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                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                            ------------------------

                                   FORM 10-K
                                ---------------

(MARK ONE)

<TABLE>
<C>        <S>
   /X/     ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
           SECURITIES EXCHANGE ACT OF 1934
</TABLE>

                   FOR THE FISCAL YEAR ENDED JANUARY 31, 2001

                                       OR

<TABLE>
<C>        <S>
   / /     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
           SECURITIES EXCHANGE ACT OF 1934
</TABLE>

        FOR THE TRANSITION PERIOD FROM ______________ TO ______________

                                       TO

                         COMMISSION FILE NUMBER 0-24201
                            ------------------------

                              CARREKER CORPORATION
             (Exact name of registrant as specified in its charter)

<TABLE>
<S>                                            <C>
               DELAWARE                                     75-1622836
    (State or other jurisdiction of                      (I.R.S. Employer
    incorporation or organization)                     Identification No.)

         4055 VALLEY VIEW LANE
          DALLAS, TEXAS 75244                                 75244
    (Address of principal executive                         (Zip Code)
               offices)
</TABLE>

       Registrant's telephone number, including area code: (972) 458-1981

          SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

                                      None

          SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:

                    Common Stock, par value $0.01 per share
                                (Title of class)

    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 if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. /X/

    The aggregate market value on March 31, 2001 of the voting and non-voting
common equity held by non-affiliates of the registrant was $343,542,306.

    Number of shares of registrant's Common Stock, par value $0.01 per share,
outstanding as of March 31, 2001: 21,765,904.

                      DOCUMENTS INCORPORATED BY REFERENCE

    Selected portions of the registrant's definitive Proxy Statement for the
2001 Annual Meeting of Shareholders are incorporated by reference into Part III
hereof.

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                              CARREKER CORPORATION
                                     INDEX

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<CAPTION>
                                                                                    PAGE
                                                                                  --------
<S>       <C>       <C>                                                           <C>
PART 1:
          Item 1.   Business....................................................      3
          Item 2.   Properties..................................................     24
          Item 3.   Legal Proceedings...........................................     24
          Item 4.   Submission of Matters to A Vote of Security Holders.........     24

PART II:
          Item 5.   Market for Registrant's Common Equity and Related
                    Stockholder Matters.........................................     25
          Item 6.   Selected Financial Data.....................................     26
          Item 7.   Management's Discussion and Analysis of Financial Condition
                    and Results of Operations...................................     27
          Item 7A.  Quantitative and Qualitative Disclosures about Market
                    Risk........................................................     36
          Item 8.   Financial Statements and Supplementary Data.................     37
          Item 9.   Changes in and Disagreements with Accountants on Accounting
                    and Financial Disclosure....................................     54

PART III:
          Item 10.  Directors and Executive Officers of the Registrant..........     54
          Item 11.  Executive Compensation......................................     54
          Item 12.  Security Ownership of Certain Beneficial Owners and
                    Management..................................................     54
          Item 13.  Certain Relationships and Related Transactions..............     54

PART IV:
          Item 14.  Exhibits, Financial Statement Schedules, and Reports On Form
                    8-K.........................................................     55
</TABLE>

                                       2
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                                     PART I

ITEM 1. BUSINESS.

    UNLESS THE CONTEXT OTHERWISE REQUIRES, THE TERM "WE," "US," "OUR,"
"COMPANY," "CARREKER," OR "CARREKER CORPORATION" WHEN USED IN THIS FORM 10-K
("REPORT") AND IN THE ANNUAL REPORT TO THE STOCKHOLDERS REFERS TO CARREKER
CORPORATION, A DELAWARE CORPORATION, AND ITS CONSOLIDATED SUBSIDIARIES AND
PREDECESSORS. THIS REPORT CONTAINS SOME FORWARD-LOOKING STATEMENTS WITHIN THE
MEANING OF THE FEDERAL SECURITIES LAWS. WHEN USED THEREIN IN THIS REPORT, THE
WORDS "EXPECTS," "PLANS," "BELIEVES," "ANTICIPATING," "ESTIMATES," AND SIMILAR
EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD LOOKING STATEMENTS. ACTUAL RESULTS
AND THE TIMING OF SOME EVENTS COULD DIFFER MATERIALLY FROM THOSE PROJECTED IN OR
CONTEMPLATED BY THE FORWARD-LOOKING STATEMENTS DUE TO A NUMBER OF FACTORS,
INCLUDING WITHOUT LIMITATION THOSE SET FORTH UNDER "--RISK FACTORS" BELOW.

OUR BUSINESS FOCUS

    We are a leading provider of integrated consulting and software solutions
that enable banks to identify and implement e-finance solutions, increase their
revenues, reduce their costs and enhance their delivery of customer services.
Our offerings, uniquely tailored to the needs of the banking industry, fall into
four groups:

    - REVENUE ENHANCEMENT--increases banks' revenues through market segmentation
      and improved customer pricing structures;

    - PAYMENTSOLUTIONS--assists banks in transitioning from paper to
      electronic-based payment systems and minimizing payment processing
      expenses;

    - ENTERPRISE SOLUTIONS--integrates systems, combines operations and improves
      workflows and internal operational processes; and

    - CASHSOLUTIONS--optimizes inventory management of a bank's cash-on-hand,
      including management of how much cash is needed, when it is needed and
      where it is needed.

    We have over 20 years of experience in the banking industry. This
experience, combined with our professional staff and managers, many of whom are
former bankers and experts in complex bank operations, and our advanced
technological expertise, positions us to address effectively the challenges and
anticipate opportunities that banks face in today's increasingly competitive
environment. Our customer list includes over 200 financial institutions in the
United States, Canada, the United Kingdom, Ireland and Australia, including 70
of the largest 100 banks in the United States.

INDUSTRY BACKGROUND

    The banking industry is one of the nation's largest industries, with
aggregate assets of approximately $7.2 trillion as of June 2000, according to
the Federal Deposit Insurance Corporation. While banks historically have focused
on reducing their operating expenses to remain competitive, they are
increasingly focused on developing new sources of revenue growth that capitalize
on their core competencies, automating operations to increase efficiencies and
outsourcing some banking functions to sustain market value growth. To this end,
banks are expending significant resources both internally and on solutions
purchased from external vendors, including outsourcing arrangements. Key
industry trends driving our market opportunity include:

    CONSOLIDATION.  The banking industry continues to experience substantial
consolidation. As banks grow by acquisition, they require the integration of
operational processes and technological applications that serve to increase
revenues from a larger customer base, achieve efficiencies of scale associated
with increased operating size and enhance customer service through a nationwide
presence and consequent broader geographic reach.

                                       3
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    REGULATORY CHANGE.  The banking industry is characterized by continuing
regulatory changes. Regulations in certain areas have been relaxed while
regulations in other areas have become more restrictive. Revisions to
regulations also have permitted interstate banking, which allows bank holding
companies to own banks in multiple states under a single charter and,
consequently, to capture the operating and structural efficiencies that such
expanded operations make possible. In addition, deregulation in certain sectors
of the banking industry has led to increased competition for banks from
insurance companies, brokerage houses and other financial institutions in areas
of business which were previously the exclusive domain of banks. These changes
have presented banks with both challenges and opportunities to improve their
operations and achieve competitive advantages.

    EVOLVING TECHNOLOGIES.  Rapid technological innovation has increased
customers' expectations and, as a result, has created new means for banks to
gain competitive advantages. Increasingly, customers are requiring that their
banks provide a broader scope of banking services quickly and easily through
automated teller machines, or ATMs, by telephone or over the Internet.
Additionally, technological development has provided banks with the potential
for numerous operational enhancements. For instance, technology currently allows
for the electronic storage of images of documents, including checks, as well as
the ability to recall and use that data quickly and simultaneously at multiple
locations. Technology also currently enables banks to minimize their non-earning
assets by reducing their reserve requirements. Furthermore, technological
developments are fueling industry-wide advancements, such as the conversion from
a paper to an electronic-based check clearing process. The electronic processing
and clearing of checks has been gaining increasing acceptance as an efficient
and viable solution for eliminating the time-consuming and expensive movement of
paper.

    EMERGENCE OF THE INTERNET.  The Internet increasingly is being used as a
medium for financial transactions and services, including bill payment and
presentment processing, cash management, payroll and other services for
commercial customers. One area of particular interest to banks is the impact
that the rapid growth of business to business, or B2B, e-commerce is having on
their customers. International Data Corporation has estimated that the amount of
B2B purchases worldwide will reach $2.2 trillion by 2004. As the trend towards
B2B e-commerce accelerates, we believe that banks, as trusted intermediaries,
are well-positioned to electronically process, transmit, record, archive,
provide customer service and mitigate the risks associated with their customers'
B2B transactions.

    In order to compete effectively in this dynamic environment, banks often
must identify effective and innovative solutions to address their unique
requirements and re-design, and in some cases completely replace, their
operational systems. Effective development and implementation of these solutions
is technically challenging, time-consuming and expensive, and banks often are
faced with a choice between building internal, custom solutions or purchasing
third party offerings. The development of internal solutions necessarily
involves either re-deploying already stretched resources or acquiring new
resources that increase fixed costs, which typically results in isolated,
departmental solutions. In addition, traditional third party solutions typically
are not designed to the banking industry's unique requirements and are often
inflexible, requiring banks to conform their work processes to available
systems. The situation is exacerbated by the fact that effective solutions
cannot be developed in isolation, given the increasingly interdependent nature
of bank-to-bank operations. Traditional third party solutions are also limited
as some offer analysis and consultation regarding a bank's operations, while
others only provide specific software applications, resulting in a piecemeal
approach to solutions development. By using multiple providers, banks face
increased costs, more complex implementation and delayed realization of
benefits. As a result, banks are in need of a solution provider, specializing in
the banking industry, to provide integrated consulting services and
technological applications.

THE CARREKER SOLUTION

    Our products and services are designed to address the unique requirements of
the banking industry. These solutions combine consulting services and
technological applications to enable banks to

                                       4
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identify and implement e-finance solutions, increase revenues, reduce costs and
enhance delivery of customer services. The key characteristics of our solutions
include:

    INTEGRATED AND CONSULTATIVE APPROACH.  We combine our consulting expertise
and proprietary technology to serve as a single-source provider of
fully-integrated solutions that address the critical needs of banks. This
approach sets us apart from providers of partial solutions that require banks to
seek costly additional expertise or implementation services to attain a complete
solution. By offering integrated solutions, we achieve more rapid identification
and implementation of solutions than would a piecemeal approach.

    COMPREHENSIVE DELIVERY MODEL.  We are able to deliver our solutions in a
variety of ways to meet our clients' needs. These delivery methods include
traditional software licensing and associated consulting, third party
Web-hosting and licensing software for use by multiple banks in a shared
operating environment. Our ability to deliver products and services in a variety
of methods allows us to provide solutions to a wider range of clients.

    ADVANCED TECHNOLOGY.  We incorporate the latest technological developments,
including web-enabled systems and protocols, to produce software applications
that can be expanded with minimal effort, are functional and are able to
interface with a bank's current or legacy systems. In addition, our current and
past participation in inter-bank organizations, such as the Electronic Check
Clearinghouse Organization, enables us to stay at the forefront of technological
innovations in the industry.

    COMPELLING BUSINESS PROPOSITION FOR CLIENTS.  Our solutions reduce
investment risk for our clients by increasing revenues or reducing costs in a
relatively short period of time. In addition, in appropriate circumstances, we
value-price certain of our solutions, whereby we receive a percentage of the
amount of additional revenues or reduced costs achieved by the customer. These
arrangements allow banks to fund their investments in our solutions with the
benefits derived from their implementation.

    BROAD ARRAY OF SERVICES AND TECHNOLOGY.  We believe that our offerings are
the broadest in the banking industry, enabling us to provide a bank with an
expert solution targeted to a narrow area of a bank's operations or to address a
broad range of a bank's operational requirements. We believe that offering a
wide variety of solutions, from revenue enhancement to cost reduction to
improved delivery of customer services, enhances the value we offer to our
customers. In addition, our solutions embrace critical aspects of e-finance,
including mitigation of fraud, electronic processing of paper-based payments,
archiving of historical transactions and research and adjustments relating to
each of these functions. Our complementary groups of products and services, when
offered together, are able to deliver comprehensive solutions to banks. We
believe we are ideally positioned to assist banks in the transformation of their
financial transaction processing expertise into profitable revenue opportunities
with their commercial customers.

STRATEGY

    Our objective is to advance our position as a leading provider of integrated
consulting and software solutions to banks. Key elements of our strategy
include:

    EXPAND CUSTOMER BASE.  We seek to increase our customer base by building on
our strong relationships with larger banks to market our solutions to their
peers, selected smaller banks and other financial institutions. We also have
partnered with several service providers or resellers, including Fiserv, Inc.
and Metavante Corporation, to establish alternate marketing and distribution
channels of certain of our solutions through those companies to smaller banks.
Additionally, we strive to capitalize on our position as a leading provider of
e-finance solutions to the banking industry in the United States to continue to
pursue international customers, particularly banks elsewhere in North America,
Europe

                                       5
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and Australia. When regulatory change or technological breakthroughs create a
significant economic opportunity, the quality and breadth of our customer base
allows us to rapidly penetrate the industry with valuable solutions.

    CROSS-MARKET OUR PRODUCTS AND SERVICES TO OUR EXISTING CUSTOMER BASE.  Once
customers contract for one or more of our products or services, we strive to
develop and expand our relationships by cross-marketing other products and
services to those customers. Over the course of these relationships, we are able
to increase revenues from our existing customer base with minimal additional
sales expense by providing multiple products and services. These relationships
typically do not involve the time and customer acquisition costs associated with
the development of new relationships.

    INCREASE USE OF VALUE-PRICING AND RECURRING REVENUE ARRANGEMENTS.  We intend
to continue to share in the value that our solutions create for customers by
expanding the use of pricing methods and negotiated arrangements to generate
high-margin and recurring revenues. We plan to increase the use of value-pricing
for solutions in appropriate circumstances where increased revenues or reduced
costs resulting from such solutions can be readily projected and measured. In
addition, we intend to expand our practice of structuring license fees for
software-based solutions according to the usage of the software, which is
intended to transform a one-time license fee into a recurring revenue stream.

    PURSUE STRATEGIC ALLIANCES AND ACQUISITIONS.  We strive to form alliances
with selected partners whose solutions and expertise, when combined with ours,
provide incremental, value-added benefits to banks and their customers. In
addition to such alliances, we also seek to make selective acquisitions of
complementary businesses that would enable us to expand our line of e-finance
solutions, grow our customer base or pursue new business opportunities.

    ENHANCE BRAND AWARENESS.  We plan to continue to build our brand awareness
and reputation to expand our customer base and attract new strategic alliances,
acquisition candidates and talented consultants, managers and employees. We
promote the Carreker brand through our Web site, direct mail, "user" conferences
conducted exclusively for our customers, participation in industry conferences
and trade shows, publication of "white papers" related to specific aspects of
our services, customer newsletters and informational listings in trade journals.

PRODUCTS AND SERVICES

    We offer a wide range of innovative solutions that enable banks to identify
and implement e-finance solutions, increase their revenues, reduce their costs
and enhance their delivery of customer services. By combining our consulting
services with our proprietary technology applications, we help banks improve
their current operations and provide access to the benefits of the Internet
economy. Our offerings, uniquely tailored to the needs of the banking industry,
fall into four complementary groups. These groups, Revenue Enhancement,
PaymentSolutions, Enterprise Solutions and CashSolutions, we believe offer
products and services that, when combined, deliver optimal benefits.

    REVENUE ENHANCEMENT.  Revenue Enhancement consulting services enable banks
to improve workflows, internal operational processes and customer pricing
structures. Our Revenue Enhancement group offers consulting services that assess
the existing policies and procedures of banks to increase their revenue streams
and reduce interest and operating expenses. These assessments generally focus on
a variety of a bank's operations, including deposits, treasury management,
commercial lending, credit cards, automobile finance, mortgage and other
consumer lending operations. Revenue Enhancement engagements typically take four
to seven months to complete and we believe are relatively non-intrusive to the
client.

    PAYMENTSOLUTIONS.  PaymentSolutions addresses the needs of a critical
function of banks, the processing of payments made by one party to another. This
includes presentment of checks in paper

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and electronic form, determination of the availability of funds, identification
and mitigation of fraudulent payments, handling irregular items such as checks
returned unpaid (exceptions), maintaining a record of past transactions
(archiving), responding to related customer inquiries (research) and correcting
any errors that are discovered (adjustments). PaymentSolutions approaches these
key functions in the context of improving operational efficiency and a gradual
transition from paper to electronic-based payment systems. Specific solutions
within this group include:

<TABLE>
<CAPTION>
        SOLUTION                             DESCRIPTION                              PRODUCTS OFFERED
        --------                             -----------                              ----------------
<S>                        <C>                                                   <C>
FraudLink                  Provides a comprehensive, automated approach to       FraudLink On-us, FraudLink
                           solving the growing problem of fraudulent             Deposit, FraudLink Kite,
                           financial transactions, including bad checks          FraudLink PositivePay,
                           drawn on banks for payment, fraudulent items          FraudLink eTracker,
                           deposited with banks for credit and check             FraudLink PC, FraudLink
                           kiting.                                               Hold

eXceptions                 Reduces the number of exceptions that banks           CheckFlow 1st Edition,
                           experience, while using technology to transform       Innovasion, Research and
                           traditionally labor-intensive bank operations         Adjustments
                           into efficient elements of the total e-payment
                           transaction chain. It features a unique
                           combination of an automated check research,
                           photo referral and adjustment solutions,
                           together with a flexible workflow engine.

eRM                        Provides tools for customer relationship              eRM Exceptions Management,
                           management in an e-finance environment through a      eRM Risk Management, eRM
                           web-enabled decision support system that              Treasury Services, eRM
                           incorporates exception management, risk               Image Requestor
                           management, treasury services and document image
                           archival and retrieval.

eTrac                      Offers an automated track and trace system            Receive Sentry, Records
                           designed to monitor items from the time they
                           enter a bank's processing stream to final
                           disposition, which enables a bank to improve
                           labor productivity by channeling resources to
                           the place they are most needed.

eInform                    Focuses on performance-measurement by using the       eiLumen, eiPerform,
                           historical data generated by eTrac through which      eiStats, Super Query,
                           end-users can analyze historical data to              eiMicr, eiQuality
                           generate key performance indicators, item
                           processing volume data, productivity statistics
                           and quality control benchmarks.
</TABLE>

                                       7
<PAGE>

<TABLE>
<CAPTION>
        SOLUTION                             DESCRIPTION                              PRODUCTS OFFERED
        --------                             -----------                              ----------------
<S>                        <C>                                                   <C>
eTransactions              Enables banks to transition away from                 CheckLink, CheckLink PC,
                           paper-based payment systems to electronic by          Deposit Manager, Branch
                           automating key elements of the processing stream      Truncation Management,
                           as well as improving a bank's yield from float        Cnotes
                           management. The aim of this product and service
                           is to reduce and eventually eliminate the
                           movement of paper payment instruments through
                           the system, automate error-prone payment
                           processing functions, consolidate payment
                           information and provide a measure of fraud
                           prevention.

Float Management           Focuses on funding requirements and overall           Float Analysis System,
                           profitability by properly managing a bank's           Float Pricing System,
                           float through float analysis, pricing and a           Consulting
                           comprehensive consulting practice to improve
                           profitability, reporting, workflow and
                           check-clearing operations. It provides critical
                           activity summaries, aids in creating multiple
                           availability and pricing schedules as well as
                           pinpointing the cost/profitability of any
                           transaction or relationship.

Recon Solutions            Improves efficiency and control over the daily        Bankrec
                           activity of balancing and reconciling financial
                           transactions. It redefines reconciliation
                           processes through technology and process
                           improvements. In addition to recommendations
                           that improve automation, control and risk
                           management practices, we employ an automated
                           reconciliation software, Bankrec-TM- Corporate,
                           to provide significant gains in efficiency and
                           control.
</TABLE>

    ENTERPRISE SOLUTIONS.  Enterprise Solutions provides conversion,
consolidation and integration consulting services and products on a bank-wide
basis. These services and products are particularly in demand in the context of
continuing consolidation activity in the banking industry and the pressure by
customers on banks to define and implement their e-finance strategies. Key
elements of this group include:

<TABLE>
<CAPTION>
        SOLUTION                             DESCRIPTION                              PRODUCTS OFFERED
        --------                             -----------                              ----------------
<S>                        <C>                                                   <C>
Enterprise Solutions       Offers customized, bank-wide conversions,             Project Management,
                           consolidation and integration consulting              eSolutions, Integration,
                           solutions in areas beyond payments systems,           Process Optimization, Line
                           including consulting and project management           of Business Consulting
                           services and IT consulting for various projects.
</TABLE>

                                       8
<PAGE>

<TABLE>
<CAPTION>
        SOLUTION                             DESCRIPTION                              PRODUCTS OFFERED
        --------                             -----------                              ----------------
<S>                        <C>                                                   <C>
Strategic Services         Assists customers in planning and implementing a      BVIP, Customer Experience
                           total e-finance and payment strategy.                 Consulting, Strategy
                                                                                 Consulting
</TABLE>

    CASHSOLUTIONS.  CashSolutions optimizes the inventory management of a bank's
cash-on-hand, including managing how much is needed, when it is needed and where
it is needed. We believe our solutions reduce the amount of cash banks need to
hold in reserve accounts and as cash-on-hand, while ensuring a high level of
customer service through timely replenishment of cash in ATMs. Specific
solutions within this group include:

<TABLE>
<CAPTION>
        SOLUTION                             DESCRIPTION                              PRODUCTS OFFERED
        --------                             -----------                              ----------------
<S>                        <C>                                                   <C>
eiService                  Advances ATM monitoring and management through        eiManager, eiGateway,
                           the use of Internet connectivity to provide           eiForecaster
                           electronic notification of cash and/or servicing
                           needs. Scalable to the largest ATM networks, it
                           forecasts cash and servicing needs, dispatches
                           vendors for cash replenishment and maintenance
                           services, records completed work and reconciles
                           vendor invoices, all via an electronic
                           communication infrastructure.

eCashInventory             Reduces the amount of non-earning assets              Cash Forecaster, Cash
                           required in reserve accounts and as cash-             Tracker, Reserve Link,
                           on-hand to meet operating needs. Using both           Reserve LinkPlus
                           technology and process reengineering, it
                           provides management tools for forecasting,
                           tracking and optimizing a bank's inventory of
                           currency. This group of solutions frees
                           underutilized money for more productive uses.

Transportation             Reduces armored car transportation costs              Optimizer, Consulting
                           incurred by banks in moving cash between              Services
                           locations and replenishing ATMs. It optimizes
                           armored car utilization based on ATM locations
                           and usage, route structures and delivery
                           frequency, as well as ATM deposit processing
                           requirements.

eCashPro                   Reduces transaction cost of centralized currency      eVaultMaster II,
                           and ATM depositing processing, typically              eDepositMaster,
                           provides significant cash reductions throughout       eVaultForecaster
                           the vault network, establishes a standardized
                           inventory measurement process and allows a
                           reduction in the number of branch and vault
                           employees, as well as improves Internet-based
                           customer reporting.
</TABLE>

                                       9
<PAGE>
CUSTOMERS

    A majority of our revenues are generated from contracts with banks
maintaining assets in excess of $5.0 billion. We currently provide services or
products to 19 of the 20 largest banks in the United States as measured by total
assets by Sheshunoff Information Services. Our five largest customers accounted
for approximately 49%, 58% and 35% of total revenues during the fiscal years
ended January 31, 2001, 2000 and 1999, respectively. Wells Fargo & Company and
Firstar Bank, N.A. accounted for approximately 24% and 13% of total revenues,
respectively, during the year ended January 31, 2000, and Firstar Bank, N.A.
accounted for approximately 27% of total revenues during the year ended
January 31, 2001.

SOLUTIONS DEVELOPMENT

    Our solutions development activities focus on identifying specific bank
needs, which includes prototyping promising applications, test marketing new
products, developing sales strategies and coordinating distribution and on-going
maintenance for each of our solutions. In certain instances, we have contracted
with third party software development companies to develop our solutions.

    We frequently receive customer requests for new services and/or software. We
strive to develop solutions in response to these requests and historically have
been able to partner with our customers and share some or all of the development
costs. In addition to customer-funded solutions development, we have invested
significant amounts in solutions development, including expenditures of
$6.1 million, $4.8 million and $4.8 million for research and development in the
years ended January 31, 2001, 2000 and 1999, respectively. Further, some of our
key product introductions have resulted from the adaptation of products
developed by customers to a wider market. In exchange for either a one-time
payment and/or on-going royalties, we are often able to obtain the right to
develop, enhance and market these modified products.

    Additionally, we believe our leadership role in the banking industry through
our relationship with the Electronic Check Clearing House Organization positions
us to identify and develop interbank solutions that have bilateral or
multilateral banking industry implications and to anticipate, recognize and
respond to the changing needs of the banking industry.

TECHNOLOGY

    Our historical software products incorporate open systems architecture and
protocols to provide maximum scalability and functionality and to interface with
a bank's current and legacy systems. Our core proprietary technologies, for both
our client/server software products and mainframe software products, are
primarily directed at using a standard set of components, drivers and
application interfaces so that our software products are constructed from
reusable components which are linked together in a tool-set fashion.

    With respect to many of our newer products, we have adopted an
Internet-based development methodology that operates on NT or Unix platforms.
These products support many of the industry-standard Web browsers, such as
Microsoft Internet Explorer and AOL Netscape, and databases, such as Oracle 8i
or SQL. These products can be delivered as an ASP or as standard packaged
product.

    We continue to enhance our second-generation computer systems, which are
primarily IBM mainframe-based or client server applications, and to use common
computer tools to integrate the data from these computer programs into our new
products.

SALES AND MARKETING

    We have developed strong relationships with many senior bank executives as a
result of our delivery of effective solutions to many of the largest banks in
the United States for over 20 years.

                                       10
<PAGE>
As of January 31, 2001, we had 19 Account Relationship Managers, who are
responsible for managing our day-to-day relationships with our customers.
Seventeen are responsible for domestic bank relationships, and two are
responsible for the United Kingdom and European bank relationships. Our Account
Relationship Managers' responsibilities include identifying customers' needs and
assisting our group managers in presenting their solutions and concluding sales.
Our Account Relationship Managers work closely with our executive officers, who
serve as Executive Relationship Managers to our customers. We also employ
technical sales support staff, who are familiar with our technology and who
participate in opportunities to sell technology-based solutions.

    We derive a significant portion of our business through customer referrals.
In addition, we market our services through a variety of media, including:

    - our Web site;

    - direct mail;

    - user conferences conducted exclusively for our customers;

    - participation in industry conferences and trade shows;

    - publication of "white papers" related to specific aspects of our services;

    - customer newsletters; and

    - informational listings in trade journals.

As of January 31, 2001, we employed a marketing staff of eight individuals,
including graphics designers, writers, administrative coordinators and a Web
master.

COMPETITION

    We compete with third-party providers of services and software products to
the banking industry, which include consulting firms and software companies.
Many of these competitors have significantly greater financial, technical,
marketing and other resources than we do. However, we believe that our market
position with respect to these competitors is enhanced by virtue of our unique
ability to deliver fully integrated consulting services and software solutions
focused on enabling banks to identify and implement e-finance solutions,
increase their revenues, reduce their costs and enhance their delivery of
customer services. We believe that we compete based on a number of factors,
including:

    - quality of solutions;

    - scope of solutions provided;

    - industry expertise;

    - access to decision makers within banks;

    - ease and speed of solutions implementation; and

    - price.

    In addition to competing with a variety of third parties, we experience
competition from our customers and potential customers when they develop,
implement and maintain their own services and applications. In addition,
customers or potential customers could enter into strategic relationships with
one or more of our competitors to develop, market and sell competing services or
products. As a result, we must continually demonstrate to existing and
prospective customers the advantages of purchasing our services and products.

                                       11
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GOVERNMENT REGULATION

    Our primary customers are banks. Although the services we currently offer
have not been subject to any material industry-specific government regulation,
the banking industry is heavily regulated. Our products and services must allow
banking customers to comply with all applicable regulations, and as a result, we
must understand the intricacies and application of many government regulations.
The regulations most applicable to our provision of solutions to banks include
requirements establishing minimum reserve requirements, governing funds
availability and the collection and return of checks, and establishing rights,
liabilities and responsibilities of parties in electronic funds transfers. For
example, our CashSolutions and related consulting services assist banks with
minimizing their reserves while complying with federal reserve requirements. In
addition, the expedited availability and check return requirements imposed by
funds availability regulations have increased fraud opportunities dramatically,
and our PaymentSolutions products and services address this concern while
complying with such regulations.

    While we are not directly subject to federal or state regulations
specifically applicable to financial institutions, such as banks, thrifts and
credit unions, the Federal Deposit Insurance Corporation, the National Credit
Union Administration, the Office of Thrift Supervision, the Office of the
Comptroller of the Currency, and various state regulatory authorities typically
assert the right to observe the operations of companies to which certain
functions of financial institutions (such as data processing) are outsourced.
These regulators may from time to time also claim the right to observe the
operations of companies like us that provide software to financial institutions.
In addition, financial institutions with whom we do business may from time to
time require, by contract or otherwise, that evaluations of our internal
controls be performed by independent auditors or by the financial institutions
themselves.

PROPRIETARY RIGHTS

    We rely upon a combination of patent, copyright, trademark and trade secret
laws, including the use of confidentiality agreements with employees,
independent contractors and third parties and physical security devices to
protect our proprietary technology and information. We have a number of issued
patents and registered trademarks and have filed applications for additional
patents and trademarks in the United States. We vigorously defend our
proprietary rights.

    We enter into invention assignment and confidentiality agreements with our
employees and independent contractors and confidentiality agreements with
certain customers. We also limit access to the source codes for our software and
other proprietary information. We believe that due to the rapid pace of
innovation within the software industry, factors such as the technological and
creative expertise of our personnel, the quality of our solutions, the quality
of our technical support and training services and the frequency of release of
technology enhancements are more important to establishing and maintaining a
technology leadership position than the various legal protections available for
our technology.

    We are not aware that we are infringing any proprietary rights of third
parties. We rely upon certain software that we license from third parties,
including software that is integrated with our internally developed software and
used in our solutions to perform key functions. We are not aware that any
third-party software being re-sold by us is infringing upon proprietary rights
of other third-parties.

EMPLOYEES

    As of January 31, 2001, we had 477 employees. Of these employees, 222
provided consulting services, 119 worked in the technical group, 58 performed
sales and marketing, customer relations and business development functions and
78 persons performed corporate, finance and administrative functions. We have no
unionized employees, and we believe that our employee relations are good.

                                       12
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INDEPENDENT CONTRACTORS

    We provide consulting and technical services and develop software in part
through the use of independent contractors who are not our employees. During
calendar year 2000, we used approximately 75 independent contractors to provide
consulting and technical services, most of whom worked from their homes or from
customers' offices. Many of these contractors are former bank executives, and we
believe that their experience in the banking industry enables them to provide
industry-specific solutions to our customers.

RISK FACTORS

    THIS REPORT AND THE ANNUAL REPORT TO STOCKHOLDERS CONTAINS SOME
FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF THE FEDERAL SECURITIES LAWS.
ACTUAL RESULTS AND THE TIMING OF SOME EVENTS COULD DIFFER MATERIALLY FROM THOSE
PROJECTED IN OR CONTEMPLATED BY THE FORWARD-LOOKING STATEMENTS DUE TO A NUMBER
OF FACTORS, INCLUDING, WITHOUT LIMITATION, THOSE SET FORTH BELOW AND ELSEWHERE
IN THIS REPORT. IN ADDITION TO THE OTHER INFORMATION IN THIS REPORT, THE
FOLLOWING FACTORS, WHICH MAY AFFECT OUR CURRENT POSITION AND FUTURE PROSPECTS,
SHOULD BE CONSIDERED CAREFULLY IN EVALUATING US AND AN INVESTMENT IN OUR COMMON
STOCK.

RISKS RELATED TO OUR BUSINESS AND INDUSTRY

OUR PERFORMANCE DEPENDS ON THE BANKING INDUSTRY, AND ANY CHANGE IN THE BANKING
INDUSTRY'S DEMAND FOR OUR SOLUTIONS COULD REDUCE OUR REVENUES AND HAVE A
MATERIAL ADVERSE EFFECT ON OUR BUSINESS.

    We derive substantially all of our revenues from solutions provided to banks
and other participants in the banking industry. Accordingly, our future success
significantly depends upon this industry's continued demand for our solutions.
We believe that an important factor in our growth has been substantial changes
in the banking industry in recent years, as manifested by continuing
consolidation, regulatory change, technological innovation, the emergence of the
Internet and other trends. If this environment of change were to slow, we could
experience reduced demand for our solutions. In addition, the banking industry
is sensitive to changes in economic conditions and is highly susceptible to
unforeseen events, such as domestic or foreign political instability, recession,
inflation or other adverse occurrences that may result in a significant decline
in the utilization of bank services. Furthermore, due to concerns regarding data
security and other factors, banks have been and may in the future be hesitant to
adopt electronic solutions, which can adversely affect the demand for our
solutions. Any event that results in decreased consumer or corporate use of bank
services, or increased pressures on banks towards the in-house development and
implementation of revenue enhancement or cost reduction measures, could have a
material adverse effect on our business, financial condition and results of
operations.

A SMALL NUMBER OF CUSTOMERS ACCOUNT FOR A SUBSTANTIAL PORTION OF OUR BUSINESS,
AND THE LOSS OF ANY ONE OF THEM COULD HAVE AN ADVERSE IMPACT ON OUR BUSINESS AND
FINANCIAL CONDITION.

    Our five largest customers accounted for approximately 49%, 58% and 35% of
total revenues during the fiscal years ended January 31, 2001, 2000 and 1999,
respectively. Wells Fargo & Company and Firstar Bank, N.A. accounted for
approximately 24% and 13% of total revenues, respectively, during the year ended
January 31, 2000, and Firstar Bank, N.A. accounted for approximately 27% of
total revenues during the year ended January 31, 2001. Our significant customers
have changed from period to period. However, a significant portion of our
current revenues is derived from customers who were major customers in prior
years, and we are therefore dependent to a significant degree on our ability to
maintain our existing relationships with these customers. There can be no
assurance that we will be successful in maintaining our existing customer
relationships or in securing additional customers, and there can be no assurance
that we can retain or increase the volume of business that we do with such
customers. In particular, continuing consolidation within the banking industry
may result in the

                                       13
<PAGE>
loss of one or more significant customers. Any failure by us to retain one or
more of our large customers, maintain or increase the volume of business done
for such customers or establish profitable relationships with additional
customers could have a material adverse effect on our business, financial
condition and results of operations.

MANY FACTORS, SOME BEYOND OUR CONTROL, COULD CAUSE FLUCTUATIONS IN OUR OPERATING
RESULTS, WHICH COULD RESULT IN A LOWER MARKET PRICE FOR OUR COMMON STOCK.

    We have experienced in the past, and expect to experience in the future,
significant fluctuations in quarterly operating results. Such fluctuations may
be caused by many factors, including but not limited to:

    - the extent and timing of revenues recognized, particularly in light of our
      historical tendency to have a disproportionately large portion of our
      contract signings near the end of each quarter;

    - increases in costs beyond anticipated levels, especially in the context of
      costs incurred under value-pricing contracts;

    - the degree of customer acceptance of new solutions;

    - the introduction of new or enhanced solutions by us or our competitors;

    - our mix of revenues derived from consulting and management service fees on
      the one hand, and software-related fees on the other;

    - customer budget cycles and priorities and purchasing cycles;

    - competitive conditions in the industry;

    - seasonal factors;

    - timing of consolidation decisions by customers;

    - the extent of customers' international expansion; and

    - general economic conditions.

    Due to the foregoing factors, many of which are beyond our control, our
quarterly revenues and operating results are difficult to forecast. It is
possible that our future quarterly results of operations from time to time will
not meet the expectations of securities analysts or investors, which could have
a material adverse effect on the market price of our common stock.

OUR USE OF FIXED-PRICE AND VALUE-PRICED ARRANGEMENTS FOR CUSTOMER PROJECTS COULD
REDUCE OUR REVENUES AND NET INCOME, WHICH COULD RESULT IN DECREASED OPERATING
MARGINS OR LOSSES.

    We primarily price our solutions on a time-and-materials, fixed-price or
value-priced basis. In connection with fixed-price projects, we occasionally
incur costs in excess of our projections and as a result achieve lower margins
than expected or may incur losses with respect to projects. In connection with
value-priced projects, we are paid based on an agreed percentage of either
projected or actual increased revenues or decreased costs derived by the bank
generally over a period of up to twelve months following the implementation of
our solutions. We typically must first commit time and resources to develop such
projections before a bank will commit to purchase our solutions and therefore
assume the risk of making these commitments and incurring related expenses with
no assurance that the bank will purchase the solutions. In addition, from time
to time, a customer will not achieve projected revenues or savings because it
belatedly decides not to implement our solutions or the solutions do not produce
the projected results, in which case we may not be able to collect any or all of
the fees provided for in the customer's contract. The nature of our fixed-priced
and value-priced

                                       14
<PAGE>
arrangements can result in decreased operating margins or losses and could
materially and adversely affect our business, financial condition and results of
operations.

WE DO NOT TYPICALLY ENTER INTO LONG-TERM AGREEMENTS WITH OUR CUSTOMERS, WHICH
MAKES IT MORE DIFFICULT TO PLAN AND EFFICIENTLY ALLOCATE OUR RESOURCES, AND ANY
DEFERRAL, MODIFICATION OR CANCELLATION OF A CUSTOMER PROJECT CAN ADVERSELY
AFFECT OUR OPERATING RESULTS.

    We typically provide services to customers on a project-by-project basis
without long-term agreements. When a customer defers, modifies or cancels a
project, we must be able to rapidly re-deploy our personnel to other projects in
order to minimize the under-utilization of our personnel and the resulting
adverse impact on operating results. In addition, our operating expenses are
relatively fixed and cannot be reduced on short notice to compensate for
unanticipated variations in the number or size of projects in progress. As a
result, any delay, modification or cancellation of a customer project, or any
disruption of our business relationships with any of our significant customers
or with a number of smaller customers could have a material adverse effect on
our business, financial condition and results of operations.

WE HAVE RECENTLY REFOCUSED OUR SOLUTIONS TO FOCUS ON E-FINANCE OPPORTUNITIES,
AND ANY INABILITY TO GAIN MARKET ACCEPTANCE OF THESE SOLUTIONS COULD HAVE A
NEGATIVE IMPACT ON OUR FUTURE GROWTH AND FINANCIAL RESULTS.

    We have recently refocused our solutions to concentrate on e-finance
opportunities. We have dedicated significant resources to this effort and cannot
be certain whether this refocusing of our solutions will achieve market
acceptance. Market acceptance of our existing and future solutions depends on
several factors, including:

    - the ease with which those solutions can be implemented and used;

    - the performance and reliability of those solutions;

    - the degree to which customers achieve expected revenue gains, cost savings
      and performance enhancements; and

    - the extent to which our customers and prospective customers are able to
      implement alternative approaches to meet their business development and
      cost-saving needs.

    Some of these factors are beyond our control. There can be no assurance that
our customers will realize the intended benefits of our solutions or that any of
our solutions will be accepted in the market. Any significant or ongoing failure
to achieve these benefits or to maintain or increase market acceptance would
restrict substantially our future growth and could have a material adverse
effect on our business, financial condition and results of operations.

WE HAVE EXPERIENCED RAPID GROWTH IN OUR BUSINESS, AND THERE CAN BE NO ASSURANCE
THAT WE WILL BE ABLE TO MAINTAIN THIS GROWTH RATE. IF WE ARE ABLE TO MAINTAIN
IT, OUR OPERATIONAL AND FINANCIAL RESOURCES COULD BE STRAINED, WHICH COULD CAUSE
US TO LOSE CUSTOMERS, PREVENT US FROM OBTAINING NEW CUSTOMERS AND INCREASE OUR
OPERATING EXPENSES.

    We have experienced significant growth in recent years, but there can be no
assurance that we will be able to maintain this growth rate. If we are not
successful in maintaining this growth rate, our business could be negatively
affected. To be successful in maintaining our growth rate, we anticipate that
additional expansion may be required in order to address potential market
opportunities. Any further growth would place further demands on our management,
operational capacity and financial resources. We anticipate that we will need to
recruit large numbers of qualified personnel in all areas of our operations,
including management, sales, marketing, delivery and software development. There
can be no assurance that we will be effective in attracting and retaining
additional qualified personnel,

                                       15
<PAGE>
expanding our operational capacity or otherwise managing growth. In addition,
there can be no assurance that our systems, procedures or controls will be
adequate to support any expansion of our operations. As a result of acquisitions
and continued growth, the needs of our management information systems are
expected to expand and change, which could result in the implementation of new
or modified management information systems and procedures. This may necessitate
additional training of existing personnel or the hiring of additional personnel.
If we cannot implement the new, or modified, management information systems in a
timely manner, our ability to manage growth effectively or generate timely
operating and financial reports could be materially and adversely affected. The
failure to manage growth effectively could have a material adverse effect on our
business, financial condition and results of operations.

OUR FUTURE SUCCESS SIGNIFICANTLY DEPENDS ON THE EXPERIENCE OF OUR KEY PERSONNEL,
AND THE LOSS OF ANY ONE OF THEM COULD IMPAIR OUR ABILITY TO DO BUSINESS.

    Our future success depends, in significant part, upon the continued services
of John D. Carreker, Jr., our Chairman of the Board and Chief Executive Officer,
as well as other executive officers and key personnel. The loss of services of
Mr. Carreker or one or more of our other executive officers or key employees
could have a material adverse effect on our business, financial condition and
results of operations, and there can be no assurance that we will be able to
retain our executive officers or key personnel. We do not maintain key-man life
insurance covering any of our executive officers or other key personnel.

OUR SOFTWARE AND SOLUTIONS MAY CONTAIN DEFECTS OR ERRORS, WHICH COULD ADVERSELY
AFFECT OUR BUSINESS AND SUBJECT US TO LIABILITY CLAIMS.

    Our solutions at times in the past have been, and in the future may be,
incompatible with the operating environments of our customers or inappropriate
to address their needs, resulting in additional costs being incurred by us in
rendering services to our customers. Further, like other software products, our
software occasionally has contained undetected errors, or "bugs," which become
apparent through use of the software. Because our new or enhanced software
initially is installed at a limited number of sites and operated by a limited
number of users, such errors and/or incompatibilities may not be detected for a
number of months after delivery of the software. The foregoing errors in the
past have resulted in the deployment of our personnel and funds to cure errors,
occasionally resulting in cost overruns and delays in solutions development and
enhancement. Moreover, solutions with substantial errors could be rejected by or
result in damages to customers, which could have a material adverse effect on
our business, financial condition and results of operations. There can be no
assurance that errors or defects will not be discovered in the future,
potentially causing delays in solution implementation or requiring design
modifications that could adversely affect our business, financial condition and
results of operations. It is also possible that errors or defects in our
solutions could give rise to liability claims against us.

OUR FUTURE SUCCESS DEPENDS ON OUR ABILITY TO DEVELOP NEW TECHNOLOGIES AND
SERVICES TO MEET THE CHANGING NEEDS OF OUR CURRENT AND FUTURE CUSTOMERS, AND OUR
INABILITY TO INTRODUCE NEW SOLUTIONS COULD NEGATIVELY IMPACT OUR ABILITY TO DO
BUSINESS AND MAINTAIN OUR FINANCIAL CONDITION.

    We regularly undertake new projects and initiatives in order to meet the
changing needs of our customers. In so doing, we invest substantial resources
with no assurance of their ultimate success. We believe our future success will
depend, in part, upon our ability to:

    - enhance our existing solutions;

    - design and introduce new solutions that address the increasingly
      sophisticated and varied needs of our current and prospective customers;

    - develop leading technology; and

    - respond to technological advances and emerging industry standards on a
      timely and cost-effective basis.

                                       16
<PAGE>
    There can be no assurance that future advances in technology will be
beneficial to, or compatible with, our business or that we will be able to
incorporate such advances into our business. In addition, keeping abreast of
technological advances in our business may require substantial expenditures and
lead-time. There can be no assurance that we will be successful in using new
technologies, adapting our solutions to emerging industry standards or
developing, introducing and marketing solution enhancements or new solutions, or
that we will not experience difficulties that could delay or prevent the
successful development, introduction or marketing of these solutions. If we
incur increased costs or are unable, for technical or other reasons, to develop
and introduce new solutions or enhancements of existing solutions in a timely
manner in response to changing market conditions or customer requirements, our
business, financial condition and results of operations could be materially and
adversely affected.

OUR FOCUS ON PROVIDING AN APPLICATION SERVICE PROVIDER, OR ASP, SOFTWARE HOSTING
MODEL WILL SUBJECT US TO NEW RISKS ASSOCIATED WITH AN INCREASED DEPENDENCE ON
THIRD-PARTY PROVIDERS AND THE INTERNET.

    Our move toward an ASP software hosting model will give rise to numerous
risks that we have not previously faced, particularly risks related to our
heightened dependence on third party providers and the Internet. The success of
our ASP software hosting model will partially depend on the performance of the
third party application service provider with whom we have contracted to provide
software hosting services. In addition, we will also be dependent on the
Internet as a reliable network backbone capable of supporting our customers' use
of our software. There can be no assurance that our solutions that rely on
Internet access will be protected against disruptions, delays or losses due to
technical difficulties, natural causes or security breaches. These problems may
adversely affect the success of our ASP software hosting initiative and could
negatively impact our operating results. We may also be subject to any
governmental adoption of regulations that charge Internet access fees or impose
taxes on subscriptions. Currently, there are few laws or regulations that
specifically regulate the Internet; however, such laws and regulations, if
adopted, may increase our operating expenses.

WE ARE SEEKING TO SELL SOFTWARE LICENSES THAT ARE PRICED BASED ON A USAGE
LICENSE FEE RATHER THAN A LUMP SUM LICENSE FEE, WHICH COULD ADVERSELY AFFECT OUR
REVENUES AND FINANCIAL RESULTS.

    Historically, when selling software licenses to customers, we have charged a
lump sum software license fee. With our increasing emphasis on selling software
licenses based on an ASP software hosting model, however, we will be seeking to
increase our usage license fees. This could have an adverse effect on our
overall software license fees as we work to implement this new pricing model.
There can be no assurance that our revenues derived from usage license fees will
offset our loss of lump sum license fees.

THERE IS INTENSE COMPETITION IN OUR INDUSTRY FOR QUALIFIED BANKING PROFESSIONALS
AND TECHNICAL AND MANAGERIAL PERSONNEL, AND OUR FAILURE TO ATTRACT AND RETAIN
THESE PEOPLE COULD AFFECT OUR ABILITY TO RESPOND TO BANKING AND TECHNOLOGICAL
CHANGE AND TO INCREASE OUR REVENUES.

    Our future success depends upon our continuing ability to attract and retain
highly qualified banking, technical and managerial personnel. Competition for
such personnel is intense, and we at times have experienced difficulties in
attracting the desired number of such individuals. Further, our employees have
left us to work in-house with our customers and with our competitors. There can
be no assurance that we will be able to attract or retain a sufficient number of
highly qualified employees or independent contractors in the future. If we are
unable to attract personnel in key positions, our business, financial condition
and results of operations could be materially and adversely affected.

                                       17
<PAGE>
WE FACE INCREASED COMPETITION THAT COULD RESULT IN PRICE REDUCTIONS, FEWER
CUSTOMER ORDERS AND LOSS OF MARKET SHARE, ANY OF WHICH COULD MATERIALLY AND
ADVERSELY AFFECT OUR BUSINESS.

    We compete with third-party providers of services and software products to
the banking industry that include consulting firms and software companies. Many
of our competitors have significantly greater financial, technical, marketing
and other resources than we do. Our competitors may be able to respond more
quickly to new or emerging technologies and changes in customer requirements or
to devote greater resources to the development, promotion and sale of their
products than we can. Also, several of our current and potential competitors
have greater name recognition and larger customer bases that such competitors
could leverage to increase market share at our expense. We expect to face
increased competition as other established and emerging companies enter the
banking services market. Increased competition could result in price reductions,
fewer customer orders and loss of market share, any of which could materially
and adversely affect our business, financial condition and results of
operations. There can be no assurance that we will be able to compete
successfully against current or future competitors, and the failure to do so
would have a material adverse effect upon our business, financial condition and
results of operations.

    In addition to competing with a variety of third parties, we experience
competition from our customers and potential customers. From time to time, these
potential customers develop, implement and maintain their own services and
applications for revenue enhancements, cost reductions and/or enhanced customer
services, rather than purchasing services and related products from third
parties. There can be no assurance that these customers or other potential
customers will perceive sufficient value in our solutions to justify investing
in them. In addition, customers or potential customers could enter into
strategic relationships with one or more of our competitors to develop, market
and sell competing services or products.

WE MAY BE UNABLE TO FULLY BENEFIT FROM OUR STRATEGIC ALLIANCES AND ACQUISITIONS,
WHICH COULD NEGATIVELY AFFECT OUR BUSINESS AND HINDER OUR ABILITY TO REALIZE
EXPECTED BENEFITS.

    We regularly evaluate opportunities and may enter into strategic alliances,
or make acquisitions of other businesses, products or technologies. Risks
inherent in alliances may include, among others:

    - substantial investment of our resources in the alliance;

    - inability to realize the intended benefits of an alliance;

    - increased reliance on third parties;

    - increased payment of third-party licensing fees or royalties for the
      incorporation of third-party technology into our solutions; and

    - inadvertent transfer of our proprietary technology to strategic
      "partners."

    Acquisitions involve numerous risks, including:

    - difficulties in identifying suitable acquisition candidates;

    - competition for acquisitions with other companies, many of which have
      substantially greater resources than we do;

    - failure to close after expending time and resources;

    - inability to obtain sufficient financing on acceptable terms to fund
      acquisitions;

    - requirement that the acquisition may be funded through additional debt
      obligations which therefore would increase interest expense;

    - volatility of stock price due to one-time charges to earnings;

                                       18
<PAGE>
    - difficulties in assimilating acquired operations and products into our
      business;

    - maintaining uniform standards, controls, procedures and policies;

    - potential loss of customers and strategic partners of acquired companies;

    - potential loss of key employees of acquired companies;

    - diversion of management's attention from other business concerns;

    - amortization of acquired intangible assets; and

    - failure of acquired businesses, products or technologies to perform as
      expected or to achieve expected levels of revenues, profitability or
      productivity.

    There can be no assurance that we will be successful in identifying and
entering into strategic alliances or making acquisitions, if at all, and any
inability to do so could have a material adverse effect on our business,
financial condition and results of operations. We recently completed several
small acquisitions, and if we were to complete larger or more complex
transactions, then the above risks would be heightened.

    We expect that future acquisitions, if any, could provide for consideration
to be paid in cash, shares of our common stock, or a combination of cash and our
common stock. If the consideration for an acquisition transaction is paid in
common stock, this could further dilute existing stockholders. Any amortization
of a significant amount of goodwill or other assets resulting from an
acquisition transaction could materially impair our operating results and
financial condition.

OUR INABILITY TO PROTECT ADEQUATELY OUR PROPRIETARY TECHNOLOGY OR TO PREVENT ITS
UNAUTHORIZED USE COULD DIVERT OUR FINANCIAL RESOURCES AND CAUSE SIGNIFICANT
EXPENDITURES, WHICH COULD MATERIALLY HARM OUR BUSINESS.

    Our success significantly depends upon our proprietary technology and
information. We rely upon a combination of patent, copyright, trademark and
trade secret laws and confidentiality procedures to protect our proprietary
technology and information. We have a number of issued patents and registered
trademarks. There can be no assurance that the steps we have taken to protect
our services and products are adequate to prevent misappropriation of our
technology or that our competitors independently will not develop technologies
that are substantially equivalent or superior to our technology. Furthermore, it
is very difficult to police unauthorized use of our software due to the nature
of software. Any such misappropriation of our proprietary technology or
information or the development of competitive technologies could have a material
adverse effect on our business, financial condition and results of operations.

    In addition, the laws of some countries in which our software is distributed
do not protect our intellectual property rights to the same extent as the laws
of the United States. For example, the laws of a number of foreign jurisdictions
in which we license our software protect trademarks solely on the basis of the
first to register. We currently do not possess any trademark registrations in
foreign jurisdictions, although we do have copyright protection of our software
under the provisions of various international conventions. Accordingly,
intellectual property protection of our services and products may be ineffective
in many foreign countries. In summary, there can be no assurance that the
protection provided by the laws of the United States or such foreign
jurisdictions will be sufficient to protect our proprietary technology or
information.

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<PAGE>
INFRINGEMENT CLAIMS BY THIRD PARTIES CAN SUBJECT US TO SUBSTANTIAL LIABILITY AND
EXPENSES AND CAN IMPAIR OUR ABILITY TO SELL OUR SOLUTIONS.

    We may need to litigate claims against third parties to enforce our
intellectual property rights, protect our trade secrets, determine the validity
and scope of the proprietary rights of others or defend against claims of
infringement or invalidity. We may be required to incur significant costs in
reaching a resolution to the asserted claims, or any other claims that may be
asserted against us. There can be no assurance that the resolution of a claim
would not require us to pay damages or obtain a license to the third party's
intellectual property rights in order to continue licensing our software as
currently offered or, if such a third-party license is required, that it would
be available on terms acceptable to us. The resolution of claims may also divert
our management resources. If we cannot adequately protect our proprietary
rights, it could have a material adverse effect on our business, operating
results and financial condition.

WE DEPEND ON THIRD PARTIES FOR TECHNOLOGY LICENSES, AND IF WE CANNOT OBTAIN
SATISFACTORY LICENSES OUR BUSINESS COULD SUFFER.

    Some technology used in our current software and software in development
includes technology licensed from third parties. These licenses generally
require us to pay royalties and to fulfill confidentiality obligations. The
termination of any such licenses, or the failure of the third party licensors to
adequately maintain or update their products, could result in delays in our
ability to implement solutions or in delays in the introduction of our new or
enhanced solutions while we search for similar technology from alternative
sources, if any, which could prove costly. Any need to implement alternative
technology could prove to be very expensive for us, and any delay in solution
implementation could result in a material adverse effect on the business,
financial condition and results of our operations. It may also be necessary or
desirable in the future to obtain additional licenses for use of third-party
products in our solutions, and there can be no assurance that we will be able to
do so on commercially reasonable terms, if at all.

WE MAY FACE LIABILITY CLAIMS RELATED TO THE USE OF OUR SOLUTIONS, INCLUDING
THOSE WHICH ARISE OUT OF THE USE OF OUR NEW ASP SOFTWARE HOSTING MODEL, AND THE
DEFENSE OF THESE CLAIMS COULD HAVE A NEGATIVE EFFECT ON OUR BUSINESS, RESULTS OF
OPERATIONS OR FINANCIAL CONDITION.

    As a result of our provision of solutions that address critical functions of
bank operations, we are exposed to possible liability claims from banks and
their customers. Although we have not experienced any material liability claims
to date, there can be no assurance that we will not become subject to such
claims in the future. A liability claim against us could have a material adverse
effect on our business, financial condition and results of operations.

    Our ASP software hosting model will require the storage and transmission of
sensitive business information of our customers electronically over the
Internet. The difficulty of securely storing confidential information
electronically has been a significant issue in conducting electronic commerce
and in carrying out banking operations over the Internet. The implementation of
our ASP software hosting model may require us to spend significant capital and
other resources to protect against the threat of security breaches or computer
viruses, or to alleviate problems caused by breaches or viruses. To the extent
that our activities or the activities of our customers require the storage and
transmission of confidential information, such as banking records or credit
information, security breaches and viruses could expose us to claims, litigation
or other possible liabilities. Our inability to prevent security breaches or
computer viruses could also cause our customers to lose confidence in our
solutions and terminate their relationships with us.

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<PAGE>
WE ARE SUBJECT TO CLAIMS AND LEGAL PROCEEDINGS FROM TIME TO TIME THAT COULD HAVE
A MATERIAL ADVERSE EFFECT ON US.

    We are subject to third party claims and are named as a defendant in legal
proceedings from time to time. We may be damaged as a result of an asserted
claim, and we may be required to incur substantial costs in reaching a
resolution of a claim. Any such claim may also divert our management resources.
A significant judgment against us in connection with any legal proceedings could
have a material adverse effect on our business, financial condition and results
of operations. Although we do not believe that the costs or liability that may
result from the resolution of currently pending claims or legal proceedings
against us will be material, there can be no assurance in this regard. See
"Legal Proceedings."

OUR STOCK PRICE HAS FLUCTUATED SIGNIFICANTLY AND, IN THE EVENT OF A DOWNTURN IN
OUR STOCK PRICE, WE COULD FACE SECURITIES CLASS ACTION LITIGATION.

    There has been significant volatility in the market price of our common
stock, as well as in the market price of securities of many companies in the
technology and emerging growth sectors. Factors which may have a significant
impact on the market price of our common stock include the following:

    - quarterly variations in our results of operations or results of operations
      of our competitors;

    - changes in earnings estimates or recommendations by securities analysts;

    - developments in our industry and in the banking industry;

    - general market and economic conditions; and

    - other factors, including factors unrelated to our operating performance or
      that of our competitors.

    We believe that factors such as quarterly fluctuations in financial results
or announcements by us, our competitors, banks and other bank industry
participants could cause the market price of our common stock to fluctuate
substantially. In addition, the stock market may experience extreme price and
volume fluctuations that often are unrelated to the operating performance of
specific companies. Market fluctuations or perceptions regarding the banking
industry and general economic or political conditions may adversely affect the
market price of the common stock. In the past, following declines in the market
price of a company's securities, securities class-action litigation often has
been instituted against that company. Litigation of this type, if instituted
against us, could result in substantial costs and a diversion of management's
attention and resources, which could have a material adverse effect on our
business, financial condition and results of operations.

WE FACE RISKS IN CONNECTION WITH THE EXPANSION OF OUR INTERNATIONAL OPERATIONS,
WHICH COULD HAVE A NEGATIVE IMPACT ON OUR BUSINESS, FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.

    We provide solutions to banks outside the United States, and a key component
of our growth strategy is to broaden our international operations. Our
international operations are subject to risks inherent in the conduct of
international business, including:

    - unexpected changes in regulatory requirements;

    - fluctuations in exchange rates and devaluations of foreign currencies;

    - export license requirements;

    - tariffs and other economic barriers to free trade;

    - restrictions on the export of critical technology;

                                       21
<PAGE>
    - difficulties in staffing international projects;

    - political and economic instability;

    - limited intellectual property protection;

    - longer accounts receivable cycles and difficulties in collecting payments;
      and

    - potentially adverse tax and labor consequences.

    Some of our international sales are denominated in local currencies, and the
impact of future exchange rate fluctuations on our financial condition and
results of operations cannot be accurately predicted. There can be no assurance
that fluctuations in currency exchange rates in the future will not have a
material adverse effect on revenue from international sales and thus our
business, financial condition and results of operations.

OUR USE OF INDEPENDENT CONTRACTORS EXPOSES US TO LEGAL AND TAX RISKS WHICH, IF
DETERMINED AGAINST US, COULD ADVERSELY AFFECT OUR BUSINESS AND FINANCIAL
CONDITION.

    We often provide solutions through independent contractors. As we do not
treat these individuals as our employees, we do not pay federal or state
employment taxes or withhold federal or state employment or income taxes from
compensation paid to such persons. We also do not consider these persons
eligible for coverage or benefits provided under our employee benefit plans or
include these persons when evaluating the compliance of our employee benefit
plans with the requirements of the Internal Revenue Code. Additionally, we do
not treat such persons as employees for purposes of worker's compensation, labor
and employment, or other legal purposes. From time to time, we may face legal
challenges to the appropriateness of the characterization of these individuals
as independent contractors from governmental agencies, the independent
contractors themselves or some other person or entity. The determination of such
a legal challenge generally will be determined on a case-by-case basis in view
of the particular facts of each case. The fact specific nature of this
determination raises the risk that from time to time an individual that we have
characterized as an independent contractor will be reclassified as an employee
for these or other legal purposes.

    In the event persons engaged by us as independent contractors are determined
to be employees by the Internal Revenue Service or any applicable taxing
authority, we would be required to pay applicable federal and state employment
taxes and withhold income taxes with respect to these individuals and could
become liable for amounts required to be paid or withheld in prior periods and
for costs, penalties and interest thereon. In addition, we could be required to
include these individuals in our employee benefit plans on a retroactive, as
well as a current, basis. Furthermore, depending on the party that makes the
legal challenge and the remedy sought, we could be subject to other liabilities
sought by governmental authorities or private persons. During the calendar year
2000, we used approximately 75 independent contractors. Any challenge by the
IRS, state authorities or private litigants resulting in a determination that
these individuals are employees could have a material adverse effect on our
business, financial condition and results of operations.

    From time to time new legislation may be proposed to establish more
stringent requirements for the engagement of independent contractors. We are
unable to assess the likelihood that any such legislation will be enacted.
Further, our ability to retain independent contractors could in the future
deteriorate, due in part to the lower commitment level that these contractors
have to us.

GOVERNMENT REGULATION AND LEGAL UNCERTAINTIES COULD FORCE US TO CHANGE OUR
OPERATIONS, WHICH COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR ABILITY TO
MAINTAIN OUR CURRENT BUSINESS.

    Our primary customers are banks. Although the solutions that we currently
offer have not been subject to any material, specific government regulation, the
banking industry is regulated heavily, and

                                       22
<PAGE>
we expect that such regulation will affect the relative demand for our
solutions. While we are not directly subject to federal or state regulations
specifically applicable to financial institutions, such as banks, thrifts and
credit unions, the Federal Deposit Insurance Corporation, the National Credit
Union Administration, the Office of Thrift Supervision, the Office of the
Comptroller of the Currency, and various state regulatory authorities typically
assert the right to observe the operations of companies to which certain
functions of financial institutions (such as data processing) are outsourced.
These regulators may from time to time also claim the right to observe the
operations of companies like us that provide software to financial institutions.
In addition, financial institutions with whom we do business may from time to
time require, by contract or otherwise, that evaluations of our internal
controls be performed by independent auditors or by the financial institutions
themselves. There can be no assurance that federal, state or foreign
governmental authorities will not adopt new regulations, and any adoption of new
regulations could require us to modify our current or future solutions. The
adoption of laws or regulations affecting us or our customers' businesses could
reduce our growth rate or could otherwise have a material adverse effect on our
business, financial condition and results of operations.

ANTI-TAKEOVER PROVISIONS IN OUR CHARTER DOCUMENTS AND UNDER DELAWARE LAW COULD
PREVENT OR DELAY POTENTIAL ACQUISITION BIDS, INCLUDING BIDS WHICH MAY BE
BENEFICIAL TO OUR STOCKHOLDERS.

    Our certificate of incorporation and bylaws contain provisions that may have
the effect of delaying, deterring or preventing a potential takeover that our
stockholders may consider to be in their best interests. The certificate and
bylaws provide for a classified board of directors serving staggered terms of
three years, prevent stockholders from calling a special meeting of stockholders
and prohibit stockholder action by written consent. The certificate also
authorizes only the board of directors to fill vacancies, including
newly-created directorships, and states that our directors may be removed only
for cause and only by the affirmative vote of holders of at least two-thirds of
the outstanding shares of the voting stock, voting together as a single class.
In addition, our board of directors may issue up to 2,000,000 shares of
preferred stock in one or more series and can fix the rights, preferences,
privileges and restrictions thereof without any further vote or action by our
stockholders. The issuance of shares of preferred stock may prevent or delay a
change of control transaction.

    In addition, Section 203 of the Delaware General Corporation Law, which is
applicable to us, restricts certain business combinations with interested
stockholders even if such a combination would be beneficial to stockholders.
These provisions may inhibit a non-negotiated merger or other business
combination. The anti-takeover provisions of the Delaware General Corporation
Law prevent us from engaging in a "business combination" with any "interested
stockholder" for three years following the date that the stockholder became an
interested stockholder. For purposes of Delaware law, a "business combination"
includes a merger or consolidation involving us and the interested stockholder
and the sale of more than 10% of our assets. In general, Delaware law defines an
"interested stockholder" as any entity or person beneficially owning more than
15% of the outstanding voting stock of a corporation and any entity or person
affiliated with or controlling or controlled by such entity or person. Under
Delaware law, a Delaware corporation may opt out of the anti-takeover
provisions. We do not intend to opt out of these anti-takeover provisions.

    The foregoing provisions could discourage potential acquisition proposals
and could delay or prevent a change in control transaction. They could also
discourage others from making tender offers for our shares. As a result, these
provisions may prevent the market price of our common stock from reflecting the
effects of actual or rumored takeover attempts. These provisions may also
prevent significant changes in our board of directors and management.

                                       23
<PAGE>
WE CANNOT PREDICT EVERY EVENT AND CIRCUMSTANCE WHICH MAY IMPACT OUR BUSINESS
AND, THEREFORE, THE RISKS AND UNCERTAINTIES DISCUSSED ABOVE MAY NOT BE THE ONLY
ONES YOU SHOULD CONSIDER.

    The risks and uncertainties discussed above are in addition to those that
apply to most businesses generally. In addition, as we continue to grow our
business, we may encounter other risks of which we are not aware at this time.
These additional risks may cause serious damage to our business in the future,
the impact of which we cannot estimate at this time.

ITEM 2. PROPERTIES.

    Our principal executive office is a leased facility with approximately
72,400 square feet of space in Dallas, Texas. The lease agreement for this space
expires on May 31, 2010. We also lease approximately 20,600 square feet in
Atlanta, Georgia pursuant to a lease agreement which expires on March 1, 2003,
approximately 3,300 square feet in Kansas City, Missouri, pursuant to a lease
agreement which expires February 28, 2002, approximately 5,300 square feet in
Bedford, Texas pursuant to a lease agreement which expires September 30, 2002,
approximately 3,000 square feet in Phoenix, Arizona, pursuant to a lease
agreement which expires August 31, 2001, approximately 6,100 square feet in
Toronto, Canada, pursuant to a lease agreement which expires November 30, 2005
and approximately 3,100 square feet in Reading, England, pursuant to a lease
agreement which expires September 4, 2004. We believe that our facilities are
well maintained and in good operating condition and are adequate for our present
and anticipated levels of operations.

ITEM 3. LEGAL PROCEEDINGS.

    We began to develop with Knowledge Based Systems, Inc., or KBSI, our
CashForecaster suite of products in 1996 pursuant to a development contract.
KBSI provided the algorithm-based components for these products. This contract
was the subject of a lawsuit filed in September 2000 and was pending in the
United States District Court for the Northern District of Texas. On April 9,
2001, Carreker entered into a settlement agreement with KBSI and on April 11,
2001 all legal proceedings were dismissed. This settlement will not have a
material adverse effect on our business, financial position or results of
operations.

    We are subject from time to time to certain claims and legal proceedings
arising in the ordinary course of our business. Although we do not believe that
the cost or liability that may result from the resolution of currently pending
claims or legal proceedings against us will be material, there can be no
assurance in this regard.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

    No matter was submitted to a vote of our stockholders during the quarterly
period ended January 31, 2001.

                                       24
<PAGE>
                                    PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

    Our Common Stock has traded on the NASDAQ National Market under the symbol
"CANI" since May 20, 1998, the date of our initial public offering. At January
31, 2001, there were approximately 74 record holders of our Common Stock,
although we believe that the number of beneficial owners of our Common Stock is
substantially greater. The table below sets forth for the fiscal quarters
indicated the high and low closing sale prices for the Common Stock, as reported
by the NASDAQ National Market.

<TABLE>
<CAPTION>
                                                                HIGH       LOW
                                                              --------   --------
<S>                                                           <C>        <C>
FISCAL YEAR ENDING JANUARY 31, 2001
    January 31, 2001........................................   $39.50     $18.25
    October 31, 2000........................................    20.19      10.19
    July 31, 2000...........................................    12.06       9.00
    April 30, 2000..........................................    14.00       8.38

FISCAL YEAR ENDING JANUARY 31, 2000
    January 31, 2000........................................   $ 9.56     $ 6.25
    October 31, 1999........................................     8.25       5.19
    July 31, 1999...........................................     9.50       5.88
    April 30, 1999..........................................     7.81       4.00
</TABLE>

    We have not paid a cash dividend on shares of our common stock since our
incorporation. We currently intend to retain our earnings in the future to
support operations and finance our growth and, therefore, do not intend to pay
cash dividends on the common stock in the foreseeable future. Any payment of
cash dividends in the future will be at the discretion of the board of directors
and subject to some limitations under the Delaware General Corporation Law and
will depend upon factors such as our earning levels, capital requirements,
financial condition and other factors deemed relevant by the board of directors.

                                       25
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA.

                      SELECTED CONSOLIDATED FINANCIAL DATA

    The following consolidated statements of operations data for each of the
three years in the period ended January 31, 2001 and the consolidated balance
sheet data as of January 31, 2001 and 2000 have been derived from our audited
consolidated financial statements which are included elsewhere in this Report.
The consolidated balance sheet data as of January 31, 1999, 1998 and 1997, and
the consolidated statement of operations data for the years ended January 31,
1998 and 1997, have been derived from our audited consolidated financial
statements not included in this Report. The selected financial data set forth
below should be read in conjunction with "Management's Discussion and Analysis
of Financial Condition and Results of Operations" and the Consolidated Financial
Statements and Notes thereto appearing elsewhere in this Report.

<TABLE>
<CAPTION>
                                                                     YEAR ENDED JANUARY 31,
                                                      ----------------------------------------------------
                                                        2001       2000       1999       1998       1997
                                                      --------   --------   --------   --------   --------
                                                             (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                                   <C>        <C>        <C>        <C>        <C>
STATEMENT OF OPERATIONS DATA:
Revenues:
  Consulting fees...................................  $ 71,715   $49,725    $26,328    $21,314    $14,407
  Software license fees.............................    18,030    13,727     16,327     11,223      6,957
  Software maintenance fees.........................    11,223     6,985      5,031      4,274      3,185
  Software implementation fees......................     9,298     5,116      6,557      4,094      3,249
  Hardware and other fees...........................        --       267        774      1,876      2,737
                                                      --------   -------    -------    -------    -------
    Total revenues..................................   110,266    75,820     55,017     42,781     30,535
Cost of revenues:
  Consulting fees...................................    38,185    27,574     16,150     12,394      8,794
  Software license fees.............................     5,529     1,766      1,216      1,412      1,307
  Software maintenance fees.........................     2,897     2,511      2,387      1,923      1,780
  Software implementation fees......................     5,653     2,381      3,862      4,156      1,808
  Hardware and other fees...........................        --       208        560      1,556      1,960
                                                      --------   -------    -------    -------    -------
    Total cost of revenues..........................    52,264    34,440     24,175     21,441     15,649
                                                      --------   -------    -------    -------    -------
Gross profit........................................    58,002    41,380     30,842     21,340     14,886
                                                      --------   -------    -------    -------    -------
Operating costs and expenses:
  Selling, general and administrative...............    31,743    25,333     18,444     12,777      9,296
  Research and development..........................     6,055     4,813      4,763      3,610      1,318
  Merger related costs..............................        --        --        485         --      1,423
                                                      --------   -------    -------    -------    -------
    Total operating costs and expenses..............    37,798    30,146     23,692     16,387     12,037
                                                      --------   -------    -------    -------    -------
Income from operations..............................    20,204    11,234      7,150      4,953      2,849
Other income (expense)..............................     1,722     1,100        925         79       (375)
                                                      --------   -------    -------    -------    -------
Income before provision for income taxes............    21,926    12,334      8,075      5,032      2,474
Provision for income taxes (1)......................     8,332     4,440      2,903      2,027      1,114
                                                      --------   -------    -------    -------    -------
Net income..........................................  $ 13,594   $ 7,894    $ 5,172    $ 3,005    $ 1,360
                                                      ========   =======    =======    =======    =======
Basic earnings per share (2)........................  $   0.70   $  0.43    $  0.32    $  0.24    $  0.11
                                                      ========   =======    =======    =======    =======
Diluted earnings per share (2)......................  $   0.67   $  0.42    $  0.30    $  0.21    $  0.10
                                                      ========   =======    =======    =======    =======
Shares used in computing basic earnings per share
  (2)...............................................    19,305    18,456     16,224     12,717     12,154
                                                      ========   =======    =======    =======    =======
Shares used in computing diluted earnings per share
  (2)...............................................    20,429    18,980     17,504     14,484     13,118
                                                      ========   =======    =======    =======    =======
</TABLE>

                                       26
<PAGE>

<TABLE>
<CAPTION>
                                                                     YEAR ENDED JANUARY 31,
                                                      ----------------------------------------------------
                                                        2001       2000       1999       1998       1997
                                                      --------   --------   --------   --------   --------
                                                             (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                                   <C>        <C>        <C>        <C>        <C>
BALANCE SHEET DATA:
  Cash, cash equivalents and short-term
    investments.....................................  $ 78,505   $39,536    $20,701    $ 2,485    $ 3,895
  Working capital...................................   111,755    56,530     52,117      7,529      5,882
  Total assets......................................   148,074    82,823     68,736     21,486     17,569
  Total stockholders' equity........................   125,058    65,406     57,131      8,803      5,571
</TABLE>

------------------------

(1) Prior to our acquisition of Antinori Software, Inc. ("ASI") on January 31,
    1997, ASI had elected to be treated as an S corporation for federal and
    state income tax purposes. The provision for income tax included as a
    component of net income for the fiscal years prior to the fiscal year ended
    January 31, 1998 reflects a pro forma tax provision which includes estimated
    federal and state income taxes (by applying statutory income tax rates) that
    would have been incurred if ASI had been subject to taxation as a C
    corporation.

(2) See Notes 2 and 8 of Notes to Consolidated Financial Statements for
    information concerning the calculation of basic and diluted net earnings per
    share.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.

    THE FOLLOWING DISCUSSION CONTAINS FORWARD LOOKING STATEMENTS THAT INVOLVE
RISKS AND UNCERTAINTIES. OUR ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE
DISCUSSED IN THE FORWARD LOOKING STATEMENTS AS A RESULT OF VARIOUS FACTORS,
INCLUDING THOSE SET FORTH UNDER "RISK FACTORS," ELSEWHERE IN THIS REPORT OR IN
THE INFORMATION INCORPORATED BY REFERENCE IN THIS REPORT. YOU SHOULD READ THE
FOLLOWING DISCUSSION AND ANALYSIS IN CONJUNCTION WITH "SELECTED CONSOLIDATED
FINANCIAL DATA" INCLUDED IN THIS REPORT, AS WELL AS OUR CONSOLIDATED FINANCIAL
STATEMENTS AND RELATED NOTES THERETO APPEARING ELSEWHERE IN THIS REPORT.

    OUR FISCAL YEAR ENDS ON JANUARY 31. REFERENCES CONTAINED IN THIS REPORT TO A
GIVEN FISCAL YEAR REFER TO THE TWELVE-MONTH PERIOD ENDED JANUARY 31 OF THE
SUCCEEDING YEAR. FOR EXAMPLE, OUR FISCAL YEAR ENDED JANUARY 31, 2001 IS REFERRED
TO IN THIS REPORT AS "FISCAL 2000."

OVERVIEW

    We are a leading provider of integrated consulting and software solutions
that enable banks to identify and implement e-finance solutions, increase their
revenues, reduce their costs and enhance their delivery of customer services. We
were founded in 1978 to provide consulting services to banks, and we
subsequently integrated software products into our banking solutions. With our
acquisition of Antinori Software, Inc. in 1997, we were able to significantly
enhance our portfolio of software products. Additionally, we acquired Genisys
Operations, Inc. in January 1999, Automated Integrated Solutions, Inc. in
February 2000 and X-Port Software, Inc. in May 2000, each of which provided
incremental added value to our product offerings. We accounted for the
acquisitions of Antinori and Genisys as a pooling of interests, and accordingly
we have restated our consolidated financial statements and the related notes, as
well as all other consolidated financial and statistical data presented in this
report, to include the financial position and results of operations of Antinori
Software, Inc. and Genisys for all periods prior to and including the period
ended January 31, 2001. The acquisitions of Automated Integrated Solutions and
X-Port Software were accounted for as purchases.

    We derive our revenues from consulting fees, software license fees, software
maintenance fees, software implementation fees and hardware and other fees.
While many customer contracts provide for both the performance of consulting
services and the license of related software, some customer contracts require
only the performance of consulting services or only a software license (and, at
the

                                       27
<PAGE>
election of the customer, related implementation services and/or annual software
maintenance services). We enter into these contracts with our customers on a
project-by-project basis.

    We seek to establish long-term relationships with our customers that will
lead to on-going projects utilizing our solutions. We are typically retained to
perform one or more discrete projects for a customer, and we use these
opportunities to extend our solutions into additional areas of the customer's
operations. To this end, a significant portion of our current revenues is
derived from customers who were major customers in prior years, and we are
therefore dependent to a significant degree on our ability to maintain our
existing relationships with these customers.

    CONSULTING FEES.  We employ three primary pricing methods in connection with
our delivery of consulting services. First, we may price our delivery of
consulting services on the basis of time and materials, in which case the
customer is charged agreed upon daily rates for services performed and
out-of-pocket expenses. In this case, we are generally paid fees and related
amounts on a monthly basis, and we recognize revenues as the services are
performed. Second, we may deliver consulting services on a fixed-price basis. In
this case, we are paid on a monthly basis or pursuant to an agreed upon payment
schedule, and we recognize revenues on a percentage-of-completion basis. We
recognize any anticipated losses on a fixed-price contract when estimable.
Third, we may deliver consulting services pursuant to a value-pricing contract
with the customer. In this case, we are paid, on an agreed upon basis with the
customer, either a specified percentage of (1) the projected increased revenues
and/or decreased costs that are expected to be derived by the customer generally
over a period of up to twelve months following implementation of our solution or
(2) the actual increased revenues and/or decreased costs experienced by the
customer generally over a period of up to twelve months following implementation
of our solution, subject in either case to a maximum, if any is agreed to, on
the total amount of payments to be made to us. These contracts typically provide
for us to receive a percentage of the projected or actual increased revenues
and/or decreased costs, with payments to be made to us pursuant to an agreed
upon schedule ranging from one to twelve months in length. We recognize revenues
generated from consulting services in connection with value-priced contracts
based upon projected results only upon completion of all services and agreement
upon the actual fee to be paid (even though billings for these services may be
delayed by mutual agreement for periods not to exceed twelve months). When fees
are to be paid based on a percentage of actual revenues and/or savings, we
recognize revenues only upon completion of all services and as the amounts of
actual revenues or savings are confirmed by the customer.

    We typically must first commit time and resources to develop projections
associated with value-pricing contracts before a bank will commit to purchase
our solutions, and we therefore assume the risk of making these commitments with
no assurance that the bank will purchase the solutions. We expect that
value-pricing contracts will account for an increasing percentage of our
revenues in the future. In addition, as a consequence of the shift toward the
use of more value-pricing contracts and due to the revenue recognition policy
associated with those contracts, our results of operations will likely fluctuate
significantly from period to period.

    Regardless of the pricing method employed by us in a given contract, we are
typically reimbursed on a monthly basis for out-of-pocket expenses incurred on
behalf of our customers, which expenses are netted against reimbursements for
consolidated financial statement reporting purposes.

    SOFTWARE LICENSE FEES.  In the event that a software license is sold either
together with consulting services or on a stand-alone basis, we are usually paid
software license fees in one or more installments, as provided in the customer's
contract. We recognize software license revenues in accordance with the American
Institute of Certified Public Accountants' Statement of Position 97-2, "Software
Revenue Recognition." Under SOP 97-2, we recognize software license revenues
upon execution of a contract and delivery of software, provided that the license
fee is fixed and

                                       28
<PAGE>
determinable, no significant production, modification or customization of the
software is required, and collection is considered probable by management.

    Although substantially all of our current software licenses provide for a
fixed price license fee, some of our payment electronification licenses instead
provide for usage fees, in which case fees are recognized and due on a monthly
basis. Software licenses that include a usage license fee have a fixed term. We
expect to increase this practice of charging license fees on a usage basis in
the future as part of our strategy to increase recurring revenues and smooth our
period-to-period revenues.

    SOFTWARE MAINTENANCE FEES.  In connection with our sale of a software
license, a customer may elect to purchase software maintenance services. Most of
the customers that purchase software licenses from us also purchase software
maintenance services, which typically are renewed annually. We charge an annual
maintenance fee, which is typically a percentage of the initial software license
fee. The annual maintenance fee generally is paid to us at the beginning of the
maintenance period, and we recognize these revenues ratably over the term of the
related contract.

    SOFTWARE IMPLEMENTATION FEES.  In connection with our sale of a software
license, a customer may elect to purchase software implementation services and
other software support services. Most of the customers that purchase software
licenses from us also purchase software implementation services. We price our
implementation services on a time-and-materials or on a fixed-price basis, and
we recognize the related revenues as services are performed.

    HARDWARE AND OTHER FEES.  We sell our computer hardware and supplies in
tandem with the delivery of related services or software and on the basis of our
cost plus a specified percentage. We recognize revenues upon shipment of the
hardware to the customer. We sell hardware at the request of our customers but
do not consider hardware sales to be a meaningful part of our business.

    In accordance with generally accepted accounting principles, we capitalize
software development costs incurred in developing a product once technological
feasibility of the product has been established. These capitalized software
development costs also include amounts paid for software that is purchased and
that has reached technological feasibility. We amortize capitalized software
development costs on the basis of each product's projected revenues or on a
straight-line basis over the remaining economic life of the product, which is
generally three to four years. At January 31, 2001, our capitalized software
development costs, net of accumulated amortization, were $10.2 million.

                                       29
<PAGE>
RESULTS OF OPERATIONS

    The following discussion of our results of operations for the fiscal years
ended January 31, 2001, 2000 and 1999 is based upon data derived from the
statements of operations contained in our audited Consolidated Financial
Statements appearing elsewhere in this Report. The following table sets forth
this data as a percentage of total revenues.

<TABLE>
<CAPTION>
                                                                   YEAR ENDED JANUARY 31,
                                                              --------------------------------
                                                                2001        2000        1999
                                                              --------    --------    --------
<S>                                                           <C>         <C>         <C>
Revenues:
  Consulting fees...........................................    65.0%       65.6%       47.9%
  Software license fees.....................................    16.4        18.1        29.7
  Software maintenance fees.................................    10.2         9.2         9.1
  Software implementation fees..............................     8.4         6.7        11.9
  Hardware and other fees...................................      --          .4         1.4
                                                               -----       -----       -----
    Total revenues..........................................   100.0       100.0       100.0
                                                               -----       -----       -----
Cost of revenues:
  Consulting fees...........................................    34.6        36.4        29.4
  Software license fees.....................................     5.0         2.3         2.2
  Software maintenance fees.................................     2.7         3.3         4.3
  Software implementation fees..............................     5.1         3.1         7.0
  Hardware and other fees...................................      --          .3         1.0
                                                               -----       -----       -----
    Total cost of revenues..................................    47.4        45.4        43.9
                                                               -----       -----       -----
Gross profit................................................    52.6        54.6        56.1
                                                               -----       -----       -----
Operating costs and expenses:
  Selling, general and administrative.......................    28.8        33.4        33.5
  Research and development..................................     5.5         6.4         8.7
  Merger related costs......................................      --          --          .9
                                                               -----       -----       -----
    Total operating costs and expenses......................    34.3        39.8        43.1
                                                               -----       -----       -----
Income from operations......................................    18.3        14.8        13.0
Other income................................................     1.6         1.5         1.7
                                                               -----       -----       -----
Income before provision for income taxes....................    19.9        16.3        14.7
Provision for income taxes..................................     7.6         5.9         5.3
                                                               -----       -----       -----
Net income..................................................    12.3%       10.4%        9.4%
                                                               =====       =====       =====
</TABLE>

YEAR ENDED JANUARY 31, 2001 (FISCAL 2000) COMPARED TO YEAR ENDED JANUARY 31,
  2000 (FISCAL 1999)

    REVENUES.  Our total revenues increased by 45.4% to $110.3 million in fiscal
2000 from $75.8 million in fiscal 1999. The increase was primarily attributable
to growth in revenues from consulting fees. Revenues from consulting fees
increased by 44.2% to $71.7 million in fiscal 2000 from $49.7 million in fiscal
1999. Consulting fees have increased primarily as a result of continued demand
for value-priced Revenue Enhancement Services and Enterprise Solutions. Revenue
Enhancement revenues increased 101.6% to $40.0 million in fiscal 2000 from
$19.8 million in fiscal 1999. Enterprise Solutions increased 34.9% to
$27.7 million in fiscal 2000 from $20.6 million in fiscal 1999. Value-priced
engagements have a favorable reception from customers in the United States and
in our foreign markets. Revenues related to value-priced opportunities tend to
fluctuate period to period and are likely to fluctuate in future periods.
Software license fees increased 31.3% to $18.0 million in fiscal 2000 from
$13.7 million in fiscal 1999. This increase was precipitated by increased demand
for our

                                       30
<PAGE>
FraudLink and eXceptions solutions. The FraudLink solution has been particularly
successful in both Australia and the United Kingdom. Software maintenance fees
increased 60.7% to $11.2 million in fiscal 2000 from $7.0 million in fiscal
1999. Increases in software maintenance fees have been driven by increased
software license revenue along with annual rate increases. Additionally,
increases in software maintenance fees have been driven by the acquisition of
new software products that were already subject to annual maintenance contracts.
Software implementation fees increased 81.7% to $9.3 million in fiscal 2000 from
$5.1 million in fiscal 1999. The increase in software implementation fees have
been driven by increased software licensing activity resulting in the growth in
the number of customers requiring these services. There were no revenues from
Hardware for fiscal 2000 compared to $267,000 during fiscal 1999. We sell
hardware at the request of our customers, but do not consider hardware sales to
be a meaningful part of our business.

    COST OF REVENUES.  Cost of revenues generally consists of personnel costs,
amortization of capitalized software development costs, and third-party
royalties. Total cost of revenues increased by 51.8% to $52.3 million in fiscal
2000 from $34.4 million in fiscal 1999. This increase resulted primarily from an
increase in the cost of revenue for consulting fees, software license fees and
software implementation fees. Cost of revenues for consulting fees increased by
38.5% to $38.2 million in fiscal 2000 from $27.6 million in fiscal 1999. The
increase was primarily the result of increases in personnel and personnel
related costs to support the growth of the Revenue Enhancement and Enterprise
Solutions practices. Cost of revenues for software licenses increased
$3.7 million to $5.5 million in fiscal 2000 from $1.8 million in fiscal 1999.
The increase was primarily due to increased amortization of capitalized software
costs along with increased software royalties expense. Cost of revenues for
software implementation increased 137.4% to $5.7 million in fiscal 2000 from
$2.4 million in fiscal 1999. The increase was primarily due to an increase in
personnel cost associated with implementation, training and customer support
related to these engagements. Total cost of revenues as a percentage of total
revenues increased to 47.4% in fiscal 2000 from 45.4% in fiscal 1999, primarily
as a result of increased amortization of capitalized software costs and
third-party royalty expense along with increased personnel costs associated with
software implementations.

    SELLING, GENERAL AND ADMINISTRATIVE.  Selling, general and administrative
expenses generally consist of personnel costs associated with selling,
marketing, general management and software management, as well as fees for
professional services and other related costs. Selling, general and
administrative expenses increased by 25.3% to $31.7 million in fiscal 2000 from
$25.3 million in fiscal 1999. The increase in these expenses primarily reflected
the addition of sales, management and administrative staff during fiscal 2000
associated with our growth. As a percentage of revenues, selling, general and
administrative expenses decreased to 28.8% in fiscal 2000 from 33.4% in fiscal
1999.

    RESEARCH AND DEVELOPMENT.  Research and development expenses generally
consist of personnel and related costs of developing solutions. In certain
instances we have contracted with a third-party to develop our solutions.
Research and development expenses increased to $6.1 million in fiscal 2000
compared to $4.8 million in fiscal 1999. Research and development expenses as a
percentage of revenues decreased to 5.5% in fiscal 2000 from 6.4% in fiscal
1999. Research and development expenses as a percentage of non-consulting
revenue decreased to 15.7% in fiscal 2000 from 18.4% in fiscal 1999.

    OTHER INCOME.  Other income increased to $1.7 million in fiscal 2000 from
$1.1 million in fiscal 1999. Other income increased as a result of higher
earnings on cash and cash equivalents, and short-term investments.

    PROVISION FOR INCOME TAXES.  Income tax provision increased to $8.3 million
in fiscal 2000 from $4.4 million in fiscal 1999, reflecting an effective tax
rate of 38% and 36% for fiscal 2000 and fiscal 1999, respectively. Increases in
the estimated annual effective rate resulted from increased state taxes and also
increased non-deductibility of certain expenses.

                                       31
<PAGE>
YEAR ENDED JANUARY 31, 2000 (FISCAL 1999) COMPARED TO YEAR ENDED JANUARY 31,
  1999 (FISCAL 1998)

    REVENUES.  Our total revenues increased by 37.8% to $75.8 million in fiscal
1999 from $55.0 million in fiscal 1998. The increase was primarily attributable
to growth in revenues from consulting services. Revenues from consulting
services increased by 88.9% to $49.7 million in fiscal 1999 from $26.3 million
in fiscal 1998. This increase reflected the startup of our Enterprise Solutions
consulting practice and continued growth of our value priced Revenue Enhancement
practice which generated $9.6 million and $9.4 million, respectively, of the
$23.4 million increase as well as continued demand for our services. Software
license revenues decreased 15.9% to $13.7 million in fiscal 1999 from
$16.3 million in fiscal 1998. Software maintenance revenue increased 37.1% to
$6.9 million in fiscal 1999 from $5.0 million in fiscal 1998. Software
maintenance growth resulted from growth in licenses sold in the prior fiscal
year, rate increases under existing contracts and from renewals of previously
terminated agreements due to Year 2000 concerns by clients. Software
implementation revenues decreased by 22.0% to $5.1 million in fiscal 1999 from
$6.6 million in fiscal 1998. Decreases in software license revenues were
precipitated by customer decisions to delay software purchases due to concerns
over Year 2000, and delayed purchase decisions due to our announced roll out
plan for our new research and adjustment product. Decreases in software
implementation revenue resulted from decreases in license sales. Hardware sales
decreased 65.5% to $267,000 in fiscal 1999 from $774,000 in fiscal 1998. This
decrease was primarily due to reduced requests by customers for bundled hardware
and license deliveries.

    COST OF REVENUES.  Cost of revenues generally consists of personnel costs,
amortization of capitalized software development costs, third-party royalties
and cost of hardware delivered. Total cost of revenues increased by 42.5% to
$34.4 million in fiscal 1999 from $24.2 million in fiscal 1998. This increase
resulted primarily from an increase in the cost of revenues in consulting
services and software maintenance. Cost of revenues for consulting services
increased by 70.7% to $27.6 million in fiscal 1999 from $16.2 million in fiscal
1998, which was a result primarily of increases in personnel to support the
growth of the Enterprise Solutions consulting practice. Cost of revenues for
software licenses increased by 45.2% to $1.8 million in fiscal 1999 from
$1.2 million in fiscal 1998. Increases in cost of license fees resulted from an
increase of 162.5% in amortization costs, to $1.2 million in fiscal 1999 from
$453,000 in fiscal 1998, generated from previously capitalized software. Cost of
revenues of software maintenance increased by 5.2% to $2.5 million in fiscal
1999 from $2.4 million in fiscal 1998. Cost of revenues for software
implementation decreased 38.3% to $2.4 million in fiscal 1999 from $3.9 million
in fiscal 1998. Decreases in implementation costs resulted principally from
lower staffing levels to accomplish fewer implementations sold. Cost of revenues
for hardware sales decreased 62.9% to $208,000 in fiscal 1999 from $560,000 in
fiscal 1998 due to reduced hardware sales levels. Total cost of revenues as a
percentage of total revenues increased to 45.4% in fiscal 1999 from 43.9% in
fiscal 1998, as a result of increases in staff to facilitate growth in
consulting efforts and increases in software amortization costs. Cost of
revenues for consulting and management service fees as a percentage of revenues
from consulting fees declined to 55.5% in fiscal 1999 from 61.3% in fiscal 1998
due to improved margins on consulting efforts and value priced engagements.

    SELLING, GENERAL AND ADMINISTRATIVE.  Selling, general and administrative
expenses generally consist of personnel costs associated with selling,
marketing, general management and software management, as well as fees for
professional services and other related costs. Selling, general and
administrative expenses increased by 37.4% to $25.3 million in fiscal 1999 from
$18.4 million in fiscal 1998. The increase in these expenses primarily reflected
the addition of sales and management staff during fiscal 1999 associated with
our growth. As a percentage of revenues, selling, general and administrative
expenses decreased to 33.4% in fiscal 1999 from 33.5% in fiscal 1998.

    RESEARCH AND DEVELOPMENT.  Research and development expenses generally
consist of personnel and related costs of developing solutions. In certain
instances we have contracted with a third-party to

                                       32
<PAGE>
develop our solutions. Research and development expenses remained constant at
$4.8 million in fiscal 1999 compared to $4.8 million in fiscal 1998. Research
and development expenses as a percentage of revenues decreased to 6.4% in fiscal
1999 from 8.7% in fiscal 1998. Research and development expenses as a percentage
of non-consulting revenue increased to 18.4% in fiscal 1999 from 16.6% in fiscal
1998.

    OTHER INCOME.  Other income increased to $1.1 million in fiscal 1999 from
$925,000 in fiscal 1998. Other income increased as a result of earnings on cash
and cash equivalents.

    PROVISION FOR INCOME TAXES.  Income tax provision increased to $4.4 million
in fiscal 1999 from $2.9 million in fiscal 1998, reflecting an effective tax
rate of 36% for fiscal 1999 and fiscal 1998.

                                       33
<PAGE>
SELECTED CONSOLIDATED QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

    The following table sets forth unaudited quarterly data for each of our last
eight quarters ended January 31, 2001. The data has been derived from our
unaudited consolidated financial statements that, in management's opinion,
include all adjustments (consisting only of normal recurring adjustments)
necessary for a fair presentation of this information when read in conjunction
with the Consolidated Financial Statements and Notes thereto appearing elsewhere
in this Report. We believe that quarter-to-quarter comparisons of our financial
results are not necessarily meaningful and should not be relied upon as any
indication of future performance.

<TABLE>
<CAPTION>
                                                                             THREE MONTHS ENDED
                                            -------------------------------------------------------------------------------------
                                            JAN 31,    OCT 31,    JULY 31,   APR 30,    JAN 31,    OCT 31,    JULY 31,   APR 30,
                                              2001       2000       2000       2000       2000       1999       1999       1999
                                            --------   --------   --------   --------   --------   --------   --------   --------
                                                                    (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                         <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>
STATEMENT OF OPERATIONS DATA:
Revenues:
Consulting fees...........................  $19,219    $17,620    $21,766    $13,110    $13,290    $15,072    $13,039    $ 8,324
Software license fees.....................    6,273      5,712      1,872      4,173      5,180      2,692      2,762      3,093
Software maintenance fees.................    3,258      2,970      2,713      2,282      2,042      1,677      1,764      1,502
Software implementation fees..............    2,037      2,455      2,311      2,495      1,050      1,391      1,232      1,443
Hardware and other fees...................       --         --         --         --         36         34         75        122
                                            -------    -------    -------    -------    -------    -------    -------    -------
  Total revenues..........................   30,787     28,757     28,662     22,060     21,598     20,866     18,872     14,484

Cost of revenues:
Consulting fees...........................   10,042      9,658      9,912      8,573      8,097      8,044      6,162      5,271
Software license fees.....................    1,520      1,602      1,264      1,143        524        394        380        468
Software maintenance fees.................      764        800        798        535        487        689        671        664
Software implementation fees..............    1,614      1,583      1,239      1,217        385        542        808        646
Hardware and other fees...................       --         --         --         --         24         23         60        101
                                            -------    -------    -------    -------    -------    -------    -------    -------
  Total cost of revenues..................   13,940     13,643     13,213     11,468      9,517      9,692      8,081      7,150
                                            -------    -------    -------    -------    -------    -------    -------    -------
Gross profit..............................   16,847     15,114     15,449     10,592     12,081     11,174     10,791      7,334
                                            -------    -------    -------    -------    -------    -------    -------    -------
Operating costs and expenses:
Selling, general and administrative.......    7,508      7,816      8,821      7,598      7,494      6,907      6,114      4,818
Research and development..................    2,001      1,625      1,445        984        826      1,313      1,356      1,318
                                            -------    -------    -------    -------    -------    -------    -------    -------
  Total operating costs and expenses......    9,509      9,441     10,266      8,582      8,320      8,220      7,470      6,136
                                            -------    -------    -------    -------    -------    -------    -------    -------
Income from operations....................    7,338      5,673      5,183      2,010      3,761      2,954      3,321      1,198
Other income (expense)....................      646        330        374        372        320        223        316        241
                                            -------    -------    -------    -------    -------    -------    -------    -------
Income before provision for income
  taxes...................................    7,984      6,003      5,557      2,382      4,081      3,177      3,637      1,439
Provision for income taxes................    3,034      2,281      2,112        905      1,469      1,144      1,351        476
                                            -------    -------    -------    -------    -------    -------    -------    -------
Net income................................  $ 4,950    $ 3,722    $ 3,445    $ 1,477    $ 2,612    $ 2,033    $ 2,286    $   963
                                            =======    =======    =======    =======    =======    =======    =======    =======
Basic earnings per share..................  $  0.23    $  0.20    $  0.19    $  0.08    $  0.14    $  0.11    $  0.12    $  0.05
                                            =======    =======    =======    =======    =======    =======    =======    =======
Diluted earnings per share................  $  0.22    $  0.19    $  0.18    $  0.08    $  0.14    $  0.11    $  0.12    $  0.05
                                            =======    =======    =======    =======    =======    =======    =======    =======
Shares used in computing basic earnings
  per share...............................   21,345     18,825     18,549     18,499     18,456     18,499     18,477     18,369
                                            =======    =======    =======    =======    =======    =======    =======    =======
Shares used in computing diluted earnings
  per share...............................   22,795     20,036     19,417     19,467     18,980     18,963     19,078     18,843
                                            =======    =======    =======    =======    =======    =======    =======    =======
</TABLE>

    Our quarterly results may vary significantly depending primarily on factors,
such as:

    - the extent and timing of revenues recognized, particularly in light of our
      historical tendency to have a disproportionately large portion of our
      contract signings near the end of each quarter;

    - increases in costs beyond anticipated levels, especially in the context of
      costs incurred under value-pricing contracts;

    - the degree of customer acceptance of new solutions;

                                       34
<PAGE>
    - the introduction of new or enhanced solutions by us or our competitors;

    - our mix of revenues derived from consulting and management service fees on
      the one hand, and software-related fees on the other;

    - customer budget cycles and priorities and purchasing cycles;

    - competitive conditions in the industry;

    - seasonal factors;

    - timing of consolidation decisions by customers;

    - the extent of customers' international expansion; and

    - general economic conditions.

Because of the above factors, the results of any particular quarter may not be
indicative of the results for the full year. There can be no assurance that we
will continue to experience growth in revenues and earnings.

LIQUIDITY AND CAPITAL RESOURCES

    We have funded our operations and cash expenditures primarily with cash
generated from operating activities. As of January 31, 2001, we had no long-term
debt. The changes in net cash provided by operating activities generally reflect
the changes in earnings plus the effect of changes in working capital. Changes
in working capital, especially accounts receivable, accounts payable and accrued
expenses, are generally the result of timing differences between collection of
fees billed and payment of operating expenses.

    During fiscal 2000, we generated operating cash of $11.2 million. Operating
cash was generated principally through net income before non-cash charges for
amortization of capitalized software, depreciation and amortization of property
and equipment, the tax benefit from stock option exercises and through a net
increase in accounts payable and accrued expenses along with deferred revenue.
Due to negotiated payment terms associated with some sales, accounts receivable
increased using $14.9 million of cash provided by operations. During fiscal
1999, we generated $14.1 million of cash flow from operating activities
principally through net income before non-cash charges for amortization of
capitalized software, depreciation and amortization of property and equipment
and through a net increase of accounts payable and accrued expenses. At
January 31, 2001 and 2000, we had working capital of $111.8 million and
$56.5 million, respectively.

    Average days' sales outstanding fluctuate for a variety of reasons,
including the timing of billings specified by contractual agreement, and
receivables for expense reimbursements. The following table contains the
quarterly days sales outstanding (DSO) with a comparative column which adds
reimbursed expenses to the revenue portion of the computation. Reimbursed
expenses are travel and out of pocket expenses, which are not considered revenue
but are included in outstanding receivables.

<TABLE>
<CAPTION>
QUARTER ENDED                              DSO      DSO INCLUDING EXPENSE REIMBURSEMENTS
-------------                              ---      ------------------------------------
<S>                                      <C>        <C>
January 31, 2001.......................    131                      119
October 31, 2000.......................    120                      108
July 31, 2000..........................    123                      112
April 30, 2000.........................    142                      128
January 31, 2000.......................    131                      119
</TABLE>

    Cash used in investing activities during fiscal 2000 was $11.1 million, and
was primarily related to the purchase of two companies, Automated Integrated
Solutions, Inc. and X-Port Software, Inc., along with purchases of property and
equipment. Cash used in investing activities during fiscal 1999 was

                                       35
<PAGE>
$8.5 million, and was primarily related to purchases of property and equipment
of $3.5 million, and purchases and development of capitalized software of
$4.3 million.

    Cash generated through financing activities for fiscal 2000 of
$37.0 million resulted primarily from proceeds of our public offering completed
November 3, 2000 for $31.5 million after deducting costs of the offering, and
$6.6 million resulting from the exercise of stock options. Cash generated
through financing activities for fiscal 1999 was not significant.

    Our future liquidity and capital requirements will depend upon numerous
factors. We believe that current cash and short-term investment balances and
cash generated from operations will be sufficient to meet the operating and
capital requirements of our ordinary business operations through at least the
next twelve months. However, there can be no assurance that we will not require
additional financing within this time frame. Our forecast of the period of time
through which our financial resources will be adequate to support our operations
is a forward-looking statement that involves risks and uncertainties, and actual
results could vary. The failure to raise capital when needed could have a
material adverse effect on our business, financial condition and results of
operations.

RECENTLY ISSUED ACCOUNTING STANDARDS

    In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities" (SFAS 133).
SFAS 133, as amended, was effective for us beginning February 1, 2001. We do not
currently utilize derivative financial instruments. Therefore, the adoption of
SFAS 133 did not have a material impact on our results of operations or
financial position.

    In December 1999, the Securities and Exchange Commission released Staff
Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements" ("SAB
101"). This bulletin summarizes certain views of the staff of the Securities and
Exchange Commission (the "Staff") on applying generally accepted accounting
principals to revenue recognition in financial statements. The application of
SAB 101, as amended, did not have a material impact on our financial position or
results of operations.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

    INTEREST RATES.  We invest our cash in a variety of financial instruments,
primarily tax-advantaged variable rate and fixed rate obligations of state and
local municipalities, and educational entities and agencies. These investments
are denominated in U.S. dollars.

    We account for our investment instruments in accordance with Statement of
Financial Accounting Standards No. 115, "Accounting for Certain Investments in
Debt and Equity Securities" ("SFAS 115"). All of the cash equivalents and
short-term investments are treated as available-for-sale under SFAS 115.

    Investments in both fixed rate and floating rate interest earning
instruments carry a degree of interest rate risk. Fixed rate securities may have
their fair market value adversely impacted due to a rise in interest rates,
while floating rate securities may produce less income than expected if interest
rates fall. Due in part to these factors, our future investment income may fall
short of expectations due to changes in interest rates or we may suffer losses
in principal if forced to sell securities which have seen a decline in market
value due to changes in interest rates. Our investment securities are held for
purposes other than trading. The weighted-average interest rate on investment
securities at January 31, 2001 and 2000 was 4.5% and 4.7%, respectively.
Amortized cost of short-term investments held at January 31, 2001 and 2000 was
$15.4 million and $13.6 million, respectively, which approximates fair value.

                                       36
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

                              CARREKER CORPORATION
                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<S>                                                           <C>
Report of Ernst & Young LLP, Independent Auditors...........     38

Consolidated Balance Sheets as of January 31, 2001 and
  2000......................................................     39

Consolidated Statements of Operations for the years ended
  January 31, 2001, 2000 and 1999...........................     40

Consolidated Statements of Stockholders' Equity for the
  years ended January 31, 2001, 2000 and 1999...............     41

Consolidated Statements of Cash Flows for the years ended
  January 31, 2001, 2000 and 1999...........................     42

Notes to Consolidated Financial Statements..................     43
</TABLE>

                                       37
<PAGE>
               REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

The Board of Directors and Stockholders
Carreker Corporation

    We have audited the accompanying consolidated balance sheets of Carreker
Corporation (the Company), as of January 31, 2001 and 2000, and the related
consolidated statements of operations, stockholders' equity, and cash flows for
each of the three years in the period ended January 31, 2001. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

    We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

    In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Carreker
Corporation at January 31, 2001 and 2000, and the consolidated results of its
operations and its cash flows for each of the three years in the period ended
January 31, 2001, in conformity with accounting principles generally accepted in
the United States.

                                          /s/ ERNST & YOUNG LLP

Dallas, Texas
March 7, 2001 (except for Note 11,
as to which the date is April 11, 2001)

                                       38
<PAGE>
                              CARREKER CORPORATION
                          CONSOLIDATED BALANCE SHEETS
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                                                  JANUARY 31,
                                                              -------------------
                                                                2001       2000
                                                              --------   --------
<S>                                                           <C>        <C>
                           ASSETS
Current assets
  Cash and cash equivalents.................................  $ 63,098   $25,973
  Short-term investments....................................    15,407    13,563
  Accounts receivable, net of allowance of $580 and $1,357
    at January 31, 2001 and 2000, respectively..............    44,746    30,843
  Federal income tax receivable.............................     5,372        --
  Prepaid expenses and other current assets.................     2,554       733
  Deferred income taxes.....................................       678       831
                                                              --------   -------
Total current assets........................................   131,855    71,943
Property and equipment, net of accumulated depreciation of
  $7,305 and $4,809 at January 31, 2001 and 2000,
  respectively..............................................     5,888     4,197
Software costs capitalized, net of accumulated amortization
  of $8,711 and $4,889 at January 31, 2001 and 2000,
  respectively..............................................    10,222     6,349
Deferred income taxes.......................................        29       179
Other assets................................................        80       155
                                                              --------   -------
Total assets................................................  $148,074   $82,823
                                                              ========   =======
            LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
  Accounts payable..........................................  $  3,521   $ 2,089
  Accrued compensation and benefits.........................     1,925     2,030
  Other accrued expenses....................................     3,902     2,583
  Note payable..............................................       880        --
  Income taxes payable......................................       862     2,310
  Deferred revenue..........................................     9,010     6,401
                                                              --------   -------
Total current liabilities...................................    20,100    15,413
Deferred income taxes.......................................     2,916     2,004
Commitments and contingencies...............................
Stockholders' equity
  Preferred stock, $.01 par value: 2,000 shares authorized;
    no shares issued or outstanding.........................        --        --
  Common stock, $.01 par value: 100,000 shares authorized;
    21,720 and 18,540 shares issued at January 31, 2001 and
    2000, respectively......................................       217       185
  Additional paid-in capital................................    90,873    44,564
  Deferred compensation.....................................        --      (183)
  Retained earnings.........................................    34,440    20,846
  Less treasury stock, at cost: 18 and 1 common shares as of
    January 31, 2001 and 2000, respectively.................      (472)       (6)
                                                              --------   -------
Total stockholders' equity..................................   125,058    65,406
                                                              --------   -------
Total liabilities and stockholders' equity..................  $148,074   $82,823
                                                              ========   =======
</TABLE>

                            See accompanying notes.

                                       39
<PAGE>
                              CARREKER CORPORATION
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                                                  YEAR ENDED JANUARY 31,
                                                              ------------------------------
                                                                2001       2000       1999
                                                              --------   --------   --------
<S>                                                           <C>        <C>        <C>
Revenues:
  Consulting fees...........................................  $71,715    $49,725    $26,328
  Software license fees.....................................   18,030     13,727     16,327
  Software maintenance fees.................................   11,223      6,985      5,031
  Software implementation fees..............................    9,298      5,116      6,557
  Hardware and other fees...................................       --        267        774
                                                              -------    -------    -------
    Total revenues..........................................  110,266     75,820     55,017
Cost of revenues:
  Consulting fees...........................................   38,185     27,574     16,150
  Software license fees.....................................    5,529      1,766      1,216
  Software maintenance fees.................................    2,897      2,511      2,387
  Software implementation fees..............................    5,653      2,381      3,862
  Hardware and other fees...................................       --        208        560
                                                              -------    -------    -------
    Total cost of revenues..................................   52,264     34,440     24,175
                                                              -------    -------    -------
Gross profit................................................   58,002     41,380     30,842
                                                              -------    -------    -------
Operating costs and expenses:
  Selling, general and administrative.......................   31,743     25,333     18,444
  Research and development..................................    6,055      4,813      4,763
  Merger related costs......................................       --         --        485
                                                              -------    -------    -------
    Total operating costs and expenses......................   37,798     30,146     23,692
                                                              -------    -------    -------
Income from operations......................................   20,204     11,234      7,150
Other income (expense):
  Interest income, net......................................    1,959      1,164        925
  Other income (expense):...................................     (237)       (64)        --
                                                              -------    -------    -------
    Total other income (expense)............................    1,722      1,100        925
                                                              -------    -------    -------
Income before provision for income taxes....................   21,926     12,334      8,075
Provision for income taxes..................................    8,332      4,440      2,903
                                                              -------    -------    -------
Net income..................................................  $13,594    $ 7,894    $ 5,172
                                                              =======    =======    =======
Basic earnings per share....................................  $  0.70    $  0.43    $  0.32
                                                              =======    =======    =======
Diluted earnings per share..................................  $  0.67    $  0.42    $  0.30
                                                              =======    =======    =======
Shares used in computing basic earnings per share...........   19,305     18,456     16,224
                                                              =======    =======    =======
Shares used in computing diluted earnings per share.........   20,429     18,980     17,504
                                                              =======    =======    =======
</TABLE>

                            See accompanying notes.

                                       40
<PAGE>
                              CARREKER CORPORATION
                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                   COMMON STOCK       ADDITIONAL                                TREASURY STOCK          TOTAL
                                -------------------    PAID-IN       DEFERRED      RETAINED   -------------------   STOCKHOLDERS'
                                 SHARES     AMOUNT     CAPITAL     COMPENSATION    EARNINGS    SHARES     AMOUNT       EQUITY
                                --------   --------   ----------   -------------   --------   --------   --------   -------------
<S>                             <C>        <C>        <C>          <C>             <C>        <C>        <C>        <C>
Balance at January 31, 1998...   13,247      $132      $ 2,155         $(754)      $ 7,780       367      $(510)      $  8,803
Adjustment of shares issued to
  Antinori
  Software shareholders.......     (141)       (1)           1            --            --        --         --             --
Common shares subject to
  put.........................       --        --        2,000            --            --        --         --          2,000
Director option grant.........       --        --          100          (100)           --        --         --             --
Sale of stock.................    3,650        37       35,800            --            --        --         --         35,837
Compensation earned under
  employee/ director stock
  option plans................       --        --           --           286            --        --         --            286
Purchases of treasury stock...       --        --           --            --            --        11        (15)           (15)
Issuance of shares of common
  stock upon exercises of
  stock options...............    1,598        16        3,100            --            --      (378)       525          3,641
Tax benefit from exercises of
  stock options...............       --        --        1,407            --            --        --         --          1,407
Net income....................       --        --           --            --         5,172        --         --          5,172
                                 ------      ----      -------         -----       -------      ----      -----       --------
  Balance at January 31,
    1999......................   18,354       184       44,563          (568)       12,952        --         --         57,131

Director option grant.........       --        --           28           (28)           --        --         --             --
Termination of restricted
  stock grant.................      (23)       --          (80)           80            --        --         --             --
Compensation earned under
  employee/ director stock
  option plans................       --        --           --           333            --        --         --            333
Purchases of treasury stock...       --        --           --            --            --        89       (574)          (574)
Issuance of shares of common
  stock upon exercises of
  stock options...............      209         1         (322)           --            --       (88)       568            247
Tax benefit from exercises of
  stock options...............       --        --          375            --            --        --         --            375
Net income....................       --        --           --            --         7,894        --         --          7,894
                                 ------      ----      -------         -----       -------      ----      -----       --------
  Balance at January 31,
    2000......................   18,540       185       44,564          (183)       20,846         1         (6)        65,406

Director option grant.........       --        --           78           (78)           --        --         --             --
Sale of stock.................    2,000        20       31,436            --            --        --         --         31,456
Compensation earned under
  employee/ director stock
  option plans................       --        --           --           261            --        --         --            261
Purchases of treasury stock...       --        --           --            --            --        18       (472)          (472)
Issuance of shares of common
  stock upon exercises of
  stock options...............    1,180        12        6,612            --            --        (1)         6          6,630
Tax benefit from exercises of
  stock options...............       --        --        8,183            --            --        --         --          8,183
Net income....................       --        --           --            --        13,594        --         --         13,594
                                 ------      ----      -------         -----       -------      ----      -----       --------
  Balance at January 31,
    2001......................   21,720      $217      $90,873         $  --       $34,440        18      $(472)      $125,058
                                 ======      ====      =======         =====       =======      ====      =====       ========
</TABLE>

                            See accompanying notes.

                                       41
<PAGE>
                              CARREKER CORPORATION
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                  YEAR ENDED JANUARY 31,
                                                              ------------------------------
                                                                2001       2000       1999
                                                              --------   --------   --------
<S>                                                           <C>        <C>        <C>
Operating Activities:
  Net income................................................  $ 13,594   $ 7,894    $  5,172
  Adjustments to reconcile net income to net cash provided
    by (used in) operating activities:
    Depreciation and amortization of property and
      equipment.............................................     2,591     1,997       1,277
    Amortization of software costs capitalized..............     3,822     1,189         453
    Compensation earned under employee/director stock option
      plan..................................................       261       333         286
    Tax benefit from exercises of stock options.............     8,183       375       1,407
    Deferred income taxes...................................      (258)      757        (199)
    Provision for doubtful accounts.........................       986       587         708
    Loss on sale of assets..................................        24        --          --
    Changes in operating assets and liabilities
      Accounts receivable...................................   (14,889)   (3,826)    (15,073)
      Prepaid expenses and other assets.....................    (1,133)     (172)        324
      Accounts payable and accrued expenses.................     2,285     2,996      (1,115)
      Income taxes payable/receivable.......................    (6,820)      910       1,599
      Deferred revenue......................................     2,571     1,053         468
                                                              --------   -------    --------
Net cash provided by (used in) operating activities.........    11,217    14,093      (4,693)
Investing Activities:
  Purchases of short-term investments.......................   (36,540)   (6,016)    (12,800)
  Sales and maturities of short-term investments............    34,696     5,302           1
  Acquisition of AIS and XPORT, net of cash acquired........    (5,268)       --          --
  Purchases of property and equipment.......................    (3,095)   (3,521)     (2,286)
  Computer software costs capitalized.......................      (928)   (4,259)     (1,469)
                                                              --------   -------    --------
Net cash used in investing activities.......................   (11,135)   (8,494)    (16,554)
Financing Activities:
  Purchases of treasury stock...............................      (466)     (574)        (15)
  Proceeds from exercises of stock options..................     6,624       247       3,641
  Proceeds from sale of stock...............................    31,456        --      35,837
  Payments on notes payable.................................      (571)       --          --
                                                              --------   -------    --------
Net cash provided by (used in) financing activities.........    37,043      (327)     39,463
                                                              --------   -------    --------
Net increase in cash and cash equivalents...................    37,125     5,272      18,216
Cash and cash equivalents at beginning of year..............    25,973    20,701       2,485
                                                              --------   -------    --------
Cash and cash equivalents at end of year....................  $ 63,098   $25,973    $ 20,701
                                                              ========   =======    ========
Supplemental disclosures of cash flow information:
  Cash paid for interest....................................  $     64   $    14    $     45
                                                              ========   =======    ========
  Cash paid for income taxes, net...........................  $  7,198   $ 2,357    $    126
                                                              ========   =======    ========
Non-cash financing activities:
  Internal use software financed through issuance of note
    payable.................................................     1,451        --          --
                                                              ========   =======    ========
</TABLE>

                             See accompanying notes

                                       42
<PAGE>
                              CARREKER CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. DESCRIPTION OF BUSINESS

    Carreker Corporation ("the Company") is a leading provider of consulting and
software solutions to the banking industry. The Company's solutions include
comprehensive service offerings coupled with a broad array of state-of-the-art,
proprietary software products, which have been designed to address the unique
requirements of the banking industry. These solutions are designed to improve
the competitiveness of a bank's financial performance and operations.

2. SUMMARY OF SIGNIFICANT ACCOUNTING PROCEDURES

    PRINCIPLES OF CONSOLIDATION AND PRESENTATION

    The consolidated financial statements include the accounts of the Company
and its wholly owned subsidiaries. All significant inter-company balances and
transactions have been eliminated in consolidation.

    Certain prior year amounts have been reclassified to conform to the current
year presentation.

    CASH AND CASH EQUIVALENTS

    The Company considers all highly liquid investments with maturities of three
months or less when purchased to be cash equivalents. Cash and cash equivalents
consist primarily of demand deposit accounts and shares in a demand money market
account comprised of domestic and foreign commercial paper, certificates of
deposit and U.S. government obligations which are maintained with nationally
recognized financial institutions.

    SHORT-TERM INVESTMENTS

    The Company considers investments with maturities of greater than three
months when purchased to be short-term investments based on the freely tradable
nature of the investments, and management's expectation that they will not be
held for greater than one year. Short-term investments consist primarily of tax
exempt municipal bonds. Management determines the appropriate classification of
debt securities at the time of purchase and reevaluates their designation as of
each balance sheet date. All debt securities have been determined by management
to be available for sale. Available for sale securities are stated at amortized
cost, which approximates fair value. Fair value of debt securities is determined
based upon current market value price quotes by security. As of January 31,
2001, substantially all of the Company's short-term investments mature in less
than one year.

    ACCOUNTS RECEIVABLE

    A significant portion of the Company's business consists of providing
consulting services and licensing software to major domestic banks, which gives
rise to a concentration of credit risk in receivables. The Company performs
on-going credit evaluations of its customers' financial condition and generally
requires no collateral. The Company maintains an allowance for losses based upon
the expected collectibility of all accounts receivable. Write-offs of
receivables during the three years ended January 31, 2001, 2000 and 1999 were
$1,763,000, $502,000 and $64,000, respectively.

    Accounts receivable include unbilled amounts that represent receivables for
work performed for which billings upon mutual agreement have not been presented
to the customers. These receivables are generally billed and collected within
one year of completion of the service. Accounts receivable include $24,055,000
and $15,064,000 of unbilled receivables at January 31, 2001 and 2000,
respectively.

                                       43
<PAGE>
    PROPERTY AND EQUIPMENT

    Property and equipment are stated at cost. Depreciation is calculated using
the straight-line method over the estimated useful lives of the respective
assets, generally from three to five years. Leasehold improvements are amortized
using the straight-line method over the shorter of the terms of the related
leases or the respective useful lives of the assets. The components of property
and equipment are as follows (in thousands):

<TABLE>
<CAPTION>
                                                                JANUARY 31,
                                                            -------------------
                                                              2001       2000
                                                            --------   --------
<S>                                                         <C>        <C>
Furniture.................................................  $ 4,304    $ 3,937
Equipment.................................................    8,204      4,610
Leasehold improvements....................................      685        459
                                                            -------    -------
  Total cost..............................................   13,193      9,006
Less accumulated depreciation and amortization............   (7,305)    (4,809)
                                                            -------    -------
  Net property and equipment..............................  $ 5,888    $ 4,197
                                                            =======    =======
</TABLE>

    SOFTWARE COSTS CAPITALIZED

    The Company capitalizes software development costs incurred in developing a
product once technological feasibility of the product has been established.
Software development costs capitalized also include amounts paid for purchased
software on products that have reached technological feasibility. Technological
feasibility of the product is determined after completion of a detailed program
design and a determination has been made that any uncertainties related to
high-risk development issues have been resolved. If the process of developing
the product does not include a detail program design, technological feasibility
is determined only after completion of a working model which has been beta
tested. All software development costs capitalized are amortized using an amount
determined as the greater of: (i) the ratio that current gross revenues for a
capitalized software project bears to the total of current and future gross
revenues for that project or (ii) the straight-line method over the remaining
economic life of the product (generally three to four years). The Company
capitalized, excluding software acquired through business combinations,
$928,000, $4,259,000, and $1,469,000 and recorded amortization relating to
software development costs capitalized of $3,822,000, $1,189,000, and $453,000
in the years ended January 31, 2001, 2000 and 1999, respectively.

    REVENUE RECOGNITION

    Revenue for consulting services performed under fixed-price contracts which
are generally in duration in excess of six months is recognized on a
percentage-of-completion method. Revenue from these contracts is recognized in
the proportion that costs incurred bear to total estimated costs at completion.
Anticipated losses on fixed-price contracts are recognized when estimable.

    Revenue generated from consulting services contracts is recognized as
services are performed. Revenue generated from value-priced consulting services
is recognized at the completion of all services and the actual fee to be paid
has been agreed to by the customer. Billings for value priced consulting
services may be delayed by mutual agreement for periods generally not to exceed
twelve months.

    Software license revenues are recognized in accordance with the American
Institute of Certified Public Accountants' Statement of Position (SOP) 97-2,
"Software Revenue Recognition." Under SOP 97-2, software license revenues are
recognized upon execution of a contract and delivery of software, provided that
the license fee is fixed and determinable, no significant production,
modification or customization of the software is required, and collection is
considered probable by management.

                                       44
<PAGE>
    Maintenance contract revenue is recognized ratably over the term of the
related contract. Revenue from computer hardware sales is recognized upon
shipment.

    Revenues for agreements that include one or more elements to be delivered at
a future date are recognized based on the relative fair value of those elements
determined using vendor-specific objective evidence. If fair values have not
been established for certain undelivered elements, revenue is deferred until
those elements have been delivered or their fair values have been determined.

    In connection with software license agreements entered into with certain
banks and purchase agreements with vendors under which the Company acquired
software technology used in products sold to its customers, the Company is
required to pay royalties on sales of the software. Approximately $1,914,000,
$577,000 and $746,000 of royalty expense was recorded under these agreements in
the years ended January 31, 2001, 2000 and 1999, respectively.

    DEFERRED REVENUE

    Deferred revenue represents amounts billed to customers under terms
specified in consulting, software licensing, and maintenance contracts for which
completion of contractual terms or delivery of the software has not occurred.

    RESEARCH AND PRODUCT DEVELOPMENT COSTS

    Research and product development costs, which are not subject to
capitalization under Statement of Financial Accounting Standards (SFAS) 86,
"Accounting for the Cost of Computer Software to be Sold, Leased, or Otherwise
Marketed," are expensed as incurred and relate mainly to the development of new
products and the ongoing maintenance of existing products.

    EARNINGS PER SHARE

    Basic earnings per share is computed using the weighted average number of
shares of common stock outstanding during each period. Diluted earnings per
share is computed using the weighted average number of shares of common stock
outstanding during each period and common equivalent shares consisting of stock
options (using the treasury stock method).

    STOCK-BASED COMPENSATION

    Compensation expense on stock options issued to employees is measured in
accordance with Accounting Principles Board Opinion 25, "Accounting for Stock
Issued to Employees" (APB 25).

    RISKS AND UNCERTAINTIES

    The Company's future results of operations and financial condition could be
impacted by the following factors, among others: dependence on the banking
industry, customer concentration, fluctuations in our operating results, use of
fixed-price or value-priced arrangements, lack of long term agreements, ability
to gain market acceptance, ability to manage growth, dependence on key
personnel, product liability, rapid technological change and dependence on new
products, dependence on third-party providers and the Internet, our ability to
increase usage software license fees over lump sum software license fees,
ability to attract and retain qualified personnel, competition, potential
strategic alliances and acquisitions, proprietary rights, claims and legal
proceedings, international operations, use of independent contractors, changing
government and tax regulations, and anti-takeover provisions in our charter.

                                       45
<PAGE>
    USE OF ESTIMATES

    The preparation of financial statements in accordance with generally
accepted accounting principles requires management to make certain estimates and
assumptions that affect the amounts reported in the financial statements. Actual
results could differ from these estimates.

    RECENTLY ISSUED ACCOUNTING STANDARDS

    In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities" (SFAS 133).
SFAS 133, as amended, was effective for the Company beginning February 1, 2001.
The Company does not currently utilize derivative financial instruments.
Therefore, the adoption of SFAS 133 did not have a material impact on the
Company's results of operations or financial position.

    In December 1999, the Securities and Exchange Commission released Staff
Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements" ("SAB
101"). This bulletin summarizes certain views of the staff of the Securities and
Exchange Commission (the "Staff") on applying generally accepted accounting
principals to revenue recognition in financial statements. The application of
SAB 101, as amended, did not have a material impact on the Company's financial
position or results of operations.

3. BUSINESS COMBINATIONS

    On January 29, 1999, the Company acquired all the outstanding common shares
of Genisys Operations, Inc. ("Genisys") from the shareholders of Genisys in
exchange for 1,240,000 shares of the Company's common stock. The transaction was
accounted for as a pooling of interests, and accordingly, the accompanying
consolidated financial statements have been restated to include the financial
position and results of operations of Genisys for all periods presented. During
the year ended January 31, 1999, the Company recorded charges of $485,000 in
connection with the Genisys merger. These charges consisted of legal, accounting
and other fees.

    On February 10, 2000, the Company acquired all of the outstanding stock of
Automated Integrated Solutions, Inc., an Ontario Company ("AIS") for
$2.3 million in cash and additional cash payments to AIS shareholders of up to
$2.0 million based on achievement of specified revenue targets over three years.
The transaction was accounted for as a purchase transaction with $2.3 million of
the purchase price allocated to capitalized software which will be amortized
over a four-year period.

    On May 29, 2000, the Company acquired all of the outstanding stock of X-Port
Software, Inc., an Ontario Company ("X-Port") for $3.0 million in cash. The
transaction was accounted for as a purchase transaction with approximately
$3.0 million of the purchase price allocated to capitalized software which will
be amortized over a four-year period.

    In connection with the acquisition of X-Port, the Company entered into a
separate agreement with the former owner of X-Port for consulting and
development services through 2003. The payments for consulting total $616,000
over the three-year period and the development services fees total $1.0 million
with an additional $400,000 if certain project milestones are met.

4. PUBLIC OFFERING OF STOCK

    On November 3, 2000, the Securities and Exchange Commission declared
effective a Registration Statement on Form S-3 relating to the Company's public
offering of 2,000,000 shares of common stock, at a price of $17.00 per share. In
connection with this offering, existing stockholders sold an additional
3,175,000 shares. The $31,456,000 of net proceeds (which include $555,000 of
offering expenses) that the Company received will be used for working capital,
general corporate purposes and possible future acquisitions.

                                       46
<PAGE>
5. PROVISION FOR INCOME TAXES

    The Company's provision for income taxes consists of the following (in
thousands):

<TABLE>
<CAPTION>
                                                          YEAR ENDED JANUARY 31,
                                                      ------------------------------
                                                        2001       2000       1999
                                                      --------   --------   --------
<S>                                                   <C>        <C>        <C>
Federal:
  Current...........................................   $7,744     $3,278     $2,802
  Deferred..........................................     (294)       714       (188)
                                                       ------     ------     ------
                                                        7,450      3,992      2,614
State:
  Current...........................................      899        404        300
  Deferred..........................................      (17)        44        (11)
                                                       ------     ------     ------
                                                          882        448        289
                                                       ------     ------     ------
                                                       $8,332     $4,440     $2,903
                                                       ======     ======     ======
</TABLE>

    The provisions for income taxes differ from the amounts computed by applying
the statutory United States federal income tax rate to income before provision
for income taxes as follows (in thousands):

<TABLE>
<CAPTION>
                                                          YEAR ENDED JANUARY 31,
                                                      ------------------------------
                                                        2001       2000       1999
                                                      --------   --------   --------
<S>                                                   <C>        <C>        <C>
Income tax expense at statutory rate................   $7,674     $4,193     $2,744
State income taxes, net of U.S. federal benefit.....      567        399        195
Tax exempt interest income..........................     (306)      (307)      (273)
Nondeductible expenses..............................      371         28        172
Other, net..........................................       26        127         65
                                                       ------     ------     ------
Provision for income taxes..........................   $8,332     $4,440     $2,903
                                                       ======     ======     ======
</TABLE>

    Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. The Company's deferred
tax assets and liabilities are as follows (in thousands):

<TABLE>
<CAPTION>
                                                                 YEAR ENDED
                                                                 JANUARY 31,
                                                             -------------------
                                                               2001       2000
                                                             --------   --------
<S>                                                          <C>        <C>
Deferred tax assets:
  Cash to accrual adjustment...............................  $    --     $  102
  Accruals not currently deductible........................      469        373
  Stock compensation.......................................       --        202
  Allowance for doubtful accounts..........................      209        495
  Other....................................................       --         65
                                                             -------     ------
Total deferred tax assets..................................      678      1,237
Deferred tax liabilities:
  Depreciation of property and equipment...................      146         63
  Capitalized software costs...............................    2,741      2,168
                                                             -------     ------
Total deferred tax liabilities.............................    2,887      2,231
                                                             -------     ------
Net deferred tax liabilities...............................  $(2,209)    $ (994)
                                                             =======     ======
</TABLE>

                                       47
<PAGE>
6. BENEFIT PLANS

    STOCK OPTION PLANS

    Effective October 7, 1994, the Company adopted the 1994 Long Term Incentive
Plan (the Long Term Incentive Plan) under which officers and employees may be
granted awards in the form of incentive stock options, non-qualified stock
options and restricted shares. The exercise price per share for the common stock
issued pursuant to incentive stock options under the Long Term Incentive Plan
shall be no less than 100% of the fair market value on the date the option is
granted. The exercise price per share for non-qualified stock options under the
Long Term Incentive Plan may be determined by the Compensation Committee of the
Company's Board of Directors (the Committee), but may not be less than the par
value of the shares. Options granted under the Long Term Incentive Plan become
exercisable and vest as determined by the Committee. To date, options granted
under the Long Term Incentive Plan fully vest within four years from the date of
grant. The term of each option granted under the Long Term Incentive Plan shall
be as the Committee determines, but in no event shall any option have a term of
longer than ten years from the date of grant. Options may be granted pursuant to
the Long Term Incentive Plan indefinitely, unless the Board of Directors
terminates the Long Term Incentive Plan.

    On January 31, 1998, the Committee issued 84,700 shares of restricted stock
with a fair market value of $8.90 per share to certain key employees under the
Company's Long Term Incentive Plan. Holders of restricted stock retain all
rights of a stockholder, except the shares cannot be sold until they vest. Upon
employee termination, all unvested shares are forfeited to the Company. On
December 15, 1999, 23,100 shares were forfeited due to an employee termination.
The remaining restricted shares vested in full on January 31, 2001. At
January 31, 2001, 2000 and 1999, there was deferred compensation related to the
restricted shares totaling $0, $183,000, and $503,000, respectively. The
deferred compensation was charged to expense ratably over the vesting period.

    The Company has a Director Stock Option Plan (the Director Plan) under which
non-employee members of the Company's Board of Directors may be granted options
to purchase shares of the Company's Common Stock at prices determined by the
Committee. Options granted under the Director Plan expire fifteen years from the
date of grant or at an earlier date as determined by the Committee and specified
in the applicable stock option agreement. Each option granted shall become
exercisable one year from the date of the agreement or in one or more
installments as determined by the Committee and as provided in the applicable
stock option agreement. All shares issued and options granted pursuant to the
Director Plan are subject to restriction agreements. During the years ended
January 31, 2001, 2000 and 1999, options to purchase 15,557 shares, 9,168 shares
and 17,790 shares, respectively, of common stock were granted to Directors. The
exercise price was set at 50% of the fair market value on the grant date. As a
result, the Company recorded deferred compensation at the dates of grant during
the years ended January 31, 2001, 2000 and 1999 of $77,500, $27,500, and
$100,026, respectively, to be expensed ratably over a one-year vesting period.
At January 31, 2001, there was no deferred compensation related to the Director
options.

                                       48
<PAGE>
    Stock option transactions under all plans for the years ended January 31,
2001, 2000 and 1999, are as follows (in thousands, except per share amounts):

<TABLE>
<CAPTION>
                                                         2001                  2000                  1999
                                                  -------------------   -------------------   -------------------
                                                             WEIGHTED              WEIGHTED              WEIGHTED
                                                   NUMBER    AVERAGE     NUMBER    AVERAGE     NUMBER    AVERAGE
                                                     OF      EXERCISE      OF      EXERCISE      OF      EXERCISE
                                                  OPTIONS     PRICE     OPTIONS     PRICE     OPTIONS     PRICE
                                                  --------   --------   --------   --------   --------   --------
<S>                                               <C>        <C>        <C>        <C>        <C>        <C>
Options outstanding at beginning of year........    3,042     $ 6.47     3,573      $6.19       4,230     $3.96
  Granted.......................................    1,152      12.50       194       6.47       1,378      6.91
  Exercised.....................................   (1,200)      5.53      (297)       .84      (1,975)     1.87
  Forfeited.....................................     (130)      9.71      (428)      8.02         (60)     8.21
                                                   ------                -----                 ------
Options outstanding at end of year..............    2,864       9.14     3,042       6.47       3,573      6.19
                                                   ======                =====                 ======
Options exercisable at end of year..............      932                1,573                  1,221
Weighted average grant-date fair value of
  options granted during the year...............              $ 8.64                $4.55                 $5.26
                                                              ======                =====                 =====
</TABLE>

    Information related to options outstanding at January 31, 2001, is
summarized below (in thousands, except per share amounts):

<TABLE>
<CAPTION>
                              OPTIONS        WEIGHTED AVERAGE      WEIGHTED          OPTIONS           WEIGHTED
                           OUTSTANDING AT       REMAINING          AVERAGE        EXERCISABLE AT       AVERAGE
RANGE OF EXERCISE PRICE   JANUARY 31, 2001   CONTRACTUAL LIFE   EXERCISE PRICE   JANUARY 31, 2001   EXERCISE PRICE
-----------------------   ----------------   ----------------   --------------   ----------------   --------------
<S>                       <C>                <C>                <C>              <C>                <C>
 $0.85 to $5.81                    761             6.92             $ 4.81               361            $ 3.75
 $6.00 to $9.88                  1,266             7.78               8.75               515              8.82
 $10.13 to $17.00                  796             9.07              13.14                56             10.54
 $23.06 to $26.19                   41             9.83              23.87                --                --
                                 -----                                                   ---
                                 2,864                                                   932
                                 =====                                                   ===
</TABLE>

    As of January 31, 2001, the Company has reserved for issuance under the Long
Term Incentive Plan 3,705,207 shares of common stock, of which 2,811,393 shares
are subject to currently outstanding options to employees, 13,444 shares are
subject to currently outstanding options to directors, and 880,370 shares are
reserved for future awards. As of January 31, 2001, the Company has reserved for
issuance under the Director Plan 96,981 shares of Common Stock, of which 38,682
shares are subject to currently outstanding options, and 58,299 shares are
reserved for future awards.

    The Company has elected to follow APB 25 and related interpretations in
accounting for its employee and director stock options because, as discussed
below, the alternative fair value accounting provided for under SFAS 123
requires the use of option valuation models that were not developed for use in
valuing employee stock options. Under APB 25, no compensation expense is
recorded when the exercise price of the Company's employee stock options equals
the fair value of the underlying stock on the date of grant. Compensation equal
to the intrinsic value of employee stock options is recorded when the exercise
price of the stock options is less than the fair value of the underlying stock
on the date of grant. Any resulting compensation is amortized to expense over
the option's vesting period. During the years ended January 31, 2001, 2000 and
1999, total compensation expense recorded relating to employee and director
stock options was $260,362, $332,447 and $286,359, respectively.

    Information regarding pro forma net income is required by SFAS 123, and has
been determined as if the Company had accounted for its employee and director
stock options under the fair value method of SFAS 123. The fair value of these
options was estimated at the date of grant using a Black-Scholes option pricing
model assuming volatility of .846 in 2001, .862 in 2000 and 1.045 in 1999, and
the

                                       49
<PAGE>
following assumptions for 2001, 2000 and 1999, respectively: weighted-average
risk free interest rate of 6.2%, 5.6% and 5.3%, no dividends, and a weighted
average expected life of 4.5 years.

    The Black-Scholes option valuation model was developed for use in estimating
the fair value of traded options which have no vesting restrictions and are
fully transferable. In addition, option valuation models require the input of
highly subjective assumptions including the expected stock price volatility.
Because the Company's employee and director stock options have characteristics
significantly different from those of traded options, and because changes in the
subjective input assumptions can materially affect the fair value estimate, in
management's opinion, the existing models do not necessarily provide a reliable
single measure of the fair value of its employee stock options.

    For purposes of pro forma disclosures, the estimated fair value of the
options is amortized to expense over the options' vesting period. The Company's
pro forma information is as follows (in thousands, except per share amounts):

<TABLE>
<CAPTION>
                                                                  YEAR ENDED JANUARY 31,
                                                              ------------------------------
                                                                2001       2000       1999
                                                              --------   --------   --------
<S>                                                           <C>        <C>        <C>
Pro forma net income........................................  $10,970     $6,051     $3,710
                                                              =======     ======     ======
Basic pro forma earnings per share..........................  $  0.57     $ 0.33     $ 0.23
                                                              =======     ======     ======
Diluted pro forma earnings per share........................  $  0.54     $ 0.32     $ 0.21
                                                              =======     ======     ======
</TABLE>

    The pro forma disclosures only include the effect of options granted
subsequent to January 31, 1995. Accordingly, the pro forma information does not
reflect the pro forma effect of all previous stock option grants of the Company,
and thus is not indicative of future amounts until SFAS 123 is applied to all
outstanding stock options.

    PROFIT SHARING PLAN

    The Company has adopted a profit sharing plan pursuant to Section 401(k) of
the Internal Revenue Code (the Code) whereby participants may contribute a
percentage of compensation not in excess of the maximum allowed under the Code.
The plan provides for a matching contribution by the Company. Effective
February 1, 1999, employees of Genisys became eligible to participate in the
Company plan. Employer matching contributions amounted to $1,268,000, $792,000
and $616,000 in 2001, 2000 and 1999, respectively. The Company may make
additional contributions at the discretion of the Board of Directors. No
discretionary contribution was made during 2001, 2000, or 1999.

    Through January 31, 1999, employees of Genisys had a separate profit sharing
plan pursuant to Section 401(k) of the Code, whereby participants could
contribute a percentage of compensation not in excess of the maximum allowed
under the Code. Employer matching and additional contributions are discretionary
and amounted to $105,000 under the Genisys plan for the year ended January 31,
1999.

    BONUS PLAN

    The Company pays discretionary bonuses to key employees based primarily on
Company profitability and the extent to which individuals meet agreed-upon
objectives for the year. The Company recorded bonus expense of approximately
$2,938,000, $2,132,000, and $513,000 in 2001, 2000 and 1999, respectively.

7. LEASE COMMITMENTS

    The Company leases office facilities and certain equipment under operating
leases for various periods. Leases that expire are generally expected to be
renewed or replaced by other leases. Rental expense under operating leases for
2001, 2000 and 1999 was approximately $2,664,000, $1,826,000, and

                                       50
<PAGE>
$1,038,000, respectively. Future minimum base rents under terms of
non-cancelable operating leases are as follows (in thousands):

Year ending January 31:

<TABLE>
<S>                                                           <C>
2002........................................................  $ 2,504
2003........................................................    2,322
2004........................................................    1,958
2005........................................................    1,890
2006 and thereafter.........................................    8,984
                                                              -------
Total.......................................................  $17,658
                                                              =======
</TABLE>

8. EARNINGS PER SHARE

    The following table sets forth the computation of basic and diluted earnings
per share (in thousands, except per share amounts):

<TABLE>
<CAPTION>
                                                                  YEAR ENDED JANUARY 31,
                                                              ------------------------------
                                                                2001       2000       1999
                                                              --------   --------   --------
<S>                                                           <C>        <C>        <C>
Basic earnings per share:
  Net income................................................  $13,594    $ 7,894    $ 5,172
                                                              =======    =======    =======
  Weighted average shares outstanding.......................   19,305     18,456     16,224
                                                              =======    =======    =======
  Basic earnings per share..................................  $  0.70    $  0.43    $  0.32
                                                              =======    =======    =======
Diluted earnings per share:
  Net income................................................  $13,594    $ 7,894    $ 5,172
                                                              =======    =======    =======
  Weighted average shares outstanding.......................   19,305     18,456     16,224
  Assumed conversion of employee stock options..............    1,124        524      1,280
                                                              -------    -------    -------
  Shares used in diluted earnings per share calculation.....   20,429     18,980     17,504
                                                              =======    =======    =======
  Diluted earnings per share................................  $  0.67    $  0.42    $  0.30
                                                              =======    =======    =======
</TABLE>

    Options totaling 4,000, 1,328,585 and 845,640 in fiscal years ending
January 31, 2001, 2000 and 1999 respectively, have been excluded from the
diluted earnings per share computation, as the options were anti-dilutive.

9. CONTINGENCIES

    The Company is involved in various legal actions and claims which arise in
the normal course of business. In the opinion of management, the final
disposition of these matters will not have a material adverse effect on the
Company's financial position or results of operations.

10. SEGMENTS

    The tables below show revenues and income (loss) from operations for the
periods indicated for our four reportable business segments: Revenue
Enhancement, PaymentSolutions, Enterprise Solutions and CashSolutions. Our
customer projects are sold on a solution basis, so it is necessary to break them
down by segment and allocate accordingly. Included in "Corporate Unallocated"
are costs related to selling and marketing, unallocated corporate overhead
expense and general software management.

                                       51
<PAGE>
Business segment results include costs for research and development as well as
product royalty expense (in thousands):

YEAR ENDED JANUARY 31, 2001

<TABLE>
<CAPTION>
                                                           YEAR ENDED JANUARY 31, 2001
                               ------------------------------------------------------------------------------------
                                 REVENUE                        ENTERPRISE                    CORPORATE
                               ENHANCEMENT   PAYMENTSOLUTIONS   SOLUTIONS    CASHSOLUTIONS   UNALLOCATED    TOTAL
                               -----------   ----------------   ----------   -------------   -----------   --------
<S>                            <C>           <C>                <C>          <C>             <C>           <C>
Revenues:
  Consulting fees............    $40,008         $ 3,628          $27,739       $   340        $     --    $ 71,715
  Software license fees......         --          13,313               --         4,717              --      18,030
  Software maintenance
    fees.....................         --           8,482               --         2,741              --      11,223
  Software implementation
    fees.....................         --           6,698               --         2,600              --       9,298
                                 -------         -------          -------       -------        --------    --------
    Total revenues...........    $40,008         $32,121          $27,739       $10,398        $     --    $110,266
                                 =======         =======          =======       =======        ========    ========
Income (loss) from
  operations.................    $28,999         $  (395)         $ 9,535       $   505        $(18,440)   $ 20,204
                                 =======         =======          =======       =======        ========    ========
</TABLE>

YEAR ENDED JANUARY 31, 2000

<TABLE>
<CAPTION>
                                                           YEAR ENDED JANUARY 31, 2000
                               ------------------------------------------------------------------------------------
                                 REVENUE                        ENTERPRISE                    CORPORATE
                               ENHANCEMENT   PAYMENTSOLUTIONS   SOLUTIONS    CASHSOLUTIONS   UNALLOCATED    TOTAL
                               -----------   ----------------   ----------   -------------   -----------   --------
<S>                            <C>           <C>                <C>          <C>             <C>           <C>
Revenues:
  Consulting fees............    $19,849         $ 6,017          $20,558       $ 3,301        $     --    $ 49,725
  Software license fees......         --          10,567               --         3,160              --      13,727
  Software maintenance
    fees.....................         --           5,458               --         1,527              --       6,985
  Software implementation
    fees.....................         --           4,274               --           842              --       5,116
  Hardware and other fees....         --             267               --            --              --         267
                                 -------         -------          -------       -------        --------    --------
    Total revenues...........    $19,849         $26,583          $20,558       $ 8,830        $     --    $ 75,820
                                 =======         =======          =======       =======        ========    ========
Income (loss) from
  operations.................    $13,219         $ 1,181          $ 7,904       $ 3,504        $(14,574)   $ 11,234
                                 =======         =======          =======       =======        ========    ========
</TABLE>

YEAR ENDED JANUARY 31, 1999

<TABLE>
<CAPTION>
                                                           YEAR ENDED JANUARY 31, 1999
                               ------------------------------------------------------------------------------------
                                 REVENUE                        ENTERPRISE                    CORPORATE
                               ENHANCEMENT   PAYMENTSOLUTIONS   SOLUTIONS    CASHSOLUTIONS   UNALLOCATED    TOTAL
                               -----------   ----------------   ----------   -------------   -----------   --------
<S>                            <C>           <C>                <C>          <C>             <C>           <C>
Revenues:
  Consulting fees............    $10,422         $ 3,634          $10,961       $ 1,311        $     --    $ 26,328
  Software license fees......         --          12,350               --         3,977              --      16,327
  Software maintenance
    fees.....................         --           4,147               --           884              --       5,031
  Software implementation
    fees.....................         --           4,901               --         1,656              --       6,557
  Hardware and other fees....         --             774               --            --              --         774
                                 -------         -------          -------       -------        --------    --------
    Total revenues...........    $10,422         $25,806          $10,961       $ 7,828        $     --    $ 55,017
                                 =======         =======          =======       =======        ========    ========
Income (loss) from
  operations.................    $ 7,171         $ 3,826          $ 3,513       $ 3,101        $(10,461)   $  7,150
                                 =======         =======          =======       =======        ========    ========
</TABLE>

    Revenues derived from a single major customer accounted for approximately
27%, 24% and 11% of total revenue in the fiscal years ended January 31, 2001,
2000 and 1999, respectively. Revenue derived from our five largest customers
accounted for approximately 49%, 58% and 35% of total revenue in the fiscal
years ended January 31, 2001, 2000 and 1999, respectively.

                                       52
<PAGE>
    The Company markets its solutions in several foreign countries. Revenues for
fiscal years ended January 31, 2001, 2000 and 1999 are attributed to countries
based on the location of the customers (in thousands):

<TABLE>
<CAPTION>
                                               2001                    2000                    1999
                                        -------------------     -------------------     -------------------
<S>                                     <C>        <C>          <C>        <C>          <C>        <C>
United States.........................  $ 94,503     85.7%      $73,171      96.5%      $51,965      94.5%
United Kingdom........................     8,282      7.5         1,462       1.9         1,818       3.3
Australia.............................     4,097      3.7            33        --            --        --
Canada................................     3,217      2.9         1,114       1.5         1,234       2.2
Other.................................       167       .2            40        .1            --        --
                                        --------    -----       -------     -----       -------     -----
Total Revenue.........................  $110,266    100.0%      $75,820     100.0%      $55,017     100.0%
                                        ========    =====       =======     =====       =======     =====
</TABLE>

11. SUBSEQUENT EVENTS

    The Company began to develop with Knowledge Based Systems, Inc., ("KBSI"),
its CashForecaster suite of products in 1996 pursuant to a development contract.
KBSI provided the algorithm-based components for these products. This contract
was the subject of a lawsuit filed in September 2000 and was pending in the
United States District Court for the Northern District of Texas. On April 9,
2001, the Company entered into a settlement agreement with KBSI and on
April 11, 2001 all legal proceedings were dismissed. This settlement will not
have a material adverse effect on the Company's business, financial position or
results of operations.

    Effective March 31, 2001, the Company entered into an alliance with Xchange
Applications, Inc. ("Xchange"). As part of this alliance the Company will be the
exclusive provider of Xchange EnAct to the banking industry. In addition, the
Company and Xchange have entered into a reseller agreement for Xchange 7.
Xchange EnAct is one of five components included in Exchange 7 and is customer
relationship management software and methodology. As part of the reseller
agreement the Company paid $6.0 million in April 2001 and will pay up to an
additional $8.5 million over the next nine months to Xchange as a guaranteed
royalty. Accordingly, the Company will record the payments during fiscal 2001 as
"Prepaid expenses and other current assets" and record the related amortization
as a "Cost of revenue".

                                       53
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.

    None.

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

    The information set forth under the captions "Election of Directors" and
"Executive Officers of the Company" in the Company's definitive Proxy Statement
for the Company's 2001 Annual Meeting of Stockholders is incorporated herein by
reference.

    Ronald G. Steinhart was recently appointed a director of the Company to fill
the position of Wyn P. Lewis who retired from his position as an officer and
director of the Company subsequent to the fiscal year ending January 31, 2001.
Mr. Lewis will continue his affiliation with the Company in a part time advisory
capacity.

ITEM 11. EXECUTIVE COMPENSATION.

    The information set forth under the caption "Executive Compensation and
Other Matters" in the Company's definitive Proxy Statement for the Company's
2001 Annual Meeting of Stockholders is incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

    The information set forth under the caption "Outstanding Capital Stock and
Stock Ownership of Directors, Certain Executive Officers and Principal
Stockholders" in the Company's definitive Proxy Statement for the Company's 2001
Annual Meeting of Stockholders is incorporated herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

    The information set forth under the caption "Compensation and Other
Committee Interlocks and Insider Participation" in the Company's definitive
Proxy Statement for the Company's 2001 Annual Meeting of Stockholders is
incorporated herein by reference.

                                       54
<PAGE>
                                    PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.

<TABLE>
<S>      <C>  <C>
    (a)  1.   The following financial statements are filed as part of this
              report:

              Report of Ernst & Young LLP, Independent Auditors

              Consolidated Balance Sheets as of January 31, 2001 and 2000

              Consolidated Statements of Operations for the years ended
              January 31, 2001, 2000 and 1999

              Consolidated Statements of Stockholders' Equity for the
              years ended January 31, 2001, 2000 and 1999

              Consolidated Statements of Cash Flows for the years ended
              January 31, 2001, 2000 and 1999

              Notes to Consolidated Financial Statements

         2.   Consolidated Financial Statement Schedules

              Financial Statement Schedules for which provision is made in
              the applicable accounting regulations of the Securities and
              Exchange Commission have been excluded, as they are not
              required under the related instructions or the information
              required has been included in the Company's Consolidated
              Financial Statements.

         3.   The following documents are filed or incorporated by
              reference as exhibits to this report:
</TABLE>

<TABLE>
<CAPTION>
       EXHIBIT
       NUMBER                             DESCRIPTION OF EXHIBITS
---------------------                     -----------------------
<C>                     <S>
             3.1        Amended and Restated Certificate of Incorporation of the
                        Company (incorporated by reference to Exhibit 3.1 to the
                        Company's Registration Statement on Form S-1 (Registration
                        No. 333-48399)).

             3.2        Bylaws of the Company (incorporated by reference to Exhibit
                        3.2 to the Company's Registration Statement on Form S-1
                        (Registration No. 333-48399)).

             4.1        Specimen Stock Certificate (incorporated by reference to
                        Exhibit 4.1 to the Company's Registration Statement on Form
                        S-1 (Registration No. 333-48399)).

             4.2        Amended and Restated Certificate of Incorporation and Bylaws
                        of the Company (incorporated by reference to Exhibit 4.2 to
                        the Company's Registration Statement on Form S-1
                        (Registration No. 333-48399)).

           +10.1        Employment Agreement dated January 31, 1997 between the
                        Company and John D. Carreker, Jr. (incorporated by reference
                        to Exhibit 10.1 to the Company's Registration Statement on
                        Form S-1 (Registration No. 333-48399)).

           +10.2        Employment Agreement dated March 12, 1998 between the
                        Company and Wyn P. Lewis (incorporated by reference to
                        Exhibit 10.4 to the Company's Registration Statement on Form
                        S-1 (Registration No. 333-48399)).

           +10.3        Employment Agreement dated March 13, 1998 between the
                        Company and Royce D. Brown (incorporated by reference to
                        Exhibit 10.6 to the Company's Registration Statement on Form
                        S-1 (Registration No. 333-48399)).
</TABLE>

                                       55
<PAGE>

<TABLE>
<CAPTION>
       EXHIBIT
       NUMBER                             DESCRIPTION OF EXHIBITS
---------------------                     -----------------------
<C>                     <S>
           +10.4        Employment Agreement between the Company and Michael Hansen
                        (incorporated by reference to Exhibit 10.1 of the Company's
                        Registration Statement on Registration Form S-3
                        (Registration No. 333-47160)).

           +10.5        Amended and Restated Carreker-Antinori 1994 Long Term
                        Incentive Plan (incorporated by reference to Exhibit 10.7 to
                        the Company's Registration Statement on Form S-1
                        (Registration No. 333-48399)).

           +10.6        Carreker-Antinori Director Stock Option Plan (incorporated
                        by reference to Exhibit 10.8 to the Company's Registration
                        Statement on Form S-1 (Registration No. 333-48399)).

           +10.7        Carreker-Antinori Profit Sharing Incentive Plan
                        (incorporated by reference to Exhibit 10.9 to the Company's
                        Registration Statement on Form S-1 (Registration No.
                        333-48399)).

            10.8        Underwriting Agreement by and among the Company and certain
                        underwriters (incorporated by reference to Exhibit 1.1 of
                        the Company's Registration Statement on Form S-3
                        (Registration No. 333-47160)).

           +10.9        Indemnification Agreement between the Company and John D.
                        Carreker, Jr. (together with a schedule) (incorporated by
                        reference to Exhibit 10.14 to the Company's Registration
                        Statement on Form S-1 (Registration No. 333-48399)).

            10.10       Form of the Company's independent contractor agreement
                        (incorporated by reference to Exhibit 10.22 to the Company's
                        Registration Statement on Form S-1 (Registration No.
                        333-48399)).

            10.11       Office Lease between Granite Tower, Ltd. And the Company
                        dated as of March 31, 1999 (incorporated by reference to
                        Exhibit 10.26 of the Registration Form 10-K for fiscal year
                        ended January 31, 1999).

            10.12       Office Lease between Granite Tower, Ltd. And the Company
                        dated August 31, 1999 (incorporated by reference to Exhibit
                        10.16 of the Registration Form 10-K for fiscal year ended
                        January 31, 2000).

            21.1        Subsidiaries of the Company.

                            (a) Genisys Operation, Inc.

                            (b) Antinori Software, Inc.

                            (c) Carreker, Ltd.

                            (d) Cash Services Australia Pty, Ltd.

                            (e) Carreker Holdings Australia Pty, Ltd.

                            (f) Carreker Canada, Inc.

           *23.1        Consent of Ernst & Young LLP, Independent Auditors.

            24.1        Power of Attorney (included on first signature page).
</TABLE>

------------------------

+   Management contract or compensatory plan or arrangement. The Company will
    furnish a copy of any exhibit listed above to any shareholder without charge
    upon written request to Mr. Terry L. Gage, Chief Financial Officer, 4055
    Valley View Lane, Suite 1000, Dallas, TX 75244.

*   Filed herewith.

                                       56
<PAGE>
    (b) No reports on Form 8-K were filed during the last quarter of the period
covered by this Report.

    (c) The Index to Exhibits filed or incorporated by reference pursuant to
Item 601 of Regulation S-K and the Exhibits being filed with this Report are
included following the signature pages to this Form 10-K

    (d) Not applicable.

                                       57
<PAGE>
                               POWER OF ATTORNEY

    KNOW ALL MEN BY THESE PRESENTS that each of Carreker Corporation, a Delaware
corporation, and the undersigned directors and officers of Carreker Corporation
hereby constitutes and appoints John D. Carreker, Jr. and Terry L. Gage, or any
one of them, its or his true and lawful attorney-in-fact and agent, for it or
him and in its or his name, place and stead, in any and all capacities, with
full power to act alone, to sign any and all amendments to this Report, and to
file each such amendment to the Report, with all exhibits thereto, and any and
all other documents in connection therewith, with the Securities and Exchange
Commission, hereby granting unto said attorney-in-fact and agent full power and
authority to do and perform any and all acts and things requisite and necessary
to be done in and about the premises as fully to all intents and purposes as it
or he might or could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent may lawfully do or cause to be done by virtue hereof.

                                   SIGNATURES

    Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized.

<TABLE>
<S>                                                    <C>  <C>
                                                       CARREKER CORPORATION

                                                       By:  /s/ JOHN D. CARREKER, JR.
                                                            -----------------------------------------
                                                            John D. Carreker, Jr.
                                                            Chairman of the Board and
                                                            Chief Executive Officer
</TABLE>

Dated: April 25, 2001

    Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the Company
in the capacities indicated on April 25, 2001.

<TABLE>
<CAPTION>
                     SIGNATURES                                            TITLE
                     ----------                                            -----
<C>                                                    <S>
              /s/ JOHN D. CARREKER, JR.
     -------------------------------------------       Chairman of the Board and Chief Executive
                John D. Carreker, Jr.                    Officer (Principal Executive Officer)

                  /s/ TERRY L. GAGE                    Executive Vice President and Chief Financial
     -------------------------------------------         Officer (Principal Financial and Accounting
                    Terry L. Gage                        Officer)

                /s/ JAMES D. CARREKER
     -------------------------------------------       Director
                  James D. Carreker

                /s/ JAMES L. FISCHER
     -------------------------------------------       Director
                  James L. Fischer
</TABLE>

                                       58
<PAGE>

<TABLE>
<CAPTION>
                     SIGNATURES                                            TITLE
                     ----------                                            -----
<C>                                                    <S>
                 /s/ DONALD L. HOUSE
     -------------------------------------------       Director
                   Donald L. House

               /s/ RICHARD R. LEE, JR.
     -------------------------------------------       Director
                 Richard R. Lee, Jr.

                  /s/ DAVID K. SIAS
     -------------------------------------------       Director
                    David K. Sias

     -------------------------------------------       Director
                 Ronald G. Steinhart
</TABLE>

                                       59
<PAGE>
                                 EXHIBIT INDEX

<TABLE>
<CAPTION>
       EXHIBIT
---------------------
<C>                     <S>
             3.1        Amended and Restated Certificate of Incorporation of the
                        Company (incorporated by reference to Exhibit 3.1 to the
                        Company's Registration Statement on Form S-1 (Registration
                        No. 333-48399)).

             3.2        Bylaws of the Company (incorporated by reference to Exhibit
                        3.2 to the Company's Registration Statement on Form S-1
                        (Registration No. 333-48399)).

             4.1        Specimen Stock Certificate (incorporated by reference to
                        Exhibit 4.1 to the Company's Registration Statement on Form
                        S-1 (Registration No. 333-48399)).

             4.2        Amended and Restated Certificate of Incorporation and Bylaws
                        of the Company (incorporated by reference to Exhibit 4.2 to
                        the Company's Registration Statement on Form S-1
                        (Registration No. 333-48399)).

           +10.1        Employment Agreement dated January 31, 1997 between the
                        Company and John D. Carreker, Jr. (incorporated by reference
                        to Exhibit 10.1 to the Company's Registration Statement on
                        Form S-1 (Registration No. 333-48399)).

           +10.2        Employment Agreement dated March 12, 1998 between the
                        Company and Wyn P. Lewis (incorporated by reference to
                        Exhibit 10.4 to the Company's Registration Statement on Form
                        S-1 (Registration No. 333-48399)).

           +10.3        Employment Agreement dated March 13, 1998 between the
                        Company and Royce D. Brown (incorporated by reference to
                        Exhibit 10.6 to the Company's Registration Statement on Form
                        S-1 (Registration No. 333-48399)).

           +10.4        Employment Agreement between the Company and Michael Hansen
                        (incorporated by reference to Exhibit 10.1 of the Company's
                        Registration Statement on Registration Form S-3
                        (Registration No. 333-47160)).

           +10.5        Amended and Restated Carreker-Antinori 1994 Long Term
                        Incentive Plan (incorporated by reference to Exhibit 10.7 to
                        the Company's Registration Statement on Form S-1
                        (Registration No. 333-48399)).

           +10.6        Carreker-Antinori Director Stock Option Plan (incorporated
                        by reference to Exhibit 10.8 to the Company's Registration
                        Statement on Form S-1 (Registration No. 333-48399)).

           +10.7        Carreker-Antinori Profit Sharing Incentive Plan
                        (incorporated by reference to Exhibit 10.9 to the Company's
                        Registration Statement on Form S-1 (Registration No.
                        333-48399)).

            10.8        Underwriting Agreement by and among the Company and certain
                        underwriters (incorporated by reference to Exhibit 1.1 of
                        the Company's Registration Statement on Form S-3
                        (Registration No. 333-47160)).

           +10.9        Indemnification Agreement between the Company and John D.
                        Carreker, Jr. (together with a schedule) (incorporated by
                        reference to Exhibit 10.14 to the Company's Registration
                        Statement on Form S-1 (Registration No. 333-48399)).

            10.10       Form of the Company's independent contractor agreement
                        (incorporated by reference to Exhibit 10.22 to the Company's
                        Registration Statement on Form S-1 (Registration No.
                        333-48399)).

            10.11       Office Lease between Granite Tower, Ltd. And the Company
                        dated as of March 31, 1999 (incorporated by reference to
                        Exhibit 10.26 of the Registration Form 10-K for fiscal year
                        ended January 31, 1999).
</TABLE>

                                       60
<PAGE>

<TABLE>
<CAPTION>
       EXHIBIT
---------------------
<C>                     <S>
            10.12       Office Lease between Granite Tower, Ltd. And the Company
                        dated August 31, 1999 (incorporated by reference to Exhibit
                        10.16 of the Registration Form 10-K for fiscal year ended
                        January 31, 2000).

            21.1        Subsidiaries of the Company.

                            (g) Genisys Operation, Inc.

                            (h) Antinori Software, Inc.

                            (i) Carreker, Ltd.

                            (j) Cash Services Australia Pty, Ltd.

                            (k) Carreker Holdings Australia Pty, Ltd.

                            (l) Carreker Canada, Inc.

           *23.1        Consent of Ernst & Young LLP, Independent Auditors.

            24.1        Power of Attorney (included on first signature page).
</TABLE>

------------------------

+   Management contract or compensatory plan or arrangement. The Company will
    furnish a copy of any exhibit listed above to any shareholder without charge
    upon written request to Mr. Terry L. Gage, Chief Financial Officer, 4055
    Valley View Lane, Suite 1000, Dallas, Texas 75244

*   Filed herewith.

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