RESULTS OF OPERATIONS

Background and Overview

We provide integrated computer systems for in-house and outsourced data processing to commercial banks, credit unions and other financial institutions. We have developed and acquired banking and credit union application software systems that we market, together with compatible computer hardware, to these financial institutions. We also perform data conversion and software implementation services regarding our systems and provide continuing customer support services after the systems are implemented. For our customers who prefer not to make an up-front capital investment in software and hardware, we provide our full range of products and services on an outsourced basis through our eight data centers in six physical locations and 12 item-processing centers located throughout the United States.

The US financial crisis is a primary concern at this time as it threatens our customers and our industry. The profits of many financial institutions have decreased and this may result in some reduction of demand for new products and services. We remain cautiously optimistic, however, with increasing portions of our business coming from recurring revenue, increases in backlog and encouraging sales pipeline in specific areas. Our customers will continue to face regulatory and operational challenges which our products and services address, and in these times have an even greater need for some of our solutions that directly address institutional profitability and efficiency. We face these uncertain times with a strong balance sheet and an unwavering commitment to superior customer service, and we believe that we are well positioned to address current opportunities as well as those which will arise when the economic rebound occurs.

A detailed discussion of the major components of the results of operations for the three months ended September 30, 2009 follows. All amounts are in thousands and discussions compare the current three-month period ended, September 30, 2009, to the prior year three-month period ended September 30, 2008.

REVENUE

License Revenue                 Three Months Ended      %
                                  September 30,       Change
                              ----------------------  ------
                                2009         2008

License                     $    11,402  $    13,294    -14%

License revenue represents the delivery of application software systems contracted with us by the customer. We license our proprietary software products under standard license agreements that typically provide the customer with a non-exclusive, non-transferable right to use the software on a single computer and for a single financial institution location.

The reduction in license revenue for the quarter compared to the same quarter a year ago is mainly attributable to a decrease in sales of our complementary product offerings, which offset revenue growth for our core software products collectively. The complementary products with the largest decreases include PROFITstar® ALM/Budgeting, our asset/liability management and budgeting system, Yellow Hammer Fraud Detective™, our fraud detection/prevention solution, and Synergy Enterprise Content Management solution, all of which had significant revenue growth during last year's first quarter.

Another factor contributing to the decrease in license revenue is the continuing shift in demand from banks and credit unions from in-house delivery to our outsourcing services, which do not require software license agreements.

Support and Service Revenue    Three Months Ended     %
                                 September 30,      Change
                              --------------------  ------
                                2009        2008

Support and service         $   155,926  $ 151,947     +3%

Quarter Over Quarter Change         $ Change  % Change

In-House Support & Other Services $      228      +<1%
EFT Support                            2,551       +7%
Outsourcing Services                   2,315       +7%
Implementation Services              (1,115)       -8%
                                    --------
Total Increase                    $    3,979

Support and services fees are generated from implementation services (including conversion, installation, configuration and training), annual support to assist the customer in operating their systems and to enhance and update the software, outsourced data processing services and EFT Support services.

There was growth in most of the support and service revenue components for the quarter ended September 30, 2009. In-house support and other services remained fairly even in comparison to prior year as gains in in-house support revenues were mostly offset by decreases in other services revenue, such as work orders and consulting. EFT support, including ATM and debit card transaction processing, online bill payment services, remote deposit capture and transaction processing services, experienced the largest dollar growth as we have seen strong growth in our bill pay and enterprise payment solutions. Outsourcing services for banks and credit unions continue to drive revenue growth as customers continue to choose outsourcing for the delivery of our solutions. We expect the trend towards outsourced product delivery to continue to benefit Outsourcing services revenue. The decrease in implementation services revenue is directly related to fewer convert/merge implementations for our bank customers due to the slowdown in the merger and acquisition activity in the current market environment.

Hardware Revenue                Three Months Ended      %
                                  September 30,       Change
                              ----------------------  ------
                                2009         2008

Hardware                    $    15,003  $    17,857    -16%

The Company has entered into remarketing agreements with several hardware manufacturers under which we sell computer hardware, hardware maintenance and related services to our customers. Revenue related to hardware sales is recognized when the hardware is shipped to our customers.

Hardware revenue decreased mainly due to a decrease in the number of hardware systems and components delivered in the current quarter compared to a year ago. Hardware revenue has been generally commensurate with the decrease in license revenue and has also been negatively impacted by the increase in outsourcing contracts, which typically do not include hardware.

BACKLOG

Our backlog increased 9% at September 30, 2009 to $291,200 ($61,800 in-house and $229,400 outsourcing) from $266,200 ($65,100 in-house and $201,100 outsourcing) at September 30, 2008.

COST OF SALES AND GROSS PROFIT

Cost of license represents the cost of software from third party vendors through remarketing agreements. These costs are recognized when license revenue is recognized. Cost of support and service represents costs associated with conversion and implementation efforts, ongoing support for our in-house customers, operation of our data and item processing centers providing services for our outsourced customers, EFT processing services and direct operating costs. These costs are recognized as they are incurred. Cost of hardware consists of the direct and related costs of purchasing the equipment from the manufacturers and delivery to our customers. These costs are recognized at the same time as the related hardware revenue is recognized. Ongoing operating costs to provide support to our customers are recognized as they are incurred.

Cost of Sales and Gross Profit         Three Months Ended     %
                                         September 30,      Change
                                      --------------------  ------
                                        2009        2008

Cost of License                     $     1,120  $   1,089     +3%
Percentage of total revenue                  1%         1%

    License Gross Profit            $    10,282  $  12,205    -16%
    Gross Profit Margin                     90%        92%
                                      --------------------

Cost of support and service         $    95,810  $  96,132    -<1%
Percentage of total revenue                 53%        53%

   Support and Service Gross Profit $    60,116  $  55,815     +8%
   Gross Profit Margin                      39%        37%
                                      --------------------

Cost of hardware                    $    11,010  $  13,348    -18%
Percentage of total revenue                  6%         7%

    Hardware Gross Profit           $     3,993  $   4,509    -11%
    Gross Profit Margin                     27%        25%
                                      --------------------

TOTAL COST OF SALES                 $   107,940  $ 110,569     -2%
Percentage of total revenue                 59%        60%

    TOTAL GROSS PROFIT              $    74,391  $  72,529     +3%

Cost of license increased for the current quarter due to greater third party reseller agreement software vendor costs. These costs have led to gross profit margin on license revenue being lower than the prior year. We expect this impact of third party software to continue to result in license gross profit margins that are lower than in prior years as third party software becomes a larger portion of our total license revenue.

The slight decrease in cost of support and service is attributable to cost control measures undertaken by the Company during the second half of fiscal 2009, which have resulted in lower personnel costs in the current quarter than a year ago. These cost reductions have led to higher overall support and service gross profit margins.

Cost of hardware decreased due to a decrease in hardware sales. Hardware gross profit margins increased slightly over last year's quarter due to changes in sales mix.

OPERATING EXPENSES

Selling and Marketing           Three Months Ended      %
                                  September 30,       Change
                              ----------------------  ------
                                2009         2008

Selling and marketing       $    12,125  $    13,932    -13%

Dedicated sales forces, inside sales teams, technical sales support teams and channel partners conduct our sales efforts for our two market segments, and are overseen by regional sales managers. Our sales executives are responsible for pursuing lead generation activities for new core customers. Our account executives nurture long-term relationships with our client base and cross sell our many complementary products and services.

For the three months ended September 30, 2009, selling and marketing expenses decreased mainly due to decreasing personnel costs, including commission expenses. Selling and marketing expense decreased as a percentage of sales to 7% compared to the first quarter of last fiscal year at 8%.

Research and Development        Three Months Ended      %
                                  September 30,       Change
                              ----------------------  ------
                                2009         2008

Research and development    $    10,148  $    11,546    -12%

We devote significant effort and expense to develop new software, to service products and to continually upgrade and enhance our existing offerings. Typically, we upgrade all of our core and complementary software applications once per year. We believe our research and development efforts are highly efficient because of the extensive experience of our research and development staff and because our product development is highly customer-driven.

Research and development expenses decreased 12% over last year's first quarter primarily due to a decrease in the use of consultants and independent contractors compared to the same period a year ago and an increase in the capitalization of expenditures to on-going software development projects; however, they remained at 6% of total revenue for each period.

General and Administrative      Three Months Ended      %
                                  September 30,       Change
                              ----------------------  ------
                                2009         2008

General and administrative  $    10,181  $    11,459    -11%

General and administrative costs include all expenses related to finance, legal, human resources, plus all administrative costs. General and administrative expense decreased for the quarter as cost control measures have resulted in lower personnel costs and reduced travel and other operating expenses. In addition, expenses related to our credit union user group meeting were down significantly due to the virtualization of that conference. Overall, our travel-related expenses were down $1,049 from last year's first quarter primarily as a result of these changes. General and administrative expenses remained at 6% of total revenue for both periods.

INTEREST INCOME (EXPENSE) - Interest income for the three months ended September 30, 2009 reflects a decrease of $522 when compared to the same period last year. Interest income decreased due to lower yields on invested balances. Interest expense decreased $337, due to fluctuations in the average outstanding balance and interest rates on the revolving bank credit facility, which as of September 30, 2009 had no balance, compared to a balance of $20,000 as of September 30, 2008.

PROVISION FOR INCOME TAXES - The provision for income taxes was $15,614 for the three months ended September 30, 2009 compared with $13,219 for the same period last year. As of the end of the current quarter, the rate of income taxes is estimated at 37.3% of income before income taxes compared to 37.0% as reported for the same quarter in fiscal 2009. The prior year rate does not include any impact of the Research and Experimentation Credit ("R&E Credit") since it had expired as of the end of the second quarter of fiscal 2008, but it has been included in the current year's first quarter provision. The R&E Credit is scheduled to expire on December 31, 2009, and accordingly, we are required under generally accepted accounting principles to allocate the credits generated prior to its expiration over the entire fiscal year.

NET INCOME - Net Income increased 17% for the three months ended September 30, 2009. For the first quarter of fiscal 2010, it was $26,274 or $0.31 per diluted share compared to $22,509, or $0.26 per diluted share in the same period last year.

BUSINESS SEGMENT DISCUSSION

The Company is a leading provider of integrated computer systems that perform data processing (available for in-house or outsourced installations) for banks and credit unions. The Company's operations are classified into two business segments: bank systems and services ("Bank") and credit union systems and services ("Credit Union"). The Company evaluates the performance of its segments and allocates resources to them based on various factors, including prospects for growth, return on investment, and return on revenue.

Bank Systems and Services
                       Three Months Ended  Percent
                         September 30,     Change
                      -------------------- -------
                        2009        2008

Revenue             $   150,426  $ 149,922      0%
Gross Profit        $    62,054  $  59,203      5%

Gross Profit Margin 41% 39%

Revenue in bank systems and services remained even as 4% growth in Support and service revenue was offset by decreases in both license and hardware revenue compared to the same period a year ago. Gross profit margin increased slightly compared to the first quarter of fiscal 2009 primarily due to cost control measures undertaken by management during the second half of fiscal 2009, which decreased personnel costs and led to a slight decrease in cost of Support and service despite the growth in revenue.

Credit Union Systems and Services

                        Three Months Ended   Percent
                          September 30,      Change
                      ---------------------- -------
                        2009         2008

Revenue             $    31,906  $    33,176     -4%
Gross Profit        $    12,337  $    13,326     -7%

Gross Profit Margin 39% 40%

Revenue in the credit union system and services segment experienced decreases in all components of revenue as current economic conditions have caused many of our credit union customers to delay discretionary expenditures. License revenue was down 5% overall from last year, as both core and complementary sales were down. Within the Support and service revenue line, Data center revenue was up 5% over last year, but was offset by lower consulting and work order revenue than in the previous year. Hardware revenue decreased due to sales mix and the amount of hardware shipped during the quarter. Credit union gross profit decreased 7% from the prior year, and gross profit margin dropped to 39% for the current quarter from 40% last year.

FINANCIAL CONDITION

Liquidity

The Company's cash and cash equivalents decreased to $108,018 at September 30,
2009, from $118,251 at June 30, 2009, but increased from $24,835 at September
30, 2008. The decrease in the cash balance from June 30, 2009 is primarily due
to the repayment of short term obligations.

The following table summarizes net cash from operating activities in the
statement of cash flows:

                                         Three months ended
                                           September 30,
                                        --------------------
                                          2009        2008

Net income                            $    26,274 $   22,509
Non-cash expenses                          16,852     17,398
Change in receivables                      70,878     87,989
Change in deferred revenue               (47,053)   (35,395)
Change in other assets and liabilities    (1,294)   (33,349)
                                        ---------   --------

                                      $    65,657 $   59,152

During the first quarter of fiscal 2010, as is the case during the first quarter of each fiscal year, the Company's cash flow from operations benefited from the collection of receivables related to our annual maintenance billings which are issued during the fourth quarter each year. In the current quarter, those inflows were partially offset by cash outflows related to an increase in prepaid expenses and a decrease in accrued expenses.

Cash used in investing activities for the current quarter totaled $17,299. The largest use of cash was capital expenditure for facilities and equipment, including the on-going construction of our new Springfield, Missouri facility, totaling $11,977. Other major uses of cash included $5,347 for the development of software. In the first quarter of fiscal 2009, cash used in investing activities totaled $13,263. The largest use of cash was for software development projects totaling $6,033. Other major uses of cash included $4,241 of capital expenditures for facilities and equipment and $3,012 in acquisition-related payments.

Financing activities used cash of $58,591 during the current quarter. There were net cash outflows to repay short-term borrowings on our lines of credit of $60,545 and $7,143 was used to fund dividends paid to stockholders. Cash used was partially offset by $9,097 proceeds from the issuance of stock for stock options exercised, excess tax benefits from stock-based compensation and the sale of common stock (through the employee stock purchase plan). In the first quarter of last year, financing activities used cash of $86,619. There were net cash outflows to repay short-term borrowings on our lines of credit of $50,039; $31,328 was used to purchase treasury stock, and $6,388 was used to fund dividends paid to stockholders. Cash used was partially offset by $1,136 proceeds from the issuance of stock for stock options exercised, excess tax benefits from stock-based compensation and the sale of common stock.

Beginning during fiscal 2008, U.S. financial markets and many of the largest U.S. financial institutions have been shaken by negative developments in the home mortgage industry and the mortgage markets, and particularly the markets for subprime mortgage-backed securities. Since that time, these and other such developments have resulted in a broad, global economic downturn. While we, as is the case with most companies, have experienced the effects of this downturn, we have not experienced any significant issues with our current collection efforts, and we believe that any future impact to our liquidity will be minimized by cash generated by recurring sources of revenue and due to our access to available lines of credit.

Capital Requirements and Resources

The Company generally uses existing resources and funds generated from operations to meet its capital requirements. Capital expenditures totaling $11,977 and $4,241 for the three-month periods ended September 30, 2009 and 2008, respectively, were made primarily for additional equipment, the on-going construction of a new facility in Springfield, Missouri and the improvement of other existing facilities. These additions were funded from cash generated by operations. Total consolidated capital expenditures for the Company are not expected to exceed $65,000 for fiscal year 2010.

The Company renewed a bank credit line on March 7, 2009 which provides for funding of up to $8,000 and bears interest at the Federal Reserve Board's prime rate (3.25% at September 30, 2009). The credit line expires March 7, 2010 and is secured by $1,000 of investments. At September 30, 2009, no amount was outstanding.

The Company renewed an unsecured bank credit line on April 28, 2008 which provides for funding of up to $5,000 and bears interest at the bank's prime rate less 1% (2.25% at September 30, 2009). The credit line matures on April 29, 2010. At September 30, 2009, no amount was outstanding.

An unsecured revolving bank credit facility allows short-term borrowings of up to $150,000 which may be increased by the Company at any time until maturity to $225,000. The unsecured revolving bank credit facility bears interest at a rate equal to (a) LIBOR or (b) an alternate base rate (the greater of (a) the Federal Funds Rate plus 0.5% or (b) the Prime Rate), plus an applicable percentage in each case determined by the Company's leverage ratio. The unsecured revolving credit line terminates May 31, 2012. At June 30, 2009, the revolving bank credit facility balance was $60,000. At September 30, 2009, there was no balance outstanding. This credit line is subject to various financial covenants that require the Company to maintain certain financial ratios as defined in the agreement. As of September 30, 2009, the Company was in compliance with all covenants.

The Company has entered into various capital lease obligations for the use of certain computer equipment. Included in property and equipment are related assets of $6,907, less accumulated depreciation of $1,235. At September 30, 2009, $2,916 was outstanding, all of which will be maturing within the next twelve months.

The Board of Directors has authorized the Company to repurchase shares of its common stock. Under this authorization, the Company may finance its share repurchases with available cash reserves or short-term borrowings on its existing credit facility. The share repurchase program does not include specific price targets or timetables and may be suspended at any time. At June 30, 2009 and September 30, 2009, there were 14,407 shares in treasury stock and the Company had the remaining authority to repurchase up to 5,584 additional shares. The total cost of treasury shares at September 30, 2009 is $309,585.

Subsequent to September 30, 2009, the Company acquired the outstanding stock of Goldleaf Financial Solutions, Inc. and, at closing, eliminated several of that entity's debt obligations. In addition, the Company also acquired PEMCO Technology Services, Inc. The Company's combined net cash outlay at closing for these acquisitions totaled over $127,000. These amounts were funded through available operating cash and borrowings of $60,000 on existing lines of credit.

Critical Accounting Policies

The Company regularly reviews its selection and application of significant accounting policies and related financial disclosures. The application of these accounting policies requires that management make estimates and judgments. The estimates that affect the application of our most critical accounting policies and require our most significant judgments are outlined in Management's Discussion and Analysis of Financial Condition and Results of Operations - "Critical Accounting Policies" - contained in our annual report on Form 10-K for the year ended June 30, 2009.

Forward Looking Statements

The Management's Discussion and Analysis of Results of Operations and Financial Condition and other portions of this report contain forward-looking statements within the meaning of federal securities laws. Actual results are subject to risks and uncertainties, including both those specific to the Company and those specific to the industry, which could cause results to differ materially from those contemplated. The risks and uncertainties include, but are not limited to, the matters detailed at Risk Factors in its Annual Report on Form 10-K for the fiscal year ended June 30, 2009. Undue reliance should not be placed on the forward-looking statements. The Company does not undertake any obligation to publicly update any forward-looking statements.

CONCLUSION

Even in this current challenging market, the Company's results of operations and its financial position continue to be solid, with increased gross profit and net income for the three months ended September 30, 2009, compared to the same period a year ago. We continue to be cautiously optimistic as we see the increases in our recurring revenue and the increases in our backlog of contracts for products and services yet to be delivered. Our overall results reflect the continuing attitude of cooperation and commitment by each employee, management's ongoing cost control efforts and our commitment to continue delivering top quality products and superior services to all of our customers in the markets we serve. We believe that we are well positioned to address current challenges and opportunities as well as those which will arise when the economic rebound occurs.