOR FUTURE SALE
 
     Upon completion of this offering, the Company will have           shares of
Common Stock outstanding (assuming no exercise of outstanding options). Of these
shares, the           shares (          shares if the over-allotment option is
exercised in full) to be sold in this offering will be freely tradable without
restriction or further registration under the Securities Act of 1933, as amended
(the "Securities Act"), except that any shares purchased by affiliates of the
Company, as that term is defined in Rule 144 ("Rule 144") under the Securities
Act ("Affiliates"), may generally only be sold in compliance with the
limitations of Rule 144 described below.
 
SALES OF RESTRICTED SHARES
 
     The remaining 13,467,233 shares of Common Stock outstanding upon completion
of this offering are deemed "Restricted Shares" under Rule 144 or Rule 701 under
the Securities Act. Approximately 379,374 of such Restricted Shares will be
eligible for sale in the public market pursuant to Rule 144(k) on the date of
this Prospectus. Upon expiration of the Lock-up Agreements, 180 days after the
date of this Prospectus, an additional 12,555,842 shares of Common Stock will be
eligible for sale in the public market pursuant to Rule 144 under the Securities
Act.
 
     In general, under Rule 144, a person (or persons whose shares are
aggregated), including an Affiliate, who has beneficially owned Restricted
Shares for at least one year is entitled to sell, within any three-month period,
a number of such shares that does not exceed the greater of (i) one percent of
the then outstanding shares of Common Stock (approximately           shares
immediately after this offering) or (ii) the average weekly trading volume in
the Common Stock in the over-the-counter market during the four calendar weeks
preceding the date on which notice of such sale is filed, provided certain
requirements concerning availability of public information, manner of sale and
notice of sale are satisfied. In addition, Affiliates must comply with the
restrictions and requirements of Rule 144, other than the one-year holding
period requirement, in order to sell shares of Common Stock which are not
restricted securities. Under Rule 144(k), a person who is not an Affiliate and
has not been an Affiliate for at least three months prior to the sale and who
has beneficially owned Restricted Shares for at least two years may resell such
shares without compliance with the foregoing requirements. In meeting the one-
and two-year holding periods described above, a holder of Restricted Shares can
include the holding periods of a prior owner who was not an Affiliate. The one-
and two-year holding periods described above do not begin to run until the full
purchase price or other consideration is paid by the person acquiring the
Restricted Shares from the issuer or an Affiliate. Rule 701 provides that
currently outstanding shares of Common Stock acquired under the Company's
employee compensation plans may be resold by persons, other than Affiliates,
beginning 90 days after the date of this Prospectus, subject only to the manner
of sale provisions of Rule 144, and by Affiliates after the date of this
Prospectus, subject only to the manner of sale provisions of Rule 144, and by
Affiliates under Rule 144 without compliance with its one-year minimum holder
period, subject to certain limitations.
 
OPTIONS
 
     Rule 701 also provides that the shares of Common Stock acquired upon the
exercise of currently outstanding options or pursuant to other rights granted
under the Company's stock plans may be resold by persons, other than Affiliates,
beginning 90 days after the date of this Prospectus, subject only to the manner
of sale provisions of Rule 144, and by Affiliates under Rule 144, without
compliance with its one-year minimum holding period, subject to certain
limitations. At March 31, 1998, approximately 3,107,837.5 shares of Common Stock
were issued or issuable pursuant to vested options or pursuant to other rights
granted under the Company's stock program, of which approximately
shares are not subject to Lock-up Agreements with the Underwriters and will be
eligible for sale in the public market in accordance with Rule 701 under the
Securities Act beginning 90 days after the date of this Prospectus.
 
     The Company intends to file one or more registration statements on Form S-8
under the Securities Act following the date of this Prospectus, to register up
to 5,461,782 shares of Common Stock subject to outstanding stock options or
other rights granted pursuant to the Company's stock option program as of
 
                                       51
<PAGE>   57
 
March 31, 1998, including the 1,657,628 shares of Common Stock subject to
options vested as of March 31, 1998, and 4,317,984 shares of Common Stock
issuable pursuant to the Company's stock plans. Such registration statements are
expected to become effective upon filing.
 
LOCK-UP AGREEMENTS
 
     Subject to certain limited exceptions, the Company, the executive officers
and directors, the Selling Stockholders and certain other securityholders have
agreed not to sell or otherwise dispose of, directly or indirectly, any shares
of Common Stock (or any security convertible into or exchangeable or exercisable
for Common Stock) without the prior written consent of Morgan Stanley & Co.
Incorporated ("Morgan Stanley") for a period of 180 days from the date of this
Prospectus. In addition, for a period of 180 days from the date of this
Prospectus, except as required by law, the Company has agreed that its Board of
Directors will not consent to any offer for sale, sale or other disposition, or
any transaction which is designed or could be expected to result in the
disposition by any person, directly or indirectly, of any shares of Common Stock
without the prior written consent of Morgan Stanley. See "Underwriters."
 
REGISTRATION RIGHTS
 
     No securityholders of the Company are entitled to require the Company to
register any securities of the Company under the Securities Act.
 
     Prior to this offering, there has been no public market for the Common
Stock of the Company, and no predictions can be made as to the effect, if any,
that market sales of shares of Common Stock prevailing from time to time, or the
availability of shares for future sale, may have on the market price for the
Common Stock. Sales of substantial amounts of Common Stock, or the perception
that such sales could occur, could adversely effect prevailing market prices for
the Common Stock and could impair the Company's future ability to obtain capital
through an offering of equity securities.
 
                                       52
<PAGE>   58
 
                                  UNDERWRITERS
 
     Under the terms and subject to the conditions contained in an Underwriting
Agreement dated the date of this Prospectus, the Underwriters named below, for
whom Morgan Stanley & Co. Incorporated, BT Alex. Brown Incorporated and UBS
Securities LLC are acting as Representatives (the "Underwriters"), have
severally agreed to purchase, and the Company has agreed to sell to them, the
respective number of shares of Common Stock set forth opposite their respective
names below:
 
<TABLE>
<CAPTION>
                                                               NUMBER
                            NAME                              OF SHARES
                            ----                              ---------
<S>                                                           <C>
Morgan Stanley & Co. Incorporated...........................
BT Alex. Brown Incorporated.................................
UBS Securities LLC..........................................
 
                                                              ---------
          Total.............................................
                                                              =========
</TABLE>
 
     The Underwriting Agreement provides that the obligations of the several
Underwriters to pay for and accept delivery of the shares of Common Stock
offered hereby are subject to the approval of certain legal matters by their
counsel and to certain other conditions. The Underwriters are committed to take
and pay for all the shares of Common Stock offered hereby (other than those
covered by the over-allotment option described below) if any such shares are
taken.
 
     The Underwriters initially propose to offer part of the Common Stock
directly to the public at the public offering price set forth on the cover page
hereof and part to certain dealers at a price which represents a concession not
in excess of $          per share under the public offering price. Any
Underwriter may allow, and such dealers may reallow, a concession not in excess
of $          per share to other Underwriters or to certain dealers. After the
initial offering of the shares of Common Stock, this offering price and other
selling terms may from time to time be varied by the Underwriters.
 
     The Company and certain stockholders of the Company, consisting of Messrs.
Anand, Aslanian, Doganis and Mekikian (collectively, the "Selling
Stockholders"), have granted the Underwriters an option, exercisable for 30 days
from the date of the Prospectus, to purchase up to an additional        shares
of Common Stock at the public offering price set forth on the cover page hereof,
less underwriting discounts and commissions. The Underwriters may exercise such
option to purchase solely for the purpose of covering over-allotments, if any,
made in connection with this offering. To the extent such option is exercised,
each Underwriter will become obligated, subject to certain conditions, to
purchase approximately the same percentage of such additional shares as the
number of shares set forth next to such Underwriter's name in the preceding
table bears to the total number of shares of Common Stock offered by the
Underwriters hereby.
 
     At the request of the Company, the Underwriters have reserved up to
shares of the Common Stock offered hereby for sale at the initial public
offering price to the Company's customers and other persons with whom the
Company has relationships. The number of shares of Common Stock available for
sale to the general public will be reduced to the extent such persons purchase
such reserved shares. Any reserved shares not so purchased will be offered by
the Underwriters to the general public on the same basis as the other shares
offered hereby.
 
     Subject to certain limited exceptions, the Company and the executive
officers and directors of the Company, the Selling Stockholders and certain
other securityholders have agreed that, without the prior written consent of
Morgan Stanley, they will not, during the period ending 180 days after the date
of this Prospectus, (a) offer, pledge, sell, contract to sell, sell any option
or contract to purchase, purchase any option
 
                                       53
<PAGE>   59
 
or contract to sell, grant any option, right or warrant to purchase, lend, or
otherwise transfer or dispose of, directly or indirectly, any shares of Common
Stock or any securities convertible into or exercisable or exchangeable for
Common Stock (regardless of whether such shares or any such securities are then
owned by such person or are thereafter acquired), or (b) enter into any swap or
other arrangement that transfers to another, in whole or in part, any of the
economic consequences of ownership of the Common Stock, regardless of whether
any such transactions described in clauses (a) or (b) of this paragraph are to
be settled by delivery of such Common Stock or such other securities, in cash or
otherwise.
 
     In order to facilitate the offering of the Common Stock, the Underwriters
may engage in transactions that stabilize, maintain or otherwise affect the
price of the Common Stock. Specifically, the Underwriters may over-allot in
connection with the offering, creating a short position in the Common Stock for
their own account. In addition, to cover over-allotments or to stabilize the
price of the Common Stock, the Underwriters may bid for, and purchase, shares of
Common Stock in the open market. Finally, the underwriting syndicate may reclaim
selling concessions allowed to an underwriter or a dealer for distributing the
Common Stock in the offering, if the syndicate repurchases previously
distributed Common Stock in transactions to cover syndicate short positions, in
stabilization transactions or otherwise. Any of these activities may stabilize
or maintain the market price of the Common Stock above independent market
levels. The Underwriters are not required to engage in these activities, and may
end any of these activities at any time.
 
     The Representatives of the Underwriters have informed the Company that the
Underwriters do not intend to confirm sales to any accounts over which they
exercise discretionary authority.
 
     The Company and the Selling Stockholders have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act.
 
PRICING OF THE OFFERING
 
     Prior to this offering, there has been no public market for the Common
Stock. The initial public offering price for the Common Stock will be determined
by negotiation between the Company and the Representatives of the Underwriters.
Among the factors to be considered in determining the initial public offering
price are the future prospects of the Company and its industry in general, net
revenues, earnings and certain other financial and operating information of the
Company in recent periods, and the price-earnings ratios, certain other ratios,
and market prices of securities and certain financial operating information of
companies engaged in activities similar to those of the Company.
 
                                 LEGAL MATTERS
 
     The validity of the shares of Common Stock offered hereby will be passed
upon for the Company by Hale and Dorr LLP, Boston, Massachusetts. Certain legal
matters in connection with this offering will be passed upon for the
Underwriters by Testa, Hurwitz & Thibeault, LLP, Boston, Massachusetts. Peter B.
Tarr, a partner of Hale and Dorr LLP, is Secretary of the Company.
 
                                    EXPERTS
 
     The Consolidated Financial Statements of the Company as of December 31,
1996 and December 31, 1997 and for the three years in the period ended December
31, 1997 included in this Prospectus have been included herein in reliance on
the report of Coopers & Lybrand L.L.P., independent accountants, given on the
authority of that firm as experts in accounting and auditing.
 
                             CHANGE IN ACCOUNTANTS
 
     In January 1997, the Company's Board of Directors decided to retain Coopers
& Lybrand L.L.P. as its independent public accountants and dismissed the
Company's former auditors. The former auditors' report on the Company's
financial statements for the years ended December 31, 1995 and 1994 does not
cover the consolidated financial statements of the Company included in this
Prospectus. Such report did not contain an
                                       54
<PAGE>   60
 
adverse opinion or disclaimer of opinion and was not modified as to uncertainty,
audit scope or accounting principles. There were no disagreements with the
former auditors on any matter of accounting principles or practices, financial
statement disclosure or auditing scope or procedure at the time of the change or
with respect to the Company's financial statements for fiscal years 1995 and
1994, which, if not resolved to the former auditors' satisfaction, would have
caused them to make reference to the subject matter of the disagreement in
connection with their report. Prior to retaining Coopers & Lybrand L.L.P., the
Company had not consulted with Coopers & Lybrand L.L.P. regarding accounting
principles.
 
                             ADDITIONAL INFORMATION
 
     The Company has filed with the Commission a Registration Statement on Form
S-1 (together with all amendments, exhibits and schedules thereto, the
"Registration Statement") under the Securities Act with respect to the Common
Stock offered hereby. This Prospectus, which constitutes part of the
Registration Statement, does not contain all of the information set forth in the
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the Commission. For further information with
respect to the Company and the Common Stock offered hereby, reference is made to
the Registration Statement. Statements contained in this Prospectus as to the
contents of any contract or other document filed as an exhibit to the
Registration Statement are not necessarily complete, and in each instance
reference is made to the copy of such document filed as an exhibit to the
Registration Statement, each such statement being qualified in all respects by
such reference. The Registration Statement may be inspected without charge at
the principal office of the Commission in Washington, D.C. and copies of all or
any part of which may be inspected and copied at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Judiciary Plaza, Room
1024, Washington, D.C. 20549, and at the Commission's regional offices located
at Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511 and 7 World Trade Center, Suite 1300, New York, New York 10048.
Copies of such material can also be obtained at prescribed rates by mail from
the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549. In addition, the Commission maintains a web site
(http://www.sec.gov) that contains reports, proxy and information statements and
other information regarding registrants that file electronically with the
Commission.
 
                                       55
<PAGE>   61
 
                     INTERNATIONAL INTEGRATION INCORPORATED
 
                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
 
<TABLE>
<CAPTION>
                                                              PAGE
                                                              ----
<S>                                                           <C>
Report of Independent Accountants...........................  F-2
 
Consolidated Balance Sheets as of December 31, 1996 and
  1997, and March 31, 1998 (unaudited)......................  F-3
 
Consolidated Statements of Income for the years ended
  December 31, 1995, 1996 and 1997, and for the three months
  ended March 31, 1997 and 1998 (unaudited).................  F-4
 
Consolidated Statement of Stockholders' Equity for the years
  ended December 31, 1995, 1996 and 1997, and for the three
  months ended March 31, 1998 (unaudited)...................  F-5
 
Consolidated Statements of Cash Flows for the years ended
  December 31, 1995, 1996 and 1997, and for the three months
  ended March 31, 1997 and 1998 (unaudited).................  F-6
 
Notes to Consolidated Financial Statements..................  F-7
</TABLE>
 
                                       F-1
<PAGE>   62
 
                       REPORT OF INDEPENDENT ACCOUNTANTS
 
To the Board of Directors and Stockholders of
International Integration Incorporated:
 
We have audited the accompanying consolidated balance sheets of International
Integration Incorporated as of December 31, 1997 and 1996 and the related
consolidated statements of income, stockholders' equity and cash flows for each
of the three years in the period ended December 31, 1997. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
 
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
 
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of International
Integration Incorporated as of December 31, 1997 and 1996, and the consolidated
results of its operations and its cash flows for each of the three years in the
period ended December 31, 1997 in conformity with generally accepted accounting
principles.
 
                                          COOPERS & LYBRAND L.L.P.
 
Boston, Massachusetts
March 16, 1998
 
                                       F-2
<PAGE>   63
 
                     INTERNATIONAL INTEGRATION INCORPORATED
 
                          CONSOLIDATED BALANCE SHEETS
                (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
 
<TABLE>
<CAPTION>
                                                                 DECEMBER 31,        MARCH 31,
                                                              ------------------    -----------
                                                               1996       1997         1998
                                                              -------    -------    -----------
                                                                                    (UNAUDITED)
<S>                                                           <C>        <C>        <C>
                                            ASSETS
Current assets:
  Cash and cash equivalents.................................  $ 3,889    $10,822      $ 9,833
  Accounts receivable, net of reserve of $114, $196 and
     $112, respectively.....................................    4,698      5,906        5,349
  Unbilled revenues.........................................      222        708          476
  Prepaid expenses and other current assets.................      192        429          490
  Deferred income taxes.....................................      795        812          878
                                                              -------    -------      -------
          Total current assets..............................    9,796     18,677       17,026
                                                              -------    -------      -------
Property and equipment, at cost:
  Computers and equipment...................................      679      2,527        2,460
  Furniture and fixtures....................................      244        602          881
                                                              -------    -------      -------
                                                                  923      3,129        3,341
  Less-accumulated depreciation.............................      384        838        1,039
                                                              -------    -------      -------
                                                                  539      2,291        2,302
Other assets................................................      167        144          190
                                                              -------    -------      -------
          Total assets......................................  $10,502    $21,112      $19,518
                                                              =======    =======      =======
 
                             LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable..........................................  $   382    $   483      $   727
  Accrued expenses..........................................    1,049      2,956        2,362
  Current portion of long-term obligations..................       --        268          258
  Accrued income taxes......................................       66          1          938
  Deferred revenues.........................................    4,444      7,116        3,567
                                                              -------    -------      -------
          Total current liabilities.........................    5,941     10,824        7,852
                                                              -------    -------      -------
Long-term obligations.......................................       --        672          623
Commitments (Note 8)
Stockholders' equity:
  Preferred stock $0.01 par value; 1,000,000 shares
     authorized, no shares issued or outstanding............       --         --           --
  Common stock $0.01 par value; 21,000,000 shares
     authorized; 12,493,212, 12,966,889 and 13,470,234
     shares issued at December 31, 1996 and 1997 and March
     31, 1998, respectively; 12,493,212, 12,963,888 and
     13,467,233 shares outstanding at December 31, 1996 and
     1997 and March 31, 1998, respectively..................      124        129          134
  Additional paid-in capital................................      250      1,516        1,566
  Treasury stock, 3,001 shares at cost......................       --         (8)          (8)
  Note receivable from stockholder..........................       --       (533)        (533)
  Retained earnings.........................................    4,187      8,512        9,884
                                                              -------    -------      -------
          Total stockholders' equity........................    4,561      9,616       11,043
                                                              -------    -------      -------
          Total liabilities and stockholders' equity........  $10,502    $21,112      $19,518
                                                              =======    =======      =======
</TABLE>
 
  The accompanying notes are an integral part of these consolidated financial
                                   statements
                                       F-3
<PAGE>   64
 
                     INTERNATIONAL INTEGRATION INCORPORATED
 
                       CONSOLIDATED STATEMENTS OF INCOME
                     (IN THOUSANDS, EXCEPT PER SHARE DATA)
 
<TABLE>
<CAPTION>
                                                                                THREE MONTHS
                                                YEAR ENDED DECEMBER 31,       ENDED MARCH 31,
                                              ----------------------------    ----------------
                                               1995      1996       1997       1997      1998
                                              ------    -------    -------    ------    ------
                                                                                (UNAUDITED)
<S>                                           <C>       <C>        <C>        <C>       <C>
Net revenues................................  $9,197    $14,479    $26,859    $5,598    $8,828
Project personnel and software costs........   2,521      5,308     10,385     2,000     3,612
                                              ------    -------    -------    ------    ------
          Gross profit......................   6,676      9,171     16,474     3,598     5,216
Operating expenses:
  Selling and marketing.....................     897      1,580      3,046       630       850
  General and administrative................   2,371      5,011      6,734     1,497     2,247
                                              ------    -------    -------    ------    ------
          Total operating expenses..........   3,268      6,591      9,780     2,127     3,097
                                              ------    -------    -------    ------    ------
Operating income............................   3,408      2,580      6,694     1,471     2,119
Other income (expense):
  Interest income...........................      92         85        460        52       156
  Interest expense..........................      --         --        (69)       --       (26)
                                              ------    -------    -------    ------    ------
          Income before income taxes........   3,500      2,665      7,085     1,523     2,249
Provision for income taxes..................   1,424      1,050      2,760       594       877
                                              ------    -------    -------    ------    ------
          Net income........................  $2,076    $ 1,615    $ 4,325    $  929    $1,372
                                              ======    =======    =======    ======    ======
Earnings per share:
  Basic.....................................  $ 0.17    $  0.13    $  0.34    $ 0.07    $ 0.10
                                              ======    =======    =======    ======    ======
  Diluted...................................  $ 0.15    $  0.12    $  0.29    $ 0.07    $ 0.09
                                              ======    =======    =======    ======    ======
Weighted average shares outstanding:
  Basic.....................................  12,323     12,425     12,627    12,519    13,244
  Diluted...................................  13,465     13,682     15,163    14,256    16,031
</TABLE>
 
  The accompanying notes are an integral part of these consolidated financial
                                   statements
                                       F-4
<PAGE>   65
 
                     INTERNATIONAL INTEGRATION INCORPORATED
 
                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                       (IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
                                             SERIES A             SERIES B
                                           COMMON STOCK         COMMON STOCK        COMMON STOCK                   TREASURY STOCK
                                        -------------------   ----------------   ------------------                --------------
                                          NUMBER               NUMBER              NUMBER             ADDITIONAL   NUMBER
                                            OF         PAR       OF       PAR        OF        PAR     PAID-IN       OF
                                          SHARES      VALUE    SHARES    VALUE     SHARES     VALUE    CAPITAL     SHARES   COST
                                        -----------   -----   --------   -----   ----------   -----   ----------   ------   -----
<S>                                     <C>           <C>     <C>        <C>     <C>          <C>     <C>          <C>      <C>
Balance at December 31, 1994..........   12,020,025    $8      300,499    $ 2            --     --          --        --      --
  Exercise of stock options...........           --    --       27,000     --            --     --          --        --      --
  Net income..........................           --    --           --     --            --     --          --        --      --
                                        -----------    --     --------    ---    ----------   ----      ------     ------    ---
Balance at December 31, 1995..........   12,020,025     8      327,499      2            --     --          --        --      --
  Conversion..........................  (12,020,025)   (8)    (327,499)    (2)   12,347,524   $123          --        --      --
  Exercise of stock options...........           --    --           --     --       145,688      1      $  250        --      --
  Net income..........................           --    --           --     --            --     --          --        --      --
                                        -----------    --     --------    ---    ----------   ----      ------     ------    ---
Balance at December 31, 1996..........           --    --           --     --    12,493,212    124         250        --      --
  Exercise of stock options...........           --    --           --     --       473,677      5         676        --      --
  Acquisition of treasury stock.......           --    --           --     --            --     --          --     (3,001)   $(8)
  Tax benefit due to stock option
    exercise..........................           --    --           --     --            --     --         590        --      --
  Net income..........................           --    --           --     --            --     --          --        --      --
                                        -----------    --     --------    ---    ----------   ----      ------     ------    ---
Balance at December 31, 1997..........           --    --           --     --    12,966,889    129       1,516     (3,001)    (8)
  Exercise of stock options...........           --    --           --     --       503,345      5          50        --      --
  Net income..........................           --    --           --     --            --     --          --        --      --
                                        -----------    --     --------    ---    ----------   ----      ------     ------    ---
Balance at March 31, 1998
  (unaudited).........................           --    --           --     --    13,470,234   $134      $1,566     (3,001)   $(8)
                                        ===========    ==     ========    ===    ==========   ====      ======     ======    ===
 
<CAPTION>
 
                                           NOTE                   TOTAL
                                        RECEIVABLE                STOCK-
                                           FROM       RETAINED   HOLDERS'
                                        STOCKHOLDER   EARNINGS    EQUITY
                                        -----------   --------   --------
<S>                                     <C>           <C>        <C>
Balance at December 31, 1994..........        --       $  609    $   619
  Exercise of stock options...........        --           --         --
  Net income..........................        --        2,076      2,076
                                           -----       ------    -------
Balance at December 31, 1995..........        --        2,685      2,695
  Conversion..........................        --         (113)        --
  Exercise of stock options...........        --           --        251
  Net income..........................        --        1,615      1,615
                                           -----       ------    -------
Balance at December 31, 1996..........        --        4,187      4,561
  Exercise of stock options...........     $(533)          --        148
  Acquisition of treasury stock.......        --           --         (8)
  Tax benefit due to stock option
    exercise..........................        --           --        590
  Net income..........................        --        4,325      4,325
                                           -----       ------    -------
Balance at December 31, 1997..........      (533)       8,512      9,616
  Exercise of stock options...........        --           --         55
  Net income..........................        --        1,372      1,372
                                           -----       ------    -------
Balance at March 31, 1998
  (unaudited).........................     $(533)      $9,884    $11,043
                                           =====       ======    =======
</TABLE>
 
  The accompanying notes are an integral part of these consolidated financial
                                   statements
 
                                       F-5
<PAGE>   66
 
                     INTERNATIONAL INTEGRATION INCORPORATED
 
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                                                               THREE MONTHS
                                               YEAR ENDED DECEMBER 31,        ENDED MARCH 31,
                                            -----------------------------    -----------------
                                             1995       1996       1997       1997      1998
                                            -------    -------    -------    ------    -------
                                                                                (UNAUDITED)
<S>                                         <C>        <C>        <C>        <C>       <C>
Cash flows from operating activities:
  Net income..............................  $ 2,076    $ 1,615    $ 4,325    $  929    $ 1,372
  Adjustments to reconcile net income to
     net cash provided by operating
     activities:
     Depreciation and amortization........      150        267        531       103        200
     Provision for doubtful accounts......       --         73         82        20         --
     Loss on disposal of fixed assets.....       --         --         97        --         --
     Deferred income taxes................     (910)       163        (17)        3        (66)
     Tax benefit due to stock option
       exercise...........................       --         --        590        --         --
     Changes in operating assets and
       liabilities:
       Accounts receivable................   (1,814)    (2,669)    (1,290)    1,848        557
       Unbilled revenues..................     (413)       191       (486)     (338)       232
       Prepaid expenses and other current
          assets..........................      (66)       (97)      (237)     (109)       (61)
       Accounts payable...................       73        290        101       338        244
       Accrued expenses...................    1,847       (328)     1,907       154       (594)
       Accrued income taxes...............      572       (937)       (65)      546        937
       Deferred revenues..................    1,551      1,955      2,672     3,021     (3,549)
                                            -------    -------    -------    ------    -------
          Net cash provided by (used in)
            operating activities..........    3,066        523      8,210     6,515       (728)
                                            -------    -------    -------    ------    -------
Cash flows from investing activities:
  Purchases of property and equipment.....     (497)      (388)    (1,788)     (564)      (212)
  Proceeds from sale of fixed assets......       --         --         25        --         --
Other.....................................     (175)        13         23        (2)       (46)
                                            -------    -------    -------    ------    -------
          Net cash used in investing
            activities....................     (672)      (375)    (1,740)     (566)      (258)
                                            -------    -------    -------    ------    -------
Cash flows from financing activities:
  Repayment of long-term obligations......       --         --       (177)       --        (58)
  Proceeds from equipment line of
     credit...............................       --         --        500        --         --
  Proceeds from exercise of stock
     options..............................       --        251        148        75         55
  Purchase of treasury stock..............       --         --         (8)       --         --
  (Increase) decrease in due from related
     parties..............................     (362)       396         --        --         --
  (Increase) decrease in due from
     officer/stockholder..................      (30)        30         --        --         --
                                            -------    -------    -------    ------    -------
          Net cash provided by (used in)
            financing activities..........     (392)       677        463        75         (3)
                                            -------    -------    -------    ------    -------
Net increase (decrease) in cash and cash
  equivalents.............................    2,002        825      6,933     6,024       (989)
Cash and cash equivalents, beginning of
  period..................................    1,062      3,064      3,889     3,889     10,822
                                            -------    -------    -------    ------    -------
Cash and cash equivalents, end of
  period..................................  $ 3,064    $ 3,889    $10,822    $9,913    $ 9,833
                                            =======    =======    =======    ======    =======
</TABLE>
 
  The accompanying notes are an integral part of these consolidated financial
                                   statements
                                       F-6
<PAGE>   67
 
                     INTERNATIONAL INTEGRATION INCORPORATED
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  (INFORMATION AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997 IS
                                   UNAUDITED)
                             (DOLLARS IN THOUSANDS)
 
(1)  ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
 
     International Integration Incorporated ("i-Cube" or the "Company") provides
application migration and custom software development services on a fixed-price,
fixed-time basis to Fortune 1000 companies and other large enterprises.
 
     A summary of the Company's significant accounting policies follows:
 
     (a) Use of Estimates
 
     The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amount of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
 
     (b) Principles of Consolidation
 
     The consolidated financial statements reflect the operations of the Company
and its wholly-owned subsidiaries. All significant intercompany transactions and
accounts have been eliminated.
 
     (c) Foreign Currency Translation
 
     Assets and liabilities of the Company's foreign operations denominated in
foreign currencies are translated into United States dollars at exchange rates
prevailing at the balance sheet date. Revenues and expenses for the period are
translated at the average exchange rates in effect during the period. Foreign
currency effects were not material during the periods presented.
 
     (d) Revenue Recognition
 
     The Company derives substantially all of its revenues from technology
consulting services. Revenues from contracts are recognized on the
percentage-of-completion basis. The cumulative impact of any revision in
estimates of the cost to complete and losses on projects in process are
reflected in the period in which they become known. Net revenues exclude
reimbursable expenses charged to customers. Revenues from maintenance contracts
is deferred and recognized ratably over the contractual periods during which
services are performed. Revenues related to time and materials engagements are
recognized when the services are performed.
 
     Deferred revenues include amounts billed in advance for technology
consulting contracts that will be recognized upon performance and amounts
received from customers in excess of revenues recognized to date. Unbilled
revenues represent revenues recognized on contracts in excess of contractual
billings to date.
 
     (e) Significant Customers and Concentration of Credit Risk
 
     For the years ended December 31, 1995, 1996 and 1997 and the three months
ended March 31, 1997 and 1998, three, three, five, three and five customers each
accounted for 10% or more of net revenues for the respective period and an
aggregate of 75%, 62%, 83%, 72% and 77% of net revenues, respectively.
 
     Financial instruments that subject the Company to credit risks consist
primarily of trade accounts receivable. As of December 31, 1996 and 1997 and
March 31, 1998, approximately 85%, 86% and 75% of the Company's accounts
receivable were due from three, four and three customers, respectively.
 
                                       F-7
<PAGE>   68
 
                     INTERNATIONAL INTEGRATION INCORPORATED
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
  (INFORMATION AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997 IS
                                   UNAUDITED)
                             (DOLLARS IN THOUSANDS)
 
     (f) Cash and Cash Equivalents
 
     Cash equivalents consist of highly liquid investments with a maturity of
less than three months when purchased. At December 31, 1997 and March 31, 1998,
cash and cash equivalents include overnight repurchase agreements with a bank of
$10,800 and $9,600, respectively. Due to the short-term nature of these
agreements, the Company does not take possession of the underlying collateral,
U.S. Government Agency notes, which are held by the bank.
 
     (g) Depreciation
 
     The Company provides for depreciation of the assets over their estimated
useful lives, using the straight-line method, as follows:
 
<TABLE>
<CAPTION>
               ASSET CLASSIFICATION                 ESTIMATED USEFUL LIFE
               --------------------                 ---------------------
<S>                                                 <C>
Computers and equipment...........................        3-5 years
Furniture and fixtures............................          5 years
</TABLE>
 
     As of December 31, 1997 and March 31, 1998, the cost of furniture and
fixtures recorded under capital leases was $473, and the related accumulated
amortization was $47 and $71, respectively. Upon retirement or disposal, the
cost of the asset disposed of and the related accumulated depreciation are
removed from the accounts and any gain or loss is reflected in income.
 
     (h) Accounting for Stock-Based Compensation
 
     The Company accounts for stock-based awards to its employees using the
intrinsic value based method as prescribed by Accounting Principles Board
("APB") Opinion No. 25, "Accounting for Stock Issued to Employees," and related
Interpretations and has adopted the provisions of Statement of Financial
Accounting Standards ("SFAS") No. 123, "Accounting for Stock-Based
Compensation," through disclosure only (Note 7).
 
     (i) Earnings Per Share
 
     The Company has adopted SFAS No. 128, "Earnings per Share," in the year
ended December 31, 1997. All historical earnings per share ("EPS") data have
been presented to conform to the provisions of this statement (Note 6). SFAS No.
128 requires the presentation of basic and diluted EPS. Basic EPS is computed by
dividing net income by the weighted average number of common shares outstanding
for the period. Diluted EPS is computed using the weighted average number of
common shares outstanding plus the dilutive effect of common stock equivalents
(using the treasury stock method).
 
     (j) Income Taxes
 
     Deferred income taxes are determined based on the difference between the
financial statements and the tax bases of assets and liabilities, as measured by
the enacted tax rates assumed to be in effect when these differences reverse.
 
     (k) Unaudited First Quarter Information
 
     The unaudited financial statements as of and for the three-month periods
ended March 31, 1997 and 1998 reflect, in the opinion of management, all
adjustments (which include only normal recurring adjustments) necessary to
fairly present the financial position, results of operations and changes in cash
flows as of
 
                                       F-8
<PAGE>   69
 
                     INTERNATIONAL INTEGRATION INCORPORATED
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
  (INFORMATION AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997 IS
                                   UNAUDITED)
                             (DOLLARS IN THOUSANDS)
 
and for the periods presented. These unaudited financial statements should be
read in conjunction with the audited financial statements and related notes
thereto. The results for the interim periods presented are not necessarily
indicative of results to be expected for the full year.
 
(2)  LONG-TERM OBLIGATIONS AND CREDIT ARRANGEMENTS
 
     The Company has a working capital line of credit ("working capital line")
with a financial institution under which the Company may borrow the lesser of
$2,000 or 75% of eligible accounts receivable, as defined in the agreement. The
interest rate on all borrowings under the working capital line is prime plus
 1/2% (9.0% at December 31, 1997) and will be reduced to prime upon the
Company's completion of an Initial Public Offering ("IPO"). The working capital
line expires in August 1998 and is collateralized by substantially all assets of
the Company. The Company is required to comply with certain operational and
financial covenants under the agreement if there are borrowings under the
working capital line. At December 31, 1997, the Company was in compliance with
all such covenants. The agreement also provides a $1,000 sublimit for foreign
exchange transactions and the issuance of letters of credit. There were no
borrowings under the working capital line for all periods presented.
 
     In July 1997, the Company obtained an equipment line of credit ("equipment
line") with the same financial institution from which the Company may borrow up
to $500 for qualified capital expenditures, as defined in the agreement. The
interest rate on all borrowings under the equipment line is prime plus  3/4%
(9.25% at December 31, 1997) and will be reduced to prime upon the Company's
completion of an IPO. The Company was able to borrow against this equipment line
until January 31, 1998 (the "draw period"). During the draw period, the Company
was required to make payments of interest only on all outstanding borrowings. At
the conclusion of the draw period, the Company is required to make 36 equal
monthly principal payments plus interest. The Company is required to comply with
certain operational and financial covenants under the agreement if there are
borrowings outstanding under the equipment line. At December 31, 1997, the
Company was in compliance with all such covenants.
 
     Long-term obligations consist of the following at December 31, 1997:
 
<TABLE>
<S>                                                           <C>
Capital lease obligations...................................  $440
Equipment line..............................................   500
                                                              ----
                                                               940
Less-current maturities.....................................   268
                                                              ----
                                                              $672
                                                              ====
</TABLE>
 
     Maturities of long-term obligations are as follows:
 
<TABLE>
<S>                                                           <C>
1998........................................................  $  348
1999........................................................     313
2000........................................................     313
2001........................................................     122
2002........................................................      16
                                                              ------
                                                               1,112
Less-amount representing interest...........................     172
                                                              ------
                                                              $  940
                                                              ======
</TABLE>
 
                                       F-9
<PAGE>   70
 
                     INTERNATIONAL INTEGRATION INCORPORATED
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
  (INFORMATION AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997 IS
                                   UNAUDITED)
                             (DOLLARS IN THOUSANDS)
 
(3)  ACCRUED EXPENSES
 
     Accrued expenses consist of the following at December 31, 1996, 1997 and
March 31, 1998:
 
<TABLE>
<CAPTION>
                                                          DECEMBER 31,       MARCH 31,
                                                        ----------------    -----------
                                                         1996      1997        1998
                                                        ------    ------    -----------
                                                                            (UNAUDITED)
<S>                                                     <C>       <C>       <C>
Accrued payroll and other payroll expenses............  $  474    $1,638      $  921
Accrued other.........................................     575     1,318       1,441
                                                        ------    ------      ------
                                                        $1,049    $2,956      $2,362
                                                        ======    ======      ======
</TABLE>
 
(4)  INCOME TAXES
 
     The provision for income taxes consists of the following for the years
ended December 31, 1995, 1996 and 1997:
 
<TABLE>
<CAPTION>
                                                            1995      1996      1997
                                                           ------    ------    ------
<S>                                                        <C>       <C>       <C>
Current
  Federal................................................  $1,768    $  692    $2,118
  State..................................................     566       196       659
                                                           ------    ------    ------
                                                            2,334       888     2,777
Deferred
  Federal................................................    (695)      124       (13)
  State..................................................    (215)       38        (4)
                                                           ------    ------    ------
                                                             (910)      162       (17)
                                                           ------    ------    ------
                                                           $1,424    $1,050    $2,760
                                                           ======    ======    ======
</TABLE>
 
     A reconciliation of the Company's income tax provision to the U.S.
statutory income tax rate is as follows:
 
<TABLE>
<CAPTION>
                                                              1995    1996    1997
                                                              ----    ----    ----
<S>                                                           <C>     <C>     <C>
U.S. federal statutory tax rate.............................  34.0%   34.0%   34.0%
State income taxes, net of federal benefit..................   6.3     6.3     6.3
Research and development credits............................  (0.7)   (1.0)   (1.0)
Other, net..................................................   1.1      .1    (0.3)
                                                              ----    ----    ----
          Effective tax rate................................  40.7%   39.4%   39.0%
                                                              ====    ====    ====
</TABLE>
 
     Significant components of the net deferred tax asset as of December 31,
1996 and 1997 are as follows:
 
<TABLE>
<CAPTION>
                                                              1996    1997
                                                              ----    ----
<S>                                                           <C>     <C>
Accruals and reserves.......................................  $784    $835
Depreciation................................................    11     (23)
                                                              ----    ----
          Total net deferred tax asset......................  $795    $812
                                                              ====    ====
</TABLE>
 
                                      F-10
<PAGE>   71
 
                     INTERNATIONAL INTEGRATION INCORPORATED
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
  (INFORMATION AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997 IS
                                   UNAUDITED)
                             (DOLLARS IN THOUSANDS)
 
(5)  STOCKHOLDERS' EQUITY
 
     Until February 1996, the Company had authorized 12,020,025 and 2,979,975 of
Series A and Series B common shares, respectively, at no par value.
 
     In February 1996, each share of Series A common stock and Series B common
stock, without par value, was converted into one share of common stock, $0.01
par value, with the same voting rights. The Company has authorized 22,000,000
shares consisting of 21,000,000 shares of common stock, $0.01 par value, and
1,000,000 shares of preferred stock, $0.01 par value.
 
     In February 1997, i-Cube's Board of Directors voted a three-for-two stock
split of the Company's common stock, payable as a stock dividend, which became
effective the same day. All share and per share data, except common stock par
value, have been retroactively adjusted to reflect these changes.
 
(6)  EARNINGS PER SHARE
 
     The following table reconciles the denominator of the basic and diluted
earnings per share computation as shown on the Consolidated Statements of
Income:
 
<TABLE>
<CAPTION>
                                                                               THREE MONTHS
                                      YEAR ENDED DECEMBER 31,                ENDED MARCH 31,
                               --------------------------------------    ------------------------
                                  1995          1996          1997          1997          1998
                               ----------    ----------    ----------    ----------    ----------
                                                                               (UNAUDITED)
<S>                            <C>           <C>           <C>           <C>           <C>
Basic common shares
  outstanding................  12,322,743    12,424,678    12,627,222    12,519,461    13,243,701
Stock options................   1,141,930     1,257,658     2,536,198     1,736,146     2,787,440
                               ----------    ----------    ----------    ----------    ----------
Diluted common and common
  equivalent shares..........  13,464,673    13,682,336    15,163,420    14,255,607    16,031,141
                               ==========    ==========    ==========    ==========    ==========
</TABLE>
 
     Options to purchase shares of the Company's common stock of 440,574,
150,000, 138,622, 204,100 and 9,522 for the years ended December 31, 1995, 1996,
1997 and three months ended March 31, 1997 and 1998, respectively, were
outstanding during the respective periods but were not included in the
computation of diluted EPS because the exercise price of the options, which
ranges from $1.33 to $2.20 in 1995, $2.20 in 1996, $5.00 in 1997, $3.00 in the
three months ended March 31, 1997 and $7.00 in the three months ended March 31,
1998, were greater than the average market price of the common stock for the
periods reported. The outstanding options not included in the calculation for
the year ended December 31, 1995 will expire between May 2005 and December 2005.
The outstanding options not included in the calculation for the year ended
December 31, 1996 will expire in September 2005. The outstanding options not
included in the calculation for the year ended December 31, 1997 will expire in
November 2007. The outstanding options not included in the calculation for the
three months ended March 31, 1997 will expire between February 2007 and March
2007. The outstanding options not included in the calculation for the three
months ended March 31, 1998 will expire in March 2008.
 
(7)  STOCK PLANS
 
     (a) 1993 Stock Plan
 
     The Company has a 1993 Stock Plan (the "1993 Plan"), pursuant to which the
Company was authorized to grant to employees, directors and consultants of the
Company statutory and nonstatutory stock options to purchase shares of Series B
common stock (now common stock). Under the 1993 Plan, incentive stock
 
                                      F-11
<PAGE>   72
 
                     INTERNATIONAL INTEGRATION INCORPORATED
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
  (INFORMATION AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997 IS
                                   UNAUDITED)
                             (DOLLARS IN THOUSANDS)
 
options may be granted at an exercise price not less than the fair market value
of the Company's common stock on the date of the grant, as determined by the
Board of Directors. Nonqualified options may be granted on terms determined by
the Board of Directors, but at a price of no less than the book value per share
or 50% of the fair market value on the date of grant, whichever is lower. The
maximum term of the options is ten years from date of grant. Upon the adoption
of the 1996 Plan,           shares remaining ungranted under the 1993 Plan were
authorized to be granted under the 1996 Plan, and the 1993 Plan was then
terminated.
 
     (b) 1996 Stock Plan
 
     On January 15, 1996, the Company's Board of Directors adopted the 1996
Stock Plan (the "1996 Plan"), pursuant to which the Company may grant to
employees, directors and consultants of the Company stock options, rights or
awards to purchase           shares of common stock. The total number of shares
available for grant under the 1996 Plan was 1,067,984 at March 31, 1998. Under
the 1996 Plan, incentive stock options ("ISOs") may be granted at an exercise
price not less than the fair market value of the Company's common stock on the
date of the grant (110% of fair market value for ISOs granted to holders of more
than 10% of the voting stock of the Company), as determined by the Board of
Directors. Stock options under the 1996 Plan are non-transferable and generally
vest over a four-year period. The maximum term of any option is ten years.
 
     Information related to all stock options granted by the Company is as
follows:
 
<TABLE>
<CAPTION>
                                                                                  WEIGHTED
                                                    WEIGHTED                      AVERAGE
                                                    AVERAGE                    EXERCISE PRICE
                                       NUMBER OF    EXERCISE      OPTIONS        OF OPTIONS
                                        SHARES       PRICE      EXERCISABLE     EXERCISABLE
                                       ---------    --------    -----------    --------------
<S>                                    <C>          <C>         <C>            <C>
Outstanding, December 31, 1994.......  1,099,988     $0.01         354,487         $0.01
  Granted............................  1,259,175      1.59
  Exercised..........................    (27,000)     0.01
                                       ---------     -----       ---------         -----
Outstanding, December 31, 1995.......  2,332,163      0.85       1,166,952         $0.54
  Granted............................  2,952,000      2.00
  Exercised..........................   (145,688)     1.72
  Forfeited/canceled.................   (479,550)     1.99
                                       ---------     -----       ---------         -----
Outstanding, December 31, 1996.......  4,658,925      1.43       1,728,001         $0.72
  Granted............................  1,928,700      3.43
  Exercised..........................   (473,677)     1.44
  Forfeited/canceled.................   (429,323)     2.17
                                       ---------     -----       ---------         -----
Outstanding, December 31, 1997.......  5,684,625      2.06       1,997,804         $0.92
  Granted............................    376,500      5.49
  Exercised..........................   (503,345)     0.11
  Forfeited/canceled.................    (95,998)     3.59
                                       ---------     -----       ---------         -----
Outstanding March 31,
  1998(unaudited)....................  5,461,782     $2.45       1,657,628         $1.32
                                       =========     =====
</TABLE>
 
                                      F-12
<PAGE>   73
 
                     INTERNATIONAL INTEGRATION INCORPORATED
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
  (INFORMATION AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997 IS
                                   UNAUDITED)
                             (DOLLARS IN THOUSANDS)
 
     The following table summarizes information about stock options outstanding
at March 31, 1998:
 
<TABLE>
<CAPTION>
                             OPTIONS OUTSTANDING                 OPTIONS EXERCISABLE
                 -------------------------------------------   ------------------------
                    NUMBER          WEIGHTED       WEIGHTED       NUMBER      WEIGHTED
     RANGE OF    OUTSTANDING        AVERAGE         AVERAGE    EXERCISABLE     AVERAGE
     EXERCISE    AT MARCH 31,      REMAINING       EXERCISE    AT MARCH 31,   EXERCISE
      PRICES         1998       CONTRACTUAL LIFE     PRICE         1998         PRICE
    ----------   ------------   ----------------   ---------   ------------   ---------
<S> <C>          <C>            <C>                <C>         <C>            <C>
    $0.01-0.67      728,500           6.53           $0.13        668,880       $0.10
     1.33-1.33       21,675           7.08            1.33         13,551        1.33
     2.00-2.20    2,721,594           8.23            2.01        840,167        2.02
     3.00-3.00    1,180,563           9.08            3.00        133,905        3.00
     5.00-5.00      717,450           9.61            5.00          1,125        5.00
     7.00-7.00       92,000           9.98            7.00             --          --
    ----------    ---------           ----           -----      ---------       -----
    $0.01-7.00    5,461,782           8.39           $2.45      1,657,628       $1.32
    ==========    =========           ====           =====      =========       =====
</TABLE>
 
     The exercise price for each of the above grants was determined by the Board
of Directors of the Company to be equal to the fair market value of the common
stock on the day of grant (110% of the fair market value for grants to holders
of more than 10% of the voting stock of the Company). In reaching this
determination at the time of each such grant, the Board considered a broad range
of factors including the illiquid nature of an investment in the Company's
common stock, the Company's historical financial performance, and the Company's
future prospects. Pursuant to the required pro forma disclosure under the fair
value method of estimating compensation cost, the Company has estimated the fair
value of its stock option grants by using the Black-Scholes option pricing
method with the following weighted-average assumptions:
 
<TABLE>
<CAPTION>
                                                              1995     1996     1997
                                                              -----    -----    -----
<S>                                                           <C>      <C>      <C>
Expected option term (years)................................    5.0      7.0      7.0
Risk-free interest rate (%).................................    6.3      6.6      6.4
Expected volatility (%).....................................    0.0      0.0      0.0
Dividend yield (%)..........................................    0.0      0.0      0.0
 
Weighted-average fair value of options granted..............  $0.40    $0.72    $1.20
</TABLE>
 
     The Company applies APB Opinion No. 25 and the related Interpretations.
Accordingly, no compensation cost has been recognized for option grants. Had
compensation cost for these awards been determined based on the fair value at
the grant dates consistent with the method prescribed by SFAS No. 123, the
Company's net income would have been adjusted to the pro forma amounts indicated
below:
 
<TABLE>
<CAPTION>
                                                            1995      1996      1997
                                                           ------    ------    ------
<S>                                                        <C>       <C>       <C>
Net income
  As reported............................................  $2,076    $1,615    $4,325
  Compensation expense for stock options.................      56       272       573
                                                           ------    ------    ------
  Pro forma net income...................................  $2,020    $1,343    $3,752
                                                           ======    ======    ======
Basic earnings per share as reported.....................  $ 0.17    $ 0.13    $ 0.34
Pro forma basic earnings per share.......................  $ 0.16    $ 0.11    $ 0.30
Diluted earnings per share as reported...................  $ 0.15    $ 0.12    $ 0.29
Pro forma diluted earnings per share.....................  $ 0.15    $ 0.10    $ 0.25
</TABLE>
 
                                      F-13
<PAGE>   74
 
                     INTERNATIONAL INTEGRATION INCORPORATED
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
  (INFORMATION AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997 IS
                                   UNAUDITED)
                             (DOLLARS IN THOUSANDS)
 
(8)  COMMITMENTS
 
     The Company leases its facilities under operating lease agreements that
expire through October 2002. The following are the future minimum lease payments
under operating leases as of December 31, 1997:
 
<TABLE>
<S>                                                   <C>
1998................................................  $1,108
1999................................................   1,144
2000................................................   1,228
2001................................................   1,140
2002................................................      45
                                                      ------
          Total minimum lease payments..............  $4,665
                                                      ======
</TABLE>
 
     Rent expense was $237, $544 and $1,158 for the years ended December 31,
1995, 1996 and 1997, respectively.
 
(9)  RELATED PARTY TRANSACTIONS
 
     In 1995, the Company had net revenues of $36 from an entity whose principal
stockholder is a principal stockholder and a former director of the Company.
 
     In 1995, the Company had net revenues of $366 from an entity of which a
principal stockholder and former director of the Company was a stockholder and
director.
 
     During 1995, the Company provided certain management, administrative and
support services and subleased a portion of its facilities to another related
entity. The Company charged the entity $102 during 1995, which was offset
against operating expenses of the Company. The amount charged was included in
due from related party in the Company's balance sheets. During 1996, all amounts
were paid in full.
 
     In 1996, the Company was paid $317 for IT services provided to a company of
which a principal stockholder and a former director of the Company was a
significant shareholder.
 
     During 1997, the Company received a note for $533 from a stockholder for
the exercise of 400,000 stock options. The note is due in October 2000 and
accrues interest at 8.5%, payable at maturity.
 
(10)  401(k) PLAN
 
     During April 1995, the Company adopted a defined contribution plan (the
"401(k) Plan") under Section 401(k) of the Internal Revenue Code. The 401(k)
Plan allows eligible employees to make contributions up to a specified annual
maximum contribution, as defined. Under the 401(k) Plan, the Company may, but is
not obligated to, match a portion of the employees contributions up to a defined
maximum. The Company did not contribute to the 401(k) Plan during 1995, 1996, or
1997. The Company's contribution to the plan was $32 during the three months
ended March 31, 1998.
 
(11)  SUPPLEMENTARY INFORMATION
 
     During 1997 and the three months ended March 31, 1998, the Company paid
interest of $69 and $22 respectively. No interest was paid in 1995, 1996, or the
three months ended March 31, 1998.
 
     During 1995, 1996, 1997 and the three months ended March 31, 1997 and 1998,
the Company paid $1,762, $1,808, $2,217, $127, and $7, respectively for income
taxes.
 
                                      F-14
<PAGE>   75
 
                     INTERNATIONAL INTEGRATION INCORPORATED
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
  (INFORMATION AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997 IS
                                   UNAUDITED)
                             (DOLLARS IN THOUSANDS)
 
     The Company entered into obligations under capital leases of $617 during
the period ended December 31, 1997.
 
     During 1997, the Company disposed of various fixed assets with an original
cost of $199.
 
     During 1996 and 1997 the Company paid $1,150 and $249 for executive signing
bonuses, respectively. These amounts are included in general and administrative
expenses.
 
                                      F-15
<PAGE>   76
[photograph of Company employees participating in a team building exercise]

<PAGE>   77
 
                                  I-Cube Logo
<PAGE>   78
 
                                    PART II
 
                     INFORMATION NOT REQUIRED IN PROSPECTUS
 
ITEM 13.  OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
 
     Estimated expenses (other than underwriting discounts and commissions)
payable in connection with the sale of the Common Stock offered hereby are as
follows:
 
<TABLE>
<S>                                                           <C>
SEC registration fee........................................  $ 12,197
NASD filing fee.............................................     4,525
Nasdaq National Market listing fee..........................    95,000
Printing and engraving expenses.............................   120,000
Legal fees and expenses.....................................   300,000
Accounting fees and expenses................................   300,000
Blue Sky fees and expenses (including legal fees)...........    10,000
Transfer agent and registrar fees and expenses..............    50,000
Miscellaneous...............................................    58,278
                                                              --------
          Total.............................................  $950,000
                                                              ========
</TABLE>
 
     The Company will bear all expenses shown above.
 
ITEM 14.  INDEMNIFICATION OF DIRECTORS AND OFFICERS.
 
     The Delaware General Corporation Law and the Registrant's Certificate of
Incorporation, as amended, provides for indemnification of the Registrant's
directors and officers for liabilities and expenses that they may incur in such
capacities. In general, directors and officers are indemnified with respect to
actions taken in good faith in a manner reasonably believed to be in, or not
opposed to, the best interests of the Registrant, and with respect to any
criminal action or proceeding, actions that the indemnitee had no reasonable
cause to believe were unlawful. Reference is made to the Registrant's Form of
Amended and Restated Certificate of Incorporation filed as Exhibit 3.2 hereto.
 
     The Underwriting Agreement provides that the Underwriters are obligated,
under certain circumstances, to indemnify directors, officers and controlling
persons of the Company against certain liabilities, including liabilities under
the Securities Act of 1933, as amended (the "Act"). Reference is made to the
form of Underwriting Agreement to be filed as Exhibit 1.1 hereto.
 
     The Company intends to obtain directors and officers liability insurance
for the benefit of its directors and certain of its officers.
 
ITEM 15.  RECENT SALES OF UNREGISTERED SECURITIES.
 
     In the three years preceding the filing of this registration statement, the
Company has issued the following securities that were not registered under the
Securities Act:
 
          (a) Issuances of Capital Stock.
 
          On February 28, 1996, the Company issued an aggregate of 8,231,683
     (pre-split) shares of its Common Stock to seven stockholders upon the
     conversion of an aggregate of 8,231,683 shares of the common stock of
     International Integration Incorporated, a Massachusetts corporation, in
     connection with the Company's reincorporation in Delaware. Of these, 18,000
     shares were issued to one stockholder upon the conversion of shares issued
     (pursuant to an exercise of options under the Company's 1993 Stock Plan) in
     the three years preceding the filing of this registration statement; the
     balance of these shares were issued to six stockholders upon the conversion
     of shares issued more than three years prior to the filing of this
     registration statement.
 
                                      II-1
<PAGE>   79
 
          Between February 28, 1996 and February 4, 1997, the Company issued an
     aggregate of 122,625 (pre-split) shares of its Common Stock to eight
     stockholders for an aggregate purchase price of $327,975. All of such
     issuances were pursuant to option exercises or restricted stock purchases
     under the Company's stock plans.
 
          The Company declared a three-for-two stock split, by means of a stock
     dividend, effective February 5, 1997. As a result, the holders of 8,354,308
     shares received an additional 4,177,154 shares of Common Stock.
 
          Since its reincorporation in Delaware, the Company has repurchased
     from stockholders an aggregate of 3,001 (post-split) shares of Common
     Stock, which are currently held in treasury by the Company.
 
          Subsequent to the stock split described above, the Company issued an
     aggregate of 938,772 (post-split) shares of its Common Stock to 16
     stockholders for an aggregate purchase price of $659,547.51. All of such
     issuances were pursuant to option exercises or restricted stock purchases
     under the Company's stock plans.
 
          (b) Certain Grants and Exercises of Stock Options and Restricted
     Stock.
 
          Prior to January 1, 1996, the Company (i) issued options under its
     1993 Stock Plan to purchase an aggregate of 1,866,363.5 (post-split) shares
     of Common Stock, exercisable at a weighted average exercise price of $.57
     per share and (ii) issued an aggregate of 951,188.5 (post-split) shares of
     Common Stock at a weighted average purchase price of $.60 per share upon
     exercise of certain of such options. Also, during this period, the Company
     issued 300,500 (post-split) shares of restricted stock under its 1993 Stock
     Plan for a weighted average purchase price of $.01 per share.
 
          From February 29, 1996 through March 31, 1998, the Company (i) issued
     options under its 1996 Stock Plan to purchase an aggregate of 4,632,628
     (post-split) shares of Common Stock, exercisable at a weighted average
     purchase price of $2.82 per share and (ii) issued an aggregate of 86,021
     (post-split) shares of Common Stock at a weighted average purchase price of
     $2.18 per share upon exercise of certain of such options. Also, during this
     period, the Company issued 112,500 (post-split) shares of restricted stock
     under its 1996 Stock Plan for a weighted average purchase price of $2.00
     per share.
 
          The foregoing exercises of stock options and grants of restricted
     stock are also included in the totals in paragraph (a) above.
 
          No underwriters were involved in the foregoing sales of securities.
     Such sales were made in reliance upon an exemption from the registration
     provisions of the Securities Act set forth in Section 4(2) thereof relative
     to sales by an issuer not involving any public offering or the rules and
     regulations thereunder, or, in the case of options to purchase Common
     Stock, Rule 701 of the Securities Act. All of the foregoing securities are
     deemed restricted securities for the purposes of the Securities Act.
 
ITEM 16.  EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
 
     (a) Exhibits:
 
<TABLE>
<CAPTION>
EXHIBIT
  NO.                                 DESCRIPTION
-------                               -----------
<C>      <C>  <S>
   1.1*  --   Form of Underwriting Agreement
   3.1   --   Certificate of Incorporation of the Registrant, as amended
   3.2*  --   Amended and Restated Certificate of Incorporation of the
              Registrant, to be filed prior to the closing of this
              offering
   3.3   --   By-laws of the Registrant, as amended
   3.4*  --   Amended and Restated By-Laws of the Registrant, to be
              effective upon the closing of this offering
   4.1*  --   Specimen Certificate for Common Stock
   5.1*  --   Opinion of Hale and Dorr LLP
  10.1   --   1993 Stock Plan
</TABLE>
 
                                      II-2
<PAGE>   80
 
<TABLE>
<CAPTION>
EXHIBIT
  NO.                                 DESCRIPTION
-------                               -----------
<C>      <C>  <S>
  10.2   --   1996 Stock Plan
  10.3*  --   1998 Stock Incentive Plan
  10.4*  --   1998 Non-Employee Director Stock Option Plan
  10.5   --   Founding Stockholders' Agreement dated as of May 6, 1997
              between the Registrant, Madhav Anand, Yannis Doganis, Sundar
              Subramaniam and Edouard Aslanian
  10.6   --   Amendment to Founding Stockholders' Agreement dated as May
              6, 1997, between the Registrant, Madhav Anand, Yannis
              Doganis, Sundar Subramaniam, Edouard Aslanian, Harrington
              Trust Limited, as Trustee of The Geneva Trust, and
              Subramaniam Limited Partnership
  10.7   --   Voting Trust Agreement dated as of October 13, 1997 between
              the Registrant, State Street Bank and Trust Company, Sundar
              Subramaniam, Subramaniam Limited Partnership and Harrington
              Trust Limited, as Trustee of the Geneva Trust
  10.8   --   Letter Agreement dated August 8, 1995 between the Registrant
              and Silicon Valley Bank
  10.9   --   Promissory Note dated August 8, 1995 between the Registrant
              and Silicon Valley Bank
  10.10  --   Commercial Security Agreement dated August 8, 1995 between
              the Registrant and Silicon Valley Bank
  10.11  --   Negative Pledge Agreement dated August 8, 1995 between the
              Registrant and Silicon Valley Bank
  10.12  --   Letter Agreement dated October 7, 1996 between the
              Registrant and Silicon Valley Bank
  10.13  --   Promissory Note dated July 31, 1997 between the Registrant
              and Silicon Valley Bank
  10.14  --   Loan Modification Agreements between Registrant and Silicon
              Valley Bank dated August 6, August 7, 1996 and August 28,
              1997, respectively
  10.15  --   Lease Agreement dated November 20, 1996 between the
              Registrant, RR&C Development Company and Patrician
              Associates, Inc.
  10.16  --   Lease Agreement dated as of July 14, 1995 between the
              Registrant and Riverfront Office Park Joint Venture
  10.17  --   Amendment No. 1 to Lease Agreement dated as of July 14, 1995
              between the Registrant and Riverfront Office Park Joint
              Venture
  10.18  --   Sublease dated as of June 19, 1995 between the Registrant
              and MathSoft, Inc.
  10.19  --   Letter Agreement dated June 3, 1996 between the Registrant
              and Michael Pehl
  10.20  --   Letter Agreement dated August 30, 1996 between the
              Registrant and Lawrence P. Begley
  10.21  --   Letter Agreement dated December 19, 1997 between the
              Registrant and Karl-Heinz Dette
  16.1   --   Letter from Arthur Andersen LLP re: change in certifying
              accountants
  21.1   --   Subsidiaries of the Registrant
  23.1   --   Consent of Coopers & Lybrand L.L.P.
  23.2*  --   Consent of Hale and Dorr LLP (included in Exhibit 5.1)
  24.1   --   Power of Attorney (see page II-5)
  27     --   Financial Data Schedule
</TABLE>
 
---------------
*   To be filed by amendment.
 
     (b) Financial Statements Schedules:
 
     All schedules for which provision is made in the applicable accounting
regulation of the Securities and Exchange Commission are not required under the
related instructions or are inapplicable, and therefore have been omitted.
 
ITEM 17.  UNDERTAKINGS.
 
     Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
registrant pursuant to provisions described in Item 14 above, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
                                      II-3
<PAGE>   81
 
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
 
     The undersigned registrant hereby undertakes (1) to provide to the
underwriters at the closing specified in the underwriting agreement certificates
in such denominations and registered in such names as required by the
underwriters to permit prompt delivery to each purchaser; (2) that for purposes
of determining any liability under the Securities Act, the information omitted
from the form of prospectus filed as part of a registration statement in
reliance upon Rule 430A and contained in the form of prospectus filed by the
registrant pursuant to Rule 424(b)(2) or (3) or (4) or 497(h) under the
Securities Act shall be deemed to be part of this registration statement as of
the time it was declared effective; and (3) that for the purpose of determining
any liability under the Securities Act, each post-effective amendment that
contains a form of prospectus shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
 
                                      II-4
<PAGE>   82
 
                                   SIGNATURES
 
     Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Cambridge, Massachusetts, on this
24th day of April, 1998.
 
                                          INTERNATIONAL INTEGRATION INCORPORATED
 
                                          By:       /s/ MICHAEL PEHL
                                            ------------------------------------
                                                        Michael Pehl
                                                  Chief Executive Officer
 
                        POWER OF ATTORNEY AND SIGNATURES
 
     We, the undersigned officers, directors and authorized representative of
International Integration Incorporated, hereby severally constitute and appoint
Michael Pehl and Lawrence P. Begley and each of them singly, our true and lawful
attorneys with full power to them, and each of them singly, to sign for us and
in our names in the capacities indicated below, the Registration Statement on
Form S-1 filed herewith and any and all pre-effective and post-effective
amendments to said Registration Statement, and any subsequent Registration
Statement for the same offering which may be filed under Rule 462(b), and
generally to do all such things in our names and on our behalf in our capacities
as officers and directors to enable International Integration Incorporated to
comply with the provisions of the Securities Act of 1933, as amended, and all
requirements of the Securities and Exchange Commission, hereby ratifying and
confirming our signatures as they may be signed by our said attorneys, or any of
them, to said Registration Statement and any and all amendments thereto or to
any subsequent Registration Statement for the same offering which may be filed
under Rule 462(b).
 
     Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
 
<TABLE>
<CAPTION>
                     SIGNATURE                                     TITLE                       DATE
                     ---------                                     -----                       ----
<C>                                                  <S>                                  <C>
 
                 /s/ MICHAEL PEHL                    Chief Executive Officer and          April 24, 1998
---------------------------------------------------    Chairman (Principal Executive
                   Michael Pehl                        Officer)
 
                 /s/ MADHAV ANAND                    President and Director               April 24, 1998
---------------------------------------------------
                   Madhav Anand
 
              /s/ LAWRENCE P. BEGLEY                 Executive Vice President, Chief      April 24, 1998
---------------------------------------------------    Financial Officer, Treasurer
                Lawrence P. Begley                     and Director (Principal
                                                       Accounting and Financial
                                                       Officer)
 
              /s/ THOMAS J. MEREDITH                 Director                             April 24, 1998
---------------------------------------------------
                Thomas J. Meredith
</TABLE>
 
                                      II-5
<PAGE>   83
 
<TABLE>
<CAPTION>
                     SIGNATURE                                     TITLE                       DATE
                     ---------                                     -----                       ----
<C>                                                  <S>                                  <C>
                /s/ JOSEPH M. TUCCI                  Director                             April 24, 1998
---------------------------------------------------
                  Joseph M. Tucci
 
               /s/ GREGORY S. YOUNG                  Director                             April 24, 1998
---------------------------------------------------
                 Gregory S. Young
 
                 /s/ JOHN A. YOUNG                   Director                             April 24, 1998
---------------------------------------------------
                   John A. Young
 
              /s/ PATRICK J. ZILVITIS                Director                             April 24, 1998
---------------------------------------------------
                Patrick J. Zilvitis
</TABLE>
 
                                      II-6
<PAGE>   84
 
                                 EXHIBIT INDEX
 
<TABLE>
<CAPTION>
EXHIBIT
  NO.                                 DESCRIPTION
-------                               -----------
<C>      <C>  <S>
   1.1*  --   Form of Underwriting Agreement
   3.1   --   Certificate of Incorporation of the Registrant, as amended
   3.2*  --   Amended and Restated Certificate of Incorporation of the
              Registrant, to be filed prior to the closing of this
              offering
   3.3   --   By-laws of the Registrant, as amended
   3.4*  --   Amended and Restated By-Laws of the Registrant, to be
              effective upon the closing of this offering
   4.1*  --   Specimen Certificate for Common Stock
   5.1*  --   Opinion of Hale and Dorr LLP
  10.1   --   1993 Stock Plan
  10.2   --   1996 Stock Plan
  10.3*  --   1998 Stock Incentive Plan
  10.4*  --   1998 Non-Employee Director Stock Option Plan
  10.5   --   Founding Stockholders' Agreement dated as of May 6, 1997
              between the Registrant, Madhav Anand, Yannis Doganis, Sundar
              Subramaniam and Edouard Aslanian
  10.6   --   Amendment to Founding Stockholders' Agreement dated as May
              6, 1997, between the Registrant, Madhav Anand, Yannis
              Doganis, Sundar Subramaniam, Edouard Aslanian, Harrington
              Trust Limited, as Trustee of The Geneva Trust, and
              Subramaniam Limited Partnership
  10.7   --   Voting Trust Agreement dated as of October 13, 1997 between
              the Registrant, State Street Bank and Trust Company, Sundar
              Subramaniam, Subramaniam Limited Partnership and Harrington
              Trust Limited, as Trustee of the Geneva Trust
  10.8   --   Letter Agreement dated August 8, 1995 between the Registrant
              and Silicon Valley Bank
  10.9   --   Promissory Note dated August 8, 1995 between the Registrant
              and Silicon Valley Bank
  10.10  --   Commercial Security Agreement dated August 8, 1995 between
              the Registrant and Silicon Valley Bank
  10.11  --   Negative Pledge Agreement dated August 8, 1995 between the
              Registrant and Silicon Valley Bank
  10.12  --   Letter Agreement dated October 7, 1996 between the
              Registrant and Silicon Valley Bank
  10.13  --   Promissory Note dated July 31, 1997 between the Registrant
              and Silicon Valley Bank
  10.14  --   Loan Modification Agreements between Registrant and Silicon
              Valley Bank dated August 6, August 7, 1996 and August 28,
              1997, respectively
  10.15  --   Lease Agreement dated November 20, 1996 between the
              Registrant, RR&C Development Company and Patrician
              Associates, Inc.
  10.16  --   Lease Agreement dated as of July 14, 1995 between the
              Registrant and Riverfront Office Park Joint Venture
  10.17  --   Amendment No. 1 to Lease Agreement dated as of July 14, 1995
              between the Registrant and Riverfront Office Park Joint
              Venture
  10.18  --   Sublease dated as of June 19, 1995 between the Registrant
              and MathSoft, Inc.
  10.19  --   Letter Agreement dated June 3, 1996 between the Registrant
              and Michael Pehl
  10.20  --   Letter Agreement dated August 30, 1996 between the
              Registrant and Lawrence P. Begley
  10.21  --   Letter Agreement dated December 19, 1997 between the
              Registrant and Karl-Heinz Dette
  16.1   --   Letter from Arthur Andersen LLP re: change in certifying
              accountants
  21.1   --   Subsidiaries of the Registrant
  23.1   --   Consent of Coopers & Lybrand L.L.P.
  23.2*  --   Consent of Hale and Dorr LLP (included in Exhibit 5.1)
  24.1   --   Power of Attorney (see page II-5)
  27     --   Financial Data Schedule
</TABLE>
 
---------------
*   To be filed by amendment.
[{"type": "S-1", "sequence": "1", "description": "INTERNATIONAL INTEGRATION INCORPORATED", "secsgml_size_bytes": 322536}]
{"company-data": {"conformed-name": "INTERNATIONAL INTEGRATION INC", "cik": "0001060233", "assigned-sic": "", "irs-number": "043169145", "state-of-incorporation": "DE", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "S-1", "act": "33", "file-number": "333-50889", "film-number": "98600022"}, "business-address": {"street1": "101 MAIN STREET", "city": "CAMBRIDGE", "state": "MA", "zip": "02142", "phone": "6172502500"}, "mail-address": {"street1": "101 MAIN STREET", "city": "CAMBRIDGE", "state": "MA", "zip": "02142"}}
1
 
     As filed with the Securities and Exchange Commission on April 24, 1998
 
                                                      Registration No. 333-
================================================================================
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                            ------------------------
 
                                    FORM S-1
            REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
                            ------------------------
 
                     INTERNATIONAL INTEGRATION INCORPORATED
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
                            ------------------------
DELAWARE                             7371                            04-3169145
 (STATE OR OTHER JURISDICTION OF      (PRIMARY STANDARD INDUSTRIAL             (I.R.S. EMPLOYER
  INCORPORATION OR ORGANIZATION)      CLASSIFICATION CODE NUMBER)           IDENTIFICATION NUMBER)
------------------------
 
                                101 MAIN STREET
                              CAMBRIDGE, MA 02142
                                 (617) 250-2500
                         (ADDRESS AND TELEPHONE NUMBER
                  OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
                            ------------------------
 
                                  MICHAEL PEHL
                      CHIEF EXECUTIVE OFFICER AND CHAIRMAN
                     INTERNATIONAL INTEGRATION INCORPORATED
                                101 MAIN STREET
                              CAMBRIDGE, MA 02142
                                 (617) 250-2500
                          (NAME, ADDRESS AND TELEPHONE
                          NUMBER OF AGENT FOR SERVICE)
                            ------------------------
 
                                   COPIES TO:
PETER B. TARR, ESQ.                                JOHN A. MELTAUS, ESQ.
              JEFFREY A. STEIN, ESQ.                          TESTA, HURWITZ & THIBEAULT, LLP
                 HALE AND DORR LLP                                    125 HIGH STREET
                  60 STATE STREET                               BOSTON, MASSACHUSETTS 02110
            BOSTON, MASSACHUSETTS 02109                          TELEPHONE: (617) 248-7000
             TELEPHONE: (617) 526-6000                           TELECOPY: (617) 248-7100
             TELECOPY: (617) 526-5000
------------------------
 
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:  As soon as
practicable after the effective date hereof.
 
    If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box.  [ ]
 
    If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering.  [ ]
 
    If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration number of the earlier effective registration statement for the same
offering.  [ ]
 
    If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.  [ ]
------------------
 
    If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box.  [ ]
--------------------------------------------------------------------------------
 
                        CALCULATION OF REGISTRATION FEE
================================================================================
-------------------------------------------------------------------------------------------------------------------
                                                          PROPOSED MAXIMUM
TITLE OF EACH CLASS OF                                   AGGREGATE OFFERING                    AMOUNT OF
SECURITIES TO BE REGISTERED                                   PRICE(1)                    REGISTRATION FEE(2)
-------------------------------------------------------------------------------------------------------------------
Common Stock, $0.01 par value....................            $40,250,000                        $12,197
===================================================================================================================
(1) Estimated solely for the purpose of calculating the amount of the
    registration fee pursuant to Rule 457(o) under the Securities Act of 1933.
 
(2) Calculated pursuant to Rule 457(a) based on an estimate of the proposed
    maximum aggregate offering price.
 
    THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
================================================================================
2
 
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
 
PROSPECTUS (Subject to Completion)
Issued April 24, 1998
 
                                           Shares
 
                                     [LOGO]
                                  COMMON STOCK
 
                            ------------------------
  ALL OF THE SHARES OF COMMON STOCK BEING OFFERED HEREBY ARE BEING SOLD BY THE
COMPANY. PRIOR TO THIS OFFERING, THERE HAS BEEN NO PUBLIC MARKET FOR THE COMMON
STOCK OF THE COMPANY. IT IS CURRENTLY ESTIMATED THAT THE INITIAL PUBLIC OFFERING
PRICE WILL BE BETWEEN $        AND $        PER SHARE. SEE "UNDERWRITERS" FOR A
  DISCUSSION OF THE FACTORS TO BE CONSIDERED IN DETERMINING THE INITIAL PUBLIC
OFFERING PRICE. APPLICATION HAS BEEN MADE TO HAVE THE COMMON STOCK APPROVED FOR
        QUOTATION ON THE NASDAQ NATIONAL MARKET UNDER THE SYMBOL "ICUB."
 
                            ------------------------
 
 THIS OFFERING INVOLVES A HIGH DEGREE OF RISK. SEE "RISK FACTORS" COMMENCING ON
                                 PAGE 5 HEREOF.
 
                            ------------------------
  THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
 EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
   AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
                               CRIMINAL OFFENSE.
                            ------------------------
 
                            PRICE $         A SHARE
                            ------------------------
UNDERWRITING
                                       PRICE TO  DISCOUNTS AND   PROCEEDS TO
                                        PUBLIC   COMMISSIONS(1)   COMPANY(2)
                                       --------  --------------  ------------
Per Share............................     $            $              $
Total(3).............................  $               $              $
------------
    (1) The Company and the Selling Stockholders have agreed to indemnify the
        Underwriters against certain liabilities, including liabilities under
        the Securities Act of 1933, as amended. See "Underwriters."
 
    (2) Before deducting expenses payable by the Company estimated at $950,000.
        The Company has agreed to pay the expenses of the Selling Stockholders,
        other than underwriting discounts and commissions.
 
    (3) The Company and the Selling Stockholders have granted the Underwriters
        an option, exercisable within 30 days of the date hereof, to purchase up
        to an aggregate of         additional Shares at the price to public less
        underwriting discounts and commissions for the purpose of covering
        over-allotments, if any. If the Underwriters exercise such option in
        full, the total price to public, underwriting discounts and commissions,
        proceeds to Company and proceeds to Selling Stockholders will be
        $        , $        , $        and $        , respectively. See
        "Underwriters."
 
                            ------------------------
 
     The Shares are offered, subject to prior sale, when, as and if accepted by
the Underwriters named herein and subject to approval of certain legal matters
by Testa, Hurwitz & Thibeault, LLP, counsel for the Underwriters. It is expected
that delivery of the Shares will be made on or about           , 1998 at the
offices of Morgan Stanley & Co. Incorporated, New York, New York, against
payment therefor in immediately available funds.
                            ------------------------
MORGAN STANLEY DEAN WITTER
                                 BT ALEX. BROWN
                                                                  UBS SECURITIES
 
                  , 1998
3
 
     NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY, THE SELLING
STOCKHOLDERS OR ANY UNDERWRITER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO
SELL, OR A SOLICITATION OF AN OFFER TO BUY, ANY SECURITIES OTHER THAN THE
REGISTERED SECURITIES TO WHICH IT RELATES OR AN OFFER TO, OR A SOLICITATION OF,
ANY PERSON IN ANY JURISDICTION WHERE SUCH AN OFFER OR SOLICITATION WOULD BE
UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE
HEREOF.
                            ------------------------
 
     UNTIL                , 1998 (25 DAYS AFTER THE COMMENCEMENT OF THIS
OFFERING), ALL DEALERS EFFECTING TRANSACTIONS IN THE COMMON STOCK, WHETHER OR
NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS DELIVERY REQUIREMENT IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER
A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD
ALLOTMENTS OR SUBSCRIPTIONS.
                            ------------------------
 
                               TABLE OF CONTENTS
PAGE
                                             ----
Prospectus Summary.........................    3
Risk Factors...............................    5
The Company................................   13
Use of Proceeds............................   13
Dividend Policy............................   13
Capitalization.............................   14
Dilution...................................   15
Selected Consolidated Financial Data.......   16
Management's Discussion and Analysis of
  Financial Condition and Results of
  Operations...............................   17
Business...................................   23
PAGE
                                             ----
Management.................................   35
Certain Transactions.......................   45
Principal Stockholders.....................   46
Description of Capital Stock...............   48
Shares Eligible for Future Sale............   51
Underwriters...............................   53
Legal Matters..............................   54
Experts....................................   54
Change in Accountants......................   54
Additional Information.....................   55
Index to Consolidated Financial
  Statements...............................  F-1
------------------------
 
     The Company intends to furnish its stockholders with annual reports
containing audited consolidated financial statements and an opinion thereon
expressed by an independent public accounting firm and with quarterly reports
for the first three quarters of each year containing unaudited consolidated
interim financial information.
                            ------------------------
 
     i-Cube, Transforming the Business World, i-Structure, iMPACT and the i-Cube
logo are service marks of the Company. This Prospectus also includes other
service marks, trademarks and trade names of the Company and of companies other
than the Company.
                            ------------------------
 
     Except as set forth in the consolidated financial statements or as
otherwise indicated herein, all information in this Prospectus (i) assumes no
exercise of the Underwriters' over-allotment option; (ii) assumes the filing
prior to the closing of this offering of the Amended and Restated Certificate of
Incorporation of the Company (the "Restated Certificate of Incorporation")
increasing the authorized shares of Common Stock, and implementing certain
provisions described below under "Description of Capital Stock -- Delaware Law
and Certain Charter and By-Law Provisions; Anti-Takeover Effects," and the
receipt of stockholder approval therefor; and (iii) reflects a three-for-two
split of the Company's Common Stock effected in February 1997. See "Description
of Capital Stock," "Underwriters" and Note 5 of Notes to Consolidated Financial
Statements. As used in this Prospectus, the "Company" and "i-Cube" refer to
International Integration Incorporated and its subsidiaries.
                            ------------------------
 
     CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK.
SPECIFICALLY, THE UNDERWRITERS MAY OVER-ALLOT IN CONNECTION WITH THE OFFERING,
AND MAY BID FOR, AND PURCHASE, SHARES OF THE COMMON STOCK IN THE OPEN MARKET.
FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITERS."
 
                                        2
4
[ARTWORK PORTRAYING THE COMPANY'S SERVICES. THE TEXT CONTAINED WITHIN THE
ARTWORK IS AS FOLLOWS:

[Introduction]
Transforming the Business World

As the business world changes, legacy systems have limited the ability of many
enterprises to compete. The gap between where they are -- with their existing
inflexible information technology infrastructure -- and where they want to be --
agile enough to rapidly adopt new competitive strategies -- is quickly growing.
i-Cube helps Fortune 1000 and other large enterprises close that gap.

[Section 1:]
The Business Situation:

Businesses today face the constant need to react quickly to changes in their
marketplace.

Deregulation, industry consolidation, globalization of product and vendor
markets, demand for more responsive customer service -- all create a need to
continually develop and implement new strategies rapidly.

A need to overcome the restrictive aspects of legacy systems.

i-Cube helps companies eliminate these constraints, while preserving the
investment they have made in their existing systems.

So applications can respond to the new demands of business.

Can interface with emerging technologies.

Can be better prepared for a future of changing business requirements.
5
[Case study:]
For McDonnell Douglas (The Boeing Company), i-Cube migrated four legacy systems
into one common client/server-based system that coordinates all contractual
requirements. While the rearchitected system provides screens and functions
familiar to users -- minimizing training costs -- the application now runs on an
open systems framework that supports swift enhancement.

[Section 2:]
The Business Methods:

i-Cube helps some of the largest organizations in the world meet their business
challenges.

With iMPACT, a suite of services including Information Systems Consulting,
Application Implementation Services and Customer Support.

Services designed to help i-Cube customers improve their competitiveness.

Services that incorporate a proven set of software tools, technologies and
methodologies.

The i-Structure.

A set of methodologies and technologies supporting the development and migration
of scalable, multi-tier, client/server applications.

Applications that are independent of the hardware and operating systems on which
they operate.

That are adaptable to future technology or business changes.

That are easily maintainable.

i-Cube uses the i-Structure for constructing large-scale, complex applications
in a rapid, predictable, low-risk manner.
6
And for migrating legacy applications by deconstructing them and reconstructing
their components into an enhanced, open systems environment.

Providing an application infrastructure with the flexibility customers need to
adapt their IT environments as their businesses evolve.

[GRAPHIC: A stylized depiction of the main lines of service provided by i-Cube,
with separate sections labeled accordingly. Section #1 reads: Information
Systems Consulting -- Solutions Workshops, Application Staging & Planning;
Section #2 reads: Application Implementation Services -- Application Design
(Application Migration, including Rearchitect, Rapid Enhancement Deployment),
Custom Development (Rapid Application Development), and Application Integration;
Section #3 reads: Customer Support -- Skills Enhancement & Empowerment, Rollout
& Transitional Maintenance.]

[CAPTION: i-Cube's Suite of Services]

[Case study:]
For Mercedes-Benz Lease Finanz, i-Cube performed a complete overhaul of the
company's lease finance system to support creative new finance options for
private customers and allow rapid feedback on credit applications to
potential customers. i-Cube helped the company achieve its goal of reducing
finance approval time from two to three days to 15 minutes.

[Section 3:]
The People:

i-Cube believes that the quality of its people will determine the quality of
services it delivers to its clients.

Placing as great a focus on its people as on its technology, i-Cube is committed
to attracting and retaining a team of high-caliber professionals with deep
business and technology experience.

So people, technology and methods work together to deliver results to clients.

It's a culture built on teamwork. The company's investment in its people
includes extensive team-building experiences for all employees. Initial and
ongoing training.
7
Mentoring. Pay-for-performance. Opportunities for accelerated career
advancement. A flexible work environment. Stock ownership opportunities for all
employees.

The i-Culture.

Helping the company foster teamwork, entrepreneurial values, leadership and a
commitment to client success.

[GRAPHIC: A stylized depiction of the i-Culture as a cube with sides
representing the people, the technology and the methods i-Cube employs to
deliver value to clients.]

[CAPTION: The i-Culture: i-Cube understands the important role its people play
in delivering solutions to clients.]

[Callout:]
The i-Cube Mission
To help clients create business advantage by rapidly revitalizing and
implementing strategic information solutions

i-Culture Values
These values are deeply held principles that govern and guide i-Cube in its
relationships with clients, team members, partners, communities and other
stakeholders.
- Trust and respect
- Integrity
- Commitment
- Teamwork
- A belief that the journey is as important as the destination

i-Culture Vision
Where technical barriers end and business solutions begin. Together, as a team,
 we consistently strive to:
- Deploy brilliant technology
- Thrill our clients
- Do the right things right
We are passionate people having fun!]
8
 
                               PROSPECTUS SUMMARY
 
     The following summary is qualified in its entirety by the more detailed
information and Consolidated Financial Statements and Notes thereto appearing
elsewhere in this Prospectus.
 
     International Integration Incorporated ("i-Cube" or the "Company") provides
application migration and custom software development services on a fixed-price,
fixed-time basis to Fortune 1000 companies and other large enterprises. The
Company believes that through these services, its customers can cost-effectively
and rapidly improve their competitiveness and narrow the gap between the demands
of their business strategies and the capabilities of their information
technology ("IT") environments. The Company offers a full range of services,
known as iMPACT, including information systems consulting, application
migration, custom software development and customer support.
 
     The Company utilizes its proprietary development methodologies and
technologies, known as i-Structure, to implement large-scale, complex
application migration and custom development projects based on a multi-tier
client/server architecture. i-Structure's proprietary technologies include
transformation tools used to separate legacy applications into their smallest
logical components, methodologies to populate an Application Repository that
contains the components of and critical information about an application, and
runtime tools used to access and integrate application components. i-Structure
provides the Company with a repeatable and consistent development framework,
applicable to both its application migration and custom development projects,
that increases the speed and reduces the risk and cost of the development of
strategic, core business applications. The applications custom developed or
migrated using i-Structure are not dependent on any single hardware provider or
operating system, are adaptable to future technologies and business changes, and
are easily maintainable. In addition, i-Structure enables the Company to migrate
legacy software applications into multi-tier client/server applications,
allowing customers to preserve the core functionality and other benefits of
their legacy applications while eliminating the constraints of legacy system
architectures. The Company believes that i-Structure enhances the productivity
of its IT professionals and the Company's continued investment in i-Structure is
a key component of its growth strategy.
 
     The Company believes that the expertise gained from completing large-scale,
strategic application migration and custom development projects since its
founding in 1992 provides a significant competitive advantage. Recent
engagements include projects for Cooper Cameron Corporation, Daimler-Benz AG,
Hewlett-Packard Company, IBM, McDonnell Douglas Corporation (now part of The
Boeing Company), Rockwell Automation/Reliance Electric, and Wisconsin Power and
Light Company.
 
                                  THE OFFERING
Common Stock offered...............................  shares
Common Stock to be outstanding after this
  offering.........................................  shares(1)
Use of proceeds....................................  For general corporate purposes, including
                                                     working capital, capital expenditures and
                                                     potential acquisitions. See "Use of Proceeds."
Proposed Nasdaq National Market symbol.............  ICUB
---------------
(1) Based on shares of Common Stock outstanding as of March 31, 1998. Excludes
    (i) 5,461,782 shares of Common Stock issuable upon exercise of stock options
    outstanding as of March 31, 1998, of which options to purchase 1,657,628
    shares were then exercisable, and (ii) 4,317,984 shares of Common Stock
    reserved for future issuance under the Company's stock plans. See
    "Description of Capital Stock," "Management -- Benefit Plans" and Note 7 of
    Notes to Consolidated Financial Statements.
 
                                        3
9
 
                      SUMMARY CONSOLIDATED FINANCIAL DATA
                     (IN THOUSANDS, EXCEPT PER SHARE DATA)
THREE MONTHS
                                                   YEAR ENDED DECEMBER 31,             ENDED MARCH 31,
                                         -------------------------------------------   ---------------
                                         1993     1994     1995     1996      1997      1997     1998
                                         -----   ------   ------   -------   -------   ------   ------
                                                                                         (UNAUDITED)
STATEMENT OF INCOME DATA:
Net revenues...........................  $ 833   $2,893   $9,197   $14,479   $26,859   $5,598   $8,828
Operating income.......................    197      792    3,408     2,580     6,694    1,471    2,119
Net income.............................    124      485    2,076     1,615     4,325      929    1,372
Earnings per share(1):
  Basic................................  $ .01   $  .04   $  .17   $   .13   $   .34   $  .07   $  .10
  Diluted..............................  $ .01   $  .04   $  .15   $   .12   $   .29   $  .07   $  .09
Weighted average shares outstanding(1):
  Basic................................  9,353   12,114   12,323    12,425    12,627   12,519   13,244
  Diluted..............................  9,353   12,114   13,465    13,682    15,163   14,256   16,031
AS OF MARCH 31, 1998
                                                              ------------------------
                                                              ACTUAL    AS ADJUSTED(2)
                                                              -------   --------------
                                                                    (UNAUDITED)
BALANCE SHEET DATA:
Cash and cash equivalents...................................  $ 9,833        $
Working capital.............................................    9,174
Total assets................................................   19,518
Long-term obligations, net of current maturities............      623              623
Total stockholders' equity..................................   11,043
---------------
(1) For an explanation of the determination of the number of shares used in
    computing earnings per share, see Note 6 of Notes to Consolidated Financial
    Statements.
 
(2) Adjusted to give effect to the sale of the           shares of Common Stock
    offered by the Company hereby at an assumed initial public offering price of
    $          per share, after deducting the estimated underwriting discounts
    and commissions and offering expenses payable by the Company and the
    application of the estimated net proceeds therefrom. See "Use of Proceeds"
    and "Capitalization."
 
                                        4
10
 
                                  RISK FACTORS
 
     In evaluating the Company's business, prospective investors should
carefully consider the following factors in addition to the other information
presented in this Prospectus before purchasing the shares of Common Stock
offered hereby. This Prospectus contains certain statements of a forward-looking
nature relating to future events or the future financial performance of the
Company. Prospective investors are cautioned that such statements are only
predictions and that actual events or results may differ materially. In
evaluating such statements, prospective investors should specifically consider
the various factors identified in this Prospectus, including but not limited to
the matters set forth below, which could cause actual results to differ
materially from those indicated by such forward-looking statements.
 
     Fluctuations in Results of Operations.  The Company's results of operations
have varied significantly in the past and may vary significantly in the future,
on a quarterly and annual basis, as a result of a variety of factors, many of
which are outside the Company's control. These factors include, without
limitation: (i) the timing and size of new contracts; (ii) the Company's ability
to accurately estimate the time and expense associated with providing services
under its customer contracts; (iii) the Company's ability to attract and retain
employees having qualifications and experience appropriate for the Company's
engagements; (iv) employee utilization, the number and type of engagements
performed by the Company during a particular period and the payment terms, other
contractual terms and degree of completion of such engagements; (v) the
Company's ability to execute the large, complex and lengthy engagements
characteristic of the Company's business, including without limitation its
ability to staff and manage the appropriate level of IT professionals; (vi) any
unexpected cancellation or termination of large engagements; (vii) demand for
the Company's services; (viii) the efforts and performance of the Company's
marketing partners; (ix) the costs associated with the opening of new offices;
(x) changes in customer budgets; (xi) the publication of opinions about the
Company and its services, or its competitors or their services, by industry
analysts; (xii) competitive conditions in the industry; and (xiii) general
domestic and international economic conditions. The Company's expense levels are
based, in significant part, on anticipated contract requirements and on other
expectations of future revenues and are relatively fixed in the short term.
Consequently, if revenue levels are below expectations, including without
limitation as a result of an unanticipated delay in or termination of a customer
engagement, expense levels could be disproportionately high as a percentage of
net revenues, and the Company's business, financial condition and results of
operations would be materially adversely affected. See "-- Project and Customer
Concentration," "-- Fixed-Price, Fixed-Time Contracts" and "Business --
Customers."
 
     The Company also believes that the purchase of its services generally
involves a significant commitment of a customer's capital resources. Therefore,
any downturn in a customer's business could have a material adverse effect on
the Company's business, financial condition and results of operations. To the
extent that projects progress faster than expected, results of operations for
subsequent quarters may be materially adversely affected. Due to these and other
factors, the Company's quarterly revenues, expenses and results of operations
could vary significantly in the future. Accordingly, period-to-period
comparisons of operating results are not necessarily meaningful and operating
results for any period should not be relied upon as indications of future
performance. There can be no assurance that the Company will be able to increase
its net revenues or operating income in future periods or be able to sustain its
level of net revenues or operating income or its rate of growth on a quarterly
or annual basis. See "-- Project Risks," "-- Length of Sales Cycle" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
 
     Due to all of the foregoing factors, it is possible that in some future
quarter, the Company's results of operations will be below the expectations of
public market analysts and investors. In such event, the market price of the
Company's Common Stock would likely be materially adversely affected. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
 
     Project and Customer Concentration.  The Company has historically derived,
and may in the future derive, a significant amount of its net revenues from
major engagements with a relatively small number of customers. In each of 1995
and 1996, the Company had three customers which individually accounted for 10%
or more of the Company's net revenues, and in 1997 the following five customers
each accounted for 10% or
 
                                        5
11
 
more of the Company's net revenues: Salt River Project (29%); IBM (19%);
Daimler-Benz AG (14%); PEMEX/Integrated Trade Systems (11%); and Wisconsin Power
and Light Company (10%). For the first three months of 1998, the following five
customers each accounted for 10% or more of the Company's net revenues: IBM
(23%); PEMEX/Integrated Trade Systems (17%); Salt River Project (16%); Rockwell
Automation/Reliance Electric (11%); and Hewlett-Packard Company (10%). Although
the Company's largest customers have varied from period to period, the Company
anticipates that its results of operations in any given period will continue to
depend to a significant extent upon large contracts with a small number of
customers. The Company has a limited history of obtaining additional projects
from certain of its major customers, and there can be no assurance that any
major customer will not decrease or discontinue its level of business with the
Company following completion of existing projects or during the course of an
engagement, or that the Company will be able to replace on a timely basis any
discontinued business with engagements from new customers. The loss of or a
reduction in the level of services provided to one or more major customers would
have a material adverse effect on the Company's business, financial condition
and results of operations. If a major customer were unable or unwilling to
proceed with a project or to pay the Company for its services on a timely basis,
the Company's business, financial condition and results of operations could be
materially adversely affected. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations," "Business -- Customers" and Note
1 of Notes to Consolidated Financial Statements.
 
     Project Risks.  Many of the Company's projects are large, complex
engagements that are performed by the Company over extended periods of time. The
Company is generally paid for these projects in installments, based on the
achievement of certain milestones. The Company's ability to successfully
complete these projects and to earn the milestone payments is based on factors
within and outside the Company's control, including the Company's ability to
hire and retain the requisite IT professionals, the Company's project management
capabilities, the abilities and cooperation of its customers, changes in project
goals and the Company's technical expertise, and accordingly, there can be no
assurance that the Company will successfully achieve milestone payments on the
timetable projected by the Company, if at all. Furthermore, because of the
significant numbers of IT professionals assigned by the Company to these large
projects, unexpected early terminations of any of such engagements could result
in underutilization of project personnel until such persons can be redeployed to
other projects. Conversely, an unexpected delay in the completion of a major
engagement could result in a delay in the redeployment of project personnel to
new assignments for which the Company is contractually committed to achieve
milestones on a timely basis. For these and other reasons, the failure of the
Company to successfully complete its large engagements within the time frame
projected by the Company could have a material adverse effect on the Company's
business, financial condition and results of operations. In addition, the
Company's failure or inability to meet a customer's expectations in the
performance of its services could give rise to claims against the Company or
damage the Company's reputation and adversely affect its ability to attract new
business.
 
     Fixed-Price, Fixed-Time Contracts.  The Company generally undertakes
projects on a fixed-price, fixed-time basis, and warrants defined project
deliverables as specified in mutually agreed upon statements of work. In making
proposals for fixed-price, fixed-time contracts, the Company relies on its
estimated costs and timing for completing the project. These estimates reflect,
among other factors, judgments as to the efficiencies of the Company's
methodologies, technologies, and IT professionals as applied to the project. Any
increased or unexpected costs or unanticipated delays in connection with the
performance of fixed-price, fixed-time contracts, including delays caused by
factors outside the Company's control, could affect the profitability of these
contracts and have a material adverse effect on the Company's business,
financial condition and results of operations. In the past, the Company has been
required to commit unanticipated additional resources to complete certain
projects, which may have negatively affected the Company's anticipated
profitability on such projects. The Company recognizes that it may experience
similar situations in the future. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
 
     Management of Growth.  The Company has experienced growth in net revenues
and expansion of its operations which have placed, and are expected to continue
to place, significant demands on the Company's managerial, operational and
financial resources. The Company must continue to manage its financial,
operational and management controls, reporting systems and procedures, and
expand, train, manage and
 
                                        6
12
 
motivate its work force. Given the scale and complexity of the Company's
technology consulting engagements and the Company's expansion of its operations
to date, the Company must continue to improve its ability to timely and
accurately predict and to staff and manage the IT professional resources
required for those engagements. The Company expects to implement an
enterprise-wide accounting and human resources software application in the
second half of 1998 to support its anticipated growth. There can be no assurance
that the Company will be able to implement this new application without
disruption, or that the Company's systems, procedures or controls will otherwise
be adequate to support the Company's expanding operations. In addition, in the
event the Company is required to expand its office facilities, there can be no
assurance that such facilities will be available on acceptable terms, if at all,
or that any expansion or relocation will not have a disruptive effect on the
Company's operations. If the Company's management is unable to manage growth
effectively, the Company's business, financial condition and results of
operations would be materially adversely affected. See "Business -- i-Cube
Culture and Professional Resources" and "Management -- Executive Officers,
Directors and Certain Key Officers."
 
     Competitive Market for IT Professionals.  The Company's success depends to
a significant extent on its ability to attract, train, motivate and retain
highly skilled IT professionals, particularly project managers, software
engineers and other senior technical personnel. There is currently a shortage
of, and significant competition for, software development and other IT
professionals with the advanced technological skills necessary to perform the
services offered by the Company. This shortage has caused wages for such
professionals to increase, which increases operating costs to IT service
providers such as the Company. The Company's ability to maintain existing
engagements and obtain new business therefore depends, in large part, on its
ability to hire and retain additional technical personnel with the IT skills
required to keep pace with continuing changes in information processing
technology, evolving industry standards and changing customer preferences. In
addition, the Company generally incurs substantial costs in recruiting, hiring
and training IT professionals before these employees become productive. There
can be no assurance that the Company will be successful in attracting and
retaining future employees or retaining current employees, or that such
employees will continue to achieve high performance levels. An inability to hire
a sufficient number of qualified employees or an inability to retain employees
could have a material adverse effect on the Company's business, financial
condition and results of operations. In addition, even if the Company is able to
expand its team of highly skilled IT professionals, the resources required to
attract and retain such employees may adversely affect the Company's operating
margins. See "Business -- i-Cube Culture and Professional Resources."
 
     Length of Sales Cycle.  The time between the date of initial contact with a
potential customer and the execution of a contract with that customer is often
lengthy, typically ranging from six weeks for smaller engagements to nine months
or more for the Company's larger engagements, and is subject to delays over
which the Company has little or no control, including customers' budgetary
constraints, customers' internal acceptance reviews, the success and continued
internal support of customers' own development efforts, and the possibility of
cancellation or delay of projects by customers. During such sales cycle, the
Company may expend substantial funds and management resources and yet not obtain
project awards or revenues. See "Business -- Sales and Marketing."
 
     Dependence on Third Party Marketing Relationships.  The Company has
developed and may continue to develop marketing relationships with third parties
that offer products or services that are complementary to those offered by the
Company. The Company currently has joint marketing relationships with Hewlett-
Packard Company and debis Systemhaus, the IT services subsidiary of Daimler-Benz
AG. The Company believes that the customer referrals and partner endorsements
provided by these relationships have contributed significantly to the award of
new business to the Company in the past. To date, these relationships have been
mutually non-exclusive and do not require any minimum level of business or
revenue. There can be no assurance that the Company can successfully maintain
these relationships or establish similar relationships with others. If the
Company's marketing partners were to reduce their efforts on behalf of the
Company, the Company's business, financial condition and results of operations
could be materially adversely affected. See "Business -- Marketing
Relationships."
 
                                        7
13
 
     Rapid Technological Change; Dependence on Client/Server Architectures.  The
market for the Company's services is characterized by innovation and rapid
technological change, evolving industry standards and changing customer
preferences. Both the needs of potential customers and the technologies
available for meeting those needs can change significantly within a short period
of time. The Company has derived a significant portion of its revenues from
projects based primarily on client/server architectures. These technologies are
continuing to develop and are subject to rapid change. Any factors negatively
affecting the acceptance of such technologies could have a material adverse
effect on the Company's business, financial condition and results of operations.
 
     The Company's future will depend in part on its ability to continually
enhance its services, to develop services that address the needs of its
customers and potential customers, and to continue to improve its i-Structure
methodologies and technologies. There can be no assurance that the Company will
be successful in developing and marketing services that respond to technological
changes, that the Company will enhance its i-Structure methodologies and
technologies on a timely or cost-effective basis, or that the Company's
services, methodologies and technologies will adequately meet the requirements
of the marketplace. The failure of the Company to respond to rapidly changing
technologies could have a material adverse effect on the Company's business,
financial condition and results of operations. See "Business -- Industry
Background," "Business -- Technology" and "Business -- Research and
Development."
 
     Dependence on Key Personnel.  The Company's future success depends to a
significant extent on Michael Pehl, its Chief Executive Officer and Chairman of
the Board of Directors, and its other executive officers and key employees. The
loss of the services of any one or more of these individuals could have a
material adverse effect on the Company's business, financial condition and
results of operations. None of these individuals is contractually obligated to
remain in the employ of the Company for any specified period of time. The
Company does not have, and is not considering securing, key-man life insurance
on any of its executive officers or other key employees.
 
     Highly Competitive Market.  The Company operates in a highly competitive
and rapidly changing market and competes with a variety of organizations that
offer services similar to those offered by the Company. The market includes
participants from a variety of market segments, including other IT service
providers, large accounting and other professional service firms, packaged
software vendors and services groups of computer equipment companies, as well as
the internal IT staffs of its customers and potential customers. Many of these
competitors have significantly greater financial, technical, sales and marketing
resources and greater name recognition than the Company. In addition, there are
relatively low barriers to entry into the market in which the Company competes
and the Company has faced, and expects to continue to face, additional
competition from new entrants into this market. There can be no assurance that
the Company will be able to continue to compete successfully with its existing
competitors or that it will be able to compete successfully with new
competitors. See "Business -- Competition."
 
     Dependence on Proprietary Rights.  The Company's success and its ability to
compete is dependent, in part, upon its proprietary rights, including its rights
in i-Structure methodologies and technologies. The Company relies primarily on a
combination of copyright, trademark and trade secret laws to establish and
protect its proprietary rights. There can be no assurance that such measures
will be adequate to protect the Company's proprietary rights. In addition, the
Company seeks to protect its proprietary rights through the use of
confidentiality agreements with employees, consultants, advisors and others.
There can be no assurance that any such agreements will provide adequate
protection for the Company's proprietary rights in the event of any unauthorized
use or disclosure, that employees of the Company, consultants, advisors or
others will maintain the confidentiality of such proprietary information, or
that such proprietary information will not otherwise become known, or be
independently developed, by competitors.
 
     The Company historically has restricted access to the source codes of its
software tools and other technologies. The Company regards its source codes as
proprietary information, and attempts to protect the confidentiality of these
source codes, some of which are embedded in the developed application and
licensed to the customer for runtime use. In certain cases, the Company has also
licensed the source code version to
 
                                        8
14
 
customers for internal use, to enable them to maintain their transformed
applications, and in other cases, the Company has entered into arrangements to
make its source code available upon the occurrence of certain events, such as
the bankruptcy or insolvency of the Company or certain material breaches of the
Company's application development contract. In the event of any release of the
source code pursuant to such arrangements, the customer's license is generally
limited to use of the source code for specific purposes. Despite the Company's
precautions, it may be possible for unauthorized parties to copy or otherwise
reverse engineer portions of the Company's software or otherwise obtain and use
information that the Company regards as proprietary.
 
     The Company does not possess any patents or copyright registrations in the
United States or any other jurisdiction. Existing copyright and trade secret
laws only offer limited protection, and the laws of certain countries in which
the Company provides services may not protect the Company's intellectual
property rights to the same extent as the laws of the United States. Certain
provisions of the agreements entered into by the Company, including provisions
protecting against unauthorized use, transfer and disclosure, may be
unenforceable under the laws of certain jurisdictions, and the Company is
required to negotiate limits on these provisions from time to time.
 
     Although the Company believes that its services and technologies do not
infringe on the intellectual property rights of others, there can be no
assurance that infringement claims will not be asserted against the Company in
the future. Such claims, if resolved against the Company, could adversely affect
the Company's reputation, preclude it from offering certain services, and have a
material adverse effect on the Company's business, financial condition and
results of operations. In its agreements with its customers, the Company agrees
to indemnify its customers for any expenses or liabilities resulting from
claimed infringements of patents, trademarks or copyrights of third parties. In
certain instances, the amount of such indemnities may be greater than the
revenues the Company may have received from the customer. There can be no
assurance that third parties will not assert infringement or misappropriation
claims against the Company in the future with respect to current or future
services. Any claims or litigation, with or without merit, could be
time-consuming, result in costly litigation or delays, or require the Company to
enter into royalty or licensing arrangements. Such royalty or licensing
arrangements, if required, may not be available on terms acceptable to the
Company, if at all, which could have a material adverse effect on the Company's
business, financial condition and results of operations. The Company has
received notice from a company located in the Netherlands that it believes that
its rights to use the i-Cube name in the Netherlands, Belgium and Luxembourg are
superior to those of the Company. In the event that the Company agrees with the
claims of such company, or in the event that the Company elects not to challenge
the assertions of such company, the Company may not be able to market its
services in those countries under the i-Cube name.
 
     The Company's business includes the development of custom software in
connection with specific customer engagements. The Company frequently assigns to
its customers the copyright and other intellectual property rights in certain
aspects of the software and documentation developed for these customers.
Although the Company's contracts with its customers provide that it retains the
rights to its intellectual property, there can be no assurance that customers
will not assert rights in, and seek to limit the Company's use of, such
intellectual property.
 
     Contract Liability.  The Company's agreements with its customers typically
contain provisions designed to limit the Company's exposure to claims relating
to the Company's professional services and the applications developed by it.
However, it is possible that the limitation of liability provisions contained in
the Company's agreements may not adequately protect the Company or be effective
under the laws of certain jurisdictions. Although the Company has not
experienced any such liability claims to date, there can be no assurance that
the Company will not be subject to such claims in the future. A liability claim
brought against the Company could have a material adverse effect on the
Company's business, financial condition and results of operations.
 
     Risk of Software Defects.  Software applications as complex as those
developed by the Company frequently contain errors or defects, especially when
first implemented. Any such defects or errors could result
 
                                        9
15
 
in delayed or lost revenues, adverse customer reaction, negative publicity
regarding the Company and its services and harm to the Company's reputation, or
could require expensive corrections, any of which could have a material adverse
effect on the Company's business, financial condition and results of operations.
 
     Risks Associated with International Operations.  In 1996, 1997 and the
first three months of 1998, net revenues from customers located outside of the
United States accounted for 9%, 14% and 7%, respectively, of the Company's net
revenues in such period. The Company expects that net revenues from
international operations, principally in Europe, may account for an increasingly
significant amount of the Company's net revenues. As a result, the Company is
subject to a number of risks, including, among other things, difficulties
relating to administering its business globally, managing foreign operations
(including the Company's office in Germany), currency fluctuations, restrictions
against the repatriation of earnings, the burdens of complying with a wide
variety of foreign laws, the uncertainty of laws and enforcement in certain
jurisdictions relating to the protection of intellectual property rights and
multiple and possibly overlapping tax structures. Other factors that can
adversely affect international operations are changes in import/export duties
and quotas, introduction of tariff or non-tariff barriers and economic or
political changes in international markets. In addition, a substantial portion
of the Company's operating expenses and capital expenditures relating to the
Company's international operations continue to be denominated in United States
dollars, while the Company anticipates that an increasing amount of its net
revenues will be generated in foreign currencies. As a result, the Company may
be exposed to fluctuations in the foreign exchange rates between the United
States dollar and the currency in which a particular engagement is transacted.
To date, the Company has not sought to hedge the risks associated with
fluctuations in foreign exchange rates. The realization of any of the foregoing
risks could have a material adverse effect on the Company's business, financial
condition and results of operations.
 
     Year 2000 Compliance Issues.  The Company believes that the purchasing
patterns of customers and potential customers may be significantly affected by
Year 2000 issues. Many companies are expending significant resources to correct
or patch their current software systems for Year 2000 compliance. These
expenditures may result in reduced funds available to purchase software services
such as those offered by the Company. Conversely, Year 2000 issues may cause
other companies to accelerate purchases, thereby causing an increase in
short-term demand and a consequent decrease in long-term demand for software
services.
 
     The Company does not believe that it has material exposure to the Year 2000
issue with respect to its own information systems because its existing systems
correctly define the year 2000. Although the Company believes that the
information systems of its major partners and vendors (insofar as they relate to
the Company's business) comply with Year 2000 requirements, there can be no
assurance that the Year 2000 issue will not affect the information systems of
the Company's major partners and vendors as they relate to the Company's
business, or that any such impact of a major partner's or vendor's information
system would not have a material adverse effect on the Company.
 
     Control by Principal Stockholders.  Following this offering, approximately
     % of the outstanding shares of Common Stock of the Company will be held by
Sundar Subramaniam, a founder of the Company, and certain trusts and
partnerships for the benefit of Mr. Subramaniam or members of his family. Prior
to the completion of this offering, all of such shares are held in a voting
trust, for which State Street Bank and Trust Company is acting as trustee. Under
the terms of the voting trust agreement, the trustee has the right to vote the
shares following discussion with certain non-management members of the Board of
Directors, but without consulting the holders of the voting trust certificates,
except with respect to certain specific actions. The voting trust agreement will
terminate upon the closing of this offering. As a result, Mr. Subramaniam and
members of his family will have the ability to substantially influence the
business and affairs of the Company, including the election of the Company's
directors, and to otherwise affect the outcome of certain actions requiring
stockholder approval, including the adoption of amendments to the Company's
Restated Certificate of Incorporation and certain mergers, sales of assets, and
other business acquisitions or dispositions. See "Principal Stockholders."
 
                                       10
16
 
     No Prior Trading Market; Potential Volatility of Stock Price.  Prior to
this offering, there has been no public market for the Company's Common Stock,
and there can be no assurance that an active trading market will develop or be
sustained after this offering or that the market price of the Common Stock will
not decline below the initial public offering price. The initial public offering
price will be determined solely by negotiations between the Company and the
Representatives of the Underwriters and therefore may not be indicative of
prices that will prevail in the trading market after this offering. The market
price of the Company's Common Stock could be subject to wide fluctuations in
response to, and may be adversely affected by, variations in quarterly results
of operations, changes in earnings estimates by analysts, adverse earnings or
other financial or business announcements by the Company and its customers or
competitors and market conditions in the industry, as well as general economic
conditions. In addition, the stock market has experienced extreme price and
volume fluctuations that have particularly affected the market prices for many
companies' stocks and that often have been unrelated to the operating
performance of such companies. These market fluctuations may adversely affect
the market price of the Company's Common Stock. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations." See "Underwriters"
for a discussion of the factors to be considered in determining the initial
public offering price.
 
     Shares Eligible for Future Sale.  Sales of substantial amounts of shares of
the Company's Common Stock in the public market following this offering could
adversely affect the market price of the Common Stock. In addition to the
            shares offered hereby (          shares if the over-allotment option
is exercised in full), approximately 379,374 additional shares of Common Stock
outstanding as of March 31, 1998, which are not subject to 180-day lock-up
agreements (the "Lock-up Agreements") with the Representatives of the
Underwriters, will be eligible for sale in the public market in accordance with
Rule 144(k) under the Securities Act of 1933, as amended (the "Securities Act"),
on the date of this Prospectus. Upon expiration of the Lock-up Agreements, 180
days after the date of this Prospectus, approximately 12,555,842 additional
shares of Common Stock will be available for sale in the public market, subject
to the provisions of Rule 144 under the Securities Act. At March 31, 1998,
approximately 3,107,837.5 shares of Common Stock were issued or issuable
pursuant to vested options or pursuant to other rights granted under the
Company's stock plans, of which approximately           shares are not subject
to Lock-up Agreements with the Representatives of the Underwriters and will be
eligible for sale in the public market in accordance with Rule 701 under the
Securities Act beginning 90 days after the date of this Prospectus. The Company
intends to file one or more registration statements on Form S-8 under the
Securities Act following the date of this Prospectus to register up to 5,461,782
shares of Common Stock subject to outstanding stock options granted pursuant to
the Company's stock option program as of March 31, 1998, including the 1,657,628
shares of Common Stock subject to options vested as of March 31, 1998, and
4,317,984 shares of Common Stock issuable pursuant to the Company's stock plans.
Such registration statements are expected to become effective upon filing. See
"Shares Eligible for Future Sale" and "Underwriters."
 
     Broad Management Discretion as to Use of Proceeds.  The anticipated net
proceeds of this offering to the Company have not been designated for specific
uses. Therefore, the Company's management will have broad discretion with
respect to the use of the net proceeds of this offering to the Company. See "Use
of Proceeds."
 
     Immediate and Substantial Dilution.  Purchasers of shares of Common Stock
offered hereby will suffer an immediate and substantial dilution in the net
tangible book value per share of the Common Stock from the initial public
offering price. See "Dilution."
 
     Potential Adverse Effects of Anti-Takeover Provisions; Availability of
Preferred Stock for Issuance. Following the closing of this offering, the
Company's Board of Directors will have the authority to issue up to 1,000,000
shares of Preferred Stock without any further vote or action by the
stockholders, and to determine the price, rights, preferences, privileges and
restrictions, including voting rights, of such shares. Since the Preferred Stock
could be issued with voting, liquidation, dividend and other rights superior to
those of the
 
                                       11
17
 
Common Stock, the rights of the holders of Common Stock will be subject to, and
may be adversely affected by, the rights of the holders of any such Preferred
Stock. The issuance of Preferred Stock, while providing flexibility in
connection with possible acquisitions and other corporate purposes, could have
the effect of making it more difficult for a third party to acquire, or could
discourage a third party from attempting to acquire, a majority of the
outstanding voting stock of the Company. Further, certain provisions of the
Company's Restated Certificate of Incorporation, including provisions that
create a classified Board of Directors, and certain provisions of the Company's
Amended and Restated By-laws and of Delaware law could have the effect of
delaying or preventing a change in control of the Company. See "Description of
Capital Stock -- Delaware Law and Certain Charter and By-Law Provisions;
Anti-Takeover Effects."
 
                                       12
18
 
                                  THE COMPANY
 
     The Company was incorporated in Massachusetts in 1992 and was
reincorporated in Delaware in 1996. The principal executive offices of the
Company are located at 101 Main Street, Cambridge, Massachusetts 02142. The
Company's telephone number is (617) 250-2500.
 
                                USE OF PROCEEDS
 
     The net proceeds to the Company from the sale of the           shares of
Common Stock offered by the Company hereby are estimated to be approximately
$          ($          if the Underwriters' over-allotment option is exercised
in full), assuming an initial public offering price of $          per share and
after deducting the estimated underwriting discounts and commissions and
offering expenses payable by the Company. The Company expects to use the net
proceeds for general corporate purposes, including working capital and capital
expenditures. A portion of the net proceeds may also be used for the acquisition
of other companies, assets, products and technologies that are complementary to
the Company's business, although the Company has no commitments or agreements
with respect to any such acquisitions, and no portion of the net proceeds has
been allocated for any specific acquisition. Pending such uses, the net proceeds
to the Company from this offering will be invested in investment grade,
interest-bearing securities.
 
                                DIVIDEND POLICY
 
     No cash dividends have ever been declared or paid on the Company's capital
stock and the Company does not anticipate paying any cash dividends on the
Common Stock in the foreseeable future. The Company currently intends to retain
all of its future earnings, if any, for use in the operation of the business. In
addition, the Company's bank facility contains a covenant prohibiting the
payment of cash dividends without the bank's consent. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations --
Liquidity and Capital Resources."
 
                                       13
19
 
                                 CAPITALIZATION
 
     The following table sets forth the capitalization of the Company at March
31, 1998 (i) on an actual basis, and (ii) as adjusted to reflect the issuance
and sale of the           shares of Common Stock offered by the Company hereby
at an assumed initial public offering price of $          per share, after
deducting the estimated underwriting discounts and commissions and offering
expenses payable by the Company, and the application of the estimated net
proceeds therefrom.
AS OF MARCH 31, 1998
                                                              --------------------------
                                                               ACTUAL       AS ADJUSTED
                                                              ---------    -------------
                                                              (UNAUDITED, IN THOUSANDS,
                                                              EXCEPT SHARE AND PER SHARE
                                                                        DATA)
Long-term obligations, net of current maturities............   $   623         $  623
Stockholders' equity(1):
  Preferred stock, $0.01 par value; 1,000,000 shares
     authorized; no shares issued or outstanding............        --             --
  Common stock, $0.01 par value; 100,000,000 shares
     authorized; 13,467,233 shares outstanding, actual;
               shares issued and outstanding, as
     adjusted(2)............................................       134
  Additional paid-in capital................................     1,566
  Treasury stock............................................        (8)            (8)
  Note receivable from stockholder..........................      (533)          (533)
  Retained earnings.........................................     9,884          9,884
                                                               -------         ------
     Total stockholders' equity.............................    11,043
                                                               -------         ------
          Total capitalization..............................   $11,666         $
                                                               =======         ======
---------------
(1) Gives effect to the filing of the Restated Certificate of Incorporation of
    the Company prior to the closing of this offering.
 
(2) Excludes (i) 5,461,782 shares of Common Stock issuable upon exercise of
    stock options outstanding as of March 31, 1998, of which options to purchase
    1,657,628 shares were then exercisable, and (ii) 4,317,984 shares of Common
    Stock reserved for future issuance under the Company's stock plans. See
    "Management -- Benefit Plans" and Note 7 of Notes to Consolidated Financial
    Statements.
 
                                       14
20
 
                                    DILUTION
 
     The net tangible book value of the Company as of March 31, 1998 was
approximately $11,043,000, or $0.82 per share of Common Stock. Net tangible book
value per share is determined by dividing the Company's tangible net worth
(tangible assets less liabilities) by the number of shares of Common Stock
outstanding. After giving effect to the sale of the           shares of Common
Stock offered by the Company hereby (at an assumed initial public offering price
of $          per share and after deducting the estimated underwriting discounts
and commissions and offering expenses payable by the Company), the net tangible
book value of the Company as of March 31, 1998 would have been $          , or
$          per share of Common Stock. This represents an immediate increase in
such net tangible book value of $          per share to existing stockholders
and an immediate dilution of $          per share to new investors. The
following table illustrates the per share dilution:
Assumed initial public offering price per share.............              $
  Net tangible book value per share before this offering....  $
  Increase in net tangible book value per share attributable
     to new investors.......................................
Net tangible book value per share after this offering.......
                                                                          --------
Dilution per share to new investors.........................              $
                                                                          ========
The following table summarizes, as of March 31, 1998, the difference
between the number of shares of Common Stock purchased from the Company, the
total consideration paid to the Company, and the average price per share paid by
existing stockholders and by new investors (at an assumed initial public
offering price of $          per share before deduction of estimated
underwriting discounts and commissions and offering expenses payable by the
Company):
SHARES PURCHASED(1)      TOTAL CONSIDERATION      AVERAGE
                                ---------------------    ---------------------      PRICE
                                  NUMBER      PERCENT      AMOUNT      PERCENT    PER SHARE
                                ----------    -------    ----------    -------    ---------
Existing stockholders.........  13,467,233          %    $  997,632          %     $  .07
New investors.................
                                ----------     -----     ----------     -----
     Total....................                 100.0%    $              100.0%
                                ==========     =====     ==========     =====
---------------
(1) Sales by the Company and the Selling Stockholders upon the exercise in full
    of the Underwriters' over-allotment option will reduce the number of shares
    of Common Stock held by existing stockholders to           shares, or      %
    of the total number of shares of Common Stock to be outstanding after this
    offering and will increase the number of shares of Common Stock held by new
    investors to           shares, or      % of the total number of shares to be
    outstanding after this offering. See "Principal Stockholders."
 
     The foregoing table assumes no exercise of stock options outstanding at
March 31, 1998. As of March 31, 1998, there were options outstanding to purchase
5,461,782 shares of Common Stock at a weighted average exercise price of $2.45
per share and 4,317,984 shares reserved for future issuance under the Company's
stock plans. To the extent any of these options are exercised, there will be
further dilution to new investors. See "Management -- Benefit Plans" and Note 7
of Notes to Consolidated Financial Statements.
 
                                       15
21
 
                      SELECTED CONSOLIDATED FINANCIAL DATA
 
     The following selected consolidated financial data should be read in
conjunction with the Company's Consolidated Financial Statements and the Notes
thereto, and with Management's Discussion and Analysis of Financial Condition
and Results of Operations, included elsewhere in this Prospectus. The selected
consolidated statement of income data set forth below for the three years in the
period ended December 31, 1997 and the selected consolidated balance sheet data
at December 31, 1996 and December 31, 1997 are derived from consolidated
financial statements of the Company audited by Coopers & Lybrand L.L.P.,
independent public accountants, which are included elsewhere in this Prospectus.
The selected consolidated statement of income data for the year ended December
31, 1994 and the selected consolidated balance sheet data at December 31, 1994
and 1995 are derived from consolidated financial statements of the Company
audited by Coopers & Lybrand L.L.P. which are not included in this Prospectus.
The selected consolidated statement of income data for the year ended December
31, 1993 and the selected consolidated balance sheet data at December 31, 1993
are derived from audited financial statements of the Company which are not
included in this Prospectus. The selected consolidated financial data for the
three months ended March 31, 1997 and March 31, 1998 are derived from the
Company's unaudited Consolidated Financial Statements included elsewhere in this
Prospectus. The unaudited Consolidated Financial Statements have been prepared
by the Company on a basis consistent with the Company's audited financial
statements and, in the opinion of management, include all adjustments
(consisting only of normal recurring adjustments) necessary for a fair
presentation of the financial position and results of operations for such
periods. Results for the three months ended March 31, 1998 are not necessarily
indicative of the results that may be expected for the year ending December 31,
1998 or any other future period.
THREE MONTHS
                                                           YEAR ENDED DECEMBER 31,             ENDED MARCH 31,
                                                  ------------------------------------------   ----------------
                                                  1993    1994     1995     1996      1997      1997     1998
                                                  ----   ------   ------   -------   -------   ------   -------
                                                                                                 (UNAUDITED)
                                                              (IN THOUSANDS, EXCEPT PER SHARE DATA)
STATEMENT OF INCOME DATA:
Net revenues....................................  $833   $2,893   $9,197   $14,479   $26,859   $5,598   $ 8,828
Project personnel and software costs............   288    1,372    2,521     5,308    10,385    2,000     3,612
                                                  ----   ------   ------   -------   -------   ------   -------
      Gross profit..............................   545    1,521    6,676     9,171    16,474    3,598     5,216
Operating expenses:
  Selling and marketing.........................    95      329      897     1,580     3,046      630       850
  General and administrative....................   253      400    2,371     5,011     6,734    1,497     2,247
                                                  ----   ------   ------   -------   -------   ------   -------
      Total operating expenses..................   348      729    3,268     6,591     9,780    2,127     3,097
                                                  ----   ------   ------   -------   -------   ------   -------
Operating income................................   197      792    3,408     2,580     6,694    1,471     2,119
Other income, net...............................    --        9       92        85       391       52       130
                                                  ----   ------   ------   -------   -------   ------   -------
      Income before income taxes................   197      801    3,500     2,665     7,085    1,523     2,249
Provision for income taxes......................    73      316    1,424     1,050     2,760      594       877
                                                  ----   ------   ------   -------   -------   ------   -------
      Net income................................  $124   $  485   $2,076   $ 1,615   $ 4,325   $  929   $ 1,372
                                                  ====   ======   ======   =======   =======   ======   =======
Earnings per share(1):
  Basic.........................................  $.01   $  .04   $  .17   $   .13   $   .34   $  .07   $   .10
                                                  ====   ======   ======   =======   =======   ======   =======
  Diluted.......................................  $.01   $  .04   $  .15   $   .12   $   .29   $  .07   $   .09
                                                  ====   ======   ======   =======   =======   ======   =======
Weighted average shares outstanding(1):
  Basic.........................................  9,353  12,114   12,323    12,425    12,627   12,519    13,244
  Diluted.......................................  9,353  12,114   13,465    13,682    15,163   14,256    16,031
AS OF DECEMBER 31,                  AS OF
                                                        -----------------------------------------    MARCH 31,
                                                        1993    1994     1995     1996     1997        1998
                                                        ----   ------   ------   ------   -------   -----------
                                                                                                    (UNAUDITED)
                                                                            (IN THOUSANDS)
BALANCE SHEET DATA:
Cash and cash equivalents.............................  $  6   $1,062   $3,064   $3,889   $10,822     $ 9,833
Working capital.......................................   169      541    2,067    3,855     7,853       9,174
Total assets..........................................   360    1,537    7,656   10,502    21,112      19,518
Long-term obligations, net of current maturities......    59       --       --       --       672         623
Total stockholders' equity............................   132      619    2,695    4,561     9,616      11,043
---------------
(1) For an explanation of the determination of the number of shares used in
    computing earnings per share, see Note 6 of Notes to Consolidated Financial
    Statements.
 
                                       16
22
 
                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
     The following discussion and analysis should be read in conjunction with
the Company's Consolidated Financial Statements and the Notes thereto included
elsewhere in this Prospectus. The following discussion contains certain trend
analysis and other statements of a forward-looking nature relating to future
events or the future financial performance of the Company. Prospective investors
are cautioned that such statements are only predictions and that actual results
or events may differ materially. In evaluating such statements, prospective
investors should specifically consider the risk factors identified in this
Prospectus, particularly the matters set forth under the caption "Risk Factors,"
which could cause actual results to differ materially from those indicated by
such forward-looking statements.
 
OVERVIEW
 
     The Company provides application migration and custom software development
services on a fixed-price, fixed-time basis to Fortune 1000 companies and other
large enterprises. The Company was founded in 1992 and has been profitable each
year since it began operations in 1993. The Company has financed its operations
principally through cash generated from operations.
 
     The Company derives substantially all of its revenues from technology
consulting services. The Company's services are principally provided on a
fixed-price basis. See "Risk Factors -- Project Risks" and "Risk
Factors -- Fixed-Price, Fixed-Time Contracts." In 1997, 96% of net revenues of
the Company were derived from fixed-price contracts. In developing the
fixed-price of a project, the Company follows a process that assesses the
technical complexity of the project, the nature of the work, the functions to be
performed, the resources required to complete the engagement, and the extent to
which the Company will deploy its internally-developed software tools to deliver
the solution. Net revenues exclude reimbursable expenses charged to customers.
 
     Revenue from fixed-price projects is recognized using
percentage-of-completion accounting, based on the ratio of labor hours incurred
to date as compared to the estimated total labor hours needed to complete the
project. Because the Company's operating results may be adversely affected by
inaccurate estimates of project completion, the Company has a series of project
review processes to help provide accurate project estimates, including a
detailed review at the end of each reporting period to determine project percent
completion. In addition, the Company attempts to mitigate the risks associated
with determining accurate project completion estimates by deferring a portion of
the revenues from certain contracts until the estimate of the time and resources
required for completion can be more accurately determined. The cumulative impact
of any revision in estimates of the time and resources required for completion
and losses on projects in process are reflected in the period in which they
become known. Revenue from maintenance contracts is deferred and recognized
ratably over the contractual periods during which the services are performed.
Revenue related to time and materials engagements is recognized when the
services are performed.
 
     The Company typically receives a substantial advance payment from its
customers upon contract signing, with additional payments required upon the
attainment of project milestones. Deferred revenues consist principally of
amounts billed in advance for the Company's technology consulting contracts that
will be recognized upon performance and amounts received from customers in
excess of revenues recognized to date.
 
     The Company has traditionally depended upon a few major customers for a
majority of its net revenues. During the three months ended March 31, 1998, net
revenues from its five largest customers accounted for 23%, 17%, 16%, 11% and
10%, respectively, of the Company's net revenues. During 1997, net revenues from
the Company's five largest customers accounted for 29%, 19%, 14%, 11% and 10%,
respectively, of the Company's net revenues. Although the Company's strategy is
to broaden its customer base, there can be no assurance that such customer
concentration will actually diminish, and the Company anticipates that its
results of operations in any given period will continue to depend to a
significant extent upon large contracts with a small number of customers. See
"Risk Factors -- Project and Customer Concentration" and Note 1 of Notes to
Consolidated Financial Statements. In 1996, 1997 and the first three months of
1998, net revenues
 
                                       17
23
 
from customers located outside of the United States accounted for 9%, 14% and
7%, respectively, of the Company's net revenues in such period.
 
     The Company's results of operations are influenced to a significant extent
by its ability to attract, train, motivate and retain highly skilled IT
professionals. As a consequence, the Company's most significant expense is the
cost of hiring and training personnel, wages and related employee costs. The
ability of the Company to manage employee utilization and to contain turnover
and payroll costs will have a significant impact on its profitability. See "Risk
Factors -- Competitive Market for IT Professionals."
 
RESULTS OF OPERATIONS
 
     The following table sets forth certain items included in the Company's
Consolidated Statements of Income as a percentage of net revenues for the
periods indicated:
THREE MONTHS
                                                     YEAR ENDED DECEMBER 31,    ENDED MARCH 31,
                                                     -----------------------    ----------------
                                                     1995     1996     1997      1997      1998
                                                     -----    -----    -----    ------    ------
Net revenues.......................................  100.0%   100.0%   100.0%   100.0%    100.0%
Project personnel and software costs...............   27.4     36.7     38.7     35.7      40.9
                                                     -----    -----    -----    -----     -----
          Gross profit.............................   72.6     63.3     61.3     64.3      59.1
Operating expenses:
  Selling and marketing............................    9.7     10.9     11.3     11.3       9.6
  General and administrative.......................   25.8     34.6     25.1     26.7      25.5
                                                     -----    -----    -----    -----     -----
          Total operating expenses.................   35.5     45.5     36.4     38.0      35.1
                                                     -----    -----    -----    -----     -----
Operating income...................................   37.1     17.8     24.9     26.3      24.0
Other income, net..................................    1.0      0.6      1.5      0.9       1.5
                                                     -----    -----    -----    -----     -----
          Income before income taxes...............   38.1     18.4     26.4     27.2      25.5
Provision for income taxes.........................   15.5      7.2     10.3     10.6       9.9
                                                     -----    -----    -----    -----     -----
          Net income...............................   22.6%    11.2%    16.1%    16.6%     15.6%
                                                     =====    =====    =====    =====     =====
THREE MONTHS ENDED MARCH 31, 1997 AND 1998
 
     Net Revenues.  The Company's net revenues increased by $3.2 million, or
57.7%, from $5.6 million in the first three months of 1997 to $8.8 million for
the comparable period in 1998. This increase in net revenues was primarily
attributable to an increased volume of projects from new customers and the
leveraging of existing customer relationships to obtain repeat business.
 
     Project Personnel and Software Costs.  Project personnel and software costs
consist primarily of compensation and related costs of personnel dedicated to
customer assignments and research and development personnel assigned to
developing and enhancing the Company's methodologies and technologies deployed
during the project delivery process. Project personnel and software costs also
include fees paid to subcontractors for work performed in connection with
projects and non-reimbursed project travel expenses. Project personnel and
software costs increased by $1.6 million, or 80.6%, from $2.0 million in the
first three months of 1997 to $3.6 million for the comparable period in 1998. As
a percentage of net revenues, these costs were 35.7% and 40.9%, respectively, in
such periods. The increase in project personnel and software costs in absolute
dollars was primarily attributable to the hiring of additional and more
experienced personnel required to deliver the Company's services and increases
in per person compensation costs. The increase in project personnel and software
costs as a percentage of net revenues was primarily attributable to an increase
in per person compensation. Project personnel headcount increased from 103
employees at March 31, 1997 to 138 employees at March 31, 1998.
 
     Selling and Marketing.  Selling and marketing costs consist primarily of
compensation and related costs of sales and marketing personnel, travel
expenses, and marketing program and promotion costs. Selling and
 
                                       18
24
 
marketing costs increased by $220,000, or 35.0%, from $630,000 in the first
three months of 1997 to $850,000 for the comparable period in 1998. As a
percentage of net revenues, these costs were 11.3% and 9.6% in the first three
months of 1997 and 1998, respectively. The increase in selling and marketing
costs in absolute dollars was primarily attributable to increased spending on
promotional activities and the hiring of more experienced sales personnel. Sales
and marketing personnel increased from 13 employees at March 31, 1997 to 14
employees at March 31, 1998.
 
     General and Administrative.  General and administrative costs consist
primarily of compensation and related costs of the Company's management and
administrative functions, including finance and accounting, human resources,
internal information technology, and the costs of the Company's facilities and
other general corporate expenses. General and administrative costs increased
$750,000, or 50.1%, from $1.5 million in the first three months of 1997 to $2.2
million for the comparable period in 1998. As a percentage of net revenues,
these costs were 26.7% and 25.5%, respectively, in such periods. The decline in
general and administrative costs as a percentage of net revenues reflected a
decline in administrative staff as a percentage of total staff and more
efficient space utilization of the Company's facilities in the first three
months of 1998. The increase in general and administrative costs in absolute
dollars was primarily attributable to an increase in general and administrative
personnel from 17 at March 31, 1997 to 26 at March 31, 1998. In addition,
expenditures for recruiting and leased equipment contributed to the dollar
increase in general and administrative costs.
 
     Other Income, Net.  Other income, net consists primarily of interest income
from the Company's cash balances and interest expense associated with fixed
asset purchases made under the Company's equipment line of credit and
obligations under capital leases. Other income, net was approximately $52,000
and $130,000 for the first three months of 1997 and 1998, respectively.
 
     Provision for Income Taxes.  The Company's effective rate for Federal and
state income taxes was 39.0% for the first three months of 1997 and 1998.
 
YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997
 
     Net Revenues.  Net revenues increased by $5.3 million, or 57.4%, from $9.2
million in 1995 to $14.5 million in 1996 and increased by $12.4 million, or
85.5%, to $26.9 million in 1997. The increases each year represent an increase
in the number of customer projects from both new and existing customers plus an
increase in the average size of projects. Net revenues from the Company's five
largest customers represented approximately 83.8%, 78.8% and 83.4% of the
Company's net revenues for 1995, 1996 and 1997, respectively.
 
     Project Personnel and Software Costs.  Project personnel and software costs
increased by $2.8 million, or 110.6%, from $2.5 million in 1995 to $5.3 million
in 1996 and by $5.1 million, or 95.6%, to $10.4 million in 1997. As a percentage
of net revenues, project personnel and software costs were 27.4%, 36.7% and
38.7% for 1995, 1996 and 1997, respectively. The increases in project personnel
and software costs in absolute dollars were primarily attributable to an
increase in the number of personnel required to deliver projects and increased
per person compensation costs. The increases in project personnel and software
costs as a percentage of net revenues were primarily attributable to an increase
in compensation on both an absolute and per employee basis. Project personnel
headcount was 65, 87 and 120 at December 31, 1995, 1996 and 1997, respectively.
 
     Selling and Marketing.  Selling and marketing costs increased by $683,000,
or 76.1%, from $897,000 in 1995 to $1.6 million in 1996 and by $1.4 million, or
92.8%, to $3.0 million in 1997. As a percentage of net revenues, selling and
marketing costs were 9.7%, 10.9% and 11.3% in 1995, 1996 and 1997, respectively.
The increased selling and marketing costs reflect the expansion of sales and
marketing personnel from five at December 31, 1995 to nine at December 31, 1996
and to 17 at December 31, 1997. In 1996 and 1997, the Company also increased its
promotional and public relations activities.
 
     General and Administrative.  General and administrative costs increased by
$2.6 million, or 111.3%, from $2.4 million in 1995 to $5.0 million in 1996 and
by $1.7 million, or 34.4%, to $6.7 million in 1997. As a percentage of net
revenues, general and administrative costs were 25.8%, 34.6% and 25.1% for 1995,
1996 and 1997, respectively. The increase in general and administrative costs in
absolute dollars resulted from an increase in general and administrative
personnel from nine employees at December 31, 1995 to 15 employees
 
                                       19
25
 
at December 31, 1996 and to 21 employees at December 31, 1997. In 1996 and 1997,
the Company hired several new officers including the Chief Executive Officer,
the Chief Financial Officer and the Vice President, Human Resources and added
resources in finance, human resources and information technology to support the
Company's rapid growth. In addition, in 1996, the Company paid a $1.0 million
bonus to Michael Pehl to secure his services as Chairman and Chief Executive
Officer and a $150,000 bonus to Lawrence P. Begley to secure his services as
Chief Financial Officer and Treasurer.
 
     Other Income, Net.  Other income, net consists primarily of interest income
from the Company's cash balances and interest expense associated with fixed
asset purchases made under the Company's equipment line of credit and
obligations under capital leases. Other income, net in 1995, 1996 and 1997 was
approximately $92,000, $85,000 and $391,000, respectively.
 
     Provision for Income Taxes.  The Company's effective rate for Federal and
state income taxes was 40.7%, 39.4%, and 39.0% for 1995, 1996 and 1997,
respectively.
 
QUARTERLY RESULTS OF OPERATIONS
 
     The following tables set forth certain unaudited quarterly financial
information for the five quarters in the period ended March 31, 1998 in dollars
and as a percentage of net revenues. This information is derived from unaudited
consolidated financial statements and has been prepared on the same basis as the
Company's Consolidated Financial Statements which appear elsewhere in this
Prospectus. In the opinion of the Company's management, this information
reflects all adjustments (consisting only of normal recurring adjustments)
necessary for a fair presentation of the information when read in conjunction
with the Company's Consolidated Financial Statements and the Notes thereto. The
results for any quarter are not necessarily indicative of future quarterly
results of operations, and the Company believes that period-to-period
comparisons should not be relied upon as an indication of future performance.
QUARTER ENDED
                               ----------------------------------------------------------------------------------
                                 MARCH 31,         JUNE 30,      SEPTEMBER 30,     DECEMBER 31,      MARCH 31,
                                    1997             1997             1997             1997             1998
                               --------------   --------------   --------------   --------------   --------------
                                                     (IN THOUSANDS, EXCEPT PERCENTAGE DATA)
STATEMENT OF INCOME DATA:
Net revenues.................  $5,598   100.0%  $6,633   100.0%  $7,093   100.0%  $7,535   100.0%  $8,828   100.0%
Project personnel and
  software costs.............   2,000    35.7    2,474    37.3    2,914    41.1    2,998    39.8    3,612    40.9
                               ------   -----   ------   -----   ------   -----   ------   -----   ------   -----
    Gross profit.............   3,598    64.3    4,159    62.7    4,179    58.9    4,537    60.2    5,216    59.1
Operating expenses:
  Selling and marketing......     630    11.3      808    12.2      770    10.9      838    11.1      850     9.6
  General and
    administrative...........   1,497    26.7    1,672    25.2    1,690    23.8    1,875    24.9    2,247    25.5
                               ------   -----   ------   -----   ------   -----   ------   -----   ------   -----
    Total operating
      expenses...............   2,127    38.0    2,480    37.4    2,460    34.7    2,713    36.0    3,097    35.1
                               ------   -----   ------   -----   ------   -----   ------   -----   ------   -----
Operating income.............   1,471    26.3    1,679    25.3    1,719    24.2    1,824    24.2    2,119    24.0
Other income, net............      52     0.9       76     1.1      115     1.6      148     2.0      130     1.5
                               ------   -----   ------   -----   ------   -----   ------   -----   ------   -----
    Income before income
      taxes..................   1,523    27.2    1,755    26.4    1,834    25.8    1,972    26.2    2,249    25.5
Provision for income taxes...     594    10.6      684    10.3      715    10.1      766    10.2      877     9.9
                               ------   -----   ------   -----   ------   -----   ------   -----   ------   -----
      Net income.............  $  929    16.6%  $1,071    16.1%  $1,119    15.7%  $1,206    16.0%  $1,372    15.6%
                               ======   =====   ======   =====   ======   =====   ======   =====   ======   =====
The Company's results of operations have varied significantly in the past
and may vary significantly in the future, on a quarterly and annual basis, as a
result of a variety of factors, many of which are outside the Company's control.
See "Risk Factors -- Fluctuations in Results of Operations." The Company
believes that the purchase of its services generally involves a significant
commitment of a customer's capital resources. Therefore, any downturn in a
customer's business could have a material adverse effect on the Company's
business, financial condition and results of operations. To the extent that
projects progress faster than expected, results of operations for subsequent
quarters may be materially adversely affected.
 
                                       20
26
 
     Although the Company has achieved significant historical quarter-to-quarter
growth in net revenues and income from operations, the Company has no assurance
that this growth rate is sustainable. In addition, throughout 1996 and 1997, the
Company's total number of employees and average per employee compensation
expense has increased each quarter and is expected to continue to increase. As a
result, the Company's gross profit margin has declined. Additionally, the
Company continues to invest in corporate infrastructure and expects to maintain,
as a percentage of net revenues, its spending on selling and marketing expenses
as well as general and administrative expenses. These costs and investments are
expected to cause the Company's operating income margin to decline.
 
     Due to all the foregoing factors, it is possible that in some future
quarter, the Company's results of operations will be below the expectations of
public market analysts and investors. In such event, the market price of the
Company's Common Stock would likely be materially adversely affected.
 
LIQUIDITY AND CAPITAL RESOURCES
 
     Since inception, the Company has funded its operations primarily through
cash provided by operations.
 
     The Company's cash balances were $3.1 million, $3.9 million, $10.8 million
and $9.8 million at December 31, 1995, 1996 and 1997, and at March 31, 1998,
respectively. The Company's working capital was $2.1 million, $3.9 million, $7.9
million and $9.2 million at December 31, 1995, 1996 and 1997, and at March 31,
1998, respectively.
 
     The Company's operating activities provided cash from operations of $3.1
million, $523,000 and $8.2 million in the years ended December 31, 1995, 1996
and 1997, respectively, and used $728,000 for the three-month period ended March
31, 1998. The decrease in cash provided from operations in 1996 as compared to
1995 was due principally to lower net income, an increase in accounts receivable
and a decrease in accrued expenses and accrued income taxes. The increase in
cash provided from operations in 1997 as compared to 1996 was due mainly to an
increase in net income, decreases in accounts receivable and an increase in
accrued expenses. The cash used for operations for the three month period ended
March 31, 1998 was mainly attributable to a decrease in accrued expenses due to
payment of bonuses and a decrease in deferred revenues resulting from the timing
of milestone billings on certain contracts.
 
     The Company used cash of $672,000, $375,000, $1.7 million and $258,000 for
investing activities in the years ended December 1995, 1996 and 1997 and the
three month period ended March 31, 1998, respectively. Cash used for investing
activities in 1995 and 1996 consisted primarily of purchases of property and
equipment, principally computer equipment and software to support the growing
base of employees and required infrastructure. In 1997, in addition to property
and equipment, the Company purchased approximately $540,000 of furniture as part
of its expansion of office facilities in Cambridge, Massachusetts and in the
City of Industry, California. At March 31, 1998, the Company had no significant
commitments for capital expenditures for 1998 but expects to continue to
purchase property and equipment to enhance its corporate infrastructure.
 
     The Company's financing activities used cash of $392,000 in 1995 and
provided cash of $677,000 and $463,000 in 1996 and 1997, respectively, and was
relatively cash neutral for the three month period ended March 31, 1998. The use
of cash in 1995 was due mainly to an increase in an amount due from a related
party. In 1996, cash was provided by the repayment of the amount due from the
related party and the exercise of stock options. In 1997, the Company's
financing activities reflect proceeds from an equipment line of credit, offset
in part by payment on the Company's capital lease transactions entered into
during the period.
 
     The Company maintains a $2.0 million working capital line of credit (the
"Line") with Silicon Valley Bank, which expires in August 1998. The interest
rate on all borrowings under the Line is prime plus  1/2% and will be reduced to
prime upon the closing of this offering. The Line is collateralized by
substantially all of the Company's assets. Under the Line, the Company may
borrow the lesser of $2.0 million or 75% of eligible accounts receivable, as
defined in the agreement. The Company is required to comply with certain
operational and financial covenants under the Line if there are borrowings under
the Line. At December 31, 1995, 1996 and 1997, and at March 31, 1998, the
Company was in compliance with these requirements and no borrowings
 
                                       21
27
 
have been made under the Line. The Line contains a covenant prohibiting the
payment of cash dividends without the bank's consent.
 
     The Company expects that cash flows from operations will continue to
provide the main source of liquidity for the Company. The Company expects that
existing cash and investment balances, together with the proceeds of this
offering and anticipated cash flows from operations, will be sufficient to meet
the Company's working capital requirements for at least the next 12 months.
 
INFLATION
 
     The Company's most significant costs are the salaries and related benefits
for its IT professionals. Competition for IT professionals with the advanced
technological skills necessary to perform the services offered by the Company
has caused wages to increase at a rate greater than the general rate of
inflation. As with other IT service providers, the Company must adequately
anticipate wage increases. There can be no assurance that the Company will be
able to recover cost increases through increases in the prices that it charges
for its services. See "Risk Factors -- Competitive Market for IT Professionals."
 
THE YEAR 2000 ISSUE
 
     The Company does not believe that it has material exposure to the Year 2000
issue with respect to its own information systems because its existing systems
correctly define the year 2000. Although the Company believes that the
information systems of its major partners and vendors (insofar as they relate to
the Company's business) comply with Year 2000 requirements, there can be no
assurance that the Year 2000 issue will not affect the information systems of
the Company's major partners and vendors as they relate to the Company's
business, or that any such impact of a major partner's or vendor's information
system would not have a material adverse effect on the Company.
 
                                       22
28
 
                                    BUSINESS
 
     International Integration Incorporated ("i-Cube" or the "Company") provides
application migration and custom software development services on a fixed-price,
fixed-time basis to Fortune 1000 companies and other large enterprises. The
Company believes that through these services, its customers can cost-effectively
and rapidly improve their competitiveness and narrow the gap between the demands
of their business strategies and the capabilities of their IT environments. The
Company offers a full range of iMPACT services including information systems
consulting, application migration, custom software development and customer
support.
 
     The Company utilizes its proprietary development methodologies and
technologies, known as i-Structure, to implement large-scale, complex
application migration and custom development projects based on a multi-tier
client/server architecture. i-Structure's proprietary technologies include
transformation tools used to separate legacy applications into their smallest
logical components, methodologies to populate an Application Repository that
contains the components of and critical information about an application, and
runtime tools used to access and integrate application components. i-Structure
provides the Company with a repeatable and consistent development framework,
applicable to both its application migration and custom development projects,
that increases the speed and reduces the risk and cost of the development of
strategic, core business applications. The applications custom developed or
migrated using i-Structure are not dependent on any single hardware provider or
operating system, are adaptable to future technologies and business changes, and
are easily maintainable. In addition, i-Structure enables the Company to migrate
legacy software applications into multi-tier client/server applications,
allowing customers to preserve the core functionality and other benefits of
their legacy applications while eliminating the constraints of legacy system
architectures. The Company believes that i-Structure enhances the productivity
of its IT professionals and the Company's continued investment in i-Structure is
a key component of its growth strategy.
 
     The Company believes that the expertise gained from completing large-scale,
strategic application migration and custom development projects since its
founding in 1992 provides a significant competitive advantage. Recent
engagements include projects for Cooper Cameron Corporation, Daimler-Benz AG,
Hewlett-Packard Company, IBM, McDonnell Douglas Corporation (now part of The
Boeing Company), Rockwell Automation/Reliance Electric, and Wisconsin Power and
Light Company.
 
INDUSTRY BACKGROUND
 
     Businesses today face the constant need to react quickly to changes in
their marketplace. Factors such as deregulation, industry consolidations, the
globalization of product and vendor markets, the increasing demand for improved
and more responsive customer service and the emergence of the Internet as a
vehicle for commerce have intensified competition and have presented businesses
with the opportunity and the need to continually develop and implement new
strategies on a rapid basis. To meet these challenges, businesses require IT
infrastructures which can be cost-effectively and swiftly developed, deployed
and modified to support their business strategies.
 
     Organizations continue to rely on inflexible legacy software applications
and systems to analyze and process vast amounts of business-critical data and
run core business processes. Furthermore, organizations have invested
significantly in their legacy systems. However, legacy software applications and
systems have significant constraints which limit the ability of organizations to
successfully and rapidly modify their IT infrastructures to support new business
strategies. Because legacy systems are typically based on proprietary
architectures, they are often incapable of incorporating technological
innovations quickly or easily, may be incompatible with other systems across the
enterprise, can be costly, time-consuming and difficult to maintain and modify
and are not easily scalable.
 
     To overcome the restrictive aspects of legacy systems, organizations have
sought to deploy multi-tier client/server applications based on open systems.
These open, client/server applications are not dependent on a particular
vendor's hardware, software or operating system platform, and their multi-tier
structure facilitates modifications and enhances scalability. As a result, such
applications provide organizations with the freedom to choose "best of breed"
technologies without compromising business functionality. In addition, they
provide the organization with the ability to enhance ease-of-use through
graphical user interfaces and seamless
                                       23
29
 
integration with other applications and data sources on disparate platforms
within and outside the enterprise. These open, multi-tier client/server
applications can be key to increasing an organization's productivity, improving
access to information and decision-making, enhancing customer service,
shortening product development, delivery, and support times and ultimately
creating and sustaining a competitive advantage.
 
     Organizations seeking to implement client/server technologies to replace
their core business legacy applications have traditionally had only two choices:
install a third-party package or develop a new, custom application. Third party
packages, while sometimes less expensive and less risky than the development of
a custom application, are limited in their utility because often, without
extensive modification, they require the organization to adapt its business
practices to meet the business rules embedded in the package and may be limited
for use in a specific technology environment. As a result, organizations often
choose to custom develop applications which are tailored to their business
practices. In order to justify their investment in these custom solutions,
organizations seek to leverage, where possible, their prior investment in their
legacy systems and to minimize the risk, expense and duration of the custom
development process. Organizations want solutions that (i) capture the benefits
of open, multi-tier client/server architectures, (ii) are integrated with other
systems throughout the enterprise, (iii) permit the application to meet changes
in the organization's business strategies and IT infrastructure and (iv)
continue to meet the needs of the organization as it grows.
 
THE I-CUBE SOLUTION
 
     i-Cube provides fixed-price, fixed-time application migration and custom
software development services which enable organizations to align the
capabilities of their IT systems with their business strategies. The Company's
services incorporate its i-Structure methodologies and technologies, which
support the development, either through the migration of the customer's legacy
application or through a custom development process, of open, multi-tier
client/server applications which are flexible, scalable and easily maintainable.
The Company's iMPACT suite of services and i-Structure methodologies and
technologies are designed to address the large-scale, strategic application
projects of its customers. The Company's services are designed to offer
customers the following benefits:
 
     Risk Reduction.  The Company's ability to migrate legacy applications to
client/server architectures reduces the risks inherent in creating and
implementing entirely new solutions. The methodologies and technologies of
i-Structure provide the Company with a repeatable and consistent framework for
the migration process and automate certain critical transformation and
reconfiguration functions, thereby reducing the risk of the development process.
In addition, the Company uses the framework provided by i-Structure for building
custom applications. This consistent development approach is designed to ensure
that the developed application will be easily maintainable by the Company or by
the customer and to reduce the cost of future system redesign.
 
     Cost-Effective, Rapid Delivery.  The Company is able to complete projects
more cost-effectively and rapidly due to the methodologies and technologies of
i-Structure. Through the consistent application of these methodologies and
technologies, the Company's IT professionals increase their efficiency and
leverage knowledge acquired throughout the Company from prior projects. In
addition, the Company offers its services on a fixed-price, fixed-time basis.
The Company believes that fixed-price, fixed-time contracts are favored by
customers because they permit more accurate estimation of development costs and
because customers perceive that such contracts more closely align the Company's
interests with their own, resulting in shorter development cycles.
 
     Preservation and Leverage of Core Functionality.  Many organizations have
made significant investments in their legacy applications which are fundamental
to the operation of their business. The Company's ability to offer complex
application migration services enables its customers to preserve and leverage
the core business functionality, user interfaces and other benefits of the
legacy applications while eliminating the "technology lock" and other
constraints of legacy system architectures.
 
     Adaptability and Flexibility.  The Company's application migration and
custom development processes are designed to separate the application's business
rules from the technology through which the application is displayed. These
processes are based on the construction of essential "building blocks" which are
configured to
                                       24
30
 
define the business functionality of the application independently of the
application technology, database or graphical user interface utilized.
i-Structure's ability to support a multi-tier client/server architecture allows
the application logic, database and presentation technology of applications
developed by the Company to be logically separated from one another, thereby
resulting in applications that are flexible and adaptable in response to future
technology and business changes and that can be easily modified for future
maintenance.
 
     Scalability.  The Company's i-Structure methodologies and technologies
provide the basis for designing applications that are scalable to meet the
customer's organizational growth as well as increased system deployment
throughout the customer's enterprise. Opportunities for incremental performance
enhancements are incorporated into application design to permit the capabilities
of the system to grow as the customer's business evolves and its IT requirements
change.
 
GROWTH STRATEGY
 
     The Company's objective is to enhance its position as a preferred provider
of application migration and custom software development services to Fortune
1000 companies and other large enterprises. i-Cube's strategy to achieve this
goal includes the following elements:
 
     Expand Market Share.  The Company believes its expertise in providing
large-scale migration and custom client/server development solutions
differentiates it from other IT service providers and is a key competitive
advantage. The Company intends to leverage this competitive advantage to
generate additional business from existing customers, establish new customer
relationships and expand its geographic presence. The Company develops new and
follow-on customer opportunities primarily through its senior executives and
direct sales force, through the efforts of its marketing partners and through
customer referrals. The Company has recently expanded its office in Germany in
order to service existing customers and to further broaden its European sales
opportunities. The Company is accepting smaller engagements which leverage its
application migration and custom development expertise in order to further
expand its base of customer relationships.
 
     Preserve High Performance Culture.  The Company believes that its high
performance culture is a major competitive advantage and a critical factor to
its success. The Company's culture emphasizes teamwork, entrepreneurship, a
passion for client satisfaction and individual responsibility and accountability
at all levels of the organization. The Company's investment in its people
includes extensive team-building exercises for employees, initial and on-going
training, mentoring, pay for performance, opportunities for accelerated career
advancement, a flexible work environment and stock ownership opportunities for
all employees. The Company believes that this emphasis on its culture and its
investment in its employees enables the Company to attract, retain and motivate
high caliber employees in a competitive employment environment.
 
     Invest in i-Structure To Maintain Competitive Advantage.  The Company's
i-Structure methodologies and technologies provide it with a competitive
differentiator in the planning and execution of its engagements. The Company
believes that i-Structure enables it to deliver its services in a rapid,
predictable and low-risk manner while providing the flexibility for customers to
adapt their IT environments as their businesses evolve. The Company has a
research and development team dedicated to enhancing i-Structure methodologies
and technologies and delivering next-generation enhancements. In addition, the
Company enhances i-Structure methodologies through a central knowledge database
that incorporates the Company's experience on prior projects. These efforts are
designed to ensure that i-Structure incorporates the latest technical advances
as well as the knowledge gained from the Company's various customer engagements.
 
     Leverage and Expand Marketing Relationships.  The Company has established
marketing relationships with Hewlett-Packard Company and debis Systemhaus (the
IT services subsidiary of Daimler-Benz AG). These relationships provide the
Company with access to incremental business development opportunities, an
expanded marketing reach and referenceable customer base, increased brand
recognition, and improved competitive positioning in certain sales situations.
The Company considers joint marketing arrangements to be appropriate in
situations where the joint marketing partner's products and services are
complementary to those of the Company and where the partner is committed to
marketing the Company's services in connection with its own product and service
offerings.
 
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31
 
SERVICES
 
     The Company's process for delivering its information technology solutions
is based on its iMPACT suite of services, consisting of information systems
consulting, application implementation services and customer support, as
follows:
 
                                    [CHART]
The document here contains a graphic portrayal of the Company's services. The
graphic shows the three categories of the Company's services: information
systems consulting; application implementation services and customer support.
Under the "Information Systems Consulting" heading are two service listings,
entitled "Solutions Workshop" and "Application Staging and Planning (ASAP)",
respectively. An arrow points from the Information Systems Consulting category
to the Application Implementation Services category. Under "Application
Implementation Services" is a box containing the words "Application Design".
Arrows point from the "Application Design" box to boxes entitled "Application
Migration" and "Custom Development", respectively. In the "Application Design"
box are the words: "rearchitect; rapid enhancement deployment", and in the
"Custom Development" box are the words "rapid application development". An arrow
points from each of these two boxes to the box entitled "Application
Integration". An arrow points from the Application Implementation Services"
category to the Customer Support category. Under the Customer Support category
are two boxes entitled "Skills Enhancement and Empowerment"" and "Rollout &
Transitional Maintenance", respectively.
 
Information Systems Consulting
 
     Each of the Company's engagements typically commences with an information
systems consulting phase, which helps the customer and the Company to understand
the customer's business objectives and to determine the technical requirements
of the application development project under consideration. As part of this
process, the Company prepares a detailed analysis of the customer's application
architecture and a fixed-price, fixed-time schedule for either the design alone
or the design and development phases of the project. The extent of the Company's
consulting services generally depends on the complexity of the development
project, and the services offered consist of the following:
 
     Solutions Workshops
 
     The Company's smaller engagements typically commence with brief, structured
scoping sessions that focus on a customer's business needs and the solutions to
address them. The Company and the customer review the functionality of the
customer's legacy applications and weigh the costs and benefits of migrating the
legacy application versus a custom development approach. These sessions, which
typically run from two days to two weeks, are custom-designed and typically
result in the delivery of a proof-of-concept or prototype.
 
     Application Staging and Planning ("ASAP")
 
     The Company's larger engagements typically commence with an intensive
staging and planning session involving the Company and business and technical
representatives of the customer. During the ASAP process, which typically takes
from four to six weeks, the Company assesses the customer's business strategies
and its strategic, core business applications, for purposes of identifying the
areas where the applications fail to match the customer's business objectives.
The Company also reviews important aspects of the applications, including the
architecture, coding standards, interfaces and batch requirements. In situations
where the legacy application generally satisfies the customer's business
requirements, the Company and the customer jointly
 
                                       26
32
 
determine whether the application is a good candidate for migration or whether a
new application should be custom developed.
 
Application Implementation Services
 
     The Company's implementation services for an engagement typically include a
design phase, a development phase (migration or custom development) and an
integration phase. In the design phase, the Company develops a design of the
customer's application, including the definition and quantification of essential
elements. This design plan encompasses user interfaces, business logic, data
management, security considerations and hardware and software configurations.
The Company and the customer develop a detailed statement of work, including, if
not done as a part of the consulting engagement, a final, fixed-price,
fixed-time timetable for an implementation plan. The development phase involves
the migration of the customer's legacy application to a multi-tier client/server
architecture, or the construction of a new application as a custom development
project, depending on the recommendations of the Company developed during the
consulting phase. Application migration projects often also include custom
development components, to enhance the functionality of the new application
beyond that inherent in the legacy application from which it was migrated. The
Company's implementation services also include the integration of the
application with the customer's IT infrastructure, including other software
applications used by the customer. The implementation phase of the Company's
engagements typically ranges from three to six months for smaller projects to
over a year for larger engagements.
 
     Application Migration
 
     The Company's application migration services consist of the migration of
customers' existing legacy applications, each often containing millions of lines
of code, from technology-specific, legacy system architectures to open,
multi-tier client/server environments. Using i-Structure, the Company analyzes
the legacy application and deconstructs it down to its smallest logical
components, consisting of interface components, data components and business
function components which are then used by the Company as generic "building
blocks" to build a platform-independent solution. Following the migration, the
application can be rapidly enhanced by the Company or the customer through
custom development of additional features. The Company believes that the
migration of existing legacy applications is a cost-effective approach for the
development of large, multi-tier client/server applications in situations where
the customer has made significant investments in a legacy application which
satisfies many of the customer's business requirements.
 
     Custom Development
 
     The Company generally provides custom development services in situations
where the customer's legacy application does not meet its business objectives,
where the customer's application is too fragmented to allow for effective
migration, or where the customer has new business objectives that require the
construction of a new application. The Company's custom development services
utilize the methodologies and technologies of i-Structure to build applications
with an architecture similar to that utilized in the application migration
process, based on generic building blocks. The Company believes that this
consistent, common development framework optimizes the capabilities of a
multi-tier client/server architecture and facilitates the development process
and subsequent application support and expansion.
 
Customer Support
 
     In order to reduce the customer's overall "cost of ownership" of an
application developed by the Company, the Company offers support services that
train the customer's users and IT personnel in the use, maintenance and
enhancement of the developed application. In addition, the Company offers
rollout support, to assist its customers in implementing the application on an
enterprise-wide basis. The Company offers transitional maintenance services,
pursuant to which it offers ongoing support and enhancements for defined periods
of time. From time to time, the Company licenses a portion of its i-Structure
tools to its customers to facilitate their support activities. The Company
believes that its support services are central to its strategy of establishing
and maintaining strong customer relationships and generating repeat business.
The Company's
                                       27
33
 
support services are generally offered on a fixed-price basis separately from
the Company's implementation services.
 
TECHNOLOGY
 
     The Company has made a significant investment in research and development
resources for the creation and enhancement of the methodologies and technologies
included within i-Structure. These methodologies and technologies support the
development and migration of scalable, multi-tier client/server applications
that are independent of the hardware and operating system on which they operate,
are adaptable to future technologies or business changes, and are easily
maintainable. For the Company's migration engagements, the Company believes that
i-Structure technologies automate a significant portion of the migration tasks,
thereby resulting in a more rapid, cost-effective and risk-reduced
implementation process.
 
     The Company's proprietary technologies consist primarily of (i) the
transformation tools used to separate legacy applications into their smallest
logical components, (ii) its methodologies in populating the Application
Repository, an SQL database containing the components and critical information
about the application, and (iii) runtime tools, which enable the customer to
access and integrate the stored components. In addition, the Company relies on
its own or commonly available third party configuration, development, testing
and system management and administration tools to complete the migration or
custom development process. Other than the transformation tools, which are
relevant only to the Company's migration projects, the Company's methodologies
and technologies apply both to migration projects and to custom development
projects, resulting in a common system architecture regardless of the
implementation approach followed.
 
     The Company utilizes its transformation tools in connection with migration
engagements to analyze the legacy application for purposes of identifying the
application logic, data types, presentation logic and job control language, and
to divide the application into its smallest logical components. These
components, as well as information about the application, are stored in the
Application Repository. For custom development engagements, the Company has
developed filtering tools that enable it to extract and segment information from
a variety of third party development tools, such as PowerBuilder and Visual
Basic, in order to populate the Application Repository.
 
     The components and other application information are then reassembled by
one of the Company's proprietary runtime tools, called the Transaction Router,
which accesses the elements contained in the Application Repository in order to
integrate and implement the business functionality of the application. The
Transaction Router operates independently of the language or application
methodology utilized by the application, and can therefore access and integrate
a wide variety of graphical user interfaces, applications and databases.
 
     i-Structure supports a variety of technology architectures. Customers can
change the presentation tier or support multiple presentation tiers while
keeping the legacy system as a database or application platform, and can
integrate new technologies, either on the client or the server. The Company
believes that the flexibility of applications developed through i-Structure
reduces the risk of the development process and helps customers narrow the gap
between the demands of their business strategies and the capabilities of their
IT environments as new technologies emerge.
 
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34
 
CUSTOMER ENGAGEMENTS
 
     Examples of the Company's engagements are set forth below:
 
     MCDONNELL DOUGLAS.  As a government contractor, McDonnell Douglas
Corporation ("MDC"), an aerospace company (now part of The Boeing Company), has
thousands of active contracts, each with its own progress and performance
reporting requirements. MDC's legacy contract management system consisted of
four different applications residing on mainframes using primarily
non-relational databases, each dealing with an individual part of the contract
management process. Each contract management system performed adequately
separately, but the system was inefficient as a whole: contract data and changes
were entered into each system separately, multiple IT teams maintained the
geographically dispersed and functionally distinct systems, and contract billing
was a cumbersome process. Additionally, MDC's internal planning and reporting
needs required full integration of contract information, regardless of the
contract stage.
 
     i-Cube was retained to consolidate MDC's contract management system by
migrating the four legacy applications into a single client/server system. The
Company rearchitected the baseline contract management application from the
mainframe to an open, three-tier client/server environment, removed duplicate
functionality and added new functionality to improve the government billing
process. The Company initiated the project in June 1995 and completed it in
October 1996 with a team averaging eight to ten IT professionals.
 
     The new architecture provides a presentation tier containing graphical user
interfaces for PC and Macintosh clients using ANSI-standard C++ code, along with
reporting tools and client software for Macintosh, Windows 3.11 and Windows NT.
The functionality tier contains core business rules and transaction processing,
transformed from COBOL to ANSI-standard C code and encapsulated using i-Cube's
proprietary tools. In the data tier, an Oracle relational database holds the
business data transformed from DB2 and IMS (a non-relational database). The
rearchitected contract management system provides screens and functions familiar
to users of the legacy application, minimizing training costs, but with the
added benefit that the application now runs on an open systems framework that
supports swift enhancement.
 
     The new system provides users with a single point of entry into the
contract management system and a streamlined process for contract data input.
The common, enterprise-wide application meets MDC's internal planning and
reporting needs for access to consistent and timely contract information. MDC
has been internally enhancing and maintaining the system since the engagement
completion date in 1996.
 
     In addition to the contracts management system, the Company has completed
follow-on engagements to develop a decision support system for manufacturing and
a financial planning system for MDC.
 
     WISCONSIN POWER AND LIGHT.  Wisconsin Power and Light Company ("WPL")
provides natural gas, water and electricity to more than 400,000 customers
spread over 16,000 square miles in central and southern Wisconsin. Due to the
deregulation of the utility industry, WPL anticipated that competition for
customers would force utilities to compete on the basis of service as well as
price. To meet these new strategic challenges, WPL sought to overhaul its
Customer Information and Billing System ("CIS") to make it scalable, as well as
Internet-enabled to support electronic commerce with customers and suppliers.
The legacy CIS had more than 3.5 million lines of code, was increasingly costly
to maintain, and could not be easily enhanced for new services.
 
     WPL selected i-Cube to rearchitect its legacy application. Through the use
of i-Structure, the Company rearchitected the CIS legacy application to a
three-tier client/server architecture in less than six months, with the total
transition project and roll-out into production taking a year and a half from
start to finish. The new architecture provides a presentation tier containing
graphical user interfaces for the PC client, along with reporting tools and
client software for Internet/intranet and Windows NT. The functionality tier
contains core business rules and transaction processing, transformed from COBOL
to ANSI-Standard C code and encapsulated using i-Cube's proprietary tools. In
the data tier, an Oracle relational database holds the business data transformed
from IMS, DB2 and flat files. The rearchitected CIS provides screens and
functions familiar to users of the legacy application, minimizing training
costs, but with the added benefit that the legacy application now runs on an
open-systems framework that supports swift enhancement.
 
                                       29
35
 
     MERCEDES-BENZ LEASE FINANZ.  In conjunction with the release of its new A
Class automobile model in Europe, Mercedes-Benz Lease Finanz (a subsidiary of
Daimler-Benz AG) decided on a complete overhaul of its Lease Finance system to
support creative new finance options and allow near real-time feedback to
potential private customers on finance and lease applications. Faced with credit
approval times of two to three days on the mainframe, the car maker's objective
was to bring the process down to 15 minutes. Most importantly, it was critical
that the application be fully functional before the A Class started shipping to
dealers, less than 12 months later.
 
     Mercedes-Benz tried to deploy a two-tier client/server system to meet the
challenge to develop a product management system. This first attempt failed
because of inadequate system performance, so debis Systemhaus, Daimler-Benz' IT
services subsidiary, turned to i-Cube to assist in custom developing the FAST
System, a fully integrated three-tier finance application designed to be used by
dealers and customer service representatives in Mercedes-Benz' German call
center. The Company committed to and provided the solution in nine months.
Leveraging i-Structure, i-Cube met the requirement for a highly flexible new
application that was compatible with existing systems and adaptable for planned
changes to hardware and software and future changes in architecture. i-Cube
designed and custom developed a fully integrated and scalable credit application
and approval system which incorporates the existing functionality of the legacy
system as well as new functionality related to creative finance options for
retail buyers. The FAST System automates and integrates all aspects of the
finance application, which includes entering customer data, performing credit
checks, incorporating financial terms, creating required documents and
electronic interfaces to credit bureaus. The new system, which operates over a
wide-area network, has complex interfaces with the dealerships, credit approval,
and enterprise resource planning applications.
 
CUSTOMERS
 
     Organizations to which the Company provided services within the past two
years include the following:
City of Columbus (Ohio)                 McDonnell Douglas Corporation
Cooper Cameron Corporation              PEMEX/Integrated Trade Systems
                                        Rockwell Automation/Reliance
Daimler-Benz AG                         Electric
debis Systemhaus                        Salt River Project
Hewlett-Packard Company                 Wisconsin Power and Light Company
IBM
The Company has historically derived, and may in the future derive, a
significant amount of its net revenues from major engagements with a relatively
small number of customers. In each of 1995 and 1996, the Company had three
customers which individually accounted for 10% or more of the Company's net
revenues, and in 1997 the following five customers each accounted for 10% or
more of the Company's net revenues: Salt River Project (29%); IBM (19%);
Daimler-Benz AG (14%); PEMEX/Integrated Trade Systems (11%); and Wisconsin Power
and Light Company (10%). For the first three months of 1998, the following five
customers each accounted for 10% or more of the Company's net revenues: IBM
(23%); PEMEX/Integrated Trade Systems (17%); Salt River Project (16%); Rockwell
Automation/Reliance Electric (11%); and Hewlett-Packard Company (10%).
 
I-CUBE CULTURE AND PROFESSIONAL RESOURCES
 
     The Company believes that its high performance culture is a major
competitive advantage and enables it to attract, retain and motivate high
caliber employees in a competitive employment environment. The Company focuses
on building a culture around a strong values set that governs and guides
relationships with clients, fellow employees, team members, partners, the
community and other stakeholders. The Company's values include trust and
respect, integrity, commitment, teamwork, and the journey. The journey value
recognizes that, while reaching each major milestone in a project is a rewarding
experience for the team, it is equally important that employees feel challenged
and recognized every day. The Company's culture is built on teamwork, an
entrepreneurial spirit and a passion for making clients successful. i-Cube has a
company-wide performance review program, teamwork enhancement programs, and
management and professional develop-
 
                                       30
36
 
ment courses. Employees are rewarded for performing in accordance with Company
values. The Company's compensation packages include a competitive base salary,
Company and individual performance-driven incentive programs, and a
comprehensive benefits package. This package includes a broad-based incentive
stock option program that enables all employees to participate in the future
performance of the Company.
 
     The Company has an intensive five-week orientation program designed to
provide new IT employees with the technical, professional and consulting skills
required to be successful with the Company. In addition, employees stay abreast
of technological advances and developments through a combination of on-the-job
exposure to relevant technology, selected training programs, peer review and
mentoring by senior personnel.
 
     The Company's career development programs center on providing initial and
ongoing training and performance feedback on a routine basis, and allocating
assignments in accordance with employees' skills and career objectives. In
addition, the Company devotes substantial resources to developing and
continuously improving the project management abilities of its senior IT
professionals. The Company believes that its emphasis on skilled project
management strengthens its competitive position and enhances its ability to
complete fixed-price, fixed-time projects successfully and profitably. See "Risk
Factors -- Management of Growth."
 
     The Company's recruiting methods include advertising in newspapers and
trade magazines, on the Company's web site and through participation in career
fairs and college recruiting events. The Company has established an employee
referral plan which rewards employees with cash or other incentives for
referring applicants who are hired by the Company, and actively involves
employees in screening candidates for new positions. As of March 31, 1998, the
Company employed seven full-time employees and two full-time contract recruiters
dedicated to recruiting IT professionals and managing its human resources.
 
     As of March 31, 1998, the Company had 178 full-time employees, comprising
138 IT professionals, 14 sales and marketing personnel and 26 general and
administrative personnel. The Company's employees are not represented by any
labor union.
 
     The Company believes that there is a shortage of, and significant
competition for, IT professionals and that its future success is highly
dependent upon its ability to attract, train, motivate and retain skilled IT
personnel with the advanced technical skills necessary to perform the services
offered by the Company. See "Risk Factors -- Competitive Market For IT
Professionals."
 
SALES AND MARKETING
 
     The Company's target market is companies within the Fortune 1000 and other
large enterprises. Within this market, the Company targets companies that are
facing competitive pressures as a result of deregulation, industry
consolidations or other reasons, and whose existing IT systems lag their
business requirements.
 
     The Company sells its services through its direct sales force located at
the Company's offices in Cambridge, Massachusetts, City of Industry, California,
and Mannheim, Germany, and through its marketing partners. The Company sells to
customers utilizing a team approach, consisting of members of the Company's
sales function (typically a senior sales executive supported by account
executives) and members of the Company's technical staff. At March 31, 1998, the
Company had eight full-time sales professionals. In addition, the Company
generates leads through its telemarketing staff located at the Company's
headquarters, its marketing partners and through customer referrals.
 
     The Company's business development and marketing activities focus on
generating leads and building market awareness and name recognition for the
Company. The Company has an active public relations program and participates in
industry conferences and trade shows. In addition, the Company seeks to leverage
the sales and marketing activities of its marketing partners.
 
     The Company's Solutions Workshops and Application Staging and Planning
sessions are an integral part of the Company's sales process. These sessions
enable the customer to identify its strategic and information technology goals
and to understand the Company's approach and technical capabilities in helping
the customer to meet them. In addition, these sessions enable the Company to
develop the specifications and
 
                                       31
37
 
prepare a detailed analysis of the customer's application architecture, and a
fixed-price schedule and plan for the development project.
 
MARKETING RELATIONSHIPS
 
     The Company is party to joint marketing agreements with Hewlett-Packard
Company and with debis Systemhaus, the IT services subsidiary of Daimler-Benz
AG. Under its agreement with the Company, Hewlett-Packard has agreed to provide
a sales and delivery organization focused on identifying, selling and delivering
migration projects during the term of the agreement. The Company has agreed to
assist Hewlett-Packard in selling these migration projects, and to staff an
"application transformation center" where the migration projects are to be
performed. Migration engagements awarded to the Company under the agreement will
generally be provided by the Company under a subcontractor agreement with
Hewlett-Packard. Pursuant to the terms of its agreement with Hewlett-Packard,
the Company is required to deposit its software tools into escrow in certain
circumstances. In the event of certain defaults by the Company, the tools in
escrow are to be released from escrow to enable Hewlett-Packard to fulfill the
Company's obligations under ongoing statements of work. See "Risk
Factors -- Dependence on Proprietary Rights." The agreement between the Company
and Hewlett-Packard commenced in July 1997 and expires in July 1999, subject to
automatic renewal for additional one year terms until terminated by either
party.
 
     The Company's agreement with a subsidiary of debis Systemhaus provides for
joint marketing of the Company's services or products, both within the debis
Systemhaus entities and among entities of the Daimler-Benz AG group of
companies. Marketing efforts are initially focused in Germany but are
subsequently expected to be directed more broadly throughout Europe.
 
     The Company considers joint marketing arrangements to be appropriate in
situations where the joint marketing partner's products or services are
complementary to those of the Company and where the partner is committed to
marketing the Company's services. From time to time, the Company may consider
additional joint marketing relationships, although the Company is not engaged in
any material discussions with respect to any such relationships as of the date
of this Prospectus. See "Risk Factors -- Dependence on Third Party Marketing
Relationships."
 
RESEARCH AND DEVELOPMENT
 
     The Company has made substantial investments in research and development to
maintain and enhance the methodologies and technologies of i-Structure and other
development resources necessary to enable the Company to continue to provide
scalable, technology-independent multi-tier client/server applications meeting
the needs of its customers. The Company's development efforts include market
requirements analysis, tool definition, design specification, coding and testing
and documentation of methodologies. Where appropriate, the Company focuses on
identifying and integrating leading third-party technologies into its
development processes and into applications developed for customers to better
meet customer needs. The Company has a dedicated research and development team,
which is supplemented from time to time by members of the Company's operations
staff. In addition, the Company supports its research and development efforts
with a central knowledge database containing relevant information learned by the
Company's IT professionals in the course of customer engagements. The Company's
research and development expenditures totaled approximately $1.6 million, $3.3
million and $1.1 million in 1996, 1997 and the first three months of 1998,
respectively. These amounts are included as part of project personnel and
software costs in the Company's Statements of Income. See "-- Technology."
 
COMPETITION
 
     The Company operates in a highly competitive and rapidly changing market
and competes with a variety of organizations that offer services similar to
those offered by the Company. The market includes participants from a variety of
market segments, including other IT service providers, large accounting and
other professional service firms, packaged software vendors and services groups
of computer equipment companies, as well as the internal IT staffs of its
customers and potential customers. Many of these competitors have significantly
greater financial, technical, sales and marketing resources and greater name
recognition than the
 
                                       32
38
 
Company. In addition, there are relatively low barriers to entry into the market
in which the Company competes and the Company has faced, and expects to continue
to face, additional competition from new entrants into this market. There can be
no assurance that the Company will be able to continue to compete successfully
with its existing competitors or that it will be able to compete successfully
with new competitors.
 
     The Company believes that the principal competitive factors in the market
in which it competes include: a willingness to offer fixed-price, fixed-time
projects, expertise in the development of large-scale, multi-tier client/server
applications, the ability to preserve the customer's investment in its legacy
application, the speed with which the application is developed, and the total
"cost of ownership" of the application, including the initial development and
implementation costs as well as ongoing maintenance costs. The Company believes
that it competes effectively in each of these areas. Nevertheless, there can be
no assurance that the Company will be able to compete successfully against
current and future competitors, and the failure to do so would have a material
adverse effect upon the Company's business, financial condition and results of
operations.
 
INTELLECTUAL PROPERTY
 
     The Company's success and its ability to compete is dependent, in part,
upon its proprietary rights, including its rights in i-Structure methodologies
and technologies. The Company relies primarily on a combination of copyright,
trademark and trade secret laws to establish and protect its proprietary rights.
There can be no assurance that such measures will be adequate to protect the
Company's proprietary rights. In addition, the Company seeks to protect its
proprietary rights through the use of confidentiality agreements with employees,
consultants, advisors and others. There can be no assurance that any such
agreements will provide adequate protection for the Company's proprietary rights
in the event of any unauthorized use or disclosure, that employees of the
Company, consultants, advisors or others will maintain the confidentiality of
such proprietary information, or that such proprietary information will not
otherwise become known, or be independently developed, by competitors.
 
     The Company historically has restricted access to the source codes of its
software tools and other technologies. The Company regards its source codes as
proprietary information, and attempts to protect the confidentiality of these
source codes, some of which are embedded in the developed application and
licensed to the customer for runtime use. In certain cases, the Company has also
licensed the source code version to customers for internal use, to enable them
to maintain their transformed applications, and in other cases, the Company has
entered into arrangements to make its source code available upon the occurrence
of certain events, such as the bankruptcy or insolvency of the Company or
certain material breaches of the Company's application development contract. In
the event of any release of the source code pursuant to such arrangements, the
customer's license is generally limited to use of the source code for specific
purposes. Despite the Company's precautions, it may be possible for unauthorized
parties to copy or otherwise reverse engineer portions of the Company's software
or otherwise obtain and use information that the Company regards as proprietary.
 
     The Company does not possess any patents or copyright registrations in the
United States or any other jurisdiction. Existing copyright and trade secret
laws only offer limited protection, and the laws of certain countries in which
the Company provides services may not protect the Company's intellectual
property rights to the same extent as the laws of the United States. Certain
provisions of the agreements entered into by the Company, including provisions
protecting against unauthorized use, transfer and disclosure, may be
unenforceable under the laws of certain jurisdictions, and the Company is
required to negotiate limits on these provisions from time to time.
 
     The Company's competitive position may be affected by its ability to
protect its proprietary information. However, because the IT industry is
characterized by rapid technological change, the Company believes that patent,
trademark, copyright and other legal protections are less significant to the
Company's success than other factors such as the knowledge, ability and
experience of the Company's personnel, the development of new services, customer
service and ongoing support.
 
     The Company's business includes the development of custom software in
connection with specific customer engagements. The Company frequently assigns to
its customers the copyright and other intellectual
                                       33
39
 
property rights in certain aspects of the software and documentation developed
for these customers. Although the Company's contracts with its customers provide
that the Company retains the rights to its intellectual property, there can be
no assurance that customers will not assert rights in, and seek to limit the
Company's use of, such intellectual property.
 
     The Company has received notice from a company located in the Netherlands
that it believes that its rights to use the i-Cube name in the Netherlands,
Belgium and Luxembourg are superior to those of the Company. See "Risk
Factors -- Dependence on Proprietary Rights."
 
MANAGEMENT INFORMATION SYSTEMS
 
     The Company has invested significantly in its information technology and
management information systems in order to build a scalable environment. The
Company has an enterprise-wide groupware application that is utilized for global
e-mail and calendaring, knowledge management discussion databases, and forms
databases. The Company's United States offices are linked via a high-speed
network, and the Company expects to establish a similar connection with its
German office prior to the end of 1998. Many of the Company's human resource
administrative functions are managed on-line, including job requisitions and
approvals, performance reviews, training course registration, employee handbook
distribution and tuition reimbursement approvals. The Company expects to
implement an enterprise-wide accounting and human resources software application
in the second half of 1998 to support its anticipated growth. See "Risk
Factors -- Management of Growth."
 
FACILITIES
 
     The Company's headquarters are located in approximately 46,700 square feet
of leased office space in Cambridge, Massachusetts. This facility is used by the
Company's senior management and its administrative, human resources and sales
and marketing personnel and serves as the Company's principal transformation and
development facility. The lease term extends to November 2001 with a five-year
renewal at the option of the Company. In addition, the Company leases
approximately 5,800 square feet of office space in City of Industry, California,
and plans to lease approximately 4,000 square feet in Mannheim, Germany, in
which it will house the Company's European operations. The Company believes that
its facilities will be adequate to meet its needs for approximately the next 12
months.
 
LEGAL PROCEEDINGS
 
     The Company is not currently a party to any material legal proceedings.
 
                                       34
40
 
                                   MANAGEMENT
 
EXECUTIVE OFFICERS, DIRECTORS AND CERTAIN KEY OFFICERS
 
     The executive officers, directors and certain key officers of the Company
and their ages as of March 31, 1998 are as follows:
NAME                     AGE                         POSITION
                   ----                     ---                         --------
EXECUTIVE OFFICERS AND DIRECTORS
Michael Pehl..............................  36     Chief Executive Officer and Chairman of the Board
                                                   of Directors
Madhav Anand..............................  31     President, Co-Founder and Director
Lawrence P. Begley........................  42     Executive Vice President, Chief Financial Officer,
                                                     Treasurer and Director
Jane Callanan.............................  42     Vice President, Human Resources
Karl-Heinz Dette..........................  46     Vice President and General Manager, European
                                                     Operations
Timothy D. Eager..........................  39     Chief Technology Officer
James K. McCann...........................  41     Vice President, Operations
Thomas J. Meredith(1).....................  47     Director
Joseph M. Tucci(2)........................  50     Director
Gregory S. Young(1).......................  41     Director
John A. Young(2)..........................  65     Director
Patrick J. Zilvitis(2)....................  55     Director
OTHER KEY OFFICERS
Maria A. Cirino...........................  34     Vice President, Sales and Marketing
Yannis Doganis............................  33     Vice President and Co-Founder
Patricia M. Gilligan......................  46     Vice President, Eastern Region Operations
Robert M. Lapides.........................  41     Vice President, Global Business Development
Gary C. Mekikian..........................  34     Vice President
Michael A. Morin..........................  44     Vice President
---------------
(1) Member of the Audit Committee.
(2) Member of the Compensation Committee.
 
     Michael Pehl has served as Chief Executive Officer since June 1996. He was
elected Chairman of the Board of Directors of the Company in July 1996. From
March 1994 to May 1996, Mr. Pehl was Chief Executive Officer of Deloitte &
Touche Consulting Group/ICS, the global SAP and Baan package implementation
group of Deloitte Touche Tohmatsu International, a global accounting and
consulting firm. From January 1991 until March 1994, Mr. Pehl was Chief
Executive Officer of ICS, a systems implementation firm that he founded and sold
to Deloitte & Touche in 1994. Prior to founding ICS, Mr. Pehl was employed by
SAP AG and SAP America from July 1986 to December 1990 where he held various
positions in the consulting and development organizations. Mr. Pehl was a member
of the SAP AG team that relocated to the United States in 1987 and established
SAP America.
 
     Madhav Anand co-founded the Company and has served as a Director since
inception. Since January 1993, Mr. Anand has served as President of the Company.
From April 1992 to December 1992, Mr. Anand was a project manager at Sapient
Corporation, an IT consulting firm. From May 1989 to April 1992, Mr. Anand was
an associate director for Cambridge Technology Partners, an IT consulting firm.
 
     Lawrence P. Begley joined the Company in October 1996 as Chief Financial
Officer, Treasurer and a Director and became Executive Vice President in April
1998. From August 1988 to October 1996, Mr. Begley was employed by The Boston
Consulting Group ("BCG"), an international management consulting firm.
 
                                       35
41
 
From August 1988 until December 1990, Mr. Begley was Director of Finance and
Corporate Controller of BCG. From December 1990 to October 1996, he was Chief
Financial Officer and Treasurer of BCG.
 
     Jane Callanan joined the Company in March 1997 as Vice President, Human
Resources. From May 1993 to January 1997, Ms. Callanan was Vice President of
Human Resources at Shiva Corporation, a provider of remote access and
internetworking technology to Fortune 1000 companies. From July 1990 to March
1993, Ms. Callanan was Vice President of Human Resources at Cambridge Technology
Partners, an IT consulting firm.
 
     Karl-Heinz Dette joined the Company in April 1998 as Vice President and
General Manager, European Operations. From July 1987 to March 1998, Mr. Dette
was employed by SAP AG where he held a variety of senior management positions
including Global Alliance Manager for Oracle and Siemens Nixdorf.
 
     Timothy D. Eager joined the Company in September 1994 as Chief Technology
Officer. From November 1983 to August 1994, Mr. Eager was employed by
Hewlett-Packard Company. Mr. Eager held several positions at Hewlett-Packard
including Senior Consultant, Project Manager and Senior Systems Engineer.
 
     James K. McCann joined the Company in June 1997 as Vice President,
Operations. From September 1974 until May 1997, Mr. McCann was employed by
Northrop Grumman, an international aerospace and defense electronics firm. From
June 1993 to May 1997, Mr. McCann was Vice President, Information Services at
Northrop Grumman. Prior to June 1993, Mr. McCann held several positions at
Northrop Grumman including Director, Information Technology Management,
Director, Information Technology Aircraft Division, and Program Director, B-2
Program Office.
 
     Thomas J. Meredith has served as a Director of the Company since March
1998. Since November 1992, Mr. Meredith has been the Chief Financial Officer of
Dell Computer. In September 1995, Mr. Meredith was named Senior Vice President,
Finance and Information Systems of Dell Computer and retained the position of
Chief Financial Officer of Dell Computer. In July 1996, Mr. Meredith's title was
changed to Senior Vice President and Chief Financial Officer of Dell Computer.
Mr. Meredith is a director of i2 Technologies Inc.
 
     Joseph M. Tucci has served as a Director of the Company since May 1995.
Since January 1993, he has been the President and Chief Executive Officer of
Wang Global (formerly Wang Laboratories, Inc.), and has been its Chairman of the
Board of Directors since October 1993.
 
     Gregory S. Young has served as a Director of the Company since August 1995.
Since 1990, Mr. Young has been President of Teton Capital Management, a private
capital investment firm. Mr. Young is the son of John A. Young.
 
     John A. Young has served as a Director of the Company since August 1995.
Mr. Young was the Chief Executive Officer and President of Hewlett-Packard
Company from 1978 to 1992. Mr. Young is a director of SmithKline Beecham p.l.c.,
Lucent Technologies, Chevron Corp., Novell, Inc., Wells Fargo Bank & Co.,
Affymetrix, Inc. and Shaman Pharmaceuticals, Inc. Mr. Young is the father of
Gregory S. Young.
 
     Patrick J. Zilvitis has served as a Director of the Company since December
1997. Since November 1992, Mr. Zilvitis has been the Vice President, Corporate
Information Technology and Chief Information Officer of The Gillette Company.
 
     Other key officers of the Company include:
 
     Maria A. Cirino joined the Company in July 1997 as a Vice President in the
sales organization. In February 1998, she also assumed responsibility for
marketing. From January 1993 to June 1997, Ms. Cirino was employed by Shiva
Corporation, a provider of remote access and internetworking technology to
Fortune 1000 companies. Ms. Cirino held several positions at Shiva including
Vice President, Internet Business Group and Vice President of Sales, Americas.
From January 1991 to January 1993, Ms. Cirino was employed by Lotus Development
Corporation as Group Manager, Word Processing Division and Channel Marketing
Manager.
 
     Yannis Doganis joined the Company as a co-founder in March 1993. Since June
1997, he has served as Vice President, Client Solutions Group. From March 1993
to June 1997, Mr. Doganis was Vice President,
                                       36
42
 
Operations. From October 1991 to March 1993, Mr. Doganis was a project manager
and technical team leader at Cambridge Technology Partners, an IT consulting
firm.
 
     Patricia M. Gilligan joined the Company in June 1997. From June 1997 to
February 1998, Ms. Gilligan was Senior Director, Eastern Region Operations. In
February 1998, Ms. Gilligan became Vice President, Eastern Region Operations.
From December 1992 to June 1997, Ms. Gilligan was employed by Cahners
Publishing, a publishing company. Ms. Gilligan served as Director of
Applications for Cahners from December 1992 until December 1994, when she was
elected Chief Information Officer of Cahners.
 
     Robert M. Lapides joined the Company in May 1997 as Vice President, Global
Business Development. From May 1984 to November 1996, Mr. Lapides was employed
by Liant Software Corporation, a provider of application development and data
access software tools. At Liant Software, Mr. Lapides held a variety of
positions including Senior Vice President, Worldwide Sales, Marketing and
Customer Service, and Vice President and General Manager, Language Products
Business Unit.
 
     Gary C. Mekikian joined the Company in September 1994. From September 1994
to December 1996, Mr. Mekikian served as Vice President, Sales. From December
1996 to February 1998, Mr. Mekikian was Vice President, Western Region
Operations. In March 1998, Mr. Mekikian became a Vice President in the sales
organization. From January 1990 to September 1994, Mr. Mekikian was employed as
Manager, Major Accounts at Hewlett-Packard Company.
 
     Michael A. Morin joined the Company in April 1996 as Northeast Area Sales
Manager. In October 1996, Mr. Morin was promoted to Vice President in the sales
organization. From February 1994 to April 1996, Mr. Morin was employed by i2
Technologies Inc., a provider of intelligent planning and scheduling software
for global supply chain management, as Northeast Regional Manager and Regional
Vice President of Sales. From March 1989 to January 1994, Mr. Morin was employed
by Consilium Incorporated, a supplier of integrated manufacturing execution
software and systems, where Mr. Morin was a regional and district manager.
 
     See "Certain Transactions" and "Principal Stockholders" for certain
information concerning the Company's directors and executive officers.
 
ELECTION OF DIRECTORS
 
     Following this offering, the Board of Directors will be divided into three
classes, each of whose members will serve for a staggered three-year term.
Messrs. Begley and G. Young will serve in the class whose term expires in 1999;
Messrs. Anand, J. Young and Zilvitis will serve in the class whose term expires
in 2000; and Messrs. Meredith, Pehl and Tucci will serve in the class whose term
expires in 2001. Upon the expiration of the term of a class of directors,
directors in such class will be elected for three-year terms at the annual
meeting of stockholders in the year in which such term expires.
 
COMPENSATION OF DIRECTORS
 
     The Company reimburses non-employee directors for reasonable out-of-pocket
expenses incurred in attending meetings of the Board of Directors. Non-employee
directors of the Company will receive stock options under the Company's 1998
Non-Employee Director Stock Option Plan (the "Directors' Plan"). See "-- Benefit
Plans." Since their election to the Board of Directors, the Company has granted
non-qualified options and issued restricted stock to certain of its non-employee
directors in the following aggregate amounts: Mr. Joseph Tucci, 45,000 options
and 37,500 shares of Common Stock; Mr. Gregory S. Young, 82,500 options and
37,500 shares of Common Stock; Mr. John Young, 45,000 options and 37,500 shares
of Common Stock; Mr. Thomas Meredith, 30,000 options; and Mr. Patrick Zilvitis,
30,000 options. No director who is an employee of the Company will receive
separate compensation for services rendered as a director.
 
BOARD COMMITTEES
 
     The Board of Directors has established a Compensation Committee and an
Audit Committee. The Compensation Committee, which consists of Messrs. Tucci, J.
Young and Zilvitis, reviews executive salaries,
                                       37
43
 
administers any bonus, incentive compensation and stock plans of the Company,
and approves the salaries and other benefits of the executive officers of the
Company. In addition, the Compensation Committee consults with the Company's
management regarding pension and other benefit plans and compensation policies
and practices of the Company.
 
     The Audit Committee, which consists of Messrs. Meredith and G. Young,
reviews the professional services provided by the Company's independent
auditors, the independence of such auditors from management of the Company, the
annual financial statements of the Company and the Company's system of internal
accounting controls. The Audit Committee also reviews such other matters with
respect to the accounting, auditing and financial reporting practices and
procedures of the Company as it may find appropriate or may be brought to its
attention.
 
EXECUTIVE COMPENSATION
 
     The following table sets forth, for the year ended December 31, 1997, the
cash compensation paid and shares underlying options granted to (i) the
Company's Chief Executive Officer and (ii) each of the four other most highly
compensated executive officers who received annual compensation in excess of
$100,000 (collectively, the "Named Executive Officers"):
 
                           SUMMARY COMPENSATION TABLE
LONG-TERM
                                                                     COMPENSATION(2)
                                                                     ---------------
                                                                         AWARDS
                                                                     ---------------
                                           ANNUAL COMPENSATION(1)      SECURITIES
                                           ----------------------      UNDERLYING        ALL OTHER
                                            SALARY        BONUS        OPTIONS(#)       COMPENSATION
                                           ---------    ---------    ---------------    ------------
Michael Pehl.............................  $260,000     $130,000         200,000          $  8,771(3)
  Chief Executive Officer and Chairman of
  the Board of Directors
Madhav Anand.............................   150,000       51,060              --                --
  President
Lawrence P. Begley.......................   250,000       96,600              --            10,910(4)
  Executive Vice President, Chief
  Financial Officer, Treasurer and
  Director
Jane Callanan............................   114,818       31,690         225,000            49,000
  Vice President, Human Resources(5)
James K. McCann..........................   116,667       28,175         225,000           100,000
  Vice President, Operations(6)
---------------
 
(1) In accordance with the rules of the Securities and Exchange Commission, the
    compensation set forth in the table does not include medical, group life or
    other benefits which are available to all salaried employees of the Company,
    and certain perquisites and other benefits, securities or property which do
    not exceed the lesser of $50,000 or 10% of the person's salary and bonus
    shown in the table.
 
(2) Represents stock options granted during the fiscal year ended December 31,
    1997. The Company did not grant any restricted or stock appreciation rights
    or make any long term incentive plan payouts during 1997 to its Named
    Executive Officers.
 
(3) Represents life insurance premiums paid on behalf of Mr. Pehl.
 
(4) Represents life and health insurance premiums paid on behalf of Mr. Begley.
 
(5) Ms. Callanan joined the Company in March 1997. Ms. Callanan would have
    earned a total annual salary of $180,000 had she been employed as an
    executive officer of the Company for the entire year ended
 
                                       38
44
 
    December 31, 1997. Ms. Callanan received a sign-on bonus of $49,000 when she
    joined the Company in March 1997.
 
(6) Mr. McCann joined the Company in June 1997. Mr. McCann would have earned a
    total annual salary of $200,000 had he been employed as an executive officer
    of the Company for the entire year ended December 31, 1997. Mr. McCann
    received a sign-on and relocation bonus of $100,000 when he joined the
    Company in June 1997.
 
     In the table above, columns required by the Regulations of the Securities
and Exchange Commission (the "Commission") have been omitted where no
information was required to be disclosed under those columns.
 
STOCK OPTIONS
 
     The following table contains information concerning the grant of options to
purchase shares of the Company's Common Stock to each of the Named Executive
Officers of the Company during the fiscal year ended December 31, 1997:
 
                       OPTION GRANTS IN LAST FISCAL YEAR
POTENTIAL REALIZABLE
                                                INDIVIDUAL GRANTS                             VALUE AT ASSUMED
                        -----------------------------------------------------------------       ANNUAL RATES
                           NUMBER OF      PERCENT OF TOTAL                                  OF STOCK APPRECIATION
                          SECURITIES       OPTIONS GRANTED                                   FOR OPTION TERM(3)
                          UNDERLYING        TO EMPLOYEES      EXERCISE PRICE   EXPIRATION   ---------------------
                        OPTIONS GRANTED   IN FISCAL YEAR(1)    ($/SHARE)(2)       DATE         5%         10%
                        ---------------   -----------------   --------------   ----------   --------   ----------
Michael Pehl..........      200,000(4)          10.4%             $3.00         06/24/07    $377,337   $  956,245
Madhav Anand..........           --               --                 --               --          --           --
Lawrence P. Begley....           --               --                 --               --          --           --
Jane Callanan.........      225,000(5)          11.7               3.00         03/05/07     424,504    1,075,776
James K. McCann.......      225,000(6)          11.7               3.00         06/02/07     424,504    1,075,776
---------------
 
(1) Based on an aggregate of 1,928,700 shares subject to options granted to
    employees of the Company in 1997.
 
(2) All options were granted at or above fair market value as determined by the
    Board of Directors on the date of grant.
 
(3) Amounts reported in these columns represent amounts that may be realized
    upon exercise of options immediately prior to the expiration of their term
    assuming the specified compounded rates of appreciation (5% and 10%) on the
    Company's Common Stock over the term of the options. The potential
    realizable values set forth above do not take into account applicable tax
    and expense payments that may be associated with such option exercises.
    Actual realizable value, if any, will be dependent on the future price of
    the Common Stock on the actual date of exercise, which may be earlier than
    the stated expiration date. The 5% and 10% assumed annualized rates of stock
    price appreciation over the exercise period of the options used in the table
    above are mandated by the rules of the Commission and do not represent the
    Company's estimate or projection of the future price of the Common Stock on
    any date. There is no representation either express or implied that the
    stock price appreciation rates for the Common Stock assumed for purposes of
    this table will actually be achieved.
 
(4) By their terms, such options will become immediately exercisable upon the
    closing of this offering.
 
(5) Such options become exercisable as follows: 37,496 shares on March 5, 1998;
    18,751 shares on September 5, 1998; 18,750 shares on March 5, 1999; 18,751
    shares on September 5, 1999; 18,751 shares on March 5, 2000; 18,750 shares
    on September 5, 2000; 18,751 shares on March 5, 2001; and 75,000 shares on
    March 5, 2004; provided that the options that become exercisable on March 5,
    2004 are subject to immediate vesting if the Company attains certain market
    capitalization thresholds.
 
                                       39
45
 
(6) Such options become exercisable as follows: 37,496 shares on June 2, 1998;
    18,751 shares on December 2, 1998; 18,750 shares on June 2, 1999; 18,751
    shares on December 2, 1999; 18,751 shares on June 2, 2000; 18,750 shares on
    December 2, 2000; 18,751 shares on June 2, 2001; and 75,000 shares on June
    2, 2004; provided that the options that become exercisable on June 2, 2004
    are subject to immediate vesting if the Company attains certain market
    capitalization thresholds.
 
FISCAL YEAR-END OPTION VALUES
 
     The following table sets forth information for each of the Named Executive
Officers with respect to the value of options outstanding as of December 31,
1997.
 
                    AGGREGATED FISCAL YEAR-END OPTION VALUES
NUMBER OF
                                                     SECURITIES UNDERLYING            VALUE OF UNEXERCISED
                                                     UNEXERCISED OPTIONS AT         IN-THE-MONEY OPTIONS AT
                         SHARES                       DECEMBER 31, 1997(#)          DECEMBER 31, 1997($)(1)
                        ACQUIRED       VALUE      ----------------------------    ----------------------------
        NAME           ON EXERCISE    REALIZED    EXERCISABLE    UNEXERCISABLE    EXERCISABLE    UNEXERCISABLE
        ----           -----------    --------    -----------    -------------    -----------    -------------
Michael Pehl.........      --           --          359,689        1,056,811      $1,054,067      $2,995,433
Madhav Anand.........      --           --           75,000           75,000         210,000         210,000
Lawrence P. Begley...      --           --           93,750          431,250         281,250       1,293,750
Jane Callanan........      --           --               --          225,000              --         450,000
James K. McCann......      --           --               --          225,000              --         450,000
---------------
(1) There was no public trading market for the Common Stock as of December 31,
    1997. Accordingly, as permitted by the rules of the Commission, these values
    have been calculated on the basis of the fair market value of the Company's
    Common Stock as of December 31, 1997, of $5.00 per share, as determined by
    the Board of Directors, less the aggregate exercise price.
 
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
 
     During the year ended December 31, 1997, the members of the Compensation
Committee of the Company's Board of Directors were Messrs. Pehl, J. Young and
Tucci. Mr. Pehl has served as Chief Executive Officer of the Company since June
1996. No member of the Compensation Committee serves as a member of the board of
directors or compensation committee of any entity that has one or more executive
officers serving as a member of the Company's Board of Directors or Compensation
Committee. See "Certain Transactions" and "Principal Stockholders."
 
EMPLOYMENT AGREEMENTS
 
     The Company is party to a letter agreement with Michael Pehl, pursuant to
which Mr. Pehl received a $1,000,000 cash signing bonus, $50,000 to pay for
negotiation and relocation expenses and a $4,000,000 life insurance policy
(which will be terminated 91 days after the closing of this offering) as
inducements to join the Company. Under the agreement, Mr. Pehl is entitled to an
annual base salary of not less than $200,000. In addition, the agreement
provides that effective upon his employment, Mr. Pehl was entitled to receive
stock options to purchase 892,500 shares of the Company's Common Stock at an
exercise price of $2.00 per share. The agreement provides for vesting of the
options over a four-year period, subject to acceleration in full upon a change
of control and subject to an acceleration provision that is effective upon the
completion of an initial public offering, as follows: if, at the time of the
Company's initial public offering, less than 50% of Mr. Pehl's options have
vested, then 50% shall immediately vest, with the remaining 50% to vest in four
equal semi-annual installments starting six months after the initial public
offering. More than 50% of Mr. Pehl's options will have vested prior to this
offering. If Mr. Pehl's employment is terminated by the Company for cause, or if
he voluntarily leaves the Company or dies, the options will terminate (provided
that he or his estate may exercise any vested options). If Mr. Pehl's employment
is terminated without cause, the options that have vested as of the date of
termination will remain exercisable until the later of June 30, 1998 or ninety
days after
 
                                       40
46
 
the date of termination, whereupon they will expire. The agreement also provides
that effective upon his employment, Mr. Pehl was entitled to receive two stock
options, each to purchase 162,000 shares of the Company's Common Stock at an
exercise price of $2.00 per share. The agreement provides for vesting of these
options at the end of seven years from the date of the agreement, subject to the
following acceleration provisions. The first of the options will completely vest
if the Company achieves a total market capitalization of $400 million while Mr.
Pehl is employed by the Company or within six months of the termination of Mr.
Pehl's employment without cause. The second of the options will completely vest
if the Company achieves a total market capitalization of $600 million while Mr.
Pehl is employed by the Company or within six months of the termination of Mr.
Pehl's employment without cause. The agreement provides that Mr. Pehl may
provide advisory services to his former employer, Deloitte & Touche Consulting
Group/ICS, for a maximum of twelve days per year.
 
     The Company is party to a letter agreement with Lawrence P. Begley, dated
August 30, 1996. Pursuant to the agreement, Mr. Begley received a $150,000 cash
signing bonus and a $1,000,000 term life insurance policy as inducements to join
the Company. Under the agreement, Mr. Begley is entitled to an annual base
salary of not less than $250,000. In addition, the agreement provides that
effective upon his employment, Mr. Begley was entitled to receive stock options
to purchase 375,000 shares of the Company's Common Stock at an exercise price of
$2.00 per share. The agreement provides for vesting of the options over a
four-year period, subject to acceleration in full upon a change of control and
subject to an acceleration provision that is effective upon the completion of an
initial public offering, as follows: if, at the time of the Company's initial
public offering, less than 50% of Mr. Begley's options have vested, then 50%
shall immediately vest, with the remaining 50% to vest in four equal semi-annual
installments starting six months after the initial public offering. Less than
50% of Mr. Begley's options will have vested prior to this offering. The
agreement also provides that effective upon his employment, Mr. Begley was
entitled to receive two stock options, each to purchase 75,000 shares of the
Company's Common Stock at an exercise price of $2.00 per share. The agreement
provides for vesting of the options at the end of seven years from the date of
the agreement, subject to the following acceleration provisions. The first of
the options will completely vest if the Company achieves a total market
capitalization of $400 million while Mr. Begley is employed by the Company or
within six months of the termination of Mr. Begley's employment without cause.
The second of the options will completely vest if the Company achieves a total
market capitalization of $600 million while Mr. Begley is employed by the
Company or within six months of the termination of Mr. Begley's employment
without cause. If the Company terminates Mr. Begley's employment without cause
or if Mr. Begley resigns as a result of (i) any reduction in compensation below
$250,000 per year or (ii) a material diminution of his job responsibilities or
position within the Company without his consent within the first thirty-six
months after he commenced employment with the Company, then Mr. Begley will
continue to receive his annual base salary and benefits for the twelve-month
period following the effective date of termination.
 
     The Company is party to a letter agreement with Karl-Heinz Dette dated
December 19, 1997. Pursuant to the agreement, Mr. Dette received a $100,000 cash
signing bonus as an inducement to join the Company. Under the agreement, Mr.
Dette is entitled to an annual base salary of $175,000, an annual bonus of up to
20% of his annual base salary and an additional annual bonus of up to $100,000,
each bonus to be based upon the attainment of certain performance criteria set
by the Board of Directors. The agreement provides that for the first
twelve-month period of Mr. Dette's employment, the Company will guarantee a
minimum performance bonus of $50,000. The agreement also provides that effective
upon his employment, Mr. Dette was entitled to receive stock options to purchase
100,000 shares of the Company's common stock. The agreement provides for vesting
of the options over a four-year period. In the event that the Company ceases to
perform computer and consulting services and Mr. Dette elects to terminate his
employment with the Company, the Company will pay him a lump sum equal to twice
his annual base salary.
 
BENEFIT PLANS
 
  1993 Stock Plan
 
     In March 1993, the Company's Board of Directors approved the 1993 Stock
Plan (the "1993 Stock Plan"), which provided for the grant of options to
purchase, awards of and authorizations to purchase
 
                                       41
47
 
(collectively, "1993 Plan Stock Rights") Common Stock of the Company to
employees, officers and directors of, and consultants or advisors to, the
Company and its parent and subsidiary corporations who are expected to
contribute to the Company's future growth and success. No grants have been made
under this plan since December 1995 and the plan was terminated by the Company's
Board of Directors in April 1996. 1993 Plan Stock Rights are not transferable by
the grantee except by will or the laws of descent and distribution. Generally,
incentive stock options granted under the 1993 Stock Plan may not be exercised
by an optionee more than two months following the termination of employment, and
such options expire not more than ten years after the date of grant. As of March
31, 1998, options to purchase 915,175 shares had been granted and were
outstanding and unexercised under the 1993 Stock Plan.
 
  1996 Stock Plan
 
     In January 1996, the Company's Board of Directors approved the 1996 Stock
Plan (the "1996 Stock Plan"), which provides for the grant of options to
purchase, awards of and rights to purchase (collectively, "1996 Plan Stock
Rights") shares of Common Stock of the Company to employees, officers and
directors of, and consultants or advisors to, the Company and its parent and
subsidiary corporations who are expected to contribute to the Company's future
growth and success. Upon the adoption of the 1998 Stock Incentive Plan in April
1998, the 1996 Stock Plan was terminated and no further grants will be made
under the 1996 Stock Plan. 1996 Plan Stock Rights are not transferable by the
grantee except by will or the laws of descent and distribution. Generally,
incentive stock options granted under the 1996 Stock Plan may not be exercised
by an optionee more than three months following the termination of employment,
and such options expire not more than ten years after the date of grant. As of
March 31, 1998, options to purchase 4,546,607 shares had been granted and were
outstanding and unexercised under the 1996 Stock Plan.
 
  1998 Stock Incentive Plan
 
     In April 1998, the Company's Board of Directors approved the 1998 Stock
Incentive Plan (the "1998 Stock Incentive Plan"), which provides for the grant
of incentive stock options, non-statutory stock options, stock appreciation
rights, performance shares and awards of restricted stock and unrestricted stock
("Awards"). The aggregate number of shares of Common Stock that may be issued
pursuant to the 1998 Stock Incentive Plan equals 3,785,484 shares plus such
additional number of shares subject to awards granted under the 1996 Stock Plan
or the 1993 Stock Plan that are not actually issued because such options expire
or otherwise result in shares not being issued, or in the case of restricted
stock, are repurchased by the Company pursuant to the terms of the applicable
stock restriction agreement.
 
     The 1998 Stock Incentive Plan is administered by the Board of Directors and
the Compensation Committee. The Board has the authority to grant Awards under
the 1998 Stock Incentive Plan and to accelerate, waive or amend certain
provisions of outstanding Awards. The Board has authorized the Compensation
Committee to administer certain aspects of the 1998 Stock Incentive Plan and has
authorized the Chief Executive Officer of the Company to grant Awards to
non-executive officer employees.
 
     Incentive Stock Options and Nonstatutory Options.  Optionees receive the
right to purchase a specified number of shares of Common Stock at some time in
the future at an exercise price and subject to such terms and conditions as are
specified at the time of the grant. Incentive stock options and options that the
Board or Compensation Committee intends to qualify as performance-based
compensation under Section 162(m) of the Code may not be granted at an exercise
price less than the fair market value of the Common Stock on the date of grant
(or less than 110% of the fair market value in the case of incentive stock
options granted to optionees holding 10% or more of the voting stock of the
Company). All other options may be granted at an exercise price that may be less
than, equal to or greater than the fair market value of the Common Stock on the
date of grant.
 
     Stock Appreciation Rights and Performance Shares.  A stock appreciation
right ("SAR") is based on the value of Common Stock and entitles the SAR holder
to receive consideration to the extent that the fair market value on the date of
exercise of the shares of Common Stock underlying the SAR exceeds the fair
market value of the underlying shares on the date the SAR was granted. A
performance share award entitles the recipient to acquire shares of Common Stock
upon the attainment of specified performance goals.
 
                                       42
48
 
     Restricted and Unrestricted Stock.  Restricted stock awards entitle
recipients to acquire shares of Common Stock, subject to the right of the
Company to repurchase all or part of such shares at their purchase price from
the recipient in the event that the conditions specified in the applicable stock
award are not satisfied prior to the end of the applicable restriction period
established for such award. The Company may also grant (or sell at a purchase
price not less than 85% of the fair market value on the date of such sale) to
participants shares of Common Stock free of any restrictions under the 1998
Stock Incentive Plan.
 
     All of the employees, officers, directors, consultants and advisors of the
Company who are expected to contribute to the Company's future growth and
success are eligible to participate in the 1998 Stock Incentive Plan.
 
     Section 162(m) of the Code disallows a tax deduction to public companies
for certain compensation in excess of $1 million paid to a company's chief
executive officer or to any of the four other most highly compensated executive
officers. Certain compensation, including "performance-based compensation," is
not included in compensation subject to the $1 million limitation. The 1998
Stock Incentive Plan limits to             the maximum number of shares of
Common Stock with respect to which Awards may be granted to any employee in any
calendar year. This limitation is intended to preserve the tax deductions to the
Company that might otherwise be unavailable under Section 162(m) with respect to
certain Awards.
 
  1998 Non-Employee Directors' Stock Option Plan
 
     In April 1998, the Company's Board of Directors adopted the 1998
Non-Employee Director Stock Option Plan (the "Director Plan"), which provides
for the grant of options to purchase a maximum of 250,000 shares of Common Stock
of the Company to non-employee directors of the Company. The Director Plan is
administered by the Board of Directors.
 
     Under the Director Plan, each director of the Company who is not also an
employee or officer of the Company is granted a nonqualified stock option to
purchase 30,000 shares of Common Stock on the date such person is first elected
to the Board of Directors and each such director is granted a nonqualified stock
option to purchase 7,500 shares of Common Stock on the date of each Annual
Meeting of the Stockholders of the Company commencing with the 1999 Annual
Meeting of Stockholders. The exercise price per share for all options granted
under the Director Plan will be equal to the fair market value of the Common
Stock on the date of grant. The options granted to a director are exercisable in
eight equal semi-annual installments, commencing six months following the date
of grant, provided that the optionee remains a director at such time. The term
of each option is ten years from the date of grant. In addition, the Director
Plan authorizes the Board of Directors to grant additional options to
non-employee directors and to determine the terms applicable to such options.
Notwithstanding the terms of the option grants set forth in the Director Plan,
the Board of Directors has the authority to grant options that are immediately
exercisable subject to the Company's right to repurchase any unvested shares of
stock acquired by the optionee on exercise of an option in the event such
optionee's service as a director terminates for any reason. Except as otherwise
set forth in the option agreement or as determined by the Board of Directors,
options may not be assigned or transferred except by will or by the laws of
descent and distribution and are exercisable to the extent vested only while the
optionee is serving as a director of the Company and within one year after the
optionee ceases to serve as a director of the Company. No options to purchase
shares have been granted to date under the Director Plan. Upon a change in
control of the Company, as defined in the Director Plan, all outstanding options
under the Director Plan will immediately vest.
 
  1998 Employee Stock Purchase Plan
 
     The Company's 1998 Employee Stock Purchase Plan (the "Purchase Plan") was
adopted by the Board of Directors in April 1998. The Purchase Plan authorizes
the issuance of up to a total of 200,000 shares of Common Stock to participating
employees.
 
     All employees of the Company who meet certain conditions, other than
officers of the Company, are eligible to participate in the Purchase Plan.
Employees who would immediately after the grant own 5% or
 
                                       43
49
 
more of the total combined voting power or value of the stock of the Company or
any subsidiary are not eligible to participate.
 
     On the first day of a designated payroll deduction period (the "Offering
Period"), the Company will grant to each eligible employee who has elected to
participate in the Purchase Plan an option to purchase shares of Common Stock as
follows: the employee may authorize an amount to be deducted by the Company from
such pay during the Offering Period. On the last day of the Offering Period, the
employee is deemed to have exercised the option, at the option exercise price,
to the extent of accumulated payroll deductions. Under the terms of the Purchase
Plan, the option price is an amount equal to 85% of the fair market value per
share of the Common Stock on either the first day or the last day of the
Offering Period, whichever is lower. An employee may purchase, in any one
Offering Period, a number of shares the aggregate purchase price of which is up
to 10% of the employee's compensation for the immediately preceding six-month
period divided by 85% of the market value of a share of Common Stock on the
commencement date of the Offering Period, subject to a limit of $25,000 in fair
market value of stock purchased in any year. The Compensation Committee may, in
its discretion, choose an Offering Period of 12 months or less for each of the
offerings under the Purchase Plan and choose a different Offering Period for
each offering under the Purchase Plan.
 
     If an employee is not a participant on the last day of the Offering Period,
such employee is not entitled to exercise any option, and the amount of such
employee's accumulated payroll deductions will be refunded. An employee's rights
under the Purchase Plan terminate upon voluntary withdrawal from the Purchase
Plan, or when such employee ceases employment for any reason, except that upon
termination of employment because of death, the employee's beneficiary has
certain rights to elect to exercise the option to purchase the shares which the
accumulated payroll deductions in the participant's account would purchase at
the date of death.
 
  401(k) Plan
 
     The Company has a Section 401(k) Retirement Savings Plan (the "401(k)
Plan"). The 401(k) Plan is a tax-qualified plan covering all full-time employees
of the Company. Under the 401(k) Plan, participants may elect to defer a portion
of their eligible compensation, subject to certain limitations. In addition, at
the discretion of the Board of Directors, the Company may make matching
contributions to the 401(k) Plan for all eligible employees. The Company
currently matches 50% of each employee's pre-tax contribution to the plan, with
such matching subject to a limit of 3% of such employee's eligible compensation.
Matching contributions currently vest in increments over a two-year period,
beginning on an employee's date of employment. The Company did not contribute to
the 401(k) Plan during 1995, 1996 or 1997. The Company contributed $32,000 to
the 401(k) Plan during the three months ended March 31, 1998.
 
                                       44
50
 
                              CERTAIN TRANSACTIONS
 
     In 1995, the Company recognized net revenues of $366,000 for services
provided to a company of which Sundar Subramaniam was a director and significant
shareholder. Mr. Subramaniam is a founder of the Company, and immediately
following this offering, will, together with certain trusts and partnerships for
his benefit and the benefit of his family, own approximately   % of the
outstanding shares of the Common Stock of the Company.
 
     In 1994 and 1995, the Company provided administrative and support services
and subleased a portion of its Cambridge, Massachusetts headquarters to a
company of which Mr. Subramaniam is a director and significant shareholder. The
Company received approximately $31,000 and $102,000 in 1994 and 1995,
respectively, for these services.
 
     In 1996, the Company loaned $60,000 to Timothy D. Eager, the Company's
Chief Technology Officer. Such loan bears interest at 7% per annum, and is
payable on demand. The loan is secured by Mr. Eager's shares of common stock. At
March 31, 1998, the outstanding amount of this loan, including accrued interest,
was $65,249.
 
     In 1996, the Company was paid $317,000 for IT services provided to a
company of which Mr. Subramaniam was a significant shareholder.
 
     In October, 1997, the Company loaned Sundar Subramaniam $533,333, which Mr.
Subramaniam used to exercise options to purchase 400,000 shares of the Common
Stock of the Company. This loan bears interest at 8.5% per annum, and is payable
in full on October 13, 2000. The loan is secured by the shares of Common Stock
acquired upon such exercise. At March 31, 1998, the outstanding amount of this
loan, including accrued interest, was approximately $554,416.
 
     The Company and Sundar Subramaniam, a principal stockholder of the Company,
are parties to a Voting Trust Agreement dated October 13, 1997. The Voting Trust
Agreement will terminate upon the closing of this offering. See "Risk
Factors -- Control by Principal Stockholders" and "Principal Stockholders."
 
                                       45
51
 
                             PRINCIPAL STOCKHOLDERS
 
     The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock as of March 31, 1998 and as adjusted to
reflect the sale of the shares offered hereby by (i) each person who is known by
the Company to own beneficially more than 5% of the outstanding shares of Common
Stock, (ii) each director and Named Executive Officer of the Company, and (iii)
all directors and executive officers of the Company as a group. Unless otherwise
indicated below, to the knowledge of the Company, all persons listed below have
sole voting and investment power with respect to their shares of Common Stock,
except to the extent authority is shared by spouses under applicable law. The
address of each person below owning beneficially more than 5% of the outstanding
shares of Common Stock is c/o International Integration Incorporated, 101 Main
Street, Cambridge, MA 02142.
SHARES BENEFICIALLY OWNED    SHARES BENEFICIALLY OWNED
                                                     PRIOR TO THE OFFERING(1)     AFTER THE OFFERING(1)(2)
                                                    --------------------------   --------------------------
                       NAME                            NUMBER         PERCENT       NUMBER         PERCENT
                       ----                         -------------    ---------   -------------    ---------
Sundar Subramaniam(3).............................     7,155,025       53.1%        7,155,025           %
Madhav Anand(4)...................................     1,848,750       13.6         1,848,750
Edouard Aslanian(5)...............................     1,755,000       13.0         1,755,000
Yannis Doganis....................................     1,755,000       13.0         1,755,000
Gary C. Mekikian(6)...............................       750,000        5.4           750,000
Michael Pehl(7)...................................       658,705.5      4.7         658,705.5
Lawrence P. Begley(8).............................       187,500.5      1.4         187,500.5
Jane Callanan(9)..................................        37,496          *            37,496
James K. McCann...................................            --         --                --         --
Thomas J. Meredith(10)............................        30,000          *            30,000
Gregory S. Young(11)..............................       104,691.5        *         104,691.5
John A. Young.....................................            --         --                --         --
Joseph M. Tucci (12)..............................        65,626          *            65,626
Patrick J. Zilvitis(13)...........................        30,000          *            30,000
All executive officers and directors as a group
  (12 persons)(14)................................     3,142,814.5     21.4%      3,142,814.5           %
---------------
  *  Less than 1% of the outstanding Common Stock.
 
 (1) The number of shares of Common Stock deemed outstanding prior to this
     offering includes: (i) 13,467,233 shares of Common Stock outstanding as of
     March 31, 1998; and (ii) shares issuable pursuant to options held by the
     respective person or group which may be exercised within 60 days after
     March 31, 1998, as set forth below. The number of shares of Common Stock
     deemed outstanding after this offering includes an additional
     shares that are being offered for sale by the Company in this offering.
     Beneficial ownership is determined in accordance with the rules of the
     Securities and Exchange Commission, and includes voting and investment
     power with respect to the shares.
 
 (2) The above table assumes no exercise of the over-allotment option to
     purchase up to an aggregate of             shares of Common Stock from the
     Company and the Selling Stockholders. If the Underwriters exercise their
     over-allotment option in full, the number of shares sold, the number of
     shares beneficially owned and the percentage of ownership after this
     offering for the Selling Stockholders and for all executive officers and
     directors as a group would be as follows: Madhav Anand,   shares sold,
     shares beneficially owned (  %) after this offering; Edouard Aslanian,
     shares sold,   shares beneficially owned (  %) after this offering; Yannis
     Doganis,   shares sold,   shares beneficially owned (  %) after this
     offering; Gary C. Mekikian,   shares sold,   shares beneficially owned
     (  %) after this offering; and all executive officers and directors as a
     group,   shares sold,   shares beneficially owned (  %) after this
     offering. Mr. Aslanian has been an employee of the Company since January
     1993.
 
                                       46
52
 
 (3) Consists of 5,355,025 shares owned by Mr. Subramaniam and 1,800,000 shares
     owned by the Geneva Trust, of which Mr. Subramaniam and his family are the
     sole beneficiaries, all of which are held in trust by State Street Bank and
     Trust Company, 225 Franklin Street, 3rd Floor, Boston, MA 02110, as
     trustee, under a certain Voting Trust Agreement dated as of October 13,
     1997 among Mr. Subramaniam, State Street Bank and Trust Company, the
     Company, Subramaniam Limited Partnership, a Massachusetts limited
     partnership and Harrington Trust Limited, as trustee of the Geneva Trust.
     The Voting Trust Agreement terminates upon the closing of this offering.
 
 (4) Includes 93,750 shares issuable pursuant to options held by Mr. Anand that
     may be exercised within 60 days after March 31, 1998.
 
 (5) Includes certain shares held by a family limited partnership controlled by
     Mr. Aslanian.
 
 (6) Includes 325,000 shares issuable pursuant to options held by Mr. Mekikian
     that may be exercised within 60 days after March 31, 1998.
 
 (7) Consists of 658,705.5 shares issuable pursuant to options held by Mr. Pehl
     that may be exercised within 60 days after March 31, 1998.
 
 (8) Consists of 187,500.5 shares issuable pursuant to options held by Mr.
     Begley that may be exercised within 60 days after March 31, 1998.
 
 (9) Includes 22,496 shares issuable pursuant to options held by Ms. Callanan
     that may be exercised within 60 days after March 31, 1998.
 
(10) Consists of 30,000 shares acquired after March 31, 1998 on exercise of
     options and held subject to the Company's right to repurchase in the event
     Mr. Meredith's service as a director terminates before vesting dates
     applicable to such options.
 
(11) Includes 42,191 shares issuable pursuant to options held by Mr. Young that
     may be exercised within 60 days after March 31, 1998.
 
(12) Includes 28,126 shares issuable pursuant to options held by Mr. Tucci that
     may be exercised within 60 days after March 31, 1998.
 
(13) Consists of 30,000 shares issuable pursuant to options held by Mr. Zilvitis
     that may be exercised within 60 days after March 31, 1998, subject to the
     Company's right to repurchase in the event Mr. Zilvitis' service as a
     director terminates before vesting dates applicable to such options.
 
(14) Includes 1,182,814 shares issuable pursuant to options that may be
     exercised within 60 days after March 31, 1998.
 
                                       47
53
 
                          DESCRIPTION OF CAPITAL STOCK
 
     Effective upon the closing of this offering, the authorized capital stock
of the Company will consist of 100,000,000 shares of Common Stock, $.01 par
value per share, and 1,000,000 shares of Preferred Stock, $.01 par value per
share.
 
     The following summary description of the Company's capital stock is not
intended to be complete and is qualified in its entirety by reference to the
provisions of applicable law and to the Company's Amended and Restated
Certificate of Incorporation (the "Restated Certificate of Incorporation") and
Amended and Restated By-laws (the "Restated By-laws"), filed as exhibits to the
Registration Statement of which this Prospectus is a part.
 
COMMON STOCK
 
     As of March 31, 1998, there were 13,467,233 shares of Common Stock
outstanding held by 30 stockholders of record. Based upon the number of shares
outstanding as of that date and giving effect to the issuance of the
shares of Common Stock offered by the Company hereby, there will be
shares of Common Stock outstanding upon the closing of this offering. In
addition, as of March 31, 1998, there were outstanding stock options for the
purchase of a total of 5,461,782 shares of Common Stock.
 
     Holders of Common Stock are entitled to one vote for each share held on all
matters submitted to a vote of stockholders and do not have cumulative voting
rights. Directors are elected by a plurality of the votes of the shares present
in person or by proxy at the meeting and entitled to vote in such election.
Holders of Common Stock are entitled to receive ratably such dividends, if any,
as may be declared by the Board of Directors out of funds legally available
therefor, subject to any preferential dividend rights of outstanding Preferred
Stock. Upon the liquidation, dissolution or winding up of the Company, the
holders of Common Stock are entitled to receive ratably the net assets of the
Company available after the payment of all debts and other liabilities of the
Company, subject to the prior rights of any outstanding Preferred Stock. Holders
of the Common Stock have no preemptive, subscription, redemption or conversion
rights, nor are they entitled to the benefit of any sinking fund. The
outstanding shares of Common Stock are, and the shares offered by the Company in
this offering will be, when issued and paid for, validly issued, fully paid and
nonassessable. The rights, powers, preferences and privileges of holders of
Common Stock are subject to, and may be adversely affected by, the rights of the
holders of shares of any series of Preferred Stock which the Company may
designate and issue in the future.
 
PREFERRED STOCK
 
     The Board of Directors will be authorized, subject to any limitations
prescribed by law, without further stockholder approval, to issue from time to
time up to an aggregate of 1,000,000 shares of Preferred Stock, in one or more
series. Each such series of Preferred Stock shall have such number of shares,
designations, preferences, voting powers, qualifications and special or relative
rights or privileges as shall be determined by the Board of Directors, which may
include, among others, dividend rights, voting rights, redemption and sinking
fund provisions, liquidation preferences, conversion rights and preemptive
rights. There are no shares of Preferred Stock currently outstanding.
 
     The stockholders of the Company have granted the Board of Directors
authority to issue the Preferred Stock and to determine its rights and
preferences in order to eliminate delays associated with a stockholder vote on
specific issuances. The rights of the holders of Common Stock will be subject to
the rights of holders of any Preferred Stock issued in the future. The issuance
of Preferred Stock, while providing desirable flexibility in connection with
possible acquisitions and other corporate purposes, could adversely affect the
voting power or other rights of the holders of Common Stock, and could make it
more difficult for a third party to acquire, or discourage a third party from
attempting to acquire, a majority of the outstanding voting stock of the
Company. The Company has not, to date, issued any shares of such Preferred Stock
and has no present plans to issue any shares of Preferred Stock.
 
                                       48
54
 
DELAWARE LAW AND CERTAIN CHARTER AND BY-LAW PROVISIONS; ANTI-TAKEOVER EFFECTS
 
     The Company is subject to the provisions of Section 203 of the General
Corporation Law of Delaware. Section 203 prohibits a publicly-held Delaware
corporation from engaging in a "business combination" with an "interested
stockholder" for a period of three years after the date of the transaction in
which the person became an interested stockholder, unless the business
combination is approved in a prescribed manner. A "business combination"
includes mergers, asset sales and other transactions resulting in a financial
benefit to the interested stockholder. Subject to certain exceptions, an
"interested stockholder" is a person who, together with affiliates and
associates, owns, or within three years did own, 15% or more of the
corporation's voting stock.
 
     The Restated Certificate of Incorporation provides for the division of the
Board of Directors into three classes as nearly equal in size as possible with
staggered three-year terms. See "Management -- Election of Directors." In
addition, the Restated Certificate of Incorporation provides that directors may
be removed only for cause by the affirmative vote of the holders of 75% of the
shares of capital stock of the Company entitled to vote. Under the Restated
Certificate of Incorporation, any vacancy on the Board of Directors, however
occurring, including a vacancy resulting from an enlargement of the Board, may
only be filled by vote of a majority of the directors then in office. The
classification of the Board of Directors and the limitations on the removal of
directors and filling of vacancies could have the effect of making it more
difficult for a third party to acquire, or of discouraging a third party from
attempting to acquire, control of the Company.
 
     The Restated Certificate of Incorporation also provides that after the
closing of this offering, any action required or permitted to be taken by the
stockholders of the Company at an annual meeting or special meeting of
stockholders may only be taken if it is properly brought before such meeting and
may not be taken by written action in lieu of a meeting. The Restated
Certificate of Incorporation further provides that special meetings of the
stockholders may only be called by the Chairman of the Board of Directors. Under
the Restated By-laws, in order for any matter to be considered "properly
brought" before a meeting, a stockholder must comply with certain requirements
regarding advance notice to the Company. The foregoing provisions could have the
effect of delaying until the next stockholders meeting stockholder actions which
are favored by the holders of a majority of the outstanding voting securities of
the Company. These provisions may also discourage another person or entity from
making a tender offer for the Company's Common Stock, because such person or
entity, even if it acquired a majority of the outstanding voting securities of
the Company, would be able to take action as a stockholder (such as electing new
directors or approving a merger) only at a duly called stockholders meeting, and
not by written consent.
 
     The General Corporation Law of Delaware provides generally that the
affirmative vote of a majority of the shares entitled to vote on any matter is
required to amend a corporation's certificate of incorporation or by-laws,
unless a corporation's certificate of incorporation or by-laws, as the case may
be, requires a greater percentage. The Restated Certificate of Incorporation
requires the affirmative vote of the holders of at least 75% of the shares of
capital stock of the Company issued and outstanding and entitled to vote to
amend or repeal any of the foregoing provisions of the Restated Certificate of
Incorporation. The Restated By-laws also may be amended or repealed by a
majority vote of the Board of Directors subject to any limitations set forth in
the Restated By-laws and amendment by stockholders of provisions described above
requires the affirmative vote of the holders of at least 75% of the shares of
capital stock of the Company issued and outstanding and entitled to vote. The
75% stockholder vote would be in addition to any separate class vote that might
in the future be required pursuant to the terms of any series Preferred Stock
that might be outstanding at the time any such amendments are submitted to
stockholders.
 
LIMITATION OF LIABILITY AND INDEMNIFICATION
 
     The Restated Certificate of Incorporation provides that the directors and
officers of the Company shall be indemnified by the Company to the fullest
extent authorized by Delaware law, as it now exists or may in the future be
amended, against all expenses and liabilities reasonably incurred in connection
with their service for or on behalf of the Company. In addition, the Restated
Certificate of Incorporation provides that the directors of the Company will not
be personally liable for monetary damages to the Company for breaches of their
fiduciary duty as directors, unless they violated their duty of loyalty to the
Company or its stockholders, acted
 
                                       49
55
 
in bad faith, knowingly or intentionally violated the law, authorized illegal
dividends or redemptions or derived an improper personal benefit from their
action as directors.
 
TRANSFER AGENT AND REGISTRAR
 
     The transfer agent and registrar for the Common Stock is Boston EquiServe
Limited Partnership.
 
                                       50
56
 
                        SHARES ELIGIBLE FOR FUTURE SALE
 
     Upon completion of this offering, the Company will have           shares of
Common Stock outstanding (assuming no exercise of outstanding options). Of these
shares, the           shares (          shares if the over-allotment option is
exercised in full) to be sold in this offering will be freely tradable without
restriction or further registration under the Securities Act of 1933, as amended
(the "Securities Act"), except that any shares purchased by affiliates of the
Company, as that term is defined in Rule 144 ("Rule 144") under the Securities
Act ("Affiliates"), may generally only be sold in compliance with the
limitations of Rule 144 described below.
 
SALES OF RESTRICTED SHARES
 
     The remaining 13,467,233 shares of Common Stock outstanding upon completion
of this offering are deemed "Restricted Shares" under Rule 144 or Rule 701 under
the Securities Act. Approximately 379,374 of such Restricted Shares will be
eligible for sale in the public market pursuant to Rule 144(k) on the date of
this Prospectus. Upon expiration of the Lock-up Agreements, 180 days after the
date of this Prospectus, an additional 12,555,842 shares of Common Stock will be
eligible for sale in the public market pursuant to Rule 144 under the Securities
Act.
 
     In general, under Rule 144, a person (or persons whose shares are
aggregated), including an Affiliate, who has beneficially owned Restricted
Shares for at least one year is entitled to sell, within any three-month period,
a number of such shares that does not exceed the greater of (i) one percent of
the then outstanding shares of Common Stock (approximately           shares
immediately after this offering) or (ii) the average weekly trading volume in
the Common Stock in the over-the-counter market during the four calendar weeks
preceding the date on which notice of such sale is filed, provided certain
requirements concerning availability of public information, manner of sale and
notice of sale are satisfied. In addition, Affiliates must comply with the
restrictions and requirements of Rule 144, other than the one-year holding
period requirement, in order to sell shares of Common Stock which are not
restricted securities. Under Rule 144(k), a person who is not an Affiliate and
has not been an Affiliate for at least three months prior to the sale and who
has beneficially owned Restricted Shares for at least two years may resell such
shares without compliance with the foregoing requirements. In meeting the one-
and two-year holding periods described above, a holder of Restricted Shares can
include the holding periods of a prior owner who was not an Affiliate. The one-
and two-year holding periods described above do not begin to run until the full
purchase price or other consideration is paid by the person acquiring the
Restricted Shares from the issuer or an Affiliate. Rule 701 provides that
currently outstanding shares of Common Stock acquired under the Company's
employee compensation plans may be resold by persons, other than Affiliates,
beginning 90 days after the date of this Prospectus, subject only to the manner
of sale provisions of Rule 144, and by Affiliates after the date of this
Prospectus, subject only to the manner of sale provisions of Rule 144, and by
Affiliates under Rule 144 without compliance with its one-year minimum holder
period, subject to certain limitations.
 
OPTIONS
 
     Rule 701 also provides that the shares of Common Stock acquired upon the
exercise of currently outstanding options or pursuant to other rights granted
under the Company's stock plans may be resold by persons, other than Affiliates,
beginning 90 days after the date of this Prospectus, subject only to the manner
of sale provisions of Rule 144, and by Affiliates under Rule 144, without
compliance with its one-year minimum holding period, subject to certain
limitations. At March 31, 1998, approximately 3,107,837.5 shares of Common Stock
were issued or issuable pursuant to vested options or pursuant to other rights
granted under the Company's stock program, of which approximately
shares are not subject to Lock-up Agreements with the Underwriters and will be
eligible for sale in the public market in accordance with Rule 701 under the
Securities Act beginning 90 days after the date of this Prospectus.
 
     The Company intends to file one or more registration statements on Form S-8
under the Securities Act following the date of this Prospectus, to register up
to 5,461,782 shares of Common Stock subject to outstanding stock options or
other rights granted pursuant to the Company's stock option program as of
 
                                       51
57
 
March 31, 1998, including the 1,657,628 shares of Common Stock subject to
options vested as of March 31, 1998, and 4,317,984 shares of Common Stock
issuable pursuant to the Company's stock plans. Such registration statements are
expected to become effective upon filing.
 
LOCK-UP AGREEMENTS
 
     Subject to certain limited exceptions, the Company, the executive officers
and directors, the Selling Stockholders and certain other securityholders have
agreed not to sell or otherwise dispose of, directly or indirectly, any shares
of Common Stock (or any security convertible into or exchangeable or exercisable
for Common Stock) without the prior written consent of Morgan Stanley & Co.
Incorporated ("Morgan Stanley") for a period of 180 days from the date of this
Prospectus. In addition, for a period of 180 days from the date of this
Prospectus, except as required by law, the Company has agreed that its Board of
Directors will not consent to any offer for sale, sale or other disposition, or
any transaction which is designed or could be expected to result in the
disposition by any person, directly or indirectly, of any shares of Common Stock
without the prior written consent of Morgan Stanley. See "Underwriters."
 
REGISTRATION RIGHTS
 
     No securityholders of the Company are entitled to require the Company to
register any securities of the Company under the Securities Act.
 
     Prior to this offering, there has been no public market for the Common
Stock of the Company, and no predictions can be made as to the effect, if any,
that market sales of shares of Common Stock prevailing from time to time, or the
availability of shares for future sale, may have on the market price for the
Common Stock. Sales of substantial amounts of Common Stock, or the perception
that such sales could occur, could adversely effect prevailing market prices for
the Common Stock and could impair the Company's future ability to obtain capital
through an offering of equity securities.
 
                                       52
58
 
                                  UNDERWRITERS
 
     Under the terms and subject to the conditions contained in an Underwriting
Agreement dated the date of this Prospectus, the Underwriters named below, for
whom Morgan Stanley & Co. Incorporated, BT Alex. Brown Incorporated and UBS
Securities LLC are acting as Representatives (the "Underwriters"), have
severally agreed to purchase, and the Company has agreed to sell to them, the
respective number of shares of Common Stock set forth opposite their respective
names below:
NUMBER
                            NAME                              OF SHARES
                            ----                              ---------
Morgan Stanley & Co. Incorporated...........................
BT Alex. Brown Incorporated.................................
UBS Securities LLC..........................................
 
                                                              ---------
          Total.............................................
                                                              =========
The Underwriting Agreement provides that the obligations of the several
Underwriters to pay for and accept delivery of the shares of Common Stock
offered hereby are subject to the approval of certain legal matters by their
counsel and to certain other conditions. The Underwriters are committed to take
and pay for all the shares of Common Stock offered hereby (other than those
covered by the over-allotment option described below) if any such shares are
taken.
 
     The Underwriters initially propose to offer part of the Common Stock
directly to the public at the public offering price set forth on the cover page
hereof and part to certain dealers at a price which represents a concession not
in excess of $          per share under the public offering price. Any
Underwriter may allow, and such dealers may reallow, a concession not in excess
of $          per share to other Underwriters or to certain dealers. After the
initial offering of the shares of Common Stock, this offering price and other
selling terms may from time to time be varied by the Underwriters.
 
     The Company and certain stockholders of the Company, consisting of Messrs.
Anand, Aslanian, Doganis and Mekikian (collectively, the "Selling
Stockholders"), have granted the Underwriters an option, exercisable for 30 days
from the date of the Prospectus, to purchase up to an additional        shares
of Common Stock at the public offering price set forth on the cover page hereof,
less underwriting discounts and commissions. The Underwriters may exercise such
option to purchase solely for the purpose of covering over-allotments, if any,
made in connection with this offering. To the extent such option is exercised,
each Underwriter will become obligated, subject to certain conditions, to
purchase approximately the same percentage of such additional shares as the
number of shares set forth next to such Underwriter's name in the preceding
table bears to the total number of shares of Common Stock offered by the
Underwriters hereby.
 
     At the request of the Company, the Underwriters have reserved up to
shares of the Common Stock offered hereby for sale at the initial public
offering price to the Company's customers and other persons with whom the
Company has relationships. The number of shares of Common Stock available for
sale to the general public will be reduced to the extent such persons purchase
such reserved shares. Any reserved shares not so purchased will be offered by
the Underwriters to the general public on the same basis as the other shares
offered hereby.
 
     Subject to certain limited exceptions, the Company and the executive
officers and directors of the Company, the Selling Stockholders and certain
other securityholders have agreed that, without the prior written consent of
Morgan Stanley, they will not, during the period ending 180 days after the date
of this Prospectus, (a) offer, pledge, sell, contract to sell, sell any option
or contract to purchase, purchase any option
 
                                       53
59
 
or contract to sell, grant any option, right or warrant to purchase, lend, or
otherwise transfer or dispose of, directly or indirectly, any shares of Common
Stock or any securities convertible into or exercisable or exchangeable for
Common Stock (regardless of whether such shares or any such securities are then
owned by such person or are thereafter acquired), or (b) enter into any swap or
other arrangement that transfers to another, in whole or in part, any of the
economic consequences of ownership of the Common Stock, regardless of whether
any such transactions described in clauses (a) or (b) of this paragraph are to
be settled by delivery of such Common Stock or such other securities, in cash or
otherwise.
 
     In order to facilitate the offering of the Common Stock, the Underwriters
may engage in transactions that stabilize, maintain or otherwise affect the
price of the Common Stock. Specifically, the Underwriters may over-allot in
connection with the offering, creating a short position in the Common Stock for
their own account. In addition, to cover over-allotments or to stabilize the
price of the Common Stock, the Underwriters may bid for, and purchase, shares of
Common Stock in the open market. Finally, the underwriting syndicate may reclaim
selling concessions allowed to an underwriter or a dealer for distributing the
Common Stock in the offering, if the syndicate repurchases previously
distributed Common Stock in transactions to cover syndicate short positions, in
stabilization transactions or otherwise. Any of these activities may stabilize
or maintain the market price of the Common Stock above independent market
levels. The Underwriters are not required to engage in these activities, and may
end any of these activities at any time.
 
     The Representatives of the Underwriters have informed the Company that the
Underwriters do not intend to confirm sales to any accounts over which they
exercise discretionary authority.
 
     The Company and the Selling Stockholders have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act.
 
PRICING OF THE OFFERING
 
     Prior to this offering, there has been no public market for the Common
Stock. The initial public offering price for the Common Stock will be determined
by negotiation between the Company and the Representatives of the Underwriters.
Among the factors to be considered in determining the initial public offering
price are the future prospects of the Company and its industry in general, net
revenues, earnings and certain other financial and operating information of the
Company in recent periods, and the price-earnings ratios, certain other ratios,
and market prices of securities and certain financial operating information of
companies engaged in activities similar to those of the Company.
 
                                 LEGAL MATTERS
 
     The validity of the shares of Common Stock offered hereby will be passed
upon for the Company by Hale and Dorr LLP, Boston, Massachusetts. Certain legal
matters in connection with this offering will be passed upon for the
Underwriters by Testa, Hurwitz & Thibeault, LLP, Boston, Massachusetts. Peter B.
Tarr, a partner of Hale and Dorr LLP, is Secretary of the Company.
 
                                    EXPERTS
 
     The Consolidated Financial Statements of the Company as of December 31,
1996 and December 31, 1997 and for the three years in the period ended December
31, 1997 included in this Prospectus have been included herein in reliance on
the report of Coopers & Lybrand L.L.P., independent accountants, given on the
authority of that firm as experts in accounting and auditing.
 
                             CHANGE IN ACCOUNTANTS
 
     In January 1997, the Company's Board of Directors decided to retain Coopers
& Lybrand L.L.P. as its independent public accountants and dismissed the
Company's former auditors. The former auditors' report on the Company's
financial statements for the years ended December 31, 1995 and 1994 does not
cover the consolidated financial statements of the Company included in this
Prospectus. Such report did not contain an
                                       54
60
 
adverse opinion or disclaimer of opinion and was not modified as to uncertainty,
audit scope or accounting principles. There were no disagreements with the
former auditors on any matter of accounting principles or practices, financial
statement disclosure or auditing scope or procedure at the time of the change or
with respect to the Company's financial statements for fiscal years 1995 and
1994, which, if not resolved to the former auditors' satisfaction, would have
caused them to make reference to the subject matter of the disagreement in
connection with their report. Prior to retaining Coopers & Lybrand L.L.P., the
Company had not consulted with Coopers & Lybrand L.L.P. regarding accounting
principles.
 
                             ADDITIONAL INFORMATION
 
     The Company has filed with the Commission a Registration Statement on Form
S-1 (together with all amendments, exhibits and schedules thereto, the
"Registration Statement") under the Securities Act with respect to the Common
Stock offered hereby. This Prospectus, which constitutes part of the
Registration Statement, does not contain all of the information set forth in the
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the Commission. For further information with
respect to the Company and the Common Stock offered hereby, reference is made to
the Registration Statement. Statements contained in this Prospectus as to the
contents of any contract or other document filed as an exhibit to the
Registration Statement are not necessarily complete, and in each instance
reference is made to the copy of such document filed as an exhibit to the
Registration Statement, each such statement being qualified in all respects by
such reference. The Registration Statement may be inspected without charge at
the principal office of the Commission in Washington, D.C. and copies of all or
any part of which may be inspected and copied at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Judiciary Plaza, Room
1024, Washington, D.C. 20549, and at the Commission's regional offices located
at Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511 and 7 World Trade Center, Suite 1300, New York, New York 10048.
Copies of such material can also be obtained at prescribed rates by mail from
the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549. In addition, the Commission maintains a web site
(http://www.sec.gov) that contains reports, proxy and information statements and
other information regarding registrants that file electronically with the
Commission.
 
                                       55
61
 
                     INTERNATIONAL INTEGRATION INCORPORATED
 
                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
PAGE
                                                              ----
Report of Independent Accountants...........................  F-2
 
Consolidated Balance Sheets as of December 31, 1996 and
  1997, and March 31, 1998 (unaudited)......................  F-3
 
Consolidated Statements of Income for the years ended
  December 31, 1995, 1996 and 1997, and for the three months
  ended March 31, 1997 and 1998 (unaudited).................  F-4
 
Consolidated Statement of Stockholders' Equity for the years
  ended December 31, 1995, 1996 and 1997, and for the three
  months ended March 31, 1998 (unaudited)...................  F-5
 
Consolidated Statements of Cash Flows for the years ended
  December 31, 1995, 1996 and 1997, and for the three months
  ended March 31, 1997 and 1998 (unaudited).................  F-6
 
Notes to Consolidated Financial Statements..................  F-7
F-1
62
 
                       REPORT OF INDEPENDENT ACCOUNTANTS
 
To the Board of Directors and Stockholders of
International Integration Incorporated:
 
We have audited the accompanying consolidated balance sheets of International
Integration Incorporated as of December 31, 1997 and 1996 and the related
consolidated statements of income, stockholders' equity and cash flows for each
of the three years in the period ended December 31, 1997. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
 
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
 
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of International
Integration Incorporated as of December 31, 1997 and 1996, and the consolidated
results of its operations and its cash flows for each of the three years in the
period ended December 31, 1997 in conformity with generally accepted accounting
principles.
 
                                          COOPERS & LYBRAND L.L.P.
 
Boston, Massachusetts
March 16, 1998
 
                                       F-2
63
 
                     INTERNATIONAL INTEGRATION INCORPORATED
 
                          CONSOLIDATED BALANCE SHEETS
                (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
DECEMBER 31,        MARCH 31,
                                                              ------------------    -----------
                                                               1996       1997         1998
                                                              -------    -------    -----------
                                                                                    (UNAUDITED)
ASSETS
Current assets:
  Cash and cash equivalents.................................  $ 3,889    $10,822      $ 9,833
  Accounts receivable, net of reserve of $114, $196 and
     $112, respectively.....................................    4,698      5,906        5,349
  Unbilled revenues.........................................      222        708          476
  Prepaid expenses and other current assets.................      192        429          490
  Deferred income taxes.....................................      795        812          878
                                                              -------    -------      -------
          Total current assets..............................    9,796     18,677       17,026
                                                              -------    -------      -------
Property and equipment, at cost:
  Computers and equipment...................................      679      2,527        2,460
  Furniture and fixtures....................................      244        602          881
                                                              -------    -------      -------
                                                                  923      3,129        3,341
  Less-accumulated depreciation.............................      384        838        1,039
                                                              -------    -------      -------
                                                                  539      2,291        2,302
Other assets................................................      167        144          190
                                                              -------    -------      -------
          Total assets......................................  $10,502    $21,112      $19,518
                                                              =======    =======      =======
 
                             LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable..........................................  $   382    $   483      $   727
  Accrued expenses..........................................    1,049      2,956        2,362
  Current portion of long-term obligations..................       --        268          258
  Accrued income taxes......................................       66          1          938
  Deferred revenues.........................................    4,444      7,116        3,567
                                                              -------    -------      -------
          Total current liabilities.........................    5,941     10,824        7,852
                                                              -------    -------      -------
Long-term obligations.......................................       --        672          623
Commitments (Note 8)
Stockholders' equity:
  Preferred stock $0.01 par value; 1,000,000 shares
     authorized, no shares issued or outstanding............       --         --           --
  Common stock $0.01 par value; 21,000,000 shares
     authorized; 12,493,212, 12,966,889 and 13,470,234
     shares issued at December 31, 1996 and 1997 and March
     31, 1998, respectively; 12,493,212, 12,963,888 and
     13,467,233 shares outstanding at December 31, 1996 and
     1997 and March 31, 1998, respectively..................      124        129          134
  Additional paid-in capital................................      250      1,516        1,566
  Treasury stock, 3,001 shares at cost......................       --         (8)          (8)
  Note receivable from stockholder..........................       --       (533)        (533)
  Retained earnings.........................................    4,187      8,512        9,884
                                                              -------    -------      -------
          Total stockholders' equity........................    4,561      9,616       11,043
                                                              -------    -------      -------
          Total liabilities and stockholders' equity........  $10,502    $21,112      $19,518
                                                              =======    =======      =======
The accompanying notes are an integral part of these consolidated financial
                                   statements
                                       F-3
64
 
                     INTERNATIONAL INTEGRATION INCORPORATED
 
                       CONSOLIDATED STATEMENTS OF INCOME
                     (IN THOUSANDS, EXCEPT PER SHARE DATA)
THREE MONTHS
                                                YEAR ENDED DECEMBER 31,       ENDED MARCH 31,
                                              ----------------------------    ----------------
                                               1995      1996       1997       1997      1998
                                              ------    -------    -------    ------    ------
                                                                                (UNAUDITED)
Net revenues................................  $9,197    $14,479    $26,859    $5,598    $8,828
Project personnel and software costs........   2,521      5,308     10,385     2,000     3,612
                                              ------    -------    -------    ------    ------
          Gross profit......................   6,676      9,171     16,474     3,598     5,216
Operating expenses:
  Selling and marketing.....................     897      1,580      3,046       630       850
  General and administrative................   2,371      5,011      6,734     1,497     2,247
                                              ------    -------    -------    ------    ------
          Total operating expenses..........   3,268      6,591      9,780     2,127     3,097
                                              ------    -------    -------    ------    ------
Operating income............................   3,408      2,580      6,694     1,471     2,119
Other income (expense):
  Interest income...........................      92         85        460        52       156
  Interest expense..........................      --         --        (69)       --       (26)
                                              ------    -------    -------    ------    ------
          Income before income taxes........   3,500      2,665      7,085     1,523     2,249
Provision for income taxes..................   1,424      1,050      2,760       594       877
                                              ------    -------    -------    ------    ------
          Net income........................  $2,076    $ 1,615    $ 4,325    $  929    $1,372
                                              ======    =======    =======    ======    ======
Earnings per share:
  Basic.....................................  $ 0.17    $  0.13    $  0.34    $ 0.07    $ 0.10
                                              ======    =======    =======    ======    ======
  Diluted...................................  $ 0.15    $  0.12    $  0.29    $ 0.07    $ 0.09
                                              ======    =======    =======    ======    ======
Weighted average shares outstanding:
  Basic.....................................  12,323     12,425     12,627    12,519    13,244
  Diluted...................................  13,465     13,682     15,163    14,256    16,031
The accompanying notes are an integral part of these consolidated financial
                                   statements
                                       F-4
65
 
                     INTERNATIONAL INTEGRATION INCORPORATED
 
                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                       (IN THOUSANDS, EXCEPT SHARE DATA)
SERIES A             SERIES B
                                           COMMON STOCK         COMMON STOCK        COMMON STOCK                   TREASURY STOCK
                                        -------------------   ----------------   ------------------                --------------
                                          NUMBER               NUMBER              NUMBER             ADDITIONAL   NUMBER
                                            OF         PAR       OF       PAR        OF        PAR     PAID-IN       OF
                                          SHARES      VALUE    SHARES    VALUE     SHARES     VALUE    CAPITAL     SHARES   COST
                                        -----------   -----   --------   -----   ----------   -----   ----------   ------   -----
Balance at December 31, 1994..........   12,020,025    $8      300,499    $ 2            --     --          --        --      --
  Exercise of stock options...........           --    --       27,000     --            --     --          --        --      --
  Net income..........................           --    --           --     --            --     --          --        --      --
                                        -----------    --     --------    ---    ----------   ----      ------     ------    ---
Balance at December 31, 1995..........   12,020,025     8      327,499      2            --     --          --        --      --
  Conversion..........................  (12,020,025)   (8)    (327,499)    (2)   12,347,524   $123          --        --      --
  Exercise of stock options...........           --    --           --     --       145,688      1      $  250        --      --
  Net income..........................           --    --           --     --            --     --          --        --      --
                                        -----------    --     --------    ---    ----------   ----      ------     ------    ---
Balance at December 31, 1996..........           --    --           --     --    12,493,212    124         250        --      --
  Exercise of stock options...........           --    --           --     --       473,677      5         676        --      --
  Acquisition of treasury stock.......           --    --           --     --            --     --          --     (3,001)   $(8)
  Tax benefit due to stock option
    exercise..........................           --    --           --     --            --     --         590        --      --
  Net income..........................           --    --           --     --            --     --          --        --      --
                                        -----------    --     --------    ---    ----------   ----      ------     ------    ---
Balance at December 31, 1997..........           --    --           --     --    12,966,889    129       1,516     (3,001)    (8)
  Exercise of stock options...........           --    --           --     --       503,345      5          50        --      --
  Net income..........................           --    --           --     --            --     --          --        --      --
                                        -----------    --     --------    ---    ----------   ----      ------     ------    ---
Balance at March 31, 1998
  (unaudited).........................           --    --           --     --    13,470,234   $134      $1,566     (3,001)   $(8)
                                        ===========    ==     ========    ===    ==========   ====      ======     ======    ===
NOTE                   TOTAL
                                        RECEIVABLE                STOCK-
                                           FROM       RETAINED   HOLDERS'
                                        STOCKHOLDER   EARNINGS    EQUITY
                                        -----------   --------   --------
Balance at December 31, 1994..........        --       $  609    $   619
  Exercise of stock options...........        --           --         --
  Net income..........................        --        2,076      2,076
                                           -----       ------    -------
Balance at December 31, 1995..........        --        2,685      2,695
  Conversion..........................        --         (113)        --
  Exercise of stock options...........        --           --        251
  Net income..........................        --        1,615      1,615
                                           -----       ------    -------
Balance at December 31, 1996..........        --        4,187      4,561
  Exercise of stock options...........     $(533)          --        148
  Acquisition of treasury stock.......        --           --         (8)
  Tax benefit due to stock option
    exercise..........................        --           --        590
  Net income..........................        --        4,325      4,325
                                           -----       ------    -------
Balance at December 31, 1997..........      (533)       8,512      9,616
  Exercise of stock options...........        --           --         55
  Net income..........................        --        1,372      1,372
                                           -----       ------    -------
Balance at March 31, 1998
  (unaudited).........................     $(533)      $9,884    $11,043
                                           =====       ======    =======
The accompanying notes are an integral part of these consolidated financial
                                   statements
 
                                       F-5
66
 
                     INTERNATIONAL INTEGRATION INCORPORATED
 
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
THREE MONTHS
                                               YEAR ENDED DECEMBER 31,        ENDED MARCH 31,
                                            -----------------------------    -----------------
                                             1995       1996       1997       1997      1998
                                            -------    -------    -------    ------    -------
                                                                                (UNAUDITED)
Cash flows from operating activities:
  Net income..............................  $ 2,076    $ 1,615    $ 4,325    $  929    $ 1,372
  Adjustments to reconcile net income to
     net cash provided by operating
     activities:
     Depreciation and amortization........      150        267        531       103        200
     Provision for doubtful accounts......       --         73         82        20         --
     Loss on disposal of fixed assets.....       --         --         97        --         --
     Deferred income taxes................     (910)       163        (17)        3        (66)
     Tax benefit due to stock option
       exercise...........................       --         --        590        --         --
     Changes in operating assets and
       liabilities:
       Accounts receivable................   (1,814)    (2,669)    (1,290)    1,848        557
       Unbilled revenues..................     (413)       191       (486)     (338)       232
       Prepaid expenses and other current
          assets..........................      (66)       (97)      (237)     (109)       (61)
       Accounts payable...................       73        290        101       338        244
       Accrued expenses...................    1,847       (328)     1,907       154       (594)
       Accrued income taxes...............      572       (937)       (65)      546        937
       Deferred revenues..................    1,551      1,955      2,672     3,021     (3,549)
                                            -------    -------    -------    ------    -------
          Net cash provided by (used in)
            operating activities..........    3,066        523      8,210     6,515       (728)
                                            -------    -------    -------    ------    -------
Cash flows from investing activities:
  Purchases of property and equipment.....     (497)      (388)    (1,788)     (564)      (212)
  Proceeds from sale of fixed assets......       --         --         25        --         --
Other.....................................     (175)        13         23        (2)       (46)
                                            -------    -------    -------    ------    -------
          Net cash used in investing
            activities....................     (672)      (375)    (1,740)     (566)      (258)
                                            -------    -------    -------    ------    -------
Cash flows from financing activities:
  Repayment of long-term obligations......       --         --       (177)       --        (58)
  Proceeds from equipment line of
     credit...............................       --         --        500        --         --
  Proceeds from exercise of stock
     options..............................       --        251        148        75         55
  Purchase of treasury stock..............       --         --         (8)       --         --
  (Increase) decrease in due from related
     parties..............................     (362)       396         --        --         --
  (Increase) decrease in due from
     officer/stockholder..................      (30)        30         --        --         --
                                            -------    -------    -------    ------    -------
          Net cash provided by (used in)
            financing activities..........     (392)       677        463        75         (3)
                                            -------    -------    -------    ------    -------
Net increase (decrease) in cash and cash
  equivalents.............................    2,002        825      6,933     6,024       (989)
Cash and cash equivalents, beginning of
  period..................................    1,062      3,064      3,889     3,889     10,822
                                            -------    -------    -------    ------    -------
Cash and cash equivalents, end of
  period..................................  $ 3,064    $ 3,889    $10,822    $9,913    $ 9,833
                                            =======    =======    =======    ======    =======
The accompanying notes are an integral part of these consolidated financial
                                   statements
                                       F-6
67
 
                     INTERNATIONAL INTEGRATION INCORPORATED
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  (INFORMATION AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997 IS
                                   UNAUDITED)
                             (DOLLARS IN THOUSANDS)
 
(1)  ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
 
     International Integration Incorporated ("i-Cube" or the "Company") provides
application migration and custom software development services on a fixed-price,
fixed-time basis to Fortune 1000 companies and other large enterprises.
 
     A summary of the Company's significant accounting policies follows:
 
     (a) Use of Estimates
 
     The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amount of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
 
     (b) Principles of Consolidation
 
     The consolidated financial statements reflect the operations of the Company
and its wholly-owned subsidiaries. All significant intercompany transactions and
accounts have been eliminated.
 
     (c) Foreign Currency Translation
 
     Assets and liabilities of the Company's foreign operations denominated in
foreign currencies are translated into United States dollars at exchange rates
prevailing at the balance sheet date. Revenues and expenses for the period are
translated at the average exchange rates in effect during the period. Foreign
currency effects were not material during the periods presented.
 
     (d) Revenue Recognition
 
     The Company derives substantially all of its revenues from technology
consulting services. Revenues from contracts are recognized on the
percentage-of-completion basis. The cumulative impact of any revision in
estimates of the cost to complete and losses on projects in process are
reflected in the period in which they become known. Net revenues exclude
reimbursable expenses charged to customers. Revenues from maintenance contracts
is deferred and recognized ratably over the contractual periods during which
services are performed. Revenues related to time and materials engagements are
recognized when the services are performed.
 
     Deferred revenues include amounts billed in advance for technology
consulting contracts that will be recognized upon performance and amounts
received from customers in excess of revenues recognized to date. Unbilled
revenues represent revenues recognized on contracts in excess of contractual
billings to date.
 
     (e) Significant Customers and Concentration of Credit Risk
 
     For the years ended December 31, 1995, 1996 and 1997 and the three months
ended March 31, 1997 and 1998, three, three, five, three and five customers each
accounted for 10% or more of net revenues for the respective period and an
aggregate of 75%, 62%, 83%, 72% and 77% of net revenues, respectively.
 
     Financial instruments that subject the Company to credit risks consist
primarily of trade accounts receivable. As of December 31, 1996 and 1997 and
March 31, 1998, approximately 85%, 86% and 75% of the Company's accounts
receivable were due from three, four and three customers, respectively.
 
                                       F-7
68
 
                     INTERNATIONAL INTEGRATION INCORPORATED
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
  (INFORMATION AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997 IS
                                   UNAUDITED)
                             (DOLLARS IN THOUSANDS)
 
     (f) Cash and Cash Equivalents
 
     Cash equivalents consist of highly liquid investments with a maturity of
less than three months when purchased. At December 31, 1997 and March 31, 1998,
cash and cash equivalents include overnight repurchase agreements with a bank of
$10,800 and $9,600, respectively. Due to the short-term nature of these
agreements, the Company does not take possession of the underlying collateral,
U.S. Government Agency notes, which are held by the bank.
 
     (g) Depreciation
 
     The Company provides for depreciation of the assets over their estimated
useful lives, using the straight-line method, as follows:
ASSET CLASSIFICATION                 ESTIMATED USEFUL LIFE
               --------------------                 ---------------------
Computers and equipment...........................        3-5 years
Furniture and fixtures............................          5 years
As of December 31, 1997 and March 31, 1998, the cost of furniture and
fixtures recorded under capital leases was $473, and the related accumulated
amortization was $47 and $71, respectively. Upon retirement or disposal, the
cost of the asset disposed of and the related accumulated depreciation are
removed from the accounts and any gain or loss is reflected in income.
 
     (h) Accounting for Stock-Based Compensation
 
     The Company accounts for stock-based awards to its employees using the
intrinsic value based method as prescribed by Accounting Principles Board
("APB") Opinion No. 25, "Accounting for Stock Issued to Employees," and related
Interpretations and has adopted the provisions of Statement of Financial
Accounting Standards ("SFAS") No. 123, "Accounting for Stock-Based
Compensation," through disclosure only (Note 7).
 
     (i) Earnings Per Share
 
     The Company has adopted SFAS No. 128, "Earnings per Share," in the year
ended December 31, 1997. All historical earnings per share ("EPS") data have
been presented to conform to the provisions of this statement (Note 6). SFAS No.
128 requires the presentation of basic and diluted EPS. Basic EPS is computed by
dividing net income by the weighted average number of common shares outstanding
for the period. Diluted EPS is computed using the weighted average number of
common shares outstanding plus the dilutive effect of common stock equivalents
(using the treasury stock method).
 
     (j) Income Taxes
 
     Deferred income taxes are determined based on the difference between the
financial statements and the tax bases of assets and liabilities, as measured by
the enacted tax rates assumed to be in effect when these differences reverse.
 
     (k) Unaudited First Quarter Information
 
     The unaudited financial statements as of and for the three-month periods
ended March 31, 1997 and 1998 reflect, in the opinion of management, all
adjustments (which include only normal recurring adjustments) necessary to
fairly present the financial position, results of operations and changes in cash
flows as of
 
                                       F-8
69
 
                     INTERNATIONAL INTEGRATION INCORPORATED
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
  (INFORMATION AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997 IS
                                   UNAUDITED)
                             (DOLLARS IN THOUSANDS)
 
and for the periods presented. These unaudited financial statements should be
read in conjunction with the audited financial statements and related notes
thereto. The results for the interim periods presented are not necessarily
indicative of results to be expected for the full year.
 
(2)  LONG-TERM OBLIGATIONS AND CREDIT ARRANGEMENTS
 
     The Company has a working capital line of credit ("working capital line")
with a financial institution under which the Company may borrow the lesser of
$2,000 or 75% of eligible accounts receivable, as defined in the agreement. The
interest rate on all borrowings under the working capital line is prime plus
 1/2% (9.0% at December 31, 1997) and will be reduced to prime upon the
Company's completion of an Initial Public Offering ("IPO"). The working capital
line expires in August 1998 and is collateralized by substantially all assets of
the Company. The Company is required to comply with certain operational and
financial covenants under the agreement if there are borrowings under the
working capital line. At December 31, 1997, the Company was in compliance with
all such covenants. The agreement also provides a $1,000 sublimit for foreign
exchange transactions and the issuance of letters of credit. There were no
borrowings under the working capital line for all periods presented.
 
     In July 1997, the Company obtained an equipment line of credit ("equipment
line") with the same financial institution from which the Company may borrow up
to $500 for qualified capital expenditures, as defined in the agreement. The
interest rate on all borrowings under the equipment line is prime plus  3/4%
(9.25% at December 31, 1997) and will be reduced to prime upon the Company's
completion of an IPO. The Company was able to borrow against this equipment line
until January 31, 1998 (the "draw period"). During the draw period, the Company
was required to make payments of interest only on all outstanding borrowings. At
the conclusion of the draw period, the Company is required to make 36 equal
monthly principal payments plus interest. The Company is required to comply with
certain operational and financial covenants under the agreement if there are
borrowings outstanding under the equipment line. At December 31, 1997, the
Company was in compliance with all such covenants.
 
     Long-term obligations consist of the following at December 31, 1997:
Capital lease obligations...................................  $440
Equipment line..............................................   500
                                                              ----
                                                               940
Less-current maturities.....................................   268
                                                              ----
                                                              $672
                                                              ====
Maturities of long-term obligations are as follows:
1998........................................................  $  348
1999........................................................     313
2000........................................................     313
2001........................................................     122
2002........................................................      16
                                                              ------
                                                               1,112
Less-amount representing interest...........................     172
                                                              ------
                                                              $  940
                                                              ======
F-9
70
 
                     INTERNATIONAL INTEGRATION INCORPORATED
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
  (INFORMATION AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997 IS
                                   UNAUDITED)
                             (DOLLARS IN THOUSANDS)
 
(3)  ACCRUED EXPENSES
 
     Accrued expenses consist of the following at December 31, 1996, 1997 and
March 31, 1998:
DECEMBER 31,       MARCH 31,
                                                        ----------------    -----------
                                                         1996      1997        1998
                                                        ------    ------    -----------
                                                                            (UNAUDITED)
Accrued payroll and other payroll expenses............  $  474    $1,638      $  921
Accrued other.........................................     575     1,318       1,441
                                                        ------    ------      ------
                                                        $1,049    $2,956      $2,362
                                                        ======    ======      ======
(4)  INCOME TAXES
 
     The provision for income taxes consists of the following for the years
ended December 31, 1995, 1996 and 1997:
1995      1996      1997
                                                           ------    ------    ------
Current
  Federal................................................  $1,768    $  692    $2,118
  State..................................................     566       196       659
                                                           ------    ------    ------
                                                            2,334       888     2,777
Deferred
  Federal................................................    (695)      124       (13)
  State..................................................    (215)       38        (4)
                                                           ------    ------    ------
                                                             (910)      162       (17)
                                                           ------    ------    ------
                                                           $1,424    $1,050    $2,760
                                                           ======    ======    ======
A reconciliation of the Company's income tax provision to the U.S.
statutory income tax rate is as follows:
1995    1996    1997
                                                              ----    ----    ----
U.S. federal statutory tax rate.............................  34.0%   34.0%   34.0%
State income taxes, net of federal benefit..................   6.3     6.3     6.3
Research and development credits............................  (0.7)   (1.0)   (1.0)
Other, net..................................................   1.1      .1    (0.3)
                                                              ----    ----    ----
          Effective tax rate................................  40.7%   39.4%   39.0%
                                                              ====    ====    ====
Significant components of the net deferred tax asset as of December 31,
1996 and 1997 are as follows:
1996    1997
                                                              ----    ----
Accruals and reserves.......................................  $784    $835
Depreciation................................................    11     (23)
                                                              ----    ----
          Total net deferred tax asset......................  $795    $812
                                                              ====    ====
F-10
71
 
                     INTERNATIONAL INTEGRATION INCORPORATED
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
  (INFORMATION AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997 IS
                                   UNAUDITED)
                             (DOLLARS IN THOUSANDS)
 
(5)  STOCKHOLDERS' EQUITY
 
     Until February 1996, the Company had authorized 12,020,025 and 2,979,975 of
Series A and Series B common shares, respectively, at no par value.
 
     In February 1996, each share of Series A common stock and Series B common
stock, without par value, was converted into one share of common stock, $0.01
par value, with the same voting rights. The Company has authorized 22,000,000
shares consisting of 21,000,000 shares of common stock, $0.01 par value, and
1,000,000 shares of preferred stock, $0.01 par value.
 
     In February 1997, i-Cube's Board of Directors voted a three-for-two stock
split of the Company's common stock, payable as a stock dividend, which became
effective the same day. All share and per share data, except common stock par
value, have been retroactively adjusted to reflect these changes.
 
(6)  EARNINGS PER SHARE
 
     The following table reconciles the denominator of the basic and diluted
earnings per share computation as shown on the Consolidated Statements of
Income:
THREE MONTHS
                                      YEAR ENDED DECEMBER 31,                ENDED MARCH 31,
                               --------------------------------------    ------------------------
                                  1995          1996          1997          1997          1998
                               ----------    ----------    ----------    ----------    ----------
                                                                               (UNAUDITED)
Basic common shares
  outstanding................  12,322,743    12,424,678    12,627,222    12,519,461    13,243,701
Stock options................   1,141,930     1,257,658     2,536,198     1,736,146     2,787,440
                               ----------    ----------    ----------    ----------    ----------
Diluted common and common
  equivalent shares..........  13,464,673    13,682,336    15,163,420    14,255,607    16,031,141
                               ==========    ==========    ==========    ==========    ==========
Options to purchase shares of the Company's common stock of 440,574,
150,000, 138,622, 204,100 and 9,522 for the years ended December 31, 1995, 1996,
1997 and three months ended March 31, 1997 and 1998, respectively, were
outstanding during the respective periods but were not included in the
computation of diluted EPS because the exercise price of the options, which
ranges from $1.33 to $2.20 in 1995, $2.20 in 1996, $5.00 in 1997, $3.00 in the
three months ended March 31, 1997 and $7.00 in the three months ended March 31,
1998, were greater than the average market price of the common stock for the
periods reported. The outstanding options not included in the calculation for
the year ended December 31, 1995 will expire between May 2005 and December 2005.
The outstanding options not included in the calculation for the year ended
December 31, 1996 will expire in September 2005. The outstanding options not
included in the calculation for the year ended December 31, 1997 will expire in
November 2007. The outstanding options not included in the calculation for the
three months ended March 31, 1997 will expire between February 2007 and March
2007. The outstanding options not included in the calculation for the three
months ended March 31, 1998 will expire in March 2008.
 
(7)  STOCK PLANS
 
     (a) 1993 Stock Plan
 
     The Company has a 1993 Stock Plan (the "1993 Plan"), pursuant to which the
Company was authorized to grant to employees, directors and consultants of the
Company statutory and nonstatutory stock options to purchase shares of Series B
common stock (now common stock). Under the 1993 Plan, incentive stock
 
                                      F-11
72
 
                     INTERNATIONAL INTEGRATION INCORPORATED
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
  (INFORMATION AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997 IS
                                   UNAUDITED)
                             (DOLLARS IN THOUSANDS)
 
options may be granted at an exercise price not less than the fair market value
of the Company's common stock on the date of the grant, as determined by the
Board of Directors. Nonqualified options may be granted on terms determined by
the Board of Directors, but at a price of no less than the book value per share
or 50% of the fair market value on the date of grant, whichever is lower. The
maximum term of the options is ten years from date of grant. Upon the adoption
of the 1996 Plan,           shares remaining ungranted under the 1993 Plan were
authorized to be granted under the 1996 Plan, and the 1993 Plan was then
terminated.
 
     (b) 1996 Stock Plan
 
     On January 15, 1996, the Company's Board of Directors adopted the 1996
Stock Plan (the "1996 Plan"), pursuant to which the Company may grant to
employees, directors and consultants of the Company stock options, rights or
awards to purchase           shares of common stock. The total number of shares
available for grant under the 1996 Plan was 1,067,984 at March 31, 1998. Under
the 1996 Plan, incentive stock options ("ISOs") may be granted at an exercise
price not less than the fair market value of the Company's common stock on the
date of the grant (110% of fair market value for ISOs granted to holders of more
than 10% of the voting stock of the Company), as determined by the Board of
Directors. Stock options under the 1996 Plan are non-transferable and generally
vest over a four-year period. The maximum term of any option is ten years.
 
     Information related to all stock options granted by the Company is as
follows:
WEIGHTED
                                                    WEIGHTED                      AVERAGE
                                                    AVERAGE                    EXERCISE PRICE
                                       NUMBER OF    EXERCISE      OPTIONS        OF OPTIONS
                                        SHARES       PRICE      EXERCISABLE     EXERCISABLE
                                       ---------    --------    -----------    --------------
Outstanding, December 31, 1994.......  1,099,988     $0.01         354,487         $0.01
  Granted............................  1,259,175      1.59
  Exercised..........................    (27,000)     0.01
                                       ---------     -----       ---------         -----
Outstanding, December 31, 1995.......  2,332,163      0.85       1,166,952         $0.54
  Granted............................  2,952,000      2.00
  Exercised..........................   (145,688)     1.72
  Forfeited/canceled.................   (479,550)     1.99
                                       ---------     -----       ---------         -----
Outstanding, December 31, 1996.......  4,658,925      1.43       1,728,001         $0.72
  Granted............................  1,928,700      3.43
  Exercised..........................   (473,677)     1.44
  Forfeited/canceled.................   (429,323)     2.17
                                       ---------     -----       ---------         -----
Outstanding, December 31, 1997.......  5,684,625      2.06       1,997,804         $0.92
  Granted............................    376,500      5.49
  Exercised..........................   (503,345)     0.11
  Forfeited/canceled.................    (95,998)     3.59
                                       ---------     -----       ---------         -----
Outstanding March 31,
  1998(unaudited)....................  5,461,782     $2.45       1,657,628         $1.32
                                       =========     =====
F-12
73
 
                     INTERNATIONAL INTEGRATION INCORPORATED
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
  (INFORMATION AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997 IS
                                   UNAUDITED)
                             (DOLLARS IN THOUSANDS)
 
     The following table summarizes information about stock options outstanding
at March 31, 1998:
OPTIONS OUTSTANDING                 OPTIONS EXERCISABLE
                 -------------------------------------------   ------------------------
                    NUMBER          WEIGHTED       WEIGHTED       NUMBER      WEIGHTED
     RANGE OF    OUTSTANDING        AVERAGE         AVERAGE    EXERCISABLE     AVERAGE
     EXERCISE    AT MARCH 31,      REMAINING       EXERCISE    AT MARCH 31,   EXERCISE
      PRICES         1998       CONTRACTUAL LIFE     PRICE         1998         PRICE
    ----------   ------------   ----------------   ---------   ------------   ---------
$0.01-0.67      728,500           6.53           $0.13        668,880       $0.10
     1.33-1.33       21,675           7.08            1.33         13,551        1.33
     2.00-2.20    2,721,594           8.23            2.01        840,167        2.02
     3.00-3.00    1,180,563           9.08            3.00        133,905        3.00
     5.00-5.00      717,450           9.61            5.00          1,125        5.00
     7.00-7.00       92,000           9.98            7.00             --          --
    ----------    ---------           ----           -----      ---------       -----
    $0.01-7.00    5,461,782           8.39           $2.45      1,657,628       $1.32
    ==========    =========           ====           =====      =========       =====
The exercise price for each of the above grants was determined by the Board
of Directors of the Company to be equal to the fair market value of the common
stock on the day of grant (110% of the fair market value for grants to holders
of more than 10% of the voting stock of the Company). In reaching this
determination at the time of each such grant, the Board considered a broad range
of factors including the illiquid nature of an investment in the Company's
common stock, the Company's historical financial performance, and the Company's
future prospects. Pursuant to the required pro forma disclosure under the fair
value method of estimating compensation cost, the Company has estimated the fair
value of its stock option grants by using the Black-Scholes option pricing
method with the following weighted-average assumptions:
1995     1996     1997
                                                              -----    -----    -----
Expected option term (years)................................    5.0      7.0      7.0
Risk-free interest rate (%).................................    6.3      6.6      6.4
Expected volatility (%).....................................    0.0      0.0      0.0
Dividend yield (%)..........................................    0.0      0.0      0.0
 
Weighted-average fair value of options granted..............  $0.40    $0.72    $1.20
The Company applies APB Opinion No. 25 and the related Interpretations.
Accordingly, no compensation cost has been recognized for option grants. Had
compensation cost for these awards been determined based on the fair value at
the grant dates consistent with the method prescribed by SFAS No. 123, the
Company's net income would have been adjusted to the pro forma amounts indicated
below:
1995      1996      1997
                                                           ------    ------    ------
Net income
  As reported............................................  $2,076    $1,615    $4,325
  Compensation expense for stock options.................      56       272       573
                                                           ------    ------    ------
  Pro forma net income...................................  $2,020    $1,343    $3,752
                                                           ======    ======    ======
Basic earnings per share as reported.....................  $ 0.17    $ 0.13    $ 0.34
Pro forma basic earnings per share.......................  $ 0.16    $ 0.11    $ 0.30
Diluted earnings per share as reported...................  $ 0.15    $ 0.12    $ 0.29
Pro forma diluted earnings per share.....................  $ 0.15    $ 0.10    $ 0.25
F-13
74
 
                     INTERNATIONAL INTEGRATION INCORPORATED
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
  (INFORMATION AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997 IS
                                   UNAUDITED)
                             (DOLLARS IN THOUSANDS)
 
(8)  COMMITMENTS
 
     The Company leases its facilities under operating lease agreements that
expire through October 2002. The following are the future minimum lease payments
under operating leases as of December 31, 1997:
1998................................................  $1,108
1999................................................   1,144
2000................................................   1,228
2001................................................   1,140
2002................................................      45
                                                      ------
          Total minimum lease payments..............  $4,665
                                                      ======
Rent expense was $237, $544 and $1,158 for the years ended December 31,
1995, 1996 and 1997, respectively.
 
(9)  RELATED PARTY TRANSACTIONS
 
     In 1995, the Company had net revenues of $36 from an entity whose principal
stockholder is a principal stockholder and a former director of the Company.
 
     In 1995, the Company had net revenues of $366 from an entity of which a
principal stockholder and former director of the Company was a stockholder and
director.
 
     During 1995, the Company provided certain management, administrative and
support services and subleased a portion of its facilities to another related
entity. The Company charged the entity $102 during 1995, which was offset
against operating expenses of the Company. The amount charged was included in
due from related party in the Company's balance sheets. During 1996, all amounts
were paid in full.
 
     In 1996, the Company was paid $317 for IT services provided to a company of
which a principal stockholder and a former director of the Company was a
significant shareholder.
 
     During 1997, the Company received a note for $533 from a stockholder for
the exercise of 400,000 stock options. The note is due in October 2000 and
accrues interest at 8.5%, payable at maturity.
 
(10)  401(k) PLAN
 
     During April 1995, the Company adopted a defined contribution plan (the
"401(k) Plan") under Section 401(k) of the Internal Revenue Code. The 401(k)
Plan allows eligible employees to make contributions up to a specified annual
maximum contribution, as defined. Under the 401(k) Plan, the Company may, but is
not obligated to, match a portion of the employees contributions up to a defined
maximum. The Company did not contribute to the 401(k) Plan during 1995, 1996, or
1997. The Company's contribution to the plan was $32 during the three months
ended March 31, 1998.
 
(11)  SUPPLEMENTARY INFORMATION
 
     During 1997 and the three months ended March 31, 1998, the Company paid
interest of $69 and $22 respectively. No interest was paid in 1995, 1996, or the
three months ended March 31, 1998.
 
     During 1995, 1996, 1997 and the three months ended March 31, 1997 and 1998,
the Company paid $1,762, $1,808, $2,217, $127, and $7, respectively for income
taxes.
 
                                      F-14
75
 
                     INTERNATIONAL INTEGRATION INCORPORATED
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
  (INFORMATION AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997 IS
                                   UNAUDITED)
                             (DOLLARS IN THOUSANDS)
 
     The Company entered into obligations under capital leases of $617 during
the period ended December 31, 1997.
 
     During 1997, the Company disposed of various fixed assets with an original
cost of $199.
 
     During 1996 and 1997 the Company paid $1,150 and $249 for executive signing
bonuses, respectively. These amounts are included in general and administrative
expenses.
 
                                      F-15
76
[photograph of Company employees participating in a team building exercise]
77
 
                                  I-Cube Logo
78
 
                                    PART II
 
                     INFORMATION NOT REQUIRED IN PROSPECTUS
 
ITEM 13.  OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
 
     Estimated expenses (other than underwriting discounts and commissions)
payable in connection with the sale of the Common Stock offered hereby are as
follows:
SEC registration fee........................................  $ 12,197
NASD filing fee.............................................     4,525
Nasdaq National Market listing fee..........................    95,000
Printing and engraving expenses.............................   120,000
Legal fees and expenses.....................................   300,000
Accounting fees and expenses................................   300,000
Blue Sky fees and expenses (including legal fees)...........    10,000
Transfer agent and registrar fees and expenses..............    50,000
Miscellaneous...............................................    58,278
                                                              --------
          Total.............................................  $950,000
                                                              ========
The Company will bear all expenses shown above.
 
ITEM 14.  INDEMNIFICATION OF DIRECTORS AND OFFICERS.
 
     The Delaware General Corporation Law and the Registrant's Certificate of
Incorporation, as amended, provides for indemnification of the Registrant's
directors and officers for liabilities and expenses that they may incur in such
capacities. In general, directors and officers are indemnified with respect to
actions taken in good faith in a manner reasonably believed to be in, or not
opposed to, the best interests of the Registrant, and with respect to any
criminal action or proceeding, actions that the indemnitee had no reasonable
cause to believe were unlawful. Reference is made to the Registrant's Form of
Amended and Restated Certificate of Incorporation filed as Exhibit 3.2 hereto.
 
     The Underwriting Agreement provides that the Underwriters are obligated,
under certain circumstances, to indemnify directors, officers and controlling
persons of the Company against certain liabilities, including liabilities under
the Securities Act of 1933, as amended (the "Act"). Reference is made to the
form of Underwriting Agreement to be filed as Exhibit 1.1 hereto.
 
     The Company intends to obtain directors and officers liability insurance
for the benefit of its directors and certain of its officers.
 
ITEM 15.  RECENT SALES OF UNREGISTERED SECURITIES.
 
     In the three years preceding the filing of this registration statement, the
Company has issued the following securities that were not registered under the
Securities Act:
 
          (a) Issuances of Capital Stock.
 
          On February 28, 1996, the Company issued an aggregate of 8,231,683
     (pre-split) shares of its Common Stock to seven stockholders upon the
     conversion of an aggregate of 8,231,683 shares of the common stock of
     International Integration Incorporated, a Massachusetts corporation, in
     connection with the Company's reincorporation in Delaware. Of these, 18,000
     shares were issued to one stockholder upon the conversion of shares issued
     (pursuant to an exercise of options under the Company's 1993 Stock Plan) in
     the three years preceding the filing of this registration statement; the
     balance of these shares were issued to six stockholders upon the conversion
     of shares issued more than three years prior to the filing of this
     registration statement.
 
                                      II-1
79
 
          Between February 28, 1996 and February 4, 1997, the Company issued an
     aggregate of 122,625 (pre-split) shares of its Common Stock to eight
     stockholders for an aggregate purchase price of $327,975. All of such
     issuances were pursuant to option exercises or restricted stock purchases
     under the Company's stock plans.
 
          The Company declared a three-for-two stock split, by means of a stock
     dividend, effective February 5, 1997. As a result, the holders of 8,354,308
     shares received an additional 4,177,154 shares of Common Stock.
 
          Since its reincorporation in Delaware, the Company has repurchased
     from stockholders an aggregate of 3,001 (post-split) shares of Common
     Stock, which are currently held in treasury by the Company.
 
          Subsequent to the stock split described above, the Company issued an
     aggregate of 938,772 (post-split) shares of its Common Stock to 16
     stockholders for an aggregate purchase price of $659,547.51. All of such
     issuances were pursuant to option exercises or restricted stock purchases
     under the Company's stock plans.
 
          (b) Certain Grants and Exercises of Stock Options and Restricted
     Stock.
 
          Prior to January 1, 1996, the Company (i) issued options under its
     1993 Stock Plan to purchase an aggregate of 1,866,363.5 (post-split) shares
     of Common Stock, exercisable at a weighted average exercise price of $.57
     per share and (ii) issued an aggregate of 951,188.5 (post-split) shares of
     Common Stock at a weighted average purchase price of $.60 per share upon
     exercise of certain of such options. Also, during this period, the Company
     issued 300,500 (post-split) shares of restricted stock under its 1993 Stock
     Plan for a weighted average purchase price of $.01 per share.
 
          From February 29, 1996 through March 31, 1998, the Company (i) issued
     options under its 1996 Stock Plan to purchase an aggregate of 4,632,628
     (post-split) shares of Common Stock, exercisable at a weighted average
     purchase price of $2.82 per share and (ii) issued an aggregate of 86,021
     (post-split) shares of Common Stock at a weighted average purchase price of
     $2.18 per share upon exercise of certain of such options. Also, during this
     period, the Company issued 112,500 (post-split) shares of restricted stock
     under its 1996 Stock Plan for a weighted average purchase price of $2.00
     per share.
 
          The foregoing exercises of stock options and grants of restricted
     stock are also included in the totals in paragraph (a) above.
 
          No underwriters were involved in the foregoing sales of securities.
     Such sales were made in reliance upon an exemption from the registration
     provisions of the Securities Act set forth in Section 4(2) thereof relative
     to sales by an issuer not involving any public offering or the rules and
     regulations thereunder, or, in the case of options to purchase Common
     Stock, Rule 701 of the Securities Act. All of the foregoing securities are
     deemed restricted securities for the purposes of the Securities Act.
 
ITEM 16.  EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
 
     (a) Exhibits:
EXHIBIT
  NO.                                 DESCRIPTION
-------                               -----------
1.1*  --   Form of Underwriting Agreement
   3.1   --   Certificate of Incorporation of the Registrant, as amended
   3.2*  --   Amended and Restated Certificate of Incorporation of the
              Registrant, to be filed prior to the closing of this
              offering
   3.3   --   By-laws of the Registrant, as amended
   3.4*  --   Amended and Restated By-Laws of the Registrant, to be
              effective upon the closing of this offering
   4.1*  --   Specimen Certificate for Common Stock
   5.1*  --   Opinion of Hale and Dorr LLP
  10.1   --   1993 Stock Plan
II-2
80
EXHIBIT
  NO.                                 DESCRIPTION
-------                               -----------
10.2   --   1996 Stock Plan
  10.3*  --   1998 Stock Incentive Plan
  10.4*  --   1998 Non-Employee Director Stock Option Plan
  10.5   --   Founding Stockholders' Agreement dated as of May 6, 1997
              between the Registrant, Madhav Anand, Yannis Doganis, Sundar
              Subramaniam and Edouard Aslanian
  10.6   --   Amendment to Founding Stockholders' Agreement dated as May
              6, 1997, between the Registrant, Madhav Anand, Yannis
              Doganis, Sundar Subramaniam, Edouard Aslanian, Harrington
              Trust Limited, as Trustee of The Geneva Trust, and
              Subramaniam Limited Partnership
  10.7   --   Voting Trust Agreement dated as of October 13, 1997 between
              the Registrant, State Street Bank and Trust Company, Sundar
              Subramaniam, Subramaniam Limited Partnership and Harrington
              Trust Limited, as Trustee of the Geneva Trust
  10.8   --   Letter Agreement dated August 8, 1995 between the Registrant
              and Silicon Valley Bank
  10.9   --   Promissory Note dated August 8, 1995 between the Registrant
              and Silicon Valley Bank
  10.10  --   Commercial Security Agreement dated August 8, 1995 between
              the Registrant and Silicon Valley Bank
  10.11  --   Negative Pledge Agreement dated August 8, 1995 between the
              Registrant and Silicon Valley Bank
  10.12  --   Letter Agreement dated October 7, 1996 between the
              Registrant and Silicon Valley Bank
  10.13  --   Promissory Note dated July 31, 1997 between the Registrant
              and Silicon Valley Bank
  10.14  --   Loan Modification Agreements between Registrant and Silicon
              Valley Bank dated August 6, August 7, 1996 and August 28,
              1997, respectively
  10.15  --   Lease Agreement dated November 20, 1996 between the
              Registrant, RR&C Development Company and Patrician
              Associates, Inc.
  10.16  --   Lease Agreement dated as of July 14, 1995 between the
              Registrant and Riverfront Office Park Joint Venture
  10.17  --   Amendment No. 1 to Lease Agreement dated as of July 14, 1995
              between the Registrant and Riverfront Office Park Joint
              Venture
  10.18  --   Sublease dated as of June 19, 1995 between the Registrant
              and MathSoft, Inc.
  10.19  --   Letter Agreement dated June 3, 1996 between the Registrant
              and Michael Pehl
  10.20  --   Letter Agreement dated August 30, 1996 between the
              Registrant and Lawrence P. Begley
  10.21  --   Letter Agreement dated December 19, 1997 between the
              Registrant and Karl-Heinz Dette
  16.1   --   Letter from Arthur Andersen LLP re: change in certifying
              accountants
  21.1   --   Subsidiaries of the Registrant
  23.1   --   Consent of Coopers & Lybrand L.L.P.
  23.2*  --   Consent of Hale and Dorr LLP (included in Exhibit 5.1)
  24.1   --   Power of Attorney (see page II-5)
  27     --   Financial Data Schedule
---------------
*   To be filed by amendment.
 
     (b) Financial Statements Schedules:
 
     All schedules for which provision is made in the applicable accounting
regulation of the Securities and Exchange Commission are not required under the
related instructions or are inapplicable, and therefore have been omitted.
 
ITEM 17.  UNDERTAKINGS.
 
     Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
registrant pursuant to provisions described in Item 14 above, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
                                      II-3
81
 
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
 
     The undersigned registrant hereby undertakes (1) to provide to the
underwriters at the closing specified in the underwriting agreement certificates
in such denominations and registered in such names as required by the
underwriters to permit prompt delivery to each purchaser; (2) that for purposes
of determining any liability under the Securities Act, the information omitted
from the form of prospectus filed as part of a registration statement in
reliance upon Rule 430A and contained in the form of prospectus filed by the
registrant pursuant to Rule 424(b)(2) or (3) or (4) or 497(h) under the
Securities Act shall be deemed to be part of this registration statement as of
the time it was declared effective; and (3) that for the purpose of determining
any liability under the Securities Act, each post-effective amendment that
contains a form of prospectus shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
 
                                      II-4
82
 
                                   SIGNATURES
 
     Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Cambridge, Massachusetts, on this
24th day of April, 1998.
 
                                          INTERNATIONAL INTEGRATION INCORPORATED
 
                                          By:       /s/ MICHAEL PEHL
                                            ------------------------------------
                                                        Michael Pehl
                                                  Chief Executive Officer
 
                        POWER OF ATTORNEY AND SIGNATURES
 
     We, the undersigned officers, directors and authorized representative of
International Integration Incorporated, hereby severally constitute and appoint
Michael Pehl and Lawrence P. Begley and each of them singly, our true and lawful
attorneys with full power to them, and each of them singly, to sign for us and
in our names in the capacities indicated below, the Registration Statement on
Form S-1 filed herewith and any and all pre-effective and post-effective
amendments to said Registration Statement, and any subsequent Registration
Statement for the same offering which may be filed under Rule 462(b), and
generally to do all such things in our names and on our behalf in our capacities
as officers and directors to enable International Integration Incorporated to
comply with the provisions of the Securities Act of 1933, as amended, and all
requirements of the Securities and Exchange Commission, hereby ratifying and
confirming our signatures as they may be signed by our said attorneys, or any of
them, to said Registration Statement and any and all amendments thereto or to
any subsequent Registration Statement for the same offering which may be filed
under Rule 462(b).
 
     Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
SIGNATURE                                     TITLE                       DATE
                     ---------                                     -----                       ----
/s/ MICHAEL PEHL                    Chief Executive Officer and          April 24, 1998
---------------------------------------------------    Chairman (Principal Executive
                   Michael Pehl                        Officer)
 
                 /s/ MADHAV ANAND                    President and Director               April 24, 1998
---------------------------------------------------
                   Madhav Anand
 
              /s/ LAWRENCE P. BEGLEY                 Executive Vice President, Chief      April 24, 1998
---------------------------------------------------    Financial Officer, Treasurer
                Lawrence P. Begley                     and Director (Principal
                                                       Accounting and Financial
                                                       Officer)
 
              /s/ THOMAS J. MEREDITH                 Director                             April 24, 1998
---------------------------------------------------
                Thomas J. Meredith
II-5
83
SIGNATURE                                     TITLE                       DATE
                     ---------                                     -----                       ----
/s/ JOSEPH M. TUCCI                  Director                             April 24, 1998
---------------------------------------------------
                  Joseph M. Tucci
 
               /s/ GREGORY S. YOUNG                  Director                             April 24, 1998
---------------------------------------------------
                 Gregory S. Young
 
                 /s/ JOHN A. YOUNG                   Director                             April 24, 1998
---------------------------------------------------
                   John A. Young
 
              /s/ PATRICK J. ZILVITIS                Director                             April 24, 1998
---------------------------------------------------
                Patrick J. Zilvitis
II-6
84
 
                                 EXHIBIT INDEX
EXHIBIT
  NO.                                 DESCRIPTION
-------                               -----------
1.1*  --   Form of Underwriting Agreement
   3.1   --   Certificate of Incorporation of the Registrant, as amended
   3.2*  --   Amended and Restated Certificate of Incorporation of the
              Registrant, to be filed prior to the closing of this
              offering
   3.3   --   By-laws of the Registrant, as amended
   3.4*  --   Amended and Restated By-Laws of the Registrant, to be
              effective upon the closing of this offering
   4.1*  --   Specimen Certificate for Common Stock
   5.1*  --   Opinion of Hale and Dorr LLP
  10.1   --   1993 Stock Plan
  10.2   --   1996 Stock Plan
  10.3*  --   1998 Stock Incentive Plan
  10.4*  --   1998 Non-Employee Director Stock Option Plan
  10.5   --   Founding Stockholders' Agreement dated as of May 6, 1997
              between the Registrant, Madhav Anand, Yannis Doganis, Sundar
              Subramaniam and Edouard Aslanian
  10.6   --   Amendment to Founding Stockholders' Agreement dated as May
              6, 1997, between the Registrant, Madhav Anand, Yannis
              Doganis, Sundar Subramaniam, Edouard Aslanian, Harrington
              Trust Limited, as Trustee of The Geneva Trust, and
              Subramaniam Limited Partnership
  10.7   --   Voting Trust Agreement dated as of October 13, 1997 between
              the Registrant, State Street Bank and Trust Company, Sundar
              Subramaniam, Subramaniam Limited Partnership and Harrington
              Trust Limited, as Trustee of the Geneva Trust
  10.8   --   Letter Agreement dated August 8, 1995 between the Registrant
              and Silicon Valley Bank
  10.9   --   Promissory Note dated August 8, 1995 between the Registrant
              and Silicon Valley Bank
  10.10  --   Commercial Security Agreement dated August 8, 1995 between
              the Registrant and Silicon Valley Bank
  10.11  --   Negative Pledge Agreement dated August 8, 1995 between the
              Registrant and Silicon Valley Bank
  10.12  --   Letter Agreement dated October 7, 1996 between the
              Registrant and Silicon Valley Bank
  10.13  --   Promissory Note dated July 31, 1997 between the Registrant
              and Silicon Valley Bank
  10.14  --   Loan Modification Agreements between Registrant and Silicon
              Valley Bank dated August 6, August 7, 1996 and August 28,
              1997, respectively
  10.15  --   Lease Agreement dated November 20, 1996 between the
              Registrant, RR&C Development Company and Patrician
              Associates, Inc.
  10.16  --   Lease Agreement dated as of July 14, 1995 between the
              Registrant and Riverfront Office Park Joint Venture
  10.17  --   Amendment No. 1 to Lease Agreement dated as of July 14, 1995
              between the Registrant and Riverfront Office Park Joint
              Venture
  10.18  --   Sublease dated as of June 19, 1995 between the Registrant
              and MathSoft, Inc.
  10.19  --   Letter Agreement dated June 3, 1996 between the Registrant
              and Michael Pehl
  10.20  --   Letter Agreement dated August 30, 1996 between the
              Registrant and Lawrence P. Begley
  10.21  --   Letter Agreement dated December 19, 1997 between the
              Registrant and Karl-Heinz Dette
  16.1   --   Letter from Arthur Andersen LLP re: change in certifying
              accountants
  21.1   --   Subsidiaries of the Registrant
  23.1   --   Consent of Coopers & Lybrand L.L.P.
  23.2*  --   Consent of Hale and Dorr LLP (included in Exhibit 5.1)
  24.1   --   Power of Attorney (see page II-5)
  27     --   Financial Data Schedule
---------------
*   To be filed by amendment.