Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Index to Financial Statements

	Report of Independent Registered Public Accounting Firm		32
	Management's Annual Report on Internal Control over Financial Reporting		33
	Report of Independent Registered Public Accounting Firm		34
	Financial Statements
		Consolidated Statements of Income,
		Years Ended June 30, 2012, 2011, and 2010	35
		Consolidated Balance Sheets,
		June 30, 2012 and 2011	36
		Consolidated Statements of Changes in Stockholders' Equity,
		Years Ended June 30, 2012, 2011, and 2010	37
		Consolidated Statements of Cash Flows,
		Years Ended June 30, 2012, 2011 and 2010	38
		Notes to Consolidated Financial Statements	39

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, 2012 and 2011, and the related consolidated statements of income, changes in stockholders' equity, and cash flows for each of the three years in the period ended June 30, 2012. 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 as of June 30, 2012 and 2011, and the results of their operations and their cash flows for each of the three years in the period June 30, 2012, 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, 2012, 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, 2012 expressed an unqualified opinion on the Company’s internal control over financial reporting.

/s/ DELOITTE & TOUCHE LLP

Kansas City, Missouri

August 27, 2012

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 2012 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, 2012 was effective.

The Company’s internal control over financial reporting as of June 30, 2012 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, 2012, 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, 2012, based on the criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements as of and for the year ended June 30, 2012 of the Company and our report dated August 27, 2012 expressed an unqualified opinion on those financial statements.

/s/ DELOITTE & TOUCHE LLP

Kansas City, Missouri

August 27, 2012

JACK HENRY & ASSOCIATES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands, Except Per Share Data)
	Year Ended June 30,
	2012				2011				2010
REVENUE
License	$	54,811			$	53,067			$	52,225
Support and service	909,176				852,253				720,504
Hardware	63,122				61,577				63,857
Total revenue	1,027,109				966,897				836,586
COST OF SALES
Cost of license	6,111				6,285				5,827
Cost of support and service	551,285				515,917				438,476
Cost of hardware	45,983				45,361				47,163
Total cost of sales	603,379				567,563				491,466
GROSS PROFIT	423,730				399,334				345,120
OPERATING EXPENSES
Selling and marketing	76,500				68,061				60,875
Research and development	60,876				63,395				50,820
General and administrative	50,119				51,561				51,172
Total operating expenses	187,495				183,017				162,867
OPERATING INCOME	236,235				216,317				182,253
INTEREST INCOME (EXPENSE)
Interest income	1,176				125				161
Interest expense	(5,743		)		(8,930		)		(1,618		)
Total interest income (expense)	(4,567		)		(8,805		)		(1,457		)
INCOME BEFORE INCOME TAXES	231,668				207,512				180,796
PROVISION FOR INCOME TAXES	76,684				70,041				62,926
NET INCOME	$	154,984			$	137,471			$	117,870
Diluted earnings per share	$	1.78			$	1.59			$	1.38
Diluted weighted average shares outstanding	87,287				86,687				85,381
Basic earnings per share	$	1.79			$	1.60			$	1.39
Basic weighted average shares outstanding	86,599				85,948				84,558
Cash dividends paid per share	$	0.440			$	0.400			$	0.360

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, 2012				June 30, 2011
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	157,313			$	63,125
Investments, at amortized cost	—				1,000
Receivables, net	218,305				207,510
Income tax receivable	8,476				17,116
Prepaid expenses and other	61,261				45,938
Prepaid cost of product	23,294				19,261
Total current assets	468,649				353,950
PROPERTY AND EQUIPMENT, net	276,730				270,186
OTHER ASSETS:
Non-current prepaid cost of product	21,344				19,083
Computer software, net of amortization	115,785				110,836
Other non-current assets	30,523				28,492
Customer relationships, net of amortization	162,561				179,133
Trade names, net of amortization	10,380				10,597
Goodwill	533,520				533,520
Total other assets	874,113				881,661
Total assets	$	1,619,492			$	1,505,797
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable	$	16,317			$	12,829
Accrued expenses	58,260				49,479
Deferred income tax liability	26,256				15,274
Notes payable and current maturities of long term debt	25,503				26,092
Deferred revenues	275,907				276,837
Total current liabilities	402,243				380,511
LONG TERM LIABILITIES:
Non-current deferred revenues	20,093				18,267
Non-current deferred income tax liability	100,932				89,304
Debt, net of current maturities	106,166				127,939
Other long-term liabilities	7,002				10,000
Total long term liabilities	234,193				245,510
Total liabilities	636,436				626,021
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 06/30/12 were 101,482,461 Shares issued at 06/30/11 were 100,766,173	1,015				1,008
Additional paid-in capital	381,919				361,131
Retained earnings	944,078				827,222
Less treasury stock at cost 15,452,064 shares at 06/30/12, 14,406,635 shares at 06/30/11	(343,956		)		(309,585		)
Total stockholders' equity	983,056				879,776
Total liabilities and equity	$	1,619,492			$	1,505,797

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,
	2012				2011				2010
PREFERRED SHARES:	—				—				—
COMMON SHARES:
Shares, beginning of year	100,766,173				99,808,367				98,020,796
Shares issued for equity-based payment arrangements	594,428				857,348				1,689,457
Shares issued for Employee Stock Purchase Plan	121,860				100,458				98,114
Shares, end of year	101,482,461				100,766,173				99,808,367
COMMON STOCK - PAR VALUE $0.01 PER SHARE:
Balance, beginning of year	$	1,008			$	998			$	980
Shares issued for equity-based payment arrangements	6				9				17
Shares issued for Employee Stock Purchase Plan	1				1				1
Balance, end of year	$	1,015			$	1,008			$	998
ADDITIONAL PAID-IN CAPITAL:
Balance, beginning of year	$	361,131			$	334,817			$	298,378
Shares issued upon exercise of stock options	6,886				16,837				26,569
Shares issued for Employee Stock Purchase Plan	3,321				2,456				1,953
Tax benefits from share-based compensation	3,631				2,298				4,666
Stock-based compensation expense	6,950				4,723				3,251
Balance, end of year	$	381,919			$	361,131			$	334,817
RETAINED EARNINGS:
Balance, beginning of year	$	827,222			$	724,142			$	636,733
Net income	154,984				137,471				117,870
Dividends	(38,128		)		(34,391		)		(30,461		)
Balance, end of year	$	944,078			$	827,222			$	724,142
TREASURY STOCK:
Balance, beginning of year	$	(309,585	)		$	(309,585	)		$	(309,585	)
Purchase of treasury shares	(34,371		)		—				—
Balance, end of year	$	(343,956	)		$	(309,585	)		$	(309,585	)
TOTAL STOCKHOLDERS' EQUITY	$	983,056			$	879,776			$	750,372

See notes to consolidated financial statements.

JACK HENRY & ASSOCIATES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
	Year Ended
	June 30,
	2012				2011				2010
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income	$	154,984			$	137,471			$	117,870
Adjustments to reconcile net income to net cash from operating activities:
Depreciation	45,322				41,912				36,589
Amortization	49,297				48,602				34,919
Change in deferred income taxes	22,610				20,526				16,694
Expense for stock-based compensation	6,950				4,723				3,251
(Gain)/loss on disposal of assets	1,198				1,025				864
Changes in operating assets and liabilities:
Change in receivables	(10,795		)		940				(1,539		)
Change in prepaid expenses, prepaid cost of product and other	(22,962		)		(24,543		)		(6,458		)
Change in accounts payable	3,488				(671		)		630
Change in accrued expenses	7,770				1,593				741
Change in income taxes	5,792				(10,933		)		4,362
Change in deferred revenues	896				19,487				10,775
Net cash from operating activities	264,550				240,132				218,698
CASH FLOWS FROM INVESTING ACTIVITIES:
Payment for acquisitions, net of cash acquired	—				—				(426,653		)
Capital expenditures	(41,441		)		(32,085		)		(54,509		)
Proceeds from sale of assets	2,772				—				1,032
Customer contracts acquired	(720		)		—				—
Computer software developed	(37,873		)		(26,954		)		(25,586		)
Proceeds from investments	3,000				4,000				4,000
Purchase of investments	(2,000		)		(3,999		)		(3,999		)
Net cash from investing activities	(76,262		)		(59,038		)		(505,715		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings on credit facilities	—				399				448,647
Repayments on credit facilities	(35,280		)		(229,854		)		(145,487		)
Purchase of treasury stock	(34,371		)		—				—
Dividends paid	(38,128		)		(34,391		)		(30,461		)
Debt acquisition costs	—				—				(7,598		)
Excess tax benefits from stock-based compensation	3,465				1,056				661
Proceeds from issuance of common stock upon exercise of stock options	11,004				19,375				31,204
Minimum tax withholding payments related to share based compensation	(4,112		)		(2,529		)		(4,635		)
Proceeds from sale of common stock, net	3,322				2,457				1,953
Net cash from financing activities	(94,100		)		(243,487		)		294,284
NET CHANGE IN CASH AND CASH EQUIVALENTS	$	94,188			$	(62,393	)		$	7,267
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	$	63,125			$	125,518			$	118,251
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	157,313			$	63,125			$	125,518

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 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 also 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 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. Accounting principles generally accepted in the Unites States of America (“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. 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. 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. 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 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.

Revenue-based taxes collected from customers and remitted to governmental authorities are presented on a net basis (i.e. excluded from revenues).

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. 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.

There were no held-to-maturity securities at June 30, 2012. At June 30, 2011, the amortized cost of held-to-maturity securities was $1,000. 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 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.

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 other indefinite-lived intangible assets 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, 2012, 2011, and 2010 equals the Company's net income.

REPORTABLE SEGMENT INFORMATION

In accordance with U.S. GAAP, the Company's operations are classified as two reportable segments: bank systems and services and credit union systems and services (see Note 13). Revenue by type of product and service is presented

on the face of the consolidated statements of income. Substantially all the Company’s revenues are derived from operations and assets located within the United States of America.

COMMON STOCK

The Board of Directors has authorized the Company to repurchase shares of its common stock. Under this authorization, the Company may finance its share repurchases with available cash reserves or short-term borrowings on its existing credit facilities. The share repurchase program does not include specific price targets or timetables and may be suspended at any time. At June 30, 2012, there were 15,452 shares in treasury stock and the Company had the remaining authority to repurchase up to 4,539 additional shares. The total cost of treasury shares at June 30, 2012 is $343,956. During fiscal 2012, the Company repurchased 1,045 treasury shares for $34,371. At June 30, 2011, there were 14,407 shares in treasury stock and the Company has the authority to repurchase up to 5,584 additional shares. There were no repurchases of treasury stock in fiscal 2011.

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

The Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2011-04, Fair Value Measurement in May 31, 2011, which became effective for the Company on January 1, 2012. The updated explanatory guidance on measuring fair value did not have a significant impact on our fair value calculations and no additional fair value measurements were required as a result of the update.

The FASB also issued ASU No. 2011-05, Comprehensive Income in June 2011, which is effective for the Company beginning July 1, 2012 and will be applied retrospectively. The updated guidance requires non-owner changes in stockholders' equity to be reported either in a single continuous statement of comprehensive income or in two separate but consecutive statements, rather than as part of the statement of changes in stockholders' equity. No changes in disclosure are anticipated as a result of the update.

In September 2011, the FASB issued ASU No. 2011-08, Testing Goodwill for Impairment, which is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011, although early adoption is permitted. The amendments in the update permit an entity to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test. The provisions in this update will be effective for the Company beginning July 1, 2012.

In July 2012, the FASB issued ASU No. 2012-02, Intangibles - Goodwill and Other. The amendments in the update permit an entity to first assess qualitative factors to determine whether it is more likely than not that the fair value of an indefinite-lived intangible asset is impaired as a basis for determining whether it is necessary to perform the quantitative impairment test. The provisions in this update will be effective for the Company beginning July 1, 2013.

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 and liabilities. The fair value of long term debt also approximates carrying value as estimated using discounted cash flows based on the Company’s current incremental borrowing rates or quoted prices in active markets.

The Company's estimates of the fair value for financial assets and financial liabilities are based on the framework established in the fair value accounting guidance. The framework is based on the inputs used in valuation, gives the highest priority to quoted prices in active markets, and requires that observable inputs be used in the valuations when available. The three levels of the hierarchy are as follows:

Level 1: observable inputs such as quoted prices in active markets

Level 2: inputs other than the quoted prices in active markets that are observable either directly or indirectly

Level 3: unobservable inputs in which there is little or no market data, which requires the Company to develop its own assumptions

Fair value of financial assets, included in cash and cash equivalents, is as follows:

		Estimated Fair Value Measurements
		Quoted Prices				Significant				Significant
		in Active				Observable				Unobservable
		Markets				Other Inputs				Inputs				Total Fair
		(Level 1)				(Level 2)				(Level 3)				Value
June 30, 2012
Financial Assets:
Money market funds		$	116,013			$	—			$	—			$	116,013
June 30, 2011
Financial Assets:
Money market funds		$	24,695			$	—			$	—			$	24,695

NOTE 3. PROPERTY AND EQUIPMENT

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

	June 30,
	2012				2011				Estimated Useful Life
Land	$	25,011			$	25,011
Land improvements	25,954				25,882				5		-	20		years
Buildings	141,733				137,580				20		-	30		years
Leasehold improvements	22,185				24,440				5		-	20		years (1)
Equipment and furniture	262,497				230,346				5		-	8		years
Aircraft and equipment	35,029				41,605				6		-	12		years
Construction in progress	5,750				8,972
	518,159				493,836
Less accumulated depreciation	241,429				223,650
Property and equipment, net	$	276,730			$	270,186

(1) Lesser of lease term or estimated useful life

The Company had no material commitments to purchase property and equipment related to the construction of new facilities at June 30, 2012, compared to $1,622 at June 30, 2011. Property and equipment included $457 and $332 that was in accrued liabilities at June 30, 2012 and 2011, respectively. Also, the Company acquired $13,488 and $6,020 of computer equipment through capital leases for the years ended June 30, 2012 and 2011, respectively. These amounts were excluded from capital expenditures on the statement of cash flows.

NOTE 4. OTHER ASSETS

Goodwill

The carrying amount of goodwill for the years ended June 30, 2012 and 2011, by reportable segments, are $403,949 for Banking Systems and Services and $129,571 for Credit Union Systems and Services, totaling $533,520. There

were no changes in the carrying amount of goodwill in either of the periods presented.

Trade names & Customer relationships

Information regarding other identifiable intangible assets is as follows:

	June 30,
	2012				2011
Customer relationships	$	275,005			$	278,617
Less accumulated amortization	(112,444		)		(99,484		)
Customer relationships, net	$	162,561			$	179,133
Trade names	$	11,064			$	11,064
Less accumulated amortization	(684		)		(467		)
Trade names, net	$	10,380			$	10,597
Computer software	$	246,707			$	209,458
Less accumulated amortization	(130,922		)		(98,622		)
Computer software, net	$	115,785			$	110,836

Most of our trade name assets have been determined to have indefinite lives and are not amortized. Customer relationships have lives ranging from 5 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 5 to 10 years. Amortization expense for computer software totaled $32,807, $31,189, and $17,782 for the fiscal years ended June 30, 2012, 2011, and 2010, respectively. There were no material impairments in any of the fiscal years presented.

Amortization expense for all intangible assets was $49,297, $48,602, and $34,919 for the fiscal years ended June 30, 2012, 2011, and 2010, respectively. The estimated aggregate future amortization expense for each of the next five years for all intangible assets remaining as of June 30, 2012, is as follows:

Years Ending June 30,	Software				Customer Relationships				Total
2013	$	29,822			$	14,522			$	44,344
2014	25,490				14,522				40,012
2015	19,656				14,082				33,738
2016	12,805				13,565				26,370
2017	3,975				13,363				17,338

NOTE 5. DEBT

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

	June 30,				June 30,
	2012				2011
LONG TERM DEBT
Term loan	$	127,500			$	150,000
Capital leases	3,518				—
Other borrowings	445				1,015
	131,463				151,015
Less current maturities	25,297				23,076
Debt, net of current maturities	$	106,166			$	127,939

SHORT TERM DEBT
Capital leases	$	206			$	3,016
Current maturities of long-term debt	25,297				23,076
Notes payable and current maturities of long term debt	$	25,503			$	26,092

The following table summarizes the annual principal payments required as of June 30, 2012:

Years ended June 30,
2013	$	25,503
2014	23,666
2015	22,500
2016	60,000
2017	—
Thereafter	—
	$	131,669

The Company has a bank credit facility agreement that includes a revolving credit facility and a term loan.

Revolving credit facility

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, 2012, there was no outstanding revolving loan balance.

Term loan

The term loan had an original principal balance of $150,000, with quarterly principal payments of $5,625 that began on September 30, 2011. The remaining outstanding balance on June 4, 2015 is due and payable on that date. At June 30, 2012, the outstanding balance of $127,500 was bearing interest at a rate of 2.47%, and $22,500 will be maturing within the next twelve months.

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 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, 2012, 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. Long term capital lease obligations were entered into of which $3,518 remains outstanding at June 30, 2012 of which $2,352 will be maturing within the next twelve months. The Company also has short term capital lease obligations totaling $206 at June 30, 2012. Included in property and equipment are assets under capital leases totaling $13,760, which have accumulated depreciation totaling $2,133.

Other lines of credit

The Company renewed an unsecured bank credit line on April 29, 2012 which provides for funding of up to $5,000 and bears interest at the prime rate less 1% (2.25% at June 30, 2012). The credit line was renewed through April 29, 2014. At June 30, 2012, no amount was outstanding.

Interest

The Company paid interest of $3,899, $8,000, and $759 in 2012, 2011, and 2010 respectively.

NOTE 6. LEASE COMMITMENTS

The Company leases certain property under operating leases which expire over the next 6 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, 2012, net future minimum lease payments are as follows:

Years Ending June 30,	Lease Payments
2013	$	6,852
2014	5,347
2015	4,350
2016	3,306
2017	2,121
Thereafter	1,450
Total	$	23,426

Rent expense was $8,410, $8,985, and $9,733 in 2012, 2011, and 2010 respectively.

NOTE 7. INCOME TAXES

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

	Year ended June 30,
	2012				2011				2010
Current:
Federal	$	48,053			$	43,334			$	39,994
State	6,022				6,180				6,238
Deferred:
Federal	20,649				18,276				14,327
State	1,960				2,251				2,367
	$	76,684			$	70,041			$	62,926

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

	June 30,
	2012				2011
Deferred tax assets:
Deferred revenue	$	8,575			$	5,372
Expense reserves (bad debts, insurance, franchise tax and vacation)	9,349				8,086
Net operating loss carryforwards	9,454				11,097
Other, net	1,410				1,122
	28,788				25,677
Deferred tax liabilities:
Accelerated tax depreciation	(34,636		)		(29,971		)
Accelerated tax amortization	(91,379		)		(81,265		)
Prepaid expenses	(23,331		)		(18,713		)
Other, net	(6,280		)		—
	(155,626		)		(129,949		)
Net deferred tax liability before valuation allowance	(126,838		)		(104,272		)
Valuation allowance	(350		)		(306		)
Net deferred tax liability	$	(127,188	)		$	(104,578	)

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

	2012				2011
Deferred income taxes (current)	$	(26,256	)		$	(15,274	)
Deferred income taxes (long-term)	(100,932		)		(89,304		)
	$	(127,188	)		$	(104,578	)

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

	Year Ended June 30,
	2012			2011			2010
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	2.2	%		2.6	%		2.5	%
Research and development credit	(1.8	)%		(2.0	)%		(0.7	)%
Domestic production activities deduction	(2.1	)%		(2.5	)%		(3.0	)%
Other (net)	(0.2	)%		0.7	%		1.0	%
	33.1	%		33.8	%		34.8	%

An adjustment was made during fiscal 2011 to reflect a $3,802 reduction to the net deferred tax liability assumed upon the acquisition of iPay in fiscal 2010. Further details are provided in Note 12.

As of June 30, 2012, we have $20,006 of net operating loss (“NOL”) carryforwards pertaining to the acquisition of GFSI, which are expected to be utilized after the application of IRC Section 382. Separately, as of June 30, 2012, we had state NOL carryforwards of $3,432. The federal and state losses have varying expiration dates, ranging from 2013 to 2030. Based on state tax rules which restrict our utilization of these losses, we believe it is more likely than not that $350 of these losses will expire unutilized. Accordingly, a valuation allowance of $350 and $306 has been recorded against these assets as of June 30, 2012 and 2011, respectively.

The Company paid income taxes of $44,962, $60,515, and $42,116 in 2012, 2011, and 2010 respectively.

At June 30, 2011, the Company had $8,897 of unrecognized tax benefits. At June 30, 2012, the Company had $6,202 of gross unrecognized tax benefits, $4,754 of which, if recognized, would affect our effective tax rate. We had accrued interest and penalties of $711 and $1,030 related to uncertain tax positions at June 30, 2012 and 2011, respectively.

A reconciliation of the unrecognized tax benefits for the years ended June 30, 2012 and 2011 follows:

	Unrecognized Tax Benefits
Balance at July 1, 2010	$	7,187
Additions for current year tax positions	1,338
Reductions for current year tax positions	—
Additions for prior year tax positions	599
Reductions for prior year tax positions	—
Settlements	—
Reductions related to expirations of statute of limitations	(227		)
Balance at June 30, 2011	8,897
Additions for current year tax positions	1,673
Reductions for current year tax positions	—
Additions for prior year tax positions	8
Reductions for prior year tax positions	(2,904		)
Settlements	(1,454		)
Reductions related to expirations of statute of limitations	(18		)
Balance at June 30, 2012	$	6,202

During the fiscal year ended June 30, 2012, the Internal Revenue Service initiated an examination of the Company’s U.S. federal income tax returns for the fiscal years ended June 30, 2010 and 2011. This audit is expected to be completed late in fiscal 2013 or early fiscal 2014. At this time, it is anticipated that the examination will not result in a material change to the Company’s financial statements. During the fiscal year ended June 30, 2010, the IRS

commenced an examination of the Company's income tax returns for the fiscal years ended June 30, 2008 and 2009. The exam was completed in fiscal 2012 and did not result in a material change to the financial condition of the Company. The U.S. federal and state income tax returns for June 30, 2009 and all subsequent years remain subject to examination as of June 30, 2012 under statute of limitations rules. We anticipate potential changes could reduce the unrecognized tax benefits balance by $200 - $2,500 within twelve months of June 30, 2012.

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, 2012, 2011, and 2010) 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

Our pre-tax operating income for the years ended June 30, 2012, 2011 and 2010 includes $6,950, $4,723 and $3,251 of equity-based compensation costs, respectively, of which $6,364, $4,209 and $2,347 relates to the restricted stock plan, respectively.

2005 NSOP and 1996 SOP

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

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.

The 2005 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.

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

	Number of Shares			Weighted Average Exercise Price				Aggregate Intrinsic Value
Outstanding July 1, 2009	3,760			$	17.75
Granted	50			23.65
Forfeited	(71	)		26.64
Exercised	(1,842	)		16.70
Outstanding July 30, 2010	1,897			18.58
Granted	—			—
Forfeited	(47	)		27.84
Exercised	(860	)		21.46
Outstanding July 1, 2011	990			15.65
Granted	—			—
Forfeited	—			—
Exercised	(526	)		15.17
Outstanding June 30, 2012	464			$	16.19			$	8,500
Vested June 30, 2012	464			$	16.19			$	8,500
Exercisable June 30, 2012	464			$	16.19			$	8,500

There were no options granted during fiscal 2012 or 2011. The only options granted during fiscal year 2010 were to non-employee members of the Company’s board of directors. The weighted-average fair value of options granted during fiscal 2010 was $8.90.

The assumptions used in estimating fair value and resulting compensation expenses at the grant dates are as follows:

	Year Ended June 30, 2010
Weighted Average Assumptions:
Expected life (years)	6.67
Volatility	33	%
Risk free interest rate	3.0	%
Dividend yield	1.52	%

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.

As of June 30, 2012, there was no unrecognized compensation costs related to stock options since all options have now vested. The weighted average remaining contractual term on options currently exercisable as of June 30, 2012 was 2.20 years.

The income tax benefits from stock option exercises totaled $3,631, $2,298 and $4,666 for the years ended June 30, 2012, 2011 and 2010, respectively.

The total intrinsic value of options exercised was $9,654, $6,342 and $12,694 for the fiscal years ended June 30, 2012, 2011 and 2010, 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 activity:

Share awards	Shares			Weighted Average Grant Date Fair Value
Outstanding July 1, 2009	267			$	21.66
Granted	139			22.59
Vested	(19	)		22.36
Forfeited	—			—
Outstanding July 1, 2010	387			21.96
Granted	102			24.54
Vested	(59	)		23.75
Forfeited	(14	)		21.88
Outstanding July 1, 2011	416			22.34
Granted	42			31.50
Vested	(106	)		22.92
Forfeited	(20	)		25.49
Outstanding June 30, 2012	332			$	23.13

The non-vested share awards 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, 2012, there was $2,537 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 1.02 years.

An amendment to the Restricted Stock Plan was adopted by the Company on August 20, 2010, for its executive officers. Unit awards will be made to employees remaining in continuous employment throughout the performance period and vary based on the Company’s percentile ranking in Total Shareholder Return (“TSR”) over the performance period compared to a peer group of companies. TSR is defined as the change in the stock price through the performance period plus dividends per share paid during the performance period, all divided by the stock price at the beginning of the performance period. It is the intention of the Company to settle the unit awards in shares of the Company’s stock.

The following table summarizes non-vested unit awards as of June 30, 2012, as well as activity for the year then ended:

Unit awards	Shares			Weighted Average Grant Date Fair Value
Outstanding July 1, 2010	—			—
Granted	293			15.77
Vested	—			—
Forfeited	—			—
Outstanding July 1, 2011	293			15.77
Granted	391			19.69
Vested	—			—
Forfeited	(12	)		15.77
Outstanding June 30, 2012	672			$	18.05

The weighted average assumptions used in this model to estimate fair value at the measurement date and resulting values are as follows:

	Year Ended June 30,
	2012			2011
Volatility	34.2	%		37.0	%
Risk free interest rate	0.31	%		0.90	%
Dividend yield	1.5	%		1.6	%
Stock Beta	0.903			0.890

At June 30, 2012, there was $7,067 of compensation expense that has yet to be recognized related to non-vested restricted stock unit awards, which will be recognized over a weighted-average period of 1.78 years.

NOTE 10. EARNINGS PER SHARE

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

	Year Ended
	June 30,
	2012				2011				2010
Net Income	$	154,984			$	137,471			$	117,870
Common share information:
Weighted average shares outstanding for basic earnings per share	86,599				85,948				84,558
Dilutive effect of stock options and restricted stock	688				739				823
Weighted average shares outstanding for diluted earnings per share	87,287				86,687				85,381
Basic earnings per share	$	1.79			$	1.60			$	1.39
Diluted earnings per share	$	1.78			$	1.59			$	1.38

Per share information is based on the weighted average number of common shares outstanding for each of the fiscal years. Stock options and restricted stock have been included in the calculation of earnings per share to the extent they are dilutive. No anti-dilutive stock options and restricted stock were excluded from the computation of diluted earnings per share for fiscal 2012, with 12 shares excluded for fiscal 2011 and 602 shares excluded for fiscal 2010.

NOTE 11. EMPLOYEE BENEFIT PLANS

The Company established an employee stock purchase plan in 2006. The plan allows the majority of employees the opportunity to directly purchase shares of the Company at a 15% discount. The plan does not meet the criteria as a non-compensatory plan. As a result, the Company records 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, 2012, 2011, and 2010 was $586, $434 and $345 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. In order to receive matching contributions, 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 $11,376, $11,076, and $9,369 for fiscal 2012, 2011, and 2010, respectively.

NOTE 12. BUSINESS ACQUISITIONS

Fiscal 2010 Acquisitions:

iPay Technologies Holding Company, LLC

On June 4, 2010, the Company acquired all of the equity interests of iPay, a 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 expanded the Company’s presence in the growing electronic payments industry, strengthened the Company’s electronic payments offering, and increased recurring revenue.

Through the Company’s measurement period evaluation in fiscal 2011 of the preliminary purchase price allocation, we identified a $2,817 decrease in the current deferred tax liability assumed, a $985 decrease in the long term deferred tax liability assumed and a $216 increase in accrued expenses assumed, with a corresponding $3,586 decrease in the goodwill arising from the acquisition. The measurement period adjustment was attributable to new information gathered related to the deferred tax liability of iPay in preparation of its final tax return. The measurement period adjustment in fiscal 2011 was made retrospectively on the acquisition date, June 4, 2010, and did not impact the consolidated income statement.

Management completed the purchase price allocation of iPay and its assessment of the fair value of acquired assets and liabilities assumed in fiscal 2011. The recognized amounts of identifiable assets acquired and liabilities assumed, based upon their fair values as of June 4, 2010, updated for the retrospective adjustment, are set forth below:

Current assets (inclusive of cash acquired of $353)		$	3,692
Long-term assets		6,362
Identifiable intangible assets		116,286
Total liabilities assumed		(13,956		)
Total identifiable net assets		112,384
Goodwill		188,759
Net assets acquired		$	301,143

The goodwill of $188,759 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, together with the value of iPay’s assembled workforce. Goodwill from this acquisition has been 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. Approximately 80% of the goodwill is expected to be deductible for income tax purposes.

The fair value of current assets acquired included accounts receivable of $1,403, all of which was 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 were 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 included revenue of $3,526 and after-tax net income of $38.

PEMCO Technology Services, Inc.

On October 29, 2009, the Company acquired all of the issued and outstanding shares of PTSI, a 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 broadened the Company’s product offerings within its electronic payments business and expanded 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, together 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 was 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 were 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 included revenue of $33,738 and after tax net income of $3,289.

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 has broadened the Company’s market presence, strengthened our competitive position by diversifying our product and service offerings and provided 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, together 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 was 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 was 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 were 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 included revenue of $44,794 and after tax net income of $1,204.

The accompanying consolidated statements of income for the fiscal years ended June 30, 2012, 2011 and 2010 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,
	2012				2011				2010
	(Actual)				(Actual)				(Pro Forma)
Revenue	$	1,027,109			$	966,897			$	910,218
Gross profit	$	423,730			$	399,334			$	381,160
Net income	$	154,984			$	137,471			$	122,435
Diluted earnings per share	$	1.78			$	1.59			$	1.43
Diluted weighted average shares outstanding	87,287				86,687				85,381
Basic earnings per share	$	1.79			$	1.60			$	1.45
Basic weighted average shares outstanding	86,599				85,948				84,558

NOTE 13. REPORTABLE SEGMENT INFORMATION

The Company is a provider of integrated computer systems that perform data processing (available for in-house

installations or outsourced services) for banks and credit unions. The Company’s operations are classified into two reportable 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.

	Year Ended
	June 30, 2012
	Bank				Credit Union				Total
REVENUE
License	$	37,200			$	17,611			$	54,811
Support and service	696,204				212,972				909,176
Hardware	45,051				18,071				63,122
Total revenue	778,455				248,654				1,027,109
COST OF SALES
Cost of license	4,863				1,248				6,111
Cost of support and service	419,954				131,331				551,285
Cost of hardware	32,123				13,860				45,983
Total cost of sales	456,940				146,439				603,379
GROSS PROFIT	$	321,515			$	102,215			423,730
OPERATING EXPENSES									187,495
INTEREST INCOME (EXPENSE)									(4,567		)
INCOME BEFORE INCOME TAXES									$	231,668

	Year Ended
	June 30, 2011
	Bank				Credit Union				Total
REVENUE
License	$	37,424			$	15,643			$	53,067
Support and service	665,297				186,956				852,253
Hardware	44,171				17,406				61,577
Total revenue	746,892				220,005				966,897
COST OF SALES
Cost of license	5,008				1,277				6,285
Cost of support and service	394,040				121,877				515,917
Cost of hardware	31,850				13,511				45,361
Total cost of sales	430,898				136,665				567,563
GROSS PROFIT	$	315,994			$	83,340			399,334
OPERATING EXPENSES									183,017
INTEREST INCOME (EXPENSE)									(8,805		)
INCOME BEFORE INCOME TAXES									$	207,512

	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 revenue	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 cost of sales	389,182				102,284				491,466
GROSS PROFIT	$	283,100			$	62,020			345,120
OPERATING EXPENSES									162,867
INTEREST INCOME (EXPENSE)									(1,457		)
INCOME BEFORE INCOME TAXES									$	180,796

	For the Year Ended June 30,
	2012				2011				2010
Depreciation expense, net
Bank systems and services	$	41,053			$	38,830			$	34,497
Credit Unions systems and services	4,269				3,082				2,092
Total	$	45,322			$	41,912			$	36,589
Amortization expense, net
Bank systems and services	$	35,492			$	35,507			$	27,675
Credit Unions systems and services	13,805				13,095				7,244
Total	$	49,297			$	48,602			$	34,919
Capital expenditures
Bank systems and services	$	34,963			$	23,730			$	51,392
Credit Unions systems and services	6,478				8,355				3,117
Total	$	41,441			$	32,085			$	54,509

	June 30,				June 30,
	2012				2011
Property and equipment, net
Bank systems and services	$	245,069			$	235,929
Credit Union systems and services	31,661				34,257
Total	$	276,730			$	270,186
Intangible assets, net
Bank systems and services	$	591,857			$	594,507
Credit Union systems and services	230,389				239,579
Total	$	822,246			$	834,086

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

NOTE 14. SUBSEQUENT EVENTS

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 August 24, 2012, the Company's Board of Directors declared a cash dividend of $0.115 per share on its common stock, payable on September 28, 2012 to shareholders of record on September 7, 2012.

QUARTERLY FINANCIAL INFORMATION

(unaudited)

	For the Year Ended June 30, 2012
	Quarter 1				Quarter 2				Quarter 3				Quarter 4				Total
REVENUE
License	$	12,264			$	13,552			$	15,009			$	13,986			$	54,811
Support and service	220,270				225,609				226,535				236,762				909,176
Hardware	15,804				16,697				14,760				15,861				63,122
Total revenue	248,338				255,858				256,304				266,609				1,027,109
COST OF SALES
Cost of license	1,127				1,115				2,424				1,445				6,111
Cost of support and service	131,124				135,833				139,593				144,735				551,285
Cost of hardware	11,661				11,501				10,904				11,917				45,983
Total cost of sales	143,912				148,449				152,921				158,097				603,379
GROSS PROFIT	104,426				107,409				103,383				108,512				423,730
OPERATING EXPENSES
Selling and marketing	18,754				18,164				18,994				20,588				76,500
Research and development	14,936				15,075				15,471				15,394				60,876
General and administrative	12,939				13,382				12,421				11,377				50,119
Total operating expenses	46,629				46,621				46,886				47,359				187,495
OPERATING INCOME	57,797				60,788				56,497				61,153				236,235
INTEREST INCOME (EXPENSE)
Interest income	129				106				85				856				1,176
Interest expense	(1,456		)		(1,448		)		(1,464		)		(1,375		)		(5,743		)
Total interest income (expense)	(1,327		)		(1,342		)		(1,379		)		(519		)		(4,567		)
INCOME BEFORE INCOME TAXES	56,470				59,446				55,118				60,634				231,668
PROVISION FOR INCOME TAXES	19,995				20,921				18,461				17,307				76,684
NET INCOME	$	36,475			$	38,525			$	36,657			$	43,327			$	154,984
Diluted earnings per share	$	0.42			$	0.44			$	0.42			$	0.50			$	1.78
Diluted weighted average shares outstanding	87,134				87,371				87,592				87,051				87,287
Basic earnings per share	$	0.42			$	0.45			$	0.42			$	0.50			$	1.79
Basic weighted average shares outstanding	86,403				86,572				86,824				86,595				86,599

	For the Year Ended June 30, 2011
	Quarter 1				Quarter 2				Quarter 3				Quarter 4				Total
REVENUE
License	$	9,459			$	15,460			$	13,025			$	15,123			$	53,067
Support and service	210,610				212,378				210,074				219,191				852,253
Hardware	14,753				14,797				17,086				14,941				61,577
Total revenue	234,822				242,635				240,185				249,255				966,897
COST OF SALES
Cost of license	1,178				2,079				1,145				1,883				6,285
Cost of support and service	125,806				126,857				131,010				132,244				515,917
Cost of hardware	10,805				10,880				12,740				10,936				45,361
Total cost of sales	137,789				139,816				144,895				145,063				567,563
GROSS PROFIT	97,033				102,819				95,290				104,192				399,334
OPERATING EXPENSES
Selling and marketing	16,362				16,979				16,929				17,791				68,061
Research and development	15,390				15,837				15,716				16,452				63,395
General and administrative	12,506				15,014				12,142				11,899				51,561
Total operating expenses	44,258				47,830				44,787				46,142				183,017
OPERATING INCOME	52,775				54,989				50,503				58,050				216,317
INTEREST INCOME (EXPENSE)
Interest income	17				32				61				15				125
Interest expense	(2,892		)		(2,487		)		(1,710		)		(1,841		)		(8,930		)
Total interest income (expense)	(2,875		)		(2,455		)		(1,649		)		(1,826		)		(8,805		)
INCOME BEFORE INCOME TAXES	49,900				52,534				48,854				56,224				207,512
PROVISION FOR INCOME TAXES	18,129				16,489				15,773				19,650				70,041
NET INCOME	$	31,771			$	36,045			$	33,081			$	36,574			$	137,471
Diluted net income per share	$	0.37			$	0.42			$	0.38			$	0.42			$	1.59
Diluted weighted average shares outstanding	86,147				86,523				86,972				87,090				86,687
Basic net income per share	$	0.37			$	0.42			$	0.38			$	0.42			$	1.60
Basic weighted average shares outstanding	85,469				85,770				86,218				86,335				85,948