Item 8. Financial Statements and Supplementary Data

**

	Index to Financial Statements
	Report of Independent Registered Public Accounting Firm		40
	Management's Annual Report on Internal Control over Financial Reporting		41
	Report of Independent Registered Public Accounting Firm		42
	Financial Statements
		Consolidated Statements of Income,
		Years Ended June 30, 2007, 2006, and 2005	43
		Consolidated Balance Sheets, June 30, 2007 and 2006	44
		Consolidated Statements of Changes in Stockholders' Equity,
		Years Ended June 30, 2007, 2006, and 2005	45
		Consolidated Statements of Cash Flows,
		Years Ended June 30, 2007, 2006, and 2005	46
		Notes to Consolidated Financial Statements	47

Financial Statement Schedules

There are no schedules included because they are not applicable or the required information is shown in the consolidated financial statements or notes thereto.

**

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

**

To the Board of Directors and Stockholders of Jack Henry & Associates, Inc. Monett, Missouri

We have audited the accompanying consolidated balance sheets of Jack Henry & Associates, Inc. and subsidiaries (the "Company") as of June 30, 2007 and 2006, and the related consolidated statements of income, stockholders' equity, and cash flows for each of the three years in the period ended June 30, 2007. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). 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, such consolidated financial statements present fairly, in all material respects, the financial position of Jack Henry & Associates and subsidiaries at June 30, 2007 and 2006, and the results of their operations and their cash flows for each of the three years in the period ended June 30, 2007, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of the Company's internal control over financial reporting as of June 30, 2007, based on the criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated August 29, 2007 expressed an unqualified opinion on management's assessment of the effectiveness of the Company's internal control over financial reporting and an unqualified opinion on the effectiveness of the Company's internal control over financial reporting.

/s/ DELOITTE & TOUCHE LLP

St. Louis, Missouri

August 29, 2007

**

MANAGEMENT'S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

**

The management of Jack Henry & Associates, Inc. is responsible for establishing and maintaining adequate internal control over financial reporting. The Company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company's consolidated financial statements for external reporting purposes in accordance with accounting principles generally accepted in the United States of America.

The Company's internal control over financial reporting includes policies and procedures pertaining to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and dispositions of assets; provide reasonable assurance transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance with accounting principles generally accepted in the United States of America, and receipts and expenditures are being made only in accordance with authorizations of management and the directors of the Company; and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company's assets that could have a material effect on the Company's consolidated financial statements. All internal controls, no matter how well designed, have inherent limitations. Therefore, even where internal control over financial reporting is determined to be effective, it can provide only reasonable assurance. Projections of any evaluation of effectiveness to future periods are subject to the risk controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate.

As of the end of the Company's 2007 fiscal year, management conducted an assessment of the effectiveness of the Company's internal control over financial reporting based on the framework established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on this assessment, management has determined the Company's internal control over financial reporting as of June 30, 2007 was effective.

Management's assessment of the effectiveness of the Company's internal control over financial reporting as of June 30, 2007 has been audited by the Company's independent registered public accounting firm, as stated in their report appearing on the next page, which expresses unqualified opinions on management's assessment and on the effectiveness of the Company's internal control over financial reporting as of June 30, 2007.

**

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

**

To the Board of Directors and Stockholders of Jack Henry & Associates, Inc. Monett, Missouri

We have audited management's assessment, included in the accompanying Management's Annual Report on Internal Control over Financial Reporting, that Jack Henry & Associates, Inc. and subsidiaries (the "Company") maintained effective internal control over financial reporting as of June 30, 2007, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express an opinion on management's assessment and an opinion on the effectiveness of the Company's internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, evaluating management's assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinions.

A company's internal control over financial reporting is a process designed by, or under the supervision of, the company's principal executive and principal financial officers, or persons performing similar functions, and effected by the company's board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, management's assessment that the Company maintained effective internal control over financial reporting as of June 30, 2007, is fairly stated, in all material respects, based on the criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of June 30, 2007, based on the criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements as of and for the year ended June 30, 2007 of the Company and our report dated August 29, 2007 expressed an unqualified opinion on those financial statements.

/s/ DELOITTE & TOUCHE LLP

St. Louis, Missouri

August 29, 2007

JACK HENRY & ASSOCIATES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands, Except Per Share Data)
			YEAR ENDED JUNE 30,
			2007		2006		2005
REVENUE
	License		$ 76,403		$ 84,014		$ 82,374
	Support and service		503,317		425,661		364,076
	Hardware		88,342		82,530		89,413
	Total		668,062		592,205		535,863
COST OF SALES
	Cost of license		4,277		2,717		5,547
	Cost of support and service		312,138		272,383		244,097
	Cost of hardware		65,469		60,658		63,769
	Total		381,884		335,758		313,413
GROSS PROFIT			286,178		256,447		222,450
OPERATING EXPENSES
	Selling and marketing		51,045		50,007		46,630
	Research and development		35,962		31,874		27,664
	General and administrative		40,617		35,209		29,087
	Total		127,624		117,090		103,381
OPERATING INCOME			158,554		139,357		119,069
INTEREST INCOME (EXPENSE)
	Interest income		3,406		2,066		1,162
	Interest expense		(1,757)		(1,355)		(388)
	Total		1,649		711		774
INCOME BEFORE INCOME TAXES			160,203		140,068		119,843
PROVISION FOR INCOME TAXES			55,522		50,145		44,342
NET INCOME			$ 104,681		$ 89,923		$ 75,501
Diluted net income per share			$ 1.14		$ 0.96		$ 0.81
Diluted weighted average shares outstanding			92,032		93,787		92,998
Basic net income per share			$ 1.16		$ 0.98		$ 0.83
Basic weighted average shares outstanding			90,155		91,484		90,891
See notes to consolidated financial statements.

JACK HENRY & ASSOCIATES, INC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Share and Per Share Data)
			JUNE 30,
			2007		2006
ASSETS
CURRENT ASSETS:
	Cash and cash equivalents		$ 88,617		$ 74,139
	Investments, at amortized cost		989		2,181
	Receivables		209,242		180,295
	Prepaid expenses and other		24,130		24,402
	Prepaid cost of product		24,147		22,228
	Deferred income taxes		3,260		3,165
	Total current assets		350,385		306,410
PROPERTY AND EQUIPMENT, net			249,882		251,632
	OTHER ASSETS:
	Prepaid cost of product		15,009		15,191
	Computer software, net of amortization		59,190		43,840
	Other non-current assets		10,754		9,285
	Customer relationships, net of amortization		61,248		63,162
	Trade names		4,009		4,009
	Goodwill		248,863		212,538
	Total other assets		399,073		348,025
	Total assets		$ 999,340		$ 906,067
LIABILITES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
	Accounts payable		$ 11,481		$ 14,525
	Accrued expenses		34,920		29,012
	Accrued income taxes		17,882		3,312
	Note payable and current maturities of capital leases		70,503		50,241
	Deferred revenues		195,691		166,402
	Total current liabilities		330,477		263,492
LONG TERM LIABILITIES:
	Deferred revenues		16,865		19,317
	Deferred income taxes		53,290		47,430
	Other long-term liabilities, net of current maturities		343		616
	Total long term liabilities		70,498		67,363
	Total liabilities		400,975		330,855
STOCKHOLDERS' EQUITY
	Preferred stock - $1 par value; 500,000 shares authorized, none issued		** -**		-
	Common stock - $0.01 par value: 250,000,000 shares authorized;
	Shares issued at 06/30/07 were 96,203,030
	Shares issued at 06/30/06 were 93,955,663		962		939
	Additional paid-in capital		262,742		224,195
	Retained earnings		484,845		401,849
	Less treasury stock at cost 7,100,967 shares
	at 06/30/07, 2,766,062 shares at 06/30/06		(150,184)		(51,771)
	Total stockholders' equity		598,365		575,212
	Total liabilities and stockholders' equity		$ 999,340		$ 906,067
See notes to consolidated financial statements.

JACK HENRY & ASSOCIATES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(In Thousands, Except Share and Per Share Data)
			YEAR ENDED JUNE 30,
			2007		2006		2005
PREFERRED SHARES:			-		-		-
COMMON SHARES:
	Shares, beginning of year		93,955,663		92,050,778		90,519,856
	Shares issued upon exercise of stock options		2,218,395		1,869,659		1,381,085
	Shares issued for Employee Stock Purchase Plan		28,972		35,226		32,111
	Shares issued in acquisition		-		-		117,726
	Shares, end of year		96,203,030		93,955,663		92,050,778
COMMON STOCK - PAR VALUE $0.01 PER SHARE:
	Balance, beginning of year		$ 939		$ 920		$ 905
	Shares issued upon exercise of stock options		23		19		14
	Shares issued in acquisition		-		-		1
	Balance, end of year		$ 962		$ 939		$ 920
ADDITIONAL PAID-IN CAPITAL:
	Balance, beginning of year		$ 224,195		$ 195,878		$ 175,706
	Shares issued upon exercise of stock options		28,557		19,909		14,250
	Shares issued for Employee Stock Purchase Plan		632		694		780
	Shares issued in acquisition		-		-		2,240
	Tax benefit on exercise of stock options		8,355		7,260		6,858
	Stock-based compensation expense		1,003		454		-
	Cost of treasury shares reissued		-		-		(3,956)
	Balance, end of year		$ 262,742		$ 224,195		$ 195,878
RETAINED EARNINGS:
	Balance, beginning of year		$ 401,849		$ 330,308		$ 271,433
	Net income		104,681		89,924		75,501
	Reissuance of treasury shares		-		-		(1,170)
	Dividends (2007- $0.24 per share;
	2006-$0.20 per share; 2005-$0.17 per share)		(21,685)		(18,383)		(15,456)
	Balance, end of year		$ 484,845		$ 401,849		$ 330,308
TREASURY STOCK:
	Balance, beginning of year		$ (51,771)		$ (9,952)		$ (5,126)
	Purchase of treasury shares		(98,413)		(41,819)		(9,952)
	Reissuance of treasury shares upon
	exercise of stock options		-		-		4,970
	Reissuance of treasury shares for
	Employee Stock Purchase Plan		-		-		156
	Balance, end of year		$ (150,184)		$ (51,771)		$ (9,952)
TOTAL STOCKHOLDERS' EQUITY			$ 598,365		$ 575,212		$ 517,154
See notes to consolidated financial statements.

JACK HENRY & ASSOCIATES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
			YEAR ENDED JUNE 30,
			2007		2006		2005
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income			$ 104,681		$ 89,923		$ 75,501
Adjustments to reconcile net income from operations
	to cash from operating activities:
	Depreciation		36,427		33,442		29,795
	Amortization		14,527		10,332		9,116
	Deferred income taxes		4,239		8,291		5,275
	Expense for stock-based compensation		1,003		454		-
	Loss on property and equipment		167		269		1,058
	Other, net		(15)		-		-
Changes in operating assets and liabilities, net of acquisitions:
	Receivables		(28,853)		30,413		(35,017)
	Prepaid expenses, prepaid cost of product, and other		(2,987)		(18,624)		(7,015)
	Accounts payable		(3,050)		(1,636)		5,160
	Accrued expenses		5,667		3,450		3,303
	Income taxes		17,865		2,563		4,190
	Deferred revenues		24,576		10,561		16,909
	Net cash from operating activities		174,247		169,438		108,275
CASH FLOWS FROM INVESTING ACTIVITIES:
	Payment for acquisitions, net of cash acquired		(39,307)		(20,745)		(119,501)
	Capital expenditures		(34,202)		(45,396)		(58,046)
	Purchase of investments		(3,603)		(4,519)		(4,976)
	Proceeds from sale of property and equipment		25		4,255		170
	Proceeds from investments		4,810		5,037		5,000
	Computer software developed		(20,743)		(16,079)		(7,846)
	Other, net		109		257		137
	Net cash from investing activities		(92,911)		(77,190)		(185,062)
CASH FLOWS FROM FINANCING ACTIVITIES:
	Proceeds from issuance of common stock upon
	exercise of stock options		28,580		19,928		14,264
	Proceeds from sale of common stock, net		632		694		781
	Note payable, net		19,388		5,120		45,000
	Excess tax benefits from stock-based compensation		4,640		4,743		-
	Purchase of treasury stock		(98,413)		(41,819)		(9,952)
	Dividends paid		(21,685)		(18,383)		(15,456)
	Net cash from financing activities		(66,858)		(29,717)		34,637
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS			** $ 14,478**		$ 62,531		$ (42,150)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR			$ 74,139		$ 11,608		$ 53,758
CASH AND CASH EQUIVALENTS, END OF YEAR			$ 88,617		$ 74,139		$ 11,608
See notes to consolidated financial statements.

**JACK HENRY & ASSOCIATES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS **(In Thousands, Except Per Share Amounts)

NOTE 1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

DESCRIPTION OF THE COMPANY

Jack Henry & Associates, Inc. and Subsidiaries ("JHA" or the "Company") is a leading provider of integrated computer systems and services that has developed and acquired a number of banking and credit union software systems. The Company's revenues are predominately earned by marketing those systems to financial institutions nationwide with computer equipment ("hardware"), by providing the conversion and software implementation services for financial institutions to utilize JHA software systems, and by providing other related services. JHA provides continuing support and services to customers using in-house or outsourced systems.

CONSOLIDATION

The consolidated financial statements include the accounts of JHA and all of its subsidiaries, which are wholly-owned, and all significant intercompany accounts and transactions have been eliminated.

STOCK-BASED COMPENSATION

Effective July 1, 2005, the Company adopted Statement of Financial Accounting Standards ("SFAS") No. 123 (R), "Share-Based Payment", ("SFAS 123(R)"), a revision of SFAS 123, "Accounting for Stock-Based Compensation", ("SFAS 123"), using the modified prospective application transition method. SFAS 123(R) requires all share-based payments to employees, including grants of stock options, to be recognized in the consolidated statements of income. The Company will continue to use the Black-Scholes option pricing model used under SFAS 123 for the purposes of determining compensation expense related to options granted. The adoption of SFAS 123(R) did not have a significant impact on our financial position or our results of operations. Prior to the adoption of SFAS 123(R), benefits of tax deductions in excess of recognized compensation costs were reported as operating cash flows. SFAS 123(R) requires excess tax benefits be reported as a financing cash inflow rather than as a reduction of taxes paid. The Company has calculated its additional paid in capital pool ("APIC pool") based on the actual income tax benefits received from exercises of stock options granted after the effective date of SFAS 123 using the long method. The APIC pool is available to absorb any tax deficiencies subsequent to the adoption of SFAS 123(R). At June 30, 2007, the APIC pool was $35,570.

Prior to July 1, 2005, in accordance with Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB 25"), no compensation expense was recorded for stock options. The Company provides below the pro forma net income disclosures required by SFAS No. 123.

		Year Ended June 30,
		2005
Net income, as reported		$ 75,501
Deduct: Total stock-based employee compensation
expense determined under fair value based method
for all awards, net of related tax effects		1,614
Pro forma net income		$ 73,887
Diluted net income per share	As reported	$ 0.81
	Pro forma	$ 0.79
Basic net income per share	As reported	$ 0.83
	Pro forma	$ 0.81

If the Company had adopted SFAS 123(R) for fiscal year 2005, net cash from financing activities would have been increased by $4,084 for the year ended June 30, 2005 and net cash from operating activities would have decreased by $4,084 for the same period.

On June 29, 2005, the Board of Directors approved the immediate vesting of all stock options previously granted under the 1996 Stock Option Plan ("1996 SOP") that had exercise prices higher than the market price on such date. As a result of this action, the vesting of 201,925 options was accelerated by an average of 15 months. No other changes to these options were made. The weighted average exercise price of these accelerated options was $21.15, and exercise prices of the affected options range from $18.64 to $25.00. The accelerated options constituted only 2.1% of the company's outstanding options, at the date of the acceleration. No options held by any directors or executive officers of the Company were accelerated or affected in any manner by this action.

The purpose of accelerating vesting of the options was to enable to Company to reduce the impact of recognizing future compensation expense associated with these options upon adoption of Statement of Financial Accounting Standards No. 123(R), "Share-Based Payment" ("SFAS 123(R)"). The aggregate pre-tax expense for the shares subject to acceleration that, absent the acceleration of vesting, would have been reflected in the Company's consolidated financial statements beginning in fiscal 2006 was estimated to be a total of approximately $802 (approximately $510 in fiscal 2006, approximately $185 in fiscal 2007, approximately $89 in fiscal 2008 and approximately $18 in fiscal 2009). These estimates are not adjusted for any actual or estimated future forfeitures.

The weighted-average fair value of options granted during fiscal 2007, fiscal 2006 and fiscal 2005 was $10.43, $10.13, and $6.97, respectively. The only options granted during fiscal 2007 and fiscal 2006 were to non-employee members of the Company's board of directors. The assumptions used in estimating fair value and resulting compensation expenses are as follows:

		Year Ended June 30,
		2007		2006		2005
Weighted Average Assumptions:
Expected life (years)		7.41		7.65		3.53
Volatility		37%		42%		48%
Risk free interest rate		4.7%		4.4%		3.1%
Dividend yield		0.96%		0.89%		0.88%

The option pricing model assumptions such as expected life, volatility, risk-free interest rate, and dividend yield impact the fair value estimate. These assumptions are subjective and generally require significant analysis and judgment to develop. When estimating fair value, some of the assumptions were based on or determined from external data (for example, the risk-free interest rate) and other assumptions were derived from our historical experience with share-based payment arrangements (e.g., volatility, expected life and dividend yield). The appropriate weight to place on historical experience is a matter of judgment, based on relevant facts and circumstances.

Our pre-tax operating income for the years ended June 30, 2007 and 2006 includes $1,003 and $454 of stock-based compensation costs, respectively.

USE OF ESTIMATES

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

REVENUE RECOGNITION

The Company derives revenue from the following sources: license fees, support and service fees and hardware sales. There are no rights of return, condition of acceptance or price protection in the Company's sales contracts.

License Fee Revenue: For software license agreements that do not require significant modification or customization of the software, the Company recognizes software license revenue when persuasive evidence of an arrangement exists, delivery of the product has occurred, the license fee is fixed and determinable and collection is probable. The Company's software license agreements generally include multiple products and services or "elements." None of these elements are deemed to be essential to the functionality of the other elements. Statement of Position ("SOP") 97-2, "Software Revenue Recognition," as amended, generally requires revenue earned on software arrangements involving multiple elements to be allocated to each element based on vendor-specific objective evidence ("VSOE") of fair value. Fair value is determined for license fees based upon the price charged when sold separately or, if the product is not yet sold separately, the price determined by management with relevant authority. In the event that we determine that VSOE does not exist for one or more of the delivered elements of a software arrangement, but does exist for all of the undelivered elements, revenue is recognized using the residual method allowed by SOP 98-9, "Software Revenue Recognition, with Respect to Certain Transactions". Under the residual method, a residual amount of the total arrangement fee is recognized as revenue for the delivered elements after the established fair value of all undelivered elements has been deducted.

Support and Service Fee Revenue: Implementation services are generally for installation, training, implementation, and configuration. These services are not considered essential to the functionality of the related software. VSOE of fair value is established by pricing used when these services are sold separately or, if the services are not yet sold separately, the price determined by management with relevant authority. Generally revenue is recognized when services are completed. On certain larger implementations, revenue is recognized based on milestones during the implementation. Milestones are triggered by tasks completed or based on direct labor hours.

Maintenance support revenue is recognized pro-rata over the contract period, typically one year. VSOE of fair value is determined based on contract renewal rates.

Outsourced data processing and ATM, debit card, and other transaction processing services revenue is recognized in the month the transactions are processed or the services are rendered.

Hardware Revenue: Hardware revenue is recognized upon delivery to the customer, when title and risk of loss are transferred. In most cases, we do not stock in inventory the hardware products we sell, but arrange for third-party suppliers to drop-ship the products to our customers on our behalf. For these transactions, the Company follows the guidance provided in Emerging Issues Task Force Issue ("EITF") No. 99-19, "Reporting Revenue Gross as a Principal versus Net as an Agent." Based upon the indicators provided within this consensus, the Company records the revenue related to our drop-ship transactions at gross and the related costs are included in cost of hardware. The Company also remarkets maintenance contracts on hardware to our customers. Hardware maintenance revenue is recognized ratably over the agreement period.

PREPAID COST OF PRODUCT

Costs for remarketed hardware and software maintenance contracts, which are prepaid, are recognized ratably over the life of the contract, generally one to five years, with the related revenue amortized from deferred revenues.

DEFERRED REVENUES

Deferred revenues consist primarily of prepaid annual software support fees and prepaid hardware maintenance fees. Hardware maintenance contracts are multi-year; therefore, the deferred revenue and maintenance are classified in accordance with the terms of the contract. Software and hardware deposits received are also reflected as deferred revenues.

COMPUTER SOFTWARE DEVELOPMENT

The Company capitalizes new product development costs incurred from the point at which technological feasibility has been established through the point at which the product is ready for general availability. Software development costs that are capitalized are evaluated on a product-by-product basis annually and are assigned an estimated economic life based on the type of product, market characteristics, and maturity of the market for that particular product. The Company's amortization policy for these capitalized costs is to amortize the costs in accordance with SFAS No. 86, "Accounting for the Costs of Computer Software to be Sold, Leased, or Otherwise Marketed". Generally, these costs are amortized based on current and estimated future revenue from the product or on a straight-line basis, whichever yields greater amortization expense.

CASH EQUIVALENTS

The Company considers all highly liquid investments with maturities of three months or less at the time of acquisition to be cash equivalents.

INVESTMENTS

The Company invests its cash that is not required for current operations primarily in U.S. government securities, money market accounts and certificates of deposit. The Company has the positive intent and ability to hold its debt securities until maturity and accordingly, these securities are classified as held-to-maturity and are carried at historical cost adjusted for amortization of premiums and accretion of discounts. Premiums and discounts are amortized and accreted, respectively, to interest income using the level-yield method over the period to maturity. The held-to-maturity securities typically mature in less than one year. Interest on investments in debt securities is included in income when earned.

The amortized cost of held-to-maturity securities is $989 and $2,181 at June 30, 2007 and 2006, respectively. Fair values of these securities did not differ significantly from amortized cost due to the nature of the securities and minor interest rate fluctuations during the periods.

PROPERTY AND EQUIPMENT AND INTANGIBLE ASSETS

Property and equipment is stated at cost and depreciated principally using the straight-line method over the estimated useful lives of the assets.

Intangible assets consist of goodwill, customer relationships, computer software, and trade names acquired in business acquisitions in addition to internally developed computer software. The amounts are amortized, with the exception of goodwill and trade names, over an estimated economic benefit period, generally five to twenty years, using the straight-line method.

The Company reviews its long-lived assets and identifiable intangible assets with finite lives for impairment whenever events or changes in circumstances have indicated that the carrying amount of its assets might not be recoverable. The Company evaluates goodwill and trade names for impairment of value on an annual basis and between annual tests if events or changes in circumstances indicate that the asset might be impaired.

COMPREHENSIVE INCOME

Comprehensive income for each of the years ended June 30, 2007, 2006 and 2005 equals the Company's net income.

BUSINESS SEGMENT INFORMATION

In accordance with SFAS No. 131, "Disclosure About Segments of an Enterprise and Related Information", the Company's operations are classified as two business segments: bank systems and services and credit union systems and services (see Note 13). Revenue by type of product and service is presented on the face of the consolidated statements of income. Substantially all the Company's revenues are derived from operations and assets located within the United States of America.

COMMON STOCK

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 of 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, 2006, there were 2,766 shares in treasury stock and the Company had the remaining authority to repurchase up to 2,225 shares. On August 25, 2006, the Company's Board of Directors approved a 5,000 share increase to the stock repurchase authorization. During fiscal 2007, the Company repurchased 4,335 treasury shares for $98,413. The total cost of treasury shares at June 30, 2007 is $150,184. At June 30, 2007, there were 7,101 shares in treasury stock and the Company had the authority to repurchase up to 2,890 additional shares.

INCOME PER SHARE

Per share information is based on the weighted average number of common shares outstanding during the year. Stock options have been included in the calculation of income per diluted share to the extent they are dilutive. The difference between basic and diluted weighted average shares outstanding is the dilutive effect of outstanding stock options (see Note 10).

INCOME TAXES

Deferred tax liabilities and assets are recognized for the tax effects of differences between the financial statement and tax bases of assets and liabilities. A valuation allowance would be established to reduce deferred tax assets if it is more likely than not that a deferred tax asset will not be realized.

RECENT ACCOUNTING PRONOUNCEMENTS

In May 2005, the Financial Accounting Standards Board ("FASB") issued Statement on Financial Accounting Standards ("SFAS") No. 154, "Accounting Changes and Error Corrections - a replacement of APB Opinion No. 20 and FASB Statement No.3" ("SFAS 154"). SFAS 154 changes the requirements for the accounting for, and reporting of, a change in accounting principle. SFAS 154 requires that a voluntary change in accounting principle be applied retrospectively with all prior period financial statements presented using the accounting principle. SFAS 154 is effective for accounting changes and corrections of errors in fiscal years beginning after December 15, 2005. The Company adopted SFAS 154 effective July 1, 2006. Since there have been no material accounting changes or errors since that time, the adoption did not have a material impact on the Company's results of operations or financial condition.

In June 2006, the FASB issued FASB Interpretation No. 48, "Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109" ("FIN 48"). FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprise's financial statements and prescribes a recognition threshold and measurement attribute for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. This interpretation also provides related guidance on derecognition, classification, interest and penalties, accounting in interim periods and disclosure. FIN 48 is effective for the Company beginning July 1, 2007. The Company is currently evaluating the impact of this pronouncement.

In September 2006, the Securities and Exchange Commission ("SEC") issued Staff Accounting Bulletin ("SAB") No. 108, "Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements" ("SAB 108"). SAB 108 provides guidance on how prior year misstatements should be considered when quantifying misstatements in current year financial statements for purposes of assessing materiality. SAB 108 requires that a registrant assess the materiality of a current period misstatement by determining how the current period's balance sheet would be affected in correcting a misstatement without considering the year(s) in which the misstatement originated and how the current period's income statement is misstated, including the reversing effect of prior year misstatements. SAB 108 was effective for the Company on June 30, 2007. The cumulative effect of applying SAB 108 may be recorded by adjusting current year beginning balances of the affected assets and liabilities with a corresponding adjustment to the current year opening balance in retained earnings if certain criteria are met. The adoption of this bulletin did not have a material impact on the Company's consolidated financial statements.

In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements" ("SFAS 157"). SFAS 157 defines fair value, establishes a framework for measuring fair value in GAAP and requires enhanced disclosures about fair value measurements. SFAS 157 does not require any new fair value measurements. SFAS 157 is effective for the Company beginning July 1, 2007. The Company is currently evaluating the impact of this pronouncement.

In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities-Including and amendment of FASB Statement No. 115" ("SFAS 159"). SFAS 159 expands the use of fair value accounting but does not affect existing standards which require assets or liabilities to be carried at fair value. Under SFAS 159, a company may elect to use fair value to measure its financial assets and liabilities. If the use of fair value is elected, any upfront costs and fees related to the item must be recognized in earnings and cannot be deferred. The fair value election is irrevocable and generally made on an instrument-by-instrument basis, even if a company has similar instruments that it elects not to measure based on fair value. At the adoption date, unrealized gains and losses on existing items for which fair value has been elected are reported as a cumulative adjustment to retained earnings. Subsequent to the adoption of SFAS 159, changes in fair value are recognized in earnings. SFAS 159 is effective for the Company beginning July 1, 2008. The Company is currently determining whether fair value accounting is appropriate for any of its eligible items and cannot estimate the impact, if any, which SFAS 159 will have on its financial statements.

NOTE 2: FAIR VALUE OF FINANCIAL INSTRUMENTS

Fair values for held-to-maturity securities are based on quoted market prices. For all other financial instruments, including amounts receivable or payable and short-term and long-term borrowings, fair values approximate carrying value, based on the short-term nature of the assets and liabilities and the variability of the interest rates on the borrowings.

NOTE 3: PROPERTY AND EQUIPMENT

The classification of property and equipment, together with their estimated useful lives is as follows:

	June 30,
	2007		2006		Estimated Useful Life
Land	$ 24,421		$ 18,174
Land improvements	19,809		18,163		5-20 years
Buildings	96,722		90,916		25-30 years
Leasehold improvements	20,838		18,985		5-10 years (1)
Equipment and furniture	155,455		150,665		5-8 years
Aircraft and equipment	42,152		41,499		8-10 years
Construction in progress	7,497		12,637
	366,894		351,039
Less accumulated depreciation	117,012		99,407
Property and equipment, net	$ 249,882		$ 251,632
(1) Lesser of lease term or estimated useful life

At June 30, 2007, the Company had no material commitments to purchase property and equipment. At June 30, 2006, the Company had commitments of approximately $3,400 to purchase property and equipment.

NOTE 4: OTHER ASSETS

Changes in the carrying amount of goodwill for the years ended June 30, 2007 and 2006, by reportable segments, are:

		Banking		Credit Union
		Systems		Systems and
		and Services		Services		Total
Balance, as of July 1, 2005		$ 166,617		$ 24,798		$ 191,415
Goodwill acquired during the year		21,123		-		21,123
Balance, as of June 30, 2006		187,740		24,798		212,538
Goodwill acquired during the year		36,325		-		36,325
Balance, as of June 30, 2007		$ 224,065		$ 24,798		$ 248,863

The Banking Systems and Services segment additions for fiscal 2007 relate primarily to the acquisition of Margin Maximizer, Inc. The additions for fiscal 2006 relate to the acquisition of Profitstar, Inc., with additional amounts relating to earn-out payments made on earlier acquisitions. See Note 12-Business Acquisitions for further details.

Information regarding other identifiable intangible assets is as follows:

	June 30,
	2007						2006
	Carrying		Accumulated				Carrying		Accumulated
	Amount		Amortization		Net		Amount		Amortization		Net
Customer relationships	$ 115,369		$ (54,121)		$ 61,248		$ 110,664		$ (47,502)		$ 63,162
Trade names	4,009		-		4,009		4,009		-		4,009
Totals	$ 119,378		$ (54,121)		$ 65,257		$ 114,673		$ (47,502)		$ 67,171

Trade names have been determined to have indefinite lives and are not amortized. Customer relationships have lives ranging from five to 20 years.

Computer software includes the unamortized cost of software products developed or acquired by the Company, which are capitalized and amortized over useful lives ranging from five to ten years.

Following is an analysis of the computer software capitalized:

		Carrying		Accumulated
		Amount		Amortization		Total
Balance, July 1, 2005		$ 37,386		$ (7,898)		$ 29,488
Acquired software		1,872		-		1,872
Disposals		(1,228)		1,228		-
Capitalizated development cost		16,079		-		16,079
Amortization expense		-		(3,599)		(3,599)
Balance, June 30, 2006		54,109		(10,269)		43,840
Acquired software		2,515		-		2,515
Capitalizated development cost		20,743		-		20,743
Amortization expense		-		(7,908)		(7,908)
Balance, June 30, 2007		$ 77,367		$ (18,177)		$ 59,190

Amortization expense for all intangible assets was $14,527, $10,332 and $9,116 for the fiscal years ended June 30, 2007, 2006, and 2005, respectively. The estimated aggregate future amortization expense for each of the next five years for all intangible assets remaining as of June 30, 2007, is as follows:

		Customer
Year		Relationships		Software		Total
2008		6,882		11,189		18,071
2009		6,795		10,729		17,524
2010		6,663		9,627		16,290
2011		6,100		8,907		15,007
2012		5,073		4,720		9,793

NOTE 5: DEBT

The Company obtained a bank credit line on April 28, 2006 which provides for funding of up to $5,000 and bears interest at the prime rate less 1% (7.25% at June 30, 2007). The credit line matures on April 30, 2008. At June 30, 2007, no amount was outstanding.

The Company renewed a credit line on March 7, 2007 which provides for funding of up to $8,000 and bears interest at the prime rate (8.25% at June 30, 2007). The credit line expires March 7, 2008 and is secured by $1,000 of investments. There were no outstanding amounts at June 30, 2007.

An unsecured revolving bank credit facility allows short-term borrowing 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 ½% 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, 2007, the outstanding revolving bank credit facility balance was $70,000. This outstanding balance bears at a weighted average rate of 5.94%

The Company has entered into various capital lease obligations for the use of certain computer equipment totaling $599 and $569 for the years ended June 30, 2007 and 2006, respectively. Those amounts are included in property and equipment and the related depreciation is included in total depreciation expense. At June 30, 2007, $631 was outstanding, of which $503 was included in current maturities. Maturities of capital lease payments by fiscal year are $503 in fiscal 2008, $96 in fiscal 2009 and $32 in fiscal 2010.

The Company paid interest of $1,975, $1,439, and $171 in 2007, 2006, and 2005 respectively. During fiscal 2007, the Company incurred a total of $2,156 of interest, $399 of which was capitalized.

NOTE 6: LEASE COMMITMENTS

The Company leases certain property under operating leases which expire over the next 15 years, but certain of the leases contain options to extend the lease term. All lease payments are based on the lapse of time but include, in some cases, payments for operating expenses and property taxes. There are no purchase options on real estate leases at this time, but most real estate leases have one or more renewal options. Certain leases on real estate are subject to annual escalations for increases in operating expenses and property taxes.

As of June 30, 2007, net future minimum lease payments are as follows:

Years Ending June 30,		Lease Payments
2008			5,528
2009			5,517
2010			3,999
2011			2,487
2012			1,327
Thereafter			2,591
Total			$ 21,449

Rent expense was $5,797, $5,372, and $4,169 in 2007, 2006, and 2005, respectively.

NOTE 7: INCOME TAXES

The provision for income taxes consists of the following:

	Year ended June 30,
	2007		2006		2005
Current:
Federal	$ 45,892		$ 38,385		$ 35,221
State	5,391		3,469		3,846
Deferred:
Federal	4,080		7,831		4,982
State	159		460		293
	$ 55,522		$ 50,145		$ 44,342

The tax effects of temporary differences related to deferred taxes shown on the balance sheets were:

			June 30,
			2007		2006
Deferred tax assets:
Carryforwards (operating losses)			$ -		$ 601
Expense reserves (bad debts, insurance,
franchise tax and vacation)			2,688		2,531
Intangible assets			-		1,070
Other, net			1,087		802
			3,775		5,004
Deferred tax liabilities:
Accelerated tax depreciation			(23,597)		(25,856)
Accelerated tax amortization			(30,208)		(23,412)
			(53,805)		(49,268)
Net deferred tax liability			$(50,030)		$(44,264)

The deferred taxes are classified on the balance sheets as follows:

			June 30,
			2007		2006
Deferred income taxes (current)			$ 3,260		$ 3,165
Deferred income taxes (long-term)			(53,290)		(47,430)
			$ (50,030)		$ (44,265)

The following analysis reconciles the statutory federal income tax rate to the effective income tax rates reflected above:

			Year Ended June 30,
			2007		2006		2005
Computed "expected" tax expense (benefit)			35.0%		35.0%		35.0%
Increase (reduction) in taxes resulting from:
State income taxes,
net of federal income tax benefits			2.3%		2.0%		2.2%
Research and development credit			-2.7%		-1.0%		-1.5%
Permanent book/tax differences			0.0%		-0.5%		0.5%
Other (net)			0.1%		0.3%		0.7%
			34.7%		35.8%		37.0%

The decrease in the effective income tax rate for fiscal 2007 is primarily due to the renewal of the Research and Experimentation Credit retroactive to January 1, 2006, which required the recording of an additional six months of credit during fiscal year 2007 related to fiscal year 2006. This created a significant tax benefit (approximately $3,000 additional benefit over the prior year) for fiscal 2007.

Net operating loss carryforwards of $1,623 (from acquisitions) expire through the year 2024. All of this amount is available for use in the Company's June 30, 2007 federal income tax returns. The Company paid income taxes of $28,887, $34,301, and $34,891 in 2007, 2006, and 2005, respectively.

The Company's federal income tax returns for the years ended June 30, 2006 and 2005 are currently under examination by the Internal Revenue Service ("IRS").

NOTE 8: INDUSTRY AND SUPPLIER CONCENTRATIONS

The Company sells its products to banks, credit unions, and financial institutions throughout the United States and generally does not require collateral. All billings to customers are due net 30 days from date of billing. Reserves (which are insignificant at June 30, 2007 and 2006) are maintained for potential credit losses.

In addition, the Company purchases most of its computer hardware and related maintenance for resale in relation to installation of JHA software systems from two suppliers. There are a limited number of hardware suppliers for these required items. If these relationships were terminated, it could have a significant negative impact on the future operations of the Company.

NOTE 9: STOCK OPTION PLANS

The Company previously issued options to employees under the 1996 Stock Option Plan ("1996 SOP") and currently issues options to outside directors under the 2005 Non-Qualified Stock Option Plan ("2005 NSOP").

**

1996 SOP

**

The 1996 SOP was adopted by the Company on October 29, 1996, for its employees. Terms and vesting periods of the options were determined by the Compensation Committee of the Board of Directors when granted and for options outstanding include vesting periods up to four years. Shares of common stock were reserved for issuance under this plan at the time of each grant, which must be at or above fair market value of the stock at the grant date. The options terminate 30 days after termination of employment, three months after retirement, one year after death or 10 years after the date of grant. In October 2002, the stockholders approved an increase in the number of stock options available from 13.0 million to 18.0 million shares. The plan terminated by its terms on October 29, 2006, although options previously granted under the 1996 SOP are still outstanding.

On June 29, 2005, the Board of Directors approved the immediate vesting of all stock options previously granted under the 1996 SOP that had exercised prices higher than the market price on such date (See Note 1).

**

2005 NSOP

**

The NSOP was adopted by the Company on September 23, 2005, for its outside directors. Generally, options are exercisable beginning six months after grant at an exercise price equal to 100% of the fair market value of the stock at the grant date. For individuals who have served less than four continuous years, 25% of all options will vest after one year of service, 50% shall vest after two years, and 75% shall vest after three years of service on the Board. The options terminate upon surrender of the option, upon the expiration of one year following notification of a deceased optionee, or 10 years after grant. 700 shares of common stock have been reserved for issuance under this plan with a maximum of 100 for each director. As of June 30, 2007, there were 630 shares available for future grants under the plan.

A summary of option plan activity under the plans is as follows:

	Number of Shares		Weighted Average Exercise Price		Aggregate Intrinsic Value
Outstanding June 30, 2004	11,384		$ 13.64
Granted	224		18.56
Forfeited	(155)		19.70
Exercised	(1,687)		8.43
Outstanding June 30, 2005	9,766		14.55
Granted	40		18.47
Forfeited	(236)		21.23
Exercised	(1,870)		10.58
Outstanding June 30, 2006	7,700		15.34
Granted	30		21.79
Forfeited	(123)		21.22
Exercised	(2,218)		12.90
Outstanding June 30, 2007	5,389		$ 16.24		$ 51,951
Vested and Expected to Vest June 30, 2007	** 5,389**		** $ 16.24**		** $ 51,951**
Exercisable June 30, 2007	5,327		$ 16.21		$ 51,518

As of June 30, 2007, there was $216 of total unrecognized compensation costs related to stock options that have not yet vested. These costs are expected to be recognized over a weighted average period of 0.77 years.

For the year ended June 30, 2005, 306 shares and 10 shares were reissued from treasury stock for shares exercised in the employee stock option plan and the employee stock purchase plan (See Note 11), respectively.

Following is an analysis of stock options outstanding and exercisable as of June 30, 2007:

Range of						Weighted-Average Remaining		Weighted-Average
Exercise Prices		Shares				Contractural Life in Years		Exercise Price
		Outstanding		Exercisable		Outstanding		Outstanding		Exercisable
$ 6.03 - $10.13		542		542		1.62		$ 8.72		$ 8.72
$10.14 - $10.75		200		200		1.18		10.75		10.75
$10.76 - $10.84		1,049		1,049		5.77		10.84		10.84
$10.85 - $16.49		130		130		3.71		12.45		12.45
$16.50 - $16.88		1,931		1,931		2.76		16.88		16.88
$16.89 - $21.25		692		642		4.94		19.84		19.98
$21.26 - $27.15		710		698		4.46		24.66		24.71
$27.16 - $29.63		129		129		3.57		28.45		28.45
$29.64 - $30.00		3		3		3.93		30.00		30.00
$30.01 - $31.00		3		3		4.00		31.00		31.00
$ 6.03 - $31.00		5,389		5,327		3.72		$ 16.24		$ 16.21

Cash received from stock option exercises for the year ended June 30, 2007 was $28,580. The income tax benefits from stock option exercises totaled $8,355 for the year ended June 30, 2007.

The total intrinsic value of options exercised was $22,643 and $19,622 for the fiscal years ended June 30, 2007 and 2006, respectively.

**

RESTRICTED STOCK PLAN

**

The Restricted Stock Plan was adopted by the Company on November 1, 2005, for its employees. Up to 3,000 shares of common stock are available for issuance under the plan. Upon issuance, shares of restricted stock are subject to forfeiture and to restrictions which limit the sale or transfer of the shares during the restriction period. As of June 30, 2007, no restricted stock has been issued.

NOTE 10: EARNINGS PER SHARE

The following table reflects the reconciliation between basic and diluted net income per share:

	Year Ended June 30,
	2007						2006							2005
			Weighted		Per				Weighted			Per				Weighted			Per
	Net		Average		Share		Net		Average		Share			Net		Average		Share
	Income		Shares		Amount		Income		Shares		Amount			Income		Shares		Amount
Basic Income Per Share:
Net income available to
common stockholders	$ 104,681		90,155		$ 1.16		$ 89,923		91,484		$ 0.98			$ 75,501		90,891		$ 0.83
Effect of dilutive securities:
Stock options	-		1,877		(0.02)		-		2,303		(0.02)			-		2,107		(0.02)
Diluted Income Per Share:
Net income available to
common stockholders	$ 104,681		92,032		$ 1.14		$ 89,923		93,787		$ 0.96			$ 75,501		92,998		$ 0.81

Stock options to purchase approximately 772 shares for fiscal 2007, 1,505 shares for fiscal 2006, and 1,792 shares for fiscal 2005, were not dilutive and therefore, were not included in the computations of diluted income per common share amounts.

NOTE 11: EMPLOYEE BENEFIT PLANS

The Company established an employee stock purchase plan in 2006. The plan allows the majority of employees the opportunity to directly purchase shares of the Company at a 5% discount. Beginning January 1, 2007, purchase prices for all participants are based on 95% of the closing bid price on or before the 15th day of the month.

The Company has a defined contribution plans for its employees, the 401(k) Retirement Savings Plan (the "Plan"). The plan is subject to the Employee Retirement Income Security Act of 1975 ("ERISA") as amended. Under the Plan, the Company matches 100% of full time employee contributions up to 5% of compensation subject to a maximum of $5 per year. Employees must be 18 years of age and be employed for at least six months. The Company has the option of making a discretionary contribution; however, none has been made for any of the three most recent fiscal years. The total matching contributions for the Plan were $7,148, $6,530, and $5,212 for fiscal 2007, 2006, and 2005, respectively.

The Company also had an Employee Stock Ownership Plan (the "ESOP" Plan), which it terminated as of January 1, 2005. No contribution had been made to the ESOP Plan for any of the three most recent fiscal years.

NOTE 12: BUSINESS ACQUISITIONS

Fiscal 2007 Acquisition:

On November 1, 2006, the Company acquired all of the capital stock of Margin Maximizer Group, Inc., which does business as US Banking Alliance ("USBA"). USBA is a leading provider of loan and deposit pricing software and related consulting services to banks and credit unions. The purchase price for USBA, $34,006 paid in cash, was preliminarily allocated to the assets and liabilities acquired based on then estimated fair values at the acquisition date, resulting in an allocation of $(2,147) to working capital, $69 to property and equipment, $2,515 to capitalized software, $4,705 to customer relationships, and $28,864 to goodwill. The capitalized software and customer relationships have weighted-average useful lives of approximately 5 years. The acquired goodwill has been allocated to the bank systems and services segment. The Company and the former shareholders of Margin Maximizer Group, Inc. jointly made a Section 338(h)(10) election for this acquisition. This election allows treatment of this acquisition as an asset acquisition, which permits the Company to amortize the capitalized software, customer relationships and goodwill for tax purposes. The results of USBA's operations have been included with the Company's from the date of acquisition, November 1, 2006, to the end of the period. The pro forma impact on net income and earnings per share have not been disclosed for the current or comparable prior periods, as the amounts were immaterial to the financial statements taken as a whole.

Fiscal 2006 Acquisition:

On November 1, 2005, the Company acquired all of the capital stock of Profitstar, Inc. ("Profitstar"). Profitstar is a leading provider of asset/liability management, risk management, profitability accounting and financial planning software and related services to banks, credit unions and other financial institutions. The purchase price for Profitstar, $19,317 paid in cash, was allocated to the assets and liabilities acquired based on then estimated fair values at the acquisition date, resulting in an allocation of ($599) to working capital, $1,233 to deferred tax liability, $1,871 to capitalized software, $1,420 to customer relationships, and $19,698 to goodwill. The acquired goodwill has been allocated to the bank segment. On August 15, 2006, the Company and the former shareholders of Profitstar, Inc. jointly made a IRC Section 338(h)(10) election for this acquisition. This election allows treatment of this acquisition as an asset acquisition, which permits the Company to amortize the capitalized software, customer relationships and goodwill for tax purposes. This election increased goodwill by a net of $720 due to the elimination of previously recorded deferred tax liabilities and to additional consideration paid to the former shareholders of Profitstar, Inc.

Fiscal 2005 Acquisitions:

On March 2, 2005, the Company acquired all of the membership interests in Tangent Analytics, LLC, ("Tangent"), a developer of business intelligence software systems. The purchase price for Tangent before any earn-out payments, $4,000 paid in cash, was allocated to the assets and liabilities acquired based on then estimated fair values at the acquisition date, resulting in an allocation of ($140) to working capital, $89 to deferred tax liability, $241 to capitalized software and $4,128 to goodwill. Contingent purchase consideration may be due based upon Tangent's earnings before interest, depreciation, taxes and amortization. In fiscal 2007 and 2006, $3,125 and $958, respectively, was paid to the former members of Tangent as part of this contingent consideration. These amounts were included in goodwill. The acquired goodwill has been allocated to the bank segment and is deductible for federal income tax. Remaining purchase consideration of $917 was paid after June 30, 2007 based upon Tangent's earnings before interest, depreciation, amortization and taxes in full settlement of the purchase agreement.

Effective January 1, 2005, the Company acquired all of the membership interests in RPM Intelligence, LLC, doing business as Stratika ("Stratika"). Stratika provides customer and product profitability solutions for financial institutions. The purchase price for Stratika before any earn-out payments, $6,241 paid in cash, was allocated to the assets and liabilities acquired based on then estimated fair values at the acquisition date, resulting in an allocation of $9 to working capital, $156 to deferred tax liability, $422 to capitalized software and $5,963 to goodwill. Contingent purchase consideration of up to $9,752 may be paid over the next year based upon the net operating income of Stratika. In fiscal 2006, $248 was paid to the former members of Stratika as part of this contingent consideration. This amount was included in goodwill. No amount was paid as part of this contingent consideration during fiscal 2007. The acquired goodwill has been allocated to the bank segment and is deductible for federal income tax.

On December 17, 2004, the Company acquired certain assets of SERSynergy™ ("Synergy"), a division of SER Solutions, Inc. Synergy is a market leader for intelligent document management for financial institutions. The purchase price for Synergy, $34,466 paid in cash, was allocated to the assets and liabilities acquired based on then estimated fair values at the acquisition date, resulting in an allocation of ($3,216) to working capital, $248 to deferred tax liability, $2,541 to capitalized software, $6,145 to customer relationships, and $29,243 to goodwill. The acquired goodwill has been allocated to the bank segment and is deductible for federal income tax.

Effective December 1, 2004, the Company acquired the capital stock of TWS Systems, Inc. and three affiliated corporations (collectively "TWS"). TWS is a leading provider of image-based item processing solutions for credit unions. The purchase price for TWS, $10,885 paid in cash, was allocated to the assets and liabilities acquired, based on then estimated fair values at the acquisition date, resulting in an allocation of ($157) to working capital, 1,759 to deferred tax liability, $2,110 to capitalized software, $2,645 to customer relationships, and $7,569 to goodwill. The acquired goodwill has been allocated to the credit union segment and is non-deductible for federal income tax.

On November 23, 2004, the Company acquired the capital stock of Optinfo, Inc. ("Optinfo"). Optinfo is a leading provider of enterprise exception management software and services. The purchase price for Optinfo, $12,927 paid in cash and $2,240 of vested options to acquire common stock, was allocated to the assets and liabilities acquired based on then estimated fair values at the acquisition date, resulting in an allocation of $705 to working capital, $1,346 to deferred tax asset, $156 to deferred tax liability, $421 to capitalized software, and $12,806 to goodwill. The acquired goodwill has been allocated to the bank segment and is non-deductible for federal income tax.

Effective October 1, 2004, the Company acquired the capital stock of Verinex Technologies, Inc. ("Verinex"). Verinex is a leading developer and integrator of biometric security solutions. The purchase price for Verinex, $35,000 paid in cash, was allocated to the assets and liabilities acquired based on then estimated fair values at the acquisition date, resulting in an allocation of $574 to working capital, $1,729 to deferred tax liability, $464 to capitalized software, $4,208 to customer relationships, and $31,457 to goodwill. The acquired goodwill has been allocated to the bank segment and is non-deductible for federal income tax.

Effective October 1, 2004, the Company acquired Select Payment Processing, Inc. ("SPP") by merger. SPP is a provider of an innovative electronic payment processing solution for financial institutions. The purchase price for SPP, $12,000 paid in cash, was allocated to the assets and liabilities acquired based on then estimated fair values at the acquisition date, resulting in an allocation of $7 to working capital, $938 to deferred tax asset, $1,729 to deferred tax liability, $467 to capitalized software and $10,570 to goodwill. The acquired goodwill has been allocated to the bank segment and is non-deductible for federal income tax.

On September 1, 2004, the Company acquired Banc Insurance Services, Inc. ("BIS") in Massachusetts. BIS is a provider of turnkey outsourced insurance agency solutions for financial institutions. The purchase price for BIS before any earn-out payments, $6,700 paid in cash, was allocated to the assets and liabilities acquired based on then estimated fair values at the acquisition date, resulting in an allocation of $56 to working capital and $6,549 to goodwill. Contingent purchase consideration may be paid over the next three years based upon BIS gross revenues which could result in additional allocations to goodwill of up to $12,931. In fiscal 2007 and 2006, $250 and $219, respectively, was paid to the former owners of BIS as part of this agreement. These amounts were included in goodwill. The acquired goodwill has been allocated to the bank segment and is non-deductible for federal income tax.

The accompanying consolidated statements of income for the fiscal year ended June 30, 2006 and 2005 do not include any revenues and expenses related to these acquisitions prior to the respective closing dates of each acquisition. The following unaudited pro forma consolidated financial information is presented as if these acquisitions had occurred at the beginning of the periods presented. In addition, this unaudited pro forma financial information is provided for illustrative purposes only and should not be relied upon as necessarily being indicative of the historical results that would have been obtained if these acquisitions had actually occurred during those periods, or the results that may be obtained in the future as a result of these acquisitions.

Pro Forma (unaudited)		Year Ended
		June 30,
		2006		2005
Revenue		$596,305		$563,746
Gross profit		259,338		237,458
Net Income		$ 90,398		$ 79,495
Earnings per share - diluted		$ 0.96		$ 0.85
Diluted shares		93,787		92,998
Earnings per share - basic		$ 0.99		$ 0.87
Basic shares		91,484		90,891

NOTE 13: BUSINESS SEGMENT INFORMATION

The Company is a leading provider of integrated computer systems that perform data processing (available for in-house or service bureau 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.

		For the Year Ended June 30, 2007
		Bank		Credit Union		Total
REVENUE
License		$ 60,683		$ 15,720		$ 76,403
Support and service		427,507		75,810		503,317
Hardware		69,266		19,076		88,342
Total		557,456		110,606		668,062
COST OF SALES
Cost of license		4,103		174		4,277
Cost of support and service		257,962		54,176		312,138
Cost of hardware		51,227		14,242		65,469
Total		313,292		68,592		381,884
GROSS PROFIT		$ 244,164		$ 42,014		$ 286,178

		For the Year Ended June 30, 2006
		Bank		Credit Union		Total
REVENUE
License		$ 66,165		$ 17,849		$ 84,014
Support and service		354,210		71,451		425,661
Hardware		62,511		20,019		82,530
Total		482,886		109,319		592,205
COST OF SALES
Cost of license		1,671		1,046		2,717
Cost of support and service		221,300		51,083		272,383
Cost of hardware		45,098		15,560		60,658
Total		268,069		67,689		335,758
GROSS PROFIT		$ 214,817		$ 41,630		$ 256,447

		For the Year Ended June 30, 2005
		Bank		Credit Union		Total
REVENUE
License		$ 53,563		$ 28,811		$ 82,374
Support and service		305,696		58,380		364,076
Hardware		69,436		19,977		89,413
Total		428,695		107,168		535,863
COST OF SALES
Cost of license		2,402		3,145		5,547
Cost of support and service		196,140		47,957		244,097
Cost of hardware		48,361		15,408		63,769
Total		246,903		66,510		313,413
GROSS PROFIT		$ 181,792		$ 40,658		$ 222,450

		For the Year Ended June 30,
		2007		2006		2005
Depreciation expense, net
Bank systems and services		$ 34,219		$ 30,818		$ 27,248
Credit Unions systems and services		2,208		2,624		2,547
Total		$ 36,427		$ 33,442		$ 29,795
Amortization expense, net
Bank systems and services		$ 12,070		$ 8,421		$ 7,356
Credit Unions systems and services		2,457		1,911		1,760
Total		$ 14,527		$ 10,332		$ 9,116
Capital expenditures, net
Bank systems and services		$ 33,510		$ 43,681		$ 49,360
Credit Unions systems and services		692		1,715		8,686
Total		$ 34,202		$ 45,396		$ 58,046

		For the Year Ended June 30,
		2007		2006
Property and equipment, net
Bank systems and services		$ 217,195		$ 217,438
Credit Unions systems and services		32,687		34,194
Total		$ 249,882		$ 251,632
Identified intangible assets, net
Bank systems and services		$ 321,096		$ 271,259
Credit Unions systems and services		52,214		52,290
Total		$ 373,310		$ 323,549

The Company has not disclosed any additional asset information by segment, as the information is not produced internally and its preparation is impracticable.

NOTE 14: SUBSEQUENT EVENTS

On July 10, 2007, the Company announced that it completed its acquisition of all of the capital stock of Gladiator Technology Services, Inc., an Atlanta, Georgia-based provider of technology security services for financial institutions for $17,632 paid in cash.

On August 27, 2007, the Company's Board of Directors declared a quarterly cash dividend of $.065 per share of common stock, payable on September 21, 2007 to shareholders of record on September 7, 2007.

QUARTERLY FINANCIAL INFORMATION (unaudited)
		For the Year Ended June 30, 2007
		Quarter 1		Quarter 2		Quarter 3		Quarter 4		Total
REVENUE
License		$ 15,539		$ 21,173		$ 15,345		$ 24,346		$ 76,403
Support and service		115,577		124,235		130,282		133,223		503,317
Hardware		19,499		21,836		23,276		23,731		88,342
Total		150,615		167,244		168,903		181,300		668,062
COST OF SALES
Cost of license		556		778		863		2,080		4,277
Cost of support and service		73,050		77,501		78,932		82,655		312,138
Cost of hardware		13,702		15,977		17,424		18,366		65,469
Total		87,308		94,256		97,219		103,101		381,884
GROSS PROFIT		63,307		72,988		71,684		78,199		286,178
OPERATING EXPENSES
Selling and marketing		11,966		12,973		12,527		13,579		51,045
Research and development		8,516		8,989		9,004		9,453		35,962
General and administrative		9,906		11,407		9,378		9,926		40,617
Total		30,388		33,369		30,909		32,958		127,624
OPERATING INCOME		32,919		39,619		40,775		45,241		158,554
INTEREST INCOME (EXPENSE)
Interest income		1,556		406		658		786		3,406
Interest expense		(216)		(299)		(439)		(803)		(1,757)
Total		1,340		107		219		(17)		1,649
INCOME BEFORE INCOME TAXES		34,259		39,726		40,994		45,224		160,203
PROVISION FOR INCOME TAXES		12,847		11,938		14,614		16,123		55,522
NET INCOME		$ 21,412		$ 27,788		$ 26,380		$ 29,101		$ 104,681
Diluted net income per share		$ 0.23		$ 0.30		$ 0.29		$ 0.32		$ 1.14
Diluted weighted average shares
Outstanding		92,893		92,246		91,753		91,237		92,032
Basic net income per share		$ 0.24		$ 0.31		$ 0.29		$ 0.33		$ .16
Basic weighted average shares
Outstanding		91,056		90,211		89,893		89,459		90,155

QUARTERLY FINANCIAL INFORMATION (unaudited)
		For the Year Ended June 30, 2006
		Quarter 1		Quarter 2		Quarter 3		Quarter 4		Total
REVENUE
License		$ 16,908		$ 20,836		$ 20,566		$ 25,704		$ 84,014
Support and service		99,401		106,524		106,083		113,653		425,661
Hardware		20,674		20,057		18,846		22,953		82,530
Total		136,983		147,417		145,495		162,310		592,205
COST OF SALES
Cost of license		851		1,061		222		583		2,717
Cost of support and service		64,237		66,356		67,962		73,828		272,383
Cost of hardware		15,340		14,517		13,629		17,172		60,658
Total		80,428		81,934		81,813		91,583		335,758
GROSS PROFIT		56,555		65,483		63,682		70,727		256,447
OPERATING EXPENSES
Selling and marketing		11,440		12,300		12,292		13,975		50,007
Research and development		6,749		8,003		8,435		8,687		31,874
General and administrative		7,805		11,130		8,239		8,035		35,209
Total		25,994		31,433		28,966		30,697		117,090
OPERATING INCOME		30,561		34,050		34,716		40,030		139,357
INTEREST INCOME (EXPENSE)
Interest income		443		425		731		467		2,066
Interest expense		(175)		(132)		(590)		(458)		(1,355)
Total		268		293		141		9		711
INCOME BEFORE INCOME TAXES		** 30,829**		** 34,343**		** 34,857**		** 40,039**		** 140,068**
PROVISION FOR INCOME TAXES		** 11,407**		** 12,707**		** 11,397**		** 14,634**		** 50,145**
NET INCOME		$ 9,422		$ 21,636		$ 23,460		$ 25,405		$ 89,923
Diluted net income per share		$ 0.21		$ 0.23		$ 0.25		$ 0.27		$ 0.96
Diluted weighted average shares
Outstanding		93,998		93,637		94,390		93,124		93,787
Basic net income per share		$ 0.21		$ 0.24		$ 0.26		$ 0.28		$ 0.98
Basic weighted average shares
outstanding		91,562		91,352		91,952		91,068		91,484

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

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None.

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