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UNITED
STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549



FORM 10-Q



(Mark One)



xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2002



or



 ̈TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES AND EXCHANGE ACT OF 1934



For the transition period from

to



Commission File Number: 000-24373





Global Imaging Systems, Inc.

(EXACT NAME OF REGISTRANT AS SPECIFIED
IN ITS CHARTER)



|DELAWARE                                                       |  | 59-3247752                          
|-------------------------------------------------------------- |  | ------------------------------------
|(STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION) |  | (I.R.S. EMPLOYER IDENTIFICATION NO.)



|3820 Northdale Boulevard, Suite 200A Tampa, Florida |  | 33624     
|--------------------------------------------------- |  | ----------
|(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)            |  | (ZIP CODE)



REGISTRANTS TELEPHONE NUMBER, INCLUDING AREA CODE: 813-960-5508





(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)



Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes x No ̈



Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes x No ̈



The registrant had 21,243,777 shares of common stock, $.01 par value,
outstanding as of February 7, 2003.





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INDEX



|                                                                                                        |  | Page
|------------------------------------------------------------------------------------------------------- |  | ----
|PART I  FINANCIAL INFORMATION                                                                          |  |     
|                                                                                                       
|ITEM 1  Consolidated Financial Statements                                                              |  |     
|                                                                                                       
|Consolidated Balance Sheets as of December 31, 2002 (Unaudited) and March 31, 2002                      |  | 3   
|                                                                                                       
|Consolidated Statements of Operations for the three months ended December 31, 2002 and 2001 (Unaudited) |  | 4   
|                                                                                                       
|Consolidated Statements of Operations for the nine months ended December 31, 2002 and 2001 (Unaudited)  |  | 5   
|                                                                                                       
|Consolidated Statements of Cash Flows for the nine months ended December 31, 2002 and 2001 (Unaudited)  |  | 6   
|                                                                                                       
|Consolidated Statement of Stockholders Equity for the nine months ended December 31, 2002 (Unaudited)  |  | 7   
|                                                                                                       
|Notes to Consolidated Financial Statements (Unaudited)                                                  |  | 8   
|                                                                                                       
|ITEM 2  Managements Discussion and Analysis of Financial Condition and Results of Operations          |  | 12  
|                                                                                                       
|ITEM 3  Quantitative and Qualitative Disclosures about Market Risk                                     |  | 19  
|                                                                                                       
|ITEM 4  Controls and Procedures                                                                        |  | 19  
|                                                                                                       
|PART II  OTHER INFORMATION                                                                             |  |     
|                                                                                                       
|ITEM 6  Exhibits and Reports on Form 8-K                                                               |  | 20  
|                                                                                                       
|SIGNATURE                                                                                               |  | 21  
|                                                                                                       
|CERTIFICATIONS                                                                                          |  | 22  
|                                                                                                       
|EXHIBIT INDEX                                                                                           |  | 26  











































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PART I  FINANCIAL INFORMATION



ITEM 1.    Consolidated Financial Statements



GLOBAL IMAGING SYSTEMS, INC.

CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS, EXCEPT SHARE AMOUNTS)



|                                                                                                                                                                             |  | December 31, 2002 |   |  | March 31, 2002 |  
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------- | - |  | -------------- | -
|                                                                                                                                                                             |  | (Unaudited)       |   |  |                |  
|ASSETS                                                                                                                                                                       |  |                   |   |  |                |  
|Current assets:                                                                                                                                                              |  |                   |   |  |                |  
|Cash and cash equivalents                                                                                                                                                    |  | $    8,787        |   |  | $             |  
|Accounts receivable, net of allowance for doubtful accounts ($2,969 and $2,376 at
December 31, 2002 and March 31, 2002, respectively)                                        |  | 76,559            |   |  | 70,763         |  
|Inventories                                                                                                                                                                  |  | 82,027            |   |  | 64,204         |  
|Deferred income taxes                                                                                                                                                        |  | 5,213             |   |  | 4,495          |  
|Prepaid expenses and other current assets                                                                                                                                    |  | 2,989             |   |  | 4,214          |  
|                                                                                                                                                                             |  |                   |   |  |                |  
|Total current assets                                                                                                                                                         |  | 175,575           |   |  | 143,676        |  
|Rental equipment, net                                                                                                                                                        |  | 13,140            |   |  | 13,885         |  
|Property and equipment, net                                                                                                                                                  |  | 11,757            |   |  | 12,377         |  
|Other assets                                                                                                                                                                 |  | 889               |   |  | 1,074          |  
|Related party notes receivable                                                                                                                                               |  | 446               |   |  | 400            |  
|Intangible assets, net:                                                                                                                                                      |  |                   |   |  |                |  
|Goodwill                                                                                                                                                                     |  | 325,809           |   |  | 296,779        |  
|Noncompete agreements                                                                                                                                                        |  | 714               |   |  | 572            |  
|Financing fees                                                                                                                                                               |  | 3,646             |   |  | 4,397          |  
|                                                                                                                                                                             |  |                   |   |  |                |  
|Total assets                                                                                                                                                                 |  | $531,976          |   |  | $473,160       |  
|                                                                                                                                                                             |  |                   |   |  |                |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                                                         |  |                   |   |  |                |  
|Current liabilities:                                                                                                                                                         |  |                   |   |  |                |  
|Accounts payable                                                                                                                                                             |  | $  30,177         |   |  | $  21,984      |  
|Accrued liabilities                                                                                                                                                          |  | 10,179            |   |  | 7,798          |  
|Accrued compensation and benefits                                                                                                                                            |  | 13,281            |   |  | 12,766         |  
|Accrued interest                                                                                                                                                             |  | 4,970             |   |  | 1,790          |  
|Current maturities of long-term debt                                                                                                                                         |  | 831               |   |  | 873            |  
|Deferred revenue                                                                                                                                                             |  | 23,576            |   |  | 21,400         |  
|Income taxes payable                                                                                                                                                         |  | 6,149             |   |  | 2,975          |  
|                                                                                                                                                                             |  |                   |   |  |                |  
|Total current liabilities                                                                                                                                                    |  | 89,163            |   |  | 69,586         |  
|Deferred income taxes                                                                                                                                                        |  | 9,435             |   |  | 6,348          |  
|Long-term debt, less current maturities                                                                                                                                      |  | 212,784           |   |  | 207,049        |  
|                                                                                                                                                                             |  |                   |   |  |                |  
|Total liabilities                                                                                                                                                            |  | 311,382           |   |  | 282,983        |  
|Stockholders equity:                                                                                                                                                        |  |                   |   |  |                |  
|Preferred stock, $.01 par value:                                                                                                                                             |  |                   |   |  |                |  
|10,000,000 shares authorized: no shares issued.                                                                                                                              |  |                  |   |  |               |  
|Common stock, $.01 par value:                                                                                                                                                |  |                   |   |  |                |  
|50,000,000 shares authorized: 22,222,627 and 22,051,668 shares issued and 21,240,307 and 20,876,029
shares outstanding at December 31, 2002 and March 31, 2002, respectively |  | 222               |   |  | 221            |  
|Common stock held in treasury, at cost                                                                                                                                       |  | (8,638            | ) |  | (10,352        | )
|Additional paid-in capital                                                                                                                                                   |  | 136,067           |   |  | 131,468        |  
|Retained earnings                                                                                                                                                            |  | 94,790            |   |  | 69,695         |  
|Unearned compensation                                                                                                                                                        |  | (1,687            | ) |  |               |  
|Accumulated other comprehensive loss                                                                                                                                         |  | (160              | ) |  | (855           | )
|                                                                                                                                                                             |  |                   |   |  |                |  
|Total stockholders equity                                                                                                                                                   |  | 220,594           |   |  | 190,177        |  
|                                                                                                                                                                             |  |                   |   |  |                |  
|Total liabilities and stockholders equity                                                                                                                                   |  | $531,976          |   |  | $473,160       |  
|                                                                                                                                                                             |  |                   |   |  |                |  



See
accompanying notes.



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GLOBAL IMAGING SYSTEMS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)



|                                               |  | Three Months Ended December 31,
|---------------------------------------------- |  | -------------------------------
|                                               |  | 2002                           
|Revenues:                                      |  |                                
|Equipment and supplies sales                   |  | $                              
|Service and rentals                            |  |                                
|                                               |  |                                
|Total revenues                                 |  |                                
|Costs and operating expenses:                  |  |                                
|Cost of equipment and supplies sales           |  |                                
|Service and rental costs                       |  |                                
|Selling, general and administrative expenses   |  |                                
|Intangible asset amortization                  |  |                                
|                                               |  |                                
|Total costs and operating expenses             |  |                                
|                                               |  |                                
|Income from operations                         |  |                                
|Interest expense                               |  |                                
|                                               |  |                                
|Income before income taxes                     |  |                                
|Income taxes                                   |  |                                
|                                               |  |                                
|Net income                                     |  | $                              
|                                               |  |                                
|Net income per common share:                   |  |                                
|Basic                                          |  | $                              
|                                               |  |                                
|Diluted                                        |  | $                              
|                                               |  |                                
|Weighted average number of shares outstanding: |  |                                
|Basic                                          |  |                                
|Diluted                                        |  |                                





See accompanying notes.



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GLOBAL IMAGING SYSTEMS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)



|                                               |  | Nine Months Ended December 31,
|---------------------------------------------- |  | ------------------------------
|                                               |  | 2002                          
|Revenues:                                      |  |                               
|Equipment and supplies sales                   |  | $                             
|Service and rentals                            |  |                               
|                                               |  |                               
|Total revenues                                 |  |                               
|Costs and operating expenses:                  |  |                               
|Cost of equipment and supplies sales           |  |                               
|Service and rental costs                       |  |                               
|Selling, general and administrative expenses   |  |                               
|Intangible asset amortization                  |  |                               
|                                               |  |                               
|Total costs and operating expenses             |  |                               
|                                               |  |                               
|Income from operations                         |  |                               
|Interest expense                               |  |                               
|                                               |  |                               
|Income before income taxes                     |  |                               
|Income taxes                                   |  |                               
|                                               |  |                               
|Net income                                     |  | $                             
|                                               |  |                               
|Net income per common share:                   |  |                               
|Basic                                          |  | $                             
|                                               |  |                               
|Diluted                                        |  | $                             
|                                               |  |                               
|Weighted average number of shares outstanding: |  |                               
|Basic                                          |  |                               
|Diluted                                        |  |                               





See accompanying notes.



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GLOBAL IMAGING SYSTEMS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(IN THOUSANDS)



|                                                                                                        |  | Nine Months Ended December 31, |        
|------------------------------------------------------------------------------------------------------- |  | ------------------------------ | -------
|                                                                                                        |  | 2002                           |        
|OPERATING ACTIVITIES:                                                                                   |  |                                |        
|Net income                                                                                              |  | $                              | 25,095 
|Adjustments to reconcile net income to net cash provided by operating
activities:                       |  |                                |        
|Depreciation                                                                                            |  |                                | 10,348 
|Amortization                                                                                            |  |                                | 493    
|Amortization of debt issuance costs                                                                     |  |                                | 914    
|Deferred income taxes                                                                                   |  |                                | 2,369  
|Unearned compensation                                                                                   |  |                                | 260    
|Changes in operating assets and liabilities, net of amounts acquired in purchase
business combinations: |  |                                |        
|Accounts receivable                                                                                     |  |                                | (1,195 
|Inventories                                                                                             |  |                                | (13,790
|Prepaid expenses and other current assets                                                               |  |                                | 1,328  
|Other assets                                                                                            |  |                                | 457    
|Accounts payable                                                                                        |  |                                | 6,178  
|Accrued liabilities, compensation and benefits and interest                                             |  |                                | 4,671  
|Deferred revenue                                                                                        |  |                                | (833   
|Income taxes payable                                                                                    |  |                                | 2,719  
|                                                                                                        |  |                                |        
|Net cash provided by operating activities                                                               |  |                                | 39,014 
|                                                                                                       
|INVESTING ACTIVITIES:                                                                                   |  |                                |        
|Purchase of property, equipment and rental equipment                                                    |  |                                | (8,273 
|Payment for purchase of businesses, net of cash acquired                                                |  |                                | (31,851
|                                                                                                        |  |                                |        
|Net cash used in investing activities                                                                   |  |                                | (40,124
|                                                                                                       
|FINANCING ACTIVITIES:                                                                                   |  |                                |        
|Net borrowings (payments) on revolving line of credit                                                   |  |                                | 6,255  
|Net payments on other long-term debt                                                                    |  |                                | (562   
|Financing fees                                                                                          |  |                                | (163   
|Common stock issued for cash                                                                            |  |                                | 762    
|Treasury shares reissued                                                                                |  |                                | 3,605  
|                                                                                                        |  |                                |        
|Net cash provided by (used in) financing activities                                                     |  |                                | 9,897  
|                                                                                                        |  |                                |        
|Net increase in cash and cash equivalents                                                               |  |                                | 8,787  
|Cash and cash equivalents, beginning of period                                                          |  |                                |       
|                                                                                                        |  |                                |        
|Cash and cash equivalents, end of period                                                                |  | $                              | 8,787  
|                                                                                                        |  |                                |        
|Supplemental disclosure of non-cash financing activities:                                               |  |                                |        
|Issuance of restricted stock                                                                            |  | $                              | 1,947  
|                                                                                                        |  |                                |        





See accompanying notes.



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GLOBAL IMAGING SYSTEMS, INC.

CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY (Unaudited)

(IN THOUSANDS, EXCEPT FOR SHARE AMOUNTS)



|                                                       |  | Common Stock     |  |           |  |                           |   |  |                            |   |  |                   |  |                       |   |  |                                     
|------------------------------------------------------ |  | ---------------- |  | --------- |  | ------------------------- | - |  | -------------------------- | - |  | ----------------- |  | --------------------- | - |  | ------------------------------------
|                                                       |  | Number of Shares |  | Par Value |  | Held in Treasury, at cost |   |  | Additional Paid-in Capital |   |  | Retained Earnings |  | Unearned Compensation |   |  | Accumulated Other Comprehensive Loss
|Balances at March 31, 2002                             |  | 20,876,029       |  | $221      |  | $(10,352                  | ) |  | $131,468                   |   |  | $69,695           |  |                      |   |  | $(855                               
|Comprehensive income:                                  |  |                  |  |           |  |                           |   |  |                            |   |  |                   |  |                       |   |  |                                     
|Net income                                             |  |                 |  |          |  |                          |   |  |                           |   |  | 25,095            |  |                      |   |  |                                    
|Gain on expiration of derivative instruments           |  |                 |  |          |  |                          |   |  |                           |   |  |                  |  |                      |   |  | 855                                 
|Unrealized loss on derivative instrument               |  |                 |  |          |  |                          |   |  |                           |   |  |                  |  |                      |   |  | (160                                
|                                                       |  |                  |  |           |  |                           |   |  |                            |   |  |                   |  |                       |   |  |                                     
|Total comprehensive income                             |  |                  |  |           |  |                           |   |  |                            |   |  |                   |  |                       |   |  |                                     
|Stock
options exercised                                |  | 68,459           |  |          |  |                          |   |  | 812                        |   |  |                  |  |                      |   |  |                                    
|Treasury stock issued in conjunction with acquisitions |  | 193,319          |  |          |  | 1,714                     |   |  | 1,891                      |   |  |                  |  |                      |   |  |                                    
|Common stock issued under restricted stock plan        |  | 102,500          |  | 1         |  |                          |   |  | 1,947                      |   |  |                  |  | $(1,947               | ) |  |                                    
|Amortization of unearned compensation                  |  |                 |  |          |  |                          |   |  |                           |   |  |                  |  | 260                   |   |  |                                    
|Cost of public equity offering                         |  |                 |  |          |  |                          |   |  | (51                        | ) |  |                  |  |                      |   |  |                                    
|                                                       |  |                  |  |           |  |                           |   |  |                            |   |  |                   |  |                       |   |  |                                     
|Balances at December 31, 2002                          |  | 21,240,307       |  | $222      |  | $  (8,638                 | ) |  | $136,067                   |   |  | $94,790           |  | $(1,687               | ) |  | $(160                               
|                                                       |  |                  |  |           |  |                           |   |  |                            |   |  |                   |  |                       |   |  |                                     





See accompanying notes.



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GLOBAL IMAGING SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)



NOTE 1.    BASIS OF PRESENTATION



The accompanying consolidated balance sheet as of December 31, 2002, consolidated statements of operations for the three and nine months
ended December 31, 2002 and 2001, consolidated statements of cash flows for the nine months ended December 31, 2002 and 2001, and the consolidated statement of stockholders equity for the nine months ended December 31, 2002 are unaudited. In
the opinion of management, all adjustments, consisting of normal recurring accruals, necessary for a fair presentation of the results of operations for the interim periods presented have been reflected herein. The results of operations for the
interim periods are not necessarily indicative of the results which may be expected for the entire fiscal year. The consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto
included in Global Imaging Systems, Inc.s (together with its subsidiaries, Global or the Company) Annual Report for the year ended March 31, 2002. Certain prior year amounts have been reclassified to conform to the
current year presentation.



NOTE
2.    EARNINGS PER SHARE



Basic earnings per share (EPS) is computed by dividing net income by the weighted average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution from the exercise of stock options or the
conversion of securities into common stock.



The
following table reconciles the numerators and denominators of the basic and diluted EPS computations (shares in thousands):



|                                                   |  | For Three Months Ended |        | For Nine Months Ended
|-------------------------------------------------- |  | ---------------------- | ------ | ---------------------
|                                                   |  | December 31, 2002      |        | December 31, 2001    
|Numerator:                                         |  |                        |        |                      
|Numerator for basic and diluted earnings per share |  | $                      | 8,911  |                      
|                                                   |  |                        |        |                      
|Denominator:                                       |  |                        |        |                      
|Denominator for basic earnings per share           |  |                        | 21,236 |                      
|Effect of dilutive securities:                     |  |                        |        |                      
|Employee stock options                             |  |                        | 597    |                      
|                                                   |  |                        |        |                      
|Denominator for diluted earnings per share         |  |                        | 21,833 |                      
|                                                   |  |                        |        |                      



NOTE
3.    ACQUISITIONS



During the nine months ended December 31, 2002 the Company acquired five businesses that provide office-imaging solutions. Aggregate consideration, net of cash acquired, for these acquisitions was approximately $31,378 consisting of
cash, 193,319 shares of the Companys common stock (valued at $3,605, based on the fair value of the stock) and acquisition related expenses. The Company, in connection with these acquisitions, assumed liabilities totaling approximately $6,735.
Goodwill of approximately $28,511 was recorded related to these acquisitions. These acquisitions were accounted for by the purchase method of accounting and accordingly are included in the results of operations from the date of acquisition.



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The unaudited
pro forma results presented below include the effects of the Companys acquisitions for fiscal years 2003 and 2002 as if they had been consummated as of April 1, 2001. The unaudited pro forma financial information below is not necessarily
indicative of either future results of operations or results that might have been achieved had the acquisitions been consummated at the beginning of the year prior to acquisition.



|                             |  | Unaudited Pro forma Nine Months ended December 31,
|---------------------------- |  | --------------------------------------------------
|                             |  | 2002                                              
|Revenues                     |  | $                                                 
|Net income                   |  | $                                                 
|                             |  |                                                   
|Net income per common share: |  |                                                   
|Basic                        |  | $                                                 
|Diluted                      |  | $                                                 



NOTE
4.    STOCK OPTION PLANS



In 1998, the Board of Directors adopted a stock option plan under which, as amended, 2,520,000 shares of the Companys common stock may be sold pursuant to stock options granted or sold as restricted stock to directors,
officers, and employees of and consultants to the Company. As of December 31, 2002, options to purchase 2,023,352 shares of the Companys common stock were outstanding under the stock option plan. During the nine months ended December 31, 2002,
options to purchase an aggregate of 728,000 shares were granted under the 1998 stock option plan with exercise prices ranging from $17.88 to $20.00 per share. During the nine months ended December 31, 2002, 102,500 restricted shares were granted for
a purchase price of $.01 per share.



On January
25, 2001, the Board of Directors adopted the Global Imaging Systems, Inc. 2001 Stock Option Plan under which Global may grant options to purchase up to 300,000 shares of Globals common stock to employees of and service providers to Global,
except for executive officers and directors. Stock options granted under the 2001 stock option plan have the same terms as those granted under the 1998 plan. As of December 31, 2002, options to purchase 266,120 shares were outstanding under the 2001
stock option plan. During the nine months ended December 31, 2002, no options were granted under the 2001 stock option plan.



In addition to options outstanding under Globals stock option plans, 10,000 shares of Globals common stock are issuable upon
the exercise of an option granted outside Globals stock option plans. This option is exercisable at a price of $12.00 per share.



NOTE 5.    DERIVATIVES



On April 1, 2001, the Company adopted Statement of Financial Accounting Standard (SFAS) No. 133, Accounting for Derivative Instruments
and Hedging Activities, as amended. SFAS No. 133 requires the recognition of all derivative instruments as either assets or liabilities in the consolidated balance sheet at fair value. The accounting for changes in the fair value (i.e., gains or
losses) of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationship and further, on the type of hedging relationship. For those derivative instruments that are designated and qualify as
hedging instruments, a company must designate the hedging instrument, based on the exposure being hedged, as either a fair value hedge, cash flow hedge, or a hedge of a net investment in a foreign operation.



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For derivative
instruments that are designated and qualify as a cash flow hedge (i.e., hedging the exposure to variability in expected future cash flows that is attributable to a particular risk, such as interest rate risk), the effective portion of the gain or
loss on the derivative instrument is reported as a component of comprehensive income and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. The remaining gain or loss on the derivative
instrument in excess of the cumulative change in the present value of the future cash flows of the hedged item, if any, is recognized in current earnings during the period of change.



Effective November 12, 2002, the Company entered into a three-year swap agreement. This agreement effectively
converted $20,000 of its variable-rate debt to fixed-rate debt and reduced its exposure to changes in interest rates. Under this swap agreement, the Company received an average variable rate of 1.4% and paid an average fixed rate of 2.7% for the
period from November 12, 2002 to December 31, 2002. The Company has recognized a loss, net of tax, of approximately $160 for the nine month period ended December 31, 2002 related to the portion of the hedging instrument included in the assessment of
hedge effectiveness, which has been recorded in comprehensive income.



The Company had previously entered into interest rate swap agreements that effectively converted a portion of its floating-rate debt to a fixed-rate basis until September 2002. Those interest rate swap agreements expired in
September 2002. The Company has recognized a gain, net of tax, of approximately $855 for the nine months ended December 31, 2002 related to the portion of the hedging instrument included in the assessment of hedge effectiveness, which has been
recorded in comprehensive income.



The Company
had previously entered into an interest rate cap agreement (cap) in the total notional amount of approximately $22,000, which was not designated as a hedging instrument. The cap expired in September 2002 and no payments were received under the cap.
The cap limited the Companys interest rate risk exposure to 9% for the related notional amount.



NOTE 6.    COMPREHENSIVE INCOME



The following table presents a reconciliation of comprehensive income, comprised of net income, the cumulative effect of adopting SFAS No.
133 on April 1, 2001 and the unrealized gain (loss) on cash flow hedges.



|                                                       |  | Three Months Ended |       |   | Nine Months Ended |  
|------------------------------------------------------ |  | ------------------ | ----- | - | ----------------- | -
|                                                       |  | December 31, 2002  |       |   | December 31, 2001 |  
|Net income                                             |  | $                  | 8,911 |   |                   | $
|Cumulative effect of adopting SFAS No. 133, net of tax |  |                    |      |   |                   |  
|Unrealized gain (loss) on cash flow hedges, net of tax |  |                    | (160  | ) |                   |  
|                                                       |  |                    |       |   |                   |  
|Total comprehensive income                             |  | $                  | 8,751 |   |                   | $
|                                                       |  |                    |       |   |                   |  



NOTE
7.    RECENT ACCOUNTING PRONOUNCEMENTS



In November 2002, the Financial Accounting Standards Board (FASB) issued FASB Interpretation No. (FIN) 45, Guarantors Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of
Others. FIN 45 elaborates on the existing disclosure



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requirements for most
guarantees, including loan guarantees such as standby letters of credit. It also clarifies that at the time a company issues a guarantee, the company must recognize an initial liability for the fair value, or market value, of the obligations it
assumes under that guarantee and must disclose that information in its interim and annual financial statements. FIN 45 is effective on a prospective basis to guarantees issued or modified after December 31, 2002. The disclosure requirements of FIN
45 are effective for financial statements of interim or annual periods ending after December 15, 2002. The Company has adopted the disclosure requirements and is currently evaluating the financial impact of the application of this interpretation,
but does not expect a material impact from the application of FIN 45 on our financial statements.



In December 2002, the FASB issued SFAS No. 148, Accounting for Stock-Based CompensationTransition and Disclosurean
amendment of FASB Statement No. 123and is effective for financials statements for fiscal years ending after December 31, 2002. SFAS No. 148 amends SFAS No. 123, Accounting for Stock-Based Compensation, to provide alternative methods of
transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. In addition, this Statement amends the disclosure requirements of SFAS No. 123 to require prominent disclosures in both annual and
interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results. The Company is currently assessing the impact of the adoption of SFAS No. 148.



NOTE 8.    SUPPLEMENTAL GUARANTOR FINANCIAL INFORMATION



The Company has issued $100,000 of 10.75%
Senior Subordinated Notes that are fully and unconditionally guaranteed on a joint and several basis by all the Companys existing subsidiaries (the Guarantors), each of which is wholly owned, directly or indirectly, by the Company. The Company
is a holding company all of whose operations are conducted by the Guarantors and the Company has no operations or assets separate from its investment in its subsidiaries.



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ITEM 2.    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
                  OPERATIONS

(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)



The following discussion and analysis should be read in conjunction with the accompanying consolidated
financial statements and related notes included elsewhere in this Report on Form 10-Q and our Annual Report for the year ended March 31, 2002. The discussion in this section contains forward-looking statements, including statements relating to the
pace of our future acquisitions and overall growth, the benefits that will be realized by businesses we have acquired or may acquire, our future product and service offerings, pace of borrowings and rate of internally generated cash flows and time
frame for seeking additional financing. These forward-looking statements are based largely on managements current expectations and projections about future events and financial trends affecting the financial condition of our business. These
forward-looking statements are subject to risks, uncertainties and assumptions, which could cause our actual results to differ materially from the results suggested by these forward-looking statements. Some factors that may cause our results to
differ materially from these statements are:



| |  |  | downturns in general economic and business conditions, either nationally or in our markets, which could reduce our revenue, restrict revenue growth or increase
costs.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | changes in our competitive climate, which could require us to lower prices and therefore would reduce our revenues with no corresponding reduction in cost.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | fewer than expected acquisition opportunities or difficulty obtaining additional financing on satisfactory terms, which could slow our growth through acquisitions.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | recognition of unanticipated costs and delays associated with ongoing integration efforts.
| | - |  | ------------------------------------------------------------------------------------------



| |  |  | inability to obtain financing on satisfactory terms due to our substantial indebtedness or fluctuations in our common stock price.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------



| |  |  | increases in borrowing rates and costs which could limit our acquisitions, cause us to reduce our pace of acquisitions or growth, or accelerate the time in which we
need to obtain new financing.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | technological developments that may reduce demand for the products and services we sell or result in us facing increased competition to sell those products and
services.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | economic and other disruptions and uncertainties resulting from the situation in Iraq and the continuing war on terrorism, including military action, new terrorist
attacks, actual or threatened, and related political events.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Information regarding many of these factors and other factors that may cause our actual results to differ materially from those contained in the forward-looking statements is presented in the
Risk Factors section of our Annual Report on Form 10-K/A for the year ended March 31, 2002. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or
otherwise.



Overview



We are a leading provider of a number of office technology
solutions. We sell and service automated office equipment, network integration solutions and electronic presentation systems. We offer solutions incorporating products from Konica, Canon, Ricoh, Sharp, Hewlett-Packard, IBM, Microsoft, InFocus, NEC
and other leading companies. We also offer a variety of ongoing contract services, including service, supply, network management, technical support and training. We currently operate from 139 locations in 28 states and the District of Columbia.
Since our founding in June 1994, we have acquired 57 businesses, all within the United States, and presently operate 15 core companies



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and 42 satellite companies.
The first acquisition was completed in August 1994. We believe the businesses we have acquired and other businesses we acquire in the future will benefit from our various programs and operating strategies. These benefits include increased operating
efficiencies, the support of experienced and professional senior management, expansion of the types of office imaging products and services offered, increased access to capital, and enhanced financial management.



Our revenues come from two sources: (1) sales of equipment and
supplies and (2) sales of complementary services and equipment rentals. The growth of equipment revenues and the complementary supplies, parts and service revenues depends on several factors, including the demand for equipment, our reputation for
providing timely and reliable service, and general economic conditions. Revenues generated from the sale of equipment and complementary supplies, parts and services are affected by price, general economic conditions, service reputation, and
competitors actions in the marketplace. Sales of complementary supplies, parts and services are affected by equipment sales and rental volumes.



Gross profit as a percentage of revenues varies from period to period depending on a number of variables. Those variables include the mix
of revenues from equipment, supplies, service and rentals; the mix of revenues among the markets served by us; and the mix of revenues of the businesses acquired by us. As we acquire businesses, the percentage of our revenues that comes from sales
of equipment and supplies, as opposed to service and rentals, fluctuates depending on whether the businesses acquired are automated office equipment dealers or are network integrators or electronic presentation systems dealers. Automated office
equipment dealers typically derive a higher percentage of their revenues from service and rentals, and a lower percentage from sales of equipment and supplies, than do network integrators or electronic presentation system dealers. Generally, sales
of equipment and supplies have lower gross profit margins than revenues from service and rentals. In addition, equipment sales in the automated office equipment market generally have higher gross profit margins than equipment sales in the network
integration or electronic presentation systems markets. While the focus of our acquisition strategy is to acquire businesses in the automated office equipment market, to the extent the network integration and electronic presentation markets grow
faster than the automated office equipment market, over time a larger percentage of our revenues and gross profits may be derived from sales that have lower gross profit margins than our current gross profit margins.



Cost of goods sold consists primarily of the cost of new
equipment, cost of supplies and parts, labor costs to provide services, rental equipment depreciation and other direct operating costs. We depreciate our rental equipment primarily over a three-year period on a straight-line basis.



Critical Accounting Policies and Estimates



Managements discussion and analysis
of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these
consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures. On an on-going basis, we evaluate these estimates, including those
related to accounts receivable, inventories, vendor incentives, intangible assets and contingencies. Our estimates and judgments are based on currently available information, historical results and other assumptions we believe are reasonable. Actual
results could differ materially from these estimates. We believe the following critical accounting policies affect the more significant judgments and estimates used in the preparation of our consolidated financial statements:



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Accounts
Receivable



We maintain allowances for
doubtful accounts for estimated losses arising from the inability of our customers to make required payments. Our estimate of losses is based upon prior collection experience, a review of specific customers and their ability to pay, and an overall
appraisal of current economic conditions. If the financial condition of our customers were to deteriorate, resulting in a reduced ability to make payments, additional allowances may be required which would reduce net income.



Inventories



Inventories are valued at the lower of cost or market value.
For equipment, cost equals either the average cost of inventory or, in the case of some specifically identified equipment inventory, the actual cost of that equipment inventory. For related parts and supplies, cost equals the average cost of
inventory. We write down our inventories for estimated obsolescence by an amount equal to the difference between the cost of the inventories and their estimated market values based upon an aging analysis of the inventories on hand, specifically
known inventory-related risks and assumptions about future demand and market conditions. These write-downs are reflected in our cost of sales. If actual market conditions are less favorable than those projected by management, additional write-downs
may be required which could have an adverse effect on our financial results.



Vendor Incentives



We receive incentives from some of our vendors in the form of volume rebates, cooperative advertising allowances and other programs or agreements. We record unrestricted volume rebates received as a reduction of inventories
and recognize the incentives as a reduction to cost of sales when the related inventories are sold. Cooperative advertising allowances are generally required by the vendor to be used by us exclusively for advertising or other marketing programs.
These restricted cooperative advertising allowances are recognized as a reduction to selling, general and administrative expenses as the related marketing expenses are incurred. Amounts received or receivable from vendors that are not yet earned are
deferred in the consolidated balance sheets.



In
addition, we receive early payment discounts from certain vendors. We record early payment discounts received as a reduction of inventories and recognize the discount as a reduction to cost of sales when the related inventories are sold.



Intangible Assets



We examine the carrying value of our goodwill, which is the
excess of cost over the fair value of our acquired net assets, and our other intangible assets as current events and circumstances warrant to determine whether there are any impairment losses. For goodwill, we test the recorded amount annually, or
more frequently if conditions change, for impairment by comparing the recorded value to estimated fair value. If indicators of impairment were present relating to other intangible assets and future cash flows were not expected to be sufficient to
recover the assets carrying amount, an impairment loss would be charged to expense in the period identified. No event has been identified that would indicate an impairment of the value of goodwill recorded in the consolidated financial
statements.



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Contingencies



We accrue
amounts for contingent obligations, including estimated legal costs, when the obligations are probable and the amounts are reasonably estimable. As facts concerning contingencies become known, we reassess our position and make appropriate
adjustments to the consolidated financial statements. Estimates that are particularly sensitive to future charges include tax, legal and other regulatory matters which are subject to change as events evolve and as additional information becomes
available during the administrative and litigation process.



RESULTS OF OPERATIONS



The following table sets forth selected consolidated financial information as a percentage of total revenues.



|                                             |  | Three Months Ended |   |  | Nine Months Ended |  
|-------------------------------------------- |  | ------------------ | - |  | ----------------- | -
|                                             |  | December 31, 2002  |   |  | December 31, 2001 |  
|Revenues:                                    |  |                    |   |  |                   |  
|Equipment and supplies sales                 |  | 74.2               | % |  | 74.1              | %
|Service and rentals                          |  | 25.8               |   |  | 25.9              |  
|                                             |  |                    |   |  |                   |  
|Total revenues                               |  | 100.0              |   |  | 100.0             |  
|Cost and operating expenses:                 |  |                    |   |  |                   |  
|Cost of equipment and supplies sales         |  | 48.1               |   |  | 49.1              |  
|Service and rental costs                     |  | 13.4               |   |  | 13.0              |  
|Selling, general and administrative expenses |  | 26.9               |   |  | 25.9              |  
|Intangible asset amortization                |  | .1                 |   |  | .1                |  
|                                             |  |                    |   |  |                   |  
|Total costs and operating expenses           |  | 88.5               |   |  | 88.1              |  
|                                             |  |                    |   |  |                   |  
|Income from operations                       |  | 11.5               |   |  | 11.9              |  
|Interest expense                             |  | 2.7                |   |  | 3.9               |  
|                                             |  |                    |   |  |                   |  
|Income before income taxes                   |  | 8.8                |   |  | 8.0               |  
|Income taxes                                 |  | 3.5                |   |  | 3.3               |  
|                                             |  |                    |   |  |                   |  
|Net income                                   |  | 5.3                | % |  | 4.7               | %
|                                             |  |                    |   |  |                   |  



THREE MONTHS ENDED
DECEMBER 31, 2002 COMPARED TO THREE MONTHS ENDED DECEMBER 31, 2001



Revenues



Total
revenues for the three months ended December 31, 2002 increased to $169,176, 11.9% higher than total revenues of $151,130 for the same period in fiscal year 2002. This was due to an increase in automated office equipment and electronic presentation
systems revenues and the acquisition of businesses during fiscal years 2003 and 2002, partially offset by a decline in network integration solutions revenues.



Equipment and supplies revenues for the three months ended December 31, 2002 increased to $125,496, 12.0% higher than equipment and
supplies revenues of $112,028 for the same period in fiscal year 2002. In fiscal years 2003 and 2002, we acquired businesses that added proportionately more equipment and supplies revenues than we had in our existing businesses. In addition, the
increase was partially due to revenue growth of automated office equipment and electronic presentation systems equipment and supplies revenues, offset by a decline in network integration solutions equipment and supplies revenues.



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Service and
rental revenues for the three months ended December 31, 2002 increased to $43,680, 11.7% higher than service and rental revenues of $39,102 for the same period in fiscal year 2002. In fiscal years 2003 and 2002, we acquired businesses that added
proportionately more service and rental revenues than we had in our existing businesses. In addition, the increase was partially due to revenue growth of automated office equipment service and rental revenues, partially offset by a decline in
network integration solutions service and rental revenues.



Gross Profit



Gross
profit of $65,159 for the three months ended December 31, 2002 reflected a 13.8% increase over the same period in fiscal year 2002. Expressed as a percent of total revenue, gross profit was 38.5% for the three months ended December 31, 2002 compared
to 37.9% for the same period in fiscal year 2002. Automated office equipment dealers typically derive a higher percentage of revenues and gross profit from service and rentals, while network integration solutions and electronic presentation systems
dealers derive a higher percentage of revenues and gross profit from sales of equipment and supplies. For our existing businesses, the sales internal growth rate of the automated office equipment dealers was higher than that of the network
integration solutions and electronic presentation systems dealers. The combined equipment and supplies gross profit as a percentage of combined equipment and supplies revenues increased to 35.1% for the three months ended December 31, 2002 from
33.8% for the same period one year ago. This was due mostly to automated office equipment revenues being a larger percentage of total equipment revenues.



As a percentage of combined service and rental revenue, the combined service and rental gross profit margin decreased to 48.2% for the
three months ended December 31, 2002 from 49.6% for the same period one year ago. This was due to a decrease in service and rental revenues and gross profit at the network integration solutions dealers.



Selling, General and Administrative Expenses



Selling, general and administrative, or
SG&A, expenses for the three months ended December 31, 2002 increased to $45,624, 16.7% higher than SG&A expenses of $39,086 for the same period in fiscal year 2002. This increase was primarily due to acquisitions of automated office
equipment dealers during fiscal years 2003 and 2002, which typically incur higher SG&A expenses as a percentage of revenue than network integration solutions and electronic presentation systems dealers. Other SG&A expenses that increased are
payroll wages and commissions, professional fees and occupancy expenses.



Intangible Asset Amortization



Intangible asset amortization was $143 for the three months ended December 31, 2002. During the same period in fiscal year 2002, intangible asset amortization was $226. This amortization is for non-compete agreements and customer
lists.



Income From Operations



Income from operations for the three months
ended December 31, 2002 was $19,392, 8.2% higher than $17,924 from the same period in fiscal year 2002. This increase was due to an increase in gross profit as discussed above.



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Interest
Expense



Interest expense for the three
months ended December 31, 2002 was $4,517, compared to $5,905 from the same period in fiscal year 2002. The decrease in interest expense was due to a lower average level of borrowings and lower interest rates. Interest expense includes the
amortization of financing fees incurred in connection with our current credit facility and our senior subordinated notes.



Income Taxes



The provision for income taxes for the three months ended December 31, 2002 was $5,964, 22.5% higher than $4,868 from the same period in
fiscal year 2002. The increase in income taxes was primarily due to higher pre-tax income for the three months ended December 31, 2002, offset by the reduction in the effective income tax rate. The effective income tax rate was 40.1% for the three
months ended December 31, 2002 and 40.5% for the same period in 2001. The effective income tax rate was higher than the federal statutory rate of 35% due to state and local taxes.



NINE MONTHS ENDED DECEMBER 31, 2002 COMPARED TO NINE MONTHS ENDED DECEMBER 31, 2001



Revenues



Total revenues for the nine months ended December 31, 2002
increased to $496,248, 6.3% higher than total revenues of $466,701 for the same period in fiscal year 2002. This was due to an increase in automated office equipment and electronic presentation systems revenues and the acquisition of businesses
during fiscal years 2003 and 2002, partially offset by a decline in network integration solutions revenues.



Equipment and supplies revenues for the nine months ended December 31, 2002 increased to $369,343, 5.2% higher than equipment and supplies
revenues of $351,017 for the same period in fiscal year 2002. In fiscal years 2003 and 2002, we acquired businesses that added proportionately more equipment and supplies revenues than we had in our existing businesses. In addition, the increase was
partially due to internal growth of automated office equipment and electronic presentations systems equipment and supplies revenues, partially offset by a decline in network integration solutions equipment and supplies revenues.



Service and rental revenues for the nine months ended December
31, 2002 increased to $126,905, 9.7% higher than service and rental revenues of $115,684 for the same period in fiscal year 2002. In fiscal years 2003 and 2002, we acquired businesses that added proportionately more service and rental revenues than
we had in our existing businesses. In addition, the increase was partially due to revenue growth of automated office equipment and electronic presentation systems service revenues, partially offset by a decline in network integration solutions
service revenues.



Gross Profit



Gross profit of $189,100 for the nine
months ended December 31, 2002 reflected a 10.5% increase over the same period in fiscal year 2002. Expressed as a percent of total revenue, gross profit was 38.1% for the nine months ended December 31, 2002 compared to 36.7% for the same period in
fiscal year 2002. Automated office equipment dealers typically derive a higher percentage of revenues and gross profit from service and rentals, while network integration solutions and electronic presentation systems dealers derive a higher
percentage of revenues and gross profit from sales of equipment and supplies. For our existing businesses, the sales internal growth rate of the automated office equipment



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dealers was higher than that
of the network integration solutions and electronic presentation systems dealers. The combined equipment and supplies gross profit as a percentage of combined equipment and supplies revenues increased to 34.2% for the nine months ended December 31,
2002 from 32.9% for the same period one year ago. This was due mostly to automated office equipment revenues being a larger percentage of total equipment revenues.



As a percentage of combined service and rental revenue, the combined service and rental gross profit margin
increased to 49.4% for the nine months ended December 31, 2002 from 48.0% for the same period one year ago. This was due to an increase in service and rental revenues and gross profit at both the automated office equipment and electronic
presentation systems dealers.



Selling,
General and Administrative Expenses



Selling, general and administrative, or SG&A, expenses for the nine months ended December 31, 2002 increased to $132,256, 11.2% higher than SG&A expenses of $118,986 for the same period in fiscal year 2002. This increase was
primarily due to acquisitions of automated office equipment dealers during fiscal years 2003 and 2002, which typically incur higher SG&A expenses as a percentage of revenue than network integration solutions and electronic presentation systems
dealers. Other SG&A expenses that increased are payroll wages and commissions, professional fees and occupancy expenses.



Intangible Asset Amortization



Intangible asset amortization was $493 for the nine months ended December 31, 2002. During the same period in fiscal year 2002, intangible
asset amortization was $738. This amortization is for non-compete agreements and customer lists.



Income From Operations



Income from operations for the nine months ended December 31, 2002 was $56,351, 9.5% higher than $51,442 from the same period in fiscal year 2002. This increase was due to an increase in gross profit
as discussed above.



Interest Expense



Interest expense for the nine months ended
December 31, 2002 was $14,457 compared to $18,862 from the same period in fiscal year 2002. The decrease in interest expense was due to a lower average level of borrowings and lower interest rates. Interest expense includes the amortization of
financing fees incurred in connection with our current credit facility, the senior subordinated notes and ineffective hedging activities.



Income Taxes



The provision for income taxes for the nine months ended December 31, 2002 was $16,799, 27.3% higher than $13,195 from the same period in
fiscal year 2002. The increase in income taxes was primarily due to higher pre-tax income for the nine months ended December 31, 2002, offset by the reduction in the effective income tax rate. The effective income tax rate was 40.1% for the nine
months ended December 31, 2002 and 40.5% for the same period in 2001. The effective income tax rate was higher than the federal statutory rate of 35% due to state and local taxes.



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LIQUIDITY AND CAPITAL
RESOURCES



Historically, Global has financed
its operations primarily through internal cash flow, sales of equity and debt securities and bank financing, including the financing facility described below. These sources of funds have been used to fund our growth both internally and through
acquisitions. We are pursuing an acquisition strategy and expect to acquire more businesses. As we continue to acquire more businesses, it is likely we will incur additional debt and seek additional equity capital.



Under the terms of one of our acquisition agreements, we may
be required to make an additional payment of up to $375 in cash during the next year to the former owner of the acquired business based on the profitability of that business since we acquired it.



During the three months ended December 31, 2002, under the
terms of a settlement with the former owner of one of our acquired businesses, we mutually agreed to terminate the remaining contingent earnout relating to the acquisition of $3,923.



For the nine months ended December 31, 2002 the net cash provided by operations was $39,014 and for the nine
months ended December 31, 2001 the net cash provided by operations was $25,319. For the nine months ended December 31, 2002 and December 31, 2001, Globals net cash used in investing activities was $40,124 and $12,927, respectively,
primarily for property, equipment and rental equipment expenditures in fiscal year 2002 and the purchase of businesses in fiscal year 2003. For the nine months ended December 31, 2002 and the nine months ended December 31, 2001, Globals net
cash provided by (used in) financing activities was $9,897 and $(12,392), respectively, primarily due to the repayment of a portion of our revolving line of credit and other long-term debt in fiscal year 2002 and the purchase of businesses in fiscal
year 2003.



As of December 31, 2002, we had
$104,100 borrowing availability under our senior credit facility. This amount has been reduced by $700 to reflect the aggregate amount of an outstanding standby letter of credit issued under the credit facility to support our obligations incurred in
the ordinary course of business. As of December 31, 2002, no amounts had been paid under this letter of credit.



We believe that cash flows from future operations, together with funds available under our senior credit agreement, will be sufficient to
fund our current and foreseeable operational needs and acquisition growth strategy.



ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK



Our market risk is primarily limited to fluctuations in interest rates as it pertains to our borrowings under our senior credit agreement
and the long-term note that bears a fixed rate. There have been no material changes, other than described below, to the information in the Item 7A disclosure made in Globals Annual Report on Form 10-K/A for the fiscal year ended March 31,
2002.



On September 9, 2002, our interest rate
swaps which effectively converted a portion of our variable rate debt to fixed rate debt expired. Effective November 12, 2002, we entered into a three-year swap agreement that effectively converted $20,000 of our variable rate debt to fixed rate
debt and reduced our exposure to changes in interest rates going forward.



ITEM 4.    CONTROLS AND PROCEDURES



(a)    Evaluation of disclosure controls and procedures. We maintain disclosure controls and procedures designed to ensure that we are able to collect and record the information we
are required to



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disclose in the reports we
file with the Securities and Exchange Commission (SEC), and to process, summarize and disclose this information within the time periods specified in the rules of the SEC. Based on their evaluation of our disclosure controls and procedures, which
took place as of a date within 90 days of the filing date of this report, the chief executive officer and chief financial officer believe that these controls and procedures are effective to ensure that we are able to collect, process and disclose
the information we are required to disclose in the reports we file with the SEC within the required time periods.



(b)    Changes in internal controls. There have been no significant changes in our internal controls or in other
factors that could significantly affect these controls subsequent to the date of the evaluation of those controls by the chief executive officer and chief financial officer.



PART II  OTHER INFORMATION



ITEM 6.    Exhibits and Reports on Form 8-K



|(a) |  | Exhibits
|--- |  | --------



The Exhibit Index filed herewith is incorporated herein by reference.



|(b) |  | Reports on Form 8-K.
|--- |  | --------------------



On October 29, 2002, the Company filed with the SEC a current report on Form 8-K to report that Chicago-based GTCR, the venture capital
firm that originally funded Global in 1994, distributed 1,000,000 shares of Global common stock to the limited partners of its Golder, Thoma, Cressey, Rauner Fund IV, L.P.



On November 15, 2002, the Company filed with the SEC a current report on Form 8-K to report that
Chicago-based GTCR, the venture capital firm that originally funded Global in 1994, distributed another 1,000,000 shares of Global common stock to the partners of its Golder, Thoma, Cressey, Rauner Fund IV, L.P.



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SIGNATURE



Pursuant to
the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



|                  |  | Global Imaging Systems, Inc.                                                                                                                  
|----------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------
|                  |  | (Registrant)                                                                                                                                  
|                 
|February 13, 2003 |  | /s/    Raymond
Schilling                                                                                                                      
|Date              |  | Raymond Schilling                                                                                                                             
|                  |  | Senior Vice President, Chief Financial Officer,Secretary and Treasurer (Duly Authorized Officerand Principal Financial and Accounting Officer)



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CERTIFICATIONS



I,
Thomas S. Johnson, certify that:



|1. |  | I have reviewed this quarterly report on Form 10-Q of Global Imaging Systems, Inc.;
|-- |  | -----------------------------------------------------------------------------------



|2. |  | Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|3. |  | Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|4. |  | The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act
Rules 13a-14 and 15d-14) for the registrant and we have:
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | b) |  | evaluated the effectiveness of the registrants disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly
report (the Evaluation Date); and
| | -- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | c) |  | presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation
Date;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------



|5. |  | The registrants other certifying officer and I have disclosed, based on our most recent evaluation, to the registrants auditors and the audit committee
of registrants board of directors (or persons performing the equivalent functions):
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | all significant deficiencies in the design or operation of internal controls which could adversely affect the registrants ability to record, process,
summarize and report financial data and have identified for the registrants auditors any material weaknesses in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 
| | 

| | b) |  | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal controls; and
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------





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|6. |  | The registrants other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or
in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|February 13, 2003 |  | /s/    Thomas S. Johnson             
|----------------- |  | -------------------------------------
|Date              |  | Thomas S. Johnson                    
|                  |  | President and Chief Executive Officer



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CERTIFICATIONS



I,
Raymond Schilling, certify that:



|1. |  | I have reviewed this quarterly report on Form 10-Q of Global Imaging Systems, Inc.;
|-- |  | -----------------------------------------------------------------------------------



|2. |  | Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|3. |  | Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|4. |  | The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act
Rules 13a-14 and 15d-14) for the registrant and we have:
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | b) |  | evaluated the effectiveness of the registrants disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly
report (the Evaluation Date); and
| | -- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | c) |  | presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation
Date;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------



|5. |  | The registrants other certifying officer and I have disclosed, based on our most recent evaluation, to the registrants auditors and the audit committee
of registrants board of directors (or persons performing the equivalent functions):
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | all significant deficiencies in the design or operation of internal controls which could adversely affect the registrants ability to record, process,
summarize and report financial data and have identified for the registrants auditors any material weaknesses in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | b) |  | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal controls; and
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------





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|6. |  | The registrants other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or
in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|February 13, 2003 |  | /s/    Raymond Schilling                                              
|----------------- |  | ----------------------------------------------------------------------
|Date              |  | Raymond Schilling                                                     
|                  |  | Senior Vice President, Chief Financial Officer,Secretary and Treasurer



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##### Table of Contents



EXHIBIT INDEX

(Pursuant to Item 601 of Regulation S-K)



|Number |  | Exhibit                                                                                                                            
|------ |  | -----------------------------------------------------------------------------------------------------------------------------------
|      
|3.1    |  | Amended and Restated Certificate of Incorporation (1)                                                                              
|      
|3.2    |  | Amended and Restated Bylaws (1)                                                                                                    
|      
|10.1   |  | Peter W. Shoemaker Restricted Stock Agreement dated October 1,
2002.*                                                              
|      
|99.1   |  | Written Statement of Chief Executive Officer and Chief Financial Officer pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.

---

|* |  | Management or compensatory contract.
|- |  | ------------------------------------



|(1) |  | Incorporated by reference to Globals Registration Statement on Form S-1, No. 333-48103, which was declared effective by the Securities and Exchange Commission
on June 17, 1998.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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