##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 (Mark One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the Quarterly Period Ended June 30, 2010
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For
the Transition Period From
 to
 Commission File Number: 000-24931
 S1 CORPORATION
 (Exact name of registrant as specified in its charter)
 Delaware(State or other jurisdiction of 
incorporation or organization)
    
    58-2395199(I.R.S. Employer
Identification No.)
 705 Westech Drive 
Norcross, Georgia
    
    30092(Address of principal executive offices)
    
    (Zip Code)
 (404) 923-3500
 (Former name, former address and former fiscal year, if changed since last report.)
 Yes þ No o
 Yes
o No o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 Yes o No þ




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##### 



S1 CORPORATION
 QUARTERLY PERIOD ENDED JUNE 30, 2010
 TABLE OF CONTENTS
 PagePART I  FINANCIAL INFORMATIONItem 1. Financial Statements:Condensed Consolidated Balance Sheets as of June 30, 2010 and December 31, 2009
    
    
    1Condensed Consolidated Statements of Operations for the Three Months and Six Months Ended
June 30, 2010 and 2009
    
    
    2Condensed Consolidated Statements of Cash Flows for the Six Months Ended
June 30, 2010 and 2009
    
    
    3Notes to Condensed Consolidated Financial Statements
    
    
    4Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    13Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    22Item 4. Controls and Procedures
    
    
    22PART II  OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    23Item 1A. Risk Factors
    
    
    23Item 5. Other Information
    
    
    25Item 6. Exhibits
    
    
    25Signature
    
    
    27Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 S1 CORPORATION
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 (IN THOUSANDS, EXCEPT SHARE DATA)
 (Unaudited)
 June 30,
    
    
    December 31,2010
    
    
    2009ASSETSCurrent assets:Cash and cash equivalents
    
    $
    51,707
    
    
    $
    61,784Accounts receivable, net
    
    
    53,083
    
    
    
    64,470Prepaid expenses
    
    
    4,929
    
    
    
    4,729Other current assets
    
    
    7,500
    
    
    
    4,931Total current assets
    
    
    117,219
    
    
    
    135,914Property and equipment, net
    
    
    22,296
    
    
    
    23,018Intangible assets, net
    
    
    13,136
    
    
    
    4,895Goodwill, net
    
    
    145,325
    
    
    
    126,605Other assets
    
    
    7,791
    
    
    
    9,634Total assets
    
    $
    305,767
    
    
    $
    300,066LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable and accrued expenses
    
    $
    9,361
    
    
    $
    7,707Accrued compensation and benefits
    
    
    8,583
    
    
    
    11,569Current portion of debt obligation
    
    
    5,515
    
    
    
    1,170Current portion of accrued restructuring
    
    
    2,220
    
    
    
    2,096Income taxes payable
    
    
    2,454
    
    
    
    1,586Deferred revenues
    
    
    36,764
    
    
    
    26,837Other current liabilities
    
    
    2,022
    
    
    
    2,007Total current liabilities
    
    
    66,919
    
    
    
    52,972Debt obligation, excluding current portion
    
    
    14
    
    
    
    5,026Accrued restructuring, excluding current portion
    
    
    357
    
    
    
    1,381Other liabilities
    
    
    2,861
    
    
    
    2,046Total liabilities
    
    
    70,151
    
    
    
    61,425Stockholders equity:Preferred stock
    
    
    10,000
    
    
    
    10,000Common stock
    
    
    520
    
    
    
    517Additional paid-in-capital
    
    
    1,789,726
    
    
    
    1,787,772Accumulated deficit
    
    
    (1,560,364
    )
    
    
    (1,557,534
    )Accumulated other comprehensive loss
    
    
    (4,266
    )
    
    
    (2,114
    )Total stockholders equity
    
    
    235,616
    
    
    
    238,641Total liabilities and stockholders equity
    
    $
    305,767
    
    
    $
    300,066Preferred shares issued and outstanding
    
    
    749,064
    
    
    
    749,064Common shares issued and outstanding
    
    
    52,019,479
    
    
    
    51,712,710
   1




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##### Table of Contents



S1 CORPORATION
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
 (Unaudited)
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Revenue:Software licenses
    
    $
    4,832
    
    
    $
    9,718
    
    
    $
    10,571
    
    
    $
    18,774Support and maintenance
    
    
    15,145
    
    
    
    14,951
    
    
    
    30,788
    
    
    
    28,778Professional services
    
    
    17,870
    
    
    
    24,090
    
    
    
    35,300
    
    
    
    47,165Hosting
    
    
    13,927
    
    
    
    12,083
    
    
    
    26,274
    
    
    
    24,413Total revenue
    
    
    51,774
    
    
    
    60,842
    
    
    
    102,933
    
    
    
    119,130Operating expenses:Cost of software licenses (1)
    
    
    569
    
    
    
    1,272
    
    
    
    951
    
    
    
    2,112Cost of professional services, support and maintenance (1)
    
    
    20,661
    
    
    
    18,537
    
    
    
    40,075
    
    
    
    36,797Cost of hosting (1)
    
    
    6,893
    
    
    
    7,118
    
    
    
    13,561
    
    
    
    14,090Selling and marketing
    
    
    6,871
    
    
    
    9,441
    
    
    
    13,555
    
    
    
    15,929Product development
    
    
    8,753
    
    
    
    8,973
    
    
    
    17,473
    
    
    
    17,145General and administrative
    
    
    5,928
    
    
    
    7,475
    
    
    
    12,975
    
    
    
    12,325Depreciation and amortization
    
    
    2,635
    
    
    
    2,427
    
    
    
    5,021
    
    
    
    5,000Total operating expenses
    
    
    52,310
    
    
    
    55,243
    
    
    
    103,611
    
    
    
    103,398Operating (loss) income
    
    
    (536
    )
    
    
    5,599
    
    
    
    (678
    )
    
    
    15,732Interest income
    
    
    55
    
    
    
    111
    
    
    
    111
    
    
    
    234Interest expense
    
    
    (118
    )
    
    
    (199
    )
    
    
    (238
    )
    
    
    (360
    )Other non-operating expenses
    
    
    (315
    )
    
    
    (440
    )
    
    
    (472
    )
    
    
    (392
    )Interest and other expense, net
    
    
    (378
    )
    
    
    (528
    )
    
    
    (599
    )
    
    
    (518
    )(Loss) income before income tax expense
    
    
    (914
    )
    
    
    5,071
    
    
    
    (1,277
    )
    
    
    15,214Income tax expense
    
    
    (860
    )
    
    
    (440
    )
    
    
    (1,553
    )
    
    
    (1,639
    )Net (loss) income
    
    $
    (1,774
    )
    
    $
    4,631
    
    
    $
    (2,830
    )
    
    $
    13,575(Loss) earnings per share:Basic
    
    $
    (0.03
    )
    
    $
    0.09
    
    
    $
    (0.05
    )
    
    $
    0.25Diluted
    
    $
    (0.03
    )
    
    $
    0.08
    
    
    $
    (0.05
    )
    
    $
    0.25Weighted average common shares outstanding  basic
    
    
    51,843,559
    
    
    
    52,868,795
    
    
    
    51,791,139
    
    
    
    52,851,339Weighted average common shares outstanding  fully diluted
    
    
    51,843,559
    
    
    
    53,601,856
    
    
    
    51,791,139
    
    
    
    53,515,854
 
 (1)
    
    Excludes charges for depreciation. Cost of software licenses includes amortization of
acquired technology.   2




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##### Table of Contents



S1 CORPORATION
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (IN THOUSANDS)
 (Unaudited)
 Six Months EndedJune 30,2010
    
    
    2009Cash flows from operating activities:Net (loss) income
    
    $
    (2,830
    )
    
    $
    13,575Adjustments to reconcile net (loss) income to net cash provided by
operating activities:Depreciation and amortization
    
    
    5,492
    
    
    
    5,915Provision for doubtful accounts receivable and billing adjustments
    
    
    928
    
    
    
    92Deferred income taxes
    
    
    (556
    )
    
    
    31Stock-based compensation expense
    
    
    1,182
    
    
    
    560Changes in assets and liabilities:Decrease (increase) in accounts receivable
    
    
    10,698
    
    
    
    (12,968
    )(Increase) decrease in prepaid expenses and other assets
    
    
    (380
    )
    
    
    1,024Increase in accounts payable and other liabilities
    
    
    388
    
    
    
    773Decrease in accrued compensation and benefits
    
    
    (2,296
    )
    
    
    (1,280
    )Increase in income taxes payable
    
    
    932
    
    
    
    627Increase in deferred revenue
    
    
    9,753
    
    
    
    8,187Net cash provided by operating activities
    
    
    23,311
    
    
    
    16,536Cash flows from investing activities:Maturities of investment securities
    
    
    1,071
    
    
    
    917Purchases of investment securities
    
    
    (1,117
    )
    
    
    Acquisition, net of acquired cash
    
    
    (29,249
    )
    
    
    Purchases of property, equipment and technology
    
    
    (3,076
    )
    
    
    (4,506
    )Net cash used in investing activities
    
    
    (32,371
    )
    
    
    (3,589
    )Cash flows from financing activities:(Payments) proceeds from exercise of employee stock awards
    
    
    (148
    )
    
    
    142Payments on capital leases and debt obligations
    
    
    (667
    )
    
    
    (2,545
    )Net cash used in financing activities
    
    
    (815
    )
    
    
    (2,403
    )Effect of exchange rate changes on cash and cash equivalents
    
    
    (202
    )
    
    
    823Net (decrease) increase in cash and cash equivalents
    
    
    (10,077
    )
    
    
    11,367Cash and cash equivalents at beginning of period
    
    
    61,784
    
    
    
    63,840Cash and cash equivalents at end of period
    
    $
    51,707
    
    
    $
    75,207
   3




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##### Table of Contents



S1 CORPORATION
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (Unaudited)
 1. BACKGROUND AND BASIS OF PRESENTATION
     2. RECENT ACCOUNTING PRONOUNCEMENTS
   4




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##### Table of Contents



3. BUSINESS COMBINATION
    Cash
    
    $
    751Accounts receivables
    
    
    908Indentifiable intangible assets:Trade names
    
    
    121Acquired technology
    
    
    3,390Customer relationships
    
    
    5,986Goodwill
    
    
    19,695Property and equipment
    
    
    502Other assets
    
    
    506Deferred revenue
    
    
    (622
    )Liabilities
    
    
    (1,163
    )Total
    
    $
    30,074
 4. FAIR VALUE MEASUREMENTS
   5




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##### Table of Contents



June 30, 2010
    
    
    December 31, 2009Carrying
    
    
    Estimated
    
    
    Carrying
    
    
    EstimatedValue
    
    
    Fair Value
    
    
    Value
    
    
    Fair ValueCash and cash equivalents
    
    $
    51,707
    
    
    $
    51,707
    
    
    $
    61,784
    
    
    $
    61,784Included in other current assets:Fixed term deposits
    
    
    301
    
    
    
    301
    
    
    
    318
    
    
    
    318Restricted fixed term deposit
    
    
    2,000
    
    
    
    2,000
    
    
    
    2,000
    
    
    
    2,000Debt obligation, excluding current portion
    
    
    14
    
    
    
    14
    
    
    
    5,026
    
    
    
    4,911
 5. ACCOUNTS RECEIVABLE
  June 30,
    
    
    December 31,2010
    
    
    2009Billed receivables
    
    $
    38,495
    
    
    $
    42,862Unbilled receivables
    
    
    17,384
    
    
    
    23,907Allowance for doubtful accounts and billing adjustments
    
    
    (2,796
    )
    
    
    (2,299
    )Total
    
    $
    53,083
    
    
    $
    64,470
  6. OTHER CURRENT ASSETS
  June 30,
    
    
    December 31,2010
    
    
    2009Restricted cash and escrow deposits
    
    $
    3,653
    
    
    $
    2,059Short-term investments
    
    
    301
    
    
    
    318Taxes receivable
    
    
    994
    
    
    
    557Deferred tax assets, net
    
    
    1,478
    
    
    
    1,079Other
    
    
    1,074
    
    
    
    918Total
    
    $
    7,500
    
    
    $
    4,931
  6




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##### Table of Contents



7. GOODWILL AND OTHER INTANGIBLE ASSETS
   Banking:
    
    
    Banking:Payments
    
    
    Large FI
    
    
    Community FI
    
    
    TotalGoodwill, net as of December 31, 2009
    
    $
    32,836
    
    
    $
    52,047
    
    
    $
    41,722
    
    
    $
    126,605Acquisition of PMSC
    
    
    
    
    
    
    
    
    
    
    19,695
    
    
    
    19,695Effect of foreign currency translations
    
    
    (370
    )
    
    
    (605
    )
    
    
    
    
    
    
    (975
    )Goodwill, net as of June 30, 2010
    
    $
    32,466
    
    
    $
    51,442
    
    
    $
    61,417
    
    
    $
    145,325
  As of June 30, 2010Gross
    
    
    Accumulated
    
    
    NetCarrying Value
    
    
    Amortization
    
    
    Carrying ValueTrade names
    
    $
    121
    
    
    $
    (40
    )
    
    $
    81Acquired technology
    
    
    25,328
    
    
    
    (21,063
    )
    
    
    4,265Customer lists
    
    
    17,986
    
    
    
    (9,196
    )
    
    
    8,790Total
    
    $
    43,435
    
    
    $
    (30,299
    )
    
    $
    13,136
 As of December 31, 2009Gross
    
    
    Accumulated
    
    
    NetCarrying Value
    
    
    Amortization
    
    
    Carrying ValueAcquired technology
    
    $
    21,938
    
    
    $
    (20,592
    )
    
    $
    1,346Customer lists
    
    
    12,000
    
    
    
    (8,451
    )
    
    
    3,549Total
    
    $
    33,938
    
    
    $
    (29,043
    )
    
    $
    4,895
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Trade names
    
    $
    30
    
    
    $
    
    
    
    $
    40
    
    
    $
    Acquired technology
    
    
    292
    
    
    
    457
    
    
    
    471
    
    
    
    915Customer lists
    
    
    422
    
    
    
    283
    
    
    
    745
    
    
    
    565Total
    
    $
    744
    
    
    $
    740
    
    
    $
    1,256
    
    
    $
    1,480
  7




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##### Table of Contents



2010
    
    
    2011
    
    
    2012
    
    
    2013
    
    
    2014Payments
    
    $
    490
    
    
    $
    490
    
    
    $
    490
    
    
    $
    490
    
    
    $
    408Banking: Large FI
    
    
    245
    
    
    
    245
    
    
    
    183
    
    
    
    
    
    
    
    Banking: Community
FI
    
    
    2,010
    
    
    
    2,089
    
    
    
    1,493
    
    
    
    1,277
    
    
    
    1,277Total
    
    $
    2,745
    
    
    $
    2,824
    
    
    $
    2,166
    
    
    $
    1,767
    
    
    $
    1,685
 8. DEFERRED REVENUE
  June 30,
    
    
    December 31,2010
    
    
    2009Software licenses
    
    $
    5,865
    
    
    $
    2,861Professional services
    
    
    8,653
    
    
    
    7,317Support and maintenance
    
    
    22,246
    
    
    
    16,659Deferred revenue, current
    
    
    36,764
    
    
    
    26,837Deferred revenue, non-current (1)
    
    
    366
    
    
    
    41Total deferred revenue
    
    $
    37,130
    
    
    $
    26,878
 (1)
    
    Non-current deferred revenue is included in Long-term Other liabilities.  9. INCOME TAXES
   8




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##### Table of Contents



10. STOCK-BASED COMPENSATION PLANS
   Grants available under 2003 Stock Incentive Plan
    
    
    1,104Stock options outstanding
    
    
    6,480Restricted stock
    
    
    1,251Total
    
    
    8,835
   9




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##### Table of Contents



Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Operating expenses:Cost of professional services, support and maintenance
    
    $
    74
    
    
    $
    213
    
    
    $
    141
    
    
    
    61Cost of hosting
    
    
    33
    
    
    
    23
    
    
    
    64
    
    
    
    43Selling and marketing
    
    
    89
    
    
    
    1,147
    
    
    
    13
    
    
    
    (73
    )Product development
    
    
    14
    
    
    
    236
    
    
    
    (9
    )
    
    
    106General and administrative
    
    
    599
    
    
    
    1,472
    
    
    
    973
    
    
    
    423Total stock-based compensation expense
    
    $
    809
    
    
    $
    3,091
    
    
    $
    1,182
    
    
    $
    560Grant type:Stock options
    
    $
    412
    
    
    $
    620
    
    
    $
    879
    
    
    $
    1,214Restricted stock
    
    
    628
    
    
    
    349
    
    
    
    1,226
    
    
    
    562Stock appreciation rights
    
    
    (231
    )
    
    
    2,122
    
    
    
    (923
    )
    
    
    (1,216
    )Total stock-based compensation expense
    
    $
    809
    
    
    $
    3,091
    
    
    $
    1,182
    
    
    $
    560
 11. SEGMENT REPORTING AND MAJOR CUSTOMERS
  Three Months Ended June 30, 2010
    
    
    Three Months Ended June 30, 2009Banking:
    
    
    Banking:
    
    
    
    
    
    
    
    
    
    
    Banking:
    
    
    Banking:Payments
    
    
    Large FI
    
    
    Community FI
    
    
    Total
    
    
    Payments
    
    
    Large FI
    
    
    Community FI
    
    
    TotalRevenue:Software licenses
    
    $
    2,359
    
    
    $
    1,261
    
    
    $
    1,212
    
    
    $
    4,832
    
    
    $
    5,536
    
    
    $
    1,315
    
    
    $
    2,867
    
    
    $
    9,718Support and maintenance
    
    
    5,161
    
    
    
    4,934
    
    
    
    5,050
    
    
    
    15,145
    
    
    
    4,659
    
    
    
    5,363
    
    
    
    4,929
    
    
    
    14,951Professional services
    
    
    4,614
    
    
    
    11,863
    
    
    
    1,393
    
    
    
    17,870
    
    
    
    4,711
    
    
    
    17,744
    
    
    
    1,635
    
    
    
    24,090Hosting
    
    
    263
    
    
    
    6,391
    
    
    
    7,273
    
    
    
    13,927
    
    
    
    189
    
    
    
    6,960
    
    
    
    4,934
    
    
    
    12,083Total revenue
    
    $
    12,397
    
    
    $
    24,449
    
    
    $
    14,928
    
    
    $
    51,774
    
    
    $
    15,095
    
    
    $
    31,382
    
    
    $
    14,365
    
    
    $
    60,842Operating expenses:Cost of software licenses
    
    
    7
    
    
    
    308
    
    
    
    254
    
    
    
    569
    
    
    
    583
    
    
    
    203
    
    
    
    486
    
    
    
    1,272Cost of professional services,
support and maintenance
    
    
    4,611
    
    
    
    10,356
    
    
    
    5,694
    
    
    
    20,661
    
    
    
    4,033
    
    
    
    10,725
    
    
    
    3,779
    
    
    
    18,537Cost of hosting
    
    
    179
    
    
    
    3,680
    
    
    
    3,034
    
    
    
    6,893
    
    
    
    138
    
    
    
    4,027
    
    
    
    2,953
    
    
    
    7,118Selling and marketing
    
    
    2,779
    
    
    
    2,529
    
    
    
    1,563
    
    
    
    6,871
    
    
    
    2,817
    
    
    
    4,608
    
    
    
    2,016
    
    
    
    9,441Product development
    
    
    1,419
    
    
    
    3,972
    
    
    
    3,362
    
    
    
    8,753
    
    
    
    1,257
    
    
    
    5,627
    
    
    
    2,089
    
    
    
    8,973General and administrative
    
    
    1,623
    
    
    
    2,733
    
    
    
    1,572
    
    
    
    5,928
    
    
    
    1,795
    
    
    
    3,604
    
    
    
    2,076
    
    
    
    7,475Depreciation and amortization
    
    
    495
    
    
    
    1,129
    
    
    
    1,011
    
    
    
    2,635
    
    
    
    396
    
    
    
    1,229
    
    
    
    802
    
    
    
    2,427Total operating expenses
    
    
    11,113
    
    
    
    24,707
    
    
    
    16,490
    
    
    
    52,310
    
    
    
    11,019
    
    
    
    30,023
    
    
    
    14,201
    
    
    
    55,243Operating income (loss)
    
    $
    1,284
    
    
    $
    (258
    )
    
    $
    (1,562
    )
    
    $
    (536
    )
    
    $
    4,076
    
    
    $
    1,359
    
    
    $
    164
    
    
    $
    5,599
  10




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##### Table of Contents



Six Months Ended June 30, 2010
    
    
    Six Months Ended June 30, 2009Banking:
    
    
    Banking:
    
    
    
    
    
    
    
    
    
    
    Banking:
    
    
    Banking:Payments
    
    
    Large FI
    
    
    Community FI
    
    
    Total
    
    
    Payments
    
    
    Large FI
    
    
    Community FI
    
    
    TotalRevenue:Software licenses
    
    $
    5,684
    
    
    $
    1,906
    
    
    $
    2,981
    
    
    $
    10,571
    
    
    $
    10,534
    
    
    $
    3,784
    
    
    $
    4,456
    
    
    $
    18,774Support and maintenance
    
    
    10,462
    
    
    
    10,180
    
    
    
    10,146
    
    
    
    30,788
    
    
    
    8,732
    
    
    
    10,334
    
    
    
    9,712
    
    
    
    28,778Professional services
    
    
    8,518
    
    
    
    24,512
    
    
    
    2,270
    
    
    
    35,300
    
    
    
    8,087
    
    
    
    36,257
    
    
    
    2,821
    
    
    
    47,165Hosting
    
    
    569
    
    
    
    12,590
    
    
    
    13,115
    
    
    
    26,274
    
    
    
    342
    
    
    
    14,200
    
    
    
    9,871
    
    
    
    24,413Total revenue
    
    $
    25,233
    
    
    $
    49,188
    
    
    $
    28,512
    
    
    $
    102,933
    
    
    $
    27,695
    
    
    $
    64,575
    
    
    $
    26,860
    
    
    $
    119,130Operating expenses:Cost of software licenses
    
    
    121
    
    
    
    436
    
    
    
    394
    
    
    
    951
    
    
    
    888
    
    
    
    513
    
    
    
    711
    
    
    
    2,112Cost of professional services,
support and maintenance
    
    
    8,963
    
    
    
    20,257
    
    
    
    10,855
    
    
    
    40,075
    
    
    
    7,093
    
    
    
    22,262
    
    
    
    7,442
    
    
    
    36,797Cost of hosting
    
    
    391
    
    
    
    7,400
    
    
    
    5,770
    
    
    
    13,561
    
    
    
    283
    
    
    
    8,043
    
    
    
    5,764
    
    
    
    14,090Selling and marketing
    
    
    5,761
    
    
    
    4,809
    
    
    
    2,985
    
    
    
    13,555
    
    
    
    5,743
    
    
    
    6,627
    
    
    
    3,559
    
    
    
    15,929Product development
    
    
    2,874
    
    
    
    8,193
    
    
    
    6,406
    
    
    
    17,473
    
    
    
    2,370
    
    
    
    10,682
    
    
    
    4,093
    
    
    
    17,145General and administrative
    
    
    3,657
    
    
    
    5,908
    
    
    
    3,410
    
    
    
    12,975
    
    
    
    2,859
    
    
    
    6,261
    
    
    
    3,205
    
    
    
    12,325Depreciation and amortization
    
    
    962
    
    
    
    2,217
    
    
    
    1,842
    
    
    
    5,021
    
    
    
    819
    
    
    
    2,537
    
    
    
    1,644
    
    
    
    5,000Total operating expenses
    
    
    22,729
    
    
    
    49,220
    
    
    
    31,662
    
    
    
    103,611
    
    
    
    20,055
    
    
    
    56,925
    
    
    
    26,418
    
    
    
    103,398Operating income (loss)
    
    $
    2,504
    
    
    $
    (32
    )
    
    $
    (3,150
    )
    
    $
    (678
    )
    
    $
    7,640
    
    
    $
    7,650
    
    
    $
    442
    
    
    $
    15,732
 Major Customer.
 Geography
 Revenue
    
    
    Revenue
    
    
    Property and EquipmentThree Months Ended June 30,
    
    
    Six Months Ended June 30,
    
    
    June 30,
    
    
    December 31,2010
    
    
    2009
    
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009Americas
    
    $
    36,793
    
    
    $
    43,248
    
    
    $
    73,987
    
    
    $
    85,684
    
    
    $
    19,972
    
    
    $
    20,451International:EMEI
    
    
    6,658
    
    
    
    9,311
    
    
    
    14,080
    
    
    
    18,143
    
    
    
    859
    
    
    
    985Africa
    
    
    3,209
    
    
    
    2,924
    
    
    
    6,514
    
    
    
    5,463
    
    
    
    1,349
    
    
    
    1,494APAC
    
    
    5,114
    
    
    
    5,359
    
    
    
    8,352
    
    
    
    9,840
    
    
    
    116
    
    
    
    88Total
    
    $
    51,774
    
    
    $
    60,842
    
    
    $
    102,933
    
    
    $
    119,130
    
    
    $
    22,296
    
    
    $
    23,018
  11




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##### Table of Contents



12. NET (LOSS) INCOME PER COMMON SHARE
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Basic (loss) earnings per share:Net (loss) income
    
    $
    (1,774
    )
    
    $
    4,631
    
    
    $
    (2,830
    )
    
    $
    13,575Amount allocated to participating preferred stockholders
    
    
    
    
    
    
    (91
    )
    
    
    
    
    
    
    (267
    )Amount allocated to participating restricted stockholders
    
    
    
    
    
    
    (42
    )
    
    
    
    
    
    
    (102
    )Net (loss) income available to common stockholders
    
    $
    (1,774
    )
    
    $
    4,498
    
    
    $
    (2,830
    )
    
    $
    13,206Basic weighted average common shares outstanding
    
    
    51,844
    
    
    
    52,869
    
    
    
    51,791
    
    
    
    52,851Basic (loss) earnings per share
    
    $
    (0.03
    )
    
    $
    0.09
    
    
    $
    (0.05
    )
    
    $
    0.25Diluted (loss) earnings per share:Net (loss) income
    
    $
    (1,774
    )
    
    $
    4,631
    
    
    $
    (2,830
    )
    
    $
    13,575Amount allocated to participating preferred stockholders
    
    
    
    
    
    
    (90
    )
    
    
    
    
    
    
    (264
    )Amount allocated to participating restricted stockholders
    
    
    
    
    
    
    (41
    )
    
    
    
    
    
    
    (101
    )Net (loss) income available to common stockholders
    
    $
    (1,774
    )
    
    $
    4,500
    
    
    $
    (2,830
    )
    
    $
    13,210Basic weighted average common shares outstanding
    
    
    51,844
    
    
    
    52,869
    
    
    
    51,791
    
    
    
    52,851Dilutive effect of employee stock options
    
    
    
    
    
    
    733
    
    
    
    
    
    
    
    665Diluted weighted average common shares outstanding
    
    
    51,844
    
    
    
    53,602
    
    
    
    51,791
    
    
    
    53,516Diluted (loss) earnings per share
    
    $
    (0.03
    )
    
    $
    0.08
    
    
    $
    (0.05
    )
    
    $
    0.25
 13. COMPREHENSIVE (LOSS) INCOME
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Net (loss) income
    
    $
    (1,774
    )
    
    $
    4,631
    
    
    $
    (2,830
    )
    
    $
    13,575Other comprehensive loss:Currency translation adjustment
    
    
    (1,191
    )
    
    
    4,150
    
    
    
    (2,152
    )
    
    
    3,180Realized gain on securities, net of tax
    
    
    
    
    
    
    66
    
    
    
    
    
    
    
    12Total other comprehensive loss
    
    
    (1,191
    )
    
    
    4,216
    
    
    
    (2,152
    )
    
    
    3,192Comprehensive (loss) income
    
    $
    (2,965
    )
    
    $
    8,847
    
    
    $
    (4,982
    )
    
    $
    16,767
 14. SUBSEQUENT EVENTS
    12




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
  Form
10-Q
 Executive Overview
      13




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##### Table of Contents



Summary financial results.
   Revenue from Significant Customers
  Revenue Backlog
  Recent Accounting Pronouncements
   14




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##### Table of Contents



Critical Accounting Policies and Estimates
   
    
    revenue recognition;
    
    estimation of our allowance for doubtful accounts and billing adjustments;
    
    valuation and recoverability of long-lived assets, including goodwill;
    
    determination of the fair value of stock-based compensation;
    
    recognition of costs in connection with restructuring plans; and
    
    income taxes.
 Revenue recognition.
  15




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##### Table of Contents



Stock-based compensation.
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Operating expenses:Cost of professional services, support and maintenance
    
    $
    74
    
    
    $
    213
    
    
    $
    141
    
    
    
    61Cost of hosting
    
    
    33
    
    
    
    23
    
    
    
    64
    
    
    
    43Selling and marketing
    
    
    89
    
    
    
    1,147
    
    
    
    13
    
    
    
    (73
    )Product development
    
    
    14
    
    
    
    236
    
    
    
    (9
    )
    
    
    106General and administrative
    
    
    599
    
    
    
    1,472
    
    
    
    973
    
    
    
    423Total stock-based compensation expense
    
    $
    809
    
    
    $
    3,091
    
    
    $
    1,182
    
    
    $
    560Grant type:Stock options
    
    $
    412
    
    
    $
    620
    
    
    $
    879
    
    
    $
    1,214Restricted stock
    
    
    628
    
    
    
    349
    
    
    
    1,226
    
    
    
    562Stock appreciation rights
    
    
    (231
    )
    
    
    2,122
    
    
    
    (923
    )
    
    
    (1,216
    )Total stock-based compensation expense
    
    $
    809
    
    
    $
    3,091
    
    
    $
    1,182
    
    
    $
    560
 Effects of Foreign Currencies
  Three Months Ended June 30, 2010
    
    
    Six Months Ended June 30, 2010At Prior Year
    
    
    
    
    
    
    
    
    
    
    At Prior YearExchange
    
    
    Exchange Rate
    
    
    
    
    
    
    Exchange
    
    
    Exchange RateRates (1)
    
    
    Effect
    
    
    As reported
    
    
    Rates (1)
    
    
    Effect
    
    
    As reportedRevenue
    
    $
    51,454
    
    
    $
    320
    
    
    $
    51,774
    
    
    $
    101,583
    
    
    $
    1,350
    
    
    $
    102,933Operating expenses
    
    
    51,960
    
    
    
    350
    
    
    
    52,310
    
    
    
    101,671
    
    
    
    1,940
    
    
    
    103,611Operating income (loss)
    
    
    (506
    )
    
    
    (30
    )
    
    
    (536
    )
    
    
    (88
    )
    
    
    (590
    )
    
    
    (678
    )Net loss
    
    
    (1,824
    )
    
    
    50
    
    
    
    (1,774
    )
    
    
    (2,510
    )
    
    
    (320
    )
    
    
    (2,830
    )Basic loss per share
    
    $
    (0.03
    )
    
    $
    
    
    
    $
    (0.03
    )
    
    $
    (0.05
    )
    
    $
    
    
    
    $
    (0.05
    )Diluted loss per share
    
    $
    (0.03
    )
    
    $
    
    
    
    $
    (0.03
    )
    
    $
    (0.05
    )
    
    $
    
    
    
    $
    (0.05
    )
 (1)
    
    Current year results translated into U.S. Dollars using prior years period
average exchange rates.  16




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##### Table of Contents



CONSOLIDATED RESULTS OF OPERATIONS
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2010
    
    
    2009
    
    
    Change
    
    
    2010
    
    
    2009
    
    
    ChangeRevenue:Software licenses
    
    $
    4,832
    
    
    $
    9,718
    
    
    
    -50
    %
    
    $
    10,571
    
    
    $
    18,774
    
    
    
    -44
    %Support and maintenance
    
    
    15,145
    
    
    
    14,951
    
    
    
    1
    %
    
    
    30,788
    
    
    
    28,778
    
    
    
    7
    %Professional services
    
    
    17,870
    
    
    
    24,090
    
    
    
    -26
    %
    
    
    35,300
    
    
    
    47,165
    
    
    
    -25
    %Hosting
    
    
    13,927
    
    
    
    12,083
    
    
    
    15
    %
    
    
    26,274
    
    
    
    24,413
    
    
    
    8
    %Total revenue
    
    
    51,774
    
    
    
    60,842
    
    
    
    -15
    %
    
    
    102,933
    
    
    
    119,130
    
    
    
    -14
    %Operating Expenses:Cost of software licenses (1)
    
    
    569
    
    
    
    1,272
    
    
    
    -55
    %
    
    
    951
    
    
    
    2,112
    
    
    
    -55
    %Cost of professional services,
support and maintenance (1)
    
    
    20,661
    
    
    
    18,537
    
    
    
    11
    %
    
    
    40,075
    
    
    
    36,797
    
    
    
    9
    %Cost of hosting (1)
    
    
    6,893
    
    
    
    7,118
    
    
    
    -3
    %
    
    
    13,561
    
    
    
    14,090
    
    
    
    -4
    %Selling and marketing
    
    
    6,871
    
    
    
    9,441
    
    
    
    -27
    %
    
    
    13,555
    
    
    
    15,929
    
    
    
    -15
    %Product development
    
    
    8,753
    
    
    
    8,973
    
    
    
    -2
    %
    
    
    17,473
    
    
    
    17,145
    
    
    
    2
    %General and administrative
    
    
    5,928
    
    
    
    7,475
    
    
    
    -21
    %
    
    
    12,975
    
    
    
    12,325
    
    
    
    5
    %Depreciation and amortization
    
    
    2,635
    
    
    
    2,427
    
    
    
    9
    %
    
    
    5,021
    
    
    
    5,000
    
    
    
    0
    %Total operating expenses
    
    
    52,310
    
    
    
    55,243
    
    
    
    -5
    %
    
    
    103,611
    
    
    
    103,398
    
    
    
    0
    %Operating (loss) income
    
    
    (536
    )
    
    
    5,599
    
    
    
    -110
    %
    
    
    (678
    )
    
    
    15,732
    
    
    
    -104
    %Interest and other expense, net
    
    
    (378
    )
    
    
    (528
    )
    
    
    -28
    %
    
    
    (599
    )
    
    
    (518
    )
    
    
    16
    %(Loss) income before income tax expense
    
    
    (914
    )
    
    
    5,071
    
    
    
    -118
    %
    
    
    (1,277
    )
    
    
    15,214
    
    
    
    -108
    %Income tax expense
    
    
    (860
    )
    
    
    (440
    )
    
    
    95
    %
    
    
    (1,553
    )
    
    
    (1,639
    )
    
    
    -5
    %Net (loss) income
    
    $
    (1,774
    )
    
    $
    4,631
    
    
    
    -138
    %
    
    $
    (2,830
    )
    
    $
    13,575
    
    
    
    -121
    %(Loss) earnings per shareBasic
    
    $
    (0.03
    )
    
    $
    0.09
    
    
    
    
    
    
    $
    (0.05
    )
    
    $
    0.25Diluted
    
    $
    (0.03
    )
    
    $
    0.08
    
    
    
    
    
    
    $
    (0.05
    )
    
    $
    0.25Effective tax rate
    
    
    -94
    %
    
    
    9
    %
    
    
    
    
    
    
    -122
    %
    
    
    11
    %Operating expenses as a percent of revenue:Cost of software licenses (2)
    
    
    12
    %
    
    
    13
    %
    
    
    
    
    
    
    9
    %
    
    
    11
    %Cost of professional services,
support and maintenance (2)
    
    
    63
    %
    
    
    47
    %
    
    
    
    
    
    
    61
    %
    
    
    48
    %Cost of hosting (2)
    
    
    49
    %
    
    
    59
    %
    
    
    
    
    
    
    52
    %
    
    
    58
    %Selling and marketing
    
    
    13
    %
    
    
    16
    %
    
    
    
    
    
    
    13
    %
    
    
    13
    %Product development
    
    
    17
    %
    
    
    15
    %
    
    
    
    
    
    
    17
    %
    
    
    14
    %General and administrative
    
    
    11
    %
    
    
    12
    %
    
    
    
    
    
    
    13
    %
    
    
    10
    %Depreciation and amortization
    
    
    5
    %
    
    
    4
    %
    
    
    
    
    
    
    5
    %
    
    
    4
    %Operating (loss) income
    
    
    -1
    %
    
    
    9
    %
    
    
    
    
    
    
    -1
    %
    
    
    13
    %Net (loss) income
    
    
    -3
    %
    
    
    8
    %
    
    
    
    
    
    
    -3
    %
    
    
    11
    %
 (1)
    
    The Cost of software licenses, professional services, support and maintenance, and
hosting excludes charges for depreciation. The Cost of software licenses includes
amortization of acquired technology.(2)
    
    Each cost of revenue is a percentage of the applicable revenue type for the
periods presented.  17




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##### Table of Contents



RESULTS OF OPERATIONS  COMPARISON OF THE THREE MONTHS ENDED JUNE 30, 2010 AND 2009
 Banking:
    
    
    Banking:(In thousands)
    
    Payments
    
    
    Large FI
    
    
    Community FI
    
    
    TotalTotal revenueThree months ended June 30, 2010
    
    $
    12,397
    
    
    $
    24,449
    
    
    $
    14,928
    
    
    $
    51,774Three months ended June 30, 2009
    
    
    15,095
    
    
    
    31,382
    
    
    
    14,365
    
    
    
    60,842Revenue (decline) growth
    
    
    (2,698
    )
    
    
    (6,933
    )
    
    
    563
    
    
    
    (9,068
    )Percentage change
    
    
    -18
    %
    
    
    -22
    %
    
    
    4
    %
    
    
    -15
    %Total operating income (loss)Three months ended June 30, 2010
    
    $
    1,284
    
    
    $
    (258
    )
    
    $
    (1,562
    )
    
    $
    (536
    )Three months ended June 30, 2009
    
    
    4,076
    
    
    
    1,359
    
    
    
    164
    
    
    
    5,599Operating income (loss) decline
    
    
    (2,792
    )
    
    
    (1,617
    )
    
    
    (1,726
    )
    
    
    (6,135
    )Percentage change
    
    
    -68
    %
    
    
    -119
    %
    
    
    -1052
    %
    
    
    -110
    %
 Revenue.
    Operating (loss) income.
    18




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##### Table of Contents



Interest and other expense, net.
 Income tax expense
 RESULTS OF OPERATIONS  COMPARISON OF THE SIX MONTHS ENDED JUNE 30, 2010 AND 2009
 Banking:
    
    
    Banking:(In thousands)
    
    Payments
    
    
    Large FI
    
    
    Community FI
    
    
    TotalTotal revenueSix months ended June 30, 2010
    
    $
    25,233
    
    
    $
    49,188
    
    
    $
    28,512
    
    
    $
    102,933Six months ended June 30, 2009
    
    
    27,695
    
    
    
    64,575
    
    
    
    26,860
    
    
    
    119,130Revenue (decline) growth
    
    
    (2,462
    )
    
    
    (15,387
    )
    
    
    1,652
    
    
    
    (16,197
    )Percentage change
    
    
    -9
    %
    
    
    -24
    %
    
    
    6
    %
    
    
    -14
    %Total operating income (loss)Six months ended June 30, 2010
    
    $
    2,504
    
    
    $
    (32
    )
    
    $
    (3,150
    )
    
    $
    (678
    )Six months ended June 30, 2009
    
    
    7,640
    
    
    
    7,650
    
    
    
    442
    
    
    
    15,732Operating income (loss) decline
    
    
    (5,136
    )
    
    
    (7,682
    )
    
    
    (3,592
    )
    
    
    (16,410
    )Percentage change
    
    
    -67
    %
    
    
    -100
    %
    
    
    -813
    %
    
    
    -104
    %
 Revenue.
     19




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##### Table of Contents



Operating (loss) income.
    Interest and other expense, net.
 Income tax expense
  20




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##### Table of Contents



Liquidity and Capital Resources
  Six Months ended June 30,2010
    
    
    2009Net cash provided by operating activities before
changes in operating assets and liabilities
    
    $
    4,216
    
    
    $
    20,173Change in operating assets and liabilities
    
    
    19,095
    
    
    
    (3,637
    )Net cash provided by operating activities
    
    
    23,311
    
    
    
    16,536Net cash used in investing activities
    
    
    (32,371
    )
    
    
    (3,589
    )Net cash used in financing activities
    
    
    (815
    )
    
    
    (2,403
    )Effect of exchange rates on cash and cash equivalents
    
    
    (202
    )
    
    
    823Net (decrease) increase in cash and cash equivalents
    
    $
    (10,077
    )
    
    $
    11,367
 June 30,
    
    
    December 31,2010
    
    
    2009Cash and cash equivalents
    
    $
    51,707
    
    
    $
    61,784Working capital (1)
    
    
    50,300
    
    
    
    82,942Total assets
    
    
    305,767
    
    
    
    300,066Total stockholders equity
    
    
    235,616
    
    
    
    238,641
 (1)
    
    Working capital includes deferred revenue of $36.8 million and $26.8 million as
of June 30, 2010 and December 31, 2009, respectively. Operating Activities
 Investing Activities
 Financing Activities
 Contractual Obligations and Off-Balance Sheet Arrangements.
  21




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##### Table of Contents



Restructuring.
 Stock appreciation rights awards.
 Capital requirements.
 
 Item 3. Quantitative and Qualitative Disclosures about Market Risk
  
 Item 4. Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
 Changes in Internal Control over Financial Reporting.
  22




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##### Table of Contents



PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  You should consider carefully the Risk Factors. If any of these risks actually occur, our
business, financial condition or results of operations would likely suffer. In that case, the
trading price of our common stock could decline, and you may lose all or a part of the money you
paid to buy our common stock.
 Our quarterly operating results may fluctuate and any fluctuations could adversely affect the
price of our common stock
  
    
    we cannot accurately predict the value, number and timing of license or services
agreements we will sign in a period, in part because the budget constraints and
internal review processes of existing and potential customers are not within our
control;
 
    
    as we sell our products on both a perpetual license and a term or subscription
license, we cannot accurately predict the mix of perpetual licenses to term licenses
sold in any one quarter. Term licenses significantly reduce the amount of revenue
recognized in the first year of the contract, but is intended to increase the
overall revenue earned from the customer during the typical customer life cycle;
perpetual license revenue can vary significantly on a quarterly basis;
 
    
    implementation projects in our Payments and Banking: Large FI segments are
increasing in size, complexity and length and, in accordance with applicable
accounting guidance, the software license revenue from these types of engagements is
generally recognized over the implementation period (referred to as the percentage
of completion method). We currently expect that the overall percentage of these
types of engagements will increase over time and, as we shift to recognizing more
software license revenue using the percentage of completion method, our current and
near-term financial results may be negatively impacted;
 
    
    the length of our sales cycle to large financial organizations generally lasts
from six to 18 months, which adds an element of uncertainty to our ability to
forecast revenue;
 
    
    during our sales and implementation cycles, we expend substantial time, effort
and resources preparing contract proposals, negotiating the contract and
implementing the software and, if our efforts do not result in a sale (whether
during the period in which such expenditures were incurred or at all), we will not
realize any revenues to offset these expenditures during the period in which they
were incurred or at all;
 
    
    even if a sale is completed, revenue recognition can be delayed or fall below
expectations if accounting guidance requires us to recognize revenue over the
implementation period, potentially resulting in significant fluctuations in our
revenue on a quarterly basis; as such, it is difficult to accurately predict the
amount of revenue that will be recognized in any given quarter;
 
    
    if we fail to or are delayed in the introduction of new or enhanced products, or
if our competitors introduce new or enhanced products, sales of our products and
services may not achieve expected levels and/or may decline;
  23




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##### Table of Contents




    
    our ability to expand the mix of distribution channels through which our products
are sold may be limited;
 
    
    our products may not achieve widespread market acceptance, which could cause our
revenue to be lower than expected;
 
    
    we have had significant contracts with legacy customers that have decreased or
terminated their services and we may not be able to replace this revenue and/or the
gross margins associated with this revenue;
 
    
    our sales may be constrained by the timing of releases of third-party software
that works with our products;
 
    
    a significant percentage of our expenses is relatively fixed and we may be unable
to reduce expenses in the short term if revenue decreases; and
 
    
    the migration of our license sales model to be more focused on recurring revenue
contracts may result in less predictable revenue due to an inability to predict the
rate at which it is adopted by our customers, or the rate at which it may be
deferred.
 The amount of our revenue backlog is based on a number of assumptions and is subject to a
number of factors, many of which are completely outside of our control, and such revenue may not be
recognized over the next 12 months, or at all
    
    
    Revenue for term licenses and hosting services are the annualized amount expected
over the next 12 months as of the date presented;
 
    
    Foreign currency exchange rates are assumed to remain constant over the 12-month
period for contracts stated in currencies other than the U.S. Dollar;
 
    
    Perpetual licenses and professional services are based on current estimates of
project completion over the next 12 months;
 
    
    Our customers may attempt to renegotiate or terminate their contracts for a
number of reasons, including mergers, changes in their financial condition or
general changes in economic conditions within their industries or geographic
locations;
 
    
    We may experience delays in the development or delivery of products or services
specified in customer contracts; and
 
    
    Our estimate is based on constant hosting transaction volumes, and changes in
hosting transaction volumes may impact the amount of revenue actually recognized in
future periods.
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##### Table of Contents



Item 5. Other Information
  
 Item 6. Exhibits
 Exhibit No.
    
    Exhibit Description2.1
    
    
    Stock Purchase Agreement dated as of March 4, 2010 by and among S1 Corporation (S1),
PM Systems Corporation, James A. Krakeel and Robert M. Broadwell, Jr. (filed as Exhibit 2.1
to S1s Current Report on Form 8-K filed with the Securities and Exchange Commission
(theSEC) on March 10, 2010 and incorporated herein by reference).3.1
    
    
    Amended and Restated Certificate of Incorporation of S1 (filed as Exhibit 1 to S1s
Registration Statement on Form 8-A (File No. 000-24931) filed with the SEC on September 30,
1998 and incorporated herein by reference).3.2
    
    
    Certificate of Amendment of Amended and Restated Certificate of Incorporation of S1
dated June 3, 1999 (filed as Exhibit 4.2 to S1s Registration Statement on Form S-8 (File
No. 333-82369) filed with the SEC on July 7, 1999 and incorporated herein by reference).3.3
    
    
    Certificate of Amendment of Amended and Restated Certificate of Incorporation of S1
dated November 10, 1999 (filed as Exhibit 3.3 to S1s Annual Report on Form 10-K filed with
the SEC on March 30, 2000 and incorporated herein by reference).3.4
    
    
    Certificate of Designation for S1s Series B Redeemable Convertible Preferred Stock
(filed as Exhibit 2 to S1s Registration Statement on Form 8-A (File No. 000-24931) filed
with the SEC on September 30, 1998 and incorporated herein by reference).3.5
    
    
    Amended and Restated Bylaws of S1, as amended (filed as Exhibit 3.6 to S1s Quarterly
Report on Form 10-Q for the quarterly period ended June 30, 2006 and incorporated herein by
reference).4.1
    
    
    Specimen certificate for S1s common stock (filed as Exhibit 4 to S1s Quarterly Report
on Form 10-Q for the quarterly period ended June 30, 2000 and incorporated herein by
reference).4.2
    
    
    Specimen certificate for S1s Series B Redeemable Convertible Preferred Stock (filed as
Exhibit 4.3 to S1s Annual Report on Form 10-K for the fiscal year ended December 31, 1998
and incorporated herein by reference).10.1
    
    
    Description of Arrangement for Directors Fees (filed as Exhibit 10.11 to S1s Current
Report on Form 8-K filed with the SEC on June 9, 2010 and incorporated herein by
reference).10.2
    
    
    Form of Indemnification Agreement with Jan Kruger, Pierre Naude, Paul Parrish, Francois
van Schoor and Edward Terino (filed as Exhibit 10 to S1s Current Report on Form 8-K filed
with the SEC on November 14, 2006 and incorporated herein by reference).
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##### Table of Contents



Exhibit No.
    
    Exhibit Description31.1
    
    
    Certification of Chief Executive Officer.31.2
    
    
    Certification of Chief Financial Officer.32.1
    
    
    Certificate of Chief Executive Officer pursuant to §906 of the Sarbanes-Oxley Act of 2002.32.2
    
    
    Certificate of Chief Financial Officer pursuant to §906 of the Sarbanes-Oxley Act of 2002.
  26




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##### Table of Contents



SIGNATURE
  S1 CORPORATIONBy:
    /s/ PAUL M. PARRISHPaul M. ParrishChief Financial Officer(Principal Financial Officer
and
Principal Accounting Officer)  27