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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)



|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2006
|- | -----------------------------------------------------------------------------------------------------------------------------------------

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 OFINCORPORATION OR ORGANIZATION) |  | (I.R.S. EMPLOYER IDENTIFICATIONNO.)



|                                                    |  |           
|--------------------------------------------------- |  | ----------
|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



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(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 a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of accelerated filer
and large accelerated filer in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer  x                    Accelerated filer ̈Non-accelerated filer ̈

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

Indicate the number of shares outstanding of each of the issuers classes of common stock, as of the latest
practicable date.



|                                       |  |                                 
|-------------------------------------- |  | --------------------------------
|Class                                  |  | Outstanding at November 3, 2006:
|Common stock, par value $.01 per share |  | 51,120,310                      



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##### Table of Contents

INDEX



|                                                                                                                                          |  |     
|----------------------------------------------------------------------------------------------------------------------------------------- |  | ----
|                                                                                                                                          |  | Page
|PART I  FINANCIAL INFORMATION                                                                                                            |  |     
|                                                                                                                                          | 
|ITEM 1  Consolidated Financial Statements                                                                                                |  |     
|                                                                                                                                          | 
|Condensed Consolidated Balance Sheets as of September 30, 2006 and March 31, 2006 (Unaudited)                                             |  | 3   
|                                                                                                                                          | 
|Condensed Consolidated Statements of Income for the three months ended September 30, 2006 and 2005 (Unaudited)                            |  | 4   
|                                                                                                                                          | 
|Condensed Consolidated Statements of Income for the six months ended September 30, 2006 and 2005 (Unaudited)                              |  | 5   
|                                                                                                                                          | 
|Condensed Consolidated Statements of Cash Flows for the six months ended September 30, 2006 and 2005 (Unaudited)                          |  | 6   
|                                                                                                                                          | 
|Condensed Consolidated Statement of Stockholders Equity and Comprehensive Income for the six months ended September 30, 2006 (Unaudited) |  | 7   
|                                                                                                                                          | 
|Notes to Condensed Consolidated Financial Statements (Unaudited)                                                                          |  | 8   
|                                                                                                                                          | 
|ITEM 2  Managements Discussion and Analysis of Financial Condition and Results of Operations                                            |  | 19  
|                                                                                                                                          | 
|ITEM 3  Quantitative and Qualitative Disclosures about Market Risk                                                                       |  | 29  
|                                                                                                                                          | 
|ITEM 4  Controls and Procedures                                                                                                          |  | 29  
|                                                                                                                                          | 
|PART II  OTHER INFORMATION                                                                                                               |  |     
|                                                                                                                                          | 
|ITEM 1.  Legal Proceedings                                                                                                               |  | 29  
|                                                                                                                                          | 
|ITEM 1A.  Risk Factors                                                                                                                   |  | 29  
|                                                                                                                                          | 
|ITEM 2.  Unregistered Sales of Equity Securities and Use of Proceeds                                                                     |  | 30  
|                                                                                                                                          | 
|ITEM 3.  Defaults Upon Senior Securities                                                                                                 |  | 30  
|                                                                                                                                          | 
|ITEM 4.  Submission of Matters to a Vote of Security Holders                                                                             |  | 31  
|                                                                                                                                          | 
|ITEM 5.  Other Information                                                                                                               |  | 31  
|                                                                                                                                          | 
|ITEM 6.  Exhibits                                                                                                                        |  | 31  
|                                                                                                                                          | 
|SIGNATURE                                                                                                                                 |  | 32  
|                                                                                                                                          | 
|EXHIBIT INDEX                                                                                                                             |  | 33  



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##### Table of Contents

PART I  FINANCIAL INFORMATION



|ITEM 1. | Consolidated Financial Statements
|------- | ---------------------------------

GLOBAL IMAGING SYSTEMS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

(IN THOUSANDS, EXCEPT SHARE AMOUNTS)



|                                                                                                                                                                                                           |  |                    |         |   |                |   |         |  
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------ | ------- | - | -------------- | - | ------- | -
|                                                                                                                                                                                                           |  | September 30, 2006 |         |   | March 31, 2006 |  
|ASSETS                                                                                                                                                                                                     |  |                    |         |   |                |   |         |  
|Current assets:                                                                                                                                                                                            |  |                    |         |   |                |   |         |  
|Cash and cash equivalents                                                                                                                                                                                  |  | $                  | 10,112  |   |                | $ | 51,610  |  
|Accounts receivable, net of allowance for doubtful accounts ($3,597 and $2,942 at September 30, 2006 and March 31, 2006,
respectively)                                                                     |  |                    | 142,165 |   |                |   | 131,497 |  
|Inventories, net                                                                                                                                                                                           |  |                    | 109,156 |   |                |   | 98,073  |  
|Deferred income taxes                                                                                                                                                                                      |  |                    | 8,957   |   |                |   | 8,937   |  
|Prepaid expenses and other current assets                                                                                                                                                                  |  |                    | 6,252   |   |                |   | 5,820   |  
|                                                                                                                                                                                                           |  |                    |         |   |                |   |         |  
|Total current assets                                                                                                                                                                                       |  |                    | 276,642 |   |                |   | 295,937 |  
|Rental equipment, net                                                                                                                                                                                      |  |                    | 17,504  |   |                |   | 15,687  |  
|Property and equipment, net                                                                                                                                                                                |  |                    | 19,042  |   |                |   | 17,810  |  
|Other assets                                                                                                                                                                                               |  |                    | 1,931   |   |                |   | 2,034   |  
|Goodwill and other intangible assets, net                                                                                                                                                                  |  |                    | 573,021 |   |                |   | 553,189 |  
|                                                                                                                                                                                                           |  |                    |         |   |                |   |         |  
|Total assets                                                                                                                                                                                               |  | $                  | 888,140 |   |                | $ | 884,657 |  
|                                                                                                                                                                                                           |  |                    |         |   |                |   |         |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                                                                                       |  |                    |         |   |                |   |         |  
|Current liabilities:                                                                                                                                                                                       |  |                    |         |   |                |   |         |  
|Accounts payable                                                                                                                                                                                           |  | $                  | 66,808  |   |                | $ | 65,890  |  
|Accrued liabilities                                                                                                                                                                                        |  |                    | 14,807  |   |                |   | 12,697  |  
|Accrued compensation and benefits                                                                                                                                                                          |  |                    | 16,990  |   |                |   | 22,489  |  
|Accrued interest                                                                                                                                                                                           |  |                    | 606     |   |                |   | 1,424   |  
|Current maturities of long-term debt                                                                                                                                                                       |  |                    | 24      |   |                |   | 2,133   |  
|Deferred revenue                                                                                                                                                                                           |  |                    | 27,799  |   |                |   | 27,159  |  
|Income taxes payable                                                                                                                                                                                       |  |                    | 10,588  |   |                |   | 7,711   |  
|                                                                                                                                                                                                           |  |                    |         |   |                |   |         |  
|Total current liabilities                                                                                                                                                                                  |  |                    | 137,622 |   |                |   | 139,503 |  
|Deferred income taxes                                                                                                                                                                                      |  |                    | 45,958  |   |                |   | 42,247  |  
|Long-term debt, less current maturities                                                                                                                                                                    |  |                    | 190,066 |   |                |   | 260,713 |  
|Other long-term liabilities                                                                                                                                                                                |  |                    |        |   |                |   | 976     |  
|                                                                                                                                                                                                           |  |                    |         |   |                |   |         |  
|Total liabilities                                                                                                                                                                                          |  |                    | 373,646 |   |                |   | 443,439 |  
|Stockholders equity:                                                                                                                                                                                      |  |                    |         |   |                |   |         |  
|Preferred stock, $.01 par value:20,000,000 shares authorized: no shares issued                                                                                                                             |  |                    |        |   |                |   |        |  
|Common stock, $.01 par value:80,000,000 shares authorized: 53,893,452 and 48,017,868 shares issued and 51,202,410 and 46,840,192 shares
outstanding at September 30, 2006 and March 31, 2006, respectively |  |                    | 538     |   |                |   | 480     |  
|Common stock held in treasury, at cost:2,691,042 and 1,177,676 shares at September 30, 2006 and March 31, 2006,
respectively                                                                               |  |                    | (50,852 | ) |                |   | (19,133 | )
|Additional paid-in capital                                                                                                                                                                                 |  |                    | 268,027 |   |                |   | 199,425 |  
|Retained earnings                                                                                                                                                                                          |  |                    | 296,194 |   |                |   | 262,569 |  
|Unearned stock-based compensation                                                                                                                                                                          |  |                    |        |   |                |   | (2,955  | )
|Accumulated other comprehensive income                                                                                                                                                                     |  |                    | 587     |   |                |   | 832     |  
|                                                                                                                                                                                                           |  |                    |         |   |                |   |         |  
|Total stockholders equity                                                                                                                                                                                 |  |                    | 514,494 |   |                |   | 441,218 |  
|                                                                                                                                                                                                           |  |                    |         |   |                |   |         |  
|Total liabilities and stockholders equity                                                                                                                                                                 |  | $                  | 888,140 |   |                | $ | 884,657 |  
|                                                                                                                                                                                                           |  |                    |         |   |                |   |         |  

See accompanying notes.



3



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GLOBAL IMAGING SYSTEMS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)



|                                               |  |                                  |         |   |      |   |         |  
|---------------------------------------------- |  | -------------------------------- | ------- | - | ---- | - | ------- | -
|                                               |  | Three Months Ended September 30, |        
|                                               |  | 2006                             |         |   | 2005 |  
|Revenues:                                      |  |                                  |         |   |      |   |         |  
|Equipment and supplies sales                   |  | $                                | 216,765 |   |      | $ | 194,993 |  
|Service and rentals                            |  |                                  | 69,026  |   |      |   | 63,818  |  
|                                               |  |                                  |         |   |      |   |         |  
|Total revenues                                 |  |                                  | 285,791 |   |      |   | 258,811 |  
|Costs and operating expenses:                  |  |                                  |         |   |      |   |         |  
|Cost of equipment and supplies sales           |  |                                  | 142,525 |   |      |   | 126,036 |  
|Service and rental costs                       |  |                                  | 36,182  |   |      |   | 33,076  |  
|Selling, general and administrative expenses   |  |                                  | 75,361  |   |      |   | 71,099  |  
|Intangible asset amortization                  |  |                                  | 437     |   |      |   | 436     |  
|                                               |  |                                  |         |   |      |   |         |  
|Total costs and operating expenses             |  |                                  | 254,505 |   |      |   | 230,647 |  
|                                               |  |                                  |         |   |      |   |         |  
|Income from operations                         |  |                                  | 31,286  |   |      |   | 28,164  |  
|Other income                                   |  |                                  | 1,194   |   |      |   |        |  
|Interest expense                               |  |                                  | (3,138  | ) |      |   | (3,445  | )
|                                               |  |                                  |         |   |      |   |         |  
|Income before income taxes                     |  |                                  | 29,342  |   |      |   | 24,719  |  
|Income taxes                                   |  |                                  | 11,326  |   |      |   | 9,443   |  
|                                               |  |                                  |         |   |      |   |         |  
|Net income                                     |  | $                                | 18,016  |   |      | $ | 15,276  |  
|                                               |  |                                  |         |   |      |   |         |  
|Earnings per common share:                     |  |                                  |         |   |      |   |         |  
|Basic                                          |  | $                                | .35     |   |      | $ | .33     |  
|                                               |  |                                  |         |   |      |   |         |  
|Diluted                                        |  | $                                | .35     |   |      | $ | .30     |  
|                                               |  |                                  |         |   |      |   |         |  
|Weighted average number of shares outstanding: |  |                                  |         |   |      |   |         |  
|Basic                                          |  |                                  | 51,017  |   |      |   | 45,810  |  
|Diluted                                        |  |                                  | 52,081  |   |      |   | 51,574  |  

See accompanying notes.



4



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GLOBAL IMAGING SYSTEMS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)



|                                               |  |                                |         |   |      |   |         |  
|---------------------------------------------- |  | ------------------------------ | ------- | - | ---- | - | ------- | -
|                                               |  | Six Months Ended September 30, |        
|                                               |  | 2006                           |         |   | 2005 |  
|Revenues:                                      |  |                                |         |   |      |   |         |  
|Equipment and supplies sales                   |  | $                              | 412,418 |   |      | $ | 377,500 |  
|Service and rentals                            |  |                                | 138,302 |   |      |   | 127,640 |  
|                                               |  |                                |         |   |      |   |         |  
|Total revenues                                 |  |                                | 550,720 |   |      |   | 505,140 |  
|Costs and operating expenses:                  |  |                                |         |   |      |   |         |  
|Cost of equipment and supplies sales           |  |                                | 266,046 |   |      |   | 241,761 |  
|Service and rental costs                       |  |                                | 72,100  |   |      |   | 66,425  |  
|Selling, general and administrative expenses   |  |                                | 150,591 |   |      |   | 140,959 |  
|Intangible asset amortization                  |  |                                | 906     |   |      |   | 889     |  
|                                               |  |                                |         |   |      |   |         |  
|Total costs and operating expenses             |  |                                | 489,643 |   |      |   | 450,034 |  
|                                               |  |                                |         |   |      |   |         |  
|Income from operations                         |  |                                | 61,077  |   |      |   | 55,106  |  
|Other income                                   |  |                                | 1,194   |   |      |   |        |  
|Loss on early extinguishment of debt           |  |                                | (1,045  | ) |      |   |        |  
|Interest expense                               |  |                                | (6,463  | ) |      |   | (6,771  | )
|                                               |  |                                |         |   |      |   |         |  
|Income before income taxes                     |  |                                | 54,763  |   |      |   | 48,335  |  
|Income taxes                                   |  |                                | 21,138  |   |      |   | 18,417  |  
|                                               |  |                                |         |   |      |   |         |  
|Net income                                     |  | $                              | 33,625  |   |      | $ | 29,918  |  
|                                               |  |                                |         |   |      |   |         |  
|Earnings per common share:                     |  |                                |         |   |      |   |         |  
|Basic                                          |  | $                              | .68     |   |      | $ | .65     |  
|                                               |  |                                |         |   |      |   |         |  
|Diluted                                        |  | $                              | .65     |   |      | $ | .59     |  
|                                               |  |                                |         |   |      |   |         |  
|Weighted average number of shares outstanding: |  |                                |         |   |      |   |         |  
|Basic                                          |  |                                | 49,462  |   |      |   | 46,160  |  
|Diluted                                        |  |                                | 52,190  |   |      |   | 51,943  |  

See accompanying notes.



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GLOBAL IMAGING SYSTEMS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(IN THOUSANDS)



|                                                                                                        |  |                                |          |   |      |   |         |  
|------------------------------------------------------------------------------------------------------- |  | ------------------------------ | -------- | - | ---- | - | ------- | -
|                                                                                                        |  | Six Months Ended September 30, |         
|                                                                                                        |  | 2006                           |          |   | 2005 |  
|OPERATING ACTIVITIES:                                                                                   |  |                                |          |   |      |   |         |  
|Net income                                                                                              |  | $                              | 33,625   |   |      | $ | 29,918  |  
|Adjustments to reconcile net income to net cash provided by operating activities:                       |  |                                |          |   |      |   |         |  
|Depreciation                                                                                            |  |                                | 8,249    |   |      |   | 8,091   |  
|Amortization                                                                                            |  |                                | 906      |   |      |   | 889     |  
|Amortization of financing fees                                                                          |  |                                | 347      |   |      |   | 545     |  
|Other income                                                                                            |  |                                | (1,194   | ) |      |   |        |  
|Non-cash portion of loss on early extinguishment of debt                                                |  |                                | 1,045    |   |      |   |        |  
|Tax benefit of stock option exercises and vested restricted stock                                       |  |                                | (3,638   | ) |      |   | 1,159   |  
|Deferred income tax expense                                                                             |  |                                | 4,018    |   |      |   | 3,671   |  
|Stock-based compensation expense                                                                        |  |                                | 1,582    |   |      |   | 841     |  
|Changes in operating assets and liabilities, net of amounts acquired in purchase business combinations: |  |                                |          |   |      |   |         |  
|Accounts receivable                                                                                     |  |                                | (8,752   | ) |      |   | (4,437  | )
|Inventories                                                                                             |  |                                | (8,907   | ) |      |   | (2,581  | )
|Prepaid expenses and other current assets                                                               |  |                                | (747     | ) |      |   | (1,051  | )
|Other assets                                                                                            |  |                                | 108      |   |      |   | 669     |  
|Accounts payable                                                                                        |  |                                | (3,174   | ) |      |   | (13,070 | )
|Accrued liabilities, compensation and benefits and interest                                             |  |                                | (5,367   | ) |      |   | (7,119  | )
|Deferred revenue                                                                                        |  |                                | (576     | ) |      |   | 201     |  
|Income taxes payable                                                                                    |  |                                | 6,515    |   |      |   | 7,083   |  
|Other long-term liabilities                                                                             |  |                                |         |   |      |   | 976     |  
|                                                                                                        |  |                                |          |   |      |   |         |  
|Net cash provided by operating activities                                                               |  |                                | 24,040   |   |      |   | 25,785  |  
|INVESTING ACTIVITIES:                                                                                   |  |                                |          |   |      |   |         |  
|Purchases of property, equipment and rental equipment                                                   |  |                                | (10,645  | ) |      |   | (11,118 | )
|Proceeds from sale of technology training division assets                                               |  |                                | 1,575    |   |      |   |        |  
|Purchases of businesses, net of cash acquired                                                           |  |                                | (20,208  | ) |      |   | (8,864  | )
|                                                                                                        |  |                                |          |   |      |   |         |  
|Net cash used in investing activities                                                                   |  |                                | (29,278  | ) |      |   | (19,982 | )
|FINANCING ACTIVITIES:                                                                                   |  |                                |          |   |      |   |         |  
|Payments on long-term debt                                                                              |  |                                | (241,508 | ) |      |   | (32,876 | )
|Proceeds from issuances of long-term debt                                                               |  |                                | 226,251  |   |      |   | 31,728  |  
|Financing fees paid                                                                                     |  |                                | (2,112   | ) |      |   |        |  
|Purchases of treasury stock                                                                             |  |                                | (32,548  | ) |      |   | (20,000 | )
|Stock options exercised                                                                                 |  |                                | 10,019   |   |      |   | 2,096   |  
|Tax benefit of stock option exercises and vested restricted stock                                       |  |                                | 3,638    |   |      |   |        |  
|                                                                                                        |  |                                |          |   |      |   |         |  
|Net cash used in financing activities                                                                   |  |                                | (36,260  | ) |      |   | (19,052 | )
|                                                                                                        |  |                                |          |   |      |   |         |  
|Net decrease in cash and cash equivalents                                                               |  |                                | (41,498  | ) |      |   | (13,249 | )
|Cash and cash equivalents, beginning of period                                                          |  |                                | 51,610   |   |      |   | 25,365  |  
|                                                                                                        |  |                                |          |   |      |   |         |  
|Cash and cash equivalents, end of period                                                                |  | $                              | 10,112   |   |      | $ | 12,116  |  
|                                                                                                        |  |                                |          |   |      |   |         |  
|Non-cash financing activity:                                                                            |  |                                |          |   |      |   |         |  
|Conversion of convertible notes to common stock, net                                                    |  | $                              | 56,105   |   |      | $ |        |  
|                                                                                                        |  |                                |          |   |      |   |         |  
|Treasury stock issued for business purchases                                                            |  | $                              | 1,100    |   |      | $ | 920     |  
|                                                                                                        |  |                                |          |   |      |   |         |  

See accompanying notes.



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GLOBAL IMAGING SYSTEMS, INC.

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY AND COMPREHENSIVE INCOME
(Unaudited)

(IN THOUSANDS, EXCEPT FOR SHARE AMOUNTS)



|                                                                               |  |                 |   |  |          |     |                         |   |         |                          |  |   |                  |   |                                 |   |         |                                            |   |        |       |  |   |      |   |  |   |         |  
|------------------------------------------------------------------------------ |  | --------------- | - |  | -------- | --- | ----------------------- | - | ------- | ------------------------ |  | - | ---------------- | - | ------------------------------- | - | ------- | ------------------------------------------ | - | ------ | ----- |  | - | ---- | - |  | - | ------- | -
|                                                                               |  | Common Stock    |   |  |          |    
|                                                                               |  | Number ofShares |   |  | ParValue |     | Held inTreasury,at Cost |   |         | AdditionalPaid-inCapital |  |   | RetainedEarnings |   | UnearnedStock-basedCompensation |   |         | AccumulatedOtherComprehensiveIncome (Loss) |   |        | Total | 
|Balances at March 31, 2006                                                     |  | 46,840,192      |   |  | $        | 480 |                         | $ | (19,133 | )                        |  | $ | 199,425          |   |                                 | $ | 262,569 |                                            | $ | (2,955 | )     |  | $ | 832  |   |  | $ | 441,218 |  
|Comprehensive income:                                                          |  |                 |   |  |          |     |                         |   |         |                          |  |   |                  |   |                                 |   |         |                                            |   |        |       |  |   |      |   |  |   |         |  
|Net income                                                                     |  |                |   |  |          |    |                         |   |        |                          |  |   |                 |   |                                 |   | 33,625  |                                            |   |       |       |  |   |     |   |  |   | 33,625  |  
|Unrealized loss on derivative instruments                                      |  |                |   |  |          |    |                         |   |        |                          |  |   |                 |   |                                 |   |        |                                            |   |       |       |  |   | (245 | ) |  |   | (245    | )
|                                                                               |  |                 |   |  |          |     |                         |   |         |                          |  |   |                  |   |                                 |   |         |                                            |   |        |       |  |   |      |   |  |   |         |  
|Total comprehensive income                                                     |  |                 |   |  |          |     |                         |   |         |                          |  |   |                  |   |                                 |   |         |                                            |   |        |       |  |   |      |   |  |   | 33,380  |  
|Stock options exercised, including income tax benefit                          |  | 950,274         |   |  |          | 9   |                         |   |        |                          |  |   | 13,501           |   |                                 |   |        |                                            |   |       |       |  |   |     |   |  |   | 13,510  |  
|Repurchases of common stock                                                    |  | (1,564,365      | ) |  |          |    |                         |   | (32,548 | )                        |  |   |                 |   |                                 |   |        |                                            |   |       |       |  |   |     |   |  |   | (32,548 | )
|Treasury stock issued in conjunction with acquisitions                         |  | 50,999          |   |  |          |    |                         |   | 829     |                          |  |   | 271              |   |                                 |   |        |                                            |   |       |       |  |   |     |   |  |   | 1,100   |  
|Common stock issued under restricted stock plan, including income tax benefit  |  | 112,000         |   |  |          | 1   |                         |   |        |                          |  |   | 146              |   |                                 |   |        |                                            |   |       |       |  |   |     |   |  |   | 147     |  
|Redemption of convertible debt                                                 |  | 4,813,310       |   |  |          | 48  |                         |   |        |                          |  |   | 56,057           |   |                                 |   |        |                                            |   |       |       |  |   |     |   |  |   | 56,105  |  
|Stock-based compensation expense                                               |  |                |   |  |          |    |                         |   |        |                          |  |   | 1,582            |   |                                 |   |        |                                            |   |       |       |  |   |     |   |  |   | 1,582   |  
|Adoption of SFAS 123(R)- reclassification of unearned stock-based compensation |  |                |   |  |          |    |                         |   |        |                          |  |   | (2,955           | ) |                                 |   |        |                                            |   | 2,955  |       |  |   |     |   |  |   |        |  
|                                                                               |  |                 |   |  |          |     |                         |   |         |                          |  |   |                  |   |                                 |   |         |                                            |   |        |       |  |   |      |   |  |   |         |  
|Balances at September 30, 2006                                                 |  | 51,202,410      |   |  | $        | 538 |                         | $ | (50,852 | )                        |  | $ | 268,027          |   |                                 | $ | 296,194 |                                            | $ |       |       |  | $ | 587  |   |  | $ | 514,494 |  
|                                                                               |  |                 |   |  |          |     |                         |   |         |                          |  |   |                  |   |                                 |   |         |                                            |   |        |       |  |   |      |   |  |   |         |  

See accompanying notes.



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GLOBAL IMAGING SYSTEMS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

NOTE 1. BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) necessary for a fair presentation have been included herein. The results of operations for the three- and six-month periods ended September 30, 2006 are not necessarily indicative of the results that
may be expected for the fiscal year ending March 31, 2007.

The condensed consolidated balance sheet at March 31, 2006 has been
derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements.

The condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes
thereto included in Global Imaging Systems, Inc.s Annual Report on Form 10-K for the year ended March 31, 2006.

As further
discussed in Note 7, all share and per share data has been adjusted to reflect a two-for-one stock split, effective August 15, 2006.

NOTE 2. STOCK-BASED COMPENSATION

Effective April 1, 2006 (the Effective Date), the Company
adopted the provisions of Statement of Financial Accounting Standards No. 123(R), Share-Based Payment, and related interpretations, or SFAS No. 123(R). SFAS No. 123(R) requires all share-based payments to employees
and non-employee members of the board of directors to be recognized in the Companys Consolidated Statement of Income based on their fair values. In March 2005, the Securities and Exchange Commission (the SEC) issued Staff
Accounting Bulletin No. 107 (SAB No. 107) regarding its interpretation of SFAS No. 123(R) and the valuation of share-based payments for public companies. The Company has applied the provisions of SAB No. 107 in its
adoption of SFAS No. 123(R).

SFAS No. 123(R) eliminates the ability to account for stock-based compensation transactions using
the intrinsic value method prescribed under APB Opinion No. 25, Accounting for Stock Issued to Employees, and instead, generally requires that such transactions be accounted for using a fair-value based method. Through fiscal year 2006,
the Company used the Black-Scholes option-pricing model to determine the fair value of its stock options under SFAS No. 123, Accounting for Stock-Based Compensation, for the pro-forma disclosures required under this pronouncement.

The Company has elected the modified prospective method as permitted by SFAS No. 123(R), and accordingly, prior periods
have not been restated to reflect the impact of SFAS No. 123(R). The modified prospective method requires compensation expense to be recognized for all share-based awards granted after the Effective Date as well as for all awards granted prior
to the Effective Date that remain unvested on the Effective Date. Stock-based compensation expense for awards granted prior to April 1, 2006 is based on



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the fair value on the date of grant as previously determined under the provisions of SFAS No. 123. Effective April 1, 2006, the Company began to
recognize compensation expense, reduced for estimated forfeitures, on a straight-line basis over the requisite service period of the award, which is the vesting term of the outstanding stock awards. The Company estimated the forfeiture rate for the
fiscal year 2007 periods based on its historical experience.

As a result of adopting SFAS No. 123(R), the impact to the Consolidated
Statement of Income for the three months ended September 30, 2006 on income before income taxes and net income was a reduction of $400 and $246, respectively, from what would have been presented if the Company had continued to account for stock
option awards under APB 25. The impact on basic and diluted earnings per share for the three months ended September 30, 2006 was a reduction of less than $0.01 per share.

The impact to the Consolidated Statement of Income for the six months ended September 30, 2006 on income before income taxes and net income was a
reduction of $706 and $434, respectively, from what would have been presented if the Company had continued to account for stock option awards under APB 25. The impact on basic and diluted earnings per share for the six months ended
September 30, 2006 was a reduction of approximately $0.01 per share.

For the three- and six-month periods ended September 30,
2006, the Company recorded total stock-based compensation expense of $838 and $1,582, respectively, which is included in selling, general and administrative expenses in the Condensed Consolidated Statements of Income.

In accordance with SFAS No. 123(R), for the six months ended September 30, 2006, the Company has presented the tax benefits resulting from tax
deductions in excess of compensation cost recognized for those options (excess tax benefits) as a cash flow from financing activities, rather than as a cash flow from operating activities, in the Condensed Consolidated Statement of Cash Flows. Cash
received from stock option exercises during the six months ended September 30, 2006 was $10,019 and the benefit received from the tax deduction from stock option exercises and vested restricted stock was $3,638 for the six months ended
September 30, 2006.

Prior to the adoption of SFAS No. 123(R), the Company measured compensation expense for its stock-based
compensation plans using the intrinsic value method prescribed by APB Opinion No. 25 and related interpretations. Options granted under these plans had an exercise price equal to or greater than the market value of the underlying common stock
on the date of grant. The Company applied the disclosure-only provisions of SFAS No. 148, Accounting for Stock-Based Compensation  Transition and Disclosure  an amendment of FASB Statement No. 123. SFAS No. 148
allowed for the continued use of the recognition and measurement principles of APB Opinion No. 25 and related interpretations in accounting for those plans; however, it required disclosure of compensation expense as if the fair value-based
method had been applied.

In connection with the adoption of SFAS No. 123(R), the company has reclassified the April 1, 2006
unearned stock-based compensation balance of $2,955 to additional paid-in capital.



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The following table illustrates the pro forma net income and pro forma earnings per share for the three-
and six-month periods ended September 30, 2005, reflecting the compensation cost that the Company would have recorded for its stock option plans had it used the fair value-based method at the date of grant for awards under the plans consistent
with the method prescribed by SFAS No. 123.



|                                                                                                                                            |  |                                    |        |   |                                  |   |        |  
|------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------------- | ------ | - | -------------------------------- | - | ------ | -
|                                                                                                                                            |  | Three MonthsEndedSeptember 30,2005 |        |   | Six MonthsEndedSeptember 30,2005 |  
|Net income, as reported                                                                                                                     |  | $                                  | 15,276 |   |                                  | $ | 29,918 |  
|Add: Stock-based compensation expense included in reported net income, net of related tax                                                   |  |                                    | 260    |   |                                  |   | 521    |  
|Deduct: Total stock-based employee compensation expense determined under fair-value based method for all awards, net of related tax
effects |  |                                    | (1,415 | ) |                                  |   | (2,721 | )
|                                                                                                                                            |  |                                    |        |   |                                  |   |        |  
|Pro forma net income                                                                                                                        |  | $                                  | 14,121 |   |                                  | $ | 27,718 |  
|                                                                                                                                            |  |                                    |        |   |                                  |   |        |  
|Earnings per share:                                                                                                                         |  |                                    |        |   |                                  |   |        |  
|Basic  as reported                                                                                                                         |  | $                                  | .33    |   |                                  | $ | .65    |  
|                                                                                                                                            |  |                                    |        |   |                                  |   |        |  
|Basic  pro forma                                                                                                                           |  | $                                  | .31    |   |                                  | $ | .60    |  
|                                                                                                                                            |  |                                    |        |   |                                  |   |        |  
|Diluted  as reported                                                                                                                       |  | $                                  | .30    |   |                                  | $ | .59    |  
|                                                                                                                                            |  |                                    |        |   |                                  |   |        |  
|Diluted  pro forma                                                                                                                         |  | $                                  | .28    |   |                                  | $ | .55    |  
|                                                                                                                                            |  |                                    |        |   |                                  |   |        |  

The Company has elected to use the Black-Scholes option-pricing model to determine the fair value
of share-based awards under SFAS No. 123(R), which is the same valuation technique previously used for pro forma disclosures under SFAS No. 123. The Black-Scholes option-pricing model incorporates various and highly subjective assumptions,
including expected term and expected volatility. The Company estimated the expected term of options granted using historical employee exercise behavior. The Company estimated the expected volatility of our common stock at the date of grant using
historical volatility over the period equal to the expected term. The risk-free interest rate assumption is determined using the Federal Reserve Treasury Constant Maturity (TCM) rates with maturities similar to those of the expected term of the
award being valued. The Company has never paid any cash dividends on our common stock; therefore, the Company assumed an expected dividend yield of zero.

Additionally, SFAS No. 123(R) requires us to estimate pre-vesting option forfeitures at the date of grant and periodically revise those estimates in subsequent periods if actual forfeitures differ from those
estimates. We record stock-based compensation expense only for those awards expected to vest using an estimated forfeiture rate based on our historical pre-vesting forfeiture data. Previously, we accounted for forfeitures as they occurred under the
pro forma disclosure provisions of SFAS No. 123 for periods prior to fiscal year 2007.



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The following table shows our assumptions used to compute the stock-based compensation expense and pro
forma information for stock option grants issued during the three- and six-month periods ended September 30, 2006 and 2005.



|                             |  |                                 |   |  |                               |   |  |      |   |  |      |  
|---------------------------- |  | ------------------------------- | - |  | ----------------------------- | - |  | ---- | - |  | ---- | -
|                             |  | Three MonthsEnded September 30, |   |  | Six MonthsEnded September 30, |  
|                             |  | 2006                            |   |  | 2005                          |   |  | 2006 |   |  | 2005 |  
|Expected option term (years) |  | 5.1                             |   |  | 5.0                           |   |  | 5.1  |   |  | 5.0  |  
|Expected volatility          |  | 43.8                            | % |  | 61.0                          | % |  | 46.5 | % |  | 62.2 | %
|Expected dividend rate       |  |                                |   |  |                              |   |  |     |   |  |     |  
|Risk-free interest rate      |  | 4.9                             | % |  | 4.1                           | % |  | 5.0  | % |  | 4.0  | %

Equity Incentive Plans

In 1998, the Board of Directors adopted a stock option plan (the 1998 Plan) under which, as amended to date, 6,640,000 shares of our common stock may be issued pursuant to stock options granted or sold as
restricted stock to directors, officers, and employees of and consultants to the Company. As of September 30, 2006, options to purchase 2,544,780 shares of our common stock were outstanding under the 1998 Plan, and 3,808,410 shares of our
common stock have been issued under the 1998 Plan upon the exercise of stock options granted. There were 51,810 shares of our common stock available to be issued under the 1998 Plan as of September 30, 2006. During the six months ended
September 30, 2006, 50,000 options were granted under the 1998 Plan with exercise prices ranging from $19.76 to $21.26, the market values at the dates of grant. In addition, we have also issued 235,000 shares of restricted stock under the 1998
Plan.

In 2001, the Board of Directors adopted the Global Imaging Systems, Inc. 2001 Stock Option Plan (the 2001 Plan) under
which we may grant options to purchase up to 600,000 shares of our common stock to employees of and service providers to Global, except for our executive officers and directors. Stock options granted under the 2001 Plan have the same terms as those
granted under the 1998 Plan. As of September 30, 2006, options to purchase 126,070 shares of our common stock were outstanding under the 2001 Plan, and 446,730 shares of our common stock have been issued under the 2001 Plan upon the exercise of
stock options granted. There were 27,200 shares of our common stock available to be issued under the 2001 Plan as of September 30, 2006. During the six months ended September 30, 2006, no options were granted under the 2001 Plan.

In 2004, our shareholders approved the Global Imaging Systems, Inc. 2004 Omnibus Long Term Incentive Plan (the 2004 Plan)
under which we may grant options to purchase up to 1,200,000 shares of our common stock to directors, officers, and employees of Global. In 2005, our shareholders approved an amendment to the 2004 Plan to increase the total shares available for
grant to 2,900,000. As of September 30, 2006, options to purchase 1,543,224 shares of our common stock were outstanding under the 2004 Plan, and 146,026 shares of our common stock have been issued under the 2004 Plan upon the exercise of stock
options granted. There were 894,750 shares of our common stock available to be issued under the 2004 Plan as of September 30, 2006. In addition, we have also issued 316,000 shares of restricted stock under the 2004 plan. During the six months
ended September 30, 2006, 787,000 options were granted under the 2004 Plan with exercise prices ranging from $18.18 to $19.79, the market values at the dates of grant.



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In addition to options outstanding under our stock option plans, we have also issued 20,000 options to
purchase our common stock at a price of $6.00 per share which may be exercised until July 31, 2008.

The weighted average fair value
of options granted during the three months ended September 30, 2006 was $9.69. The weighted average fair value of options granted during the six months ended September 30, 2006 was $9.29.

The following table summarizes the stock option activity for the six months ended September 30, 2006:



|                                          |  |                  |   |  |                                 |       |                                                       |     |                          |   |       
|----------------------------------------- |  | ---------------- | - |  | ------------------------------- | ----- | ----------------------------------------------------- | --- | ------------------------ | - | ------
|                                          |  | Number of Shares |   |  | Weighted-Average Exercise Price |       | Weighted-AverageRemaining Contractual term (in years) |     | AggregateIntrinsic Value
|Outstanding at March 31, 2006             |  | 4,389,998        |   |  | $                               | 12.52 |                                                       |     |                          |   |       
|Granted                                   |  | 837,000          |   |  | $                               | 19.56 |                                                       |     |                          |   |       
|Exercised                                 |  | (950,274         | ) |  | $                               | 10.57 |                                                       |     |                          |   |       
|Canceled                                  |  | (42,650          | ) |  | $                               | 16.97 |                                                       |     |                          |   |       
|                                          |  |                  |   |  |                                 |       |                                                       |     |                          |   |       
|Outstanding at September 30, 2006         |  | 4,234,074        |   |  | $                               | 14.30 |                                                       | 7.5 |                          | $ | 32,880
|                                          |  |                  |   |  |                                 |       |                                                       |     |                          |   |       
|Options exercisable at September 30, 2006 |  | 3,261,874        |   |  | $                               | 12.98 |                                                       | 6.8 |                          | $ | 29,636
|                                          |  |                  |   |  |                                 |       |                                                       |     |                          |   |       
|Available for grant at September 30, 2006 |  | 973,760          |   |  |                                 |       |                                                       |     |                          |   |       
|                                          |  |                  |   |  |                                 |       |                                                       |     |                          |   |       

The aggregate intrinsic value in the table above represents the difference between the
Companys closing price on September 30, 2006 and the option exercise price, multiplied by the number of in-the-money options at September 30, 2006. This amount changes based on the fair market value of the Companys common
stock. The total intrinsic value of stock options exercised during the three and six months ended September 30, 2006 was approximately $2,540 and $9,140, respectively. As of September 30, 2006, there was $7,598 of total unrecognized
stock-based compensation cost related to stock options. That cost is expected to be recognized over a weighted-average period of 4.4 years. The total fair value of equity-based awards vested during the six months ended September 30, 2006 was
$307.

The following table summarizes the restricted stock activity for the six months ended September 30, 2006:



|                                |  |                  |   |  |                                        |      
|------------------------------- |  | ---------------- | - |  | -------------------------------------- | -----
|                                |  | Number of Shares |   |  | Weighted Average Grant Date Fair Value
|Nonvested at March 31, 2006     |  | 398,000          |   |  | $                                      | 13.99
|Granted                         |  | 112,000          |   |  | $                                      | 19.11
|Exercised/Vested                |  | (55,000          | ) |  | $                                      | 12.05
|Canceled                        |  |                 |   |  |                                        |     
|                                |  |                  |   |  |                                        |      
|Nonvested at September 30, 2006 |  | 455,000          |   |  | $                                      | 15.48
|                                |  |                  |   |  |                                        |      

The total fair value of shares of restricted stock that vested during the six months ended
September 30, 2006 was $662. As of September 30, 2006, there was $4,218 of unrecognized stock-based compensation expense related to nonvested restricted stock awards. That cost is expected to be recognized over a weighted average period of
2.0 years.

On March 31, 2006, we accelerated the vesting of 2,863,704 stock options previously issued to officers and employees under
the Companys stock-based compensation plans. Options held by non-employee directors were not accelerated. Shares received upon the exercise of accelerated options held by executive officers and other key members of senior management may not be
sold prior to the



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earlier of the original vesting dates or their termination of employment or service. The vesting acceleration resulted in additional compensation expense to
the Company of $488 for fiscal year 2006. The primary purpose of the accelerated vesting was to eliminate future compensation expense the Company would otherwise recognize in its statement of income with respect to these accelerated options upon the
adoption of SFAS No. 123(R).

NOTE 3. EARNINGS PER SHARE

Basic earnings per share is computed by dividing net income by the weighted average number of shares outstanding for the period. Diluted earnings per
share reflects the potential dilution from the exercise of stock options and restricted stock, as well as the conversion of convertible notes into common stock.

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



|                                            |  |                                 |        |                                |   |        |  |      |        |  |   |       
|------------------------------------------- |  | ------------------------------- | ------ | ------------------------------ | - | ------ |  | ---- | ------ |  | - | ------
|                                            |  | Three Months EndedSeptember 30, |        | Six Months Ended September 30,
|                                            |  | 2006                            |        | 2005                           |   | 2006   |  | 2005
|Numerator:                                  |  |                                 |        |                                |   |        |  |      |        |  |   |       
|Numerator for basic earnings per share      |  | $                               | 18,016 |                                | $ | 15,276 |  | $    | 33,625 |  | $ | 29,918
|Effect of dilutive securities:              |  |                                 |        |                                |   |        |  |      |        |  |   |       
|4% convertible notes                        |  |                                 |       |                                |   | 442    |  |      | 219    |  |   | 885   
|                                            |  |                                 |        |                                |   |        |  |      |        |  |   |       
|Numerator for diluted earnings per share    |  | $                               | 18,016 |                                | $ | 15,718 |  | $    | 33,844 |  | $ | 30,803
|                                            |  |                                 |        |                                |   |        |  |      |        |  |   |       
|Denominator:                                |  |                                 |        |                                |   |        |  |      |        |  |   |       
|Denominator for basic earnings per share    |  |                                 | 51,017 |                                |   | 45,810 |  |      | 49,462 |  |   | 46,160
|Effect of dilutive securities:              |  |                                 |        |                                |   |        |  |      |        |  |   |       
|4% convertible notes                        |  |                                 |       |                                |   | 4,814  |  |      | 1,719  |  |   | 4,814 
|Employee stock options and restricted stock |  |                                 | 1,064  |                                |   | 950    |  |      | 1,009  |  |   | 969   
|                                            |  |                                 |        |                                |   |        |  |      |        |  |   |       
|Denominator for diluted earnings per share  |  |                                 | 52,081 |                                |   | 51,574 |  |      | 52,190 |  |   | 51,943
|                                            |  |                                 |        |                                |   |        |  |      |        |  |   |       

As further described in Note 8, during the six-month period ended September 30, 2006, all of
the outstanding convertible subordinated notes due 2008 (Notes) were converted into shares of our common stock. The above effects of the 4% convertible notes only include the impact of the Notes prior to the conversion. Upon conversion,
the outstanding shares issued as a result of the conversion of the Notes are treated consistent with other issued shares.

NOTE 4. ACQUISITIONS

During the six months ended September 30, 2006, we acquired three businesses that provide office-imaging
solutions and related services. Aggregate consideration, net of cash acquired, for these acquisitions was approximately $21,072, consisting of cash paid to the sellers, 50,999 shares of Globals common stock, par value $.01 per share, that were
previously held in treasury (valued at $1,100, based on the fair value of the stock on the date of issuance), and acquisition-related expenses. Liabilities assumed in connection with these acquisitions totaled approximately $5,388. The fair value of
total assets acquired in these acquisitions consisted of approximately $4,961 of tangible assets, net of cash acquired, and approximately $21,499 of intangible assets. We are in the



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process of completing valuations of certain assets. When our valuations are completed and the purchase price allocation is finalized, there may be additional
adjustments to the intangible assets (some of which may be amortizable) and hence there may also be additional adjustments to amortization expense and deferred income taxes. During the three months ended September 30, 2006, we finalized certain
valuations of the intangible assets acquired during the three months ended June 30, 2006 and have, accordingly, adjusted the fair values of customer relationships. During the six months ended September 30, 2006, we paid $236 of additional
acquisition-related expenses related to fiscal year 2006 acquisitions.

During the six months ended September 30, 2005, we acquired
two businesses that provide office-imaging solutions and related services. Aggregate consideration, net of cash acquired, for these acquisitions was approximately $9,768, consisting of cash paid to the sellers, 53,380 shares of Globals common
stock, par value $.01 per share, that were previously held in treasury (valued at $920, based on the fair value of the stock on the date of issuance), and acquisition-related expenses. Liabilities assumed in connection with these acquisitions
totaled approximately $1,418. The fair value of total assets acquired in these acquisitions consisted of approximately $1,804 of tangible assets, net of cash acquired, and approximately $9,382 of intangible assets. During the six months ended
September 30, 2005, we paid $16 of additional acquisition-related expenses related to fiscal year 2005 acquisitions.

All acquisitions
have been accounted for using the purchase method of accounting and, accordingly, are included in our results of operations from the effective date of acquisition.

The excess purchase price over the estimated fair values of the underlying assets acquired, including identifiable intangible assets, and liabilities assumed are allocated to goodwill. The primary factors contributing
to the recognition of goodwill include the expected synergies to be derived from the business combination, purchasing leverage from increased economies of scale, enhancement or growth of market territories, an industry-seasoned workforce and the
reputation of the company being acquired.

The unaudited pro forma results presented below include the effects of the acquisitions as if
they had been consummated at the beginning of the year prior to acquisition. 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            
|                           |  | Three Months EndedSeptember 30, |         | Six Months EndedSeptember 30,
|                           |  | 2006                            |         | 2005                          |   | 2006    |  | 2005
|Revenues                   |  | $                               | 287,949 |                               | $ | 271,804 |  | $    | 556,586 |  | $ | 532,036
|Net income                 |  | $                               | 18,084  |                               | $ | 15,883  |  | $    | 33,815  |  | $ | 31,200 
|                           |  |                                 |         |                               |   |         |  |      |         |  |   |        
|Earnings per common share: |  |                                 |         |                               |   |         |  |      |         |  |   |        
|Basic                      |  | $                               | .35     |                               | $ | .35     |  | $    | .68     |  | $ | .67    
|Diluted                    |  | $                               | .35     |                               | $ | .32     |  | $    | .65     |  | $ | .62    



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NOTE 5. COMPREHENSIVE INCOME

The following table presents a reconciliation of comprehensive income, comprised of net income and the unrealized gain (loss) on cash flow hedges.



|                                                       |  |                                 |        |                               |      |   |        |  |   |        |   |  |   |       
|------------------------------------------------------ |  | ------------------------------- | ------ | ----------------------------- | ---- | - | ------ |  | - | ------ | - |  | - | ------
|                                                       |  | Three Months EndedSeptember 30, |        | Six Months EndedSeptember 30,
|                                                       |  | 2006                            |        |                               | 2005 |   | 2006   |  |   | 2005  
|Net income                                             |  | $                               | 18,016 |                               |      | $ | 15,276 |  | $ | 33,625 |   |  | $ | 29,918
|Unrealized gain (loss) on cash flow hedges, net of tax |  |                                 | (315   | )                             |      |   | 382    |  |   | (245   | ) |  |   | 120   
|                                                       |  |                                 |        |                               |      |   |        |  |   |        |   |  |   |       
|Total comprehensive income                             |  | $                               | 17,701 |                               |      | $ | 15,658 |  | $ | 33,380 |   |  | $ | 30,038
|                                                       |  |                                 |        |                               |      |   |        |  |   |        |   |  |   |       

NOTE 6. DERIVATIVES

We enter into swap and interest rate cap agreements to hedge the fluctuations in variable interest rates and do not use derivative instruments for
speculative purposes.

In December 2004, we entered into two forward swap agreements which we accounted for as cash flow hedges. The
agreements effectively convert $40,000 of our variable-rate debt to fixed-rate debt, reducing the exposure to changes in interest rates. Under the first swap agreement, we received an average LIBOR variable rate of 5.17% and paid an average LIBOR
fixed rate of 3.85% for the period from April 1, 2006 to September 30, 2006. Under the second swap agreement, we received an average LIBOR variable rate of 5.17% and paid an average LIBOR fixed rate of 3.87% for the period from
April 1, 2006 to September 30, 2006. Both agreements are effective for a period of two years, beginning December 2005.

In May
2005, we entered into a forward swap agreement which we accounted for as a cash flow hedge. The agreement effectively converts $30,000 of our variable-rate debt to fixed-rate debt, reducing the exposure to changes in interest rates. Under the
agreement, we received an average LIBOR variable rate of 5.15% and paid a LIBOR fixed rate of 4.05% for the period from April 1, 2006 to September 30, 2006. The agreement is effective for a period of two years, beginning September 2005.

The LIBOR interest rates in the preceding paragraphs exclude our applicable interest rate spreads under our credit facilities.

We have recognized a loss, net of tax, of approximately $245 and a gain, net of tax, of approximately $120 for the six-month periods ended
September 30, 2006 and 2005, respectively, related to our interest rate swap agreements. These amounts have been recorded in comprehensive income.

In September 2003, we entered into three two-year interest rate cap agreements in notional amounts of $20,000 each. These three cap agreements expired in September 2005. In July 2004, we entered into a two-year
interest rate cap agreement in the notional amount of $25,000. In May 2005, we also entered into a two-year forward interest rate cap agreement in the notional amount of $30,000, effective September 2005 (collectively, the Caps). These Caps are not
designated as hedging instruments and as such are recorded on the consolidated balance sheet at their estimated fair value, with changes in the fair value being recorded in the consolidated statement of income as an increase or decrease to interest
expense during the period of change. The change in the Caps



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fair value resulted in additional interest expense of $79 and $44, before tax, for the six-month periods ended September 30, 2006 and 2005,
respectively. The July 2004 cap limits our interest rate risk exposure for the related notional amounts to a 4.00% LIBOR rate plus the applicable margin. The September 2005 cap limits our interest rate risk exposure for the related notional amount
to a 5.50% LIBOR rate plus the applicable margin. We have received $103 under the July 2004 Cap agreement.

NOTE 7.
STOCKHOLDERS EQUITY

Stock Repurchase Program

On May 9, 2006, our Board of Directors approved a stock repurchase program authorizing the Company to repurchase up to $150,000 of Global common stock over a three-year period. During the six months ended
September 30, 2006, we repurchased a total of 1,564,365 shares of common stock for an aggregate purchase price of $32,548, excluding commissions.

Stock Dividend

On July 18, 2006, our Board of Directors approved a two-for-one stock split of the Companys
common stock. The split was paid in the form of a 100% stock dividend on August 15, 2006 to stockholders of record on August 1, 2006. All prior period common stock, additional paid-in capital and applicable share and per share amounts have
been retroactively adjusted to reflect the split.

NOTE 8. LONG-TERM DEBT

Our long term debt consisted of the following as of September 30, 2006 and March 31, 2006:



|                                                      |  |                    |         |   |                |   |         |  
|----------------------------------------------------- |  | ------------------ | ------- | - | -------------- | - | ------- | -
|                                                      |  | September 30, 2006 |         |   | March 31, 2006 |  
|Senior Credit Facility:                               |  |                    |         |   |                |   |         |  
|Term Loan                                             |  | $                  | 150,000 |   |                | $ | 205,293 |  
|Revolving Line of Credit                              |  |                    | 40,000  |   |                |   |        |  
|Convertible Senior SubordinatedNotes, 4% due May 2008 |  |                    |        |   |                |   | 57,500  |  
|Various notes payable                                 |  |                    | 90      |   |                |   | 53      |  
|                                                      |  |                    |         |   |                |   |         |  
|Total long-term debt                                  |  |                    | 190,090 |   |                |   | 262,846 |  
|Less: current maturities                              |  |                    | (24     | ) |                |   | (2,133  | )
|                                                      |  |                    |         |   |                |   |         |  
|Long-term debt, less current maturities               |  | $                  | 190,066 |   |                | $ | 260,713 |  
|                                                      |  |                    |         |   |                |   |         |  

Effective June 29, 2006, we refinanced our prior senior credit facility and entered into a
new senior credit agreement. As part of the refinancing, we also reduced our outstanding borrowings. Our new senior credit facility is with a syndicate of banks and financial institutions, with Wachovia National Association serving as administrative
agent. Our new senior credit facility is comprised of a $200,000 five-year revolving credit line and a $150,000 five-year no amortization term loan. Both the new revolving credit line and the new term loan bear interest, based on the Companys
current leverage ratios, at 1.25% over LIBOR or 100% of a base rate related to the prime rate. The new senior credit facility provides for an unused commitment fee payable to the lenders and certain other fees payable by us and our material
subsidiaries. The commitment fee rates range from .225% to .275% of the unused balance. Amounts borrowed under the revolving credit line of the new senior credit facility may be repaid and borrowed over the life of the new senior credit facility,
with a final maturity date of June 29, 2011. The terms of the new senior credit facility require compliance with various affirmative, negative, and financial covenants. Amounts borrowed under the senior credit facility may be used to fund
working capital, share repurchases and other general corporate purposes, including acquisitions. We are only required to obtain written consent prior to an acquisition if our leverage ratio is greater than 2.75 and there is less than $40,000
available under the revolving credit facility. We are permitted to pay cash dividends as long as the Company is in compliance with its covenants.



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During the six months ended September 30, 2006, we incurred a loss on early extinguishment of debt
in the amount of $1,045 related to the refinancing of our prior senior credit facility.

On May 9, 2006, our Board of Directors
authorized the redemption of our 4% convertible senior subordinated notes due 2008, with a principal balance of $57,500. Prior to the June 9, 2006 redemption date, 100 percent of the Notes were converted into 4,813,310 shares of our common
stock. The conversion price was $11.946 per share in accordance with the terms of the indenture agreement governing the Notes.

NOTE 9. OTHER INCOME

Other income represents a gain on the sale of selected assets of the Companys technology training
division.

NOTE 10. RECENT ACCOUNTING PRONOUNCEMENTS

In June 2006, the Financial Accounting Standards Board (FASB) issued Interpretation No. 48, Accounting for Uncertainty in Income
Taxes-an interpretation of FASB Statement No. 109, Accounting for Income Taxes (FIN 48), which clarifies the accounting for uncertainty in income taxes. FIN 48 prescribes a recognition threshold and measurement attribute for the
financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The Interpretation requires that the Company recognize in the financial statements, the impact of a tax position, if that position is
more likely than not of being sustained on audit, based on the technical merits of the position. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods and disclosure. The provisions of
FIN 48 are effective for fiscal years beginning after December 15, 2006 with the cumulative effect of the change in accounting principle recorded as an adjustment to opening retained earnings. The Company is currently evaluating the impact of
adopting FIN 48 on its consolidated financial statements.

In September 2006, the FASB issued SFAS No. 157, Fair Value
Measurements (SFAS No. 157). SFAS No. 157 defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles, and expands disclosures about fair value
measurements. This statement does not require any new fair value measurements; rather, it applies under other accounting pronouncements that require or permit fair value measurements. The provisions of this statement are to be applied prospectively
as of the beginning of the fiscal year in which this statement is initially applied, with any transition adjustment recognized as a cumulative-effect adjustment to the opening balance of retained earnings. The provisions of SFAS No. 157 are
effective for the fiscal years beginning after November 15, 2007; therefore, we anticipate adopting this standard as of April 1, 2008. We have not determined the effect, if any, the adoption of this statement will have on our financial
condition or results of operations.



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In September 2006, the SEC issued Staff Accounting Bulletin No. 108, Considering the Effects of
Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements (SAB 108). SAB 108 provides guidance on how prior year misstatements should be taken into consideration when quantifying misstatements in
current year financial statements for purposes of determining whether the current years financial statements are materially misstated. SAB 108 permits registrants to record the cumulative effect of initial adoption by recording the necessary
correcting adjustments to the carrying values of assets and liabilities as of the beginning of that year with the offsetting adjustment recorded to the opening balance of retained earnings only if material under the dual method. SAB 108
is effective for fiscal years ending on or after November 15, 2006. We do not expect the adoption of SAB 108 to have a material impact on our financial condition or results of operations.



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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 condensed consolidated financial statements and related notes included elsewhere in this Report on Form 10-Q and our Annual Report on Form 10-K for the year ended
March 31, 2006. 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 future cash flows. 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:



| |  |  | the departure of one or more of our senior executives or a substantial number of our core company presidents could disrupt our operations, divert the attention of our management, or
otherwise adversely affect our revenues;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the highly competitive nature of the markets we serve may result in changes in our competitive climate, which could require us to lower prices and therefore would reduce our
revenues, as well as, lower gross margins;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | our significant debt service obligations may exacerbate the effect on our cash flow if downturns in economic and business conditions hinder our ability to adjust to rapidly changing
market conditions;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | covenants in our senior credit facility impose operating and financial restrictions that limit our discretion on some business matters, which may affect our future financing plans
or our ability to enter into certain types of strategic transactions;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | our dependence on our vendor relationships, the availability of products and our lease financing partners;
| | - |  | ----------------------------------------------------------------------------------------------------------



| |  |  | some or all of our substantial amount of goodwill and other intangible assets may become impaired, which would adversely affect our operating results;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | fewer than expected acquisition opportunities could slow our growth;
| | - |  | --------------------------------------------------------------------



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



| |  |  | 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; and
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | our ability to continue to comply with the provisions of the Sarbanes-Oxley Act of 2002.
| | - |  | ----------------------------------------------------------------------------------------

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 for the year ended March 31, 2006. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.



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Overview

We are one of the leading providers of office technology solutions to middle-market businesses in the United States, selling and providing primarily contract services for automated office equipment, including copiers, multi-function
products (MFPs), facsimile machines and printers, network integration solutions and electronic presentation systems. We believe that the markets for our products and services are converging as technology advancements and innovation produce increases
in automated office equipment functionality and networking capabilities. Incorporating products from the Ricoh family of products, Konica Minolta, Sharp, Canon, Toshiba, Hewlett-Packard, IBM, Microsoft, NEC, Hitachi, InFocus and other leading
companies, we offer solutions for our customers from a network of more than 180 locations in 32 states and the District of Columbia. The contractual nature of our service and supply business, tailored lease financing programs, high level of repeat
equipment purchases and our emphasis on superior customer service generate stable and recurring revenue streams. Since our founding in June 1994, we have acquired more than 80 businesses, all within the United States, which we have organized as a
network of 20 core companies with corresponding satellite businesses. We believe the businesses we have acquired and the 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 primarily come from two sources: sales of equipment and related supplies; and sales of complementary services and equipment rentals. The
growth of our revenues depends on the demand for the equipment we offer, our reputation for providing timely and reliable service, our competitors actions in the marketplace and general economic conditions. Sales of complementary supplies,
parts and services are affected by equipment sales and rental volumes. Most of our service revenue is generated by contractual arrangements to service automated office equipment.

Our gross profit as a percentage of revenues varies from period to period depending on a number of variables including the mix of revenues from
equipment, supplies, service and rentals; the mix of revenues among the markets we serve; and the mix of revenues of the businesses we have acquired. 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 technology equipment 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 technology equipment markets.

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 judgments and estimates that affect the reported amounts of assets,
liabilities, revenues and expenses, and related disclosures. On an ongoing basis, we evaluate these estimates, including those related to accounts receivable, inventories, vendor incentives, intangible assets and contingencies. Our judgments and
estimates are



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based on currently available information, historical results and other assumptions we believe to be 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.

Accounts Receivable

We maintain allowances for
doubtful accounts for estimated losses arising from the inability of our customers to make required payments. We evaluate the need for adjustments to our allowance for doubtful accounts at least quarterly. Our estimate of losses is based upon prior
collection experience, a review of specific customers and their ability to pay, and an overall consideration 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 parts and supplies, cost equals the average cost of inventory. We evaluate the need for adjustments to our reserve for excess and slow-moving inventory at
least quarterly. 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 would reduce net income.

Vendor Incentives

We receive incentives from some of our vendors related to volume rebates, cooperative advertising allowances and other programs or agreements. Certain
incentive programs are generally for quarterly periods and historically have not varied significantly from quarter to quarter. There are also certain annual volume rebate programs offered by some of our vendors. We do not record any volume rebate
until it is probable that it will be earned and the amount can be reasonably estimated. 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 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

As a result of our acquisition activity, we carry a substantial amount of
goodwill, which is the excess of the cost of our acquired businesses over the fair value of the acquired net assets. We examine the carrying value of our goodwill 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 for impairment on the first day of the fourth quarter of our fiscal year, or more frequently if conditions change, by



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comparing the recorded value to the estimated fair value. If indicators of impairment were present relating to our 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. To date, we have not identified any event that would indicate an impairment of the value
of goodwill or other intangible assets recorded in our consolidated financial statements.

Contingencies

We accrue amounts for losses arising from contingent obligations 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 health insurance, 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.



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RESULTS OF OPERATIONS

The following table sets forth our total revenues, revenues by type and our estimated internal growth rates for all revenues during the periods indicated.
We calculate the internal growth rate for each period by comparing total revenues earned by businesses that were part of our company during the entire subject period to the total revenues earned by those same businesses during the corresponding
period in the prior year. The growth rates provided are our best estimates of changes in total revenues that are not the result of business acquisitions during a particular period.



|                                             |  |                                 |         |   |                               |   |         |      |  |   |         |   |  |   |         |  
|-------------------------------------------- |  | ------------------------------- | ------- | - | ----------------------------- | - | ------- | ---- |  | - | ------- | - |  | - | ------- | -
|                                             |  | Three Months EndedSeptember 30, |         |   | Six Months EndedSeptember 30, |  
|                                             |  | 2006                            |         |   | 2005                          |   |         | 2006 |  |   | 2005    |  
|Revenues:                                    |  |                                 |         |   |                               |   |         |      |  |   |         |   |  |   |         |  
|Equipment revenues                           |  | $                               | 177,247 |   |                               | $ | 157,818 |      |  | $ | 332,557 |   |  | $ | 303,273 |  
|Supplies revenues                            |  |                                 | 39,518  |   |                               |   | 37,175  |      |  |   | 79,861  |   |  |   | 74,227  |  
|                                             |  |                                 |         |   |                               |   |         |      |  |   |         |   |  |   |         |  
|Equipment and supplies revenues              |  |                                 | 216,765 |   |                               |   | 194,993 |      |  |   | 412,418 |   |  |   | 377,500 |  
|                                             |  |                                 |         |   |                               |   |         |      |  |   |         |   |  |   |         |  
|Service revenues                             |  |                                 | 65,278  |   |                               |   | 59,884  |      |  |   | 130,783 |   |  |   | 119,836 |  
|Rental revenues                              |  |                                 | 3,748   |   |                               |   | 3,934   |      |  |   | 7,519   |   |  |   | 7,804   |  
|                                             |  |                                 |         |   |                               |   |         |      |  |   |         |   |  |   |         |  
|Service and rental revenues                  |  |                                 | 69,026  |   |                               |   | 63,818  |      |  |   | 138,302 |   |  |   | 127,640 |  
|                                             |  |                                 |         |   |                               |   |         |      |  |   |         |   |  |   |         |  
|Total revenues                               |  | $                               | 285,791 |   |                               | $ | 258,811 |      |  | $ | 550,720 |   |  | $ | 505,140 |  
|                                             |  |                                 |         |   |                               |   |         |      |  |   |         |   |  |   |         |  
|Estimated internal growth rates for revenues |  |                                 | 6.1     | % |                               |   | 4.6     | %    |  |   | 4.7     | % |  |   | 5.0     | %

The following table sets forth our gross profit by revenue type and gross profit by revenue type
as a percentage of revenue during the periods indicated:



|                                                         |  |                                 |         |   |                               |   |        |      |  |   |         |   |  |   |         |  
|-------------------------------------------------------- |  | ------------------------------- | ------- | - | ----------------------------- | - | ------ | ---- |  | - | ------- | - |  | - | ------- | -
|                                                         |  | Three Months EndedSeptember 30, |         |   | Six Months EndedSeptember 30, |  
|                                                         |  | 2006                            |         |   | 2005                          |   |        | 2006 |  |   | 2005    |  
|Gross profit by revenue type:                            |  |                                 |         |   |                               |   |        |      |  |   |         |   |  |   |         |  
|Equipment                                                |  | $                               | 56,643  |   |                               | $ | 52,421 |      |  | $ | 110,600 |   |  | $ | 102,118 |  
|Supplies                                                 |  |                                 | 17,597  |   |                               |   | 16,536 |      |  |   | 35,772  |   |  |   | 33,621  |  
|Service                                                  |  |                                 | 31,800  |   |                               |   | 29,513 |      |  |   | 63,926  |   |  |   | 58,686  |  
|Rental                                                   |  |                                 | 1,044   |   |                               |   | 1,229  |      |  |   | 2,276   |   |  |   | 2,529   |  
|                                                         |  |                                 |         |   |                               |   |        |      |  |   |         |   |  |   |         |  
|Total gross profit                                       |  | $                               | 107,084 |   |                               | $ | 99,699 |      |  | $ | 212,574 |   |  | $ | 196,954 |  
|                                                         |  |                                 |         |   |                               |   |        |      |  |   |         |   |  |   |         |  
|Gross profit by revenue type as a percentage of revenue: |  |                                 |         |   |                               |   |        |      |  |   |         |   |  |   |         |  
|Equipment                                                |  |                                 | 32.0    | % |                               |   | 33.2   | %    |  |   | 33.3    | % |  |   | 33.7    | %
|Supplies                                                 |  |                                 | 44.5    | % |                               |   | 44.5   | %    |  |   | 44.8    | % |  |   | 45.3    | %
|Service                                                  |  |                                 | 48.7    | % |                               |   | 49.3   | %    |  |   | 48.9    | % |  |   | 49.0    | %
|Rental                                                   |  |                                 | 27.9    | % |                               |   | 31.2   | %    |  |   | 30.3    | % |  |   | 32.4    | %
|                                                         |  |                                 |         |   |                               |   |        |      |  |   |         |   |  |   |         |  
|Total gross profit as a percentage of revenue            |  |                                 | 37.5    | % |                               |   | 38.5   | %    |  |   | 38.6    | % |  |   | 39.0    | %
|                                                         |  |                                 |         |   |                               |   |        |      |  |   |         |   |  |   |         |  



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THREE MONTHS ENDED SEPTEMBER 30, 2006 COMPARED TO THREE MONTHS ENDED
SEPTEMBER 30, 2005

Revenues

Total revenues for the three months ended September 30, 2006 were $285,791, which represents an increase of 10.4% over the same period in fiscal year 2006. Our estimated combined internal growth rate for the
three months ended September 30, 2006 was 6.1%. Internal growth for our automated office equipment business and our technology business for the three months ended September 30, 2006 was 0.7% and 24.4%, respectively. The balance of the
increase in revenues was due to revenues from three businesses acquired during the six months ended September 30, 2006 and five businesses acquired in fiscal year 2006 that were not a part of our business for the full quarter last year.

Equipment and supplies revenues for the three months ended September 30, 2006 were $216,765, which represents an increase of 11.2%
over the same period in fiscal year 2006. Equipment revenues increased 12.3% and supplies revenues increased 6.3%, with the growth due to a combination of revenues from the businesses acquired and internal revenue growth. Approximately 75% of the
increase in equipment revenues resulted from our technology business.

Service and rental revenues for the three months ended
September 30, 2006 were $69,026, which represents an increase of 8.2% over the same period in fiscal year 2006. Service revenues increased 9.0%, with the growth due to a combination of revenues from the businesses acquired and internal revenue
growth. Rental revenues decreased 4.7%. Rentals primarily result from customer preference, as opposed to a significant targeted marketing program. Accordingly, the revenue changes from period to period may not follow overall revenue trends.

As indicated above, our combined internal revenue growth for the three month periods ended September 30, 2006 and 2005 was 6.1% and
4.6%, respectively. We only provide forward guidance for the internal revenue growth for the next quarter of results. We expect the internal revenue growth for the three months ended December 31, 2006 to be in the range of 3.0% to 5.0%.

Gross Profit

Gross
profit for the three months ended September 30, 2006 totaled $107,084, or a 7.4% increase over the same period in fiscal year 2006. The gross profit increase is due to the new business acquisitions and the growth in revenues from our existing
companies.

Equipment gross profit margin for the three months ended September 30, 2006 decreased 1.2 percentage points from the same
period in fiscal year 2006, which is substantially due to a change in the mix of revenues. Technology equipment revenues, which generally have a lower gross profit margin than automated office equipment revenues, increased at a higher rate than
automated office equipment revenues.

Supplies gross profit margin for the three months ended September 30, 2006 was generally
consistent with the same period in fiscal year 2006.

Service gross profit margin for the three months ended September 30, 2006
decreased 0.6 percentage points from the same period in fiscal year 2006, primarily due to a decrease in the gross profit margins in technology services.



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Selling, General and Administrative Expenses

Selling, general and administrative expenses, or SG&A expenses, increased 6.0% to $75,361 for the three months ended September 30, 2006. As a
percentage of revenues, SG&A expenses were 26.4% and 27.5% for the three months ended September 30, 2006 and 2005, respectively. The overall increase in SG&A expenses for the three months ended September 30, 2006 was primarily due
to our newly acquired businesses and increased compensation costs. The decline in SG&A expenses as a percentage of revenues for the three months ended September 30, 2006 was primarily the result of a greater portion of revenues being
derived from our technology business, which generally has lower selling expenses.

Intangible Asset Amortization

Intangible asset amortization was $437 for the three months ended September 30, 2006 compared to $436 for the same period in fiscal year 2006. This
amortization relates to non-compete agreements and customer relationships.

Income From Operations

Income from operations was $31,286, or 10.9% of total revenues, for the three months ended September 30, 2006 compared to $28,164, or 10.9% of total
revenues, for the same period in fiscal year 2006.

Other Income

Other income for the three months ended September 30, 2006 includes a $1,194 gain on sale of selected technology training division assets.

Interest Expense

Interest expense decreased 8.9% to $3,138 for the three months ended September 30, 2006 compared to $3,445 for the same period in fiscal year 2006. The decrease in interest expense was primarily due to a decrease in our average
outstanding borrowings, partially offset by a 1.3 percentage point increase in average interest rates. Interest expense includes the amortization of financing fees incurred in connection with our senior credit facilities of $142 and $273 for the
three months ended September 30, 2006 and 2005, respectively.

Income Taxes

The provision for income taxes was $11,326 for the three months ended September 30, 2006 compared to $9,443 for the same period in fiscal year 2006.
The effective income tax rate was 38.6% and 38.2% for the three months ended September 30, 2006 and 2005, respectively.

SIX MONTHS ENDED SEPTEMBER
30, 2006 COMPARED TO SIX MONTHS ENDED SEPTEMBER 30, 2005

Revenues

Total revenues for the six months ended September 30, 2006 were $550,720, which represents an increase of 9.0% over the same period in fiscal year
2006. Our estimated combined internal growth rate for the six months ended September 30, 2006 was



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4.7%. Internal growth for our automated office equipment business and our technology business for the six months ended September 30, 2006 was 1.4% and
16.2%, respectively. The balance of the increase in revenues was due to revenues from three businesses acquired during the six months ended September 30, 2006 and six businesses acquired in fiscal year 2006 that were not a part of our business
for the full six months last year.

Equipment and supplies revenues for the six months ended September 30, 2006 were $412,418, which
represents an increase of 9.2% over the same period in fiscal year 2006. Equipment revenues increased 9.7% and supplies revenues increased 7.6%, with the growth due to a combination of revenues from the businesses acquired and internal revenue
growth, particularly from the increase in technology equipment revenues.

Service and rental revenues for the six months ended
September 30, 2006 were $138,302, which represents an increase of 8.4% over the same period in fiscal year 2006. Service revenues increased 9.1%, with the growth due to a combination of revenues from the businesses acquired and internal revenue
growth. Rental revenues decreased 3.7%. Rentals primarily result from customer preference, as opposed to a significant targeted marketing program. Accordingly, the revenue changes from period to period may not follow overall revenue trends.

Gross Profit

Gross
profit for the six months ended September 30, 2006 totaled $212,574, or a 7.9% increase over the same period in fiscal year 2006. The gross profit increase is due to the new business acquisitions and the growth in revenues from our existing
companies.

Equipment gross profit margin for the six months ended September 30, 2006 decreased 0.4 percentage points from the same
period in fiscal year 2006, which is primarily due to a change in the mix of revenues. Technology equipment revenues, which generally have a lower gross profit margin than automated office equipment revenues, increased at a higher rate than
automated office equipment revenues.

Supplies gross profit margin for the six months ended September 30, 2006 decreased 0.5
percentage points as compared to the same period in fiscal year 2006, which is primarily due to a decrease in automated office equipment supply gross profit margins.

Service gross profit margin for the six months ended September 30, 2006 was generally consistent with the same period in fiscal year 2006.

Selling, General and Administrative Expenses

Selling, general and administrative expenses, or SG&A expenses, increased 6.8% to $150,591 for the six months ended September 30, 2006. As a percentage of revenues, SG&A expenses were 27.3% and 27.9% for the six months ended
September 30, 2006 and 2005, respectively. The overall increase in SG&A expenses for the six months ended September 30, 2006 was primarily due to our newly acquired businesses and increased compensation costs. The slight decrease in
SG&A expenses as a percentage of revenues for the six months ended September 30, 2006 was primarily the result of a greater portion of revenues being derived from our technology business, which generally has lower selling expenses.



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Intangible Asset Amortization

Intangible asset amortization was $906 for the six months ended September 30, 2006 compared to $889 for the same period in fiscal year 2006. This
amortization relates to non-compete agreements and customer relationships.

Income From Operations

Income from operations was $61,077, or 11.1% of total revenues, for the six months ended September 30, 2006 compared to $55,106, or 10.9% of total
revenues, for the same period in fiscal year 2006. Income from operations was primarily impacted by the decline in selling, general and administrative expenses as a percentage of revenues, partially offset by the slight decrease in gross profit
margins.

Other Income

Other income for the six months ended September 30, 2006 includes a $1,194 gain on sale of selected technology training division assets.

Loss on early extinguishment of debt

During the six months ended September 30, 2006, we
incurred a loss on early extinguishment of debt in the amount of $1,045 related to the write off of selected financing costs of our debt refinancing.

Interest Expense

Interest expense decreased 4.5% to $6,463 for the six months ended
September 30, 2006 compared to $6,771 for the same period in fiscal year 2006. The decrease in interest expense was due to a decrease in our average outstanding borrowings, partially offset by higher average interest rates of 1.5 percentage
points as compared to the same period in fiscal year 2006. Interest expense includes the amortization of financing fees incurred in connection with our senior credit facilities and the 4% convertible senior subordinated notes due 2008, prior to
their redemption in June 2006, of $347 and $545 for the six months ended September 30, 2006 and 2005, respectively.

Income Taxes

The provision for income taxes was $21,138 for the six months ended September 30, 2006 compared to $18,417 for the same period in
fiscal year 2006. The effective income tax rate was 38.6% and 38.1% for the six months ended September 30, 2006 and 2005, respectively.

LIQUIDITY AND CAPITAL RESOURCES

Historically, we have financed our 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, we may incur additional debt and seek additional equity capital.



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Our long term debt consisted of the following as of September 30, 2006 and March 31, 2006:



|                                                       |  |                   |         |   |               |   |         |  
|------------------------------------------------------ |  | ----------------- | ------- | - | ------------- | - | ------- | -
|                                                       |  | September 30,2006 |         |   | March 31,2006 |  
|Senior Credit Facility:                                |  |                   |         |   |               |   |         |  
|Term Loan                                              |  | $                 | 150,000 |   |               | $ | 205,293 |  
|Revolving Line of Credit                               |  |                   | 40,000  |   |               |   |        |  
|Convertible Senior Subordinated Notes, 4% due May 2008 |  |                   |        |   |               |   | 57,500  |  
|Various notes payable                                  |  |                   | 90      |   |               |   | 53      |  
|                                                       |  |                   |         |   |               |   |         |  
|Total long-term debt                                   |  |                   | 190,090 |   |               |   | 262,846 |  
|Less: current maturities                               |  |                   | (24     | ) |               |   | (2,133  | )
|                                                       |  |                   |         |   |               |   |         |  
|Long-term debt, less current maturities                |  | $                 | 190,066 |   |               | $ | 260,713 |  
|                                                       |  |                   |         |   |               |   |         |  

Effective June 29, 2006, we refinanced our prior senior credit facility and entered into a
new senior credit agreement. As part of the refinancing, we also reduced our outstanding borrowings. Our new senior credit facility is with a syndicate of banks and financial institutions, with Wachovia National Association serving as administrative
agent. Our new senior credit facility is comprised of a $200,000 five-year revolving credit line and a $150,000 five-year no amortization term loan. Both the new revolving credit line and the new term loan bear interest, based on the Companys
current leverage ratios, at 1.25% over LIBOR or 100% of a base rate related to the prime rate. The new senior credit facility provides for an unused commitment fee payable to the lenders and certain other fees payable by us and our material
subsidiaries. The commitment fee rates range from .225% to .275% of the unused balance. Amounts borrowed under the revolving credit line of the new senior credit facility may be repaid and borrowed over the life of the new senior credit facility,
with a final maturity date of June 29, 2011. The terms of the new senior credit facility require compliance with various affirmative, negative, and financial covenants. Amounts borrowed under the senior credit facility may be used to fund
working capital, share repurchases and other general corporate purposes, including acquisitions. We are only required to obtain written consent prior to an acquisition if our leverage ratio is greater than 2.75 and there is less than $40,000
available under the revolving credit facility. We are permitted to pay cash dividends as long as the Company is in compliance with its covenants.

On May 9, 2006, our Board of Directors authorized the redemption of our 4% convertible senior subordinated notes due 2008, with a principal balance of $57,500. Prior to the June 9, 2006 redemption date, 100 percent of the Notes
were converted into 4,813,310 shares of our common stock. The conversion price was $11.946 per share in accordance with the terms of the indenture agreement governing the Notes.

On July 18, 2006, the Companys Board of Directors approved a two-for-one stock split of the Companys common stock. The split was paid in
the form of a 100% stock dividend on August 15, 2006 to stockholders of record on August 1, 2006. All prior period Common stock, Additional paid-in capital and applicable share and per share amounts have been retroactively adjusted to
reflect the split.

Net cash provided by operating activities totaled $24,040 for the six months ended September 30, 2006 as compared
to net cash provided by operating activities of $25,785 for the same period in fiscal year 2006. The primary components of the change were an increase in net income and better management of accounts payable in the current fiscal period as compared
to the prior fiscal period. Net cash used in investing activities of $29,278 during the six months ended September 30, 2006 was primarily for purchases of three acquisitions as well as purchases of property, equipment and rental equipment. Net
cash used in financing activities of $36,260 during the six months ended September 30, 2006 was primarily for the purchase of common stock pursuant to the Companys stock repurchase program and repayment of long term debt as part of the
Companys debt refinancing.



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We believe that cash flows from future operations, together with funds available under our new senior
credit facility, will be sufficient to fund our operational needs and acquisition growth strategy for at least the next twelve months.



|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 new senior credit facility. There have been no material changes to the information in the Item 7A disclosure made in our
Annual Report on Form 10-K for the fiscal year ended March 31, 2006.



|ITEM 4. | CONTROLS AND PROCEDURES
|------- | -----------------------

(a) EVALUATION OF
DISCLOSURE CONTROLS AND PROCEDURES. Our Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of the Companys disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under
the Securities and Exchange Act of 1934, as amended (the Exchange Act) as of September 30, 2006. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of September 30, 2006,
our disclosure controls and procedures are effective in bringing to their attention on a timely basis material information relating to the Company (including its consolidated subsidiaries) required to be included in the Companys periodic
filings under the Exchange Act.

(b) CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING. There have been no changes in our
internal controls over financial reporting during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

PART II - OTHER INFORMATION



|ITEM 1. |  Legal Proceedings
|------- | -------------------

See Part 1, Item 2
 Contingencies



|ITEM 1A. |  Risk Factors
|-------- | --------------

There has been no material
change to the risk factors as set forth in our Annual Report on Form 10-K for the fiscal year ended March 31, 2006.



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ITEM 2.  Unregistered Sales of Equity Securities and Use Of Proceeds

In May 2006, our Board of
Directors authorized a share repurchase program of up to $150,000 of the Companys common stock over a three-year period. The share repurchases are made on the open market, through block trades or otherwise. The number of shares purchased and
the timing of the purchases is based on working capital requirements, general business conditions and other factors, including alternative investment opportunities. Shares repurchased by the Company are held in treasury for general corporate
purposes, including issuances under employee equity incentive plans and acquisitions.

The following table presents information with
respect to purchases of common stock by the Company under the share repurchase program during the quarter ended September 30, 2006:



|                         |  |                                       |  |                                 |       |                                                                             |         |                                                                                  |   |            
|------------------------ |  | ------------------------------------- |  | ------------------------------- | ----- | --------------------------------------------------------------------------- | ------- | -------------------------------------------------------------------------------- | - | -----------
|                         |  | Issuer Purchases of Equity Securities
|Period                   |  | Totalnumber ofsharespurchased         |  | Average pricepaid per share (1) |       | Total number ofshares purchased aspart of publiclyannounced plan
orprograms |         | Maximum dollar value ofshares that may yet bepurchased under the planor
programs
|July 1  July 31, 2006   |  |                                      |  |                                 |      |                                                                             |        |                                                                                  |   |            
|Aug. 1  Aug. 31, 2006   |  | 941,965                               |  | $                               | 21.23 |                                                                             | 941,965 |                                                                                  |   |            
|Sept. 1  Sept. 30, 2006 |  |                                      |  |                                 |      |                                                                             |        |                                                                                  |   |            
|                         |  |                                       |  |                                 |       |                                                                             |         |                                                                                  |   |            
|Total                    |  | 941,965                               |  | $                               | 21.23 |                                                                             | 941,965 |                                                                                  | $ | 117,451,963
|                         |  |                                       |  |                                 |       |                                                                             |         |                                                                                  |   |            



|(1) | Excludes commissions.
|--- | ---------------------



|ITEM 3. | Defaults Upon Senior Securities
|------- | -------------------------------

None



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|ITEM 4. | Submission of Matters to a Vote of Security Holders
|------- | ---------------------------------------------------

At Globals 2006 Annual Meeting of Shareholders held August 7, 2006, our shareholders approved the following items:



| | 1. | Daniel T. Hendrix was elected to serve as our Director with a term to expire in 2009. The vote upon such proposal was as follows:
| | -- | ---------------------------------------------------------------------------------------------------------------------------------



|         |  |           
|-------- |  | ----------
|For      |  | 45,431,002
|Withheld |  | 2,535,574 



| | 2. | Michael E. Shea, Jr. was elected to serve as our Director with a term to expire in 2009. The vote upon such proposal was as follows:
| | -- | ------------------------------------------------------------------------------------------------------------------------------------



|         |  |           
|-------- |  | ----------
|For      |  | 47,571,488
|Withheld |  | 395,088   



| | 3. | M. Lazane Smith was elected to serve as our Director with a term to expire in 2009. The vote upon such proposal was as follows:
| | -- | -------------------------------------------------------------------------------------------------------------------------------



|         |  |           
|-------- |  | ----------
|For      |  | 46,727,106
|Withheld |  | 1,239,470 



|ITEM 5. | Other Information
|------- | -----------------

None



|ITEM 6. | Exhibits
|------- | --------

The Exhibit Index filed herewith is
incorporated herein by reference.



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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)                                                                                                                                
|                 |  | 
|November 8, 2006 |  |  |  | /s/ Raymond Schilling                                                                                                                       
|Date             |  |  |  | Raymond Schilling                                                                                                                           
|                 |  |  |  | On behalf of Global Imaging Systems and as Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)



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EXHIBIT INDEX

(Pursuant to Item 601 of Regulation S-K)



|       |  |                                                                                                                                                          
|------ |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------
|Number |  | Exhibit                                                                                                                                                  
|       | 
|3i.1   |  | Amended and Restated Certificate of Incorporation of Global Imaging Systems, Inc. (1)                                                                    
|       | 
|3i.2   |  | Certificate of Amendment of Certificate of Incorporation of Global Imaging Systems, Inc. (3)                                                             
|       | 
|3ii.1  |  | Amended and Restated Bylaws of Global Imaging Systems, Inc. (1)                                                                                          
|       | 
|3ii.2  |  | Amendment to Amended and Restated Bylaws of Global Imaging Systems, Inc. (2)                                                                             
|       | 
|4.1    |  | Form of 4% Convertible Senior Subordinated Notes Due 2008. (2)                                                                                           
|       | 
|10.1   |  | Form of Agreement restricting the sale of shares of Common Stock acquired by Company executives upon the Exercise of accelerated options. (4)            
|       | 
|*31.1  |  | Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                  
|       | 
|*31.2  |  | Certification of the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                  
|       | 
|*32.1  |  | Written Statement of Chief Executive Officer and Chief Financial Officer furnished (not filed) pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

---

|* | Filed herewith.
|- | ---------------



|(1) | Incorporated by reference to Globals Registration Statement on Form S-1, No. 333-48103, as filed with the SEC on May 8, 1998.
|--- | ------------------------------------------------------------------------------------------------------------------------------



|(2) | Incorporated by reference to Globals Registration Statement on Form S-3/A, No. 333-107948, as filed with the SEC on October 7, 2003.
|--- | -------------------------------------------------------------------------------------------------------------------------------------



|(3) | Incorporated by reference to Globals Proxy Statement on Form DEF 14A, as filed with the SEC on July 19, 2004.
|--- | --------------------------------------------------------------------------------------------------------------



|(4) | Incorporated by reference to Globals Quarterly Report on Form 10-Q, as filed with the SEC on August 8, 2006.
|--- | -------------------------------------------------------------------------------------------------------------



33