10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10–K

Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the year ended December 31, 2001.

Commission File Number 0–23488

CIBER, INC.

(Exact name of Registrant as specified in its charter)

Delaware	38–2046833
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
5251 DTC Parkway, Suite 1400, Greenwood Village, Colorado  80111
(Address of principal executive offices)                                (Zip Code)
(303) 220–0100
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of Class	Name of exchange on which registered
Common Stock, $0.01 par value	New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:

None

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.    ý Yes    o No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S–K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10–K. o

The aggregate market value of the voting stock (Common Stock) held by non–affiliates of the registrant as of February 28, 2002 was $454,287,301 based upon the closing price of $8.62 per share as reported on the New York Stock Exchange on that date.

As of February 28, 2002 there were 60,803,665 shares of the registrant’s Common Stock outstanding.

Portions of the Proxy Statement for the Registrant’s 2002 Annual Meeting of Shareholders to be held on May 2, 2002 are incorporated by reference into Part III of this Report.

CIBER, Inc.

Form 10-K

Table of Contents

Part  I
				Item 1.	Description of Business
				Item 2.	Properties
				Item 3.	Legal Proceedings
				Item 4.	Submission of Matters to a Vote of Security Holders
Part  II
			Item 5.		Market for Registrant’s Common Equity and Related Shareholder Matters
			Item 6.		Selected Financial Data
			Item 7.		Management’s Discussion and Analysis of Financial Condition and Results of Operations
			Item 7A.		Quantitative and Qualitative Disclosures About Market Risk
			Item 8.		Financial Statements and Supplementary Data
			Item 9.		Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Part  III
		Item 10.			Directors and Executive Officers
		Item 11.			Executive Compensation
		Item 12.			Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
		Item 13.			Certain Relationships and Related Transactions
Part  IV
	Item 14.				Exhibits, Financial Statement Schedules and Reports on Form 8-K
Signatures

2

Part I

Item 1.    Description of Business

(a) General Development of Business

CIBER, Inc. was originally incorporated in Michigan in 1974 and later reincorporated in Delaware in 1993.  CIBER, Inc. and its subsidiaries (generally referred to herein as “we”) provide information technology (IT) system integration consulting and other services and to a lesser extent, resell certain hardware and software products. Our clients consist primarily of Fortune 500 and middle market companies across most major industries and governmental agencies. We operate from branch offices across the United States, plus offices in Canada and Europe. At December 31, 2001, we had approximately 5,000 employees.

We began operations in 1974 to assist companies in need of computer programming support. In the mid-1980s, we initiated a growth strategy that included expanding our range of computer-related services, developing a professional sales force and selectively acquiring established complementary companies. Since July 1998 we have completed 22 business combinations, which are more fully described in Notes 3 and 4 of the Notes to Consolidated Financial Statements included under item 8 of this Report. We continue to expand and modify our service offerings to address changes in customer demands and rapidly changing technology. In addition, we look to form strategic alliances with select package software and hardware vendors to stay at the leading edge of technology advances, to develop new business and to generate additional revenue.

(b) Financial Information about Industry Segments

The information required by this item is incorporated herein by reference to Note 20 of the Notes to Consolidated Financial Statements included under item 8 of this Report.

(c) Narrative Description of Business

Services and Operations

In the second half of 2001 we reorganized some of our business operations. In 2000, we originally formed DigiTerra and announced our intent to spin off DigiTerra to CIBER shareholders as a separate publicly traded entity.  In 2001, as the result of unfavorable business and market conditions, the plans to spin off DigiTerra were cancelled and DigiTerra significantly refocused and restructured its business making leadership changes, organizational changes and transforming its costs structure.  As part of the DigiTerra reorganization, a new CIBER division named CIBER Enterprise Solutions (CES) was formed.  CES was previously part of DigiTerra, Inc.  In September 2001, we merged the operations of our subsidiary, Waterstone, Inc., into our CIBER branch office operations, suspending its brand and eliminating the related corporate overhead costs.  As a result of the reorganizations in 2001, at December 31, 2001 we have two reportable segments, Custom Solutions and Package Solutions. The Custom Solutions segment primarily includes our CIBER custom branch offices and our CIBER Solution Partners European operations.  Our Package Solutions segment is comprised of our CIBER Enterprise Solutions Division and our subsidiary DigiTerra, Inc.

CIBER Custom Solutions

Our CIBER custom branch operations provide IT project solutions and IT staffing in custom developed software environments.  Each branch office has local leadership, sales, recruiting and delivery capabilities.  Our branch office network is integral to our business strategy. Through the branch office network, we can (1) offer a broad range of consulting services on a local basis, (2) respond to changing market demands for IT services through a variety of contacts in many industries and geographic areas and (3) maintain a quality professional staff because of our nationwide reputation and our training programs.  Our strategy is to leverage our long-standing staffing relationships to win strategic consulting and/or project solutions and systems integration business.  As we begin 2002, the business mix of CIBER custom branch operations is approximately 40% project solutions and systems integration business and 60% strategic staffing.

3

The migration toward a more solutions-based business model has resulted from our efforts to (1) create significant thought leadership in leading technologies through our National Practices, (2) establish a consultative sales methodology that enhances our ability to identify, pursue and close solutions-based business, and (3) improve our solutions delivery capability by continuing to refine our project management and delivery methodology.  Our National Practices, which support the local sales and delivery functions, include:

•        Enterprise Application Integration

•        Business Intelligence

•        Internet Solutions

•        Infrastructure and Security

•        Wireless Integration

•        Outsourcing

•        Managed Services

While 70% of our operations are directed at commercial clientele, 30% of our custom branch operations have a focus on state and federal government organizations.  Our State Government Practice has a number of specialty focus areas, including: health and human services; public health; law and justice, and motor vehicles, among others.  Our Federal Government Practice initiatives include: defense/aerospace; outsourcing; human resource and financial management systems; and strategy and enterprise services.

Our Custom Solutions reporting segment also includes our CIBER Solution Partners European operations, which are based in Eindhoven, the Netherlands. In 2001 we opened new offices in Germany and Hungary.  Solution Partners provides custom-based solutions on various software platforms as well as SAP and Microsoft implementation consulting and other e-business solutions.

CIBER Package Solutions

Our CIBER Enterprise Solutions Division (CES) provides consulting services to support software from enterprise solutions vendors including Oracle, PeopleSoft and SAP.  CES supports the Customer Relationship Management (CRM) offerings of these enterprise partners, and in addition, provides services for users of independent CRM software, such as Siebel and Onyx.  CES is an Oracle Certified Solutions Partner, a PeopleSoft Certified Consulting Partner as well as an SAP Services Partner.  CES also has earned corporate-level certification on Internet enabled PeopleSoft Version 8.  CES has vertical expertise in healthcare, higher education, public sector, telecommunications and manufacturing, among others.

CIBER Solution Partners UK, based in Oxford, England is a Microsoft Gold Certified Partner delivering a range of enterprise and Internet solutions.

DigiTerra, Inc. primarily provides middle-market companies with packaged software assessment, planning and implementation services, with an emphasis on software from J. D. Edwards and Lawson, as well as several Supply Chain Management (SCM) products.  DigiTerra is a J. D. Edwards Consulting Alliance Partner.  DigiTerra’s Technology Solutions Practice helps clients select, configure and design IT platform-related solutions and is an authorized reseller of selected hardware and software products from IBM, Hewlett-Packard, Sun Microsystems and Intermec.

Business Combinations

We have expanded our geographic breadth, increased our client base and added to our technical expertise and service offerings through business combinations. Given the highly fragmented nature of the IT services industry, we intend to pursue business combinations as part of our growth and operation strategy, including possible international opportunities. The success of this strategy depends not only upon our ability to identify and acquire businesses on a cost-effective basis, but also upon our ability to integrate acquired operations into our organization effectively, to retain and motivate personnel and to retain clients of

4

acquired or merged companies. In reviewing potential business combinations, we consider the target company’s geographic reach, cultural fit, capabilities in specific technical services, client base, expected financial performance, valuation expectations, and the abilities of management, sales and recruiting personnel, among other factors. From July 1998 to December  2001, we have completed the following business combinations:

Date	Name	Main Office	Approximate Consideration, in millions (1)
October 2001	Metamor Industry Solutions, Inc.	Chicago, Illinois	$	37.8
September 2001	Aris Corporation	Bellevue, Washington	$	30.0
August 2001	Century Computer Consultants, Inc.	Overland Park, Kansas	$	10.4
February to July 2001	3 immaterial business combinations		$	4.8
November 2000	Enspherics, Inc. (2)	Greenwood Village, Colorado	$	2.5
December 1999	Solution Partners B.V.	Eindhoven, the Netherlands	$	16.0
December 1999	Interactive Papyrus, Inc.	Colorado Springs, Colorado	$	7.0
November 1999	Software Design Concepts, Inc.	Philadelphia, Pennsylvania	$	12.0
October 1999	Waterstone Consulting, Inc.	Chicago, Illinois	$	30.7
October 1999	The Isadore Group, Inc.	Phoenix, Arizona	$	18.3
April 1999	Digital Software Corporation	Aurora, Colorado	$	6.9
March 1999	Compaid Consulting Services, Inc.	Atlanta, Georgia	$	10.3
February 1999	Business Impact Systems, Inc.	Herndon, Virginia	$	62.2
February 1999	Paradyme HR Technologies Corporation	Columbia, South Carolina	$	8.0
February 1999	Integration Software Consultants, Inc.	Philadelphia, Pennsylvania	$	34.0
January 1999	York & Associates, Inc.	St. Paul, Minnesota	$	14.5
January 1999	Paragon Solutions, Inc.	Pittsburgh, Pennsylvania	$	6.9
November 1998	The Doradus Corporation	Minneapolis, Minnesota	$	4.1
August 1998	The Cushing Group, Inc.	Nashua, New Hampshire	$	24.1
August 1998	EJR Computer Associates, Inc.	Hoboken, New Jersey	$	36.0

(1)Approximate consideration includes the value of CIBER common stock issued, the value of certain options for CIBER common stock issued and cash paid (including any recorded additional consideration).

(2)CIBER acquired 51% of Enspherics, Inc. (ownership increased to 80% in February 2002)

Clients

Our clients consist primarily of Fortune 500 and middle market companies across most major industries and governmental agencies. These organizations typically have significant IT budgets and/or depend on outside consultants to help achieve their business and IT objectives.

In 2001, our approximate percentage of revenue by client industry was:

Information technology	27	%
Government	20	%
Manufacturing	17	%
Finance, banking & insurance	12	%
Telecommunications	8	%
Healthcare	7	%
Other	9	%

5

Certain customers account for a significant portion of our revenues. Our five largest clients represented approximately 16% of our total revenues in 2001 with our largest client accounting for approximately 6% of our revenues. Some of our significant clients include: Boeing; City & County of San Francisco; Commonwealth of Pennsylvania; Federal Deposit Insurance Corporation; Fidelity Investments; Ford; IBM; Lockheed Martin; WorldCom; and Xerox. If any significant client terminates its relationship with us or substantially decreases its use of our services, it could have a material adverse effect on our business, financial condition and results of operations. We seek to develop long-term relationships with our clients. Although a typical individual client assignment ranges from three months to twelve months in duration, some of our client relationships have continued for more than 10 years.

Sales Force

We maintain a direct sales force of approximately 200 employees at December 31, 2001 who market our services to senior business executives, chief information officers, information systems managers and others who purchase IT services. New client contacts are generated through a variety of methods, including client referrals, trade shows, personal sales calls and direct mailings to targeted clients.

Consultants and Recruiters

Our future success depends in part on our ability to hire and retain adequately trained personnel who can address the changing and increasingly sophisticated technology needs of our clients. Our ongoing personnel needs arise from turnover, which is generally high in the industry, and client needs for consultants trained in the newest software and hardware technologies. Few of our employees are bound by non-compete agreements. Historically, competition for personnel in the information technology services industry has been significant. We have had in the past, and expect at some point in the future, to have difficulty attracting and retaining an optimal level of qualified consultants. There can be no assurance that we will be successful in attracting and retaining the personnel we require to conduct and expand our operations successfully. Because of this, the recruitment of skilled consultants is a critical element to our success. We devote significant resources to meeting our personnel requirements. At December 31, 2001, we had approximately 70 full-time recruiters.

Competition

The IT services industry is extremely competitive and characterized by continuous changes in customer requirements and improvements in technologies. Our competition varies significantly from city to city as well as by the type of service provided.

Our principal competitors include: Accenture; American Management Systems; Atos Origin; Cap Gemini Ernst &Young; CMG; IBM Global Services; Keane; and KPMG Consulting. Many large accounting and consulting firms also offer services that overlap with some of our services. Many of our competitors are larger than we are and have greater financial, technical, sales and marketing resources than we do. In addition, we must frequently compete with a client’s own internal information technology staff. We also compete with Internet professional services firms as well as the service divisions of various software developers. There can be no assurance that we will be able to continue to compete successfully with existing or future competitors or that competition will not have a material adverse effect on our results of operations and financial condition.

Employees

As of December 31, 2001, we had approximately 5,000 employees. None of our employees are subject to a collective bargaining arrangement. We have employment agreements with our executive officers. We believe our relations with our employees are good.

6

Item 2.    Properties

Our corporate office is located at 5251 DTC Parkway, Suite 1400, Greenwood Village, Colorado 80111, where we have a lease for approximately 38,500 square feet that expires in December 2003. We lease office space at approximately 60 other locations. We believe our facilities are adequate for our current level of operations and that suitable additional or alternative space will be available as needed.

Item 3.    Legal Proceedings

We are from time to time the subject of lawsuits and other claims and regulatory proceedings arising in the ordinary course of our business. We do not expect any of these matters, individually or in the aggregate, will have a material impact on our financial condition or results of operations.

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

No matters were submitted to a vote of our shareholders during the fourth quarter of 2001.

Part II

Item 5.    Market for Registrant’s Common Equity and Related Shareholder Matters

Our common stock is listed on the New York Stock Exchange under the symbol “CBR.” The table below sets forth, for the periods indicated, the high and low sales price per share of our common stock.

	Low		High
Year Ended December 31, 2000
First Quarter	$	17.13	$	27.50
Second Quarter	12.50		21.31
Third Quarter	7.88		13.63
Fourth Quarter	3.88		8.63
Year Ended December 31, 2001
First Quarter	4.50		6.70
Second Quarter	3.95		9.50
Third Quarter	4.50		9.10
Fourth Quarter	4.93		10.95

The closing price of our common stock on March 8, 2002 was $9.93. As of February 28, 2002, there were approximately 28,000 beneficial owners of our common stock.

Our policy is to retain our earnings to support the growth of our business. Accordingly, we have never paid cash dividends on our common stock and have no present plans to do so.  In addition, pursuant to the terms of the Loan and Security Agreement with Wells Fargo Bank dated September 26, 2001, we are prohibited from paying any dividends on our stock.

7

Item 6.    Selected Financial Data

The following selected consolidated financial data has been derived from our consolidated financial statements. This information should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our Consolidated Financial Statements and Notes thereto, which are included herein.

	Years Ended June 30,				Six Months Ended Dec. 31,	Years Ended December 31,
	1997		1998	1999	1999	2000		2001
	In thousands, except per share data
Operating Data:
Revenues	$	413,380	576,488	719,661	362,000	621,534		558,875
Amortization of intangible assets	$	3,087	3,936	7,520	6,754	14,032		12,155
Other charges	$	1,218	4,538	1,535	—	83,768		3,051
Operating income (loss)	$	33,368	57,868	89,340	29,225	(56,897	)	2,596
Net income (loss)	$	21,226	36,477	54,495	17,643	(66,775	)	1,684
Pro forma net income	$	20,423	34,270	n/a	n/a	n/a		n/a
Earnings (loss) per share - basic	$	.43	.67	.98	.31	(1.15	)	.03
Earnings (loss) per share - diluted	$	.40	.64	.95	.30	(1.15	)	.03
Cash dividends	$	—	—	—	—	—		—
Weighted average shares - basic	47,894		51,355	55,362	57,345	57,900		58,191
Weighted average shares - diluted	50,613		53,843	57,141	58,496	57,900		58,698
Balance Sheet Data:
Working Capital	$	70,369	110,703	149,948	77,983	102,918		101,938
Total assets	$	165,354	221,785	408,632	422,568	326,347		368,751
Total long-term liabilities	$	1,075	—	—	5,355	—		18,634
Total shareholders’ equity	$	117,614	165,844	337,136	342,256	270,242		291,290
Shares outstanding at end of period	49,547		52,248	58,433	57,697	56,775		60,455

Notes:

•Effective December 31, 1999, we changed our year end from June 30 to December 31.

•Other charges for the years ended June 30, 1997 to June 30, 1999 consist of merger costs related to pooling of interests business combinations. During the year ended December 31, 2000, we recorded a goodwill impairment charge of $80,773,000.  In 2000 and 2001 we also incurred certain other charges (see Note 2 to Consolidated Financial Statements).

•We have completed various acquisitions during the periods presented (see Note 3 to Consolidated Financial Statements).

•Fiscal 1997 and 1998 amounts have been restated to reflect pooling of interests business combinations that occurred through 1999.

•Pro forma net income is after a pro forma adjustment to income tax expense resulting from pooling of interests business combinations and is used to calculate earnings per share in those years.

8

Item 7.    Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion of the results of operations and financial condition should be read in conjunction with our Consolidated Financial Statements and Notes thereto. With the exception of historical matters and statements of current status, certain matters discussed below are forward-looking statements that involve substantial risks and uncertainties that could cause actual results to differ materially from targets or projected results. Without limiting the foregoing, the words “believes,” “anticipates,” “plans,” “expects” and similar expressions are intended to identify forward-looking statements. Factors that could cause actual results to differ materially are discussed herein under the caption “Factors that May Affect Future Results.” Many of these factors are beyond our ability to predict or control. We disclaim any intent or obligation to update publicly such forward-looking statements, whether as a result of new information, future events or otherwise. In addition, as a result of these and other factors, our past financial performance should not be relied on as an indication of future performance.

Business and Industry Overview

CIBER, Inc. and its subsidiaries provide information technology (“IT”) system integration consulting and other services and to a lesser extent, resell certain hardware and software products.  Our services are offered on a project or strategic staffing basis, in both custom and enterprise resource planning (ERP) package environments, and across all technology platforms, operating systems and infrastructures. Our clients consist primarily of Fortune 500 and middle market companies across most major industries and governmental agencies. We operate from branch offices across the United States, plus offices in Canada and Europe.

The market demand for CIBER’s services is heavily dependent on discretionary spending by major corporations in the area of IT.  Due to current macroeconomic conditions, the demand for IT services has been soft compared to prior years.  Beginning in 1998 through the middle of 1999, major corporations spent heavily on IT services in order to prepare their information systems for the potential problems presented by the year 2000 (“Y2K”).  Companies with information systems applications that were not “Y2K compliant” either fixed those systems by re-writing software code or implemented new systems that were Y2K compliant.  CIBER participated in this heavy demand period by providing both Y2K remediation services, re-writing software code to make systems Y2K compliant, and by providing ERP implementation services, implementing new systems that were Y2K compliant.

After this period of spending on Y2K compliance, existing major corporations and well funded startup entities spent heavily on systems that supported the conduct of business over the Internet. For major corporations this spending on “ebusiness initiatives” was, in part, a defensive tactic against new businesses entering the market.  These new “dot.com” business entities, raised a great deal of money in both the private and public equity markets and used a significant portion of those proceeds on information systems to support their new business models.

Along with these dot.com businesses came Internet consultancies that provided information technology services to support the ebusiness initiatives of both new dot.com business entities and existing corporations wanting to conduct business over the Internet.  Several of these Internet consultancies were successful raising capital in the public equity markets and were also successful gaining acceptance as experts in the newer Internet technologies.  As a consequence, a disproportionate share of the dollars spent on ebusiness initiatives by both new dot.coms and existing corporations went to these new Internet consultancies, at the expense of firms such as CIBER, who had the expertise but not the reputation for delivering solutions in the newer Internet technologies.

Beginning in the latter part of 2000 and into 2001, many of these dot.com entities exhausted the capital raised in the equity markets, were not able to raise additional capital, and did not have a cash flow stream to support their businesses as going concerns.  Consequently, many of these firms went out of business, and the threat of these dot.coms to traditional business models waned, negatively impacting IT spending on ebusiness initiatives.  As dot.com entities began failing and IT spending declined, many of the new Internet

9

consultancies that entered the market failed as well, making the competitive landscape less crowded for well established firms such as CIBER.

While the failure of many Internet consultancies was competitively beneficial to CIBER, by the middle of 2001 the U.S. economy was in recession and major corporations further curtailed discretionary IT spending.  As we enter 2002, we are hopeful that the U.S. economic recession will be short lived, and that spending on IT initiatives will grow at normal historical rates.  In that event, we believe that CIBER is competitively well positioned due to our strong long-term client relationships, our comprehensive service offerings and our competitive rate structure, among other factors.

Business Combinations

We have completed 22 business combinations since July 1998.  For purposes of this report, the term “acquisition” refers to business combinations accounted for as a purchase and the term “merger” refers to business combinations accounted for as a pooling of interests.  Our consolidated financial statements include the results of operations of an acquired business since the date of acquisition. Mergers result in a one-time charge for costs associated with completing the business combination. Unless the effects are immaterial, our consolidated financial statements are restated for all periods prior to a merger to include the results of operations, financial position and cash flows of the merged company. We completed six business combinations in 2001, one in 2000, five during the six months ended December 31, 1999 and ten business combinations during the year ended June 30, 1999.

New Accounting Pronouncements

In July 2001, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 141, “Business Combinations” and SFAS No. 142, “Goodwill and Other Intangible Assets.”  SFAS 141 requires all business combinations initiated after June 30, 2001 to be accounted for using the purchase method and specifies the criteria for recording intangible assets separate from goodwill.  Under SFAS 142, goodwill and intangible assets with indefinite lives will no longer be amortized, but instead will be reviewed annually (or more frequently as impairment indicators arise) for impairment. Separate intangible assets that do not have indefinite lives will continue to be amortized over their useful lives.  The non-amortization and amortization provisions of SFAS 142 are effective for goodwill and intangible assets acquired after June 30, 2001.  As a result, we will not record any amortization of goodwill related to the acquisitions of Century Computer Consultants, Inc., Aris Corporation and Metamor Industry Solutions Inc. during the last four months of 2001.  With respect to goodwill and intangible assets acquired prior to July 1, 2001, we will adopt SFAS 142 effective January 1, 2002.  We expect the adoption of these accounting standards will result in a reduction of our amortization of goodwill commencing January 1, 2002, however, periodic impairment reviews may result in future write-downs.

Reporting Segments

In the second half of 2001 we reorganized some of our business operations.   In 2000, we originally formed DigiTerra and announced our intent to spin off DigiTerra to CIBER shareholders as a separate publicly traded entity.  In 2001, as the result of unfavorable business and market conditions, the plans to spin off DigiTerra were cancelled and DigiTerra significantly refocused and restructured its business making leadership changes, organizational changes and transforming its costs structure. Most of the overhead that was established to support DigiTerra as a separate independent entity was eliminated late in 2001.  As part of the DigiTerra reorganization, a new CIBER division named CIBER Enterprise Solutions (CES) was formed.  CES provides consulting services to support enterprise software of vendors such as Oracle, PeopleSoft and SAP as well as customer relationship software such as Siebel and Onyx.   DigiTerra provides middle-market companies with package software services, specializing in software from J. D. Edwards and Lawson, as well as supply chain services and hardware-related technology solutions.

In September 2001, we merged the operations of our subsidiary, Waterstone, Inc., into our CIBER branch office operations, suspending its brand and eliminating the related corporate overhead costs.

10

As a result of the reorganizations in 2001, at December 31, 2001 we have two reportable segments, Custom Solutions and Package Solutions. The Custom Solutions segment primarily includes our CIBER custom branch offices and our CIBER Solution Partners European operations.  Our Package Solutions segment is comprised of our CIBER Enterprise Solutions Division and our subsidiary DigiTerra, Inc.  Prior year segment information has been restated to conform to the current year presentation.

Year End Change

Effective December 31, 1999, we changed our year end from June 30 to December 31. As used herein, the term fiscal year refers to our fiscal year ended June 30.

Results of Operations

Other revenues include sales of computer hardware products, commissions on computer hardware and software product sales and software license and maintenance fees. We sold our software business in September 1999.

The following table sets forth certain items from our consolidated statements of operations, expressed as a percentage of revenues:

	Year  Ended June 30,		Six Months Ended  December 31,		Years Ended December 31,
	1999		1999		1999		2000		2001
Revenues	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%
Gross margin	35.6	%	33.1	%	34.6	%	32.1	%	30.7	%
Selling, general and administrative expenses	21.9		23.2		22.6		25.5		27.5
Operating income before amortization and other charges	13.7		9.9		12.0		6.6		3.2
Amortization of intangible assets	1.1		1.8		1.7		2.3		2.2
Other charges	.2		—		—		13.5		.5
Operating income (loss)	12.4		8.1		10.3		(9.2	)	.5
Interest and other income, net	.4		.4		.4		.2		—
Income (loss) before income taxes	12.8		8.5		10.7		(9.0	)	.5
Income tax expense	5.2		3.6		4.4		1.7		.2
Net income (loss)	7.6	%	4.9	%	6.3	%	(10.7%	)	.3	%

Year Ended December 31, 2001 as Compared to Year Ended December 31, 2000

Total revenues decreased 10% to $558.9 million for the year ended December 31, 2001 from $621.5 million for the year ended December 31, 2000. This represents a 10% decrease in consulting services revenues and an 8% decrease in other revenues. Other revenues decreased to $32.3 million in 2001 from $35.1 million in 2000 due to decreased hardware sales. Custom Solutions revenues decreased 9% while Package Solutions revenues decreased 16%, when compared to last year. Custom Solutions accounted for approximately 78% of revenues in 2001 compared to 77% in 2000.

Delayed starts to new projects and increased competition have created a very challenging IT service marketplace in 2001.  The decrease in revenues is primarily attributable to a decrease in billable consultants during the first half of the year, partially off-set by the addition of approximately 960 consultants as a result of our acquisitions of Century Computer Consultants, Inc., Aris Corporation and Metamor Industry Solutions Inc. during the last four months of the year.  Average billing rates remained consistent with the prior year.

11

Gross margin percentage decreased to 30.7% of revenues in 2001 from 32.1% of revenues in 2000. This decrease is due to declining gross margins on consulting services offset partially by improved gross margins on other revenues. Consulting services gross margins declined primarily due to a decrease in the utilization levels of our consultants as well as increased consultant costs. Custom Solutions gross margin on consulting services declined to 28.7% in 2001 from 30.4% in 2000, while Package Solutions consulting gross margin declined to 34.5% in 2001 from 34.7% in 2000. Gross margin percentage on other revenues increased due to decreased sales of lower margin computer hardware products.

Selling, general and administrative expenses (“SG&A”) decreased to $153.7 million in 2001 from $158.6 million in 2000, while as a percentage of sales, SG&A increased to 27.5% in 2001 from 25.5% in 2000. This reflects the semi-fixed nature of SG&A and the decline in revenues.  In September 2001, we merged the operations of our subsidiary, Waterstone, Inc., into our Custom Solutions operations, suspending its brand and eliminating the related corporate overhead costs.  Beginning in mid-2000, in connection with our planned spin-off of DigiTerra, we developed a corporate overhead structure for DigiTerra to prepare it to be an independent entity.  We reorganized DigiTerra’s operations in the second half of 2001 and eliminated a large part of its corporate overhead costs.  As our focus continues to shift to more solutions-oriented and project work, SG&A is expected to increase as a percentage of sales and partially offset the expected higher gross margins on such work.

Income from operations before amortization and other charges (which is how we internally measure our operations) decreased to $17.8 million (3.2% of revenues) for 2001 from $40.9 million (6.6% of revenues) in 2000.

Amortization of intangible assets decreased to $12.2 million in 2001 from $14.0 million in 2000. This decrease was primarily due to the effects of the goodwill write-down in the September 2000 quarter.

Other charges of $3.1 million were incurred in 2001.  These charges are comprised of  $1.8 million of severance costs and $1.3 million of office closure costs.  In connection with our reorganization of our DigiTerra and Waterstone subsidiaries, during the fourth quarter of 2001, we incurred severance costs related to certain executive management positions that were eliminated.  In addition, during 2001 we incurred charges related to losses on excess office space that we have sub-leased to other parties.  During the quarter ended September 30, 2000, we recorded a goodwill impairment charge of $80.8 million to write-down the goodwill associated with certain acquisitions. This charge represents the amount required to write-down the goodwill to our best estimate of the future discounted cash flows of these operations. In addition in 2000, we incurred $1.3 million of severance costs resulting from involuntary terminations related to personnel realignment, $975,000 for an asset write-down, and $720,000 of professional fees resulting from our planned spin-off of DigiTerra. In 2001, as the result of changes in market and business conditions, the plans to spin-off DigiTerra were cancelled.

Net other income, including interest income and interest expense, decreased to $261,000 in 2001 from $1.0 million for the year ended December 31, 2000. Other income includes $2,000 and $504,000 in 2001 and 2000, respectively, from gains on sales of investments. Interest income and expense fluctuates based on our average cash balance invested or amounts borrowed under our line of credit.  In addition, in connection with our acquisition of Metamor in October 2001, we borrowed under our line of credit.

Tax expense was $1.2 million in 2001 as compared to $10.9 million for the year ended December 31, 2000.  Tax expense was recorded for the year ended December 31, 2000, even though pre-tax loss was reported, because most of the goodwill impairment charge was not deductible for income tax purposes since the majority of the impaired goodwill related to non-taxable acquisitions.  Our effective tax rate for the year ended December 31, 2001 was 41.1% compared to 50.8% (excluding the effects of the goodwill impairment charge) in 2000.  The decrease in our effective tax rate in 2001, results from a $1.4 million federal and state tax benefit from adjusting our prior years estimate tax liability to actual amounts upon completion of our tax returns.

Net income was $1.7 million in 2001 as compared to a net loss of $66.8 million in 2000.

12

Year Ended December 31, 2000 as Compared to Year Ended December 31, 1999

Total revenues decreased 16% to $621.5 million for the year ended December 31, 2000 from $741.9 million for the year ended December 31, 1999. This represents a 16% decrease in consulting services revenues and a decrease in other revenues. Other revenues decreased to $35.1 million in 2000 from $43.6 in 1999 due to decreased hardware sales and reduced software revenues. Custom Solutions revenues decreased 13% while Package Solutions revenues decreased 23%, when compared to the prior year. Custom Solutions accounted for approximately 77% of revenues in 2000 compared to 74% in 1999.

During 2000, there continued to be an industry-wide shift in IT spending, principally resulting from the resolution of the Y2K issue and ERP curtailments. Many companies reduced IT expenditures beginning mid-1999 due to completion of Y2K and ERP specific projects and a general tendency to minimize new IT initiatives during the end of 1999. This adversely impacted us, particularly in our mainframe staffing and ERP related service offerings. There was a significant industry trend toward new IT services driven by the Internet and increased bandwidth availability. These new services include web-designed, e-business technologies, customer relationship management (“CRM”) and supply chain software, and wireless integration, among others. We have focused more of our efforts to deliver these newer IT services. These efforts include new alliances with independent software vendors, such as Commerce One and Siebel, and the realignment of our professional and sales personnel toward a greater focus on new technology services. In addition, commencing in the Spring of 2000, the IT services industry was negatively impacted by the shift in investor sentiment away from development and early stage dot.com businesses. As a result, industry demand for IT services by dot.com companies decreased significantly. This has led to greater competition within the IT services industry.

Gross margin percentage decreased to 32.1% of revenues in 2000 from 34.6% of revenues in 1999. This decrease is due to declining gross margins on consulting services offset partially by improved gross margins on other revenues. Consulting services gross margins declined primarily due to a decrease in the utilization levels of professional staff. Custom Solutions gross margin on consulting services declined to 30.4% in 2000 from 30.9% in 1999, while Package Solutions consulting gross margin declined to 34.7% in 2000 from 44.1% in 1999. Gross margin percentage on other revenues increased due to decreased sales of lower margin computer hardware products.

Selling, general and administrative expenses (“SG&A”) decreased to $158.6 million in 2000 from $167.6 million in 1999, while as a percentage of sales, SG&A increased to 25.5% for the year ended December 31, 2000 from 22.6% in 1999. This reflects the semi-fixed nature of SG&A. We also incurred additional SG&A in 2000 related to new marketing and branding initiatives as well as costs to prepare for DigiTerra (which we formed in April 2000) to be a stand-alone entity.

Income from operations before amortization and other charges (which is how we internally measure our operations) decreased to $40.9 million (6.6% of revenues) in 2000 from $88.8 million (12.0% of revenues) in 1999.

Amortization of intangible assets increased to $14.0 million in 2000 from $12.1 million in 1999. This increase was due to the additional intangible assets resulting from acquisitions, partially offset by the effects of the goodwill write-down in the September 2000 quarter.

Other charges of $83.8 million were incurred in 2000.  We recorded a goodwill impairment charge of $80.8 million during the quarter ended September 30, 2000 to write-down the goodwill associated with certain acquisitions. This charge represents the amount required to write-down the goodwill to our best estimate of the future discounted cash flows of these operations. In addition, we incurred charges of $1.3 million for severance costs resulting from involuntary terminations related to personnel realignment, $975,000 for an asset write-down, and $720,000 of professional fees resulting from our planned spinoff of DigiTerra.

Net other income, including interest income and interest expense, decreased to $1.0 million in 2000 from $2.8 million in 1999. Other income in 2000 includes gains of $504,000 from sales of investments and other income in 1999 includes a gain of $827,000 on the sale of our LogisticsPRO software business.  The fluctuations in interest income and expense are the result of changes in our average cash balance invested or amounts borrowed under our line of credit.

13

Tax expense of $10.9 million was recorded in 2000 even though a pre-tax loss was reported. Tax expense was recorded for the year ended December 31, 2000 because most of the goodwill impairment charge was not deductible for income tax purposes since the majority of the impaired goodwill related to non-taxable acquisitions. Excluding the effects of the goodwill impairment charge, our effective tax rate would have been approximately 50.8% in 2000 as compared to 41.2% in 1999. Tax expense for 2000 also reflects the effects of increased non-deductible goodwill amortization, increased other non-deductible expenses and increased state income taxes.

Our net loss was $66.8 million in 2000 as compared to net income of $46.7 million in 1999.

Six Months Ended December 31, 1999 as Compared to Six Months Ended December 31, 1998

Our total revenues increased 7% to $362.0 million for the six months ended December 31, 1999 from $339.7 million for the six months ended December 31, 1998. This represents a 13% increase in consulting services revenues offset by a decrease in other revenues, primarily sales of computer hardware products. Other revenues decreased to $20.9 million for the six months ended December 31, 1999 from $36.6 million for the same period of 1998. The increase in consulting services revenues was primarily due to additional revenues from acquisitions.  Custom Solutions revenues remained consistent, while Package Solutions revenues increased 27%. Custom Solutions revenues decreased to approximately 74% of total revenues for the six months ended December 31, 1999 from 79% in the same period of 1998.

Gross margin percentage decreased to 33.1% of revenues for the six months ended December 31, 1999 from 35.3% of revenues for the same period of 1998. This decrease was due to declining gross margins on consulting services offset by improved gross margins on other revenues. Consulting services gross margins declined primarily due to a decrease in the utilization levels of professional staff. Custom Solutions gross margin on consulting services declined to 29.6% for the six months ending December 31, 1999 from 33.0% for the same period of 1998, while Package Solutions consulting gross margin declined to 41.5% from 46.1% for the same period of 1998. Gross margin on other revenues increased due to decreased sales of lower margin computer hardware products.

Selling, general and administrative expenses were 23.2% of revenues for the six months ended December 31, 1999 compared to 21.9% of revenues for the same period of 1998. This increase was due primarily to additional costs incurred for new programs implemented to position us for future growth, including the addition of senior and executive management team members, branding and marketing initiatives, and internal systems development.

Income from operations before amortization and other charges decreased to $36.0 million (9.9% of revenues) for the six months ended December 31, 1999 from $45.6 million (13.4% of revenues) for the same period of 1998.

Amortization of intangible assets increased to $6.8 million for the six months ended December 31, 1999 from $2.2 million for the same period of 1998. This increase was due to the additional intangible assets resulting from acquisitions.

No other charges were incurred during the six months ended December 31, 1999, while merger costs of $1.5 million, primarily transaction related broker and professional costs related to pooling of interests business combinations, were incurred during the six months ended December 31, 1998.

Interest income decreased to $920,000 for the six months ended December 31, 1999 from $1.3 million for the same period of 1998 due to decreased average cash balances available for investment. Interest expense was $190,000 for the six months ended December 31, 1999, while no interest expense was incurred during the same period of 1998. This increase was due to borrowings under our line of credit during the six months ended December 31, 1999. Included in other income for the six months ended December 31, 1999 is an $827,000 gain on the sale of our LogisticsPRO software business.

14

Our effective tax rate for the six months ended December 31, 1999 was 42.6% compared to 41.2% for the same period of 1998. Our effective tax rate for the six months ended December 31, 1999 increased due to increased nondeductible amortization resulting from certain acquisitions.

Net income was $17.6 million for the six months ended December 31, 1999 as compared to $25.4 million for the same period of 1998.

Liquidity and Capital Resources

At December 31, 2001, we had $101.9 million of working capital and a current ratio of 2.7:1. We believe that our cash and cash equivalents, our operating cash flow and our available line of credit will be sufficient to finance our working capital needs through at least the next year.

Our Board of Directors has authorized the repurchase of up to 6,888,591 shares of our common stock. As of December 31, 2001, we have purchased 6,735,000 shares for $71.5 million under this program. We may use significant amounts of cash for the repurchase of our stock or to acquire other businesses. As a result, we may borrow to finance such activities.

Net cash provided by operating activities was $63.4 million in fiscal 1999, $28.7 million for the six months ended December 31, 1999, and $62.9 million, $36.5 million and $26.4 million for the years ended December 31, 1999, 2000 and 2001, respectively. The decrease in 2001 primarily reflects reduced income, compared to 2000, excluding the non-cash goodwill impairment charge. Accounts receivable totaled $135.3 million at December 31, 2001 compared to $127.2 million at December 31, 2000. Total Accounts receivable days sales outstanding (“DSO”) was 82 days at December 31, 2001.

Net cash used in investing activities was $40.5 million in fiscal 1999, $67.3 million for the six months ended December 31, 1999, and $99.3 million, $11.2 million and $49.7 million during the years ended December 31, 1999, 2000 and 2001, respectively. We used cash for acquisitions of $26.5 million during fiscal 1999, $60.1 million during the six months ended December 31, 1999, and $82.5 million, $16.2 million and $50.0 million during the years ended December 31, 1999, 2000 and 2001, respectively. In 2001, we received $5.8 million for the sale of a building acquired through our acquisition of Aris. We purchased property and equipment of $14.0 million during fiscal 1999, $7.2 million during the six months ended December 31, 1999, and $16.8 million, $8.5 million and $6.0 million during the years ended December 31, 1999, 2000 and 2001, respectively. Purchases of property and equipment have decreased in 2001 because of the significant number of assets acquired though acquisitions.

Net cash provided by (used in) financing activities was $1.8 million in fiscal 1999, ($20.5 million) in the six months ended December 31, 1999, and ($22.9 million), $8.9 million, and $13.8 million during the years ended December 31, 1999, 2000 and 2001, respectively. We obtained net cash proceeds from employee stock purchases and options exercised of $14.8 million in fiscal 1999, $10.9 million in the six months ended December 31, 1999, and $19.7 million, $10.9 million and $6.9 million during the years ended December 31, 1999, 2000 and 2001, respectively. We purchased 706,000 shares of treasury stock for $13.0 million during fiscal 1999, 2,255,000 shares for $36.7 million during the six months ended December 31, 1999, 2,860,000 shares for $47.9 million, 1,925,000 shares for $14.1 million and 2,055,000 shares for $12.0 million during the years ended December 31, 1999, 2000 and 2001, respectively. We have reissued some of the treasury shares under our stock plans and in connection with acquisitions.

We have a $37.5 million reducing revolving line of credit with a bank. At the end of each calendar quarter the maximum available borrowing under this line of credit is reduced by $2.5 million.  There was $18,634,000 outstanding under this line of credit at December 31, 2001.  Outstanding Borrowings bear interest based on the bank’s prime rate and ranges from prime minus 0.20% to prime less 0.70%, depending on our ratio of indebtedness to earnings before interest, taxes, depreciation and amortization. At December 31, 2001, the bank’s prime rate was 4.75% and our rate on borrowing was 4.05%. We are also required to pay a fee of 0.125% per annum on the unused portion of the line of credit.  The credit agreement expires on September 30, 2004.

15

Seasonality

We experience a moderate amount of seasonality. Typically, operating income as a percentage of revenues is lowest in the fourth quarter of each calendar year because more holidays and vacations are taken at that time of year resulting in fewer hours billed in that period.

Critical Accounting Policies and Estimates

Our discussion and analysis of financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States.  The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent liabilities and the reported amounts of revenues and expenses. On an on-going basis, we evaluate our estimates including those related to the collectibility of accounts receivable, costs to complete fixed-priced projects, the realizability of goodwill, income taxes, certain accrued liabilities and contingencies and litigation. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.  Actual results could differ from those estimates.

We believe the following critical accounting policies affect the significant judgments and estimates used in the preparation of our consolidated financial statements. We maintain an allowance for doubtful accounts for estimated losses resulting from customers failing to pay amounts we have billed them.  If the financial condition of our customers were to deteriorate, resulting in an impairment of their ability to make payments or if customers were to express dissatisfaction with the services we have provided, additional allowances may be required.  We recognize revenue on fixed-priced contracts using the percentage of completion method, which relies on estimates of total expected contract revenues and costs. The cumulative impact of any revisions in estimated revenues and costs are recognized in the period in which the facts that give rise to the revision become known.  We assess the impairment of goodwill whenever events or changes in circumstances indicate that the carrying value may not be recoverable.  Conditions that may trigger an impairment assessment include a history of operating losses of the related business, a significant reduction in the revenues of the related business, and a loss of a major customer, our market capitalization relative to net book value, among others. An impairment would be considered to exist when the estimated undiscounted future cash flows expected to result from the use of the intangible asset are less than the carrying amount of the asset. Considerable management judgment is necessary to estimate future cash flows.  To record income tax expense, we are required to estimate our income taxes in each of the jurisdictions in which we operate.  This involves estimating our actual current tax exposure together with assessing temporary differences that result in deferred tax assets and liabilities and expected future tax rates.  We record a valuation allowance to reduce our deferred tax assets to an amount we believe is more likely than not to be realized.  We consider future taxable income and prudent and feasible tax planning strategies in assessing the need for a valuation allowance.  If we subsequently determine that we will realize more or less of our net deferred tax assets in the future, such adjustment would be recorded as an increase or reduction of income tax expense in the period such determination is made.

Factors that May Affect Future Results

Included in this Report and elsewhere from time to time in other written reports and oral statements, including but not limited to, the Annual Report to Shareholders, quarterly shareholder letters, news releases and investor presentations, are forward-looking statements about our business strategies, market potential, future financial performance and other matters which reflect our current expectations. Without limiting the foregoing, the words “believes,” “anticipates,” “plans,” “expects” and similar expressions are intended to identify forward-looking statements. We disclaim any intent or obligation to update publicly such forward-

16

looking statements. Actual results may differ materially from those projected in any such forward-looking statements due to a number of factors, including, without limitation, those set forth below.

We operate in a dynamic and rapidly changing environment that involves numerous risks and uncertainties. The following section lists some, but not all, of the risks and uncertainties that may have a material adverse effect on our business, financial condition, results of operations and the market price of our common stock.

Growth Through Business Combinations and Internal Expansion -- As an integral part of our business strategy, we intend to continue to expand by acquiring information technology businesses. We regularly evaluate potential business combinations and aggressively pursue attractive transactions. Since July 1998, we have completed 22 business combinations. The success of this strategy depends not only upon our ability to identify and acquire businesses on a cost-effective basis, but also upon our ability to successfully integrate the acquired business with our organization and culture. Business combinations involve numerous risks, including: the ability to manage geographically remote operations; the diversion of management’s attention from other business concerns; risks of losing clients and employees of the acquired business; and the risks of entering markets in which we have limited or no direct experience. There can be no assurance we will be able to acquire additional business, or that any business combination will result in benefits to us. In addition, we may open new offices in attractive markets with our own personnel. Many of our branch offices were originally start-up operations. Not all branch offices, whether start-up or acquired, have been successful. There can be no assurances that we will be able to successfully start up, identify, acquire, or integrate future successful branch office operations.

Ability to Attract and Retain Qualified Consultants — Our future success depends in part on our ability to attract and retain adequately trained personnel who can address the changing and increasingly sophisticated technology needs of our clients. Our ongoing personnel needs arise from turnover, which is generally high in the industry, and client needs for consultants trained in the newest software and hardware technologies. Few of our employees are bound by non-compete agreements. Competition for personnel in the information technology services industry is significant. We have had, and expect to continue to have, difficulty in attracting and retaining an optimal level of qualified consultants. There can be no assurance that we will be successful in attracting and retaining the personnel we require to conduct and expand our operations successfully.

Dependence on Significant Relationships and the Absence of Long-Term Contracts — Our five largest clients accounted for 16% of our revenues in 2001 with our largest client accounting for 6% of revenues. We strive to develop long-term relationships with our clients. Most individual client assignments are from three to twelve months, however, many of our client relationships have continued for many years. Although they may be subject to penalty provisions, clients may generally cancel a contract at any time. In addition, under many contracts, clients may reduce their use of our services under such contract without penalty. If any significant client terminates its relationship with us or substantially decreases its use of our services, it could have a material adverse effect on our business, financial condition and results of operations. Additionally, we have a significant relationship with PeopleSoft as an implementation partner. Approximately 8% of our revenues are from services related to PeopleSoft software. In the event PeopleSoft products become obsolete or non-competitive, or if we should lose our “implementation partner” status with PeopleSoft, we could suffer a material adverse effect. We have other similar relationships and strategic alliances with other technology vendors. The sudden loss of any significant relationship or substantial decline in demand for their products could also adversely affect us.

Management of a Rapidly Changing Business — Our market is characterized by rapidly changing technologies, such as the evolution of the Internet, frequent new product and service introductions and evolving industry standards. If we cannot keep pace with these changes, our business could suffer. Our success depends, in part, on our ability to develop service offerings that keep pace with continuing changes in technology, evolving industry standards and changing client preferences. Our success will also depend on our ability to develop and implement ideas for the successful application of existing and new technologies. We may not be successful in addressing these developments on a timely basis or our ideas may not be successful in the marketplace. Products and technologies developed by our competitors may also make our services or product offerings less competitive or obsolete.

17

Project Risks — We provide and intend to continue to provide project services to our clients. Projects are distinguishable from CIBER’s professional services staff supplementation contracts by the level of responsibility we assume. With professional services staff supplementation contracts, our clients generally maintain responsibility for the overall tasks. In a typical project, we assume major responsibilities for the management of the project and/or the design and implementation of specific deliverables based upon client-defined requirements. As our project engagements become larger and more complex and often must be completed in shorter time frames, it becomes more difficult to manage the project and the likelihood of any mistake increases. In addition, our projects often involve applications that are critical to our client’s business. Our failure to timely and successfully complete a project and meet our client’s expectations could have a material adverse effect on our business, results of operations or financial condition. Such adverse effects may include delayed or lost revenues, additional services being provided at no charge and a negative impact to our reputation. In addition, claims for damages may be brought against us, regardless of our responsibility, and our insurance may not be adequate to cover such claims. Our contracts generally limit our liability for damages that may arise in rendering our services. However, we cannot be sure these contractual provisions will successfully protect us from liability if we are sued.  We sometimes undertake projects on a fixed-fee basis or cap the amount of fees we may bill on a time and materials basis. Any increased or unexpected costs or unanticipated delays could make such projects less profitable or unprofitable and could have a material adverse effect on our business, results of operations and financial condition.

Competition — We operate in a highly competitive industry. We believe that we currently compete principally with IT and Internet professional services firms, technology vendors and internal information systems groups. Many of the companies that provide services in our markets have significantly greater financial, technical and marketing resources than we do. In addition, there are relatively few barriers to entry into our markets and we have faced, and expect to continue to face, competition from new entrants into our markets. There can be no assurance that we will be able to continue to compete successfully with existing or future competitors or that competition will not have a material adverse effect on our business, results of operations and financial condition.

Internet Growth and Usage — Our business is dependent in part upon continued growth of the use of the Internet by our clients and prospective clients as well as their customers and suppliers. If Internet usage and commerce conducted over the Internet does not continue to grow, the demand for our services may decrease and, as a result, our revenues would decline. Capacity constraints of the Internet, unless resolved, could impede further growth of Internet usage. In addition, any laws and regulations relating to the Internet that are adopted by governments in the United States or abroad that could reduce growth or usage of the Internet as a commercial medium may impact our business. We cannot predict how any such government regulations may affect our business. However, if such regulations were to result in a decrease in the demand for our services, they could have a material adverse effect on our business, results of operations and financial condition.

International Expansion — We expect to expand our international operations. We currently have offices in five foreign countries: Canada, Germany, Hungary, the Netherlands and the United Kingdom.  Our foreign operations accounted for 3% of our 2001 revenues. We have limited experience in marketing, selling and providing our services internationally. International operations are subject to political and economic uncertainties, fluctuations in foreign currency exchange rates and new tax and legal requirements. Other risks inherent in international operations include managing geographically distant locations and customers, employees speaking different languages and different cultural approaches to the conduct of business. If any of these risks materialize, they could have a material adverse effect on our business, results of operations and financial condition.

Potential Fluctuations in Quarterly Operating Results — Our quarterly operating results may fluctuate significantly in the future as a result of a variety of factors, many of which are outside our control. Factors that may affect our quarterly revenues or operating results generally include: costs relating to the expansion of our business; the extent and timing of business acquisitions; our ability to obtain new and follow-up on client engagements; the timing of assignments from customers; our consultant utilization rate (including

18

our ability to transition employees quickly from completed assignments to new engagements); the seasonal nature of our business due to variations in holidays and vacation schedules; the introduction of new services by us or our competitors; price competition or price changes; and our ability to manage costs and economic and financial conditions specific to our clients. Quarterly sales and operating results can be difficult to forecast, even in the short term. Due to all of the foregoing factors, it is possible that our revenues or operating results in one or more future quarters will fail to meet or exceed the expectations of security analysts or investors. In such event, the price of our common stock would likely be materially adversely affected.

Price Volatility — The market price of our common stock could be subject to significant fluctuations in response to: variations in quarterly operating results; changes in earnings estimates by securities analysts; any differences between our reported results and securities analysts’ expectations; general economic, financial and other factors; and market conditions that can affect the capital markets. In addition, reaction to announcements made by us or by our competitors, such as new contracts or service offerings, acquisitions or strategic investments may impact our stock price.

Item 7A.    Quantitative and Qualitative Disclosures About Market Risk

We are exposed to market risks from foreign currency fluctuations and changes in interest rates on any borrowings we may have. We currently do not use derivative financial or commodity instruments.

Foreign Exchange. We are exposed to foreign exchange rate fluctuations as the financial results of our foreign operations are translated into U.S. dollars in consolidation. As exchange rates vary, these results, when translated, may vary from expectations and adversely impact our financial position or results of operations. During the year ended December 31, 2001, approximately 3% of our total revenue was attributable to foreign operations. CIBER does not enter into forward exchange contracts as a hedge against foreign currency exchange risk on transactions denominated in foreign currencies or for speculative or trading purposes. We believe that our exposure to foreign currency exchange risk at December 31, 2001 is not material.

Interest Rates. We have a $37.5 million reducing revolving line of credit with a bank. There was $18,634,000 outstanding under this bank line of credit at December 31, 2001.The interest rate on the line of credit is based on the bank’s prime rate and ranges from prime minus 0.20% to prime less 0.70%, depending on our ratio of indebtedness to earnings before interest, taxes, depreciation and amortization.  Therefore, as Prime fluctuates, we would experience changes in interest expense related to any outstanding borrowings.

19

Item 8.    Financial Statements and Supplementary Data

Independent Auditors’ Report

The Board of Directors and Shareholders

CIBER, Inc.:

We have audited the accompanying consolidated balance sheets of CIBER, Inc. and subsidiaries as of December 31, 2000 and 2001, and the related consolidated statements of operations, shareholders’ equity and cash flows for the year ended June 30, 1999, the six-month period ended December 31, 1999 and each of the years in the two-year period ended December 31, 2001. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. 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 consolidated financial statements referred to above present fairly, in all material respects, the financial position of CIBER, Inc. and subsidiaries as of December 31, 2000 and 2001, and the results of their operations and their cash flows for the year ended June 30, 1999, the six-month period ended December 31, 1999 and each of the years in the two-year period ended December 31, 2001, in conformity with accounting principles generally accepted in the United States of America.

As discussed in note 1 to the consolidated financial statements, effective July 1, 2001, CIBER, Inc. adopted the provisions of Statement of Financial Accounting Standards (“SFAS”) No. 141, “Business Combinations,” and certain provisions of SFAS No. 142, “Goodwill and Other Intangible Assets,” as required for goodwill and intangible assets resulting from business combinations consummated after June 30, 2001.

KPMG LLP

Denver, Colorado

February 5, 2002

20

CIBER, Inc. and Subsidiaries

Consolidated Statements of Operations

	Year ended June 30,		Six months ended December 31,			Years ended December 31,
	1999		1999			2000			2001
	In thousands, except per share data
Consulting services	$	660,384	$	341,123		$	586,481		$	526,615
Other revenues	59,277		20,877			35,053			32,260
Total revenues	719,661		362,000			621,534			558,875
Cost of consulting services	423,131		229,853			401,359			369,086
Cost of other revenues	40,176		12,239			20,719			18,290
Selling, general and administrative expenses	157,959		83,929			158,553			153,697
Amortization of intangible assets	7,520		6,754			14,032			12,155
Other charges	1,535		—			83,768			3,051
Operating income (loss)	89,340		29,225			(56,897		)	2,596
Interest income	2,640		920			1,093			526
Interest expense	—		(190		)	(436		)	(432		)
Other income, net	—		778			381			167
Income (loss) before income taxes	91,980		30,733			(55,859		)	2,857
Income tax expense	37,485		13,090			10,916			1,173
Net income (loss)	$	54,495	$	17,643		$	(66,775	)	$	1,684
Earnings (loss) per share — basic	$	0.98	$	0.31		$	(1.15	)	$	0.03
Earnings (loss) per share — diluted	$	0.95	$	0.30		$	(1.15	)	$	0.03
Weighted average shares — basic	55,362		57,345			57,900			58,191
Weighted average shares — diluted	57,141		58,496			57,900			58,698

See accompanying notes to consolidated financial statements.

21

CIBER, Inc. and Subsidiaries

Consolidated Balance Sheets

	December 31,
	2000			2001
	In thousands, except share data
Assets
Current assets:
Cash and cash equivalents	$	19,193		$	9,369
Accounts receivable, net	127,217			135,334
Prepaid expenses and other current assets	5,689			9,598
Income taxes refundable	2,775			3,531
Deferred income taxes	2,538			2,933
Total current assets	157,412			160,765
Property and equipment, at cost	55,388			64,467
Less accumulated depreciation and amortization	(30,082		)	(38,797		)
Net property and equipment	25,306			25,670
Intangible assets, net	137,057			169,424
Deferred income taxes	3,173			8,301
Other assets	3,399			4,591
Total assets	$	326,347		$	368,751
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	$	17,092		$	17,706
Accrued compensation and related liabilities	24,342			25,108
Other accrued expenses and liabilities	12,488			15,761
Income taxes payable	572			252
Total current liabilities	54,494			58,827
Bank line of credit	—			18,634
Total liabilities	54,494			77,461
Minority interest	836			—
Contingent redemption value of put options	775			—
Commitments and contingencies (see Notes)
Shareholders’ equity:
Preferred stock, $0.01 par value, 5,000,000 shares authorized, no shares issued	—			—
Common stock, $0.01 par value, 100,000,000 shares authorized, 59,579,000 and 60,967,000 shares issued	596			610
Additional paid-in capital	229,732			241,316
Retained earnings	70,098			54,385
Accumulated other comprehensive loss	(1,470		)	(1,701		)
Treasury stock, 2,804,000, and 512,000 shares, at cost	(28,714		)	(3,320		)
Total shareholders’ equity	270,242			291,290
Total liabilities and shareholders’ equity	$	326,347		$	368,751

See accompanying notes to consolidated financial statements.

22

CIBER, Inc. and Subsidiaries

Consolidated Statements of Shareholders’ Equity

				Additional Paid-in Capital					Retained Earnings				Accumulated Other Comprehensive Loss			Treasury Stock			Total Shareholder’s Equity
	Common Stock
	Shares	Amount
	In thousands
Balances at June 30, 1998	52,248	522			93,889			71,433				—				—				165,844
Employee stock purchases and options exercised	1,435	14			14,738			(3,225			)	—				3,225				14,752
Acquisition consideration	4,286	43			106,492			(96			)	—				1,049				107,488
Immaterial pooling of interests	961	10			806			—				—				—				816
Tax benefit from exercise of stock options	—	—			5,499			—				—				—				5,499
Stock compensation expense	3	—			395			—				—				—				395
Stock options exchanged for compensation	—	—			833			—				—				—				833
Net income	—	—			—			54,495				—				—				54,495
Purchases of treasury stock	—	—			—			—				—				(12,986		)		(12,986		)
Balances at June 30, 1999	58,933	589			222,652			122,607				—				(8,712		)		337,136
Employee stock purchases and options exercised	457	4			4,485			(923			)	—				7,326				10,892
Acquisition consideration	—	—			1,590			(15			)	—				9,850				11,425
Tax benefit from exercise of stock options	—	—			1,664			—				—				—				1,664
Stock compensation expense	24	1			224			—				—				—				225
Net income	—	—			—			17,643				—				—				17,643
Purchases of treasury stock	—	—			—			—				—				(36,729		)		(36,729		)
Balances at December 31, 1999	59,414	594			230,615			139,312				—				(28,265		)		342,256
Net loss	—	—			—			(66,775			)	—				—				(66,775		)
Unrealized loss on investments, net of $353 tax	—	—			—			—				(529			)	—				(529		)
Foreign currency translation	—	—			—			—				(941			)	—				(941		)
Comprehensive loss																				(68,245		)
Employee stock purchases and options exercised	160	2			(313		)	(2,439			)	—				13,670				10,920
Gain on sale of stock by subsidiary	—	—			71			—				—				—				71
Tax benefit from exercise of stock options	—	—			389			—				—				—				389
Sales and settlement of put options	—	—			(444		)	—				—				—				(444		)
Contingent liability for put options	—	—			(775		)	—				—				—				(775		)
Stock compensation expense	5	—			189			—				—				—				189
Purchases of treasury stock	—	—			—			—				—				(14,119		)		(14,119		)
Balances at December 31, 2000	59,579		596			229,732				70,098				(1,470	)		(28,714	)			270,242
Net income	—	—			—			1,684				—				—				1,684
Unrealized gain on investments, net of $176 tax	—	—			—			—				370				—				370
Foreign currency translation	—	—			—			—				(601			)	—				(601		)
Comprehensive income																				1,453
Acquisition consideration	1,386	14			9,393			(3,904			)	—				16,197				21,700
Employee stock purchases and options exercised	1	—			(119		)	(13,028			)	—				20,074				6,927
Tax benefit from exercise of stock options	—	—			1,412			—				—				—				1,412
Contingent liability for put options	—	—			775			—				—				—				775
Stock compensation expense	1	—			123			(465			)	—				1,090				748
Purchases of treasury stock	—	—			—			—				—				(11,967		)		(11,967		)
Balances at December 31, 2001	60,967	$	610		$	241,316		$		54,385		$		(1,701	)	$	(3,320	)		$	291,290

See accompanying notes to consolidated financial statements.

23

CIBER, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

	Year Ended June 30, 1999			Six months ended December 31, 1999
							Years ended December 31,
							2000			2001
	In thousands
Operating activities:
Net income (loss)	$	54,495		$	17,643		$	(66,775	)	$	1,684
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Goodwill impairment charge	—			—			80,773			—
Depreciation	7,590			4,443			9,190			9,441
Amortization of intangible assets	7,520			6,754			14,032			12,155
Deferred income taxes	(2,049		)	(77		)	(716		)	(221		)
Other, net	395			(598		)	(782		)	1,100
Changes in operating assets and liabilities, net of the effect of acquisitions:
Accounts receivable	(17,789		)	17,295			10,881			24,353
Other current and long-term assets	416			(3,968		)	(2,103		)	(1,711		)
Accounts payable	1,782			4,420			850			(4,391		)
Accrued compensation and related liabilities	9,212			(7,446		)	(7,045		)	(6,910		)
Other accrued expenses and liabilities	(4,211		)	(5,782		)	3,563			(10,181		)
Deferred revenues	(247		)	(1,760		)	147			—
Income taxes payable/refundable	6,252			(2,227		)	(5,565		)	1,035
Net cash provided by operating activities	63,366			28,697			36,450			26,354
Investing activities:
Acquisitions, net of cash acquired	(26,500		)	(60,090		)	(16,184		)	(49,959		)
Purchases of property and equipment, net	(13,972		)	(7,218		)	(8,474		)	(5,962		)
Sale of building, net	—			—			—			5,828
Repayment of advances to Agilera	—			—			9,908			—
Collection of note receivable	—			—			2,000			—
Purchases of investments	—			—			(463		)	(885		)
Sales of investments	—			—			2,001			1,218
Net cash used in investing activities	(40,472		)	(67,308		)	(11,212		)	(49,760		)
Financing activities:
Employee stock purchases and options exercised	14,752			10,892			10,920			6,927
Sale of stock by subsidiary	—			—			123			—
Proceeds from sale of put options	—			—			692			—
Cash settlement of put options	—			—			(1,136		)	—
Net borrowings (payments) on short term bank line of credit	—			5,355			(5,355		)	—
Borrowings on long term bank line of credit	—			—			—			79,910
Payments on long term bank line of credit	—			—			—			(61,276		)
Debt issuance costs paid	—			—			—			(613		)
Purchases of treasury stock	(12,986		)	(36,729		)	(14,119		)	(11,190		)
Net cash (used in) provided by financing activities	1,766			(20,482		)	(8,875		)	13,758
Effect of foreign exchange rate changes on cash	—			—			(28		)	(176		)
Net increase (decrease) in cash and cash equivalents	24,660			(59,093		)	16,335			(9,824		)
Cash and cash equivalents, beginning of period	37,291			61,951			2,858			19,193
Cash and cash equivalents, end of period	$	61,951		$	2,858		$	19,193		$	9,369

See accompanying notes to consolidated financial statements.

24

CIBER, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

(1) Nature of Operations and Summary of Significant Accounting Policies

(a) Nature of Operations

CIBER, Inc. and its subsidiaries provide information technology (IT) system integration consulting and other services and to a lesser extent, resell certain hardware and software products. Our services are offered on a project or strategic staffing basis, in both custom and ERP package environments, and across all technology platforms, operating systems and infrastructures. Our clients consist primarily of Fortune 500 and middle market companies across most major industries and governmental agencies. We operate from branch offices across the United States, plus offices in Canada and Europe.

(b) Principles of Consolidation

The consolidated financial statements include the accounts of CIBER, Inc. and all wholly-owned and majority-owned subsidiaries. All material intercompany balances and transactions have been eliminated.

(c) Estimates

The preparation of these financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent liabilities and the reported amounts of revenues and expenses. On an on-going basis, we evaluate our estimates including those related to the collectibility of accounts receivable, costs to complete fixed-priced projects, the realizability of goodwill, income taxes, certain accrued liabilities and contingencies and litigation. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates.

(d) Change in Fiscal Year End

We changed our year end to December 31 from June 30, effective December 31, 1999.

(e) Cash Equivalents

Cash equivalents represents funds temporarily invested with original maturities of three months or less.

(f) Investments in Marketable Securities

Investments in marketable equity securities are classified as available-for-sale and are recorded at fair market value, which is determined based on quoted market prices. Investments in marketable securities are included in prepaid expenses and other current assets on the consolidated balance sheet. The unrealized gain or loss, net of tax, is included in accumulated other comprehensive loss on the consolidated balance sheet. Realized gains and losses on the sale of investments are based on average cost and are included in other income in the consolidated statements of operations.

(g) Property and Equipment

Property and equipment, which consists of computer equipment, and software, furniture and leasehold improvements, is stated at cost. Depreciation is computed using straight-line and accelerated methods over the estimated useful lives, ranging primarily from three to seven years.  Direct costs of time and material incurred for the development of software for internal use are capitalized as property and equipment. These costs are depreciated using the straight-line method over the estimated useful life of the software, ranging from three to seven years.

25

(h) Intangible Assets and Recent Accounting Pronouncements

Intangible assets consist of goodwill and noncompete agreements. Goodwill acquired prior to July 1, 2001 is amortized over 6 to 20 years. Goodwill acquired after June 30, 2001 is not amortized.  Noncompete agreements are amortized over the terms of the contracts, which range from one to three years. Amortization is recorded using the straight-line method.

Intangible assets are reviewed for impairment when events or changes in circumstances indicate the carrying amount of intangible assets may not be recoverable. Conditions that may trigger an impairment assessment include a history of operating losses of the related business, a significant reduction in the revenues of the related business, and a loss of a major customer, our market capitalization relative to net book value, among others. An impairment would be considered to exist when the estimated undiscounted future cash flows expected to result from the use of the intangible asset are less than the carrying amount of the asset. Future cash flows are estimated at the lowest business unit level that includes all of the operations that directly benefit from the intangible asset. This level may be a practice, branch office, region or subsidiary. If the acquired business has been fully integrated into operations, enterprise-wide goodwill would be evaluated at the consolidated level. Estimated cash flows at the business unit level are net of taxes and do not include any allocation of interest or other corporate level items. Impairment, if any, is measured based on forecasted future discounted operating cash flows. Considerable management judgment is necessary to estimate future cash flows. Accordingly, actual results could vary significantly.

In July 2001, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 141, “Business Combinations” and SFAS No. 142, “Goodwill and Other Intangible Assets.”  SFAS 141 requires all business combinations initiated after June 30, 2001 to be accounted for using the purchase method and specifies the criteria for recording intangible assets separate from goodwill.  Under SFAS 142, goodwill and intangible assets with indefinite lives will no longer be amortized, but instead will be reviewed annually (or more frequently as impairment indicators arise) for impairment. Separate intangible assets that do not have indefinite lives will continue to be amortized over their useful lives.  The non-amortization and amortization provisions of SFAS 142 are effective for goodwill and intangible assets acquired after June 30, 2001.  As a result we will not record any amortization of goodwill related to the acquisitions of Century, Aris and Metamor (see Note 3).  With respect to goodwill and intangible assets acquired prior to July 1, 2001, we will adopt SFAS 142 effective January 1, 2002.  We expect the adoption of these accounting standards will result in a reduction of our amortization of goodwill commencing January 1, 2002, however, periodic impairment reviews may result in future write-downs.

(i) Revenue Recognition

We provide consulting services under time-and-material and fixed-priced contracts. The majority of our service revenues are recognized under time-and-material contracts as hours and costs are incurred. Revenues include reimbursable expenses separately billed to clients. For fixed-priced contracts, revenue is recognized on the basis of the estimated percentage of completion based on costs incurred relative to total estimated costs. The cumulative impact of any revisions in estimated revenues and costs are recognized in the period in which the facts that give rise to the revision become known. Losses, if any, on fixed-price contracts are recognized when the loss is determined. Under certain national IT services contracts, we are required by our customer to act as a billing agent for other service providers to such client. We recognize the net fee under these arrangements as revenue.

Other revenues include sales of computer hardware products, commissions on computer product sales and software license and maintenance fees. Revenues related to the sale of computer products are recognized when the products are shipped. Where we are the remarketer of certain computer products, commission revenue is recognized when the products are drop-shipped from the vendor to the customer. On September 30, 1999, we sold our software business. Software license fee revenues were recognized over the period of the software implementation and revenues from maintenance agreements were recognized ratably over the maintenance period. Unbilled accounts receivable represent amounts recognized as revenue based on services performed in advance of billings in accordance with contract terms.

26

(j) Income Taxes

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. A tax benefit or expense is recognized for the net change in the deferred tax asset or liability during the period. The effect on deferred tax assets and liabilities due to a change in tax rates is recognized in income tax expense in the period that includes the enactment date.

(k) Stock-based Compensation

As permitted by Statement of Financial Accounting Standards No. 123 (“SFAS 123”), we account for stock-based employee compensation in accordance with the provisions of Accounting Principles Board Opinion 25, and related interpretations, including FASB Interpretation No. 44, “Accounting for Certain Transactions Involving Stock Compensation (an Interpretation of APB Opinion No. 25)”. We measure stock-based compensation cost as the excess, if any, of the quoted market price of CIBER common stock (or the estimated fair value of subsidiary stock) at the grant date over the amount the employee must pay for the stock. We generally grant stock options at fair market value at the date of grant. The pro forma disclosures, as if the fair-value based method defined in SFAS 123 had been applied, are provided in Note 15.

(l) Minority Interest

At December 31, 2000, we owned 88% of Waterstone, Inc. In 2001, we purchased the remaining shares that represented the minority interest in Waterstone for $1.7 million, which resulted in additional goodwill of $792,000. On November 27, 2000, we acquired 51% of Enspherics, Inc.  The minority stockholders’ proportionate share of the equity of these subsidiaries is reflected as minority interest in the consolidated balance sheet.  As Enspherics has incurred losses in excess of minority interest equity capital, no minority interest is recorded at December 31, 2001. The minority stockholders’ proportionate share of the net income (loss) of these subsidiaries is included in other income, net in the consolidated statement of operations.  For the year ended December 31, 2000, the minority interest in the net loss of subsidiaries was $467,000.

(m) Comprehensive Loss

Comprehensive loss includes changes in the balances of items that are reported directly as a separate component of shareholders’ equity in the consolidated balance sheet. Comprehensive loss includes net income (loss) plus changes in the net unrealized gain/loss on investments, net of taxes and changes in cumulative foreign currency translation adjustment.  At December 31, 2001, the total accumulated other comprehensive loss of $1,701,000 is comprised of unrealized loss on investments of $159,000 and $1,542,000 of foreign currency translation.

(n) Foreign Currency Translation

The assets and liabilities of our foreign operations are translated into U.S. dollars at current exchange rates and revenues and expenses are translated at average exchange rates for the period. The resulting cumulative translation adjustment is included in accumulated other comprehensive loss on the consolidated balance sheet.  Foreign currency translation adjustment excludes tax effects given that the earnings of non-U.S. subsidiaries are deemed to be reinvested for an indefinite period of time.  Foreign currency transaction gains and losses have not been significant and are included in the results of operations as incurred.

(o) Fair Value of Financial Instruments

The fair value of our financial instruments approximates our carrying amounts due to the relatively short periods to maturity of the instruments and/or variable interest rates of the instruments, which approximate current market rates.

27

(2) Other Charges

Other charges are comprised of the following (in thousands):

	Year ended June 30, 1999		Years ended December 31,
			2000		2001
Employee severance costs	$	—	$	1,300	$	1,800
Office lease closure costs	—		—		1,251
Goodwill impairment	—		80,773		—
Asset write-down	—		975		—
DigiTerra professional fees	—		720		—
Merger costs for poolings of interests	1,535		—		—
	$	1,535	$	83,768	$	3,051

2001— In connection with our reorganization of our DigiTerra and Waterstone subsidiaries, during the fourth quarter of 2001, we incurred severance costs related to certain executive management positions that were eliminated.  In addition, during 2001 we incurred charges related to losses on excess office space that we have sub-leased to other parties.

2000 — During the quarter ended September 30, 2000, we recorded a goodwill impairment charge of $80.8 million to write-down the goodwill associated with certain acquisitions. These acquisitions included: Business Impact Systems, Inc. (“BIS”), Integration Software Consultants, Inc. (“ISC”), York & Associates, Inc., Interactive Papyrus, Inc. and Paragon Solutions, Inc. Of the total goodwill impairment charge, $58.6 million related to the Custom Solutions segment and $22.2 million related to our Package Solutions segment. These businesses were acquired at a time when the value of IT services companies was much higher than at the time of the impairment charge. In addition, approximately 88% of the goodwill impairment charge related to businesses acquired for consideration paid 100% in our stock. Stock consideration typically involves a premium over cash consideration. These acquired operations experienced a decrease in the demand for their services as post Year 2000 IT spending of many companies decreased. In addition, in the spring of 2000, the IT services requirements of dot.com companies decreased significantly. This has led to greater competition within the IT services industry for the remaining business, and as a result, revenues, cash flows and expected future growth rates of these operations have decreased.

Due to the significance of the change in conditions, we performed an evaluation of the recoverability of the goodwill related to these operations in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 121, “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of.” Because the estimated future undiscounted cash flows of these operations were less than the carrying value of the related goodwill, an impairment charge was required. The impairment charge represents the amount required to write-down this goodwill to our best estimate of these operations’ future discounted cash flows. In addition, we reduced the remaining goodwill amortization periods for BIS and ISC to 10 years and 14 years, respectively. This reduction resulted in additional goodwill amortization of $330,000 during the year ended December 31, 2000, which increased the net loss by the same amount.

In March 2000, we announced our intent to spin-off our DigiTerra subsidiary to our shareholders and incurred related charges for an asset write-down as well as professional fees.  In 2001, as the result of changes in market and business conditions, the plans to spin-off DigiTerra were cancelled.

1999—-Merger costs represent professional fees, primarily broker fees, associated with certain pooling of interests business combinations.

28

(3) Acquisitions

We have acquired certain businesses, as set forth below, that we have accounted for using the purchase method of accounting for business combinations and accordingly, the accompanying consolidated financial statements include the results of operations of each acquired business since the date of acquisition.

Acquisitions — 2001

Metamor Industry Solutions, Inc (“Metamor”) - On October 15, 2001, CIBER, Inc. acquired Metamor Industry Solutions, Inc. and its subsidiary, Metamor Government Solutions, Inc.  CIBER acquired all of the outstanding stock of Metamor Industry Solutions, Inc. from PSINet Consulting Solutions Holdings, Inc., a subsidiary of PSINet, Inc., for consideration of approximately  $37.8 million.  We have recorded goodwill of $29.0 million all of which is expected to be deductible for tax purposes.  The actual purchase price is subject to finalization between the parties. We recorded reserves of $1.7 million for estimated office lease closure costs as additional costs of the acquisition. Metamor, based in Chicago, IL, provided IT consulting services similar to CIBER, including custom software development and IT staffing, primarily to governmental entities.  Our primary reason for acquiring Metamor was to expand our services to federal, state and local governments.

Aris Corporation (“Aris”) — On September 18, 2001, we acquired the business and properties of Aris as the result of Aris’ merger with and into CIBER. The total purchase price was $29.9 million consisting of $15.8 million in cash (including acquisition costs), 2,222,092 shares of CIBER common stock valued at $12.7 million and CIBER stock options valued at $1.4 million.  The value of the CIBER shares issued was based on the average closing price of CIBER stock over the two-day period before and after the revised terms of the acquisition were agreed to. We have recorded $4.3 million of goodwill, all of which is not deductible for tax purposes.  No benefit has been recorded for Aris’s foreign tax loss carryforwards at the acquisition date.  Any subsequent realization of these tax benefits will be adjusted to goodwill.  We recorded reserves of $2.0 million and $1.9 million for employee severance and office lease closure costs, respectively, as additional costs of the acquisition.  The severance costs were paid by December 31, 2001.  Aris, headquartered in Bellevue, WA, provided IT consulting services similar to CIBER, including enterprise systems implementation and front-end web development. Our primary reason for acquiring Aris was to expand our presence in Microsoft and Oracle technologies as well as to add to our geographic presence in Seattle and New Jersey and add new locations in Portland and the United Kingdom.

Century Computer Consultants, Inc. (“Century”) — On August 31, 2001, we acquired Century for an aggregate purchase price of approximately $10.4 million, consisting of $2.9 million in cash and 1,134,644 shares of CIBER common stock valued at $7.5 million.  The value of the CIBER shares issued was based on the closing stock price on August 30, 2001.  We have recorded $6.6 million of goodwill, all of which is not deductible for tax purposes.  Century, based in Overland Park, Kansas, provided IT services similar to CIBER.  Our primary reasons for acquiring Century were to strengthen strategic client relationships in Kansas City and in the wireless industry, add leadership to our existing Kansas City operations and realize the cost efficiencies associated with the combined operation.

The following table summarizes the estimated fair value of assets acquired and liabilities assumed of Metamor, Aris and Century on the respective acquisition date (in thousands):

	Metamor		Aris		Century
Cash	$	1,061	$	12,680	$	1,609
Accounts receivable	19,795		8,984		2,081
Equipment and furniture	1,315		1,441		67
Building	—		5,828		—
Deferred taxes	—		4,920		79
Other assets	2,802		3,585		76
Goodwill	29,045		4,302		6,615
Total assets acquired	54,018		41,740		10,527
Accounts payable and accrued liabilities	16,236		11,782		145
Net assets acquired	$	37,782	$	29,958	$	10,382

29

The following pro forma information presents the combined results of operations of CIBER, Metamor, Aris and Century as if the acquisitions had occurred as of the beginning of the year presented, after giving effect to certain adjustments, including elimination of historical goodwill amortization of the acquired companies, decreased interest income as a result of the cash paid for these acquisitions and income taxes at our marginal tax rate.  The pro forma financial information is not necessarily indicative of the results of operations that would have occurred had CIBER and these acquired companies constituted a single entity during such periods, nor are they necessarily indicative of future operating results.

	Pro Forma Combined Year Ended December 31,
	2000			2001
	In thousands, except per share data
Total revenues	$	783,333		$	678,908
Net loss	(79,581		)	(16,076		)
Loss per share — basic	$	(1.30	)	$	(0.26	)
Loss per share — diluted	$	(1.30	)	$	(0.26	)

The above pro forma combined financial information includes certain non-recurring items related to Aris. Aris had an investment loss of $3.5 million and an investment gain of $1.5 million, net of tax effects in 2000 and 2001, respectively.  Aris also recorded net income (loss) from discontinued operations of $665,000 and ($343,000) in 2000 and 2001, respectively.

Other acquisitions — In 2001, we also acquired three other businesses for cash consideration of $4.8 million, for which we recorded goodwill of $4.3 million.

Acquisition — 2000

Enspherics, Inc. (“Enspherics”) — On November 27, 2000, we acquired 51% of the outstanding capital stock of Enspherics for $2.5 million. Per the terms of the agreement, additional consideration may be paid based on Enspherics achieving certain performance objectives in 2002. We recorded goodwill of $2.5 million related to this acquisition, which will be amortized over 10 years. Enspherics, located in Greenwood Village, Colorado, provides custom designed IT security solutions to clients who operate in high-risk environments.

Acquisitions — July 1, 1999 through December 31, 1999

Solution Partners B.V. (“Solution Partners”) — On December 2, 1999, we acquired all of the outstanding capital stock of Solution Partners for initial consideration of $14.1 million. As part of the purchase price, we issued 171,580 shares of our common stock with a value of $4.0 million. In 2000, we agreed to pay additional consideration of approximately $1.9 million, of which $1.0 million was paid in 2001 and the remainder was paid in February 2002. The additional consideration has been recorded as goodwill and as a result, we have recorded total goodwill of $15.3 million related to this acquisition, which is being amortized over 20 years. Solution Partners, located in Eindhoven, the Netherlands, provides e-business and supply chain solutions using SAP software to companies throughout Europe.

Interactive Papyrus, Inc. (“IPI”) — On December 2, 1999, we acquired approximately 78% of the outstanding capital stock of IPI for $6.2 million. As part of the purchase price, we issued 22,500 shares of our common stock with a value of $450,000. We originally recorded goodwill of $5.7 million related to this acquisition, which was being amortized over 6 years. In 2000, we reduced the goodwill associated with IPI to $924,000 (see Note 2). IPI, located in Colorado Springs, Colorado, developed interactive web sites to build online business ventures.

Software Design Concepts, Inc. (“SDC”) — On November 15, 1999, we acquired certain assets, liabilities and all of the business operations of SDC for $9.0 million in cash and the issuance of 160,378 shares of our common stock with a value of $3.0 million. The aggregate purchase price was $12.0 million. We have

30

recorded goodwill of $11.5 million related to this acquisition, which is being amortized over 20 years. SDC, located in Philadelphia, Pennsylvania, provided software development and consulting services similar to us.

Waterstone Consulting, Inc. (“Waterstone”) — On October 29, 1999, we acquired certain assets, liabilities and all of the business operations of Waterstone for $30.7 million. As part of the purchase price, we issued 243,347 shares of our common stock with a value of $4.0 million. We have recorded goodwill of $29.8 million related to this acquisition, which is being amortized over 20 years. Waterstone, located in Chicago, Illinois, provided consulting services specializing in supply chain and customer relationship management solutions.

The Isadore Group, Inc. (“Isadore”) — On October 15, 1999, we acquired certain assets, liabilities and all of the business operations of Isadore for $18.3 million. Additionally, the terms of the purchase provide for additional consideration of up to $10.4 million based on certain revenue earned during the 3-year period ending December 31, 2002. We have recorded goodwill of $17.5 million related to this acquisition, which is being amortized over 20 years. Any additional consideration paid will be accounted for as additional goodwill. Isadore, based in Phoenix, Arizona, provided PeopleSoft higher education consulting services.

Acquisitions - Year Ended June 30, 1999

Digital Software Corporation (“DSC”) — On April 30, 1999, we acquired certain assets, liabilities and all of the business operations of DSC for $6.9 million in cash. We recorded goodwill of $7.0 million related to this acquisition, which is being amortized over 15 years. DSC, located in Aurora, Colorado, provided software engineering services similar to us.

Compaid Consulting Services, Inc. (“Compaid”) — On March 2, 1999, we acquired all of the outstanding capital stock of Compaid for $10.3 million. We have recorded goodwill of $8.0 million related to this acquisition, which is being amortized over 15 years. Compaid, headquartered in Atlanta, Georgia, provided services similar to us.

Business Impact Systems, Inc. (“BIS”) — On February 26, 1999, we issued 2,401,028 shares of our common stock in exchange for substantially all of the outstanding assets and liabilities of BIS. The aggregate purchase price was $62.2 million, including acquisition costs. We had originally recorded goodwill of $55.6 million related to this acquisition, which was being amortized over 20 years. In 2000, we reduced the goodwill related to BIS to $9.8 million and reduced the remaining goodwill amortization period to 10 years (see Note 2). BIS, headquartered in Herndon, Virginia, provided enterprise integration services.

Paradyme HR Technologies Corporation (“Paradyme HRT”) — On February 5, 1999, we acquired certain assets, liabilities and all of the business operations of Paradyme HRT.  We paid total consideration of $8.0 million.  Paradyme HRT, located in Columbia, South Carolina, provided ERP outsourcing services and HR/Payroll business services. The acquired business became part of Agilera, Inc., which effective January 1, 2000 was no longer part of CIBER (see Note 5).

Integration Software Consultants, Inc. (“ISC”) — On February 2, 1999, we issued 1,280,289 shares of our common stock in exchange for all of the outstanding common stock of ISC. The aggregate purchase price was $34.0 million, including acquisition costs. We had originally recorded goodwill of $31.9 million related to this acquisition, which was being amortized over 20 years. In 2000, we reduced the goodwill related to ISC to $11.7 million and reduced the remaining goodwill amortization period to 14 years (see Note 2). ISC, headquartered in Philadelphia, Pennsylvania, provided SAP software implementation services.

York & Associates, Inc. (“York”) — On January 29, 1999, we issued 548,857 shares of our common stock and granted options for 30,643 shares of our common stock (at an aggregate exercise price of $159,000) in exchange for substantially all of the outstanding assets and liabilities of York. The aggregate purchase price was $14.5 million, including acquisition costs. We had originally recorded goodwill of $12.2 million related to this acquisition, which was being amortized over 20 years. In 2000, we wrote off all of the goodwill related to York because we exited the primary business for which York was acquired (see Note 2).

31

Paragon Solutions, Inc. (“Paragon”)— On January 8, 1999, we acquired certain assets, liabilities and all of the business operations of Paragon for $4.4 million. Additional consideration of $2.5 million was paid in 2000. We had originally recorded total goodwill of $6.8 million related to this acquisition, which was being amortized over 15 years. In 2000, we reduced the goodwill associated with Paragon to $1.9 million (see Note 2). Paragon, located in Pittsburgh, Pennsylvania, provided Oracle software implementation services.

The Doradus Corporation (“Doradus”) — On November 15, 1998, we acquired all of the outstanding capital stock of Doradus for $4.1 million. Additional consideration of $288,000 was paid in during the six months ended December 31, 1999. We have recorded total goodwill of $4.2 million related to this acquisition, which is being amortized over 15 years. Doradus, located in Minneapolis, Minnesota, provided IT consulting services similar to us.

(4) Poolings of Interests

During the year ended June 30, 1999, we completed certain business combinations accounted for as poolings of interests, as set forth below.

The Cushing Group, Inc. (“Cushing”) — On August 31, 1998, we issued 961,135 shares of our common stock in connection with the merger of Cushing.  Our financial statements include the accounts of EJR since the pooling of interests as prior period amounts were immaterial.

EJR Computer Associates, Inc. (“EJR”) — On August 11, 1998, we issued 1,155,516 shares of our common stock in connection with the merger of EJR.  Our financial statements include the accounts of EJR for all periods prior to the pooling of interests.

(5) Agilera Investment

In March 2000, our wholly owned subsidiary, Agilera, Inc., sold convertible preferred stock to new investors. In connection with the preferred stock sale, Agilera paid us $9.9 million in repayment of our advances to Agilera as of December 31, 1999, reducing our historical cost basis in our remaining ownership in Agilera to zero.  As a result of participating rights obtained by the preferred stockholders in connection with their investment, our voting interest in Agilera was reduced to 41%. Accordingly, effective January 1, 2000, for financial reporting purposes, we do not consolidate Agilera and we account for investment in Agilera using the equity method of accounting. Under the equity method, since the basis of our investment in Agilera is zero and Agilera has incurred losses, we did not record our proportionate share of Agilera’s net losses during that period.  As the result of other Agilera equity transactions, in January 2001 our voting interest in Agilera was reduced to approximately 19%. As a result of this decrease in ownership, we account for our investment in Agilera at cost, which is zero.

Agilera provides enterprise application hosting or application service provider (“ASP”) services.  We provide software implementation services to Agilera as a subcontractor under certain Agilera customer contracts. We have recorded revenue of $5,986,000 and $3,952,000 related to these services during the year ended December 31, 2000 and 2001 respectively.  In addition, we have an agreement to sublease an office facility to Agilera at an annual cost of approximately $351,000, through the expiration of our lease in January 2003.

(6) Sale of LogisticsPRO

On September 30, 1999, we sold our LogisticsPRO software business for $2.0 million resulting in a gain of $827,000 that is included in other income.  As consideration, we received a $2.0 million promissory note that was paid in full in September 2000. The software business was sold to an entity owned by the management of the LogisticsPRO business as well as two non-executive officers of DigiTerra.

32

(7) Earnings (Loss) Per Share

The computation of earnings (loss) per share — basic and diluted is as follows:

	Year ended June 30,		Six months ended December 31,		Years ended December 31,
	1999		1999		2000			2001
	in thousands, except per share amounts
Numerator:
Pro forma net income
Net income (loss)	$	54,495	$	17,643	$	(66,775	)	$	1,684
Denominator:
Basic weighted average shares outstanding	55,362		57,345		57,900			58,191
Dilutive effect of employee stock options	1,779		1,151		—			507
Diluted weighted average shares outstanding	57,141		58,496		57,900			58,698
Earnings (loss) per share — basic	$	0.98	$	0.31	$	(1.15	)	$	0.03
Earnings (loss) per share — diluted	$	0.95	$	0.30	$	(1.15	)	$	0.03

Loss per share — diluted for the year ended December 31, 2000 excludes common stock equivalents because the effect of their inclusion would be anti-dilutive, or would decrease the reported loss per share. The dilutive common equivalent shares for the year ended December 31, 2000 were 876,000, had we reported net income. In addition, the number of antidilutive stock options (options whose exercise price is greater than the average CIBER stock price during the period) omitted from the computation of weighted average shares — diluted was 1,182,000, 2,316,000, 4,175,000 and 3,361,000 for the year ended June 30, 1999, the six months ended December 31, 1999 and the years ended December 31, 2000 and 2001, respectively.

(8) Accounts Receivable

Accounts receivable consist of the following (in thousands):

	December 31,
	2000			2001
Billed accounts receivable	$	105,193		$	129,707
Unbilled accounts receivable	24,087			10,338
	129,280			140,045
Less allowance for doubtful accounts	(2,063		)	(4,711		)
	$	127,217		$	135,334

The activity in the allowance for doubtful accounts consist of the following (in thousands):

	Additions
	Balance at beginning of period	Charge to cost and expense	Other (1)	Deductions (Write-offs)		Balance at end of period
Year ended June 30, 1999	2,510	3,312	381	(2,859	)	3,344
Six months ended December 31, 1999	3,344	1,784	4	(2,489	)	2,643
Year ended December 31, 2000	2,643	5,019	6	(5,605	)	2,063
Year ended December 31, 2001	2,063	4,912	3,707	(5,971	)	4,711

(1)          Represents additions due to acquisitions

33

(9) Investments

Summary information about investments in marketable equity securities is as follows (in thousands):

	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Carrying Amount & Fair Value
December 31, 2001	$	1,177	$	111	$	(446	)	$	842
December 31, 2000	$	1,398	$	12	$	(895	)	$	515

Gains and losses from the sale of investments in marketable equity securities are as follows (in thousands):

	Years ended December 31,
	2000			2001
Gross realized gains	$	564		$	141
Gross realized losses	$	(60	)	$	(139	)

In 2000, we purchased 134,400 shares of Merrill Lynch & Co., Inc. Structured Yield Product Exchangeable for Stock (“STRYPES”), payable with shares of common stock of CIBER, Inc at a cost of $1,534,000. On February 1, 2001, we received 285,044 shares of our common stock plus interest upon the maturity of the STRYPES. We recorded these shares as treasury stock at December 31, 2000, at a cost of $1,534,000, net of interest received.  The CIBER, Inc. common stock delivered by Merrill Lynch & Co. in settlement of the STRYPES was purchased by Merrill Lynch & Co. from a trust controlled by Bobby G. Stevenson, our Chairman, pursuant to a forward purchase contract entered into in January 1998.

(10) Property and Equipment

Property and equipment consist of the following (in thousands):

	December 31,
	2000			2001
Computer equipment and software	$	38,946		$	44,012
Furniture and fixtures	11,447			13,848
Leaseholds	4,995			6,607
	55,388			64,467
Less accumulated depreciation	(30,082		)	(38,797		)
Property and equipment, net	$	25,306		$	25,670

In October 2001, we completed the sale of the building that we acquired with Aris in September 2001 (see Note 3), resulting in net cash proceeds of $5,828,000.

(11) Intangible Assets

	December 31,
	2000			2001
	In thousands
Goodwill	$	166,383		$	210,527
Less accumulated amortization	(31,082		)	(41,963		)
Goodwill, net	135,301			168,564
Noncompete agreements	4,701			3,665
Less accumulated amortization	(2,945		)	(2,805		)
Noncompete agreements, net	1,756			860
Intangible assets, net	$	137,057		$	169,424

34

(12) Bank Line of Credit and Financing Agreement

Bank Line of Credit - In September 2001, we obtained a new $40 million reducing revolving line of credit from Wells Fargo Bank, N.A.  At the end of each calendar quarter the maximum available borrowing under our line of credit is reduced by $2.5 million, therefore the maximum available borrowing was $37.5 million at December 31, 2001.  The line of credit expires September 30, 2004.  Borrowings bear interest based on the bank’s prime rate and ranges from prime minus 0.20% to prime less 0.70%, depending on our ratio of indebtedness to earnings before interest, taxes, depreciation and amortization.  At December 31, 2001 our outstanding balance under the line of credit was $18.6 million.  At December 31, 2001, the bank’s prime rate was 4.75% and our rate on borrowing was 4.05%. We are also required to pay a fee of 0.125% per annum on the unused portion of the line of credit.  The line of credit is secured by substantially all of our assets.  The terms of the credit agreement contain, among other provisions, certain financial covenants including minimum interest coverage and minimum tangible net worth, as well as specific limitations on additional indebtedness, liens and merger activity and prohibits the payment of any dividends.

Wholesale Financing Agreement - In connection with our operation as an authorized remarketer of certain computer hardware and products, we have an Agreement for Wholesale Financing with IBM Credit Corporation.  Outstanding amounts under the Wholesale Financing Agreement, which totaled $3,247,000 and $5,310,000 at December 31, 2000 and 2001, respectively, are included in accounts payable on the balance sheet.  Our payment of individual amounts financed is due within normal trade credit payment terms, generally 45 days, and are without interest.  Outstanding amounts under the Wholesale Financing Agreement are secured by substantially all of our assets.

(13) Leases

We have noncancelable operating leases for our office space.  We also have certain office locations that we have subleased to other parties.  Net rent expense for operating leases totaled $10,730,000, $6,218,000, $12,106,000 and $13,387,000 for the year ended June 30, 1999, the six months ended December 31, 1999 and the years ended December 31, 2000 and 2001 respectively. Our net rental expense for the year ended December 31, 2001 consists of gross rental expense of $14,476,000 and sublease income of $1,089,000.

Future minimum lease payments and sublease receipts as of December 31, 2001 are (in thousands):

	Rental Payments		Sublease Receipts
2002	16,957		2,919
2003	13,822		1,887
2004	8,262		947
2005	4,459		451
2006	1,693		35
Thereafter	2,106		—
Total minimum lease payments	$	47,299	$	6,239

We have a lease reserve for certain office leases that are vacant or have been subleased at a loss.  The activity in the lease reserve consists of the following (in thousands):

		Additions
	Balance at beginning of year	Charge to cost and expense	Other (1)	Deductions (Payments)		Balance at end of year
Year ended December 31, 2001	—	1,251	3,567	(743	)	4,075

(1)     Represents additions due to acquisitions.

35

(14) Income Taxes

Income tax expense (benefit) consists of the following (in thousands):

	Year ended June 30,			Six months ended December 31,			Years ended December 31,
	1999			1999			2000			2001
Current:
Federal	$	34,005		$	11,082		$	8,211		$	577
State and local	5,297			1,829			2,157			139
Foreign	232			256			1,264			678
	39,534			13,167			11,632			1,394
Deferred:
Federal	(1,773		)	(66		)	(582		)	(230		)
State and local	(276		)	(11		)	(113		)	9
Foreign	—			—			(21		)	—
	(2,049		)	(77		)	(716		)	(221		)
Income tax expense	$	37,485		$	13,090		$	10,916		$	1,173

Income tax expense differs from the amounts computed by applying the statutory U.S. federal income tax rate to income before income taxes as a result of the following (in thousands):

	Year ended June 30,		Six months ended December 31,			Years ended December 31,
	1999		1999			2000			2001
Income tax expense (benefit) at the federal statutory rate of 35%	$	32,193	$	10,757		$	(19,551	)	$	1,000
Increase (decrease) resulting from:
State income taxes, net of federal income tax benefit	3,263		1,182			1,329			96
Nondeductible goodwill amortization	1,008		929			1,490			876
Nondeductible goodwill write-down	—		—			26,752			—
Nondeductible other costs	970		369			903			641
Adjustment to prior year’s estimated tax liability	—		—			—			(1,251		)
Other	51		(147		)	(7		)	(189		)
Income tax expense	$	37,485	$	13,090		$	10,916		$	1,173

U.S. and foreign income (loss) before income taxes are as follows (in thousands):

	Year ended June 30,		Six months ended December 31,		Years ended December 31,
	1999		1999		2000			2001
United States	$	90,719	$	30,166	$	(58,974	)	$	345
Foreign	1,261		567		3,115			2,512
	$	91,980	$	30,733	$	(55,859	)	$	2,857

36

The components of the net deferred tax asset or liability are as follows (in thousands):

	December 31,
	2000			2001
Deferred tax assets:
Intangible assets	$	5,213		$	5,101
Accrued expenses	2,413			2,783
Accounts receivable	—			821
Net operating losses	—			6,339
Other	463			177
Total gross deferred tax assets	8,089			15,221
Less valuation allowance	—			(1,750		)
Net deferred tax assets	8,089			13,471
Deferred tax liabilities:
Property and equipment	(2,040		)	(1,389		)
Accounts receivable	(239		)	—
Other	(99		)	(848		)
Total gross deferred tax liabilities	(2,378		)	(2,237		)
Net deferred tax asset	$	5,711		$	11,234
Balance sheet classification of deferred tax asset:
Deferred tax asset - current	$	2,538		$	2,933
Deferred tax asset - long term	3,173			8,301
Net deferred tax asset	$	5,711		$	11,234

Based on our evaluation of current and anticipated future taxable income, we believe sufficient taxable income will be generated to realize the deferred tax assets.

At December 31, 2001 we have available tax loss carryforwards of approximately $17.5 million resulting from certain acquired companies and certain subsidiaries, which begin to expire in 2018.  The valuation allowance at December 31, 2001, relates to $5.0 million of acquired foreign net operating loss carryforwards, for which any future realized benefit would be allocated to reduce goodwill. The utilization of $9.4 million of U.S. net operating loss carryforwards is subject to certain annual limits under the Internal Revenue Code.

(15) Stock-Based Plans

Our stock-based compensation plans are described below.

Employees’ Stock Option Plan — We have a stock option plan for employees and up to 10,500,000 shares of CIBER, Inc. common stock are authorized for issuance under this plan. At December 31, 2001, 1,309,485 options were available for future grants. The plan administrators may grant to officers, employees and consultants, restricted stock, stock options, performance bonuses or any combination thereof. The Compensation Committee of the Board of Directors determines the number and nature of awards. Options become exercisable as determined at the date of grant by the Board of Directors and expire within 10 years from the date of grant. In 2001, stock grants were made to employees for 130,000 shares of common stock valued at an average price of $4.50 per share.

1989 Stock Option Plan — We established a stock option plan in 1989 that was discontinued during 1994. The options expire twenty years after the date of grant through 2013. At December 31, 2001, options for 148,872 shares were outstanding and vested at an average exercise price of $0.45.

Directors’ Stock Option Plan — Up to 200,000 shares of CIBER, Inc. common stock are authorized for issuance to non-employee, non-affiliate directors under this plan. Such stock options are non-discretionary and granted annually at the fair market value of our common stock on the date of grant. The number of options

37

granted annually is fixed by the plan. Options expire 10 years from the date of grant.  At December 31, 2001, 69,000 options were available for future grants.

At December 31, 2001, there were 7,901,442 shares of CIBER, Inc. common stock reserved for future issuance under our stock option plans.

Directors’ Stock Compensation Plan —A total of 50,000 shares of CIBER, Inc. common stock are authorized for issuance to non-employee directors under this plan.    Each non-employee director is issued shares having a fair market value of approximately $2,500 for attendance at each meeting of our Board of Directors. During the year ended June 30, 1999, the six months ended December 31, 1999 and the years ended December 31, 2000 and 2001, we issued 1,980; 1,445; 3,892 and 7,550 shares, respectively, of common stock under this plan.  At December 31, 2001, 32,236 shares were available for future grants.

A summary of the status of the CIBER, Inc. stock option plans as of June 30, 1999, the six months ended December 31, 1999 and the years ended December 31, 2000 and 2001, and changes during the periods ending on those dates is presented below (shares in thousands):

	Year ended June 30, 1999				Six months ended December 31, 1999				Year ended December 31, 2000
	Shares		Weighted Average Exercise Price		Shares		Weighted Average Exercise Price		Shares		Weighted Average Exercise Price
Outstanding at beginning of period	5,187		$	12.34	5,364		$	15.36	6,928		$	16.45
Granted	2,760		22.57		2,457		18.46		2,594		9.96
Exercised	(960	)	4.73		(476	)	10.17		(168	)	7.96
Canceled	(1,623	)	24.34		(417	)	21.39		(1,949	)	19.54
Outstanding at end of period	5,364		$	15.36	6,928		$	16.45	7,405		$	13.55
Options exercisable at period end	1,875				2,270				3,514

	Year ended, December 31, 2001
	Shares		Weighted Average Exercise Price
Outstanding at beginning of year	7,405		$	13.55
Granted	3,497		6.35
Exercised	(1,014	)	1.95
Canceled	(3,188	)	16.71
Outstanding at end of year	6,700		$	9.72
Options exercisable at year end	3,267

38

Summary information about CIBER, Inc. stock options outstanding and exercisable at December 31, 2001 is as follows (shares in thousands):

	Options Outstanding				Options Exercisable
Range of Exercise Prices	Number Outstanding	Weighted  Average  Exercise  Price		Weighted  Average  Remaining  Life (Years)	Number  Exercisable	Weighted  Average Exercise  Price
$ 0.01 — $ 4.63	1,562	$	4.00	8.7	854	$	3.59
4.71 —    8.25	2,219	5.84		9.6	576	6.31
8.40 —  16.00	1,688	12.22		7.9	889	13.00
16.31 —  50.98	1,231	20.57		6.6	947	20.51
$ 0.01 —$50.98	6,700	$	9.72	8.4	3,267	$	11.54

DigiTerra, Inc. Equity Incentive Plan — In July 2001, our DigiTerra, Inc. subsidiary established a stock option plan for its employees.  In 2001, options for 3,611,532 shares at an average exercise price of $1.33 were issued of which 1,543,150 have been cancelled and 2,068,385 are outstanding at December 31, 2001. Options for 517,096 shares are vested at December 31, 2001.  As a result of our decision to not spin off DigiTerra and our subsequent reorganization of DigiTerra, efforts are underway to terminate the plan and cancel these options sometime during 2002.

Waterstone, Inc. Equity Incentive Plan — Our Waterstone subsidiary had a stock option plan under which there were 1,472,900 options outstanding as of December 31, 2000.  During 2001, this plan was discontinued and all options were cancelled.

Employee Stock Purchase Plan (“ESPP”) — We have a stock purchase plan that allows eligible employees to purchase, through payroll deductions, shares of CIBER, Inc. common stock at 85% of the fair market value at specified dates. Up to 4,750,000 shares of common stock are authorized to be issued under the ESPP, of which, a total of 3,730,351 shares have been issued through December 31, 2001. During the years ended June 30, 1999, the six months ended December 31, 1999 and the years ended December 31, 2000 and 2001, employees purchased 633,405, 440,290 and 837,850 and 1,675,670 shares of common stock, respectively.

39

For our stock-based plans, we have recorded compensation expenses of $395,000, $225,000, $189,000 and $748,000 during the year ended June 30, 1999, the six months ended December 31, 1999 and the years ended December 31, 2000 and 2001, respectively. Had we determined compensation cost for our stock-based compensation plans based on the fair value approach of SFAS 123, our net income (loss) and income (loss) per share would have been as indicated in the pro forma amounts below (in thousands, except per share data):

		Year ended June 30,		Six months ended December 31,		Years ended December 31,
		1999		1999		2000			2001
Net income (loss)	As reported	$	54,495	$	17,643	$	(66,775	)	$	1,684
	Pro forma	41,373		11,323		(81,295		)	(4,563		)
Earnings (loss) per share — basic	As reported	.98		.31		(1.15		)	.03
	Pro forma	.75		.20		(1.40		)	(.08		)
Earnings (loss) per share — diluted	As reported	.95		.30		(1.15		)	.03
	Pro forma	.72		.19		(1.40		)	(.08		)

The effect of applying SFAS 123 in this pro forma disclosure may not be indicative of the effect on pro forma net income for future years because variables such as the number of options granted, exercises and stock price volatility included in these disclosures may not be indicative of future activity.

The weighted average fair values of CIBER, Inc. options granted during the year ended June 30, 1999, the six months ended December 31, 1999 and the years ended December 31, 2000 and 2001 were $16.24, $9.20, $6.41 and $3.64, respectively.  The fair value of options at the date of grant was estimated using the Black-Scholes option pricing model with the following weighted-average assumptions:

	Year ended June 30,		Six months ended December 31,		Years ended December 31,
	1999		1999		2000		2001
Expected life	5 years		5 years		5 years		5 years
Risk free interest rate	4.8	%	6.0	%	6.0	%	4.5	%
Expected volatility	80	%	60	%	80	%	75	%
Dividend yield	0	%	0	%	0	%	0	%

Warrants for Common Stock — In connection with our acquisition of Aris, we issued warrants for 96,954 shares of our common stock in replacement of Aris’s previously outstanding warrants.  The warrants are exercisable at prices from $15.63 to $58.24 with an average exercise price of $24.22 and expire at various times through October 2004.

(16) 401(k) Savings Plan

We have a savings plan under Section 401(k) of the Internal Revenue Code. Our company matching contribution is determined based on the employee’s completed years of service.  We recorded expense of $4,555,000, $2,464,000, $3,593,000 and $2,945,000 for the years ended June 30, 1999, the six months ended December 31, 1999 and the years ended December 31, 2000 and 2001, respectively, related to this plan.

40

(17) Stock Purchase Rights

On September 21, 1998, CIBER, Inc. paid a dividend of one preferred stock purchase right (a “Right”) for each outstanding share of CIBER, Inc. common stock (“Common Stock”). A Right is also attached to all shares of Common Stock issued after the dividend date. Each Right entitles the registered holder to purchase one one-hundredth of a share of Series A Junior Preferred Stock, par value $0.01, at a purchase price of $250, subject to adjustment. The Rights become exercisable ten business days following a public announcement that a person or group has acquired, or has commenced or intends to commence a tender offer for 15% or more of our outstanding Common Stock. In the event the Rights become exercisable, each Right will entitle its holder, other than the Acquiring Person (as defined in the Rights Agreement), to that number of shares of our Common Stock having a market value of two times the exercise price of the Right. In the event the Rights become exercisable because of a merger or certain other business combination, each Right will entitle its holder to purchase common stock of the acquiring company having a market value of two times the exercise price of the Right. If the Rights are fully exercised, the shares issued would cause substantial dilution to the Acquiring Person or the shareholders of the acquiring company.  We can redeem the Rights in their entirety, prior to their becoming exercisable, at $0.001 per Right. The Rights expire on August 28, 2008, unless extended or earlier redeemed.

(18) Share Repurchase Program

On June 21, 1999, our Board of Directors authorized the repurchase of up to 5,888,591 shares (10%) of our common stock. On April 17, 2001 our Board of Directors authorized the repurchase of an additional 1,000,000 shares of our common stock for a total of 6,888,591 shares that have been authorized for repurchase.  As of December 31, 2001, we have purchased 6,735,000 shares for $71,527,000 under this program.

(19) Business and Credit Concentrations

Our clients are located principally throughout the United States. Our revenue and accounts receivable are concentrated with large companies across several industries and governmental entities. Our largest client accounted for approximately 6%, 7%, 6% and 6% of total revenues for the years ended June 30, 1999, the six months ended December 31, 1999 and the years ended December 31, 2000 and 2001, respectively. In addition, our five largest clients accounted for, in the aggregate, approximately 15%, 16%, 14% and 16% of our total revenues for the years ended June 30, 1999, the six months ended December 31, 1999 and the years ended December 31, 2000 and 2001, respectively. We have a policy to regularly monitor the creditworthiness of our clients and generally do not require collateral. We have a concentration of revenues related to clients purchasing software from PeopleSoft, Inc. Approximately 10%, 8%, 8% and 8% of our total revenues for the years ended June 30, 1999, the six months ended December 31, 1999 and the years ended December 31, 2000 and 2001, respectively, were generated from implementing PeopleSoft software.

(20) Segment Information

In the fourth quarter of 2001, we realigned our operations based on the nature of their services.  As a result, we have two reportable segments, Custom Solutions and Package Solutions. The Custom Solutions segment primarily includes our CIBER custom branch offices and our CIBER Solution Partners European operations.  Our Custom Solutions segment provides IT project solutions and IT staffing in custom developed software environments. Our Package Solutions segment is comprised primarily of our CIBER Enterprise Solutions Division and our subsidiary DigiTerra, Inc.  Package Solutions provides enterprise software implementation services including enterprise resource planning (ERP), supply chain management customer relationship management software from software vendors such as  J.D. Edwards, Lawson, Oracle, PeopleSoft, and SAP, among others.  Prior year information has been restated to conform to this presentation.

We evaluate our segments based on operating income before amortization of intangible assets and goodwill impairment and other charges. The accounting policies of the reportable segments are the same as those disclosed in the Summary of Significant Accounting Policies.

41

The following presents information about our segments (in thousands):

	Year ended June 30,			Six months ended December 31,			Years ended December 31,
	1999			1999			2000			2001
Total revenues:
Custom Solutions	$	549,779		$	266,604		$	477,098		$	436,016
Package Solutions	172,938			94,705			148,247			124,905
All Other	1,591			2,783			—			—
Inter-segment	(4,647		)	(2,092		)	(3,811		)	(2,046		)
Total	$	719,661		$	362,000		$	621,534		$	558,875
Inter-segment revenues:
Custom Solutions	$	(795	)	$	(211	)	$	(875	)	$	(52	)
Package Solutions	(3,852		)	(1,881		)	(2,936		)	(1,994		)
Total	$	(4,647	)	$	(2,092	)	$	(3,811	)	$	(2,046	)
Income (loss) from operations:
Custom Solutions	$	77,182		$	31,618		$	48,694		$	29,447
Package Solutions	34,010			16,772			8,650			967
All Other	(765		)	(3,131		)	—			—
Corporate	(12,032		)	(9,280		)	(16,441		)	(12,612		)
Total	98,395			35,979			40,903			17,802
Amortization of intangibles	(7,520		)	(6,754		)	(14,032		)	(12,155		)
Other charges	(1,535		)	—			(83,768		)	(3,051		)
Operating income (loss)	$	89,340		$	29,225		$	(56,897	)	$	2,596
Total capital expenditures:
Custom Solutions	$	830		$	1,874		$	6,304		$	4,649
Package Solutions	7,120			1,678			962			215
All Other	109			1,566			—			—
Corporate	5,913			2,050			1,208			1,098
Total capital expenditures	$	13,972		$	7,168		$	8,474		$	5,962
Total assets:
Custom Solutions	$	117,370		$	110,896		$	106,023		$	115,241
Package Solutions	67,138			55,578			54,353			44,400
All Other	1,758			5,843			—			—
Corporate and other	65,354			16,276			28,914			39,686
Intangible assets	157,012			233,975			137,057			169,424
Total assets	$	408,632		$	422,568		$	326,347		$	368,751

Revenues from foreign operations were $11,418,000 and $16,743,000 for the years ended December 31, 2000 and 2001, respectively, and were not significant during the prior periods presented. Total assets of foreign operations were $21,305,000 and $18,938,000 at December 31, 2000 and 2001, respectively.

42

(21) Supplemental Statement of Cash Flow Information

Supplemental statement of cash flow information is as follows (in thousands):

	Year  ended  June 30			Six months ended December 31,			Years ended December 31,
	1999			1999			2000			2001
Acquisitions:
Fair value of assets acquired, excluding cash	$	143,371		$	84,879		$	4,891		$	96,225
Liabilities assumed	(10,586		)	(5,371		)	(579		)	(27,890		)
Common stock issued	(106,285		)	(11,425		)	—			(21,679		)
Change in acquisition costs payable	—			(7,888		)	11,862			2,445
Change in minority interest	—			(105		)	10			858
Cash paid for acquisitions, net of cash acquired	$	26,500		$	60,090		$	16,184		$	49,959
Noncash investing and financing activities:
Exchange of shares of non-marketable investment for CIBER stock	$	—		$	—		$	—		$	777
Issuance of common stock in satisfaction of acquisition costs payable	$	1,203		$	—		$	—		$	—
Stock options exchanged for accrued compensation	$	833		$	—		$	—		$	—
Cash paid for interest	$	—		$	94		$	547		$	211
Cash paid for income taxes, net	$	32,941		$	15,139		$	16,921		$	506

(22) Selected Quarterly Financial Information (Unaudited)

	First Quarter		Second Quarter		Third Quarter			Fourth Quarter		Total
	In thousands, except per share data
Year ended December 31, 2001
Revenues	$	145,864	$	140,009	$	127,951		$	145,051	$	558,875
Amortization of intangible assets	3,025		3,065		3,036			3,029		12,155
Other charges	—		406		—			2,645		3,051
Operating income (loss)	2,553		122		(1,099		)	1,020		2,596
Net income (loss)	1,565		375		(591		)	335		1,684
Earnings (loss) per share — basic	$	0.03	$	0.01	$	(0.01	)	$	0.01	$	0.03
Earnings (loss) per share — diluted	$	0.03	$	0.01	$	(0.01	)	$	0.01	$	0.03
Year ended December 31, 2000
Revenues	$	166,306	$	157,357	$	153,285		$	144,586	$	621,534
Amortization of intangible assets	4,046		4,041		2,931			3,014		14,032
Other charges	2,275		323		80,773			397		83,768
Operating income (loss)	5,493		6,894		(73,927		)	4,643		(56,897		)
Net income (loss)	3,325		3,980		(76,888		)	2,808		(66,775		)
Earnings (loss) per share — basic	$	0.06	$	0.07	$	(1.32	)	$	0.05	$	(1.15	)
Earnings (loss) per share — diluted	$	0.06	$	0.07	$	(1.32	)	$	0.05	$	(1.15	)

In the fourth quarter of 2001, we have reclassified $836,000 originally reported in other charges during the second quarter of 2001 to selling, general and administrative expenses.  In addition, we reclassified $991,000 originally reported as consulting services revenues during the third quarter of 2001 to other revenues.

See Note 2 for information on other charges.

43

(23) Comparative Financial Information (Unaudited)

The following financial information is included for comparative purposes (in thousands):

	Six months ended December 31, 1999		Year ended December 31, 1999
Total revenues	$	339,714	$	741,947
Operating income	41,908		76,657
Income before income taxes	43,238		79,475
Income tax expense	17,801		32,774
Net income	25,437		46,701
Earnings per share — basic	$	0.31	$	0.81
Earnings per share — diluted	$	0.30	$	0.80

44

Item 9.    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Part III

The information required by Part III is omitted from this Report on Form 10-K because the Registrant will file a definitive proxy statement (the “Proxy Statement”) within 120 days of December 31, 2001 and certain information included therein is incorporated herein by reference.

Item 10. Directors and Executive Officers

The information required by this item is incorporated by reference to CIBER’s 2002 Proxy Statement.

Item 11. Executive Compensation

The information required by this item is incorporated by reference to CIBER’s 2002 Proxy Statement.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information required by this item is incorporated by reference to CIBER’s 2002 Proxy Statement.

Item 13. Certain Relationships and Related Transactions

The information required by this item is incorporated by reference to CIBER’s 2002 Proxy Statement.

Part IV

Item 14.  Exhibits Financial Statement Schedules and Reports on Form 8-K

(a)           (1)         Financial Statements

The following financial statements are filed as part of this report:

Independent Auditors’ Report

Consolidated Statements of Operations — Years Ended June 30,1999, the Six Months Ended December 31, 1999 and the Years Ended December 31, 2000 and 2001.

Consolidated Balance Sheets — December 31, 2000 and 2001.

Consolidated Statements of Shareholders’ Equity — Years Ended June 30, 1999, the Six Months Ended December 31, 1999 and the Years Ended December 31, 2000 and 2001.

Consolidated Statements of Cash Flows — Years Ended June 30, 1999, the Six Months Ended December 31, 1999 and the Years Ended December 31, 2000 and 2001.

Notes to Consolidated Financial Statements

(2)         Financial Statement Schedules

None.

45

(3) Exhibits

Number	Description of Exhibits
2.1	Agreement and Plan of Reorganization and Liquidation by and among CIBER, Inc., CIBER Integration Services, Inc., Business Impact Systems, Inc. and the Affiliated Stockholders of Business Impact Systems, Inc. dated February 26, 1999, incorporated by reference to the Current Report on Form 8-K filed with the Commission on July 1, 1999
2.2	The Second Amended and Restated Agreement and Plan of Merger by and Between CIBER, Inc. and Aris Corporation, incorporated by reference to the Post-Effective Amendment No. 2 to Form S-4 filed by CIBER, Inc. on August 3, 2001
2.3	Stock Purchase Agreement dated September 7, 2001 by and among CIBER, Inc., PSINet Consulting Solutions Holdings, Inc. and PSINet Inc. and the Amendment Agreement dated October 9, 2001 and Closing Agreement dated October 15, 2001, incorporated by reference to the Current Report on Form 8-K filed with the Commission on October 30, 2001
3(i)	Amended and Restated Certificate of Incorporation of CIBER, Inc.; Certificate of Amendment to Amended and Restated Certificate of Incorporation of CIBER, Inc. dated October 29, 1996; Certificate of Amendment to Amended and Restated Certificate of Incorporation of CIBER, Inc. dated March 4, 1998, incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended March 31, 1998; Certificate of Amendment to Amended and Restated Certificate of Incorporation of CIBER, Inc. dated October 29, 1999, incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended September 30, 1999
3(ii)	Amended and Restated Bylaws of CIBER, Inc. as adopted February 15, 2001, incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended March 31, 2001
4.1	Form of Common Stock Certificate (1)
4.2	Rights Agreement, dated as of August 31, 1998, between CIBER, Inc. and UMB Bank, N. A., and exhibits, incorporated by reference to the Form 8-K filed by CIBER on September 16, 1998
10.1†	1989 CIBER, Inc. Employee Stock Option Plan (1)
10.2	Form of CIBER, Inc. Non-Employee Directors’ Stock Option Plan (1)
10.3†	CIBER, Inc. Equity Incentive Plan, amended and restated as of February 15, 2001, incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended March 31, 2001
10.4	CIBER, Inc. Non-Employee Directors’ Stock Compensation Plan (as amended July 1, 1997), incorporated by reference to the Annual Report on Form 10-K for the year ended June 30, 1998
10.5†	Employment Agreement between CIBER, Inc. and Mac J. Slingerlend (2)
10.6†	Employment Agreement between CIBER, Inc. and Joseph A. Mancuso (2)
10.7†	Promissory Note between CIBER, Inc. and Joseph A. Mancuso, incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended September 30, 1999
10.8†	Employment Agreement between CIBER, Inc. and David G. Durham, incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 2001
10.9	Loan and Security Agreement with Wells Fargo Bank dated September 26, 2001, incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended September 30, 2001
10.10	Commercial & Investment Real Estate Purchase & Sale Agreement dated August 2, 2001 between Aris Corporation and Parker, Smith and Feek, Inc., including Amendment and Second Amendment, incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended September 30, 2001
10.11†	DigiTerra, Inc. Equity Incentive Plan*
10.12†	Employment Agreement between CIBER, Inc. and William R. Wheeler*
10.13†	Salary Continuation Retirement Plan for Mac J. Slingerlend, Second Revision — February 2002*
21.1	List of Subsidiaries of CIBER, Inc.*
23.1	Consent of KPMG LLP*

(1)Incorporated by reference to the Registration Statement on Form S-1, as amended (File No. 33-74774), as filed with the Commission on February 2, 1994.

(2)Incorporated by reference to the Annual Report on Form 10-K for the year ended June 30, 1999.

*Filed herewith

†Indicates a management contract or compensatory plan.

46

(b)           Reports on Form 8-K During the Quarter Ended December 31, 2001

On October 30, 2001, we filed a Form 8-K dated October 15, 2001 announcing our acquisition of Metamor Industry Solutions, Inc. and subsidiary.  On December 21, 2001, we filed a Form 8-K/A to amend the Form 8-K filed October 30, 2001 and to provide financial statements and pro forma financial information related to our acquisition of Metamor Industry Solutions, Inc.

47

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

CIBER, Inc.

(Registrant)

Date: March 15, 2002	By	/s/ Mac J. Slingerlend
			Mac J. Slingerlend Chief Executive Officer, President and Secretary

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/ Bobby G. Stevenson	Chairman of the Board and Founder	March 15, 2002
Bobby G. Stevenson
/s/ Mac J. Slingerlend	Chief Executive Officer, President, Secretary and Director	March 15, 2002
Mac J. Slingerlend
/s/ David G. Durham	Chief Financial Officer, Senior Vice President and Treasurer (Principal Financial Officer)	March 15, 2002
David G. Durham
/s/ Christopher L. Loffredo	Vice President/Chief Accounting Officer (Principal Accounting Officer)	March 15, 2002
Christopher L. Loffredo
/s/ Archibald J. McGill	Director	March 15, 2002
Archibald J. McGill
/s/ James A. Rutherford	Director	March 15, 2002
James A. Rutherford
/s/ James C. Spira	Director	March 15, 2002
James C. Spira

48

EX-10.11

DIGITERRA, INC.

EQUITY INCENTIVE PLAN

SECTION 1

INTRODUCTION

1.1           Establishment. DigiTerra, Inc. hereby adopts the DigiTerra, Inc. Equity Incentive Plan (the “Plan”) for certain officers, employees, consultants and non–employee directors of the Company.

1.2           Purposes. The purposes of the Plan are to provide the officers, employees, consultants and non–employee directors of the Company selected for participation in the Plan with added incentives to continue in the long–term service of the Company and to create in such persons a more direct interest in the future success of the operations of the Company by relating incentive compensation to increases in stockholder value, so that the income of such persons is more closely aligned with the income of the Company’s stockholders. The Plan is also designed to enhance the ability of the Company to attract, retain and motivate officers, employees, consultants and non–employee directors by providing an opportunity for investment in the Company.

SECTION 2

DEFINITIONS

2.1           Definitions. The following terms shall have the meanings set forth below:

(a)           “Affiliated Corporation” means (i) any corporation or other entity (including but not limited to a partnership) that directly, or through one or more intermediaries controls, is controlled by, or is under common control with, DigiTerra, Inc., or (ii) any entity in which the Company has a significant equity interest, as determined by the Committee. CIBER, Inc., a Delaware corporation and the owner of all of the issued and outstanding shares of DigiTerra Common Stock at the Effective Date (“CIBER”) shall be deemed to be an Affiliated Corporation for so long as CIBER owns more than a majority of the issued and outstanding shares of DigiTerra and DigiTerra is not Publicly Traded.

(b)           “Award” means a grant made under this Plan in the form of Stock, Options, Restricted Stock, Performance Shares, or Performance Units.

(c)           “Board” means the Board of Directors of the Company.

(d)           “Committee” means (i) the Board, or (ii) one or more committees of the Board to whom the Board has delegated all or part of its authority under this Plan. After the DigiTerra Common Stock is Publicly Traded, any committee under clause (ii) hereof which makes grants to “officers” of the Company (as that term is defined in Rule 16a–1(f) promulgated under the Exchange Act) shall be comprised of not less than the minimum number of persons

from time to time required by Rule 16b–3, each of whom, to the extent necessary to comply with Rule 16b–3 only, shall be a “non–employee director” within the meaning of Rule 16b–3(b)(3)(i).

(e)           “Company” means DigiTerra, Inc., a Delaware corporation, together with its Affiliated Corporations, except where “DigiTerra” is used herein, it means DigiTerra, Inc. and excludes CIBER, notwithstanding that CIBER is at the time an Affiliated Corporation.

(f)            “Effective Date” means May 15, 2001.

(g)           “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

(h)           “Fair Market Value” means, as of any date, the value of the Stock determined as follows:

(i)            If the Stock is listed on any established stock exchange or a national market system, its Fair Market Value shall be the closing sales price for such Stock (or the closing bid, if no sales were reported) as quoted on such exchange or system for the last market trading day prior to the time of determination, as reported in The Wall Street Journal or such other source as the Committee deems reliable;

(ii)           If the Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, the Fair Market Value of a Share shall be the mean between the high bid and low asked prices for the Stock on the last market trading day prior to the day of determination, as reported in the Wall Street Journal or such other source as the Committee deems reliable;

(iii)          In the absence of an established market for the Stock, the Fair Market Value shall be determined in good faith by the Committee.

(i)            “Incentive Stock Option” means any Option designated as such and granted in accordance with the requirements of Section 422 of the Internal Revenue Code.

(j)            “Initial Public Offering” means a public distribution of the DigiTerra Stock, either through registration of the Common Stock under the Securities Act of 1933, as amended, or through a distribution of the DigiTerra Stock, the consequence of which is that the DigiTerra Common Stock is Publicly Traded.

(k)           “Internal Revenue Code” means the Internal Revenue Code of 1986, as it may be amended from time to time, and the rules and regulations promulgated thereunder.

(1)           “Non–Statutory Option” means any Option other than an Incentive Stock Option.

(m)          “Option” means a right to purchase Stock at a stated price for a specified period of time.

2

(n)           “Option Price” means the price at which shares of Stock subject to an Option may be purchased, determined in accordance with Section 7.2(b).

(o)           “Participant” means an employee or non–employee director of, or consultant to, the Company designated by the Committee from time to time during the term of the Plan to receive one or more Awards under the Plan.

(p)           “Performance Cycle” means the period of time as specified by the Committee over which Performance Shares or Performance Units are to be earned.

(q)           “Performance Shares” means an Award made pursuant to Section 9 which entitles a Participant to receive Shares, their cash equivalent or a combination thereof based on the achievement of performance targets during a Performance Cycle.

(r)            “Performance Units” means an Award made pursuant to Section 9 which entitles a Participant to receive cash, Stock or a combination thereof based on the achievement of performance targets during a Performance Cycle.

(s)           “Publicly Traded” means that DigiTerra has a class of equity securities registered pursuant to Section 12 of the Exchange Act.

(t)            “Restricted Stock” means Stock granted under Section 8 that is subject to restrictions imposed pursuant to such Section.

(u)           “Rule 16b–3” shall mean Rule 16b–3 as promulgated by the Securities and Exchange Commission under the Exchange Act, or any successor rule or regulation thereto as in effect from time to time.

(v)           “Service Provider” means an employee or non–employee director of or consultant to the Company.

(w)          “Share” means a share of Stock.

(x)            “Stock” means the common stock, $.01 par value, of DigiTerra.

2.2           Gender and Number. Except when otherwise indicated by the context, the masculine gender shall also include the feminine gender, and the definition of any term herein in the singular shall also include the plural.

SECTION 3

PLAN ADMINISTRATION

3.1           Authority of Committee. The Plan shall be administered by the Committee. Subject to the terms of the Plan and applicable law, and in addition to other express powers and

3

authorizations conferred on the Committee by the Plan, the Committee shall have full power and authority to: (i) designate Participants; (ii) determine the type or types of Awards to be granted to eligible Participants; (iii) determine the number of Shares to be covered by, or with respect to which payments, rights, or other matters are to be calculated in connection with, Awards; (iv) determine the terms and conditions of any Award; (v) determine whether, to what extent, and under what circumstances Awards may be settled or exercised in cash, Shares, other securities, other Awards or other property, or canceled, forfeited, or suspended and the method or methods by which Awards may be settled, exercised, canceled, forfeited, or suspended; (vi) determine whether, to what extent, and under what circumstances to accelerate the exercisability of any Award or the end of a performance period or the termination of the restriction period for any Restricted Stock Award; (vii) correct any defect, supply any omission, reconcile any inconsistency and otherwise interpret and administer the Plan and any instrument or agreement relating to the Plan or any Award hereunder; (viii) establish, amend, suspend, or waive such rules and regulations and appoint such agents as it shall deem appropriate for the proper administration of the Plan; and (ix) make any other determination and take any other action that the Committee deems necessary or desirable for the administration of the Plan. To the extent necessary or appropriate, the Committee may adopt sub–plans consistent with the Plan to conform to applicable state or foreign securities or tax laws. A majority of the members of the Committee may determine its actions and fix the time and place of its meetings.

3.2           Determinations Under the Plan. Unless otherwise expressly provided in the Plan all designations, determinations, interpretations, and other decisions under or with respect to the Plan or any Award shall be within the sole discretion of the Committee, may be made at any time and shall be final, conclusive, and binding upon all persons, including the Company, any Affiliated Corporation, any Participant, any, holder or beneficiary of any Award, and any Shareholder. No member of the Committee shall be liable, in the absence of bad faith, for any act or omission with respect to his or her services on the Committee. Service on the Committee shall constitute service as a director of the Company so that members of the Committee shall be entitled to indemnification, any limitation of liability and reimbursement as directors with respect to their services as members of the Committee.

3.3           Delegation of Certain Responsibilities. The Committee shall determine the number of Shares to be subject to Option grant from time to time and shall designate the terms of all Awards to executive officers and directors. The Committee may, in its sole discretion and subject to the limitations set forth herein, delegate to the Chief Executive Officer of DigiTerra its authority under this Section 3 to allocate Awards available after such determinations among employees who are not executive officers or directors of DigiTerra. All authority delegated by the Committee under this Section 3.3 shall be exercised in accordance with the provisions of the Plan and any guidelines for, conditions on, or limitations to the exercise of, such authority that may from time to time be established by the Committee; provided, however, that no such delegation by the Committee shall be made (i) if such delegation would not be permitted under applicable law or (ii) with respect to the administration of the Plan as it affects executive officers or directors of the Company; and provided further that the Committee may not delegate its authority to correct errors, omissions or inconsistencies in the Plan.

4

SECTION 4

STOCK SUBJECT TO THE PLAN

4.1           Number of Shares. The number of Shares of Stock authorized for issuance under the Plan shall be 20% of DigiTerra’s Shares of Stock issued and outstanding from time to time. Accordingly, based on the assumption that DigiTerra currently has 60,000,000 Shares of Stock outstanding, 12,000,000 Shares of Stock are currently authorized for issuance under the Plan, subject to adjustment as provided in Section 4.3. The number of shares authorized for issuance under the Plan shall be increased upon each issuance of shares of Stock by DigiTerra (other than issuances under the Plan) such that the number of Shares authorized for issuance under the Plan is equal to no less than 20% of the total number of issued and outstanding shares of Stock; provided, further, that no such increase shall be effected upon the issuance of shares of Stock in a public offering registered under the Securities Act of 1933, as amended. Shares shall be issued in accordance with the provisions of the Plan and subject to such restrictions or other provisions as the Committee may from time to time deem necessary. Options for up to 12,000,000 Shares of Stock may be granted as Incentive Stock Options. No Participant may be granted Awards for more than 1,000,000 Shares in any twelve–month period. The Shares may be divided among the various Plan components as the Committee shall determine. Shares which may be issued upon the exercise of Options shall reduce the maximum number of Shares remaining available for use under the Plan. The Company shall at all times during the tern of the Plan and while any Options are outstanding retain as authorized and unissued Stock, or as treasury Stock, at least the number of Shares from time to time required under the provisions of the Plan, or otherwise assure itself of its ability to perform its obligations hereunder.

4.2           Unused and Forfeited Stock. Any Shares that are subject to an Award under this Plan which are not used because the terms and conditions of the Award are not met, including any Shares that are subject to an Option which expires or is terminated for any reason, any Shares which are used for full or partial payment of the purchase price of Shares with respect to which an Option is exercised and any Shares retained by the Company pursuant to Section 15.2 shall automatically become available for use under the Plan. Notwithstanding the foregoing, any Shares delivered to the Company for full or partial payment of the purchase price of the Shares with respect to which an Option is exercised and any Shares retained by the Company pursuant to Section 15.2 that, in each case, were originally Incentive Stock Option Shares shall still be considered as having been granted for purposes of determining whether the Share limitation provided for in Section 4.1 has been reached for purposes of Incentive Stock Option grants.

4.3           Adjustments for Stock Split, Stock Dividend, etc. If DigiTerra shall at any time increase or decrease the number of its outstanding Shares of Stock or change in any way the rights and privileges of such Shares by means of the payment of a stock dividend or any other distribution upon such Shares payable in Stock, or through a stock split, subdivision, consolidation, combination, reclassification or recapitalization involving the Stock, then in relation to the Stock that is affected by one or more of the above events, the numbers, rights and privileges of (i) the shares of Stock as to which Awards may be granted under the Plan, and (ii) the Shares of Stock then included in each outstanding Option, Performance Share or Performance Unit granted hereunder, shall be increased, decreased or changed in like manner as if they had been issued and outstanding, fully paid and nonassessable at the time of such occurrence.

5

4.4           Dividend Payable in Stock of Another Corporation, etc. If DigiTerra shall at any time pay or make any dividend or other distribution upon the Stock payable in securities of another corporation or other property (except money or Stock), a proportionate part of such securities or other property shall be set aside and delivered to any Participant then holding an Award for the particular type of Stock for which the dividend or other distribution was made, upon exercise thereof in the case of Options, and upon the vesting thereof in the case of other Awards. Prior to the time that any such securities or other property are delivered to a Participant in accordance with the foregoing, the Company shall be the owner of such securities or other property and shall have the right to vote the securities, receive any dividends payable on such securities, and in all other respects shall be treated as the owner. If securities or other property which have been set aside by the Company in accordance with this Section are not delivered to a Participant because an Award is not exercised or otherwise vested, then such securities or other property shall remain the property of the Company and shall be dealt with by the Company as it shall determine in its sole discretion.

4.5           Other Changes in Stock. In the event there shall be any change, other than as specified in Sections 4.3 and 4.4, in the number or kind of outstanding shares of Stock of DigiTerra or of any stock or other securities into which the Stock of DigiTerra shall be changed or for which it shall have been exchanged, including a change in DigiTerra’s per share stockholders’ equity resulting from the price at which additional shares of Stock are issued, and if the Committee shall in its discretion determine that such change equitably requires an adjustment in the number or kind of Shares subject to outstanding Awards or which have been reserved for issuance pursuant to the Plan but are not then subject to an Award, then such adjustments shall be made by the Committee and shall be effective for all purposes of the Plan and on each outstanding Award that involves the particular type of stock for which a change was effected.

4.6           General Adjustment Rules. If any adjustment or substitution provided for in this Section 4 shall result in the creation of a fractional Share under any Award, the Company shall, in lieu of selling or otherwise issuing such fractional Share, pay to the Participant a cash sum in an amount equal to the product of such fraction multiplied by the Fair Market Value of a Share on the date the fractional Share would otherwise have been issued. In the case of any such substitution or adjustment affecting an Option, the total Option Price for the shares of Stock then subject to an Option shall remain unchanged but the Option Price per Share under each such Option shall be equitably adjusted by the Committee to reflect the greater or lesser number of shares of Stock or other securities into which the Stock subject to the Option may have been changed.

4.7           Determination by Committee, etc. Adjustments under this Section 4 shall be made by the Committee, whose determinations with regard thereto shall be final and binding upon all persons.

6

SECTION 5

REORGANIZATION AND LIQUIDATION

In the event that the Company is merged or consolidated with another corporation (other than a merger or consolidation in which the Company is the continuing corporation and which does not result in any reclassification or change of outstanding Shares), or if all or substantially all of the assets or more than 50% of the outstanding voting stock of the Company is acquired by any other corporation, business entity or person (other than a sale or conveyance in which the Company continues as a holding company of an entity or entities that conduct the business or businesses formerly conducted by the Company), or in case of a reorganization (other than a reorganization under the United States Bankruptcy Code) or liquidation of the Company, and if the provisions of Section 10 do not apply, the Committee, or the board of directors of any corporation assuming the obligations of the Company, shall have the power and discretion to prescribe the terms and conditions for the exercise, or modification, of any outstanding Awards granted hereunder. By way of illustration, and not by way of limitation, the Committee may provide for the complete or partial acceleration of the dates of exercise of the Options, or may provide that such Options will be exchanged or converted into options to acquire securities of the surviving or acquiring corporation, or may provide for a payment or distribution in respect of outstanding Options (or the portion thereof that is currently exercisable) in cancellation thereof. The Committee may remove restrictions on Restricted Stock and may modify the performance requirements for any other Awards. The Committee may provide that Stock or other Awards granted hereunder must be exercised in connection with the closing of such transaction, and that if not so exercised such Awards will expire. Any such determinations by the Committee may be made generally with respect to all Participants, or may be made on a case–by–case basis with respect to particular Participants. The provisions of this Section 5 shall not apply to (i) transactions undertaken for the purpose of reincorporating the Company under the laws of another jurisdiction, if such transaction does not materially affect the beneficial ownership of the Company’s capital stock, or (ii) an Initial Public Offering of the DigiTerra Stock.

SECTION 6

PARTICIPATION

Participants in the Plan shall be those employees, non–employee directors or consultants who, in the judgment of the Committee, are performing, or during the term of their incentive arrangement will perform, important services in the management, operation and development of the Company, and significantly contribute, or are expected to significantly contribute, to the achievement of long–term corporate economic objectives. Participants may be granted from time to time one or more Awards; provided, however, that the grant of each such Award shall be separately approved by the Committee, receipt of one such Award shall not result in automatic receipt of any other Award, and written notice shall be given to such person, specifying the terms, conditions, rights and duties related thereto; and farther provided that Incentive Stock Options shall not be granted to (i) consultants, (ii) part–time employees or (iii) Eligible Employees of any partnership or other entity which is included within the definition of an Affiliated Corporation but whose employees are not permitted to receive Incentive Stock Options under the Internal Revenue Code. Each Participant shall enter into an agreement with the

7

Company, in such form as the Committee shall determine and which is consistent with the provisions of the Plan, specifying such terns, conditions, rights and duties. Awards shall be deemed to be granted as of the date specified in the grant resolution of the Committee, which date shall be the date of any related agreement with the Participant. In the event of any inconsistency between the provisions of the Plan and any such agreement entered into hereunder, the provisions of the Plan shall govern.

SECTION 7

STOCK OPTIONS

7.1           Grant of Options. Coincident with or following designation for participation in the Plan, a Participant may be granted one or more Options. The Committee in its sole discretion shall designate whether an Option is to be considered an Incentive Stock Option or a NonStatutory Option. The Committee may grant both an Incentive Stock Option and Non–Statutory Option to the same Participant at the same time or at different times. Incentive Stock Options and Non–Statutory Options, whether granted at the same or different times, shall be deemed to have been awarded in separate grants, shall be clearly identified, and in no event shall the exercise of one Option affect the right to exercise any other Option or affect the number of Shares for which any other Option may be exercised.

7.2           Option Agreements. Each option granted under the Plan shall be evidenced by a written stock option agreement which shall be entered into by the Company and the Participant to whom the Option is granted (the “Option Holder’, and which shall contain the following terms and conditions, as well as such other terms and conditions not inconsistent therewith, as the Committee may consider appropriate in each case.

(a)           Number of Shares. Each stock option agreement shall state that it covers a specified number of Shares, as determined by the Committee. To the extent that the aggregate Fair Market Value of Shares with respect to which Options designated as Incentive Stock Options are exercisable for the first time by any Participant during any year (under all plans of the Company and any Affiliated Corporation) exceeds $100,000, such Options shall be treated as not being Incentive Stock Options. The foregoing shall be applied by taking Options into account in the order in which they were granted. For the purposes of the foregoing, the Fair Market Value of any Share shall be determined as of the time the Option with respect to such Share is granted. In the event the foregoing results in a portion of an Option designated as an Incentive Stock Option exceeding the $100,000 limitation, only such excess shall be treated as not being an Incentive Stock Option.

(b)           Price. The price at which each Share covered by an Option may be purchased shall be determined in each case by the Committee and set forth in the stock option agreement, but in no event shall the Option Price for each Share covered by an Incentive Stock Option be less than the Fair Market Value of the Stock on the date the Option is granted; provided, however, that the Option Price for each Share covered by a Non–Statutory Option may be granted at any price less than Fair Market Value, in the sole discretion of the Committee; and provided further than the Option Price for each Share covered by an Incentive Stock Option

8

granted to an Eligible Employee who then owns stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or any parent or subsidiary corporation of the Company must be at least 110% of the Fair Market Value of the Stock subject to the Incentive Stock Option on the date the Option is granted.

(c)           Duration of Options. Each stock option agreement shall state the period of time, determined by the Committee, within which the Option may be exercised by the Option Holder (the “Option Period”). The Option Period must expire, in all cases, not more than ten years from the date an Option is granted; provided, however, that the Option Period of an Incentive Stock Option granted to an Eligible Employee who then owns stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or any parent or subsidiary corporation of the Company must expire not more than five years from the date such an Option is granted. Each stock option agreement shall also state the periods of time, if any, as determined by the Committee, when incremental portions of each Option shall vest. If any Option is not exercised during its Option Period, it shall be deemed to have been forfeited and of no further force or effect.

(d)           Termination of Service, Death, Disability, etc. Except as otherwise determined by the Committee, each stock option agreement shall provide as follows with respect to the exercise of the Option upon an Option Holder ceasing to be a Service Provider or on the death or disability of the Option Holder.

(i)            If the Option Holder ceases to be a Service Provider within the Option Period for cause, as determined by the Company, the Option shall thereafter be void for all purposes. As used in this Section 7.2(d), “cause” shall mean a gross violation, as determined by the Company, of the Company’s established policies and procedures. The effect of this Section 7.2(d)(i) shall be limited to determining the consequences of a termination, and nothing in this Section 7.2(d)(i) shall restrict or otherwise interfere with the Company’s discretion with respect to the termination of any Service Provider:

(ii)           If the Option Holder ceases to be a Service Provider with the Company in a manner determined by the Board, in its sole discretion, to constitute a retirement (which determination shall be communicated to the Option Holder within 10 days of such termination), the Option may be exercised by the Option Holder, or in the case of death by the persons specified in clause (iii) of this Section 7.2(d), within three months following his or her retirement if the Option is an Incentive Stock Option or within twelve months following his or her retirement if the Option is a Non–Statutory Stock Option (provided in each case that such exercise must occur within the Option Period), but not thereafter. In any such case, the Option may be exercised only as to the Shares as to which the Option had become exercisable on or before the date the Option Holder ceases to be a Service Provider.

(iii)          If the Option Holder dies (A) while he or she is a Service Provider, (B) within the three–month period referred to in clause (v) below, or (C) within the three or twelve–month period referred to in clause (ii) above, the Option may be exercised by those entitled to do so under the Option Holder’s will or by the laws of descent and distribution within twelve months following the Option Holder’s death (provided that such exercise must occur

9

within the Option Period, but not thereafter). In any such case, the Option may be exercised only as to the Shares as to which the Option had become exercisable on or before the date of the Option Holder ceased to be a Service Provider.

(iv)          If the Option Holder becomes disabled (within the meaning of Section 22(e) of the Internal Revenue Code) while a Service Provider, Incentive Stock Options held by the Option Holder may be exercised by the Option Holder within twelve months following the date the Option Holder ceases to be a Service Provider (provided that such exercise must occur within the Option Period), but not thereafter. If the Option Holder becomes disabled (within the meaning of Section 22(e) of the Internal Revenue Code) while a Service Provider or within the three–month period referred to in clause (v) below or within the twelve month period following his or her retirement as provided in clause (ii) above, Non–Statutory Options held by the Option Holder may be exercised by the Option Holder within twelve months following the date of the Option Holder’s disability (provided that such exercise must occur within the Option Period), but not thereafter. In any such case, the Option may be exercised only as to the Shares as to which the Option had become exercisable on or before the date the Option Holder ceased to be a Service Provider.

(v)           If the Option Holder ceases to be a Service Provider within the Option Period for any reason other than cause, retirement as provided in clause (ii) above, disability as provided in clause (iv) above or the Option Holder’s death, the Option may be exercised by the Option Holder within three months following the date of such cessation (provided that such exercise must occur within the Option Period), but not thereafter. In any such case, the Option may be exercised only as to the Shares as to which the Option had become exercisable on or before the date that the Option Holder ceases to be a Service Provider.

(e)           Exercise, Payments, etc.

(i)            Each stock option agreement shall provide that the method for exercising the Option granted therein shall be by delivery to the Corporate Secretary of the Company of written notice specifying the number of shares with respect to which such Option is exercised (which must be in a minimum amount of 25 shares) and payment of the Option Price. Such notice shall be in a form satisfactory to the Committee and shall specify the particular Option (or portion thereof) which is being exercised and the number of Shares with respect to which the Option is being exercised. The exercise of the Option shall be deemed effective upon receipt of such notice by the Corporate Secretary and payment to the Company. The purchase of such Stock shall take place at the principal offices of the Company upon delivery of such notice, at which time the purchase price of the Stock shall be paid in full by any of the methods or any combination of the methods set forth in (ii) below. A properly executed certificate or certificates representing the Stock shall be issued by the Company and delivered to the Option Holder. If Stock is used to pay all or part of the Option Price, the Company shall issue and deliver to the Option Holder two separate certificates, one for the number of shares of Stock purchased upon exercise of the Option and another representing the excess, if any, of the total number of Shares represented by the certificate delivered in payment of the Option Price over the number of Shares delivered in payment of the Option Price.

10

(ii)           The exercise price shall be paid by any of the following methods or any combination of the following methods:

(A)          in cash;

(B)           by cashier’s check payable to the order of the Company;

(C)           if authorized by the Committee, by delivery to the Company of certificates representing a number of Shares then owned by the Option Holder, the Fair Market Value of which equals the purchase price of the Stock purchased pursuant to the Option, properly endorsed for transfer to the Company; provided however, that Shares used for this purpose must have been held by the Option Holder for such minimum period of time as may be established from time to time by the Committee; and provided further that the Fair Market Value of any Shares delivered in payment of the purchase price upon exercise of the Option shall be the Fair Market Value as of the exercise date, which shall be the date of delivery of the certificates for the Stock used as payment of the Option Price; or

(D)          if authorized by the Committee, by delivery to the Company of a properly executed notice of exercise, together with irrevocable instructions to a broker to deliver to the Company promptly the amount of the proceeds of the sale of all or a portion of the Stock or of a loan from the broker to the Option Holder necessary to pay the exercise price.

(iii)          In the discretion of the Committee, the Company may guaranty a third–party loan obtained by a Participant to pay part or all of the Option Price of the Shares, provided that such loan or the Company’s guaranty is secured by the Shares.

(f)            Date of Grant. An option shall be considered as having been granted on the date specified in the grant resolution of the Committee.

(g)           Withholding.

(i)            Non–Statutory Options. Each stock option agreement covering Non–Statutory Options shall provide that, upon exercise of the Option, the Option Holder shall make appropriate arrangements with the Company to provide for the amount of additional withholding required by applicable federal and state income tax laws, including payment of such taxes through delivery of Stock or by withholding Stock to be issued under the Option, as provided in Section 15.

(ii)           Incentive Options. In the event that an Option Holder makes a disposition (as defined in Section 424(c) of the Internal Revenue Code) of any Stock acquired pursuant to the exercise of an Incentive Stock Option prior to the later of (i) the expiration of two years from the date on which the Incentive Stock Option was granted or (ii) the expiration of one year from the date on which the Option was exercised, the Option Holder shall send written notice to the Company at its principal office (Attention: Corporate Secretary) of the date of such disposition, the number of shares disposed of, the amount of proceeds received from such

11

disposition, and any other information relating to such disposition as the Company may reasonably request. The Option Holder shall, in the event of such a disposition, make appropriate arrangements with the Company to provide for the amount of additional withholding, if any, required by applicable federal and state income tax laws.

(h)          Additional Provisions. Stock option agreements may, in the discretion of the Committee, contain terms providing that (i) the Company will have an option to repurchase Options or Shares purchased on exercise of the Option upon termination of employment with the Company for cash or unsecured promissory notes or a combination thereof, (ii) the Company will have a right of first refusal to purchase Shares purchased on exercise of an Option prior to transfer of such Shares by the Option Holder, or (iii) the Company may, in connection with an acquisition of the Company by a third party buyer, require an Option Holder to sell to the buyer such Option Holder’s Options or Shares previously purchased on exercise of Options.

7.3           Adjustment of Options. Subject to the limitations contained in Sections 7and 14, the Committee may make any adjustment in the Option Price, the number of shares subject to, or the terms of, an outstanding Option and a subsequent granting of an Option by amendment or by substitution of an outstanding Option. Such amendment, substitution, or re–grant may result in terms and conditions (including Option Price, number of shares covered, vesting schedule or exercise period) that differ from the terms and conditions of the original Option. The Committee may not, however, adversely affect the rights of any Participant to previously granted Options without the consent of such Participant. If such action is effected by amendment, the effective date of such amendment shall be the date of the original grant.

7.4           Stockholder Privileges. No Option Holder shall have any rights as a stockholder with respect to any Shares covered by an Option until the Option Holder becomes the holder of record of such Stock, and no adjustments shall be made for dividends or other distributions or other rights as to which there is a record date preceding the date such Option Holder becomes the holder of record of such Stock, except as provided in Section 4.

SECTION 8

RESTRICTED STOCK AWARDS

8.1           Awards Granted by Committee. Coincident with or following designation for participation in the Plan, a Participant may be granted one or more Restricted Stock Awards consisting of Shares. The number of Shares granted as a Restricted Stock Award shall be determined by the Committee.

8.2           Restrictions. A Participant’s right to retain a Restricted Stock Award granted to him under Section 8.1 shall be subject to such restrictions, including but not limited to his continuing to perform as a Service Provider for a restriction period specified by the Committee, or the attainment of specified performance goals and objectives, as may be established by the Committee with respect to such Award. The Committee may in its sole discretion require different periods of service or different performance goals and objectives with respect to

12

(i) different Participants, (ii) different Restricted Stock Awards, or (iii) separate, designated portions of the Shares constituting a Restricted Stock Award.

8.3           Privileges of a Stockholder, Transferability. A Participant shall have all voting, dividend, liquidation and other rights with respect to Stock in accordance with its terms received by him as a Restricted Stock Award under this Section 8 upon his becoming the holder of record of such Stock; provided, however, that the Participant’s right to sell, encumber or otherwise transfer such Stock shall be subject to the limitations of Section 11.2 hereof.

8.4           Enforcement of Restrictions. The Committee may in its sole discretion require one or more of the following methods of enforcing the restrictions referred to in Section 8.2 and 8.3:

(a)           placing a legend on the stock certificates referring to the restrictions;

(b)           requiring the Participant to keep the stock certificates, duly endorsed, in the custody of the Company while the restrictions remain in effect; or

(c)           requiring that the stock certificates, duly endorsed, be held in the custody of a third party while the restrictions remain in effect.

8.5           Termination of Service, Death, Disability, etc. In the event of the death or disability (within the meaning of Section 22(e) of the Internal Revenue Code) of a Participant, or the retirement of a Participant as provided in Section 7.2(d)(ii), all service period and other restrictions applicable to Restricted Stock Awards then held by him shall lapse, and such Awards shall become fully nonforfeitable. Subject to Sections 5 and 10, in the event a Participant ceases to be a Service Provider for any other reason, any Restricted Stock Awards as to which the service period or other restrictions have not been satisfied shall be forfeited.

SECTION 9

PERFORMANCE SHARES AND PERFORMANCE UNITS

9.1           Awards Granted by the Committee. Coincident with or following the designation for participation in the Plan, a Participant may be granted Performance Shares or Performance Units.

9.2           Amount of Award. The Committee shall establish a maximum amount of a Participant’s Award, which amount shall be denominated in Shares in the case of Performance Shares or in dollars in the case of Performance Units.

9.3           Communication of Award. Written notice of the maximum amount of a Participant’s Award and the Performance Cycle determined by the Committee shall be given to a Participant as soon as practicable after approval of the Award by the Committee.

13

9.4           Amount of Award Payable. The Committee shall establish maximum and minimum performance targets to be achieved during the applicable Performance Cycle. Performance targets established by the Committee shall relate to corporate, group, unit or individual performance and maybe established in terms of earnings, growth in earnings, ratios of earnings to equity or assets, or such other measures or standards determined by the Committee. Multiple performance targets may be used and the components of multiple performance targets may be given the same or different weighting in determining the amount of an Award earned, and may relate to absolute performance or relative performance measured against other groups, units, individuals or entities. Achievement of the maximum performance target shall entitle the Participant to payment (subject to Section 9.6) at the full or maximum amount specified with respect to the Award; provided, however, that notwithstanding any other provisions of this Plan, in the case of an Award of Performance Shares the Committee in its discretion may establish an upper limit on the amount payable (whether in cash or Stock) as a result of the achievement of the maximum performance target. The Committee may also establish that a portion of a full or maximum amount of a Participant’s Award will be paid (subject to Section 9.6) for performance which exceeds the minimum performance target but falls below the maximum performance target applicable to such Award.

9.5           Adjustments. At any time prior to payment of a Performance Share or Performance Unit Award, the Committee may adjust previously established performance targets or other terns and conditions to reflect events such as changes in laws, regulations, or accounting practice, or mergers, acquisitions or divestitures.

9.6           Payments of Awards. Following the conclusion of each Performance Cycle, the Committee shall determine the extent to which performance targets have been attained, and the satisfaction of any other terms and conditions with respect to an Award relating to such Performance Cycle. The Committee shall determine what, if any, payment is due with respect to an Award and whether such payment shall be made in cash, Stock or some combination. Payment shall be made in a lump sum or installments, as determined by the Committee, commencing as promptly as practicable following the end of the applicable Performance Cycle, subject to such terns and conditions and in such form as may be prescribed by the Committee.

9.7           Termination of Employment. If a Participant ceases to be a Service Provider before the end of a Performance Cycle by reason of his death, disability as provided in Section 7.2(d)(iv), or retirement as provided in Section 7.2(d)(ii), the Performance Cycle for such Participant for the purpose of determining the amount of the Award payable shall end at the end of the calendar quarter immediately preceding the date on which such Participant ceased to be a Service Provider. The amount of an Award payable to a Participant to whom the preceding sentence is applicable shall be paid at the end of the Performance Cycle and shall be that fraction of the Award computed pursuant to the preceding sentence the numerator of which is the number of calendar quarters during the Performance Cycle during all of which said Participant was a Service Provider and the denominator of which is the number of full calendar quarters in the Performance Cycle. Upon any other termination of a Participant’s services as a Service Provider during a Performance Cycle, participation in the Plan shall cease and all outstanding Awards of Performance Shares or Performance Units to such Participant shall be canceled.

14

SECTION 10

CHANGE IN CONTROL

10.1         Options, Restricted. Stock In the event of a change in control of the Company as defined in Section 10.3, the Committee may, in its sole discretion, without obtaining stockholder approval, to the extent permitted in Section 14, take any or all of the following actions: (a) accelerate the exercise dates of any outstanding Options or make all such Options fully vested and exercisable; (b) grant a cash bonus award to any Option Holder in an amount necessary to pay the Option Price of all or any portion of the Options then held by such Option Holder; (c) pay cash to any or all Option Holders in exchange for cancellation of their outstanding Options in an amount equal to the difference between the Option Price of such Options and the greater of the tender offer, merger or acquisition price for the underlying Stock or the Fair Market Value of the Stock on the date of the cancellation of the Options; (d) make any other adjustments or amendments to the outstanding Options; and (e) eliminate all restrictions with respect to Restricted Stock and deliver Shares free of restrictive legends to any Participant.

10.2         Performance Shares and Performance Units. Under the circumstances described in Section 10.1, the Committee may, in its sole discretion, and without obtaining stockholder approval, to the extent permitted in Section 14, provide for payment of outstanding Performance Shares and Performance Units at the maximum award level or any percentage thereof.

10.3         Definition. For purposes of the Plan, a “change in control” shall be deemed to have occurred if: (a) any “person” or “group” (within the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act), other than CIBER, Bobby G. Stevenson or a trustee or other fiduciary holding securities under an employee benefit plan of the Company or under a trust, the grantor of which is Bobby G. Stevenson, is or becomes the “beneficial owner” (as defined in Rule 13d–3 under the Exchange Act), directly or indirectly, of more than 33 1/3% of the then outstanding voting stock of the Company; or (b) at any time during any period of three consecutive years (not including any period prior to the Effective Date), individuals who at the beginning of such period constitute the Board (and any new director whose election by the Board or whose nomination for election by the Company’s stockholders was approved by a vote of at least two–thirds of the directors then still in office who either were directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority thereof; or (c) the stockholders of the Company approve a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) at least 80% of the combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation, or (d) the stockholders approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets. For purposes of this Section 10, an Initial Public Offering of DigiTerra Stock shall not constitute a Change of Control.

15

SECTION 11

CONTINUATION OF SERVICES; TRANSFERABILITY

11.1         Continuation of Services. Nothing contained in the Plan or in any Award granted under the Plan shall confer upon any Participant any right with respect to the continuation of his or her services as a Service Provider, or interfere in any way with the right of the Company, subject to the terms of any separate employment or consulting agreement to the contrary, at any time to terminate such services or to increase or decrease the compensation of the Participant from the rate in existence at the time of the grant of an Award. Whether an authorized leave of absence, or absence in military or government service, shall constitute a termination of Participant’s services as a Service Provider shall be determined by the Committee at the time.

11.2         Nontransferability. Except as provided in Section 11.3, no right or interest of any Participant in an Award granted pursuant to the Plan shall be assignable or transferable during the lifetime of the Participant, either voluntarily or involuntarily, or be subjected to any lien, directly or indirectly, by operation of law or otherwise, including execution, levy, garnishment, attachment, pledge or bankruptcy, except (if otherwise permitted under Section 11.4) pursuant to a domestic relations order. In the event of a Participant’s death, a Participant’s rights and interests in Options shall, if otherwise permitted under Section 11.4, be transferable by testamentary will or the laws of descent and distribution, and payment of any amounts due under the Plan shall be made to, and exercise of any Options may be made by, the Participant’s legal representatives, heirs or legatees. If, in the opinion of the Committee, a person entitled to payments or to exercise rights with respect to the Plan is disabled from caring for his affairs because of mental condition, physical condition or age, payment due such person may be made to, and such rights shall be exercised by, such person’s guardian, conservator or other legal personal representative upon furnishing the Committee with evidence satisfactory to the Committee of such status. Transfers shall not be deemed to include transfers to the Company or “cashless exercise” procedures with third parties who provide financing for the purpose of (or who otherwise facilitate) the exercise of Awards consistent with applicable laws and the authorization of the Committee.

11.3         Permitted Transfers. Subject to Section 11.4, pursuant to conditions and procedures established by the Committee from time to time, the Committee may permit Awards to be transferred to, exercised by and paid to certain persons or entities related to a Participant, including but not limited to members of the Participant’s immediate family, charitable institutions, or trusts or other entities whose beneficiaries or beneficial owners are members of the Participant’s immediate family and/or charitable institutions. In the case of initial Awards, at the request of the Participant, the Committee may permit the naming of the related person or entity as the Award recipient. Any permitted transfer shall be subject to the condition that the Committee receive evidence satisfactory to it that the transfer is being made for estate and/or tax planning purposes on a gratuitous or donative basis and without consideration (other than nominal consideration).

11.4         Limitations on Incentive Stock Options. Notwithstanding anything in this Agreement (or in any stock option agreement evidencing the grant of an Option hereunder) to the contrary, Incentive Stock Options shall only be transferable to the extent permitted by Section

16

422 of the Internal Revenue Code and the treasury regulations thereunder without affecting the Option’s qualification under Section 422 as an Incentive Stock Option.

SECTION 12

GENERAL RESTRICTIONS

12.1         Investment Representations. The Company may require any person to whom an Option or other Award is granted, as a condition of exercising such Option or receiving Stock under the Award, to give written assurances in substance and form satisfactory to the Company and its counsel to the effect that such person is acquiring the Stock subject to the Option or the Award for his own account for investment and not with any present intention of selling or otherwise distributing the same, and to such other effects as the Company deems necessary or appropriate in order to comply with federal and applicable state securities laws. Legends evidencing such restrictions may be placed on the certificates evidencing the Stock.

12.2         Compliance with Securities Laws. Each Award shall be subject to the requirement that, if at any time counsel to the Company shall determine that the listing, registration or qualification of the Shares subject to such Award upon any securities exchange or under any state or federal law, or the consent or approval of any governmental or regulatory body, is necessary as a condition of, or in connection with, the issuance or purchase of Shares thereunder, such Award may not be accepted or exercised in whole or in part unless such listing, registration, qualification, consent or approval shall have been effected or obtained on conditions acceptable to the Committee. Nothing herein shall be deemed to require the Company to apply for or to obtain such listing, registration or qualification. At the Effective Date, no such listing, registration or qualification is in effect, and until such listing, registration or qualification is effected, Shares issued upon exercise of Options shall bear a restrictive legend setting forth the applicable securities laws restrictions.

12.3         Stock Restriction Agreement. Until DigiTerra is Publicly Traded, the Shares of Stock issuable under the Plan shall be subject to restrictions whereby the Company has a right of first refusal with respect to such Shares or a right or obligation to repurchase all or a portion of such Shares at the time an Option Holder ceases to be a Service Provider, which restrictions survive a Participant’s cessation or termination as a Service Provider. Such restrictions shall be specified in the applicable Stock Option Agreement. After DigiTerra is Publicly Traded, the Committee may provide for such rights of first refusal or rights or obligations of repurchase as it, in its discretion, deems appropriate.

SECTION 13

OTHER EMPLOYEE BENEFITS

The amount of any compensation deemed to be received by a Participant as a result of the exercise of an Option or the grant or vesting of any other Award shall not constitute “earnings” with respect to which any other benefits of such Participant are determined, including without limitation benefits under any pension, profit sharing, life insurance or salary continuation plan.

17

SECTION 14

PLAN AMENDMENT, MODIFICATION AND TERMINATION

The Board may at any time terminate, and from time–to–time may amend or modify, the Plan; provided, however, that no amendment or modification may become effective without approval of the amendment or modification by the stockholders if stockholder approval is required to enable the Plan to satisfy any applicable statutory or regulatory requirements, or if the Company, on the advice of counsel, determines that stockholder approval is otherwise necessary or desirable.

No amendment, modification or termination of the Plan shall in any manner adversely affect any Awards theretofore granted under the Plan, without the consent of the Participant holding such Awards.

SECTION 15

WITHHOLDING

15.1         Withholding Requirement. The Company’s obligations to deliver Shares upon the exercise of an Option, or upon the vesting of any other Award, shall be subject to the Participant’s satisfaction of all applicable federal, state and local income and other tax withholding requirements.

15.2         Withholding with Stock. At the time the Committee grants an Award, it may, in its sole discretion, grant the Participant an election to pay all such amounts of tax withholding, or any part thereof, by electing to transfer to the Company Shares owned by the Participant (or by the Participant and his or her spouse, jointly) and acquired more than six months prior to such tender (excluding any shares of Restricted Stock awarded under Section 8 of the Plan), or to have the Company withhold from Shares otherwise issuable to the Participant, in each case having a value equal to the amount required to be withheld or such lesser amount as may be elected by the Participant. All elections shall be subject to the approval or disapproval of the Committee. The value of Shares to be withheld shall be based on the Fair Market Value of the Stock on the date that the amount of tax to be withheld is to be determined (the “Tax Date”). Any such elections by Participants to have Shares withheld for this purpose will be subject to the following restrictions:

(a)           All elections must be made prior to the Tax Date;

(b)           All elections shall be irrevocable;

(c)           If DigiTerra is at the time Publicly Traded, and if the Participant is an officer or director of the Company within the meaning of Section 16 of the Exchange Act (“SEC Section 16”), the Participant must satisfy the requirements of SEC Section 16 and any applicable rules thereunder with respect to the use of Stock to satisfy such tax withholding obligation.

18

SECTION 16

SECTION 162(m) PROVISIONS

16.1         Limitations. Notwithstanding any other provision of this Plan, if the Committee determines at the time any Restricted Stock Award or Performance Award is granted to a Participant that such Participant is, or is likely to be at the time he or she recognizes income for federal income tax purposes in connection with such Award, a Covered Employee (within the meaning of Section 162(m)(3) of the Internal Revenue Code), then the Committee may provide that this Section 16 is applicable to such Award.

16.2         Performance Goals. If an Award is subject to this Section 16, then the lapsing of restrictions thereon and the distribution of cash, Shares or other property pursuant thereto, as applicable, shall be subject to the achievement of one or more objective performance goals established by the Committee, which shall be based on the attainment of one or any combination of the following: specified levels of earnings per share from continuing operations, operating income, revenues, gross margin, return on operating assets, return on equity, economic value added, stock price appreciation, total stockholder return (measured in terms of stock price appreciation and dividend growth), or cost control, of the Company or any Affiliated Corporation (or any division thereof) for or within which the Participant is primarily employed. Such performance goals also may be based upon attaining the specified levels of Company performance under one or more of the measures described above relative to the performance of other corporations. Such performance goals shall be set by the Committee within the time period prescribed by, and shall otherwise comply with the requirements of, Section 162(m) of the Internal Revenue Code and the regulations thereunder.

16.3         Adjustments. Notwithstanding any provision of the Plan other than Section 10, with respect to any Award that is subject to this Section 16, the Committee may not adjust upwards the amount payable pursuant to such Award, not may it waive the achievement of the applicable performance goals except in the case of the death or disability of the Participant.

16.4         Other Restrictions. The Committee shall have the power to impose such other restrictions on Awards subject to this Section 16 as it may deem necessary or appropriate to ensure that such Awards satisfy all of the requirements for “performance–based compensation” within the meaning of Section 162(m)(4)(B) of the Internal Revenue Code or any successor thereto.

SECTION 17

TAXES

17.1         If property which is non–transferable and subject to a substantial risk of forfeiture is transferred to a Participant pursuant to an Award and if such Participant properly elects pursuant to Section 83(b) of the Internal Revenue Code within thirty days of the date of the transfer to include in gross income for U.S. Federal income tax purposes an amount equal to the

19

Fair Market Value (on the date of such transfer) of the Stock subject to the Award (or the difference between the Fair Market Value and the Option Price on the date of exercise of an Option), such Participant shall make arrangements satisfactory to the Committee to pay to the Company, at the time of such transfer (or at the time of exercise in the case of an Option), any U.S. Federal, state or local taxes required to be withheld with respect to such Award. If such Participant shall fail to make such tax payments as are required, the Company shall, to the extent permitted by law, have the right to deduct any such taxes from any payment of any kind otherwise due to the Participant.

17.2         Any Participant who does not or cannot make the election described in Section 17.1 with respect to an Award, shall, no later than the date as of which the value of the Award first becomes includable in the gross income of the Participant for income tax purposes, pay to the Company, or make arrangements satisfactory to the Company regarding payment of, any taxes of any kind required by law to be withheld with respect to the Stock or other property subject to such Award, and the Company shall, to the extent permitted by law, have the right to deduct any such taxes from any payment of any kind otherwise due to the Participant.

SECTION 17

BROKER ARRANGEMENTS

The Committee, in its discretion, may enter into arrangements with one or more banks, brokers or other financial institutions to facilitate the disposition of shares acquired upon exercise of Stock Options, including, without limitation, arrangements for the simultaneous exercise of Stock Options and sale of the Shares acquired upon such exercise.

SECTION 19

NONEXCLUSIVITY OF THE PLAN

Neither the adoption of the Plan by the Board nor the submission of the Plan to stockholders of the Company for approval shall be construed as creating any limitations on the power or authority of the Board to adopt such other or additional incentive or other compensation arrangements of whatever nature as the Board may deem necessary or desirable or preclude or limit the continuation of any other plan, practice or arrangement for the payment of compensation or fringe benefits to employees or consultants generally, or to any class or group of employees or consultants, which the Company or any Affiliated Corporation now has lawfully put into effect, including, without limitation, any retirement, pension, savings and stock purchase plan, insurance, death and disability benefits and executive short–term incentive plans.

SECTION 20

REQUIREMENTS OF LAW

20.1         Requirements of Law. The issuance of Stock and the payment of cash pursuant to the Plan shall be subject to all applicable laws, rules and regulations.

20

20.2         Rule 16b–3. After such time as DigiTerra is Publicly Traded, transactions under the Plan and within the scope of SEC Section 16 are intended to comply with all applicable conditions of Rule 16b–3. To the extent any provision of the Plan or any action by the Committee under the Plan fails to so comply, such provision or action shall, without further action by any person, be deemed to be automatically amended to the extent necessary to effect compliance with Rule 16b–3; provided, however, that if such provision or action cannot be amended to effect such compliance, such provision or action shall be deemed null and void to the extent permitted by law and deemed advisable by the Committee.

20.3         Governing Law. The Plan and all agreements hereunder shall be construed in accordance with and governed by the laws of the State of Delaware.

SECTION 21

DURATION OF THE PLAN

No Award shall be granted under the Plan after ten years from the Effective Date; provided, however, that any Award theretofore granted may, and the authority of the Board or the Committee to amend, alter, adjust, suspend, discontinue or terminate any such Award or to waive any conditions or rights under any such Award shall, extend beyond such date.

21

EX-10.12

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (“Agreement”) is made and entered into as of July 1, 2001, by and between CIBER, Inc., a Delaware corporation (together with its affiliates, the “Company”) and William R. Wheeler (“Officer”).

Recital

Company desires to employ Officer in the position set forth on Exhibit A, and Officer is willing to accept such employment by Company, on the terms and subject to the conditions set forth in this Agreement.

Agreement

THE PARTIES AGREE AS FOLLOWS:

1.             Duties.  Officer agrees to be employed by and to serve the Company in the position set forth on Exhibit A, and the Company agrees to employ and retain Officer in such capacity, subject to the terms of this Agreement.  Officer shall devote all of his business time, energy and skill to the affairs of the Company, subject to the direction of executive officers of the Company. Officer shall have powers and duties commensurate with his position set forth on Exhibit A.  Officer shall comply with the general management policies of the Company as announced from time to time and made available to Officer in writing.  Officer’s principal place of business with respect to his services to the Company shall be within twenty-five (25) miles of the central business district of Seattle, Washington.  Officer shall be required at various times to travel as part of his duties.

2.             Term of Employment.   The initial term of employment of Officer by the Company shall be from the date of this Agreement through December 31, 2001, unless terminated earlier pursuant to this Agreement.  This Agreement shall renew automatically for a period of one year on January 1, 2002 and on each subsequent anniversary date thereof, subject to the termination provisions hereof.

3.             Salary, Benefits and Bonus Compensation.

3.1           Base Salary.  Commencing on the date of this Agreement, the Company agrees to pay to Officer a “Base Salary’ at the annualized rate as described on Exhibit A, payable in twenty-six (26) equal biweekly installments in accordance with the Company’s regular payroll practice. The Base Salary for each fiscal year (currently January 1 through December 31 of each year) or portion thereof after fiscal year 2001 shall be as determined in the sole discretion of the Board of Directors, but shall not be less than $240,000 per annum. In the absence of and until any salary determination by the Board, Officer’s Base Salary for a particular fiscal year shall be identical to Officer’s Base Salary in effect on December 31^st of the immediately preceding fiscal year.

1

3.2           Bonuses.  Officer will be eligible to receive a bonus for the fiscal year ending December 31, 2001 provided Officer remains an employee through such date.  Such bonus shall be determined as described on Exhibit A hereto and paid within Seventy-five (75) days after the fiscal year end to which such bonus relates. The bonus for each fiscal year or portion thereof after fiscal year 2001 shall be determined in the sole discretion of the board of directors.

3.3           Additional Benefits. During the term of his employment, Officer shall be entitled to the following fringe benefits:

3.3.1        Officer Benefits.  Officer shall be eligible to participate in such of the Company’s benefit and compensation plans as may be generally available to employees of the Company.  All such benefit plans may be amended or discontinued in the sole discretion of the Company.

3.3.2        Business Expenses.  The Company shall reimburse Officer for all reasonable and necessary expenses incurred in carrying out his duties under this Agreement, including travel and entertainment expenses, in accordance with the Company’s policies in effect from time to time.  Officer shall present promptly to the Company an itemized account of such expenses in such form as may be required by the Company of its senior officers.

3.3.3        Vacation.  Officer shall be entitled to vacation time pursuant to the Company’s policy, during which time Officer’s compensation shall be paid in full.  In addition, Officer shall be entitled to paid holidays and personal days off in accordance with the Company’s policies in effect from time to time.

3.4           Option to Acquire Common Stock. Officer will be entitled to non-statutory stock option (“Option”) grants to purchase shares of the Company’s Common Stock, such grants to occur at the time the Company determines, in the best interest of the Company, to grant Options, pursuant to and subject to the terms and conditions of Company’s Equity Incentive Plan. The exercise price of Officer’s Options will be determined upon the date the Company grants the Options. Officer’s Options, when granted by the Company, will vest over that period of time set forth in the Company’s Equity Incentive Plan.  Any Options shall be granted at the sole discretion of the Company’s Board of Directors. Officer agrees to execute a Non-Statutory Stock Option Agreement (“Stock Option Agreement”) upon the date the Company grants the Options to Officer, the terms and conditions of which shall be in conformity with this Section 3.4.

4.             Termination of Employment.

4.1           Termination for Cause.  Termination for Cause (as defined below) of Officer’s employment may be effected by the Company at any time without liability except as specifically set forth in this Subsection.  The termination shall be effected by verbal or written notification to Officer and shall be effective as of the time stated in such notice.  At the effective time of a Termination for Cause, Officer immediately shall be paid all accrued Base Salary and any reasonable and necessary business expenses incurred by Officer in connection with his duties hereunder, all to the effective time of termination.  In addition, Officer shall be entitled to benefits under any benefit plans of the Company in which Officer is a participant to the full extent of Officer’s rights under such plans.

2

4.2           Termination Other Than for Cause.  The Company may effect a Termination Other Than for Cause (as defined below) of Officer’s employment at any time upon giving verbal or written notice to Officer of such termination and without liability except as specifically set forth in this Subsection.  The termination shall be effective as of the time stated in such notice which shall not precede the date of the notice. At the effective time of any Termination Other Than for Cause, Officer shall immediately be paid all accrued Base Salary and any reasonable and necessary business expenses incurred by Officer in connection with his duties hereunder, all to the effective time of termination. Officer shall also be entitled to be paid any unpaid bonus compensation and such unpaid bonus compensation shall be paid promptly once it has been determined, but no later than sixty (60) days after the first quarter end following termination.  Unpaid bonus compensation for the purposes of this Section 4 shall be determined as set forth in Exhibit A. In addition, Officer shall immediately be paid the percentage of his Base Salary set forth on Exhibit A.  Officer shall also be entitled to benefits under any benefit plans of Company in which Officer is a participant to the full extent of Officer’s rights under such plans, and Company shall pay Officer’s medical, life and disability insurance premiums under Company’s plans (or shall pay Officer a sum in cash, not to exceed $1,000.00 per month, to pay private plan premiums for coverage substantially the same as Company’s) for the number of months following termination set forth on Exhibit A.

4.3           Termination for Good Reason. Upon a Termination for Good Reason (as defined below) of Officer’s employment, which termination shall be effective as of the time stated in the termination notice, Officer shall immediately be paid all accrued Base Salary and any reasonable and necessary business expenses incurred by Officer in connection with his duties hereunder, all to the effective time of termination. Officer shall also be entitled to be paid any unpaid bonus compensation and such unpaid bonus compensation shall be paid promptly once it has been determined, but no later than sixty (60) days after the first quarter end following termination.  Unpaid bonus compensation for the purposes of this Section 4 shall be determined as set forth in Exhibit A. In addition, Officer shall immediately be paid the percentage of his Base Salary set forth on Exhibit A.  Officer shall also be entitled to benefits under any benefit plans of Company in which Officer is a participant to the full extent of Officer’s rights under such plans, and Company shall pay Officer’s medical, life and disability insurance premiums under Company’s plans (or shall pay Officer a sum in cash, not to exceed $1,000.00 per month, to pay private plan premiums for coverage substantially the same as Company’s) for the number of months following termination set forth on Exhibit A.

4.4           Termination by Reason of Disability.  If Officer, in the reasonable judgment of the executive officers of the Company, has failed to perform his duties under this Agreement on account of illness or physical or mental incapacity, and such illness or incapacity continues for a period of more than six (6) months, then the question of whether Officer’s illness or incapacity is reasonably likely to continue shall be submitted to the Company or, if disability insurance is maintained on Officer, Officer’s disability insurance carrier for determination.  In the event the Company or such insurance carrier determines that Officer is subject to such an illness or incapacity for which no reasonable accommodation is possible, the Company shall have the right to terminate Officer’s employment (“Termination for Disability”) by written notification to Officer and payment to Officer of all accrued Base Salary, unpaid bonus compensation (pro rated as provided in Exhibit A)

3

and any reasonable and necessary business expenses incurred by Officer in connection with his duties hereunder, all to the date of termination. In addition, Officer shall be immediately be paid the percentage of his Base Salary set forth in Exhibit A. Officer shall also be entitled to benefits under any benefit plans in which Officer is a participant, including disability benefits which may be provided pursuant to Section 3.3.1, to the full extent of Officer’s rights under such plans, and Company shall pay Officer’s medical, life and disability insurance premiums under Company’s plans (or shall pay Officer a sum in cash, not to exceed $1,000.00 per month, to pay private plan premiums for coverage substantially the same as Company’s) for the number of months following termination set forth on Exhibit A.

4.5           Death.  In the event of Officer’s death during the term of employment, Officer’s employment shall be deemed to have terminated as of the last day of the month during which his death occurs, and the Company shall pay promptly to his estate (a) all accrued Base Salary, unpaid bonus compensation (pro rated as provided in Exhibit A) and any reasonable and necessary business expenses incurred by Officer in connection with his duties hereunder, all to the effective date of termination and (b) the percentage of Base Salary set forth on Exhibit A.  Officer’s estate shall also be entitled to benefits under any benefit plans of the Company in which Officer was a participant to the full extent of Officer’s rights under such plans.

4.6           Voluntary Termination.  In the event of a Voluntary Termination (as defined below) by Officer, the Company shall immediately pay all accrued Base Salary and any reasonable and necessary business expenses incurred by Officer in connection with his duties hereunder, all to the date of termination.

4.7           Termination upon a Change of Control.  In the event of a Termination upon a Change of Control (as defined below), Officer shall immediately be paid all accrued Base Salary, unpaid bonus compensation (as set forth in Exhibit A) and any reasonable and necessary business expenses incurred by Officer in connection with his duties hereunder, all to the date of termination. In addition, Officer shall immediately be paid the amount set forth on Exhibit A. Also, any Options granted to Officer by the Company shall vest and become immediately exercisable by Officer in accordance with Section 3.4 and the Stock Option Agreement. Officer shall also be entitled to benefits under any benefit plans of Company in which Officer is a participant to the full extent of Officer’s rights under such plans, and Company shall pay Officer’s medical, life and disability insurance premiums under Company’s plans (or shall pay Officer a sum in cash, not to exceed $1,000.00 per month, to pay private plan premiums for coverage substantially the same as Company’s) for the number of months following termination set forth on Exhibit A.  Notwithstanding the foregoing, solely in the event of a Termination upon Change of Control, the aggregate amount of severance compensation paid to an Officer under this Agreement or otherwise shall not include any amount that the Company is prohibited from deducting for federal income tax purposes by virtue of Section 280G of the Internal Revenue Code or any successor provision.

4.8           Other Benefits. Nothing in this Article 4 shall be deemed to limit or restrict any right or benefit of Officer under Company’s Certificate of Incorporation, Bylaws or other documents or agreements of the Company applicable to Officer.

4

5.             Protection of the Company’s Business

5.1           No Competition.  Officer shall not, during the term of his employment and for twelve (12) months following the termination of his employment, work as an employee, director, or independent contractor or become an investor or lender of any business, corporation, partnership or other entity engaged in a Competing Business.  An investment by Officer of up to 2% of the outstanding equity in a publicly-traded corporation shall not constitute a violation of this Section 5.1.  A “Competing Business” is a business which Company has engaged in, or has actively investigated engaging in, at any time during the twenty-four (24) months prior to the termination of Officer’s employment in which Officer had responsibility to manage, direct or supervise.

5.2           No Solicitation of Clients.  Officer shall not, during the term of his employment and for eighteen (18) months following the termination of his employment (unless Company grants him written authorization):  (a) call upon, cause to be called upon, solicit or assist in the solicitation of, any client or potential client of Company for the purpose of selling, renting or supplying any product or service competitive with the products or services of Company;  (b) provide any product or services to any client or potential client of Company which is competitive with the products or services of Company; or (c) request, recommend or advise any client or potential client to cease or curtail doing business with the Company.  Any individual, governmental authority, corporation, partnership or other entity to whom Company has provided services or products at any time prior to or during Officer’s employment or to whom Company has made one or more sales or sales calls during the eighteen (18) month period preceding the date of termination of Officer’s employment shall be deemed a client or potential client.

5.3           No Hire of Other Officers or Contractors.  Except on behalf of the Company, Officer shall not, during the term of his employment and for a period of eighteen (18) months following the termination of his employment: (a) employ, engage or seek to employ or engage any individual or entity, on behalf of Officer or any entity (including a client of Company), who is employed or engaged by Company or who was employed or engaged by the Company during the six (6) month period preceding Officer’s termination; (b) solicit, recommend or advise any employee of the Company or independent contractor to terminate their employment or engagement with the Company for any reason; or (c) solicit recruiting prospects and/or candidates whose files are actively maintained or have been maintained during the last six (6) months prior to Officer’s termination by the Company.

6.             Confidentiality.

6.1           Confidential Information and Materials.  All of the Confidential Information and Materials, as defined herein, are and shall continue to be the exclusive confidential property and trade secrets of Company.  Confidential Information and Materials have been or will be disclosed to Officer solely by virtue of his employment with Company and solely for the purpose of assisting him in performing his duties for Company. “Confidential Information and Materials” refers to all information belonging to or used by Company or Company’s clients relating to internal operations, procedures and policies, finances, income, profits, business strategies, pricing, billing information, compensation and other personnel information, client contacts, sales lists, employee lists, technology, software source codes, programs, costs, marketing plans, developmental plans, computer

5

programs, computer systems, inventions, developments, personnel manuals, computer program manuals, programs and system designs, and trade secrets of every kind and character, whether or not they constitute a trade secret under applicable law and whether developed by Officer during or after business hours.  Confidential Information does not include information that: (a) is or becomes generally available to the public other than, directly or indirectly, as a result of a disclosure by Officer; (b) was in the Officer’s possession (other than by or on behalf of the Company) on a nonconfidential basis prior to its disclosure by Company; or (c) becomes available to Officer on a non–confidential basis from a person who to the best of knowledge of Officer is not otherwise prohibited from transmitting the information to Officer.

Officer acknowledges and agrees all Confidential Information and Materials shall, to the extent possible, be considered works made for hire for the Company under applicable copyright law.  To the extent any Confidential Information and Materials are not deemed to be a work made for hire, Officer hereby assigns to the Company any rights he may have or may acquire in such Confidential Information and Materials as they are created, throughout the world, in perpetuity.  Further, Officer hereby waives any and all moral rights he may have in such Confidential Information and Materials.  Notwithstanding the foregoing, the Company acknowledges that it shall have no right to inventions or other material for which no equipment, supplies, facilities or Confidential Information and Material of the Company are used and which are developed entirely on Officer’s own time and (i) do not relate directly to the business of the Company or (ii) do not result from any work performed by Officer hereunder.

6.2           Non-disclosure and Non-use.  Officer may use Confidential Information and Material while an employee of Company and in the course of that employment to the extent deemed necessary by Company for the performance of Officer’s responsibilities.  Such permission expires upon termination of his employment with Company or on notice from Company.  Officer shall not, either during or after his employment with Company, disclose any Confidential Information or Materials to any person, firm, corporation, association or other entity for any reason or purpose unless expressly permitted by Company in writing.  Officer shall not use, in any manner other than to further Company’s business, any Confidential Information or Materials of Company.  Upon termination of his employment, Officer shall immediately return all Confidential Information or Materials or other property of Company or its clients or potential clients in his possession or control..

7.             Definitions.

7.1           Definitions.  For purposes of this Agreement, the following terms shall have the following meanings:

7.1.1.                       “Termination for Cause” shall mean termination by Company of Officer’s employment by Company by reason of Officer’s conviction of any felony crime, Officer’s willful dishonesty towards, fraud upon or deliberate injury or attempted injury to Company or its clients, Officer’s material breach of this Agreement, or any material reason that constitutes cause under applicable law.

6

7.1.2                        “Termination Other Than for Cause” shall mean termination by Company of Officer’s employment for any or no reason, other than a Termination for Cause, Termination upon Change in Control, Termination for Good Reason, or Termination for Death or Disability.

7.1.3                        “Termination upon a Change in Control” shall mean a termination by Company or any successor thereto or by Officer of Officer’s employment with the Company or such successor for any reason within one hundred eighty (180) days from the date on which any of the following occurs:  (a) any “person” or “group” (within the meaning of Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934 (the “1934 Act”)), other than CIBER, Inc., Bobby G. Stevenson or a trustee or other fiduciary holding securities under an employee benefit plan of Company, is or becomes the “beneficial owner” (as defined in Rule 13d–3 under the 1934 Act), directly or indirectly, of more than thirty three percent (33%) of the then outstanding voting stock of Company; or (b) at any time during any period of three consecutive years (not including any period prior to the Effective Date), individuals who at the beginning of such period constitute the Board (and any new director whose election by the Board or whose nomination for election by Company’s stockholders was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority thereof; or (c) the stockholders of Company approve a merger or consolidation of Company with any other corporation, other than a merger or consolidation which would result in the voting securities of Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) at least 80% of the combined voting power of the voting securities of Company or such surviving entity outstanding immediately after such merger or consolidation, or the stockholders approve a plan of complete liquidation of Company or an agreement for the sale or disposition by Company of all or substantially all of Company’s assets.

7.1.4                        For purposes of this Agreement “Good Reason” shall include, but not be limited to, any of the following (without the Officer’s express written consent):  (a) the assignment to the Officer by the Company of duties inconsistent with, or a substantial diminution in the nature or status of, the Officer’s responsibilities, other than any changes primarily attributable to the fact that the Company’s securities are no longer publicly traded; (b) a reduction by the Company in the Officer’s compensation, benefits, or perquisites as in effect upon the effective date of this Agreement; (c) a relocation of the Company’s principal offices to a location outside Seattle, Washington, or the Officer’s relocation to any place other than the Seattle, Washington offices of the Company, except for reasonably required travel by the Officer on the Company’s business; (d) any material breach by the Company of any provision of this Agreement, if such material breach has not been cured within thirty (30) days following written notice by the Officer to the Company of such breach setting forth with specificity the nature of the breach; or (e) any failure by the Company to obtain the assumption and performance of this Agreement by any successor (by merger, consolidation or otherwise) or assign of the Company.

7

7.1.5                        “Voluntary Termination” shall mean termination by Officer of Officer’s employment with Company, but shall not include (i) constructive termination by Company by reason of material breach of this Agreement by Company; (ii) Termination upon a Change in Control; (iii) Termination for Good Reason; and (iv) termination by reason of Officer’s death or disability as described in Subsections 4.4 and 4.5.  Voluntary Termination shall include a termination by Company after its receipt of a notice of an otherwise Voluntary Termination from Officer.

8.               Remedies.

8.1           Liquidated Damages.

8.1.1                        If Officer violates Subsection 5.1, Officer shall pay to Company the sum of $100,000.00 as liquidated damages to compensate Company for its lost investment of money for recruitment, training, cost of replacement, lost revenues and other damages due to the likely disruption of the operation of Company’s business.

8.1.2                        If Officer violates Subsection 5.2, Officer shall pay to Company as liquidated damages the greater of Company’s gross billings to the client to which products or services are supplied in violation of Subsection 5.2 during the year immediately prior to the first improper solicitation or $25,000.00, to compensate Company for its lost revenue, client development expenses and other damages.

8.1.3                        If Officer violates Subsection 5.3, Officer shall pay to Company as liquidated damages, in compensation for its recruitment and training costs, lost revenues and other damages, the following sums for each employee or independent contractor hired or engaged in violation of Subsection 5.3:

Officer or Independent Contractor	Amount
Vice-President or other officer	$	100,000
Other Manager or Recruiter	$	50,000
Marketer or other sales personnel	$	50,000
Programmers or other billable personnel	$	12,500
Other office staff	$	5,000

8.1.4                        Officer and Company have carefully considered the issue of liquidated damages and after negotiation agree that they are a reasonable compromise after attempting to estimate what the actual damages would be and assessing the risk of collection.

8.1.5                        Officer authorizes Company to disclose the terms of Sections 5, 6 and 8 of this Agreement to any subsequent employer or client of Officer.

8

8.2           Equitable Remedies.  The service rendered by Officer to Company and the information disclosed to Officer during his employment are of a unique and special character, and any breach of Sections 5 or 6 hereof will cause Company irreparable injury and damage which will be extremely difficult to quantify.  Although the parties have agreed on liquidated damages for some of the potential breaches by Officer, they agree that because of the risk of collection and intangibles which are impossible to measure, Company will be entitled to, in addition to all other remedies available to it, injunctive relief to prevent a breach and to secure the enforcement of all provisions of Sections 5 and 6.  Officer represents his experience and knowledge will enable him to earn an adequate living in a non–competitive business and that the injunctive relief will not prevent him from providing for him and his family.  Injunctive relief may be granted immediately upon the commencement of any such action without notice to Officer, WHICH NOTICE EMPLOYEE SPECIFICALLY WAIVES.

8.3           Costs.  If litigation is brought to enforce or interpret any provision contained herein, the court shall award reasonable attorneys’ fees and disbursements to the prevailing party as determined by the court.

8.4           Severability.  THE PARTIES HAVE CAREFULLY CONSIDERED ALL OF SECTIONS 5, 6 AND 8 AND AGREE THAT THEY REPRESENT A PROPER BALANCING OF THEIR INTERESTS AND WILL NOT PREVENT EMPLOYEE FROM EARNING A LIVING AFTER TERMINATION OF HIS EMPLOYMENT.  It is the express intent of the parties hereto that the obligations of, and restrictions on, the parties as provided in Sections 5 and 6 shall be enforced and given effect to the fullest extent legally permissible.  If, in any judicial proceeding, a court shall refuse to enforce one or more of the covenants or agreements contained in this Agreement because the duration thereof is too long, the scope thereof is too broad or some other reason, for the purpose of such proceeding, the court may reduce such duration or scope to the extent necessary to permit the enforcement of such obligations and restrictions.

9.             Miscellaneous.

9.1           Payment Obligations.  Company’s obligation to pay Officer the compensation provided herein is subject to the condition precedent that Officer perform his obligations.

9.2           Waiver.  The waiver of the breach of any provision of this Agreement shall not operate or be construed as a waiver of any subsequent breach of the same or other provision hereof.

9.3           Entire Agreement; Modifications.  This Agreement represents the entire understanding between the parties with respect to the subject matter hereof, and this Agreement supersedes any and all prior understandings, agreements, plans and negotiations, whether written or oral, with respect to the subject matter hereof, including, without limitation, any understandings, agreements or obligations respecting employment, noncompetition, nonsolicitation, any past or future compensation, bonuses, reimbursements or other payments to Officer from Company.  All modifications to this Agreement must be in writing and signed by the party against whom enforcement of such modification is sought; provided; however, that the provisions concerning Position, Base Salary (subject to the limitation in Section 3.1) and Bonus set forth on Exhibit A may be modified at any time by the Board of Directors in its sole discretion.

9

9.4           Notices.  All notices and other communications under this Agreement shall be in writing and shall be given by hand delivery, or first-class mail, certified or registered with return receipt requested, or by commercial overnight courier or by fax and shall be deemed to have been duly given upon hand delivery, three (3) days after mailing, the first business day following delivery to a commercial overnight courier or upon receipt of a fax (as confirmed by a machine generated report), addressed as follows:

If to Company:

CIBER, Inc.

5351 DTC Parkway,  Suite 1400

Greenwood Village, Colorado  80111

Attn: Mac J. Slingerlend

If to Officer:

William R. Wheeler

15215 NE 167th Place

Woodinville, WA 98072

Any party may change such party’s address for notices by notice given pursuant to this Section 9.4.

9.5           Headings.  The Section headings herein are intended for reference and shall not by themselves determine the construction or interpretation of this Agreement.

9.6           Arbitration. Any controversy or claim arising out of or relating to this contract, or the breach thereof, shall be settled by arbitration administered by the American Arbitration Association under its National Rules for the Resolution of Employment Disputes, and judgment upon the award rendered by the arbitrator(s) may be entered by any court having jurisdiction thereof.

9.7           Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Colorado without application of its conflict of laws rules.

9.8           Severability.  Should a court or other body of competent jurisdiction determine that any provision of this Agreement is excessive in scope or otherwise invalid or unenforceable, such provision shall be adjusted rather than voided, if possible, so that it is enforceable to the maximum extent possible, and all other provisions of the Agreement shall be deemed valid and enforceable to the extent possible.

9.9           Survival of Company’s Obligations.  Company’s obligations hereunder shall not be terminated by reason of any liquidation, dissolution, bankruptcy, cessation of business or similar event relating to Company.  This Agreement shall not be terminated by any merger or consolidation or other reorganization of Company.  In the event any such merger, consolidation or

10

reorganization shall be accomplished by transfer of stock or by transfer of assets or otherwise, the provisions of this Agreement shall be binding upon and inure to the benefit of the surviving or resulting corporation or person.  This Agreement shall be binding upon and inure to the benefit of the executors, administrators, heirs, successors and assigns of the parties; provided, however, that except as provided in this Subsection in the event of a merger consolidation or reorganization of the Company, including the sale of substantially all of its assets, this Agreement shall not be assignable either by Company or by Officer.

9.10         Counterparts.  This Agreement may be executed in one or more counterparts, all of which taken together shall constitute one and the same Agreement.

9.11         Withholdings.  All compensation and benefits to Officer hereunder shall be reduced by all federal, state, local and other withholdings and similar taxes and payments required by applicable law.  Company may withhold amounts due it from Officer from amounts due under this Agreement to Officer.

IN WITNESS WHEREOF, the parties hereto have executed this Employment Agreement as of the date first above written.

EMPLOYEE	CIBER, INC., a Delaware corporation
	By:
William R. Wheeler	Mac J. Slingerlend,
	President, Chief Executive Officer

11

EXHIBIT A

To

Employment Agreement of William R. Wheeler dated July 1, 2001

I.	*Position:  Senior Vice President, CIBER Enterprise Solutions
II.	*Base Salary Per Annum beginning July 1, 2001:  $250,000.00
III.	*Bonus Potential for period July 1, 2001 to December 31, 2001:  $50,000.00
IV.	Option Grant:  N/A
V.	Additional sums payable upon termination events as referenced in Section 4 of the Agreement.
	A.	Termination for Cause:  None
	B.	Termination Other than for Cause: 100% of Base Salary plus the pro rata portion of the bonus compensation received by the Officer for the year preceding the year in which termination occurs. Additionally, the eighteen (18) month non-compete period in Section 5.1 shall be reduced to twelve (12) months.
	C.	Termination for Good Reason: 100% of Base Salary plus the pro rata portion of the bonus compensation received by the Officer for the year preceding the year in which termination occurs.
	D.	Termination by Reason of Disability: 50% of Base Salary plus pro rata portion of the bonus compensation received by the Officer for the year preceding the year in which termination occurs.
	E.	Death: 50% of Base Salary plus pro rata portion of the bonus compensation received by the Officer for the year preceding the year in which termination occurs.
	F.	Voluntary Termination:  None
	G.	Termination Upon a Change of Control: 1.5 times the sum of the following: Base Salary plus an amount equal to the bonus compensation received by the Officer for the year preceding the year in which termination occurs.

*              Items subject to modification by the Board

12

EX-10.13

CIBER, INC.

SALARY CONTINUATION RETIREMENT PLAN FOR

MAC J. SLINGERLEND

Second Revision - February, 2002

THIS PLAN is adopted by CIBER, Inc., a Delaware corporation (the “Company”) , as of the Effective Date, for the purpose of providing certain salary continuation retirement benefits to MAC J. SLINGERLEND (the “Participant”).

1.             Definitions.  The following definitions apply to terms used in this Plan:

1.1           “Annual Benefit Amount” means an amount based on the Participant’s attained age when the Participant’s employment with the Company terminates:

Participant’s Age at Termination of Employment	Benefit Amount
54	$	75,000
55	$	85,000
56	$	95,000
57	$	102,500
58	$	110,000
59	$	117,500
60 or older	$	125,000

1.2           “Beneficiary” means the beneficiary determined under section 4 to receive any benefits under the Plan that become payable after the death of the Participant.

1.3           “Benefit Commencement Date” means the date on which the Participant attains the age of 60 years.

1.4           “Company” means CIBER, INC., a Delaware corporation.

1.5           “Effective Date” means the date of adoption of this Plan by the Company, which is indicated at the end of the Plan document.

1.6           “Participant” means MAC J. SLINGERLEND.

1.7           “Plan” means this CIBER, INC. Salary Continuation Retirement Plan for Mac J. Slingerlend, as set forth in herein and as may hereafter be amended from time to time.

1.8           “Spouse” means with respect to the Participant, the person to whom the Participant is legally married, or to whom he was legally married at the time of his death.  The term “spouse” specifically excludes a former spouse if the marriage was terminated by divorce, annulment, or dissolution, rather than by the death of one of the parties.

2.             Purposes.  The Participant is a valued employee of the Company.  The Company recognizes that the Participant has performed his services with ability and distinction, and that the growth and success of the Company’s business reflects and will reflect the services rendered by the Participant.  To reward and retain the services of the Participant, and to assist the Participant in providing for the contingencies of retirement, the Company adopts this Plan to provide certain salary continuation retirement benefits to the Participant or the Participant’s Beneficiary.  The Company and the Participant intend that: (a) this Plan is unfounded for tax purposes and for purposes of Title I of the Employee Retirement Income Security Act of 1974; (b) this Plan is maintained by the Company primarily for the purpose of providing deferred compensation for the Participant; and (c) the Participant is one of a select group of management or highly compensated employees of the Company.

3.             Salary Continuation Benefits

3.1         Amount and Payment of Benefits.  Except as provided in section 3.2, the Company shall pay salary continuation benefits as provided in this Plan.  The salary continuation benefits under this Plan shall consist of fifteen annual payments of the Participant’s Annual Benefit Amount, payable on the Benefit Commencement Date and each year thereafter on the anniversary of the Benefit Commencement Date until a total of fifteen annual payments has been made.   The Company may, at its sole option and at any time after the employee’s employment

2

has been terminated or at any time after the Benefit Commencement Date (regardless of whether the Employee’s employment has been terminated), prepay the benefits under this Plan by paying a lump sum, in cash, equal to the present value of all remaining unpaid payments, calculated using a discount rate of 8% per annum.  Upon such prepayment, the Company shall have no further obligations under this Plan.

3.2        Forfeiture of Benefits on Termination for Cause.  If the Participant’s employment with the Company is terminated for cause, either before or after the Benefit Commencement Date, then any benefits not actually paid prior to the time of termination shall be forfeited, and no further salary continuation benefits shall be payable under this Plan.  For this purpose, “cause” means (a) commission of a felony, or (b) fraud or misappropriation or intentional material damage to the property or business of the Company, provided that such “cause” shall have been found by a majority vote of the members of the Board of Directors of the Company (other than the Participant, if he is a member of the Board of Directors).

3.3         Recipient.  The salary continuation benefits under his Plan shall be paid as follows:

a.              All payments that become payable during the Participant’s lifetime shall be paid to the Participant.

b.             Any payments that become payable following the Participant’s death shall be paid to the Participant’s Beneficiary.

4.             Beneficiary.

4.1           Designation.  The Participant may from time to time designate a Beneficiary to receive amounts that may become payable under this plan following the Participant’s death.  If more than one Beneficiary is named, the shares and/or precedence of each shall be indicated.  The Participant may at any time revoke or change any previous beneficiary designation.  Any

3

beneficiary designation or any revocation or change of a previous beneficiary designation shall be in writing, shall be signed by the Participant, shall be effective only upon its actual receipt by the Company, and shall be in the form of Exhibit A attached hereto.

4.2           No Designated beneficiary.  If there is no beneficiary designation in effect for the Participant at the time when any amounts become payable to the participant’s Beneficiary, or if the Beneficiary designated by the Participant is not then living or in existence, then the Participant’s Beneficiary shall be, and the payment(s) shall be made to:

a.             The Participant’s surviving Spouse, if any;

b.             The Participant has no surviving Spouse, then to the Participant’s personal representative, to be distributed as a part of the Participant’s estate.

4.3           Withholding Benefits.  If the Company is in doubt as to the proper Beneficiary to receive any payment under this plan, the Company may withhold payment until the matter is finally adjudicated.

4.4           Incompetent Payee.  If the Participant or any Beneficiary is a minor or otherwise legally incompetent, the Company may make payment to the Participant’s or Beneficiary’s conservator or legal guardian or, in the sole and absolute discretion of the Company, to the Participant’s or Beneficiary’s parent or another relative of the Beneficiary.  The receipt of a conservator, guardian, parent or other relative to whom a payment is made under this section shall be a complete discharge of the Company, and the Company shall have obligation to see to the application of any payment so made.

4.5           Discharge of Company.  Any payment made by the Company in good faith and in accordance with the provisions of this Plan shall fully discharge the Company from all further obligations with respect to that payment.

4

5.             Relationship to Other Agreements.  This Plan does not constitute a contract of employment between the Company and the Participant.  No provision of this Plan shall restrict the right of the Company to discharge or terminate the Employment of the Participant, nor the right of the Participant to terminate the Participant’s employment with the Company.

6.             Unfunded Plan.

6.1           Company’s Obligations.  The Company’s obligations under this Plan shall be an unfounded and unsecured promise to make benefit payments in the future.  The Company shall not, under any circumstances, be obligated to fund its financial obligations under this Plan.

6.2           Rights of Participants and Beneficiaries.  In seeking to enforce payment of benefits under this Plan, the Participant or the Participant’s Beneficiary shall have the status and rights, but only the status and rights, of general unsecured creditors of the Company.

6.3           No Rights in Specific Assets.  No assets held, or acquired in the future, by the Company, shall be considered to be held or acquired in connection with or as security for the liabilities of the Company pursuant to this Plan, and shall not be deemed to be held under any trust for the benefit of the Participants or their Beneficiaries, or be deemed security for the performance of the obligations of the Company under this plan, but shall be and remain general, unpledged and unrestricted assets of the Company.  The Participant hereby acknowledges that the Participant’s participation in the acquisition of any general asset for the Company shall not constitute a representation to the Participant, the Participant’s Beneficiary, or any other person claiming through the Participant, that any of them has any special or beneficial interest in any general asset of the Company.

7.             Inalienability.  Except as specifically provided in this Plan with respect to the Participant’s right to designate a Beneficiary, the Participant’s right to benefits hereunder is personal to the Participant, and neither the Participant nor the Participant’s Beneficiary shall

5

have any right to anticipate, sell, assign, mortgage, pledge, or otherwise dispose of or encumber any of the benefits provided for under this Plan, nor shall such benefits be liable for the debts or obligations of the Participant or the Participant’s Beneficiary, or be subject to attachment, garnishment, execution, creditors bill, or other legal or equitable process.

8.             Claims Procedure.  The following provisions are part of the Plan and are intended to meet the requirements of the Employee Retirement Income Security Act of 1974:

8.1           Named Fiduciary.  The “named Fiduciary” is the Company.

8.2           Unfunded Plan.  This Plan is unfunded.

8.3           Basis of Payment of Benefits.  The basis of payment of benefits under this Plan is that the Company shall pay the benefits out of its general assets, in accordance with the terms of this plan.

8.4           Claims Procedure.

a.             Claim.  A person who believes that he or she is being denied a claim for benefits to which he or she is entitled under this Plan (a “Claimant”) may file a written request for such benefits to with the Company, setting forth the claim.  The request must be addressed to the President of the Company at the Company’s then principal place of business.

b.             Decision on a Claim.  If a claim is denied, the President shall deliver a written explanation to the Claimant, setting forth: (a) the specific reason or reasons for the denial; (b) references to the pertinent provisions of this Plan on which the denial is based; (c) a description of any additional material or information necessary for the Claimant to perfect the claim and an explanation of why that material or information is necessary; (d) appropriate information as to the steps to be taken if the Claimant wishes to submit the claim for review; and (e) the time limit for requesting a review of the claim under section 8.4.c.  The written explanation shall be delivered to the Claimant within 90 days after receipt of the claim by the Company.

6

c.             Review of a Denied Claim.  A Claimant shall have 60 days following receipt of the denial of a claim to request a review of the denial.  A request for review shall be in writing and addressed to the President at the Company’s then principal place of business.  The Claimant may submit pertinent documents and written issues and comments.  The President shall review the denial of the claim, and shall furnish the Claimant with a decision on review within 60 days after receipt of the Claimant’s request for review.  The decision on review shall be in writing, shall be written in a manner calculated to be understood by the Claimant, and shall include specific reasons for the decision and specific references to the pertinent provisions of this Plan on which the decision is based.

9.             Miscellaneous.

9.1           Amendment or Termination.  This Plan may be amended or terminated only in a written instrument signed by both the Company and the Participant.

9.2           Inurement.  The terms of this Plan shall be binding upon, and shall inure to the benefit of, the Company, the Participant, the Participant’s Beneficiary, and their respective heirs, personal representatives, successors, and permitted assigns.

9.3           Governing Law.  This Plan shall be governed by and construed in accordance with the laws of the State of Colorado.

9.4           Exhibit.  The Exhibit attached hereto is incorporated herein by reference.

7

IN WITNESS WHEREOF, the Company has adopted this Plan effective as of the date indicated below.

	“Company”
	CIBER, Inc., a Delaware corporation
Effective date:
February 15, 2002	By:
	Name:
	Title:

8

EX-21.1

Exhibit 21.1

CIBER, Inc.

List of Subsidiaries

As of February 28, 2002

Name	Jurisdiction of Organization
CIBER Associates, Inc.	Delaware
DigiTerra, Inc.,	Delaware
CIBER of Canada, Inc.	Canada
Waterstone, Inc.	Delaware
Enspherics, Inc.	Colorado
CIBER International, Inc.	Delaware
Arsenal Acquisition Corporation	Delaware
CIBER International Holdings C.V.	The Netherlands
CIBER European Holdings B.V.	The Netherlands
Solution Partners B.V.	The Netherlands
CIBER Deutschland GmBH	Germany
CIBER Hungary Consulting LLC	Hungary
CIBER (UK) Limited	United Kingdom
CIBER Solution Partners (UK) Limited	United Kingdom
Aris UK Limited	United Kingdom

EX-23.1

Exhibit 23.1

Consent of Independent Auditors

The Board of Directors

CIBER, Inc.:

We consent to the incorporation by reference in the registration statements on Form S-8 (Nos. 33-81320, 33-87978, 33-88046, 33-88048, 33-88050, 333-15091, 333-25543, 333-25545, 333-59015, 333-61287, 333-91969 and 333-61388) and Form S-4 (Nos. 333-31905 and 333-69031, as amended on July 2, 2001 and August 3, 2001) of CIBER, Inc. of our report dated February 5, 2002, relating to the consolidated balance sheets of CIBER, Inc. and subsidiaries as of December 31, 2000 and 2001, and the related consolidated statements of operations, shareholders’ equity and cash flows for the year ended June 30, 1999, the six-month period ended December 31, 1999 and for each of the years in the two-year period ended December 31, 2001, which report appears in the December 31, 2001 Annual Report on Form 10-K of CIBER, Inc.

KPMG LLP

Denver, Colorado

March 11, 2002