Good day, and welcome to the Jack Henry & Associates Second Quarter Fiscal Year 2009 Conference Call. Today's conference is being recorded. With us today is Chief Executive Officer, Mr. Jack Prim, Chief Financial Officer, Mr. Kevin Williams and President, Mr. Tony Wormington. At this time, I would like to turn the call over to Mr. Kevin Williams. Please go ahead, sir.

Thank you, Connie. Good morning and welcome to the Jack Henry & Associates second quarter fiscal year 2009 earnings call. Statements and response to questions may be made in this conversation, which are forward-looking or deal with expectations about the future. Like any statement about the future, these are subject to a number of factors which could cause actual results to differ materially from those which we anticipate. Such factors are disclosed in our recent SEC filings. There could also be other factors not included that could potentially cause results to differ materially. Again, we're pleased to host the call this morning to provide a company update and report our financial results for our second fiscal quarter ended December 31, 2008. With that I will now turn the call over to Jack Prim, our CEO.

Thanks, Kevin. We continued to see a cautious outlook by our financial institution customers during the quarter regarding discretionary hardware and software expenditures. In most cases these caution stands more from uncertainty about the economic environment than from their actual financial performance. While the majority of our customers are delivering generally solid financial performances, they are facing a number of areas of likely future cost increases in areas such as regulatory compliance, increased FDIC insurance cost, corporate credit unions recapitalization charges and potential challenges in their customer base as unemployment rate appear likely to increase. We expect the discretionary spending earnings to remain challenged until funds of economic stability are on the horizon. While new in-house core system sales year-to-date and the credit union segment continue to run well ahead of the year ago period, the average size credit union contracted was roughly half the size from the year ago. But again it's more a reflection of executions that happened in the valuation cycle at the moment than anything related to the economy. However, combined to the to add-on software license impact seen in pretty much all product categories and the bank and credit union segments, we saw a decrease of 36% in license fee revenue, compared to the year-ago period. Hardware sales were again down, compared to the year-ago period by 14%. The majority of the impact here was related to reduced I-Series and P- Series service from IBM. As mentioned on the last quarter call, IBM had a November 2007 upgrade TAT deadline for a popular model of their I-Series, which drove some process of upgrade in the September and December quarters last year with no comparable catalyst in the 2008 quarters. Remote deposit scanner sales were essentially inline with the sales in the year-ago quarter and a…

Thanks, Jack. We continue to remain focused on customer retention and customer satisfaction. The results of our monitoring indicate continued success with our demanding customer base. To meet the ongoing demand of our customers or enhancing existing products and services, extending debt and functionality as well as developing new solutions to market to our customer bases. As jack indicated, we had a solid and positive performance in our support and service revenue line. The 18% growth in the EFT revenue line is fueled by increasing profits in volumes in nearly all systems of EFT, which includes ATM and debit card processing, bill payment processing, merchant capture and Check21 exchange. The ATM and debit card processing volumes increased 11%, compared to prior year quarter a bill payment transaction volumes increased 21% in the same period. The number of financial institutions installed with our Enterprise Payments AFT solution for remote deposit processing or merchant capture increased 34%, compared to prior year quarter. In the financial institutions merchant installed and utilizing this solution increased 87% to nearly 17,000 merchants in over 67,000 location. Along with signing and implementing new institutions and their respected merchants, we saw solid increases in the volume and transactions being processed. Merchant-related transactions increased by 109%, compared to the same quarter year ago. I will now turn it over to Kevin for a further look at the numbers.

Thanks, Tony. As Jack previously mentioned, during the quarter just ended, we experienced decline in total revenues 1% to $190.2 million for the quarter. And our year-to-date revenue grew by just 2% from $373.3 million. License revenue decreased by 36%, compared to that in the year ago and it's down 24% year-to-date. However on sequential basis, our license revenue was actually up 12%. And while the banking segment license revenue was basically flat sequentially. The credit union segment license revenue was up 63% compared to the September quarter, which this grow was driven entirely by the company's product sales made primarily by our fraud suite products which is Yellow Hammer, BSA and our EFT products. Our net total product which was just recently began offering in the credit unions customers. Our Synergy document suite of products and our Synergy CRM all showed very nice growth in the December quarter compared to September quarter in the credit unions space. Our support and serves had increased in every component within that line of revenue with the exception of implementation revenue. For a quarter and year-to-date implementation revenues decreased 11% and 8% respectively, compared to the same periods year ago. However implementation revenues were up slightly sequentially. Our EST or electronic payments business as Tony talked about was up 18% per quarter and 17% year-to-date, which as Jack mentioned the true core EST business is higher when considering the impact of the decrease and early termination fees and the impact of the change in Check21. Also EST would be essentially flat to slightly up sequentially considering the same issues. OutLink data and IM processing was up 1% for the quarter and 4% year-to-date. However OutLink was also impacted by a decrease in the one-time early termination fees just like EFT for the year-over-year…

(Operator Instructions). And we will take our first question from Tim Fox from Deutsche Bank. Tim Fox – Deutsche Bank : Hi thanks. Good morning.

Good morning, Tim. Tim Fox – Deutsche Bank: My first question was around your the EFT business. I am just wondering we been hearing some noise about the decreases in overall volumes from some of the other providers out there. If you could just give us a little bit of color about how your volumes are trending particularly in the credit, debit and ATM transactions space, do you expect there to be any pressure on the overall transaction volumes going forward, or do you think that can be relatively stable in your client base?

We've seen some decrease in the transactions volumes in the last quarter and the prior quarter. We think that's some what due to the current economic environment, but we expect to see transaction volumes to be pretty stable moving forward at this point.

And one another thing, Tim. We continued to add additional products into that product suite with the EFT and debit switch solution that we can get additional transaction fees on products like fraud center and some other things, we are also putting products out there to help to drive the use of data cards so and I think all those will help at least to solidify the constant growth within that moderate revenue. Tim Fox – Deutsche Bank: And just a follow-up on that. As far as penetration about how many customers do you have that, because of switch products at this point do you see opportunities for share gains over the rest of this fiscal year?

I don't have that number in front of us. I can get that number and then try to give it you later. But I don’t have it.

Tim, I think it's somewhere around 700 total core customers that are on our switch products. It maybe slightly less than that, so there is some additional opportunity there and as you pointed, and this is clearly becoming more of a commodity gain, so what we have to pull is the high level integration, the high level customer service we provide and the suite of products that we're now attaching our products. So is there some potential market share out there? Absolutely, as you can see it from the numbers, we have done very pretty well in gaining some market share in the credit union space and we think there is more opportunity there. Tim Fox – Deutsche Bank: Okay. And just last on the hardware side. You talked a little bit about some of the tough compares given some of the programs that were run last year. At what point do the hardware comparisons start to get a little bit easier for you throughout calendar 09?

I am not sure they get a whole easier, Tim, because if you remember this time last year we were just especially in the June quarter there was another IBM initiative that was going on out there, and then also the remote deposit capture scanner sales were just lying up shelf a year ago. And those have slowly moved downwards and we are still falling a very good share of that, but to say we are going to continue to grow. And again those scanners have become more of a commodity, I mean when you got merchants out there that can go to office vehicle and buy them off shelf at significantly less margins that we were willing to selling them for. That is going to put some pressure on that. And then the ongoing, our bank going to branch and teller capture away from the traditional a four-side product that shows the size of our hard work continues to go down and significantly so. I think the hardware comparisons are going to continue to be a challenge for the rest of this year. Tim Fox – Deutsche Bank: Okay. I was going to speak one more if I may. You have obviously done nice job on a cost control size. I was just wondering how much room do you have left do you think around the cost control area, and if things do deteriorate a little bit more in the near-term, do you think you have some more leverage available to you to kind of maintain that margin?

Yes. Tim this is Jack. There certainly are some things that we can do. Again our outlook on the business, as we feel like this is a temporary economic headwind. How temporary? Your guess as good as ours right now, but we are trying to be very cautious, but we don't take action that damage the business for a long-term. And there certainly are other steps that we can take that are something are of a short-term in nature without some of those ramification occasions. But there are more things we can do. At this point, kind of lined them up and look at them and sort of those in the back of our minds depending on what we see happening in the business going forward, but there is definitely some additional things we can do if we need to. Tim Fox – Deutsche Bank: Very good and thank you.

Thanks, Tim.

And we will take our next question from John Kraft from D.A. Davidson. John Kraft – D.A. Davidson: Good morning guys.

Good morning, John. John Kraft – D.A. Davidson: Jack, just to reconcile something that you mentioned and than also Tony discussed that the remote deposit scanner sales you said were flat. And than Tony talked about some pretty impressive growth metrics for number of merchants in the inflations and all that, is that simply just a timing issue where they were some big orders made by some of these banks ahead of implementations or are you seeing a pickup in other scanner vendors selling into that customer base?

It’s a great question John and the these things just tend to be the all of the board. What I would have expected to see in the quarter was continued reduction compared to the same quarter year ago and scanner sales and to my surprise they ended up that right around same number. I think some of it is that we have come out with some promotions that involve the leasing of the device which again and it wouldn’t seem like a $300 or $400 scanner would be a significant items, but a lot of times for these merchants, there are the banks trying to figure out how to put it into a business to be able to not have to come up with that upfront capital can be a good thing. I think we are seeing some good response to a leasing approach which from our standpoint is really treated as the sale, but through the third-party vendor, we are able to put some of those scanners out there on lease basis. I think that has helped, I think that we have made some good inroads with some other non-financial institutions that provide merchant acquiring services and other thing that need a remote deposit solution and they are selected to partner with our solutions so that's probably driving some of the, some of the scanner business as well. But also hard to predict, I mean all of the trends that I would look at would say that scanner sales should continue to falloff somewhat even as merchants continue to grow simply because of the under available alternatives for them to acquire those scanners. John Kraft – D.A. Davidson: Okay, and then those leasing revenues would be in the hardware line, right?

Well, they really aren’t leasing revenues to us. We are doing that through a third-party. So it's treated as a hardware purchase to us, the leasing component that is actually on somebody else's book. John Kraft – D.A. Davidson: Okay, okay. And then Kevin just to clarify your kind of your guidance your worst case scenario you said that, what did you say about economy conditions if they would continue to worsen. Or is that they would stay fairly stable?

Well, if they would stay where they are today which in my opinion is pretty bad. I think that's worse case John. The kind of guidance that I'm giving out there is obviously in the second half of this year. There is relatively no early termination fees in the support and services line impact, so if you back out just the termination fee from the first half and apples-to-apples, our support and services have grown 10% year-to-date. And if you just tax it differed check out and back out the impact of Check21, which is going to get smaller and smaller, but support and services is actually at 11% for the quarter and year-to-date. So having said that I think that second half of the year, our support and services line of revenue should grow at roughly 10% or thereabout. And so why I'm saying is worse case is if the economy stays where it is and we continue to have challenge with our discretionary spending. And we continue to be at equivalent levels down in software and hardware that we will add to first half of the year, then we are going to wind up about the same place we did last year. And I don't think that’s obviously we're going to wind up, but what I'm just trying to give you all from the guidance is in the worst case. I think this is where we wind up. I think obviously it’s going to be better than that. I think the best case is we close a few of these warrants Mitch and Gil have been talking about the economic stabilizes. We get the easier comparables, because of the no termination fees. And obviously we grow somewhere to the guidance I gave in the last earnings call.

And John our crystal ball is as cloudy as anybody else's out there right now and related to economy and what’s going to happen to some of the discretionary purchase items. We keep thinking that surely the last shoe has drawn at this point, but just to give you an example here in the last week, week and a half there is this discussion in the credit union segment around one of the large corporate credit unions that had some difficulties similar to some of the things the banks have had, and there is going to have to be a recapitalization plan to shore them back up. These guys are right now not eligible for TARP fund, so that's going to be basically an assessment of all the credit needs. Well, and I had a conversation recently with a large credit union, $2 billion credit union. They are estimating the charge to them based on what they know right now to be somewhere between $8 million and $11 million for their piece of this component. And that's a big credit union, would be that much for everybody. I you take a $100 million credit union is potentially looking at a $400,000 unplanned, unbudgeted expense to shore up a corporate credit union and as it expands right now the final guidelines are not eloquent there, but as it stands right now that’s a charge from income. It's not they can’t capitalize it, they can't do that over multiple years. Now may be that will change by the final stage, but my point is that I hear news in the last week and a half that in the credit unions, it's got some fairly significant ramification for some of these folks. So we just don’t know how to predict, are we there yet? Have we seen the last bad news revision and start seeing things stabilize. John Kraft – D.A. Davidson: Okay, now that’s fair. Well, let me just ask one last question something a little bit more positive hopefully. On the bill pay side, that transaction growth number was strong. And I don’t know if you would even track this, but do you happen to know on top of you head roughly what the penetration bill pay usage penetration is within your end use or customer base.

With meaning the penetration rate of their customers, Different financial institutions offer bill pay of what percentage of their customer often are using it. John Kraft – D.A. Davidson: Yes.

I would quote that number wrong; we do have that I will tell you that it is pretty low. I think there is definitely a room for upside to that number. In fact, we discussed the number of promotions that we could work with our customers to offer for them to be able spur additional bill pay adoption within their customer base, sort of the come up with generic statements suffered and things like, that can be bank or credit union branded they can use for that. We have not now moved forward there, because quite frankly even for the banks and credits unions that understand the value that having a customer home bill pay running in terms of stickiness and typical acreage analysis compared to customers that don’t use it etcetera. I think people are reluctant to go out there and try to stimulate the demand for a service as that is going to cost them more money to offer at this point in time, even given the positive ramifications of what happens when a customer does use you bill pay. So but I would say that I believe that our penetration is low, probably low by industry standards and I do believe there is also pretty good upside opportunity there at the appropriate time.

Plus the other things, John that I mentioned it must in my opening comments was we are starting to see some really nice success in our net teller offering, which obviously has a refresh look and feel that we are selling into the credit union space. And we think there are some nice opportunities there to cross-sell our bill pay offering because its all integrated one look and feel which is considerably different than the typical credit union have today. So we think are some not only as Jack mentioned, additional opportunity in our customers base to get more filtration there. But we think that there is a significant opportunity in the 700 credit unions that we have to cross-sell that product because, up until two quarters we didn't even really offer our bill pay offering into the credit unions space. John Kraft – D.A. Davidson: All right, Okay. That’s helpful. Thanks, guys.

Yup.

And we will take our next question from Tim Willi from Avondale Partners. Tim Willi – Avondale Partners: Thanks and good morning.

Good morning. Tim Willi – Avondale Partners: A couple of questions about the backlog if I could, first and I know it's probably hard to give an exact number. But as you have seen let's over the last four to five quarters, very strong growth in the outsourcing backlog, is there any way that you can just sort of frame how much license revenue that you think you may have cannibalized from customers that may have stepped up and licensed an additional product or two from you that no longer would be doing that might be hitting that license line item right now?

Well, that's a tough one there. And I am sure Tim that there is some of that, I believe that it's relatively smaller percentage, because I think that what we are finding when folks make the elections and may be from an outsource deliveries that they typically signup for several additional product that that they have had their eye on but just were not willing to come up with the license fees to do it. So had they stayed in that in-house environment, my gut feel is they would have continue to hold off on making those capital outlays for license fees and move forward with those products that they needed. So I am sure there are some of that, but there is I think that there clearly is some cannibalization of hardware over two to three year period. At some point they would have needed to do capacity upgrade or possibly to replace an outdated box all together. So there certainly is some cannibalization on the hardware side. On software side, I don't how to quantify it, but my gut feel is that it's a relatively small number.

Especially in this environment, because I think if we were to continued holding off in this environment and space if they were already holding off. Tim Willi – Avondale Partners: Okay. And the second question related to the outsourcing backlog. Can you give us a feel for within that support and services line item you do have the outsourcing services category which you disclosed. It would seem there was pretty substantial ramp up in the year-over-year growth rates of that outsourcing backlog. That there should be some pick up in the outsourcing services growth rate. And so I am just curious if that logic is true, and if there is anyway you can sort of frame where that may begin to flow into the income statement given that we're now about three to four quarters and to pretty strong up tick in your outsourcing backlog.

Well, I guess first of all, Tim, remember last year has at June 30th we talked about that we had 27 banks that made decision of opening an outsourcing and 14 of those were basically in June, so not all of those are even converted yet and as Jack mentioned we're ahead of the pace last year half way for the total of last year. But I doubt if any of those are converted yet, so it’s going to be a small ramp. But to your point is it going to drive additional increase in our OutLink line of revenue? Absolutely, because as we have talked about what we charge them is going up even though we had to put it in place because as Jack mentioned on average they are taking additional three or four products, so there will be a slow up tick, and we will we able to see it? Yet, but it will be probably a year now and you'll start seeing it in quarter or a year-over-year base. You will probably even see it sequentially as that flows in so smoothly as we convert those customers. And one of the points to caution, remember this will eventually hurt a low headwind on our in-house maintenance line of revenue as these customers switch over, because if you can take away from in-house maintenance and it’s going to take all of that revenue plus the additional up tick and predict the offline.

Keep in mind too that the impact on the backlog from one of these transactions is a little different than the impact on the P&L when they actually implement. Yeah, when it goes into backlog you will see in the four, five year value of that contract or in some cases is seven to ten years value of that contract versus when they do get moved over, you are seeing in one month or three month in a quarter of that amount that actually rolled into the P&L. So, it would take quite a while to see for example 16% increase in the outsourcing line item.

But also remember that the outsourcing backlog number is an extremely conservative number, Tim, because what we put in there is the minimum. So as bank switch over from in-house outsourcing and as they grow and they grow over account, we are going to charge them more on the basis which revenue is going to grow but we don’t go back and raise just backlog. Tim Willi – Avondale Partners: Yeah, understood. Okay, and then just the question on your commentary around sort of worst case scenario around guidance versus more realistic. When you sort of say flattish with last year are you taking just dollars of net income, or you are talking about earnings per share?

EPS primarily. Tim Willi – Avondale Partners: EPS? Okay. And then how are you thinking about share buyback given again the balance sheet is in pretty good shape. There still seems to be pretty good predictability around the vast majority of your business?

We bought back obviously as I mentioned in opening comments a we got a backlog, quiet a few shares. We bought 2.6 million shares so far this year. At the last board meeting, our board is pretty conservative too, and Tim, they wanted us to be just little more cautious as we move forward with buyback stock. And I think for two reasons, Tim. One just the unknown in the economy out there. And secondly, we also think that in the current environment that the M&A activity is going to come back. We think there is going to be some properties that are going to hit the market this year and we definitely have dry powder, so we can go after those in the event that happens, But having said that if our stock price would take a significant dive, or we would be back in there with both feet absolutely. Tim Willi – Avondale Partners: Okay. Thank you.

(Operator Instructions). And we’ll go next to John Maietta from Needham & Company. John Maietta – Needham & Company: Hey, thanks very much.

Hi John. John Maietta – Needham & Company: Hey Kevin, hi Jack, hi Tony. Kevin this is a follow-up again on this worse case scenario for the seventh time, what's kind of the greatest delta in terms of the close rate that you applied at the pipeline to kind of get, from the worse case to a more normalize scenario, the greatest variable around the perpetual license line, is it maybe if you could just talk about some of the puts and takes that would be helpful?

Well, I think that the biggest variable John, is clearly license and around the some of the mid-tier opportunities that we are continuing to pursue, we get very good predictability in the support and services line item that is unlikely to have any kind of dramatic change in the next two quarters that would make a significant difference to the numbers, but in a large credit union, a large bank license transaction those would be the kind of things that would get us back up in to the range where we expected to be.

Or you know as Jack, commented, I mean, John, if we could just go a month without more bad news out there to where the bank kind of feel like the last you had drops, and they didn’t have to be quit precautious, I mean I think there is and I hate to use this word, but I think there it is some growing demand out there for some products than people put on the backbone and I think once they get a little more comfortable with the economic environment, I think that's right there in itself even without the mid-tier. Because you get us back up into more predictable type range. And then if you throw the mid-tier gets on top of that that's, why I said that would be the best case scenario if the economy stabilizes and we get closer on a couple of those deals, that's for this back in other words beginning of the year. John Maietta – Needham & Company: Yes. Understood, that makes sense. Okay. And then I think Kevin what gives you sense as to that there might be some pent up demand out there. Is that an increase in conversations association that sales are having is some of that actually in the pipeline and maybe you have deals where they've haven't been signed off but they are in the process?

I think that it's a number of things John. Obviously our sales people are saying there's delays out there. And we are aware of some deals that, deals would actually have board approval and before its on contract they start to delay I mean this is, this is not what you would consider normal slippage or whatever. This is actually just true delay, they know they want the product, but they are going to wait a while and see what happens to economy before they are ready to either sign the contract or in some cases contracts, they just don't want to end that yet. So that those indications are out there and I think as Jack and Kevin have talked. I think a lot of this, that's part of, the other part is, we think that there is just a lot of people out there that are not even looking right now, because of the uncertainty in the economy.

Although this is the paradox, but the sales teams and banking, credit union and processors will all tell you that there is being increased sales activity in terms of customers prospects that are evaluating solutions. Surprisingly to me, an increase in new core sales activity. We have never seen the core side of activity in the credit union business slowdown. Yeah, we would like to get couple of bigger ones, but we will take what's available right now, which has been credit unions roughly half the size or smaller than what we saw on the year ago period. That level of new core sale evaluation activity has not slow down and continues to look very good, but with some exceptions in some banking territories if you are working on Michigan, Ohio territory is probably little slower, but we are seeing surprisingly good new core system evaluation activity in a processors group has got some good activity as well. So it is passing you got it at least as much as not more activity than we probably had a year ago, but as Kevin said we are seeing some delays that tell some of these things to push out. There is really kind of we have it with the forecasting methodology and things that you cannot develop over the years that, frankly all that's all right now in terms of trying to apply to those. John Maietta – Needham & Company: Okay. Thanks guys.

Thanks, John.

And we will take our next question from Gil Luria from Wedbush. Gil Luria – Wedbush: Good morning.

Hi, Gil. Gil Luria – Wedbush: You talked some about existing banks making decisions and the pipeline and then you got into little bit of depth around that. Could you talk a little bit about the trends that you saw on the last calendar year in terms of de novo activity? If you have seen that stable or going up or down, and flipside of that in terms of attrition, do you try to follow what FDIC is doing and their watch list, because from my understanding so far we haven't seen as much attrition as maybe people thought at the beginning of this crisis. Are those trends working in your favor or they part of the drag right now?

Yeah, again Gil, it is a good question, but it's a combination of things. De novo activity has definitely slowed down. I would estimate that it's down 40% from what we would have seen a year ago this time. You actually got some states where it's been reported that the FDIC is not going to issue insurance for new charters, in the South East and the West. But as far as they defined it, but whatever they would consider southeast And west, they can indicate that they are not willing to issue insurance for new de novo charters. We had regulators just in some cases to say we think we got enough banks right now that they don't want to see some stabilization before they get back to approving de novo charter, so. So we think A is down and B is likely to continue to be down for some time. Attrition, again we have had a very high retention rates. We continue to have very high retention rate. We like everybody else have some banks that are on the government watch list and we pay attention to that. But frankly, there is not much you can do about it. Given all this you can remembers on of your head, if you just looked and said okay, let's look at the absolute news that it's an area, if we in this fix stage where most of your real estate problems are concentrated. If every single bank that we had in every single one of those states got closed, it was still have relatively modest impact on, I mean yeah certainly that’s good news but it was relatively modest impact compared to what would be the absolute this day scenario. So again certainly there is a bit of a headwind. I think you are right on, Gil, that the some of this initial estimates of banks closings were way overwhelmed. Again, I don’t have a crystal ball there, but in a stimulus package what is the normal forget this economic environment, normal attrition. Not attrition, but consolidation into banking industry has been year in year out its run 2% for last 5 to 7 years. Will it likely pick up with some of the bank failures? Yeah, Probably, but at the same time that that picks up you have got banks, sold their bank under that normal 2% attrition where everybody’s stock has been so depressed and priced, if they are going pull it off the market until times turn around, if I had to guess, I would guess that the shrinkage we might see for next two years might be 3% instead of 2%, but again your guess is as good as ours on that at this point.

But, Gil, we also think that all those will come back, and we think they will probably come back stronger than they were a year ago, because we think about the large banks that have merged together in the last two year. I don't have the name, you know then, but there is a significant number of loan officers on the three which is typically ones who start new de novo, so as soon as the regulators had loosened up a little bit, and the FDIC is a little more comfortable, I think the de novo market will come back stronger than ever and will right there to take advantage of it. And as we have talked about before, yeah, de novo was down. We are so close with you, but you are really not going to see much impact on our financial statements even if we don't get any de novo for 9 to 12 months, because there is virtually no revenue in the first nine to 12 months after you sign on anyway. Gil Luria – Wedbush: Got it. So in terms of that activity and those six real estate bubble states, is that more or less than 10% of the overall business?

Well, Gil. Okay here is what we did. And this is and it's the total billings, I haven't taken the pros number out there, because I am sure show on somebody's call reports. First call, but what I did I looked at all of our customers in those fixed days, and we said okay if every bank shutdown, which we all know that's not going to happen. But if every bank and every credit union those fixed days shutdown that represented about 10% of last years total revenue. So let's say 20% of those banks to get shutdown, it's 2% of our revenue. 20% of the banking market. 20% accounts and impact is much likely scenario than 100%. Gil Luria – Wedbush: And a lot of the times those banks get bought by out of region bank and they continue to survive and those could be your customers too.

We said it happened already last year. Gil Luria – Wedbush: Lat question. When we talk about the discretionary items that your customers are passing on right now or pushing out decisions, we are not talking about core and we are probably not talking about fraud. What product categories fall into that bucket of products that banks are taking a little longer to make decisions right now?

Well, Gill, we think CRM solutions which they would like to have, but could live without it would be things like our Synergy document imaging solutions. Most banks today have some type of a document imaging solution. They might be looking for more than enterprise offering like our Synergy product. But again your hands are tied, that would be in expense like a hold off for a while. So, I think in a lot of cases this replacement of existing technologies with more modern types of technologies. Fraud continues to be pretty strong as well, but I think those are big, Kevin linked with. Kevin there's others that are that are obvious to you?

Well, I think when I say Gil, I mean, in some instance fraud can be discussed here for sometime, because a lot depends on what bank it is, what geographic areas we are in. So, if you got a bank that just got hit for $60 tightening scheme and basically product and they would have compensated for $60,000. That how they moved from a discretionary, so it must have automatically. So if you got a small bank that’s never had fraud issue, whichever bank has fraud issue but no significance that’s probably going to be discretionary items. So, I mean if you look at the 100 plus complementary products we have, I mean, per average bank out there depending on where they are at and what bank at they are is going to dictate what products are discretionary, and which ones we must have. Gil Luria – Wedbush: Got it. Thank you.

Yes.

(Operator Instruction). And we will go next to Brett Huff from Stephens Inc. Brett Huff – Stephens Inc.: Good morning, guys.

Good morning, Brett. Brett Huff – Stephens Inc.: A couple of quick housekeeping things. Did you go over the recurring revenue number for this quarter?

Don't know if I missed or not, our estimate it was 34% for the quarter and 74% year-to-date. Brett Huff – Stephens Inc.: Okay. Thanks. And then a question on pricing pressure, it sounds like maybe bank switching on cores and things like that has slow down. But have you seen any change in pricing pressure this quarter versus last quarter?

No, I can't tell you. Again we are an competitive environment as long as I can remember and it remains but in terms of anything certainly in the way of what would appear to be a new promotion or campaign or a policy from one of the major players, we really haven’t anything change. Brett Huff – Stephens Inc.: Okay, and I want to make sure I understood, Kevin, you mentioned specifically you are talking about license I they didn't notice, I think it was year-over-year, you mentioned it was license was flat in the bank segment, but up 63% in license for credit union is that right?

That was in the December quarter compared to the September sequentially. Brett Huff – Stephens Inc.: Okay. That was sequentially.

Banking license is relatively flat and credit union was up significantly. And again that goes right back to some of those complimentary products, which is the document imaging the fraud solutions and the new net teller offering and those type of things. Brett Huff – Stephens Inc.: And then partially because those are new offerings to that particular base, right?

Well, it's not new offering in that base. And we just came out a data was as it is, its rate to credit union basis going well, the CRM solution we just got done with the integration of the product and some of the financial products are doing well, Silhouette Document Imaging has been going well, but we are actually got a new partner in there that is making that an even stronger offerings in the credit union space, and I think more anything is our sales guys on that side of the house are just getting a lot of momentum and they have got new excitement. Brett Huff – Stephens Inc.: Okay, and then just to get a better understanding for the kind you are talking about mid-tier deals in the pipeline. And I originally thought it was mostly credit union, but it sounds like it might be bank too, could you A, coming on that and B, give us a sense of how big is big on the deals and how many are in the pipeline in any range of the pipeline if you could give us any comment on that?

Yeah, it’s a combination of both bank and credit union deals Primarily, Brett, what we were talking about there is the north of $1 billion, technically we want the $1 billion to $10 billion kind of an asset range in a numbers 3 or 4 probably in some stage of the evaluation at this point.

The key to that number is when they get to that size, they are typically looking at going in-house, so as software, hardware and services hitting all three lines of our revenue. Brett Huff – Stephens Inc.: And with aspect due of that size, any sort of broad guidelines and how much in general that would bring in revenue?

It could range in software from $1 billion size, it could range in software firm $1.5 million Brett Huff – Stephens Inc.: And then last question, you mentioned that there were still some things like you do on cost, it seems like the cogs line maybe benefited more than R&D this quarter, where do you see the lowest hanging fruit where we should for additional saves, cogs or OpEx, and if you can give us more details which of those sub line items?

Well, I think there was continued leverage in our selling and marketing. And obviously, we need all of our sales organization on the street doing what they're doing to continue to keep the pipeline full and drive business. As our recurring revenue is as your first question refer to continues to grow. There is very little commission tied to those recurring lines of revenue, which that is where can get some leverage. From the R&D, we have said all along. We continue to move upstream into larger banks, larger credit unions, which our most demanding customers, I don’t know that you will ever see Much leverage on the R&D line. I think there is some additional leverage potentially on the G&A line. As we move forward and we went through couple or three years are basically holding G&A lines completely flat dollar-for-dollar. And they would put the new back office and they kind of jumped up there for last couple of years, but I think there is some opportunity to leverage there on the OpEx line going forward. And just to back up on your previous question on SilverLake Brett? Brett Huff – Stephens Inc.: Yes.

The real key to that is what they are buying, because if I'm going to buy a SilverLake, you got one thing, but if they are buying SilverLake and ten other products, you could have basically the gap of $1 million to $3 million on a $1 billion size bank. Brett Huff – Stephens Inc.: Okay, got you. That's all I needed. Thank you.

Thank, Brett.

And we will take our follow-up question from Tim Willi from Avondale Partners. Tim Willi – Avondale Partners: Thanks for the follow up. Kevin, one question for you, tax rate that you said 35% for just the back half of the year, I think that sort of shakes about 35% for the full year. Is that correct?

Yes. Tim Willi – Avondale Partners : How would you think about that, I guess for '010, I mean do you expect to get the credit again? Is there anything you are doing with tax planning that was change that rate dramatically that you are aware of right now?

Well, I understand Tim when they renew the R&D credit it was retroactive to January 1, but that is a two year renewal. So, what will automatically give the first half of next fiscal year R&D credit, so our effective tax rate next year will probably be and we haven't run through all the numbers yet, but they will probably be somewhere around 36% for the year. Tim Willi – Avondale Partners: Okay. And then Jack and Kevin telling all of three of you if you have thought that you could share, I mean how would you compare what were going through now with what was going on and sort of the post Y2K bubble tech.com collapse '01, '02. Not only in terms of holding back on decisions and obviously there is a lot of pressure on license and discretionary spending, but also the mood of the customers, Jack Prim, you’ve made some comments that clearly point to a surprising amount of activity on the sales front. I think, versus what you would think in this environment. How good would you recollect that things were back in the last downturn? Was there just as much activity and people still looking but not making decisions or was there just really no activity anywhere during that timeframe?

Well, Tim, I would say that there appears to be more uncertainty around where are we in this cycle than there was in post Y2K a lot of slowdown in the post Y2K and this was not that big of a surprise, shifting that, Tim, a lot of valuation ramped up and implementation ramped ahead of what post Y2K. There was every reason to believe that there would be some slowdown post Y2K and there was I think it probably slowed a little longer than we expected to, but I think everybody can say hey we cannot understand what we are up against there. And just got to work our way through it. I'm not sure that people yet understand completely what it is for revenue. I know if there is component issue and I said in the very beginning of this thing the lack of clarity was a bigger issue for the majority of our customers than the actual performance. And of course with hundreds and thousands of people have being laid off and those kind of things, now we've got some issues that find their way to loosing our customers as well. So my sense is, and Ken has probably got a better recollection on this than I do on the in the post Y2K time timeframe, but my sense is that there is probably more system evaluation activity going on now than there was in post Y2K. And quite frankly, some of it may have to do with the fact that lot of the systems got implemented in 1997 and 1998, that was ten years ago. So people may be doing out some ramps and that may be was the right 1997 and 1998 but may be I will be looking at what right partners is for me out there today, John if you could John that.

Nice. That’s absolutely right I mean there was everybody that got ready through Y2K and then they went to that quite period where nobody could do anything by mandates in FDIC, and they came out of that, and we came out, Tim, if you remember the March quarter of that year we came back for another record year. But there was hardly any core deals in that deals in that. That was all add-on products that people had delayed getting through Y2K. And when everybody was surprised when light came on January 1st and the world was still here business can go back to usual where the Jack's point they would want the light are going to come back on, because they don't know when business are going go back being unusual here like it did there I mean there was one movement in time. And once we got pass that point it is like keep our doors let's get back to business. I don't even know when that major point in this situation we are in today. Tim Willi – Avondale Partners : Great, thank you.

Thanks.

And at this time, we have no further questions in the queue. I’d like to turn the conference back over to you presenters for any additional or closing remarks.

Thank you, Connie. First of all I would like to let everyone know that date for upcoming annual Analyst Day, which will be held on May 11th and May 12th. These days will be held in Dallas, Texas again this year and will kick it off with the mini-tech fair and there are many events, so highlight some of the newer model products just what we did last year. And then on Tuesday, you will have the opportunity to hear from most of our operations CMs and all of our national sales managers and the executive team here today. The Tuesday event conclude about 3:00 pm in afternoon, so please build your schedule accordingly, and the registration lines will be sent out sometime in the next 30 days or so if you find rest of the event. Now I am turning the call, we would like to thank you for joining us today to review our second fiscal 2000 quarter results. We are obviously not pleased with discretionary revenue during the quarter year-to-date. However, we are extremely pleased with the efforts of all of our associates to help control cost during the current economic environment. We remain confident that we are well-positioned and we have the right product and services to approached the financial services market. We also believe, we have proper resources and the people and technologies for continued future opportunities. We continue to expand and improve our product and services and we are committed to build on all of our competitive strengths. Our executive, managers and all the members of our team will continue to focus to do what's right and best for our shareholders. Again thank you very much for joining us this morning, And with that Connie, will you please provide the replay number?

Thank you. And that does concludes today's conference. If you would like to dial in for the replay, that number is 888 203 1112 using the confirmation code 865 1481 and if you are calling from international it is 719-457 0820 and that conference will be available today at 10:45am central time and we will run through February 11, at 11:45pm central time. Thank you and have a good day.