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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

(Mark One)

For the quarter ended June 30, 2002

OR

For the transition period from                              to                             

Commission File Number 1-7516

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

        Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý    No o

        As of June 30, 2002, the number of issued and outstanding shares of Common Stock (excluding 190,535 shares held in treasury) and Class B Common Stock are 75,310,908 and 284,854 shares, respectively.

Keane, Inc. and Subsidiaries

TABLE OF CONTENTS

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Keane, Inc. and Subsidiaries

Condensed Consolidated Statements of Income (unaudited)

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

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Keane, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

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

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Keane, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows (unaudited)

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

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Keane, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

(In thousands except per share amounts)

Note 1.

        The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principals for interim financial information and accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations for the interim periods reported and of the Company's financial condition as of the date of the interim balance sheet have been included. Operating results for the three and six-month period ended June 30, 2002 are not necessarily indicative of the results that may be expected for the year ending December 31, 2002.

        The balance sheet at December 31, 2001 has been derived from the audited financial statements at that date, but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.

        For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2001.

Note 2.

        Computation of earnings per share for the three and six months ended June 30, 2002 and 2001.

Note 3.

        The Company offers an integrated mix of end-to-end business solutions, such as Business Consulting (Plan), Application Development and Integration Services (Build), and Application Development and Management Outsourcing (Manage). The Company's Healthcare Solutions Division represented 6% of the Company's revenue during the first six months of 2002. This revenue is included in the Company's Build service revenues.

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Note 4.

        Total comprehensive income (i.e. net income plus available-for-sale securities valuation adjustments and currency translation adjustments to stockholders equity) was $7.2 million for the second quarter of 2002 and $13.7 million for the year to date, and was $7.5 million for the second quarter of 2001 and $17.2 million for the prior year to date.

Note 5.

        In the fourth quarter of 2001, 2000 and 1999, the Company recorded restructuring charges of $10.4 million, $8.6 million and $13.7 million, respectively. Of these charges, $4.4 million, $1.7 million and $3.8 million related to workforce reductions, primarily technical consultants, of approximately 900, 200 and 600 employees for the years 2001, 2000 and 1999, respectively. In addition, the Company performed a review of its business strategy and concluded that consolidating some of its branch offices was key to its success. As a result of this review, the Company wrote off $800,000 in 2001, $3.4 million in 2000 and $4.8 million in 1999 of assets, which became impaired as a result of these restructuring actions. The restructuring charges also included $5.1 million in 2001, $3.5 million in 2000 and $5.1 million in 1999 for branch office closings and certain other expenditures.

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        A summary of recent and second quarter restructuring activity, which is recorded in accrued expenses in the accompanying balance sheet, is as follows:

Note 6.

        In October, 2001, the Company entered into a lease with Gateway Developers LLC ("Gateway LLC") for a term of twelve years. Under this lease, the Company has agreed to lease approximately 95,000 square feet of office and development space in a building under construction at One Chelsea Street in Boston, Massachusetts (the "New Facility"). The Company will lease approximately 57% of the New Facility and the remaining 43% will be occupied by other tenants. John Keane Family LLC is a member of Gateway LLC. The members of John Keane Family LLC are trusts for the benefit of John F. Keane, Chairman of the Board of the Company, and his immediate family members, including Brian Keane, President, Chief Executive Officer and a director of the Company.

        On October 31, 2001, Gateway LLC entered into a $39.4 million construction loan (the "Gateway Loan") in connection with development of the New Facility and an adjacent building to be located at 20 City Square, Boston, Massachusetts. John Keane Family LLC and John F. Keane are each liable for

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certain obligations under the Gateway Loan if and to the extent Gateway LLC requires funds to comply with its obligations under the Gateway Loan.

        The Company currently expects to occupy the new facility in January 2003. The Company will consolidate several existing facilities it has in the Boston area as part of this move. Based upon its knowledge of rental payments for comparable facilities in the Boston area, the Company believes that the rental payments under the lease for the New Facility, which will be approximately $3.2 million per year ($33.00 per square foot for the first 75,000 square feet and $35.00 per square foot for the remainder of the premises) for the first six years of the lease term and $3.5 million per year ($36.00 per square foot for the first 75,000 square feet and $40.00 per square foot for the remainder of the premises) for the remainder of the lease term, plus specified percentages of any annual increases in real estate taxes and operating expenses, were, at the time the Company entered into the lease, as favorable to the Company as those which could have been obtained from an independent third party.

        In view of these related party transactions, the Company has concluded that, during the construction phase of the New Facility, the estimated construction in progress costs for the New Facility will be capitalized in accordance with EITF No. 97-10, "The Effect of Lessee Involvement in Asset Construction." A credit in the same amount is included in the caption "Accrued construction-in-progress costs" in the accompanying balance sheet. For purposes of the consolidated statement of cash flows, the Company characterizes this treatment as a non-cash financing activity.

Note 7.

        Effective January 1, 2002, the Company adopted FAS No. 142, "Goodwill and Other Intangible Assets." Under FAS 142, goodwill and indefinite lived intangible assets are no longer amortized but are reviewed annually (or more frequently if impairment indicators arise) for impairment. Separable intangible assets that are not deemed to have an indefinite life will continue to be amortized over their useful lives. The amortization provisions of Statement 142 apply to goodwill and intangible assets acquired on or after June 30, 2001. With respect to goodwill and intangible assets acquired prior to June 30, 2001, companies are required to adopt Statement 142 in their first fiscal year beginning after December 15, 2001. Because of the different transition dates for goodwill and intangible assets acquired on or before June 30, 2001 and those acquired after that date, pre-existing goodwill and intangibles will be amortized during this transition period until adoption whereas new goodwill and indefinite lived intangible assets acquired after June 30, 2001 will not.

        The Company is required to report, in the period of adoption, a disclosure reflecting net income and earnings per share for the prior year, adjusted to exclude amortization expense related to goodwill and other intangible assets effected by FAS142.

        The following table discloses the reconciliation of reported net income to the adjusted net income.

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Goodwill & Other Intangible Assets — Adoption of Statement 142
(In thousands except per share amounts)

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Acquired Intangible Assets
(In thousands)

Goodwill

        The changes in the carrying amounts of goodwill for the quarter ended June 30, 2002 are as follows:

        Upon adoption of FAS 142, the Company is required to perform a transitional impairment test on all indefinite lived intangible assets. To the extent that an impairment charge is required, it will be treated as a cumulative effect of a change in accounting principle. The Company completed its analysis of the impact of SFAS No. 142, including the transitional impairment test, during the second quarter of the fiscal year 2002 and determined that the change in accounting principle did not yield an impairment charge.

        Effective January 1, 2002, the company adopted SFAS No. 144, "Accounting for the Impairment or Disposal of Long-lived Assets." SFAS No. 144 supersedes SFAS No. 121, "Accounting for the Impairment of Long-lived Assets and for Long-lived Assets to Be Disposed of" and provides a single accounting model for long-lived assets to be disposed of. The Company has determined that the impact of SFAS 144 did not have a material effect on its results of operations for the second quarter.

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Note 8

        On March 15, 2002, Keane acquired SignalTree Solutions Holding, Inc., a privately-held, U.S.-based corporation with two software development facilities in India and additional operations in the United States. Under the terms of the merger agreement, Keane paid $68.1 million in cash for SignalTree.

        In accordance with recently issued Statement of Financial Accounting Standards No.141, "Business combinations," and certain provisions of Statement of Financial Accounting Standard No. 142, "Goodwill and other Intangible Assets," The Company used the purchase method of accounting for a business combination to account for the acquisition, as well as the new accounting and reporting regulations for goodwill and other intangibles. Under these methods of accounting, the assets and liabilities of SignalTree, including intangible assets, were recorded at their respective fair values. All intangible assets will be amortized over their estimated useful life with the exception of goodwill. The financial position, results of operations and cash flows of SignalTree were included in the Company's financial statements effective as of the purchase date.

        The total cost of the merger was $77.8 million. Portions of the purchase price, including intangible assets, were identified by independent appraisers utilizing proven valuation procedures and techniques.

        The components of the purchase price allocation is as follows:

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        The following table presents the condensed balance sheet disclosing the amounts assigned to each of the major assets acquired and liabilities assumed of SignalTree at the acquisition date:

        The unaudited pro forma combined condensed statements of income below combine the historical statements of the Company and SignalTree as if the purchase had occurred at January 1, 2001. Unaudited pro forma combined condensed financial information is presented for comparative purposes only and is not necessarily indicative of the results of operations that would have actually been reported had the purchase occurred at the beginning of the periods presented, nor is it necessarily indicative of future financial position or results of operations.

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Keane, Inc. and Subsidiaries
Management's Discussion and Analysis of Financial Condition and Results of Operations

        This Quarterly Report on Form 10-Q contains forward-looking statements. For this purpose, any statements contained herein that are not statements of historical fact may be deemed forward-looking statements. Without limiting the foregoing, the words "believes," "anticipates," "plans," "expects" and similar expressions are intended to identify forward-looking statements. There are a number of important factors that could cause the Company's actual results to differ materially from those indicated by such forward-looking statements. These factors include, without limitation, those set forth below under the caption "Certain Factors That May Affect Future Results." The Company assumes no obligation to update any forward-looking statements.

RESULTS OF OPERATIONS:

        The Company's total revenue for the second quarter of 2002 was $226.1 million, a 15% increase from revenue of $197.0 million in the second quarter of 2001. This increase in total revenue was primarily the result of the acquisition of Metro Information Services, which closed on November 30, 2001, and the acquisition of SignalTree Solutions Holding, Inc., which closed on March 15, 2002.

        For the second quarter of 2002, revenue from the Company's Plan services was $15.3 million, down from $19.2 million during the second quarter of 2001. Plan revenue is comprised primarily of business innovation consulting services delivered by Keane Consulting Group (KCG), the Company's business consulting arm, and IT consulting services, which are sold and implemented out of Keane's network of branch offices. This decrease in Plan revenue was primarily the result of the deferral of consulting projects due to macroeconomic conditions.

        For the second quarter of 2002, revenue from the Company's Build Services was $55.7 million, down from $70.6 million during the second quarter of 2001. Keane's Build revenue, which consists primarily of application development and integration business, was also adversely affected during the second quarter by the challenging economic environment and the related deferral of new software development projects in both North America and the United Kingdom. However, revenue from the less cyclical public sector and healthcare related vertical markets, which are also included in Build Services revenue, lends stabilization to this sector.

        Revenue from the Company's Manage services, which consist primarily of Keane's Application Development and Management (ADM) Outsourcing service, as well as Staff Augmentation services and other Maintenance and Migration services, grew to $155.1 million during the second quarter of 2002, an increase of 45% from $107.2 million during the second quarter of 2001. This increase was the result of increasing revenue from Keane's ADM Outsourcing service, which was $106.1 million during the second quarter of 2002, up 4% from $102.1 million during the second quarter of 2001 and the acquisitions of Metro Information Services and SignalTree Solutions Holding, Inc.

        Total revenue for the six months ended June 30, 2002 was $447.3 million, up 12% from $400.1 million for the first half of 2001, excluding revenue associated with the Company's Help Desk operations, which was divested during the first quarter of 2001. Total revenue for the six months ended June 30, 2002 was up 10% from $405.3 million for the first half of 2001, including revenue associated with the Company's divested Help Desk operations. Revenue from Keane's ADM Outsourcing service was $202.6 million during the first half of 2002, and represented 45% of total revenue, as compared to $202.1 million, or 50% of revenue during the first six months of 2001.

        Plan, Build, and Manage revenues for the first half of 2002 were $33.8 million, $111.6 million, and $302.0 million, respectively, as compared to $39.9 million, $146.8 million, and $218.6 million, respectively, during the first half of 2001. Excluding Help Desk operations, Manage revenue, was $213.4 million for the first six months of 2001.

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        The Company has observed no indications of a significant increase in discretionary IT spending during the Second Quarter. As a result, Keane anticipates continuing softness in its Application Development and Integration business, which represents a majority of its Build sector, and in its Plan sector, until economic conditions improve and customers once again begin funding capital projects. However, the Company continues to see strong opportunities in its Application Development and Management Outsourcing business, which represents a majority of its Manage sector, and anticipates that outsourcing revenues will continue to act as a mitigating influence on future declines in Keane's revenues.

        With organic growth difficult in the current business environment, Keane's strategy is to market a mix of services to help customers optimize return on investment from business applications and IT assets. At the same time, the Company is also seeking to tightly control its discretionary expenses, carefully manage its employee utilization and evaluate acquisition opportunities that can provide incremental revenue and customers, while helping to leverage SG&A expense. For example, as part of its acquisition of Metro Information Services, the Company identified approximately $15 million in redundant annualized SG&A expenses that can be eliminated and expects to realize at least $11 million of these savings during the second half of 2002. During the first quarter of 2002, Keane completed the integration of Metro's corporate functions with those of Keane, and during the second quarter of 2002, the Company completed the consolidation and relocation of overlapping branch offices. During the second quarter of 2002, the Company also integrated U.S.-based operations acquired from SignalTree Solutions with those of Keane, and it anticipates integrating the corporate functions of SignalTree with Keane's during the third quarter of 2002. The Company plans to increase utilization of its two software development facilities in India, now rebranded as Keane India Ltd, in support of its outsourcing and software development customers.

        Salaries, wages and other direct costs for the second quarter of 2002 were $161.9 million, or 71.6% of total revenue, compared to $137.8 million, or 69.9% of total revenue, for the second quarter of 2001. As a result, Keane's gross margins for the second quarter of 2002 were 28.4%, as compared to 30.1% during the second quarter of 2001. The decrease in gross margins reflects continuing softness in the market for IT services and lower margins associated with Keane's ten year, $500 million dollar application outsourcing deal with PacifiCare, signed during the first quarter of 2002. For the first six months ended June 30, 2002, salaries, wages and other direct costs were $319.7 million, or 71.5% of total revenue, compared to $282.9 million, or 69.8% of total revenue, for the first half of 2001. As a result, Keane's gross margins for the first six months of 2002 were 28.5%, down from 30.2% during the first six months of 2001.

        Selling, General & Administrative ("SG&A") expenses for the second quarter of 2002 were $51.0 million, or 22.6% of total revenue, as compared to $46.2 million, or 23.5% of total revenue, for the second quarter of 2001. For the first six months of 2002 SG&A expense was $103.3 million, or 23.1% of total revenue, versus $95.5 million, or 23.6% of total revenue for the first six months of 2001. The improvement in SG&A as a percentage of revenue is the result of cost synergies obtained from the acquisition of Metro Information Services. The Company expects further improvements in its SG&A as a percentage of revenue as it fully realizes the anticipated cost savings from this acquisition.

        Amortization of intangible assets for the second quarter of 2002 was $4.2 million, or 1.9% of total revenue, compared to $3.5 million, or 1.8% of total revenue, in the second quarter of 2001. For the first six months of 2002, amortization of intangible assets was $7.6 million, or 1.7% of total revenue, compared to $6.9 million, or 1.7% of total revenue, for the first six months of 2001. The increase in amortization is attributable to additional intangible assets as a result of the Company's acquisitions of Metro Information Services and SignalTree Solutions offset by the fact that, effective January 1, 2002, goodwill is no longer amortized under generally accepted accounting principles.

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        Interest and dividend income totaled $.5 million for the second quarter of 2002, compared to $1.7 million for the second quarter of 2001. For the first six months of 2002, interest and dividend income totaled $1.5 million, compared to $3.3 million for the first six months of 2001. The decrease in interest and dividend income was attributable to having less cash earning interest and dividends due to the use of cash for the acquisition of Signal Tree and the repurchase of Keane stock, as well as interest rate declines. Other expense was $125,000 for the second quarter of 2002, as compared to other income of $109,000 in the second quarter of 2001. For the first six months of 2002, other income was $345,000 versus $2.4 million for the first six months of 2001. Other income during the first six months of 2001 was related to a gain of $4.0 million from the sale of Keane's Help Desk business partially offset by the Company's decision to write-off certain equity investments totaling $2.0 million, as well as gains from the sale of investments.

        The Company's effective tax rate was 40.0% for the second quarter and first six months of 2002, down from 40.5% in the second quarter and first six months of 2001. This decrease is a direct result of the adoption of FASB 142. The Company anticipates a similar rate for the remainder of 2002.

Liquidity and Capital Resources

        The Company's cash and investments at the end of the second quarter increased to $69.4 million, from $63.9 million as of the end of the first quarter of 2002. The increase in cash was primarily attributable to a decrease in accounts receivable as a result of the Company's focus on reducing its Days Sales Outstanding ("DSO"), offset in part by decreases in accounts payable and accrued expenses along with purchases of property plant and equipment.

        On September 19, 2001, the Company announced that its Board of Directors had authorized the Company to repurchase up to 1,542,800 shares of its common stock over the next 12 months. A total of 175,000 shares of common stock were repurchased under this authorization during the second quarter of 2002 at an average price of $12.88 for a total cost of $2.2 million. As of June 30, 2002, the balance remaining on this authorization was 1,367,800 shares. On July 26, 2002, the Board of Directors authorized a new share repurchase program, which will allow the Company to repurchase up to 5 million shares. This represents an increase of 3,632,200 shares from the number of shares remaining available for repurchase under the previous program which would have expired on September 18, 2002. Since May 1999, the Company has invested $111 million to repurchase 5,632,200 shares of its common stock under three separate authorizations. The timing and amount of additional share repurchases will be determined by the Company's management based on its evaluation of market and economic conditions and other factors.

        During the quarter, the Company paid $6.0 million associated with restructuring charges. Further details relating to restructuring and be found in the footnotes under Note 5.

        On March 15, 2002 the Company acquired SignalTree Solutions Holding, Inc., a privately—held, U.S. based corporation with two software development facilities in India and additional operations in the United States. The Company paid approximately $66.9 million in cash for the acquisition. Further details and disclosures related to this transaction can be found in the footnotes under Note 8.

        The Company has available a $10 million unsecured demand line of credit with a major Boston bank for operations and acquisition opportunities. Currently, the Company has no outstanding loans from this line of credit.

        Based on the Company's current operating plan, the Company believes that its cash and cash equivalents on hand, cash flows from operations, and its current available line of credit will be sufficient to meet its current capital requirements for at least the next twelve months.

        CERTAIN FACTORS THAT MAY AFFECT FUTURE RESULTS:    The following important factors, among others, could cause actual results to differ materially from those indicated by forward-

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looking statements made in this Quarterly Report on Form 10-Q and presented elsewhere by management from time to time.

        Keane's quarterly operating results have varied, and are likely to continue to vary significantly. This may result in volatility in the market price of Keane's shares.    Keane has experienced and expects to continue to experience fluctuations in its quarterly results. Keane's gross margins vary based on a variety of factors including employee utilization rates and the number and type of services performed by Keane during a particular period. A variety of factors influence Keane's revenue in a particular quarter, including:

•

general economic conditions which may influence investment decisions or cause downsizing;



•

the number and requirements of client engagements;



•

employee utilization rates;



•

changes in the rates Keane can charge clients for services;



•

acquisitions; and



•

other factors, many of which are beyond Keane's control.

        A significant portion of Keane's expenses do not vary relative to revenue. As a result, if revenue in a particular quarter does not meet expectations, Keane's operating results could be materially adversely affected, which in turn may have a material adverse impact on the market price of Keane common stock. In addition, many of Keane's engagements are terminable without client penalty. An unanticipated termination of a major project could result in an increase in underutilized employees and a decrease in revenue and profits.

        Keane has pursued, and intends to continue to pursue, strategic acquisitions. Failure to successfully integrate acquired businesses or assets may adversely affect Keane's financial performance.    In the past five years, Keane has grown significantly through acquisitions. From January 1, 1999 through June 30, 2002, Keane has completed nine acquisitions. The aggregate cost of these acquisitions totaled approximately $331.3 million. Keane's future growth may be based in part on selected acquisitions. At any given time, Keane may be in various stages of considering acquisition opportunities. Keane can provide no assurances that it will be able to find and identify desirable acquisition targets or that it will be successful in entering into a definitive agreement with any one target. In addition, even if Keane reaches a definitive agreement, there is no assurance that Keane will complete any future acquisition.

        Keane typically anticipates that each acquisition will bring benefits, such as an increase in revenue. Prior to completing an acquisition, however, it is difficult to determine if Keane can actually realize these benefits. Accordingly, there is a risk that an acquired company may not achieve an increase in revenue or other benefits for Keane. In addition, an acquisition may result in unexpected costs, expenses and liabilities. Any of these events could have a material adverse effect on Keane's business, financial condition and results of operations.

        The process of integrating acquired companies into Keane's existing business may also result in unforeseen difficulties. Unforeseen operating difficulties may absorb significant management attention, which Keane might otherwise devote to its existing business. In addition, the process may require significant financial resources that Keane might otherwise allocate to other activities, including the ongoing development or expansion of Keane's existing operations.

        Finally, future acquisitions could result in Keane having to incur additional debt and/or contingent liabilities. Any of these possibilities could have a material adverse effect on Keane's business, financial condition and result of operations.

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        The complex process of integrating Metro and SignalTree Solutions with Keane may disrupt the business activities of the Company and affect employee morale, thus affecting the Company's ability to pursue its business plan and retain key employees.    Integrating the operations and personnel of Metro Information Services, Inc., which Keane acquired in November 2001, and SignalTree Solutions, which the Company acquired in March 2002 with Keane is a complex process. The integration of each of Metro and SignalTree Solutions may not be completed in the expected time period or may not achieve the anticipated benefits of the merger. The successful integration of Metro and SignalTree Solutions with Keane requires, among other things, integration of finance, human resources and sales organizations. The diversion of the attention of Keane's management and any difficulties encountered in the process of combining the companies could cause the disruption of, or a loss of momentum in, the activities of the combined company's business. Further, the process of combining Metro and SignalTree Solutions with Keane could negatively affect employee morale and the ability of the combined company to retain some of its key employees after the merger. The inability to successfully integrate the operations and personnel of Metro and SignalTree Solutions with Keane could have a material adverse effect on Keane's business, financial condition and results of operations.

        Keane's growth could be limited if it is unable to attract personnel in the Information Technology and business consulting industries.    Keane believes that its future success will depend in large part on its ability to continue to attract and retain highly skilled technical and management personnel. The competition for such personnel is intense. Keane may not succeed in attracting and retaining the personnel necessary to develop its business. If Keane does not, its business, financial condition and result of operations could be materially adversely affected.

        Keane faces significant competition for its services, and its failure to remain competitive could limit its ability to maintain existing clients or attract new clients.    The market for Keane's services is highly competitive. The technology for custom software services can change rapidly. The market is fragmented, and no company holds a dominant position. Consequently, Keane's competition for client assignments and experienced personnel varies significantly from city to city and by the type of service provided. Some of Keane's competitors are larger and have greater technical, financial and marketing resources and greater name recognition in the markets they serve than does Keane. In addition, clients may elect to increase their internal information systems resources to satisfy their custom software development and integration needs.

        In the healthcare software systems market, Keane competes with some companies that are larger in the healthcare market and have greater financial resources than Keane. Keane believes that significant competitive factors in the healthcare software systems market include size and demonstrated ability to provide service to targeted healthcare markets.

        Keane may not be able to compete successfully against current or future competitors. In addition, competitive pressures faced by Keane may materially adversely affect its business, financial condition and results of operations.

        Keane conducts business in the United Kingdom and India, which exposes it to a number of difficulties inherent in international activities.    As a result of its acquisition of SignalTree Solutions in March 2002, Keane has two software development facilities in India and has added approximately 400 technical professionals to its professional services organization. India is currently experiencing conflicts with Pakistan over the disputed territory of Kashmir as well as clashes between different religious groups within the country. These conflicts, in addition to other unpredictable developments in the political, economic and social conditions in India, could eliminate or reduce the availability of these development and professional services. If access to these services were to be unexpectedly eliminated or significantly reduced, Keane's ability to meet development objectives important to its new strategy would be hindered, and its business could be harmed.

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        If Keane fails to manage its geographically dispersed organization, it may fail to meet or exceed its financial objectives and its revenues may decline. Keane performs development activities in the U.S. and Canada and soon will be in India, and has offices throughout the United States, the United Kingdom, Canada and India. This geographic dispersion requires substantial management resources that locally-based competitors do not need to devote to their operations.

        Keane's operations in the U.K. and India are subject to currency exchange rate fluctuations, foreign exchange restrictions, changes in taxation and other difficulties in managing operations overseas. Keane may not be successful in its international operations.

        Keane may be unable to redeploy its professionals effectively if engagements are terminated unexpectedly, which would adversely affect its results of operations.    Keane's clients can cancel or reduce the scope of their engagements with Keane on short notice. If they do so, Keane may be unable to reassign its professionals to new engagements without delay. The cancellation or reduction in scope of an engagement could, therefore, reduce the utilization rate of Keane's professionals, which would have a negative impact on Keane's business, financial condition and results of operations.

        As a result of these and other factors, the Company's past financial performance should not be relied on as an indication of future performance. Keane believes that period to period comparisons of its financial results are not necessarily meaningful and it expects that results of operations may fluctuate from period to period in the future.

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Keane, Inc. and Subsidiaries

Part II—Other Information

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

        The following matters were submitted to a vote of the stockholders at the 2002 Annual Meeting of Stockholders of the Company held on May 29, 2002 (the "Annual Meeting"): (1) electing three Class I directors for the ensuing three years, and (2) ratifying and approving the selection by the Board of Directors of Ernst & Young LLP as the Company's independent accountants for the current year. The number of shares of common stock and Class B common stock outstanding and eligible to vote as of the record date of April 1, 2002 were 75,461,917 and 284,866, respectively. Each of these matters were approved by the requisite vote of the stockholders. Set forth below is the number of votes cast for, against or withheld, as well as the number of abstentions and broker non-votes as to each such matter, including a separate tabulation with respect to each nominee for director:

        Proposal #1—To elect three Class I directors for the ensuing three years:

        Proposal #2—To ratify and approve the selection by the Board of Directors of Ernst & Young LLP as the Company's independent accountants for the current year:

Item 5. Other Information

        The Company announced on July 26, 2002 that its Board of Directors has authorized the Company to repurchase up to 5,000,000 shares of its common stock over the next 12 months. The authorization represents an increase from the shares remaining available for repurchase under the Company's previous stock repurchase program, which program would have expired on September 18, 2002. The timing and amount of shares repurchased will be determined by the Company's management based on its evaluation of market and economic conditions. The Company expects to use any shares repurchased for its stock plans, employee stock purchase and stock benefit plans, and other general corporate purposes, including acquisitions.

Item 6. Exhibits and Reports on Form 8-K

(a)

Exhibits

10.1    2001 Stock Incentive Plan, as amended

99.1    Statement Pursuant to 18 U.S.C. §1350

(b)

Reports on Form 8-K. The Registrant filed no Current Reports on Form 8-K during the quarter ended June 30, 2002.

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Signatures

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

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