Item 8. Financial Statements and Supplementary Data

Index to Financial Statements
Report of Independent Registered Public Accounting Firm		38
Management's Annual Report on Internal Control over Financial Reporting		39
Report of Independent Registered Public Accounting Firm		40
Financial Statements
	Consolidated Statements of Income,
	Years Ended June 30, 2010, 2009, and 2008	41
	Consolidated Balance Sheets, June 30, 2010 and 2009	42
	Consolidated Statements of Changes in Stockholders' Equity,
	Years Ended June 30, 2010, 2009, and 2008	43
	Consolidated Statements of Cash Flows,
	Years Ended June 30, 2010, 2009, and 2008	44
	Notes to Consolidated Financial Statements	45

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, 2010 and 2009, and the related consolidated statements of income, stockholders' equity, and cash flows for each of the three years in the period ended June 30, 2010. 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, Inc. and subsidiaries at June 30, 2010 and 2009, and the results of their operations and their cash flows for each of the three years in the period ended June 30, 2010, 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 Company’s internal control over financial reporting as of June 30, 2010, 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, 2010 expressed an unqualified opinion on the Company’s internal control over financial reporting.

DELOITTE & TOUCHE LLP

St. Louis, Missouri

August 27, 2010

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 2010 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, 2010 was effective.

Management’s annual report on internal control over financial reporting excluded iPay Technologies Holding Company, LLC, acquired on June 4, 2010. This acquisition is a wholly-owned subsidiary with total assets representing 21% of consolidated total assets and both revenue and net income representing less than 1% of consolidated revenue and net income, respectively as of and for the year ended June 30, 2010. If adequately disclosed, companies are allowed to exclude acquisitions made near the fiscal year end from their assessment of internal control over financial reporting while integrating the acquired company under guidelines established by the US Securities and Exchange Commission.

The Company’s internal control over financial reporting as of June 30, 2010 has been audited by the Company’s independent registered public accounting firm, as stated in their report appearing on the next page.

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, 2010, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. As described in Management’s Annual Report on Internal Control Over Financial Reporting, management excluded from its assessment the internal control over financial reporting at iPay Technologies Holding Company, LLC, which was acquired on June 4, 2010 and whose financial statements constitute 21% of consolidated total assets and both revenue and net income constitute less than 1% of consolidated revenues and net income, respectively as of and for the year ended June 30, 2010. Accordingly, our audit did not include the internal control over financial reporting at iPay Technologies Holding Company, LLC. 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, 2010, 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, 2010 of the Company and our report dated August 27, 2010 expressed an unqualified opinion on those financial statements.

DELOITTE & TOUCHE LLP

St. Louis, Missouri

August 27, 2010

JACK HENRY & ASSOCIATES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands, Except Per Share Data)
		YEAR ENDED JUNE 30,
		2010		2009		2008
REVENUE
License		$ 52,225		$ 58,434		$ 73,553
Support and service		720,504		614,242		580,334
Hardware		63,857		72,917		89,039
Total		836,586		745,593		742,926
COST OF SALES
Cost of license		5,827		6,885		6,698
Cost of support and service		438,476		385,837		364,140
Cost of hardware		47,163		53,472		64,862
Total		491,466		446,194		435,700
GROSS PROFIT		345,120		299,399		307,226
OPERATING EXPENSES
Selling and marketing		60,875		54,931		55,916
Research and development		50,820		42,901		43,326
General and administrative		51,172		43,681		43,775
Total		162,867		141,513		143,017
OPERATING INCOME		182,253		157,886		164,209
INTEREST INCOME (EXPENSE)
Interest income		161		781		2,145
Interest expense		(1,618)		(1,357)		(1,928)
Total		(1,457)		(576)		217
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES		180,796		157,310		164,426
PROVISION FOR INCOME TAXES		62,926		54,208		59,139
INCOME FROM CONTINUING OPERATIONS		117,870		103,102		105,287
DISCONTINUED OPERATIONS (Note 12)
Loss from operations of discontinued component (including loss on disposal of $2,718 in 2008)		-		-		(4,175)
Income tax benefit		-		-		3,110
Loss on discontinued operations		-		-		(1,065)
NET INCOME		$ 117,870		$ 103,102		$ 104,222
Continuing operations		$ 1.38		$ 1.22		$ 1.17
Discontinued operations		-		-		(0.01)
Diluted net income per share		$ 1.38		$ 1.22		$ 1.16
Diluted weighted average shares outstanding		85,381		84,830		89,702
Continuing operations		$ 1.39		$ 1.23		$ 1.19
Discontinued operations		-		-		(0.01)
Basic net income per share		$ 1.39		$ 1.23		$ 1.18
Basic weighted average shares outstanding		84,558		84,118		88,270
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,
		2010		2009
ASSETS
CURRENT ASSETS:
Cash and cash equivalents		$ 125,518		$ 118,251
Investments, at amortized cost		1,000		1,000
Receivables		208,450		192,733
Income tax receivable		6,940		2,692
Prepaid expenses and other		31,762		24,371
Prepaid cost of product		19,432		19,717
Deferred income taxes		-		882
Total current assets		393,102		359,646
PROPERTY AND EQUIPMENT, net		274,670		237,778
OTHER ASSETS:
Prepaid cost of product		11,093		6,793
Computer software, net of amortization		115,647		82,679
Other non-current assets		25,385		11,955
Customer relationships, net of amortization		196,328		55,450
Trade names		10,815		3,999
Goodwill		537,106		292,400
Total other assets		896,374		453,276
Total assets		$ 1,564,146		$ 1,050,700
LIABILITES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable		$ 13,500		$ 8,206
Accrued expenses		46,187		34,018
Deferred income taxes		13,265		-
Accrued income taxes		3,851		1,165
Note payable and current maturities of long term debt		105,963		63,461
Deferred revenues		264,219		237,557
Total current liabilities		446,985		344,407
LONG TERM LIABILITIES:
Deferred revenues		11,398		7,981
Deferred income taxes		74,589		65,066
Long-term debt, net of current maturities		272,732		-
Other long-term liabilities		8,070		6,740
Total long term liabilities		366,789		79,787
Total liabilities		813,774		424,194
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 06/30/10 were 99,808,367
Shares issued at 06/30/09 were 98,020,796		998		980
Additional paid-in capital		334,817		298,378
Retained earnings		724,142		636,733
Less treasury stock at cost
14,406,635 shares at 06/30/10 and at 06/30/09		(309,585)		(309,585)
Total stockholders' equity		750,372		626,506
Total liabilities and stockholders' equity		$ 1,564,146		$ 1,050,700
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,
		2010		2009		2008
PREFERRED SHARES:		-		-		-
COMMON SHARES:
Shares, beginning of year		98,020,796		97,702,098		96,203,030
Shares issued for equity-based payment arrangements		1,689,457		196,727		1,443,071
Shares issued for Employee Stock Purchase Plan		98,114		121,971		55,997
Shares, end of year		99,808,367		98,020,796		97,702,098
COMMON STOCK - PAR VALUE $0.01 PER SHARE:
Balance, beginning of year		$ 980		$ 977		$ 962
Shares issued for equity-based payment arrangements		17		2		14
Shares issued for Employee Stock Purchase Plan		1		1		1
Balance, end of year		$ 998		$ 980		$ 977
ADDITIONAL PAID-IN CAPITAL:
Balance, beginning of year		$ 298,378		$ 291,120		$ 262,742
Shares issued upon exercise of stock options		26,569		1,882		19,151
Shares issued for Employee Stock Purchase Plan		1,953		1,888		1,228
Tax benefits from share-based compensation		4,666		1,216		6,555
Stock-based compensation expense		3,251		2,272		1,444
Balance, end of year		$ 334,817		$ 298,378		$ 291,120
RETAINED EARNINGS:
Balance, beginning of year		$ 636,733		$ 560,534		$ 484,845
Net income		117,870		103,102		104,222
FASB Interpretation No. 48 transition amount		-		-		(3,850)
Dividends (2010-$0.36 per share;
2009- $0.32 per share; 2008-$0.28 per share)		(30,461)		(26,903)		(24,683)
Balance, end of year		$ 724,142		$ 636,733		$ 560,534
TREASURY STOCK:
Balance, beginning of year		$ (309,585)		$ (251,180)		$ (150,184)
Purchase of treasury shares		-		(58,405)		(100,996)
Balance, end of year		$ (309,585)		$ (309,585)		$ (251,180)
TOTAL STOCKHOLDERS' EQUITY		$ 750,372		$ 626,506		$ 601,451
See notes to consolidated financial statements.

JACK HENRY & ASSOCIATES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
		YEAR ENDED JUNE 30,
		2010		2009		2008
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income		$ 117,870		$ 103,102		$ 104,222
Adjustments to reconcile net income from operations
to cash from operating activities:
Depreciation		36,589		38,859		40,195
Amortization		34,919		25,288		21,811
Deferred income taxes		16,694		7,047		5,320
Expense for stock-based compensation		3,251		2,272		1,444
Loss on assets (including 6/30/08
loss on discontinued operations)		866		938		1,683
Other, net		(2)		(7)		(33)
Changes in operating assets and liabilities, net of acquisitions:
Receivables		(1,539)		21,214		(2,913)
Prepaid expenses, prepaid cost of product, and other		(6,458)		1,969		9,670
Accounts payable		630		1,260		(4,951)
Accrued expenses		741		(2,430)		541
Income taxes		4,362		(14,867)		(1,088)
Deferred revenues		10,775		21,943		5,100
Net cash from operating activities		218,698		206,588		181,001
CASH FLOWS FROM INVESTING ACTIVITIES:
Payment for acquisitions, net of cash acquired		(426,653)		(3,027)		(49,324)
Capital expenditures		(54,509)		(31,562)		(31,105)
Purchase of investments		(3,999)		(2,996)		(1,975)
Proceeds from sale of assets		1,032		42		2,098
Proceeds from investments		4,000		3,000		2,000
Computer software developed		(25,586)		(24,684)		(23,736)
Other, net		-		-		(106)
Net cash from investing activities		(505,715)		(59,227)		(102,148)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock upon
exercise of stock options		31,204		2,720		19,165
Minimum tax withholding payments related to option exercises		(4,635)		(836)		-
Proceeds from sale of common stock, net		1,953		1,889		1,229
Borrowings on credit facilities		448,647		76,692		145,097
Repayments on credit facilities		(145,487)		(90,181)		(145,526)
Debt acquisition costs		(7,598)		-		-
Excess tax benefits from stock-based compensation		661		349		3,809
Purchase of treasury stock		-		(58,405)		(100,996)
Dividends paid		(30,461)		(26,903)		(24,683)
Net cash from financing activities		294,284		(94,675)		(101,905)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		$ 7,267		$ 52,686		$ (23,052)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR		$ 118,251		$ 65,565		$ 88,617
CASH AND CASH EQUIVALENTS, END OF YEAR		$ 125,518		$ 118,251		$ 65,565
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. U.S. GAAP generally require 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. When 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. 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.

Arrangements with customers that include significant customization, modification, or production of software are accounted for under contract accounting, with the revenue being recognized using the percentage-of-completion method.

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 within U.S. GAAP. To the extent hardware revenue is part of such an arrangement 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. 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 U.S. GAAP_._ 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 $1,000 at both June 30, 2010 and 2009. 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 those with an indefinite life (such as goodwill), 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, 2010, 2009, and 2008 equals the Company's net income.

BUSINESS SEGMENT INFORMATION

In accordance with generally accepted accounting principles, 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 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, 2009, there were 14,407 shares in treasury stock and the Company had the remaining authority to repurchase up to 5,584 additional shares. During fiscal 2009, the Company repurchased 3,106 treasury shares for $58,405. The total cost of treasury shares at June 30, 2010 is $309,585. At June 30, 2010, there were 14,407 shares in treasury stock and the Company had the authority to repurchase up to 5,584 additional shares. There were no repurchases of treasury stock in 2010.

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.

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 is measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. Also, interest and penalties expense are recognized on the full amount of deferred benefits for uncertain tax positions. Our policy is to include interest and penalties related to unrecognized tax benefits in income tax expense.

RECENT ACCOUNTING PRONOUNCEMENTS

In December 2007, the Financial Accounting Standards Board (“FASB”) issued Statement on Financial Accounting Standards (“SFAS”) No. 141(R), “Business Combinations,” (“SFAS 141(R)”) which replaces SFAS No. 141 and has since been incorporated into the Accounting Standards Codification (“ASC”) as ASC 805-10. ASC 805-10 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 acquired entity 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. Relative to SFAS 141(R), the FASB issued FSP 141(R)-1 on April 1, 2009, which is now incorporated in ASC 805-20. ASC 805-20 eliminates the requirement under FAS 141(R) to record assets and liabilities at the acquisition date for noncontractual contingencies at fair value where it is deemed “more-likely-than-not” that an asset or liability would result. Under ASC 805-20, such assets and liabilities would only need to be recorded where the fair value can be determined during the measurement period or where it is probable that an asset or liability exists at the acquisition date and the amount of fair value can be reasonably determined. ASC 805-10 was effective for the Company on July 1, 2009. The adoption of ASC 805-10 did not have a material impact on the Company’s financial statements.

In April 2008, the FASB issued FSP FAS 142-3, “Determination of the Useful Life of Intangible Assets,” which is now incorporated into ASC 350-30. This position amends ASC 350 regarding the factors that should be considered in developing the useful lives for intangible assets with renewal or extension provisions. ASC 350-30 requires an entity to consider its own historical experience in renewing or extending similar arrangements, regardless of whether those arrangements have explicit renewal or extension provisions, when determining the useful life of an intangible asset. In the absence of such experience, an entity shall consider the assumptions that market participants would use about renewal or extension, adjusted for entity-specific factors. ASC 350-30 also requires an entity to disclose information regarding the extent to which the expected future cash flows associated with an intangible asset are affected by the entity’s intent and/or ability to renew or extend the agreement. ASC 350-30 is effective for qualifying intangible assets acquired by the Company on or after July 1, 2009. The application of FSP142-3 did not have a material impact on the Company’s financial statements upon adoption.

In June 2009, the FASB issued SFAS No. 168, “The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles, a replacement of FASB Statement No. 162,” which is now incorporated as ASC 105-10 and establishes the FASB Accounting Standards Codification as the source of authoritative accounting principles recognized by the FASB to be applied in the preparation of financial statements in conformity with generally accepted accounting principles (“GAAP”). ASC 105-10 explicitly recognizes rules and interpretive releases of the SEC under federal securities laws as authoritative GAAP for SEC registrants. ASC 105-10 was effective for the Company as of the beginning of fiscal 2010, but it did not have a material impact on the Company’s financial statements.

NOTE 2: FAIR VALUE OF FINANCIAL INSTRUMENTS

Fair values for held-to-maturity securities are based on quoted market prices. For cash equivalents, amounts receivable or payable and short-term borrowings, fair values approximate carrying value, based on the short-term nature of the assets. The fair value of long term debt also approximates carrying value as estimated using discounting cash flows based on the Company’s current incremental borrowing rates or quoted prices in active markets.

NOTE 3: PROPERTY AND EQUIPMENT

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

	June 30,
	2010		2009		Estimated Useful Life
Land	$ 24,911		$ 24,411
Land improvements	19,838		19,845		5-20 years
Buildings	103,744		99,400		25-30 years
Leasehold improvements	21,012		21,946		5-10 years (1)
Equipment and furniture	211,698		194,149		5-8 years
Aircraft and equipment	40,192		40,060		6-10 years
Construction in progress	53,596		16,694
	474,991		416,505
Less accumulated depreciation	200,321		178,727
Property and equipment, net	$ 274,670		$ 237,778
(1) Lesser of lease term or estimated useful life

The Company had material commitments to purchase property and equipment related to the construction of new facilities, totaling $4,153 and $24,382 at June 30, 2010 and 2009, respectively. Property and equipment included $723 and $273 that was in accrued liabilities at June 30, 2010 and 2009, respectively. Also, the Company acquired $8,896 and $6,748 of computer equipment through a capital lease for the years ended June 30, 2010 and 2009, respectively. These amounts were excluded from capital expenditures on the statement of cash flows.

NOTE 4: OTHER ASSETS

Changes in the carrying amount of goodwill for the years ended June 30, 2010 and 2009, by reportable segments, are:

		Banking		Credit Union
		Systems		Systems and
		and Services		Services		Total
Balance, as of July 1, 2008		$ 264,575		$ 24,798		$ 289,373
Goodwill acquired during the year		3,027		-		3,027
Balance, as of June 30, 2009		267,602		24,798		292,400
Goodwill acquired during the year		138,319		106,387		244,706
Balance, as of June 30, 2010		$ 405,921		$ 131,185		$ 537,106

The Banking Systems and Services segment additions for fiscal 2010 relate primarily to the acquisitions of iPay and GFSI. The Credit Union Systems and Services segment additions for fiscal 2010 relate to the acquisitions of iPay and PTSI. The additions for fiscal 2009 relate primarily to the ultimate resolution of contingent consideration amounts for the acquisitions of RPM Intelligence, LLC, and AudioTel Corporation. See Note 13-Business Acquisitions for further details.

Information regarding other identifiable intangible assets is as follows:

	June 30,
	2010						2009
	Carrying		Accumulated				Carrying		Accumulated
	Amount		Amortization		Net		Amount		Amortization		Net
Customer relationships	$ 279,273		$ (82,945)		$ 196,328		$ 126,244		$ (70,794)		$ 55,450
Trade names	10,834		(19)		10,815		3,999		-		3,999
Totals	$ 290,107		$ (82,964)		$ 207,143		$ 130,243		$ (70,794)		$ 59,449

Most of our trade name assets 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, 2008		$ 104,632		$ (29,689)		$ 74,943
Acquired software		-		-		-
Capitalized development cost		24,684		-		24,684
Disposals		(45)		17		(28)
Amortization expense		-		(16,920)		(16,920)
Balance, June 30, 2009		129,271		(46,592)		82,679
Acquired software		30,801		(4,870)		25,931
Capitalized development cost		25,586		-		25,586
Disposals		(783)		16		(767)
Amortization expense		-		(17,782)		(17,782)
Balance, June 30, 2010		$ 184,875		$ (69,228)		$ 115,647

Amortization expense for all intangible assets was $34,919, $25,288, and $21,811 for the fiscal years ended June 30, 2010, 2009, and 2008, respectively. The estimated aggregate future amortization expense for each of the next five years for all intangible assets remaining as of June 30, 2010, is as follows:

		Customer
Year		Relationships		Software		Total
2011		12,326		19,616		31,942
2012		11,299		15,428		26,727
2013		9,935		9,430		19,365
2014		9,935		5,456		15,391
2015		9,180		3,097		12,277

NOTE 5: DEBT

The Company’s outstanding long and short term debt is as follows:

	June 30,
	2010		2009
LONG TERM DEBT
Long term revolving credit facility	$ 120,000		$ -
Term loan	150,000		-
Capital leases	5,689		-
Other borrowings	2,244		-
	277,933		-
Less current maturities	5,201		-
Long-term debt, net of current maturities	$ 272,732		$ -
SHORT TERM DEBT
Short term revolving credit facility	$ -		$ 60,000
Bullet term loan	100,000		-
Current maturities of long-term debt	5,201		-
Other borrowings	762		3,461
	$ 105,963		$ 63,461

The following table summarizes the annual principal payments required as of June 30, 2010:

Years ended June 30,
2011	$ 105,963
2012	24,499
2013	23,020
2014	22,696
2015	202,517
Thereafter	-
	$ 378,695

The Company has entered into a bank credit facility agreement that includes a revolving loan, a term loan and a bullet term loan.

Revolving credit facilities

The long term revolving loan allows for borrowings of up to $150,000, which may be increased by the Company at any time until maturity to $250,000. The revolving loan terminates June 4, 2015. At June 30, 2010, the outstanding revolving loan balance was $120,000.

Term loan

The term loan has an original principal balance of $150,000, with quarterly principal payments of $5,625 beginning on September 30, 2011, and the remaining balance due June 4, 2015.

Bullet term loan

The bullet term loan had an original principal balance of $100,000. The full balance, which would have been due on December 4, 2010, was paid in full on July 8, 2010 as set forth in Note 15.

Each of the above loans bear interest at a variable rate equal to (a) a rate based on LIBOR or (b) an alternate base rate (the greater of (a) the Federal Funds Rate plus 0.5%, (b) the Prime Rate or (c) LIBOR plus 1.0%), plus an applicable percentage in each case determined by the Company's leverage ratio. The outstanding balances bear interest at a weighted average rate of 2.99%. The loans are secured by pledges of capital stock of certain subsidiaries of the Company. The loans are also guaranteed by certain subsidiaries of the Company. The credit facility is subject to various financial covenants that require the Company to maintain certain financial ratios as defined in the agreement. As of June 30, 2010, the Company was in compliance with all such covenants.

Capital leases

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 $8,872. At June 30, 2010, $5,689 was outstanding, of which $4,380 will be maturing in the next twelve months.

Other lines of credit

The Company renewed an unsecured bank credit line on April 29, 2010 which provides for funding of up to $5,000 and bears interest at the prime rate less 1% (2.25% at June 30, 2010). The credit line was renewed through April 29, 2012. At June 30, 2010, $762 was outstanding.

The Company renewed a bank credit line on March 7, 2010 which provides for funding of up to $8,000 and bears interest at the Federal Reserve Board’s prime rate (3.25% at June 30, 2010). The credit line expires March 7, 2011 and is secured by $1,000 of investments. At June 30, 2010, no amount was outstanding.

Interest

The Company paid interest of $759, $1,606, and $2,521 in 2010, 2009, and 2008 respectively. During fiscal 2010, the Company incurred a total of $1,625 of interest, $7 of which was capitalized.

NOTE 6: LEASE COMMITMENTS

The Company leases certain property under operating leases which expire over the next 8 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, 2010, net future minimum lease payments are as follows:

Years Ending June 30,		Lease Payments
2011			$ 8,765
2012			5,362
2013			4,060
2014			3,286
2015			2,565
Thereafter			3,190
Total			$ 27,228

Rent expense was $9,733, $8,314, and $7,895 in 2010, 2009, and 2008, respectively.

NOTE 7: INCOME TAXES

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

	Year ended June 30,
	2010		2009		2008
Current:
Federal	$ 39,994		$ 39,616		$ 48,472
State	6,238		7,527		5,347
Deferred:
Federal	14,327		7,345		4,972
State	2,367		(280)		348
	$ 62,926		$ 54,208		$ 59,139

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

			June 30,
			2010		2009
Deferred tax assets:
Deferred revenue			$ 1,198		$ 577
Expense reserves (bad debts, insurance,
franchise tax and vacation)			6,591		1,834
Net operating loss carryforwards			12,222		401
Other, net			514		2,273
			20,525		5,085
Deferred tax liabilities:
Accelerated tax depreciation			(17,425)		(20,579)
Accelerated tax amortization			(74,341)		(47,995)
Other, net			(16,307)		(418)
			(108,073)		(68,992)
Net deferred tax liability before valuation allowance			(87,548)		(63,907)
Valuation allowance			(306)		(277)
Net deferred tax liability			$(87,854)		$ (64,184)

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

			June 30,
			2010		2009
Deferred income taxes (current)			$(13,265)		$ 882
Deferred income taxes (long-term)			(74,589)		(65,066)
			$(87,854)		$(64,184)

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

			Year Ended June 30,
			2010		2009		2008
Computed "expected" tax expense			35.0%		35.0%		35.0%
Increase (reduction) in taxes resulting from:
State income taxes,
net of federal income tax benefits			2.5%		2.7%		2.3%
Research and development credit			-0.7%		-3.0%		-1.0%
Permanent book/tax differences			-0.9%		-0.4%		-0.3%
Section 199 - prior year benefits			-1.8%		0.0%		0.0%
Deferred tax adjustments			0.7%		0.0%		0.0%
Valuation Allowance			0.0%		0.2%		0.0%
			34.8%		34.5%		36.0%

The effective income tax rate for fiscal 2010 increased from fiscal 2009 due primarily to the expiration of the Research and Experimentation Credit (“R&E Credit”), effective January 1, 2010, as well as increases in the rate at which deferred tax liabilities are expected to reverse in future years. These increases were mostly offset by additional benefits received through an extensive analysis of the Domestic Production Activities Deduction (IRC Section 199).

As a result of the acquisition of GFSI, we recorded a net deferred tax asset of $1,776. A net deferred tax liability of $8,043 was recorded upon the acquisition of iPay.

As part of the acquisition of GFSI, we acquired gross net operating loss (“NOL”) carryforwards of $64,431; of which, only $34,592 are expected to be utilized due to the application of IRC Section 382. Separately, as of June 30, 2010, we had state NOL carryforwards of $838. These losses have varying expiration dates, ranging from 2012 to 2029. Based on state tax rules which restrict our usage of these losses, we believe it is more likely than not that $306 of these losses will expire unutilized. Accordingly, a valuation allowance of $306 has been recorded against these assets as of June 30, 2010.

The Company paid income taxes of $42,116, $62,965, and $51,709 in 2010, 2009, and 2008, respectively.

At June 30, 2009, the Company had $5,518 of unrecognized tax benefits. At June 30, 2010, the Company had $7,187 of unrecognized tax benefits, of which, $4,989, if recognized, would affect our effective tax rate. We had accrued interest and penalties of $890 and $732 related to uncertain tax positions at June 30, 2010 and 2009, respectively.

A reconciliation of the unrecognized tax benefits for the years ended June 30, 2010 and 2009 follows:

						Unrecognized Tax Benefits
Balance at July 1, 2008						$ 4,055
Additions for current year tax positions						1,044
Additions for prior year tax positions						2,052
Reductions for prior year tax positions						(110)
Settlements						(936)
Reductions related to expirations of statute of limitations						(587)
Balance at June 30, 2009						5,518
Additions for current year tax positions						691
Reductions for current year tax positions						(39)
Additions for prior year tax positions						2,049
Reductions for prior year tax positions						(298)
Settlements						-
Reductions related to expirations of statute of limitations						(734)
Balance at June 30, 2010						$ 7,187

During the fiscal year ended June 30, 2010, the Internal Revenue Service commenced an examination of the Company’s U.S. federal income tax returns for fiscal years ended June 2008 through 2009. The U.S. federal and state income tax returns for June 30, 2007 and all subsequent years still remain subject to examination as of June 30, 2010 under statute of limitations rules. We anticipate potential changes resulting from the expiration of statutes of limitations of up to $965 could reduce the unrecognized tax benefits balance within twelve months of June 30, 2010.

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 30 days from date of billing. Reserves (which are insignificant at June 30, 2010, 2009 and 2008) 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, 2010, there were 480 shares available for future grants under the plan.

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

	Number of		Weighted Average		Aggregate
	Shares		Exercise Price		Intrinsic Value
Outstanding July 1, 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
Granted	50		17.45
Forfeited	(19)		20.77
Exercised	(248)		12.28
Outstanding June 30, 2009	3,760		17.75
Granted	50		23.65
Forfeited	(71)		26.64
Exercised	(1,842)		16.70
Outstanding June 30, 2010	1,897		$18.58		$11,712
Vested and Expected to Vest June 30, 2010	1,897		$18.58		$11,712
Exercisable June 30, 2010	1,882		$18.55		$11,678

The weighted-average fair value of options granted during fiscal 2010, fiscal 2009, and fiscal 2008 was $8.90, $7.87, and $11.83, respectively. The only options granted during fiscal years 2010, 2009 and 2008 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,
		2010		2009		2008
Weighted Average Assumptions:
Expected life (years)		6.67		3.72		7.41
Volatility		33%		30%		28%
Risk free interest rate		3.0%		1.4%		4.1%
Dividend yield		1.52%		1.72%		0.98%

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, 2010, 2009 and 2008 includes $3,251, $2,272 and $1,444 of stock-based compensation costs, respectively. The total cost for the years ended June 30, 2010, 2009 and 2008 includes $2,347, $1,620, and $871 relating to the restricted stock plan, respectively.

As of June 30, 2010, there was $42 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 0.51 years. The weighted average remaining contractual term on options currently exercisable as of June 30, 2010 was 2.75 years.

Following is an analysis of stock options outstanding and exercisable as of June 30, 2010:

Range of						Weighted-Average Remaining		Weighted-Average
Exercise Prices		Shares				Contractural Life in Years		Exercise Price
		Outstanding		Exercisable		Outstanding		Outstanding		Exercisable
$10.84 - $11.50		698		698		2.78		$ 10.84		$ 10.84
$11.51 - $18.55		202		197		5.02		17.05		17.04
$18.56 - $21.52		195		195		2.82		19.76		19.76
$21.53 - $22.86		190		190		2.34		21.87		21.87
$22.87 - $25.71		210		205		3.23		24.39		24.41
$25.72 - $27.14		5		5		1.15		25.72		25.72
$27.15 - $27.22		250		250		0.97		27.15		27.15
$27.23 - $29.61		134		129		3.16		28.46		28.45
$29.62 - $29.99		10		10		0.43		29.63		29.63
$30.00 - $30.00		3		3		0.93		30.00		30.00
$10.84 - $30.00		1,897		1,882		2.80		$ 18.58		$ 18.55

The income tax benefits from stock option exercises totaled $4,666 for the year ended June 30, 2010.

The total intrinsic value of options exercised was $12,694, $1,999 and $18,010 for the fiscal years ended June 30, 2010, 2009 and 2008, 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.

The following table summarizes non-vested share awards as of June 30, 2010, as well as activity for the year then ended:

		Shares		Weighted Average Grant Date Fair Value
Non-vested shares at July 1, 2008		130		$ 24.87
Granted		146		19.04
Vested		(9)		25.60
Forfeited		-		-
Non-vested shares at June 30, 2009		267		21.66
Granted		139		22.59
Vested		(19)		22.36
Forfeited		-		-
Non-vested shares at June 30, 2010		387		$ 21.96

The non-vested shares 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, 2010, there was $4,339 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 2.09 years.

NOTE 10: EARNINGS PER SHARE

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

	Year Ended June 30,
	2010		2009		2008
Income from continuing operations	$117,870		$103,102		$105,287
Discontinued Operations	-		-		(1,065)
Net Income	$117,870		$103,102		$104,222
Common share information:
Weighted average shares outstanding for basic EPS	84,558		84,118		88,270
Dilutive effect of stock options	823		712		1,432
Shares for diluted EPS	85,381		84,830		89,702
Basic Earnings per Share:
Income from continuing operations	$ 1.39		$ 1.23		$ 1.19
Discontinued operations	-		-		(0.01)
Basic Earnings per Share	$ 1.39		$ 1.23		$ 1.18
Diluted Earnings per Share:
Income from continuing operations	$ 1.38		$ 1.22		$ 1.17
Discontinued operations	-		-		(0.01)
Diluted Earnings per Share	$ 1.38		$ 1.22		$ 1.16

Stock options to purchase approximately 602 shares for fiscal 2010, 1,267 shares for fiscal 2009, and 536 shares for fiscal 2008, 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, 2010 and 2009 was $345 and $333, respectively.

The Company has a defined contribution plan 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 $9,369, $8,341, and $7,937 for fiscal 2010, 2009, and 2008, 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 a pre-tax loss of $2,718.

In accordance with the provisions of GAAP, 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
Revenue	$ 1,680
Loss before income taxes	(1,457)
Income tax benefit	536
Net loss from discontinued operations	(921)
Less loss on disposal, net of income taxes	(144)
Loss on discontinued operations	$ (1,065)

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

NOTE 13: BUSINESS ACQUISITIONS

Fiscal 2010 Acquisitions:

Goldleaf Financial Solutions, Inc.

On October 1, 2009, the Company acquired all of the issued and outstanding shares of GFSI, a provider of integrated technology and payment processing solutions to financial institutions of all sizes. According to the terms of the merger agreement, each share of GFSI stock issued and outstanding was converted into the right to receive $0.98 in cash, for a total cash outlay of $19,085. The acquisition of GFSI is expected to broaden the Company’s market presence, strengthen our competitive position by diversifying our product and service offerings and provide significant cost synergies to the combined organization. In addition to the cash paid to acquire the outstanding shares of GFSI, the Company also paid $48,532 in cash at closing to settle various outstanding obligations of GFSI, resulting in a total cash outlay of $67,617. This cash outlay was funded using existing operating cash.

The recognized amounts of identifiable assets acquired and liabilities assumed, based upon their fair values as of October 1, 2009 are set forth below:

Current assets (inclusive of cash acquired of $1,319)		$ 12,952
Long-term assets		7,466
Identifiable intangible assets		39,845
Total liabilities assumed		(25,727)
Total identifiable net assets		34,536
Goodwill		33,081
Net assets acquired		$ 67,617

The goodwill of $33,081 arising from the acquisition consists largely of the synergies and economies of scale expected from combining the operations of the Company with those of GFSI, along with the value of GFSI’s assembled workforce. All of the goodwill was assigned to the Banking Systems and Services segment. None of this goodwill is expected to be deductible for income tax purposes.

The fair value of current assets acquired includes trade accounts receivable with a fair value of $8,089. The gross amount receivable is $8,769, of which $680 is expected to be uncollectible. In addition, the Company acquired an investment in direct financing leases, which includes lease payments receivable of $4,210, all of which is assumed to be collectible.

During fiscal 2010, the Company incurred $1,708 in costs related to the acquisition of GFSI. These costs included fees for legal, accounting, valuation and other professional fees. These costs have been included within general and administrative expenses.

The results of GFSI’s operations included in the Company’s consolidated statement of operations from the acquisition date to June 30, 2010 includes revenue of $44,794 and after tax net income of $1,204.

PEMCO Technology Services, Inc.

On October 29, 2009, the Company acquired all of the issued and outstanding shares of PTSI, a leading provider of payment processing solutions primarily for the credit union industry, for $61,841 paid in cash. The cash used for this acquisition was funded using borrowings against available lines of credit.

The acquisition of PTSI is expected to broaden the Company’s product offerings within its electronic payments business as well as expand the Company’s presence in the credit union market beyond its core client base.

The recognized amounts of identifiable assets acquired and liabilities assumed, based upon their fair values as of October 29, 2009 are set forth below:

Current assets (inclusive of cash acquired of $2,275)		$ 9,448
Long-term assets		1,222
Identifiable intangible assets		34,912
Total liabilities assumed		(3,572)
Total identifiable net assets		42,010
Goodwill		19,831
Net assets acquired		$ 61,841

The goodwill of $19,831 arising from this acquisition consists largely of the synergies and economies of scale expected from combining the operations of the Company with those of PTSI, along with the value of PTSI’s assembled workforce. All of the goodwill from this acquisition was assigned to the Credit Union Systems and Services segment. The Company and the former shareholder of PTSI jointly made an Internal Revenue Code 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 goodwill for tax purposes.

The fair value of current assets acquired includes accounts receivable of $4,686, all of which is deemed collectible.

During fiscal 2010, the Company incurred $249 in costs related to the acquisition of PTSI. These costs included fees for legal, accounting, valuation and other professional fees. These costs have been included within general and administrative expenses.

The results of PTSI’s operations included in the Company’s consolidated statement of operations from the acquisition date to June 30, 2010 includes revenue of $33,738 and after tax net income of $3,289.

iPay Technologies Holding Company, LLC

On June 4, 2010, the Company acquired all of the equity interests of iPay, a leading provider of online bill payment solutions for both banks and credit unions, for $301,143 paid in cash. The cash used for this acquisition was funded primarily through borrowings on available lines of credit and certain term notes issued concurrent with the acquisition.

The acquisition of iPay is expected to expand the Company’s presence in the growing electronic payments industry, strengthen the Company’s electronic payments offering, and increase recurring revenue.

The recognized amounts of identifiable assets acquired and liabilities assumed, based upon their fair values as of June 4, 2010 are set forth below:

Current assets (inclusive of cash acquired of $354)		$ 3,692
Long-term assets		6,362
Identifiable intangible assets		116,286
Total liabilities assumed		(17,542)
Total identifiable net assets		108,798
Goodwill		192,345
Net assets acquired		$ 301,143

The amounts shown above may change in the near term as management continues to assess the fair value of acquired assets and liabilities and evaluate the income tax implications of this business combination.

The goodwill of $192,345 arising from this acquisition consists largely of the growth potential, synergies and economies of scale expected from combining the operations of the Company with those of iPay, along with the value of iPay’s assembled workforce. Goodwill from this acquisition has been preliminarily allocated between our Banking Systems and Services and our Credit Union Systems and Services segments based upon the extent to each segment is expected to benefit from the synergies of the combination; however, management has not fully completed its assessment of this allocation as of the date of these financial statements. Approximately 80% of the goodwill is expected to be deductible for income tax purposes.

The fair value of current assets acquired includes accounts receivable of $1,403, all of which is deemed to be collectible.

During fiscal year 2010, the Company incurred $2,280 in costs related to the acquisition of iPay. These costs included fees for legal, accounting, valuation and other professional fees. These costs have been included within general and administrative expenses.

The results of iPay’s operations included in the Company’s consolidated statement of operations from the acquisition date to June 30, 2010 include revenue of $3,526 and after-tax net income of $38.

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. As part of the purchase agreement, $3,000 of consideration was contingent upon the achievement of operating income targets over the two-year period ending on September 30, 2009. During the third quarter of fiscal 2009, the Company and the former shareholders of AudioTel agreed to amend the purchase agreement to fully settle the contingency for $15. The acquired goodwill has been allocated to the banking systems and services segment and is non-deductible for tax purposes.

The accompanying consolidated statements of income for the fiscal years ended June 30, 2010, 2009 and 2008 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,
		2010		2009		2008
Revenue		$910,218		$906,078		$883,730
Gross profit		$387,160		$370,474		$370,655
Income from continuing operations		$124,955		$113,464		$108,448
Earnings per share - continuing operations		$ 1.46		$ 1.34		$ 1.21
Diluted shares		85,381		84,830		89,702
Earnings per share - continuing operations		$ 1.48		$ 1.35		$ 1.23
Basic shares		84,558		84,118		88,270

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, 2010
		Bank		Credit Union		Total
REVENUE
License		$ 38,117		$ 14,108		$ 52,225
Support and service		585,470		135,034		720,504
Hardware		48,695		15,162		63,857
Total		672,282		164,304		836,586
COST OF SALES
Cost of license		4,732		1,095		5,827
Cost of support and service		348,489		89,987		438,476
Cost of hardware		35,961		11,202		47,163
Total		389,182		102,284		491,466
GROSS PROFIT		$283,100		$ 62,020		$ 345,120

		For the Year Ended June 30, 2009
		Bank		Credit Union		Total
REVENUE
License		$ 45,169		$ 13,265		$ 58,434
Support and service		514,748		99,494		614,242
Hardware		57,794		15,123		72,917
Total		617,711		127,882		745,593
COST OF SALES
Cost of license		6,113		772		6,885
Cost of support and service		321,489		64,348		385,837
Cost of hardware		42,297		11,175		53,472
Total		369,899		76,295		446,194
GROSS PROFIT		$247,812		$ 51,587		$ 299,399

		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,
		2010		2009		2008
Depreciation expense, net
Bank systems and services		$ 34,497		$ 36,816		$ 37,970
Credit Unions systems and services		2,092		2,043		2,225
Total		$ 36,589		$ 38,859		$ 40,195
Amortization expense, net
Bank systems and services		$ 27,675		$ 22,779		$ 19,580
Credit Unions systems and services		7,244		2,509		2,231
Total		$ 34,919		$ 25,288		$ 21,811
Capital expenditures
Bank systems and services		$ 51,392		$ 30,752		$ 30,994
Credit Unions systems and services		3,117		810		111
Total		$ 54,509		$ 31,562		$ 31,105

		For the Year Ended June 30,
		2010		2009
Property and equipment, net
Bank systems and services		$ 241,596		$ 208,488
Credit Unions systems and services		33,074		29,290
Total		$ 274,670		$ 237,778
Intangible assets, net
Bank systems and services		$ 613,217		$ 389,252
Credit Unions systems and services		246,679		45,276
Total		$ 859,896		$ 434,528

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

In accordance with SFAS 165, Subsequent Events, the Company has evaluated any significant events occurring from the date of these financial statements through the date they were issued. The effects of any such events upon conditions existing as of the balance sheet date have been reflected within the financial statements to the extent that the effects were material. Any significant events occurring after the balance sheet date that do not relate to conditions existing as of that date are disclosed below.

On July 8, 2010, the Company paid in full its bullet term loan of $100,000, which was due on December 4, 2010.

On August 23, 2010, the Company’s Board of Directors declared a quarterly cash dividend of $0.095 per share of common stock, payable on September 22, 2010 to shareholders of record on September 7, 2010.

QUARTERLY FINANCIAL INFORMATION (unaudited)
		For the Year Ended June 30, 2010
		Quarter 1		Quarter 2		Quarter 3		Quarter 4		Total
REVENUE
License		$ 11,402		$ 12,013		$ 16,391		$ 12,419		$ 52,225
Support and service		155,926		184,143		182,090		198,345		720,504
Hardware		15,003		14,705		17,068		17,081		63,857
Total		182,331		210,861		215,549		227,845		836,586
COST OF SALES
Cost of license		1,120		1,091		1,804		1,812		5,827
Cost of support and service		95,810		110,026		114,667		117,973		438,476
Cost of hardware		11,010		10,664		12,565		12,924		47,163
Total		107,940		121,781		129,036		132,709		491,466
GROSS PROFIT		74,391		89,080		86,513		95,136		345,120
OPERATING EXPENSES
Selling and marketing		12,125		14,866		16,765		17,119		60,875
Research and development		10,148		12,339		14,001		14,332		50,820
General and administrative		10,181		14,512		12,088		14,391		51,172
Total		32,454		41,717		42,854		45,842		162,867
OPERATING INCOME		41,937		47,363		43,659		49,294		182,253
INTEREST INCOME (EXPENSE)
Interest income		41		4		9		107		161
Interest expense		(90)		(143)		(186)		(1,199)		(1,618)
Total		(49)		(139)		(177)		(1,092)		(1,457)
INCOME BEFORE INCOME TAXES		41,888		47,224		43,482		48,202		180,796
PROVISION FOR INCOME TAXES		15,614		17,247		11,847		18,218		62,926
NET INCOME		$ 26,274		$ 29,977		$ 31,635		$ 29,984		$117,870
Diluted net income per share		$ 0.31		$ 0.35		$ 0.37		$ 0.35		$ 1.38
Diluted weighted average shares
outstanding		84,823		85,224		85,480		85,998		85,381
Basic net income per share		$ 0.31		$ 0.36		$ 0.37		$ 0.35		$ 1.39
Basic weighted average shares
outstanding		83,870		84,341		84,694		85,325		84,558

QUARTERLY FINANCIAL INFORMATION (unaudited)
		For the Year Ended June 30, 2009
		Quarter 1		Quarter 2		Quarter 3		Quarter 4		Total
REVENUE
License		$ 13,294		$ 14,860		$ 12,730		$ 17,550		$ 58,434
Support and service		151,947		155,053		151,839		155,403		614,242
Hardware		17,857		20,291		15,839		18,930		72,917
Total		183,098		190,204		180,408		191,883		745,593
COST OF SALES
Cost of license		1,089		2,052		1,436		2,308		6,885
Cost of support and service		96,132		96,502		96,732		96,471		385,837
Cost of hardware		13,348		14,277		12,002		13,845		53,472
Total		110,569		112,831		110,170		112,624		446,194
GROSS PROFIT		72,529		77,373		70,238		79,259		299,399
OPERATING EXPENSES
Selling and marketing		13,932		13,845		12,873		14,281		54,931
Research and development		11,546		10,191		10,694		10,470		42,901
General and administrative		11,459		11,725		9,595		10,902		43,681
Total		36,937		35,761		33,162		35,653		141,513
OPERATING INCOME		35,592		41,612		37,076		43,606		157,886
INTEREST INCOME (EXPENSE)
Interest income		563		146		56		16		781
Interest expense		(427)		(524)		(241)		(165)		(1,357)
Total		136		(378)		(185)		(149)		(576)
INCOME BEFORE INCOME TAXES		35,728		41,234		36,891		43,457		157,310
PROVISION FOR INCOME TAXES		13,219		13,249		12,089		15,651		54,208
NET INCOME		$ 22,509		$ 27,985		$ 24,802		$ 27,806		$103,102
Diluted net income per share		$ 0.26		$ 0.33		$ 0.30		$ 0.33		$ 1.22
Diluted weighted average shares
outstanding		86,622		84,958		83,480		84,261		84,830
Basic net income per share		$ 0.26		$ 0.33		$ 0.30		$ 0.33		$ 1.23
Basic weighted average shares
outstanding		85,744		84,314		82,873		83,541		84,118

Item 9.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosures

None.