Item 8. Financial Statements and Supplementary Data

**

Index to Financial Statements
Report of Independent Registered Public Accounting Firm		39
Management's Annual Report on Internal Control over Financial Reporting		40
Report of Independent Registered Public Accounting Firm		41
Financial Statements
	Consolidated Statements of Income,
	Years Ended June 30, 2008, 2007, and 2006	42
	Consolidated Balance Sheets, June 30, 2008 and 2007	43
	Consolidated Statements of Changes in Stockholders' Equity,
	Years Ended June 30, 2008, 2007, and 2006	44
	Consolidated Statements of Cash Flows,
	Years Ended June 30, 2008, 2007, and 2006	45
	Notes to Consolidated Financial Statements	46

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 balance sheets of Jack Henry & Associates, Inc. and subsidiaries (the "Company") as of June 30, 2008 and 2007, and the related statements of income, stockholders' equity, and cash flows for each of the three years in the period ended June 30, 2008. 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 financial statements present fairly, in all material respects, the financial position of the Company at June 30, 2008 and 2007, and the results of its operations and its cash flows for each of the three years in the period ended June 30, 2008, in conformity with accounting principles generally accepted in the United States of America.

As discussed in Note 12 to the financial statements, the Company discontinued the insurance agency outsourcing component of its operations in June 2008 when it sold Banc Insurance Services, Inc. and Banc Insurance Agency, Inc. on June 30, 2008. The loss on sale and results prior to the sale are included in loss from discontinued operations in the accompanying financial statements.

As discussed in Note 7 to the financial statements, in fiscal 2008 the Company changed its method of accounting for income taxes to conform to FASB Interpretation No. 48, "Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109."

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company's internal control over financial reporting as of June 30, 2008, 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 27, 2008 expressed an unqualified opinion on the Company's internal control over financial reporting.

/s/ DELOITTE & TOUCHE LLP

St. Louis, Missouri

August 27, 2008

**

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 2008 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, 2008 was effective.

The Company's internal control over financial reporting as of June 30, 2008 has been audited by the Company's independent registered public accounting firm, as stated in their report appearing on the next page, which expresses an unqualified opinion on the effectiveness of the Company's internal control over financial reporting as of June 30, 2008.

**

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 internal control over financial reporting of Jack Henry & Associates, Inc. and subsidiaries (the "Company") as of June 30, 2008, 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, included in the accompanying Management's Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on 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, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

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, the Company maintained, in all material respects, effective internal control over financial reporting as of June 30, 2008, based on the criteria established in Internal Control-Integrated Framework issued by the Committee on 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, 2008 of the Company and our report dated August 27, 2008 expressed an unqualified opinion and includes explanatory paragraphs relating to a change in accounting for income taxes and discontinued operations.

/s/ DELOITTE & TOUCHE LLP

St. Louis, Missouri

August 27, 2008

JACK HENRY & ASSOCIATES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands, Except Per Share Data)
			YEAR ENDED JUNE 30,
			2008		2007		2006
REVENUE
	License	$	73,553	$	76,403	$	84,014
	Support and service		580,334		501,722		424,333
	Hardware		89,039		88,342		82,530
	Total		742,926		666,467		590,877
COST OF SALES
	Cost of license		6,698		4,277		2,717
	Cost of support and service		364,140		309,919		270,485
	Cost of hardware		64,862		65,469		60,658
	Total		435,700		379,665		333,860
GROSS PROFIT			307,226		286,802		257,017
OPERATING EXPENSES
	Selling and marketing		55,916		50,195		49,126
	Research and development		43,326		35,962		31,874
	General and administrative		43,775		40,617		35,196
	Total		143,017		126,774		116,196
OPERATING INCOME			164,209		160,028		140,821
INTEREST INCOME (EXPENSE)
	Interest income		2,145		3,406		2,066
	Interest expense		(1,928)		(1,757)		(1,355)
	Total		217		1,649		711
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES			** 164,426**		161,677		141,532
PROVISION FOR INCOME TAXES			59,139		56,033		50,669
INCOME FROM CONTINUING OPERATIONS			105,287		105,644		90,863
DISCONTINUED OPERATIONS (Note 12)
	Loss from operations of discontinued component (including loss on disposal of $2,718)		** (4,175)**		(1,474)		(1,464)
	Income tax benefit		3,110		511		524
	Loss on discontinued operations		(1,065)		(963)		(940)
NET INCOME		$	104,222	$	104,681	$	89,923
Continuing operations		$	1.17	$	1.15	$	0.97
Discontinued operations			(0.01)		(0.01)		(0.01)
Diluted net income per share		$	1.16	$	1.14	$	0.96
Diluted weighted average shares outstanding			89,702		92,032		93,787
Continuing operations		$	1.19	$	1.17	$	0.99
Discontinued operations			(0.01)		(0.01)		(0.01)
Basic net income per share		$	1.18	$	1.16	$	0.98
Basic weighted average shares outstanding			88,270		90,155		91,484
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,
			2008		2007
ASSETS
CURRENT ASSETS:
	Cash and cash equivalents	$	65,565	$	88,617
	Investments, at amortized cost		997		989
	Receivables		213,947		209,242
	Prepaid expenses and other		25,143		24,130
	Prepaid cost of product		19,515		24,147
	Deferred income taxes		4,590		3,260
	Total current assets		329,757		350,385
PROPERTY AND EQUIPMENT, net			239,005		249,882
OTHER ASSETS:
	Prepaid cost of product		9,584		15,009
	Computer software, net of amortization		74,943		59,190
	Other non-current assets		10,564		10,754
	Customer relationships, net of amortization		63,819		61,248
	Trade names		3,999		4,009
	Goodwill		289,373		248,863
	Total other assets		452,282		399,073
	Total assets	$	1,021,044	$	999,340
LIABILITES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
	Accounts payable	$	6,946	$	11,481
	Accrued expenses		35,996		34,920
	Accrued income taxes		15,681		17,882
	Note payable and current maturities of capital leases		70,177		70,503
	Deferred revenues		212,375		195,691
	Total current liabilities		341,175		330,477
LONG TERM LIABILITIES:
	Deferred revenues		11,219		16,865
	Deferred income taxes		61,710		53,290
	Other long-term liabilities, net of current maturities		5,489		343
	Total long term liabilities		78,418		70,498
	Total liabilities		419,593		400,975
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 06/30/08 were 97,702,098
	Shares issued at 06/30/07 were 96,203,030		977		962
	Additional paid-in capital		291,120		262,742
	Retained earnings		560,534		484,845
	Less treasury stock at cost
	11,301,045 shares at 06/30/08, 7,100,967 shares at 06/30/07		(251,180)		(150,184)
	Total stockholders' equity		601,451		598,365
	Total liabilities and stockholders' equity	$	1,021,044	$	999,340
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,
				2008		2007		2006
PREFERRED SHARES:				-		-		-
COMMON SHARES:
	Shares, beginning of year			96,203,030		93,955,663		92,050,778
	Shares issued upon exercise of stock options			1,443,071		2,218,395		1,869,659
	Shares issued for Employee Stock Purchase Plan			55,997		28,972		35,226
	Shares, end of year			97,702,098		96,203,030		93,955,663
COMMON STOCK - PAR VALUE $0.01 PER SHARE:
	Balance, beginning of year		$	962	$	939	$	920
	Shares issued upon exercise of stock options			14		23		19
	Shares issued for Employee Stock Purchase Plan			1		-		-
	Balance, end of year		$	977	$	962	$	939
ADDITIONAL PAID-IN CAPITAL:
	Balance, beginning of year		$	262,742	$	224,195	$	195,878
	Shares issued upon exercise of stock options			19,151		28,557		19,909
	Shares issued for Employee Stock Purchase Plan			1,228		632		694
	Tax benefit on exercise of stock options			6,555		8,355		7,260
	Stock-based compensation expense			1,444		1,003		454
	Balance, end of year		$	291,120	$	262,742	$	224,195
RETAINED EARNINGS:
	Balance, beginning of year		$	484,845	$	401,849	$	330,308
	Net income			104,222		104,681		89,924
	FASB Interpretation No. 48 transition amount			(3,850)		-		-
	Dividends (2008-$0.28 per share;
	2007-$0.24 per share; 2006-$0.20 per share)			(24,683)		(21,685)		(18,383)
	Balance, end of year		$	560,534	$	484,845	$	401,849
TREASURY STOCK:
	Balance, beginning of year		$	(150,184)	$	(51,771)	$	(9,952)
	Purchase of treasury shares			(100,996)		(98,413)		(41,819)
	Balance, end of year		$	(251,180)	$	(150,184)	$	(51,771)
TOTAL STOCKHOLDERS' EQUITY			$	601,451	$	598,365	$	575,212
See notes to consolidated financial statements.

JACK HENRY & ASSOCIATES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
			YEAR ENDED JUNE 30,
			2008				2007				2006
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income		$	104,222		$		104,681		$		89,923
Adjustments to reconcile net income from operations
	to cash from operating activities:
	Depreciation		40,195				36,427				33,442
	Amortization		21,811				14,527				10,332
	Deferred income taxes		5,320				4,239				8,291
	Expense for stock-based compensation		1,444				1,003				454
	Loss on property and equipment (including 6/30/08
	loss on discontinued operations)		1,683				167				269
	Other, net		(33)				(15)				-
Changes in operating assets and liabilities, net of acquisitions:
	Receivables		(2,913)				(28,853)				30,413
	Prepaid expenses, prepaid cost of product, and other		9,670				(2,987)				(18,624)
	Accounts payable		(4,951)				(3,050)				(1,636)
	Accrued expenses		541				5,667				3,450
	Income taxes		(1,088)				17,865				2,563
	Deferred revenues		5,100				24,576				10,561
	Net cash from operating activities		181,001				174,247				169,438
CASH FLOWS FROM INVESTING ACTIVITIES:
	Payment for acquisitions, net of cash acquired		(49,324)				(39,307)				(20,745)
	Capital expenditures		(31,105)				(34,202)				(45,396)
	Purchase of investments		(1,975)				(3,603)				(4,519)
	Proceeds from sale of property and equipment		2,098				25				4,255
	Proceeds from investments		2,000				4,810				5,037
	Computer software developed		(23,736)				(20,743)				(16,079)
	Other, net		(106)				109				257
	Net cash from investing activities		(102,148)				(92,911)				(77,190)
CASH FLOWS FROM FINANCING ACTIVITIES:
	Proceeds from issuance of common stock upon
	exercise of stock options		19,165				28,580				19,928
	Proceeds from sale of common stock, net		1,229				632				694
	Borrowings under lines of credit		145,097				115,595				108,062
	Repayments under lines of credit		(145,526)				(96,207)				(102,942)
	Excess tax benefits from stock-based compensation		3,809				4,640				4,743
	Purchase of treasury stock		(100,996)				(98,413)				(41,819)
	Dividends paid		(24,683)				(21,685)				(18,383)
	Net cash from financing activities		(101,905)				(66,858)				(29,717)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		** $**	** (23,052)**		$		14,478		$		62,531
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR		$	88,617		$		74,139		$		11,608
CASH AND CASH EQUIVALENTS, END OF YEAR		$	65,565		$		88,617		$		74,139
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 together with computer equipment (hardware) and 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.

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. Some of our hardware revenues are derived under "arrangements" as defined by SOP 97-2. To the extent hardware revenue is subject to SOP 97-2 and is not deemed essential to the functionality of any of the other elements to the arrangement, it is recognized based on VSOE of fair value at the time of delivery. 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 and money market accounts. 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 $997 and $989 at June 30, 2008 and 2007, 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 as of January 1 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, 2008, 2007 and 2006 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 14). 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 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, 2007, there were 7,101 shares in treasury stock and the Company had the remaining authority to repurchase up to 2,890 shares. On February 4, 2008, the Company's Board of Directors approved a 5,000 share increase to the stock repurchase authorization. On August 25, 2008, subsequent to the fiscal year 2008 ending, the Company's Board of Directors approved an additional 5,000 share increase to the stock repurchase authorization. During fiscal 2008, the Company repurchased 4,200 shares for $100,996. The total cost of treasury shares at June 30, 2008 is $251,180. At June 30, 2008, there were 11,301 shares in treasury stock and the Company had the authority to repurchase up to 3,690 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.

On July 1, 2007, the Company adopted the provisions of Financial Accounting Standards Board ("FASB") Interpretation No. 48 ("FIN 48") - "Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement No. 109," which provides a financial statement recognition threshold and measurement attribute for a tax position taken or expected to be taken in a tax return. Under FIN 48, the Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based upon the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement.

RECENT ACCOUNTING PRONOUNCEMENTS

In September 2006, the FASB issued Statement on Financial Accounting Standards ("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, 2008. We do not anticipate that the adoption of this Standard will have a material impact on the Company's consolidated financial statements.

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 adoption of this Standard did not have a material impact on the Company's consolidated financial statements.

In December 2007, the FASB issued SFAS No. 141(R), "Business Combinations," ("SFAS 141(R)") which replaces SFAS No. 141. SFAS 141(R) establishes principles and requirements for how an acquirer recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, any non-controlling interest in the acquire and the goodwill acquired. The Statement also establishes disclosure requirements which will enable users of the financial statements to evaluate the nature and financial effects of the business combination. SFAS 141(R) is effective for the Company on July 1, 2009. SFAS 141(R) will have an impact on the Company's accounting for business combinations on a prospective basis once adopted; however, the materiality of that impact cannot be determined.

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,
		2008		2007		Estimated Useful Life
Land	$	24,411	$	24,421
Land improvements		19,826		19,809		5-20 years
Buildings		97,594		96,722		25-30 years
Leasehold improvements		21,995		20,838		5-10 years (1)
Equipment and furniture		179,613		155,455		5-8 years
Aircraft and equipment		38,874		42,152		8-10 years
Construction in progress		4,995		7,497
		387,308		366,894
Less accumulated depreciation		148,303		117,012
Property and equipment, net	$	239,005	$	249,882
1) Lesser of lease term or estimated useful life

The Company had no material commitments to purchase property and equipment at June 30, 2008 or 2007. At June 30, 2008, property and equipment included $455 that was in accrued liabilities. This amount was excluded from capital expenditure on the statement of cash flows.

NOTE 4: OTHER ASSETS

Changes in the carrying amount of goodwill for the years ended June 30, 2008 and 2007, by reportable segments, are:

		Banking		Credit Union
		Systems and		Systems and
		Services		Services		Total
Balance, as of July 1, 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
Goodwill acquired during the year		40,510		-		40,510
Balance, as of June 30, 2008	$	264,575	$	24,798	$	289,373

The Banking Systems and Services segment additions for fiscal 2008 relate primarily to the acquisitions of Gladiator Technology Services, Inc. and AudioTel Corporation. The additions for fiscal 2007 relate to the acquisition of Margin Maximizer, Inc. See Note 13-Business Acquisitions for further details.

Information regarding other identifiable intangible assets is as follows:

		June 30,
		2008						2007
		Carrying		Accumulated				Carrying		Accumulated
		Amount		Amortization		Net		Amount		Amortization		Net
Customer relationships	$	126,245	$	(62,426)	$	63,819	$	115,369	$	(54,121)	$	61,248
Trade names		3,999		-		3,999		4,009		-		4,009
Totals	$	130,244	$	(62,426)	$	67,818	$	119,378	$	(54,121)	$	65,257

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, 2006	$	54,109	$	(10,269)	$	43,840
Acquired software		2,515		-		2,515
Capitalized development cost		20,743		-		20,743
Amortization expense		-		(7,908)		(7,908)
Balance, June 30, 2007		77,367		(18,177)		59,190
Acquired software		5,728		-		5,728
Capitalized development cost		23,736		-		23,736
Disposals		(2,199)		1,993		(206)
Amortization expense		-		(13,505)		(13,505)
Balance, June 30, 2008	$	104,632	$	(29,689)	$	74,943

Amortization expense for all intangible assets was $21,811, $14,527 and $10,332 for the fiscal years ended June 30, 2008, 2007, and 2006, respectively. The estimated aggregate future amortization expense for each of the next five years for all intangible assets remaining as of June 30, 2008, is as follows:

		Customer
Year		Relationships		Software		Total
2009		8,368		14,337		22,705
2010		8,236		13,236		21,472
2011		7,673		12,516		20,189
2012		6,647		8,328		14,975
2013		5,282		2,244		7,526

NOTE 5: DEBT

The Company renewed a 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% (4.00% at June 30, 2008). The credit line matures on April 29, 2010. At June 30, 2008, no amount was outstanding.

The Company renewed a credit line on March 7, 2008 which provides for funding of up to $8,000 and bears interest at the Federal Reserve Board's prime rate (5.00% at June 30, 2008). The credit line expires March 7, 2009 and is secured by $1,000 of investments. There were no outstanding amounts at June 30, 2008.

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, 2008, the outstanding revolving bank credit facility balance was $70,000. This outstanding balance bears interest at a weighted average rate of 3.11%. 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 June 30, 2008, the Company was in compliance with all such 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 $1,169, less accumulated depreciation of $651. At June 30, 2008, $201 was outstanding, of which $177 was included in current maturities. Maturities of capital lease payments by fiscal year are $177 in fiscal 2009 and $24 in fiscal 2010.

The Company paid interest of $2,521, $1,975, and $1,439 in 2008, 2007, and 2006 respectively. During fiscal 2008, the Company incurred a total of $2,306 of interest, $378 of which was capitalized.

NOTE 6: LEASE COMMITMENTS

The Company leases certain property under operating leases which expire over the next 10 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, 2008, net future minimum lease payments are as follows:

	Years Ending June 30,		Lease Payments
	2009			8,389
	2010			6,183
	2011			4,210
	2012			2,548
	2013			2,075
	Thereafter			5,091
	Total		$	28,496

Rent expense was $7,895, $5,797, and $5,372 in 2008, 2007, and 2006, respectively.

NOTE 7: INCOME TAXES

The provision for income taxes from continuing operations consists of the following:

		Year ended June 30,
		2008		2007		2006
Current:
Federal	$	48,472	$	46,369	$	38,880
State		5,347		5,425		3,498
Deferred:
Federal		4,972		4,080		7,831
State		348		159		460
	$	59,139	$	56,033	$	50,669

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

		June 30,
		2008		2007
Deferred tax assets:
Deferred Revenue	$	6,286	$	-
Expense reserves (bad debts, insurance,
franchise tax and vacation)		2,670		2,688
Capital loss carryforward		2,168		-
Other, net		2,580		1,087
		13,704		3,775
Deferred tax liabilities:
Accelerated tax depreciation		(20,105)		(23,597)
Accelerated tax amortization		(45,359)		(30,208)
Other, net		(5,360)		-
		(70,824)		(53,805)
Net deferred tax liability	$	(57,120)	$	(50,030)

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

		June 30,
		2008		2007
Deferred income taxes (current)	$	4,590	$	3,260
Deferred income taxes (long-term)		(61,710)		(53,290)
	$	(57,120)	$	(50,030)

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

		Year Ended June 30,
		2008		2007		2006
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%		2.3%		2.0%
Research and development credit		-1.0%		-2.7%		-1.0%
Permanent book/tax differences		-0.3%		0.0%		-0.5%
Other (net)		0.0%		0.1%		0.3%
		36.0%		34.7%		35.8%

The effective income tax rate for fiscal year 2008 increased from the fiscal year 2007 tax rate due to the renewal of the Research and Experimentation Credit ("R&E Credit"), during fiscal year 2007, retroactive to January 1, 2006. Renewal of this credit had a significant tax benefit in fiscal year 2007 since retroactive renewal required the recording of an additional six months of credit during fiscal year 2007 related to fiscal year 2006. In addition, the R&E Credit expired as of December 31, 2007, which also contributed to the increase in the tax rate for fiscal year 2008.

As of June 30, 2006, the Company had net operating loss carryforwards of $1,623 (from acquisitions). All of that amount was used in the Company's June 30, 2007 federal income tax return. The Company paid income taxes of $51,709, $28,887, and $34,301 in 2008, 2007, and 2006, respectively. As of June 30, 2008, the Company has a capital loss carryforward of $5,858, which expires June 30, 2013.

Effective July 1, 2007, the Company adopted the provisions of FIN 48, which prescribes a comprehensive model for how a company should recognize, measure, present and disclose in its financial statements uncertain tax positions that the company has taken or expects to take on a tax return. Though the validity of any tax position is a matter of tax law, the body of statutory, regulatory and interpretive guidance on the application of the law is complex and often ambiguous. Because of this, whether a tax position will ultimately be sustained may be uncertain. Under FIN 48, the impact of an uncertain tax position that will more likely than not be sustained based on technical merits upon examination by the relevant taxing authority must be recognized at the largest amount that is more likely than not to be sustained. No portion of an uncertain tax position is recognized if the position does not have a more than 50% likelihood of being sustained. Also, under FIN 48, interest and penalties expense are recognized on the full amount of deferred benefits for uncertain tax positions.

Adopting FIN 48 had the following impact on our financial statements: decreased retained earnings by $3,850 and increased long term liabilities by $3,850.

At June 30, 2008, the Company had $4,055 of unrecognized tax benefits, all of which, if recognized, would affect our effective tax rate. Our policy is to include interest and penalties related to unrecognized tax benefits in income tax expense. As of June 30, 2008, we had accrued interest and penalties of $738 related to uncertain tax positions.

A reconciliation of the unrecognized tax benefits for the year ended June 30, 2008 follows:

		Unrecognized Tax Benefits
Balance at July 1, 2007	$	5,838
Additions for current year tax positions		671
Additions for prior year tax positions		-
Reductions for prior year tax positions		(2,131)
Settlements		-
Reductions related to expirations of statute of limitations		(323)
Balance at June 30, 2008	$	4,055

During the fiscal year ended June 30, 2008, the Internal Revenue Service concluded its examination of the Company's U.S. federal income tax returns for fiscal years ended June 2005 through 2006. However, the U.S. federal and state income tax returns for these two fiscal years and all subsequent fiscal years still remain subject to examination as of June 30, 2008 under statute of limitations rules. We anticipate potential changes of up to $500 could reduce the unrecognized tax benefits balance within twelve months of June 30, 2008.

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, 2008 and 2007) 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 BASED COMPENSATION 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 and vested.

**

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, 2008, there were 580 shares available for future grants under the plan.

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

			Weighted
	Number of		Average		Aggregate
	Shares		Exercise Price		Intrinsic Value
Outstanding July 1, 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
Granted	50		28.52
Forfeited	(8)		24.64
Exercised	(1,454)		13.38
Outstanding June 30, 2008	3,977		$17.42		$20,101
Vested and Expected to Vest June 30, 2008	3,977		$17.42		$20,101
Exercisable June 30, 2008	3,938		$17.36		$20,054

The weighted-average fair value of options granted during fiscal 2008, fiscal 2007 and fiscal 2006 was $11.83, $10.43, and $10.13, respectively. The only options granted during fiscal years 2008, 2007 and 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,
		2008		2007		2006
Weighted Average Assumptions:
Expected life (years)		7.41		7.41		7.65
Volatility		28%		37%		42%
Risk free interest rate		4.1%		4.7%		4.4%
Dividend yield		0.98%		0.96%		0.89%

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, 2008, 2007 and 2006 includes $1,444, $1,003 and $454 of stock-based compensation costs, respectively. The total cost for the year ended June 30, 2008 includes $871 relating to the restricted stock plan. There was no such cost for 2007 or 2006.

As of June 30, 2008, there was $109 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 0.89 years. The weighted average remaining contractual term on options currently exercisable as of June 30, 2008 was 3.14 years.

Following is an analysis of stock options outstanding and exercisable as of June 30, 2008:

Range of						Weighted-Average Remaining		Weighted-Average
Exercise Prices		Shares				Contractural Life in Years		Exercise Price
		Outstanding		Exercisable		Outstanding		Outstanding		Exercisable
$ 8.77 - $10.13		130		130		0.89		$ 9.22		$ 9.22
$10.14 - $10.84		913		913		4.78		10.84		10.84
$10.85 - $16.49		66		66		3.61		12.74		12.74
$16.50 - $16.88		1,472		1,471		1.76		16.88		16.88
$16.89 - $21.25		552		539		4.12		19.79		19.83
$21.26 - $25.65		407		402		3.78		23.33		23.35
$25.66 - $28.63		400		380		3.67		27.56		27.50
$28.64 - $29.23		24		24		2.75		28.94		28.94
$29.24 - $29.63		10		10		2.43		29.63		29.63
$29.64 - $30.00		3		3		2.93		30.00		30.00
$ 6.03 - $31.00		3,977		3,938		3.19		$ 17.42		$ 17.36

Cash received from stock option exercises for the year ended June 30, 2008 was $19,165. The income tax benefits from stock option exercises totaled $6,555 for the year ended June 30, 2008.

The total intrinsic value of options exercised was $18,010, $22,643 and $19,622 for the fiscal years ended June 30, 2008, 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. The restrictions will be lifted over periods ranging from three to seven years from grant date. On certain awards, the restrictions may be lifted sooner if certain targets for shareholder return are met. As of June 30, 2008, 133 shares of restricted stock have been issued, however, none of these shares have vested.

The following table summarizes non-vested share awards as of June 30, 2008, as well as activity for the year then ended:

		** Shares**		Weighted Average Grant Date Fair Value
Non-vested shares at July 1, 2007		-		$	-
Granted		133			24.86
Vested		-			-
Forfeited		(3)			24.50
Non-vested shares at June 30, 2008		130		$	24.87

The non-vested shares will be non-voting and will not participate in dividends during the restriction period. As a result, the weighted-average fair value of the non-vested share awards is based on the fair market value of the Company's equity shares on the grant date, less the present value of the expected future dividends to be declared during the restriction period.

At June 30, 2008, there was $2,429 of compensation expense that has yet to be recognized related to non-vested restricted stock share awards, which will be recognized over a weighted-average period of 2.87 years.

NOTE 10: EARNINGS PER SHARE

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

			Year Ended June 30,
			2008		2007		2006
Income from continuing operations		$	105,287	$	105,644	$	90,863
Discontinued Operations			(1,065)		(963)		(940)
	Net Income	$	104,222	$	104,681	$	89,923
Common share information:
	Weighted average shares outstanding for basic EPS		** 88,270**		90,155		91,484
	Dilutive effect of stock options		1,432		1,877		2,303
Shares for diluted EPS			89,702		92,032		93,787
Basic Earnings per Share:
	Income from continuing operations	$	1.19	$	1.17	$	0.99
	Discontinued operations		(0.01)		(0.01)		(0.01)
Basic Earnings per Share		$	1.18	$	1.16	$	0.98
Diluted Earnings per Share:
	Income from continuing operations	$	1.17	$	1.15	$	0.97
	Discontinued operations		(0.01)		(0.01)		(0.01)
Diluted Earnings per Share		$	1.16	$	1.14	$	0.96

Stock options to purchase approximately 536 shares for fiscal 2008, 772 shares for fiscal 2007, and 1,505 shares for fiscal 2006, 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 originally allowed the majority of employees the opportunity to directly purchase shares of the Company at a 5% discount. On October 30, 2007, the shareholders approved an amendment to the plan that increased the discount to 15% beginning January 1, 2008. With this amendment, the plan no longer met the criteria as a non-compensatory plan. As a result, beginning January 1, 2008, the Company began recording the total dollar value of the stock discount given to employees under the plan as expense. Total expense recorded by the Company under the plan for the year ended June 30, 2008 was $125.

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 $7,937, $7,148, and $6,530 for fiscal 2008, 2007, and 2006, respectively.

NOTE 12: DISCONTINUED OPERATIONS

On June 30, 2008, the Company sold its insurance agency outsourcing business, Banc Insurance Services, Inc. ("BIS") and Banc Insurance Agency, Inc. ("BIA"), to the division's management team and a private equity group for a nominal amount. The transaction resulted in an pre-tax loss of $2,718.

In accordance with the provisions of SFAS No. 144, "Accounting for the Impairment or Disposal of Long-lived Assets," the results of operations of this business for the current and prior periods have been reported as discontinued operations. The divesture of this business was made as a result of poorer than expected operating results.

The insurance agency outsourcing business provided turnkey outsourced insurance agency solutions for financial institutions. Operations of the business, which were formerly included in the Bank Systems and Services segment, are summarized as follows:

		Year Ended June 30,
		2008		2007		2006
Revenue	$	1,680	$	1,595	$	1,328
Loss before income taxes		(1,457)		(1,474)		(1,464)
Income tax benefit		536		511		524
Net loss from discontinued operations		(921)		(963)		(940)
Less loss on disposal, net of income taxes		(144)		-		-
Loss on discontinued operations	$	(1,065)	$	(963)	$	(940)

Assets and liabilities of the insurance agency outsourcing business before disposal, were as follows:

		June 30, 2008
Cash	$	656
Accounts receivable		688
Other assets		90
Property and equipment, net		1,007
Total assets		2,441
Accounts payable and other		194
Total liabilities	$	194

In connection with the sale, the Company accrued $471 lease loss, net of estimated subleases.

NOTE 13: BUSINESS ACQUISITIONS

Fiscal 2008 Acquisitions:

On July 1, 2007, the Company acquired all of the capital stock of Gladiator Technology Services, Inc. ("Gladiator"). Gladiator is a provider of technology security services for financial institutions. The purchase price for Gladiator, $17,425 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 $(729) to working capital, $799 to property and equipment, $4,859 to customer relationships, and $12,496 to goodwill. The acquired goodwill has been allocated to the banking systems and services segment. The Company and the former shareholders of Gladiator jointly made an 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 customer relationships and goodwill for tax purposes.

On October 1, 2007, the Company acquired all of the capital stock of AudioTel Corporation ("AudioTel"). AudioTel is a provider of remittance, merchant capture, check imaging, document imaging and management, and telephone and internet banking solutions. The purchase price for AudioTel, $32,092 paid in cash, was preliminarily allocated to the assets and liabilities acquired based upon then-estimated fair values at the acquisition date, resulting in an allocation of $(2,634) to working capital, $528 to property and equipment, $6,017 to customer relationships, $5,728 to capitalized software, $(4,346) to deferred taxes, and $26,799 to goodwill. The acquired goodwill has been allocated to the banking systems and services segment and is non-deductible for tax purposes. Contingent purchase consideration of up to $3,000 may be due based on AudioTel's operating income over the two-year period ending September 30, 2009. This additional purchase price, if any, will be payable on or before November 15, 2009.

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 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.

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 was due based upon Tangent's earnings before interest, depreciation, taxes and amortization. In fiscal 2008, 2007 and 2006, $917, $3,125 and $958, respectively, was paid to the former members of Tangent based upon Tangent's earnings before interest, depreciation, amortization and taxes in full settlement 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.

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.

The accompanying consolidated statements of income for the fiscal year ended June 30, 2008, 2007 and 2006 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,
		2008		2007		2006
Revenue	$	746,041	$	685,647	$	616,537
Gross profit	$	308,565	$	298,488	$	273,688
Income from continuing operations	$	105,373	$	107,296	$	94,041
Earnings per share - continuing operations	$	1.17	$	1.17	$	1.00
Diluted shares		89,702		92,032		93,787
Earnings per share - continuing operations	$	1.19	$	1.19	$	1.03
Basic shares		88,270		90,155		91,484

NOTE 14: 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. The following amounts have been adjusted to exclude discontinued operations (See Note 12):

			For the Year Ended June 30, 2008
			Bank		Credit Union		Total
REVENUE
	License	$	52,528	$	21,025	$	73,553
	Support and service		495,687		84,647		580,334
	Hardware		68,175		20,864		89,039
	Total		616,390		126,536		742,926
COST OF SALES
	Cost of license		5,376		1,322		6,698
	Cost of support and service		305,640		58,500		364,140
	Cost of hardware		49,504		15,358		64,862
	Total		360,520		75,180		435,700
GROSS PROFIT		$	255,870	$	51,356	$	307,226

			For the Year Ended June 30, 2007
			Bank		Credit Union		Total
REVENUE
	License	$	60,683	$	15,720	$	76,403
	Support and service		425,912		75,810		501,722
	Hardware		69,266		19,076		88,342
	Total		555,861		110,606		666,467
COST OF SALES
	Cost of license		4,103		174		4,277
	Cost of support and service		255,743		54,176		309,919
	Cost of hardware		51,227		14,242		65,469
	Total		311,073		68,592		379,665
GROSS PROFIT		$	244,788	$	42,014	$	286,802

			For the Year Ended June 30, 2006
			Bank		Credit Union		Total
REVENUE
	License	$	66,165	$	17,849	$	84,014
	Support and service		352,882		71,451		424,333
	Hardware		62,511		20,019		82,530
	Total		481,558		109,319		590,877
COST OF SALES
	Cost of license		1,671		1,046		2,717
	Cost of support and service		219,402		51,083		270,485
	Cost of hardware		45,098		15,560		60,658
	Total		266,171		67,689		333,860
GROSS PROFIT		$	215,387	$	41,630	$	257,017

		For the Year Ended June 30,
		2008		2007		2006
Depreciation expense, net
Bank systems and services	$	37,970	$	34,219	$	30,818
Credit Unions systems and services		2,225		2,208		2,624
Total	$	40,195	$	36,427	$	33,442
Amortization expense, net
Bank systems and services	$	19,580	$	12,070	$	8,421
Credit Unions systems and services		2,231		2,457		1,911
Total	$	21,811	$	14,527	$	10,332
Capital expenditures, net
Bank systems and services	$	30,994	$	33,510	$	43,681
Credit Unions systems and services		111		692		1,715
Total	$	31,105	$	34,202	$	45,396

			For the Year Ended June 30,
			2008		2007
Property and equipment, net
Bank systems and services		$	208,288	$	217,195
Credit Unions systems and services			30,717		32,687
Total		$	239,005	$	249,882
Identified intangible assets, net
Bank systems and services		$	385,671	$	321,096
Credit Unions systems and services			46,463		52,214
Total		$	432,134	$	373,310

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

NOTE 15: SUBSEQUENT EVENTS

On August 25, 2008, the Company's Board of Directors declared a quarterly cash dividend of $.075 per share of common stock, payable on September 19, 2008 to shareholders of record on September 5, 2008. Also, on August 25, 2008, the Company's Board of Directors increased its stock repurchase authorization by 5.0 million shares bringing the total authorized repurchase since 2001 to 20.0 million shares.

QUARTERLY FINANCIAL INFORMATION (unaudited)
			For the Year Ended June 30, 2008
			Quarter 1		Quarter 2		Quarter 3		Quarter 4		Total
REVENUE
	License	$	13,522	$	23,294	$	18,441	$	18,296	$	73,553
	Support and service		137,912		144,979		148,772		148,671		580,334
	Hardware		23,442		23,596		20,267		21,734		89,039
	Total		174,876		191,869		187,480		188,701		742,926
COST OF SALES
	Cost of license		770		1,770		1,739		2,419		6,698
	Cost of support and service		87,206		88,781		93,871		94,282		364,140
	Cost of hardware		17,298		16,352		14,875		16,337		64,862
	Total		105,274		106,903		110,485		113,038		435,700
GROSS PROFIT			69,602		84,966		76,995		75,663		307,226
OPERATING EXPENSES
	Selling and marketing		13,680		13,803		13,597		14,836		55,916
	Research and development		9,959		11,404		11,340		10,623		43,326
	General and administrative		9,808		13,463		9,514		10,990		43,775
	Total		33,447		38,670		34,451		36,449		143,017
OPERATING INCOME			36,155		46,296		42,544		39,214		164,209
INTEREST INCOME (EXPENSE)
	Interest income		1,349		339		267		190		2,145
	Interest expense		(83)		(104)		(583)		(1,158)		(1,928)
	Total		1,266		235		(316)		(968)		217
** INCOME FROM CONTINUING OPERATIONS **
BEFORE INCOME TAXES			37,421		46,531		42,228		38,246		164,426
PROVISION FOR INCOME TAXES			13,658		17,101		15,430		12,950		59,139
INCOME FROM CONTINUING OPERATIONS			** 23,763**		** 29,430**		** 26,798**		** 25,296**		** 105,287**
DISCONTINUED OPERATIONS
	Loss from operations of discontinued operations		(352)		(440)		(293)		(3,090)		(4,175)
	Income tax benefit		128		161		107		2,714		3,110
	Loss on discontinued operations		(224)		(279)		(186)		(376)		(1,065)
NET INCOME		$	23,539	$	29,151	$	26,612	$	24,920	$	104,222
Continuing operations		$	0.26	$	0.32	$	0.30	$	0.29	$	1.17
Discontinued operations			(0.00)		(0.00)		(0.00)		(0.00)		(0.01)
Diluted net income per share		$	0.26	$	0.32	$	0.30	$	0.28	$	1.16
Diluted weighted average shares
	outstanding		90,833		90,922		88,907		88,145		89,702
Continuing operations *		$	0.27	$	0.33	$	0.31	$	0.29	$	1.19
Discontinued operations *			(0.00)		(0.00)		(0.00)		(0.00)		(0.01)
Basic net income per share		$	0.26	$	0.33	$	0.30	$	0.29	$	1.18
Basic weighted average shares
	outstanding		89,168		89,393		87,615		86,902		88,270
*	Amounts may not add due to rounding

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		115,206		123,874		129,842		132,800		501,722
	Hardware		19,499		21,836		23,276		23,731		88,342
	Total		150,244		166,883		168,463		180,877		666,467
COST OF SALES
	Cost of license		556		772		869		2,080		4,277
	Cost of support and service		72,575		76,942		78,388		82,014		309,919
	Cost of hardware		13,702		15,977		17,424		18,366		65,469
	Total		86,833		93,691		96,681		102,460		379,665
GROSS PROFIT			63,411		73,192		71,782		78,417		286,802
OPERATING EXPENSES
	Selling and marketing		11,768		12,822		12,294		13,311		50,195
	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		30,190		33,218		30,676		32,690		126,774
OPERATING INCOME			33,221		39,974		41,106		45,727		160,028
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 FROM CONTINUING OPERATIONS **
BEFORE INCOME TAXES			34,561		40,081		41,325		45,710		161,677
PROVISION FOR INCOME TAXES			12,960		12,045		14,732		16,296		56,033
INCOME FROM CONTINUING OPERATIONS			** 21,601**		** 28,036**		** 26,593**		** 29,414**		** 105,644**
DISCONTINUED OPERATIONS
	Loss from operations of discontinued operations		(302)		(355)		(331)		(486)		(1,474)
	Income tax benefit		113		107		118		173		511
	Loss on discontinued operations		(189)		(248)		(213)		(313)		(963)
NET INCOME		$	21,412	$	27,788	$	26,380	$	29,101	$	104,681
Continuing operations		$	0.23	$	0.30	$	0.29	$	0.32	$	1.15
Discontinued operations			(0.00)		(0.00)		(0.00)		(0.00)		(0.01)
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
Continuing operations		$	0.24	$	0.31	$	0.30	$	0.33	$	1.17
Discontinued operations			(0.00)		(0.00)		(0.00)		(0.00)		(0.01)
Basic net income per share		$	0.24	$	0.31	$	0.29	$	0.33	$	1.16
Basic weighted average shares
Outstanding			91,056		90,211		89,893		89,459		90,155

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

None.

**