<Page>

                                  United States
                       Securities and Exchange Commission
                             Washington, D.C. 20549



                                    FORM 10-Q

[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the Period Ended July 31, 2001.

[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the Transition Period from _______________ to _________________.

Commission file number    0-24201
                       --------------------------

                              Carreker Corporation
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)


                Delaware                                  75-1622836
------------------------------------------   -----------------------------------
     (State or other jurisdiction of           (IRS Employer Identification No.)
     incorporation or organization)

     4055 Valley View Lane, #1000
     Dallas, Texas                               75244
------------------------------------------   -----------------------------------
  (Address of principal executive office)        (Zip Code)


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


--------------------------------------------------------------------------------
              (Former name, former address and former fiscal year,
                         if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter periods 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 the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practical date.

Common Stock, $.01 par value --- 21,883,970 shares as of August 31, 2001.

<Page>

                              CARREKER CORPORATION

                                      INDEX


<Table>
<Caption>

                                                                                     PAGE
                                                                                     ----
<S>                                                                                  <C>
PART I:           FINANCIAL INFORMATION

        ITEM 1.   FINANCIAL STATEMENTS (UNAUDITED)

                  CONDENSED CONSOLIDATED BALANCE SHEETS AT JULY 31, 2001 AND
                  JANUARY 31, 2001                                                     3

                  CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE
                  THREE AND SIX MONTHS ENDED JULY 31, 2001 AND 2000                    4

                  CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE
                  SIX MONTHS ENDED JULY 31, 2001 AND 2000                              5

                  NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS                 6


        ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                  AND RESULTS OF OPERATIONS                                           15

        ITEM 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK          26



PART II:          OTHER INFORMATION

        ITEM 1.   LEGAL PROCEEDINGS                                                   27

        ITEM 2.   CHANGES IN SECURITIES AND USE OF PROCEEDS                           27

        ITEM 3.   DEFAULTS UPON SENIOR SECURITIES                                     27

        ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                 27

        ITEM 5.   OTHER INFORMATION                                                   28

        ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K                                    28


SIGNATURES                                                                            29

</Table>







                                       2
<Page>

PART I FINANCIAL INFORMATION

      ITEM 1. FINANCIAL STATEMENTS


                                                   CARREKER CORPORATION
                                           CONDENSED CONSOLIDATED BALANCE SHEETS
                                                        (UNAUDITED)
                                                      (IN THOUSANDS)


<Table>
<Caption>

                                                            ASSETS
                                                                                          JULY 31,             JANUARY 31,
                                                                                            2001                  2001
                                                                                     -----------------    -------------------
<S>                                                                                  <C>                  <C>
CURRENT ASSETS
    Cash and cash equivalents.............................................           $         34,364     $           63,098
    Short-term investments................................................                         --                 15,407
    Accounts receivable, net..............................................                     55,161                 44,746
    Federal income tax receivable.........................................                      7,860                  5,372
    Prepaid software royalties............................................                      8,942                    635
    Prepaid expenses and other current assets.............................                      5,079                  1,919
    Deferred income taxes.................................................                        868                    678
                                                                                     -----------------    -------------------
Total current assets......................................................                    112,274                131,855

Property and equipment, net of accumulated depreciation ..................                      8,718                  5,888
Software costs, net of accumulated amortization...........................                     27,261                 10,222
Goodwill, net of accumulated amortization.................................                     66,885                     --
Intangible assets, net of accumulated amortization........................                     13,611                     --
Deferred loan costs.......................................................                        795                     --
Deferred income taxes.....................................................                      4,988                     29
Other assets..............................................................                        682                     80
                                                                                     -----------------    -------------------
Total assets..............................................................           $        235,214     $          148,074
                                                                                     =================    ===================

                                              LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
    Accounts payable......................................................           $          3,542     $            3,521
    Accrued compensation and benefits.....................................                     19,388                  1,925
    Other accrued expenses ...............................................                      4,692                  3,902
    Note payable .........................................................                        300                    880
    Income taxes payable .................................................                         --                    862
    Deferred revenue......................................................                     30,565                  9,010
    Accrued merger costs..................................................                      7,345                     --
                                                                                     -----------------    -------------------
Total current liabilities.................................................                     65,832                 20,100
Long-term debt............................................................                     45,000                     --
Deferred income taxes.....................................................                      3,473                  2,916
Deferred revenue..........................................................                      3,620                     --
                                                                                     -----------------    -------------------
Total liabilities.........................................................                    117,925                 23,016
                                                                                     -----------------    -------------------
                                                                                                   --                     --
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; 21,882 and 21,720 shares issued,
        respectively......................................................                        219                    217
    Additional paid-in capital............................................                     93,451                 90,873
    Deferred compensation.................................................                        (19)                    --
    Retained earnings.....................................................                     24,111                 34,440
    Less treasury stock, at cost:  18 common shares as of July 31, 2001
    and January 31, 2001..................................................                       (473)                  (472)
                                                                                     -----------------    -------------------
Total stockholders' equity................................................                    117,289                125,058
                                                                                     -----------------    -------------------
Total liabilities and stockholders' equity................................           $        235,214     $          148,074
                                                                                     =================    ===================

</Table>

                                               See accompanying notes.






                                                           3

<Page>

                                               CARREKER CORPORATION
                                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                                   (UNAUDITED)
                                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)


<Table>
<Caption>

                                                                     THREE MONTHS ENDED            SIX MONTHS ENDED
                                                                          JULY 31,                     JULY 31,
                                                                 ---------------------------  ---------------------------
                                                                     2001          2000           2001          2000
                                                                 ------------- -------------  ------------- -------------
<S>                                                              <C>           <C>            <C>           <C>
REVENUES:
  Consulting fees............................................... $   10,655     $   21,766    $   25,500     $  34,876
  Software license fees.........................................     12,057          1,872        17,292         6,045
  Software maintenance fees ....................................      6,437          2,713         9,633         4,995
  Software implementation fees .................................      4,703          2,311         6,831         4,806
                                                                 ------------- -------------  ------------- -------------
    Total revenues  ............................................     33,852         28,662        59,256        50,722

COST OF REVENUES:
  Consulting fees ..............................................      9,558          9,912        19,573        18,485
  Software license fees ........................................      1,788          1,264         2,954         2,407
  Write-off of capitalized software costs ......................      2,819             --         2,819            --
  Software maintenance fees ....................................      1,784            798         3,083         1,333
  Software implementation fees .................................      3,506          1,239         5,230         2,456
                                                                 ------------- -------------  ------------- -------------
    Total cost of revenues .....................................     19,455         13,213        33,659        24,681
                                                                 ------------- -------------  ------------- -------------
GROSS PROFIT ...................................................     14,397         15,449        25,597        26,041
                                                                 ------------- -------------  ------------- -------------

OPERATING COSTS AND EXPENSES:
  Selling, general and administrative ..........................     14,091          8,821        23,028        16,419
  Research and development .....................................      2,009          1,445         2,876         2,429
  Amortization of goodwill and intangible assets ...............      1,142             --         1,142            --
  Merger-related costs .........................................     15,596             --        15,596            --
                                                                 ------------- -------------  ------------- -------------
    Total operating costs and expenses .........................     32,838         10,266        42,642        18,848
                                                                 ------------- -------------  ------------- -------------
Income (loss) from operations ..................................    (18,441)         5,183       (17,045)        7,193

OTHER INCOME (EXPENSE):
  Interest income, net..........................................        568            394         1,338           781
  Interest expense, net.........................................        520              7           626            16
  Other income (expense): ......................................        (84)           (13)          (62)          (19)
                                                                 ------------- -------------  ------------- -------------
    Total other income (expense)................................        (36)           374           650           746

Income (loss) before provision (benefit) for income taxes.......    (18,477)         5,557       (16,395)        7,939
Provision (benefit) for income taxes ...........................     (6,836)         2,112        (6,066)        3,017
                                                                 ------------- -------------  ------------- -------------
Net income (loss)............................................... $  (11,641)    $    3,445    $  (10,329)    $   4,922
                                                                 ============= =============  ============= =============
Basic earnings (loss) per share................................. $    (0.53)    $     0.19    $    (0.47)    $    0.27
                                                                 ============= =============  ============= =============
Diluted earnings (loss) per share............................... $    (0.53)    $     0.18    $    (0.47)    $    0.25
                                                                 ============= =============  ============= =============
Shares used in computing basic earnings per share...............     21,863         18,549        21,813        18,524
Shares used in computing diluted earnings per share.............     21,863         19,417        21,813        19,442

</Table>

                                            See accompanying notes.





                                                       4

<Page>

<Table>
<Caption>

                                                   CARREKER CORPORATION
                                     CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                       (UNAUDITED)
                                                      (IN THOUSANDS)

                                                                                                SIX MONTHS ENDED
                                                                                                    JULY 31,
                                                                                      -------------------------------------
                                                                                             2001               2000
                                                                                      ------------------  -----------------
<S>                                                                                   <C>                 <C>
OPERATING ACTIVITIES:
  Net income (loss).......................................................             $     (10,329)       $      4,922
  Adjustments to reconcile net income (loss) to net cash (used in)
   provided by operating activities:
    Depreciation and amortization of property and equipment...............                     1,604               1,186
    Amortization of software costs........................................                     2,493               1,694
    Amortization of goodwill and intangible assets .......................                     1,142                  --
    Compensation earned under employee/director stock option plan.........                        37                 132
    Tax benefit from exercises of stock options...........................                     1,445                  --
    Deferred income taxes.................................................                    (4,592)                743
    Non-cash portion of merger-related costs..............................                    15,122                  --
    Write-off of capitalized software costs ..............................                     2,819                  --
    Provision for doubtful accounts.......................................                       826                 960
    Amortization of software royalties ...................................                        88                  --
    Amortization of deferred loan costs ..................................                        43                  --
    Loss on sale of asset ................................................                         9                  --
    Changes in operating assets and liabilities, net of effects of
     acquisitions
      Accounts receivable.................................................                    (1,430)             (9,120)
      Prepaid expenses and other assets...................................                    (2,782)             (1,291)
      Prepayment of software royalty......................................                    (9,000)                 --
      Accounts payable and accrued expenses ..............................                    (1,430)              1,690
      Income taxes payable/receivable.....................................                    (3,349)               (300)
      Deferred revenue....................................................                     1,619                 269
                                                                                      -----------------   -----------------
Net cash (used in) provided by operating activities.......................                    (5,665)                885


INVESTING ACTIVITIES:
  Purchases of short-term investments.....................................                        --              (9,300)
  Sales and maturities of short-term investments..........................                    15,407              10,874
  Acquisitions, net of cash acquired......................................                   (77,849)             (5,268)
  Purchases of property and equipment.....................................                    (2,145)             (1,732)
  Computer software costs capitalized.....................................                    (3,164)               (358)
  Proceeds from disposition of assets ....................................                        22                  --
                                                                                      -----------------   -----------------
Net cash used in investing activities.....................................                   (67,729)             (5,784)

FINANCING ACTIVITIES:
  Purchase of treasury stock..............................................                        (1)                 --
  Proceeds from issuance of long-term debt................................                    45,000                  --
  Payment of deferred loan costs..........................................                      (838)                 --
  Proceeds from exercises of stock options................................                     1,079                 793
  Payments on notes payable...............................................                      (580)                 --
                                                                                      -----------------   -----------------
Net cash provided by financing activities.................................                    44,660                 793
                                                                                      -----------------   -----------------
Net decrease in cash and cash equivalents.................................                   (28,734)             (4,106)
Cash and cash equivalents at beginning of period..........................                    63,098              25,973
                                                                                      -----------------   -----------------
Cash and cash equivalents at end of period................................             $      34,364        $     21,867
                                                                                      =================   =================

Supplemental disclosures of cash flow information:
  Cash paid for interest..................................................             $         235        $         16
                                                                                      =================   =================
  Cash paid for income taxes, net.........................................             $         422        $      2,545
                                                                                      =================   =================
</Table>

                                                   See accompanying notes.


                                                             5
<Page>



                              CARREKER CORPORATION
                    NOTES TO CONDENSED CONSOLIDATED FINANCIAL
               STATEMENTS FOR THE THREE AND SIX MONTHS ENDED JULY
                                31, 2001 AND 2000

                                     PART I
                                     ------

1.       BASIS OF PRESENTATION AND NEW ACCOUNTING STANDARDS

    The accompanying condensed consolidated unaudited financial statements and
notes thereto have been prepared in accordance with the rules and regulations of
the Securities and Exchange Commission for Form 10-Q and include all of the
information and disclosures required by generally accepted accounting principles
for interim financial reporting. The results of operations for the three and six
months ended July 31, 2001 and 2000 are not necessarily indicative of the
results for the full year.

    These financial statements should be read in conjunction with the financial
statements, accounting policies and financial notes thereto included in the
Company's Annual Report on Form 10-K for the fiscal year ended January 31, 2001
filed with the Securities and Exchange Commission. In the opinion of management,
the accompanying condensed consolidated unaudited financial statements reflect
all adjustments (consisting only of normal recurring adjustments) which are
necessary for a fair representation of financial results for the interim periods
presented.

    In June 2001, the Financial Accounting Standards Board issued Statements of
Financial Accounting Standards No. 141, BUSINESS COMBINATIONS, and No. 142,
GOODWILL AND OTHER INTANGIBLE ASSETS, effective for fiscal years beginning after
December 15, 2001. Under the new rules, goodwill and intangible assets deemed to
have indefinite lives will no longer be amortized but will be subject to annual
impairment tests in accordance with the Statements. Other intangible assets will
continue to be amortized over their useful lives. The Company will apply the new
rules on accounting for goodwill and other intangible assets beginning in the
first quarter of 2002. Application of the nonamortization provisions of the
Statement is expected to result in an increase in net income of $6.8 million
($0.31 per share using the dilutive number of shares at July 31, 2001) per year.
During 2002, the Company will perform the first of the required impairment tests
of goodwill and indefinite lived intangible assets as of February 1, 2002 and
has not yet determined what the effect of these will be on the earnings and
financial position of the Company.

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


2.       BUSINESS ACQUISITIONS

    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 and was to be
amortized over a four year period. However, during the three months ended July
31, 2001, the Company recorded a non-cash charge of $2.8 million representing
the write-off of the remaining net book value of the capitalized software. See
footnote 10.

    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 other criteria are met.

    On June 6, 2001, the Company completed the acquisition of Check Solutions
Company, a New York general partnership ("Check Solutions") for $109.5 million
in cash, plus an additional $1.8 million of direct acquisition costs. Check
Solutions is a check and image processing software and installation business
that services the payment-processing sector of the financial industry. The
operating results of Check Solutions are reported in the Business Segment and
Revenue Concentration footnote in the Global Technology Solutions segment. The
Company funded the acquisition through $64.5 million of its cash, and funded the
remaining $45.0 million from proceeds under the Revolving Credit Agreement as
described in footnote 11.


                                       6
<Page>


    The acquisition was accounted for by the purchase method of accounting, and
accordingly, the statements of operations include the results of Check Solutions
beginning June 6, 2001. The assets acquired and liabilities assumed were
recorded at estimated fair values as determined by the Company's management,
based on information currently available and on current assumptions as to future
operations.

    The Company has obtained preliminary independent appraisals of the fair
values of the identified intangible assets, and their remaining useful lives,
which are being amortized on a straight-line basis. Accordingly, the allocation
of the purchase price is subject to revision, which is not expected to be
material, based on the final determination of the appraised fair values.

    A summary of the assets acquired and liabilities assumed in the acquisition
follows (In thousands):

<Table>

     <S>                                                                  <C>
     Net assets of Check Solutions......................................  $     4,162
     Current technology and software products (estimated life of
      5-6 years)........................................................       23,200
     Customer relationships (estimated life of 6 years).................        8,400
     Assembled workforce (estimated life of 6 years)....................        5,600
     Goodwill (estimated life of 15 years)..............................       67,638
     In-process research and development................................        2,300
                                                                        --------------
           Total purchase price.........................................  $   111,300
                                                                        ==============
</Table>

    In connection with the acquisition of Check Solutions, a portion of the
purchase price was allocated to acquired in-process research and development
("IPR&D"). The $2.3 million attributed to IPR&D was expensed on the date of the
acquisition as the IPR&D projects had not reached technological feasibility nor
had any alternative future use.

    The following unaudited pro forma financial information for the three and
six months ended July 31, 2001 and 2000, assumes the Check Solutions acquisition
occurred at the beginning of the respective periods (In thousands, except per
share data).

<Table>
<Caption>
                                                   THREE MONTHS ENDED JULY 31,         SIX MONTHS ENDED JULY 31,
                                                --------------------------------  ---------------  ----------------
                                                     2001             2000              2001             2000
                                                ---------------  ---------------  ---------------  ----------------
     <S>                                        <C>              <C>              <C>              <C>

     Revenue....................................$    37,344      $     37,940     $     74,013      $    67,092
     Net income (loss)..........................$   (12,657)     $        634     $    (13,280)     $    (1,789)
     Primary and diluted earnings (loss) per
       share....................................$     (0.58)     $       0.03     $      (0.61)     $     (0.10)
</Table>

    The unaudited pro-forma financial information for the three months ended
July 31, 2001 combines the Company's statement of operations for the three
months ended July 31, 2001 which includes Check Solutions since the acquisition
date of June 6, 2001 with Check Solutions' historical May 2001 statement of
operations. The unaudited pro-forma financial information for the three months
ended July 31, 2000 combines the Company's historical statement of operations
for the three months ended July 31, 2000 with Check Solutions' historical
statement of operations for the three months ended June 30, 2000. The unaudited
pro-forma financial information for the six months ended July 31, 2001 combines
the Company's statement of operations for the six months ended July 31, 2001,
which includes Check Solutions since the acquisition date of June 6, 2001 with
Check Solutions historical statement of operations for the four months ended May
31, 2001. The unaudited pro-forma financial information for the six months ended
July 31, 2000 combines the Company's historical statement of operations for the
six months ended July 31, 2000 with Check Solutions' historical statement of
operations for the six months ended June 30, 2000.

    The pro-forma information reflects adjustments for amortization of
software costs, goodwill and other intangible assets, additional interest
expense and amortization of deferred loan costs related to the new credit
agreement, a reduction in interest income, and the income tax impact of these
adjustments.

    The unaudited pro forma financial information has been prepared for
comparative purposes only and is not necessarily indicative of the results of
operations that may occur in the future or what would have occurred had the
acquisition of Check Solutions been affected on the dates indicated.


                                       7
<Page>


3.       CASH AND CASH EQUIVALENTS

    The Company considers all highly liquid investments with maturities of three
months or less when purchased to be cash equivalents. At July 31, 2001, cash
equivalents consisted principally of an overnight investment account maintained
with a nationally recognized financial institution and shares in a mutual fund
that invests principally in U.S. Treasury Securities.


4.       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 such
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. The fair value of
debt securities is determined based upon current market value price quotes by
security. As of July 31, 2001, all short-term investments had been liquidated.


5.       ACCOUNTS RECEIVABLE

    Accounts Receivable include unbilled amounts that represent receivables for
work performed, or for software delivered which are billed shortly after the end
of the period or for which billings upon mutual agreement have not been
presented to the customers. These receivables are generally billed and collected
within one year of the completion of the service, or the delivery of the
software. Accounts receivable include $31,893,000 and $24,055,000 of unbilled
receivables at July 31, 2001 and January 31, 2001, respectively.

6.       DEFERRED LOAN COSTS

    Deferred loan costs consist of loan closing costs and other administrative
expenses associated with the Revolving Credit Agreement. The costs are being
amortized over the 36 month life of the credit agreement.













                                       8
<Page>

7.       EARNINGS PER SHARE

    Basic earnings per share is computed by 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, if dilutive. The number of additional shares is calculated using the
treasury stock method.

    The following table sets forth the computation of basic and diluted earnings
per share for the three and six months ended July 31, 2001 and 2000 (In
thousands, except per share amounts):


<Table>
<Caption>

                                                                     THREE MONTHS ENDED              SIX MONTHS ENDED
                                                                         JULY 31,                       JULY 31,
                                                               -----------------------------  ------------------------------
                                                                    2001           2000           2001             2000
                                                               --------------  -------------  --------------  --------------
<S>                                                            <C>             <C>            <C>             <C>
Basic earnings per share:
   Net income (loss)..........................................  $  (11,641)     $   3,445      $  (10,329)     $   4,922
                                                               ==============  =============  ==============  ==============
   Weighted average shares outstanding........................      21,863         18,549          21,813         18,524
                                                               ==============  =============  ==============  ==============
   Basic earnings (loss) per share............................  $    (0.53)     $    0.19      $    (0.47)     $    0.27
                                                               ==============  =============  ==============  ==============

Diluted earnings per share:
   Net income (loss)..........................................  $  (11,641)     $   3,445      $  (10,329)     $   4,922
                                                               ==============  =============  ==============  ==============

   Weighted average shares outstanding........................      21,863         18,549          21,813         18,524
   Assumed conversion of employee stock options...............          --            868              --            918
                                                               --------------  -------------  --------------  --------------

   Shares used in diluted earnings per share calculation......      21,863         19,417          21,813         19,442
                                                               ==============  =============  ==============  ==============

   Diluted earnings (loss) per share..........................  $    (0.53)     $    0.18      $    (0.47)     $    0.25
                                                               ==============  =============  ==============  ==============

</Table>














                                                     9

<Page>

8.       BUSINESS SEGMENTS AND REVENUE CONCENTRATION

    The tables below show revenues and income (loss) from operations for the
periods indicated for our three reportable business segments: Revenue
Enhancement, Global Technology Solutions and Enterprise Solutions. Our customer
projects are sold on a solution basis, so it is necessary to break them down by
segment and allocate accordingly. During the three and six months ended July 31,
2001, the Company updated the composition of its reportable business segments to
combine the Cash Solutions and Payment Solutions business segments with Check
Solutions to form the Global Technology Solutions business segment. Segment
information from all prior periods have been reclassified to conform with the
current presentation. Included in "Corporate Unallocated" are costs related to
selling and marketing, unallocated corporate overhead expense and general
software management. Business segment results include costs for research and
development as well as product royalty expense, the amortization of goodwill and
intangible assets, the write-off of capitalized software costs and
merger-related costs (In thousands):


<Table>
<Caption>

                                                                           THREE MONTHS ENDED JULY 31, 2001
                                               -----------------------------------------------------------------------------------
                                                                     Global
                                                   Revenue         Technology       Enterprise      Corporate
                                                 Enhancement       Solutions        Solutions      Unallocated          Total
                                               ---------------  ---------------  ---------------  --------------   ---------------
<S>                                            <C>              <C>              <C>              <C>              <C>
Revenues:
    Consulting fees..........................  $       5,790    $        402     $      4,463     $         --     $     10,655
    Software license fees....................             60          11,997               --               --           12,057
    Software maintenance fees................             --           6,437               --               --            6,437
    Software implementation fees.............            524           4,179               --               --            4,703
    Intercompany revenue.....................             --             (32)              32               --               --
                                               ---------------  ---------------  ---------------  --------------   ---------------
       Total revenues........................  $       6,374    $     22,983     $      4,495     $         --     $     33,852
                                               ===============  ===============  ===============  ==============   ===============

Income (loss) from operations before
  amortization of goodwill and intangible
  assets and unusual charges.................  $       1,401    $      5,980     $        314     $     (6,579)    $      1,116

    Amortization of goodwill and intangible
     assets..................................             --          (1,142)              --               --           (1,142)
    Write-off of capitalized software costs .             --          (2,819)              --               --           (2,819)
    Merger-related costs.....................             --         (15,596)              --               --          (15,596)
                                               ---------------  ---------------  ---------------  --------------   ---------------
Income (loss) from operations................  $       1,401    $    (13,577)    $        314     $     (6,579)    $    (18,441)
                                               ===============  ===============  ===============  ==============   ===============

</Table>


<Table>
<Caption>

                                                                           THREE MONTHS ENDED JULY 31, 2000
                                               -----------------------------------------------------------------------------------
                                                                     Global
                                                   Revenue         Technology       Enterprise      Corporate
                                                 Enhancement       Solutions        Solutions      Unallocated          Total
                                               ---------------  ---------------  ---------------  --------------   ---------------
<S>                                            <C>              <C>              <C>              <C>              <C>
Revenues:
    Consulting fees..........................  $      14,763    $      1,087     $      5,916     $         --     $     21,766
    Software license fees....................             --           1,872               --               --            1,872
    Software maintenance fees................             --           2,713               --               --            2,713
    Software implementation fees.............             --           2,311               --               --            2,311
                                               ---------------  ---------------  ---------------  --------------   ---------------
       Total revenues........................  $      14,763    $      7,983     $      5,916     $         --     $     28,662
                                               ===============  ===============  ===============  ==============   ===============

Income (loss) from operations before
  amortization of goodwill and intangible
   assets and unusual charges................  $      11,485    $     (2,829)    $      1,679     $     (5,152)    $      5,183

    Amortization of goodwill and intangible
    assets...................................             --              --               --               --               --
    Write-off of capitalized software costs .             --              --               --               --               --
    Merger-related costs.....................             --              --               --               --               --
                                               ---------------  ---------------  ---------------  --------------   ---------------

Income (loss) from operations................  $      11,485    $     (2,829)    $      1,679     $     (5,152)    $      5,183
                                               ===============  ===============  ===============  ==============   ===============

</Table>


                                                        10

<Page>


<Table>
<Caption>

                                                                           SIX MONTHS ENDED JULY 31, 2001
                                               -----------------------------------------------------------------------------------
                                                                     Global
                                                   Revenue         Technology       Enterprise      Corporate
                                                 Enhancement       Solutions        Solutions      Unallocated          Total
                                               ---------------  ---------------  ---------------  --------------   ---------------
<S>                                            <C>              <C>              <C>              <C>              <C>
Revenues:
    Consulting fees.........................   $      13,638    $        987     $     10,875     $         --     $      25,500
    Software license fees...................              60          17,232               --               --            17,292
    Software maintenance fees...............              --           9,633               --               --             9,633
    Software implementation fees............             524           6,307               --               --             6,831
    Intercompany revenue....................              --             (32)              32               --                --
                                               ---------------  ---------------  ---------------  --------------   ---------------
       Total revenues.......................   $      14,222    $     34,127     $     10,907     $         --     $      59,256
                                               ===============  ===============  ===============  ==============   ===============

Income (loss) from operations before
  amortization of goodwill and intangible
  assets and unusual charges................   $       5,912    $      7,290     $      1,246     $    (11,936)    $       2,512

    Amortization of goodwill and intangible
     assets.................................              --          (1,142)              --               --            (1,142)
    Write-off of capitalized software costs               --          (2,819)              --               --            (2,819)
    Merger-related costs....................              --         (15,596)              --               --           (15,596)
                                               ---------------  ---------------  ---------------  --------------   ---------------
Income (loss) from operations...............   $       5,912    $    (12,267)    $      1,246     $    (11,936)    $     (17,045)
                                               ===============  ===============  ===============  ==============   ===============

</Table>


<Table>
<Caption>

                                                                           SIX MONTHS ENDED JULY 31, 2000
                                               -----------------------------------------------------------------------------------
                                                                     Global
                                                   Revenue         Technology       Enterprise      Corporate
                                                 Enhancement       Solutions        Solutions      Unallocated          Total
                                               ---------------  ---------------  ---------------  --------------   ---------------
<S>                                            <C>              <C>              <C>              <C>              <C>
Revenues:
    Consulting fees.........................   $      20,484    $      2,400     $     11,992     $         --     $      34,876
    Software license fees...................              --           6,045               --               --             6,045
    Software maintenance fees...............              --           4,995               --               --             4,995
    Software implementation fees............              --           4,806               --               --             4,806
                                               ---------------  ---------------  ---------------  --------------   ---------------
       Total revenues.......................   $      20,484    $     18,246     $     11,992     $         --     $      50,722
                                               ===============  ===============  ===============  ==============   ===============

Income (loss) from operations before
  amortization of goodwill and intangible
  assets and unusual charges................   $      14,800    $     (2,260)    $      3,871     $     (9,218)    $       7,193

    Amortization of goodwill and intangible
     assets.................................              --              --               --               --                --
    Write-off of capitalized software costs               --              --               --               --                --
    Merger-related costs....................              --              --               --               --                --
                                               ---------------  ---------------  ---------------  --------------   ---------------
Income (loss) from operations...............   $      14,800    $     (2,260)    $      3,871     $     (9,218)    $       7,193
                                               ===============  ===============  ===============  ==============   ===============

</Table>




                                                        11

<Page>


    The following table summarizes revenue concentration for our largest
customer and top five customers during the periods indicated. Customers
comprising each category are determined for the period indicated irrespective of
companies comprising prior period amounts:

<Table>
<Caption>
                                                                    THREE MONTHS ENDED              SIX MONTHS ENDED
                                                                         JULY 31,                       JULY 31,
                                                               -----------------------------  -----------------------------
                                                                    2001            2000            2001          2000
                                                               --------------  -------------  --------------  -------------
<S>                                                            <C>             <C>            <C>             <C>

Single customer...............................................        20%            47%             15%           35%
Top five customers............................................        41%            72%             41%           61%

</Table>

    The Company markets its solutions in several foreign countries. Revenue for
the following periods are attributed to countries based on locations of the
customers (In thousands):

<Table>
<Caption>
                                                               THREE MONTHS ENDED
                                      ----------------------------------------------------------------------
                                                   JULY 31,                             JULY 31,
                                                     2001                                 2000
                                      ----------------------------------------------------------------------
   <S>                                <C>                  <C>              <C>                 <C>
   United States..................... $        26,300            78%        $        24,079          84%
   United Kingdom....................           1,001             3                   4,470          16
   Australia.........................           2,091             6                      82          --
   Canada............................           4,190            12                      31          --
   Other.............................             270             1                      --          --
                                      ----------------     -------------    ----------------    ------------
       Total revenue................. $        33,852           100%        $        28,662         100%
                                      ================     =============    ================    ============
</Table>

<Table>
<Caption>
                                                                 SIX MONTHS ENDED
                                       ---------------------------------------------------------------------
                                                    JULY 31,                            JULY 31,
                                                      2001                                2000
                                      ----------------------------------------------------------------------
   <S>                                <C>                  <C>              <C>                 <C>
   United States..................... $        43,428            73%        $        43,835          86%
   United Kingdom....................           7,898            13                   5,551          11
   Australia.........................           2,743             5                   1,188           2
   Canada............................           4,879             8                     148           1
   Other.............................             308             1                      --          --
                                      ----------------     -------------    ----------------    ------------
       Total revenue................. $        59,256           100%        $        50,722         100%
                                      ================     =============    ================    ============
</Table>


9.       STRATEGIC ALLIANCE

    Effective March 31, 2001, the Company entered into an alliance with
Exchange Applications, Inc. ("Xchange"). As part of this alliance the Company
will be the exclusive provider of Xchange EnAct to the banking industry
through September 30, 2002. In addition, the Company and Xchange have entered
into a reseller agreement for Xchange 7. Xchange EnAct is one of five
components included in Xchange 7 and is customer relationship management
software and methodology. As part of the EnAct agreement the Company paid
$9.0 million through July 31, 2001 and will pay up to an additional $3.5
million through December 15, 2001 to Xchange as a guaranteed royalty.
Accordingly, the Company will record the payments during fiscal 2001 as
"Prepaid software royalties" and record the related amortization as a "Cost
of revenue". The Company periodically evaluates the future realization of the
prepaid royalty and charges to "cost of revenue" any amount deemed unlikely
to be amortized based on revenues realized from this product. The exclusivity
component of this agreement is renewable October 2002 at the discretion of
the Company subject to the payment of additional royalties.

                                      12
<Page>


10.      MERGER-RELATED COSTS AND WRITE-OFF OF CAPITALIZED SOFTWARE COSTS

    In connection with the acquisition of Check Solutions, the Company recorded
$15.6 million in merger-related costs (consisting of $11.3 million attributable
to cost of revenues, $2.3 million attributable to research and development, and
$2.0 million attributable to selling, general and administrative costs).
Additionally, during the quarter ended July 31, 2001 the Company wrote-off $2.8
million of capitalized software costs. These costs are summarized below (In
thousands):

<Table>
<Caption>
                                                     ---------------------------------------
                                                                            WRITE-OFF OF
                                                       MERGER-RELATED        CAPITALIZED
                                                           COSTS           SOFTWARE COSTS
                                                     -------------------  ------------------
     <S>                                             <C>                  <C>
     Workforce reductions.........................    $      1,925          $          --
     Charges relating to CheckFlow Suite..........          10,833                     --
     In-process research and development
       costs......................................           2,300                     --
     Facility closures............................             240                     --
     Other........................................             298                     --
     Capitalized X-Port Vault product costs.......              --                  2,819
                                                     -------------------  ------------------
     Total........................................    $     15,596          $       2,819
                                                     ===================  ==================
</Table>

    Included in merger-related costs was $1.9 million of cash termination
benefits associated with the separation of approximately 50 employees. Most of
the affected employees will leave their positions by October 31, 2001.

    After an extensive review of the CheckFlow Suite product line, and
considering the difficulties reported to the Company by customers with
achieving the business functionality originally envisioned for the CheckFlow
Suite, management determined that the CheckFlow Suite was no longer viable in
the market in the form originally developed. The Company developed the
CheckFlow Suite with PegaSystems, Inc. ("Pega") under a Product Development,
Distribution and Sublicensing Agreement effective May 5, 1999 (the
"Agreement"). Pega filed suit to restrain the Company from developing,
marketing, licensing, advertising, leasing or selling any products, including
certain Exceptions Management ("EM") products acquired during the Check
Solutions business combination, that allegedly compete with products jointly
developed under the Agreement. On August 27, 2001, the Company sent Pega
notice of termination of the Agreement. That same day, the Company initiated
an arbitration proceeding seeking damages for Pega's prior and material
breaches of the Agreement.

    The charges related to CheckFlow Suite included a write-off of
capitalized software costs, accounts receivable net of deferred revenue,
settlements and estimated implementation cost for existing CheckFlow
customers, write-off of prepaid royalties previously paid to Pega, and
payments under existing work orders and other product wind-down costs.

    As described in footnote 2, a $2.3 million in-process research and
development charge was recorded reflecting the estimated fair value of
acquired research and development projects at Check Solutions, which have not
yet reached technological feasibility or that have no alternative future use.

    The facility closure charge includes $240,000 for office space, which will
no longer be utilized as a result of the acquisition.











                                      13
<Page>


    The activity related to the merger-related costs reserve balance is as
follows (In thousands):

<Table>
<Caption>
                                          -------------------------------------------------------------------------------------
                                                              Charges relating
                                             Workforce          to CheckFlow         Facility
                                            Reductions             Suite             Closures         Other          Total
                                          ----------------  --------------------   --------------  -------------  -------------
<S>                                       <C>               <C>                    <C>             <C>            <C>

May 1, 2001 reserve balance.............. $          --     $              --      $        --     $       --     $       --
Merger costs, excluding in-process
  research and development costs.........         1,925                10,833              240            298         13,296
Cash paid................................          (305)                 (317)              --             --           (622)
Non-cash charges against reserve.........            --                (5,181)              --           (298)        (5,479)
Other....................................            --                   150               --             --            150
                                          ----------------  --------------------   --------------  -------------  -------------
July 31, 2001 reserve balance............ $       1,620     $           5,485      $       240     $       --     $    7,345
                                          ================  ====================   ==============  =============  =============
</Table>

    During the second quarter of fiscal 2001, in connection with the Company's
periodic impairment review of its portfolio of software products, the Vault
software acquired in the X-Port business combination in May 2000 was deemed to
be impaired. Based on the Company's calculation of the expected cash flows of
the product, a $2.8 million non-cash charge was recorded. The charge resulted
from the loss of two key transactions and the projected changes in the approach
to selling and delivering the software and related services under a time or
usage model.

11.      REVOLVING CREDIT AGREEMENT

    On June 6, 2001, the Company entered into a three-year revolving credit
agreement with a group of banks in an amount not to exceed $60.0 million. All
borrowings are due on June 5, 2004. Borrowings under the credit agreement bear
interest equal to either the greater of prime or federal funds rate plus a
margin ranging from 0.00% to 0.75% depending on the Company's ratio of funded
debt to EBITDA; or LIBOR plus a margin equal to 1.50% to 2.25% depending on the
Company's ratio of funded debt to EBITDA. Interest payments are due quarterly.
The Company is required to pay a commitment fee equal to 0.25% to 0.50%
depending on the Company's ratio of funded debt to EBITDA on the unused amount
of the revolving credit agreement. The revolving credit agreement contains
customary affirmative and negative covenants including financial covenants
requiring the maintenance of specified interest coverage, ratio of EBITDA to
funded debt, and ratio of accounts receivable, cash and short-term investments
to funded debt. Additionally, the payment of dividends is precluded subject to
the approval of the banks. As of July 31, 2001, the Company believes it is in
compliance with the covenants of the revolving credit agreement. Substantially
all of the Company's assets collateralize this Revolving Credit Agreement.

    At July 31, 2001, the Company has borrowed $45.0 million to fund the
acquisition of Check Solutions and has available $15.0 million under the
Revolving Credit Agreement. Interest expense on the Revolving Credit Agreement
was $421,000 during the six month period ended July 31, 2001.















                                      14
<Page>


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

    All statements other than statements of historical fact contained in this
report, including statements in this "Management's Discussion and Analysis of
Financial Condition and Results of Operations" concerning our financial position
and liquidity, results of operations, prospects for future growth, and other
matters are forward-looking statements. Although we believe that the
expectations reflected in such forward-looking statements are reasonable, no
assurance can be given that such expectations will prove correct. Factors that
could cause our results to differ materially from the results discussed in, or
contemplated by, such forward-looking statements include the risks described
under "Risk Factors" in the company's Form 10-K for the fiscal year ended
January 31, 2001, on file with the Commission. Such risks include, without
limitation, risks associated with our acquisition of Check Solutions, 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. All forward-looking statements in this report are
expressly qualified in their entirety by the cautionary statements in this
paragraph, in "Risk Factors" (as set forth in the aforementioned Form 10-K) and
elsewhere in this report.


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 Check Solutions in June 2001, we were able to significantly
enhance our portfolio of software products. The acquisition of Check Solutions
was accounted for as a purchase.

    We derive our revenues from consulting and management service fees, software
license fees, software maintenance fees, and software implementation 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
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 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 paid 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). In an
effort to allow customers to more closely match expected benefits from our
services with payments to us, during the third quarter of fiscal 2001, we have
begun to offer payment terms which extend beyond 12 months. When we enter into
an agreement which has a significant component of the total amount payable under
the agreement due beyond 12 months, revenue under the arrangement will be
recognized as payments become due and


                                      15
<Page>


payable. Under this approach, upon contract signing, a completed backlog of
revenue is established which is incrementally recognized as revenue over
future quarters as amounts become due and payable under the agreement. When
fees are to be paid based on a percentage of actual revenues and/or savings to
our customers, 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 continue to account for a large percentage of our
revenues in the future. As a consequence of the use of 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. 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 but not to exceed twelve months. 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 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,
including software enhancements, patches 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.

    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 accordance with generally accepted accounting principles, we capitalize
software development costs incurred in developing a product once technological
feasibility of the product has been determined. 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 July 31, 2001, our capitalized software
development costs, net of accumulated amortization, were $27.3 million.





                                      16
<Page>


    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 three complementary groups. These groups,
Revenue Enhancement, Global Technology Solutions and Enterprise Solutions, we
believe offer products and services that, when combined, deliver optimal
benefits. During the second quarter of fiscal 2001, the Company combined the
Cash Solutions group with the Payment Solutions group, along with the
acquisition of Check Solutions, to form the Global Technology Solutions group
reflecting the common thread of technology between these activities. The Check
Solutions suite of products are also included within the Global Technology
Solutions group.

    REVENUE ENHANCEMENT. Revenue Enhancement consulting services enable banks
to improve workflows, internal operational processes and customer pricing
structures.

<Table>
<Caption>
-----------------------------------------------------------------------------------------------------------------------------------
         SOLUTION                              DESCRIPTION                                          PRODUCTS OFFERED
-----------------------------------------------------------------------------------------------------------------------------------
<S>                        <C>                                                               <C>

Revenue Enhancement        Provides consulting services that assess the                      Revenue Enhancement Consulting
                           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.

EnAct                      EnAct is one of the five components included in                   EnAct
                           Xchange 7 and is a customer relationship management
                           software and methodology. Xchange 7 enables companies
                           to focus their resources on customers who represent
                           the highest potential value, and then drive customer
                           interactions consistently across every customer channel,
                           to increase profitability of its customer base.

-----------------------------------------------------------------------------------------------------------------------------------
</Table>




















                                                              17
<Page>

    GLOBAL TECHNOLOGY SOLUTIONS. Global Technology Solutions 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 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). Global Technology Solutions approaches these key
functions in the context of improving operational efficiency and a gradual
transition from paper to electronic-based payment systems. Another specific area
that Global Technology Solutions specializes in is optimizing 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>
FraudLink                 Provides a comprehensive, automated approach to      FraudLink On-us, FraudLink Deposit, FraudLink Kite,
                          solving the growing problem of fraudulent financial  FraudLink PositivePay, FraudLink eTracker,
                          transactions, including bad checks drawn on banks    FraudLink PC, FraudLink Hold
                          for payment, fraudulent items deposited with banks
                          for credit and check kiting.

Back Office               Brings new efficiencies to back office operations    Adjustments/Express, Exceptions/Express,
                          through the use of state-of-the-art image and        Input/Express, Inbound Returns/Express,
                          workflow technologies.                               IRS/Express, Image Bulk-File and Fine Sort

Capture                   Offers an extensive array of enhancement products    Image Processor 2, NeXGen Solutions, CPCS
                          that add flexibility and usability to IBM's Check    Enhancements, Platform Emulation
                          Processing Control System (CPCS) and the 3890/XP
                          series of reader/sorters.

Image                     Products and services related to check image         ALS, Image Statements, Internet Statements, Net
                          capture and its related applications.                Deliver/Reject Repair, RECO, Image POD, Image
                                                                               Delivery, Image Enhancements

Archive                   Comprehensive array of check image archive           Check Image Enterprise Archive, Check Image Archive
                          management products which may be tailored to a       Load
                          bank's unique requirements based on their
                          operational environments and volumes.

Global Tracking           Offers an automated track and trace system designed  Receive Sentry
                          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.


eMetrics                  Focuses on performance-measurement by using          eiLumen, eiPerform, eiStats, eiMicr, eiQuality
                          historical data to generate key performance
                          indicators, item processing volume data,
                          productivity statistics and quality control
                          benchmarks.

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


                                                         18

<Page>

----------------------------------------------------------------------------------------------------------------------------------
         SOLUTION                             DESCRIPTION                                        PRODUCTS OFFERED
----------------------------------------------------------------------------------------------------------------------------------

Electronic Check          Electronic Check Enables banks to transition away    CheckLink, CheckLink PC, Deposit Manager, Branch
  Presentment             from paper-based payment systems to electronic by    Truncation Management, Cnotes
                          automating key elements of the processing stream
                          as well as improving a bank's yield from float
                          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, Float Pricing System,
                          profitability by properly managing a bank's float    Consulting
                          through float analysis, pricing and a 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.

ATM Solutions             Advances ATM monitoring and management               eiManager, eiGateway, iCom
                          through the use of Internet connectivity to
                          provide 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.

Cash Solutions            Reduces the amount of non-earning assets required    iCom, Reserve Link, Reserve LinkPlus
                          in reserve accounts and as cash-on-hand to meet
                          operating needs. Using both 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.

Logistics                 Reduces armored car transportation costs incurred    Consulting Services
                          by banks in moving cash between 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.

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


                                                         19

<Page>

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:

---------------------------------------------------------------------------------------------------------------------------------
         SOLUTION                             DESCRIPTION                                        PRODUCTS OFFERED
---------------------------------------------------------------------------------------------------------------------------------

Enterprise Solutions      Offers customized, bank-wide conversions,            Project Management, eSolutions, Integration,
                          consolidation and integration consulting solutions   Process Optimization, Line of Business Consulting
                          in areas beyond payments systems, including
                          consulting and project management services and IT
                          consulting for various projects.

                          Expense reduction processes are optimization
                          strategies to help banks reduce operation expenses
                          across the enterprises.

Strategic Services        Assists customers in planning and implementing a     BVIP, Customer Experience Consulting, Strategy
                          total e-finance and payment strategy.                Consulting

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

</Table>













                                                         20

<Page>

RESULTS OF OPERATIONS

    The following table sets forth for the periods indicated, the percentages
that selected items in the unaudited condensed consolidated statements of
operations bear to total revenues. The period to period comparisons of financial
results are not necessarily indicative of future results.


<Table>
<Caption>

                                                             Three Months Ended                    Six Months Ended
                                                                  July 31,                             July 31,
                                                       ------------------------------      -------------------------------
                                                            2001            2000                2001             2000
                                                       --------------   -------------      --------------    -------------
<S>                                                    <C>              <C>                <C>               <C>
     Revenues:
       Consulting fees ............................         31.5%           75.9%               43.0%            68.8%
       Software license fees ......................         35.6             6.5                29.2             11.9
       Software maintenance fees  .................         19.0             9.5                16.3              9.8
       Software implementation fees ...............         13.9             8.1                11.5              9.5
                                                       --------------   -------------      --------------    -------------
         Total revenues  ..........................        100.0           100.0               100.0            100.0

     Cost of revenues:
       Consulting fees ............................         28.2            34.6                33.0             36.5
       Software license fees ......................          5.3             4.4                 5.0              4.8
       Write-off capitalized software costs .......          8.3              --                 4.8               --
       Software maintenance fees ..................          5.3             2.8                 5.2              2.6
       Software implementation fees ...............         10.4             4.3                 8.8              4.8
                                                       --------------   -------------      --------------    -------------
         Total cost of revenues ...................         57.5            46.1                56.8             48.7
                                                       --------------   -------------      --------------    -------------
     Gross profit .................................         42.5            53.9                43.2             51.3
                                                       --------------   -------------      --------------    -------------

     Operating costs and expenses:
       Selling, general and administrative ........         41.6            30.8                38.9             32.3
       Research and development ...................          5.9             5.0                 4.9              4.8
       Amortization of goodwill and intangible
       assets .....................................          3.4              --                 1.9               --
       Merger-related costs .......................         46.1              --                26.3               --
                                                       --------------   -------------      --------------    -------------
         Total operating costs and expenses .......         97.0            35.8                72.0             37.1

     Income (loss) from operations ................        (54.5)           18.1               (28.8)            14.2
     Other income (expense) .......................         (0.1)            1.3                 1.1              1.5
                                                       --------------   -------------      --------------    -------------

     Income (loss) before provision (benefit) for
     income taxes .................................        (54.6)           19.4               (27.7)            15.7
     Provision (benefit) for income taxes .........        (20.2)            7.4               (10.3)             6.0
                                                       --------------   -------------      --------------    -------------
     Net income (loss) ............................        (34.4)%          12.0%              (17.4)%            9.7%
                                                       ==============   =============      ==============    =============

</Table>
















                                                    21


<Page>


REVENUES

    REVENUES: Our total revenues increased by $5.2 million or 18% to $33.9
million for the quarter ended July 31, 2001 from $28.7 million for the quarter
ended July 31, 2000, and by $8.5 million or 17% to $59.3 million for the six
months ended July 31,2001 from $50.7 million for the six months ended July 31,
2000. After adjusting for the new revenue attributable to the acquisition of
Check Solutions on June 6, 2001, underlying revenue decreased 27% for the
quarter ended July 31, 2001 and 9% for the six months ended July 31, 2001. The
decrease in both periods can be traced to a decline of revenue in both the
Revenue Enhancement and Enterprise Solution business segments.

    CONSULTING FEES: Revenues from consulting fees decreased by $11.1 million or
51% to $10.7 million for the quarter ended July 31, 2001 from $21.8 million for
the quarter ended July 31, 2000, and by $9.4 million or 27% to $25.5 million for
the six months ended July 31, 2001 from $34.9 million for the six months ended
July 31, 2000. Consulting fees have decreased primarily due to a decrease within
the Revenue Enhancement business segment. Revenue Enhancement revenues decreased
by $9.0 million or 61% to $5.8 million for the quarter ended July 31, 2001 from
$14.8 million for the quarter ended July 31, 2000, and by $6.9 million or 33% to
$13.6 million for the six months ended July 31, 2001 from $20.5 million for the
six months ended July 31, 2000. The revenues of these value-priced opportunities
tend to fluctuate period to period. A total of five Revenue Enhancement
engagements have been delayed until future quarters. Enterprise Solutions
consulting fees decreased $1.4 million or 25% to $4.5 million for the quarter
ended July 31, 2001 from $5.9 million for the quarter ended July 31, 2000, and
by $1.1 million or 9% to $10.9 million for the six months ended July 31, 2001
from $12.0 million for the six months ended July 31, 2000. We believe economic
conditions have caused customers to delay the timing of IT spending decisions,
along with increased pricing pressures on these engagements.

    SOFTWARE LICENSE FEES: Revenues from software license fees increased $10.2
million or 544% to $12.1 million for the quarter ended July 31, 2001 from $1.9
million for the quarter ended July 31, 2000, and by $11.2 million or 186% to
$17.3 million for the six months ended July 31, 2001 from $6.1 million for the
six months ended July 31, 2000. After adjusting for the new software license
fees attributable to the Check Solutions acquisition of $8.0 million, our
underlying software license fees increased 118% for the quarter ended July 31,
2001 as compared to the quarter ended July 31, 2000, and software license fees
increased 54% for the six months ended July 31, 2001 as compared to the six
months ended July 31, 2000. Underlying growth in software license fees is a
result of increased demand for our FraudLink solutions both in the United States
and in our foreign markets, particularly Australia.

    SOFTWARE MAINTENANCE FEES: Revenues from software maintenance fees increased
$3.7 million or 137% to $6.4 million for the quarter ended July 31, 2001 from
$2.7 million for the quarter ended July 31, 2000, and by $4.6 million or 93% to
$9.6 million for the six months ended July 31, 2001 from $5.0 million for the
six months ended July 31, 2000. After adjusting for new software maintenance
fees attributable to the Check Solutions acquisition of $3.0 million, our
underlying software maintenance fees increased 26% for the quarter ended July
31, 2001 as compared to the quarter ended July 31, 2000, and underlying software
maintenance fees increased 32% for the six months ended July 31, 2001 as
compared to the six months ended July 31, 2000. Our underlying software
maintenance fees have increased as a result of increased software revenue during
the last four fiscal quarters, resulting in an increased number of customers and
products under maintenance contracts. Maintenance contacts are also normally
subject to annual rate increases, usually between 5% and 10%.

    SOFTWARE IMPLEMENTATION FEES: Revenues from software implementation fees
increased $2.4 million or 104% to $4.7 million for the quarter ended July 31,
2001 from $2.3 million for the quarter ended July 31, 2000, and by $2.0 million
or 42% to $6.8 million for the six months ended July 31, 2001 from $4.8 million
for the six months ended July 31, 2000. After adjusting for new software
implementing fees attributable to the Check Solutions acquisition of $2.1
million, our underlying software implementation fees increased 13% for the
quarter ended July 31, 2001 as compared to the quarter ended July 31, 2000, and
underlying software implementation fees decreased 1% for the six months ended
July 31, 2001 as compared to the six months ended July 31, 2000. The lack of
growth of software implementation fees, even though we experienced underlying
growth of new software license fees, is due to our product mix and the decision
to discontinue our CheckFlow product. The majority of the software license
growth is in the FraudLink Solutions, which generally require less complicated
and therefore less expensive installations.






                                      22
<Page>


COST OF REVENUES

    COST OF REVENUES: Our total cost of revenues have increased $6.2 million or
47% to $19.5 for the quarter ended July 31, 2001 from $13.2 million for the
quarter ended July 31, 2000, and by $9.0 million or 36% to $33.7 million for the
six months ended July 31, 2001 from $24.7 million for the six months ended July
31, 2000.

    After adjusting for cost of revenues attributable to the Check Solutions
acquisition of $2.6 million and write-off of capitalized software costs of $2.8
million, our underlying cost of revenues increased 6%. This increase, while
modest, has come at a time of declining revenues, which has negatively impacted
our operating margins. The majority of the increase is due to increased
personnel costs for value-priced consulting efforts where the corresponding
revenue has been delayed.

    COST OF CONSULTING: Cost of consulting decreased $300,000 or 4% to $9.6
million for the quarter ended July 31, 2001 from $9.9 million for the quarter
ended July 31, 2000. Cost of consulting as a percentage of consulting fees
increased to 90% for the quarter ended July 31, 2001 from 46% for the quarter
ended July 31, 2000. Cost of consulting increased $1.1 million or 6% to $19.6
million for the six months ended July 31, 2001 from $18.5 million for the six
months ended July 31, 2000. Cost of consulting as a percentage of consulting
fees increased to 77% for the six months ended July 31, 2001 from 53% for the
six months ended July 31, 2000. There has been no impact on these costs
attributable to the Check Solutions acquisition. The decrease in the cost of
consulting for the quarter ended July 31, 2001 is due to increased salary
expense offset by a larger decrease in bonuses accrued during the period. The
increase in the cost of consulting as a percentage of consulting fees during the
quarter ended July 31, 2001 is due to the aforementioned decline in consulting
fees in both the Revenue Enhancement and Enterprise Solutions business segments
at a higher rate than the decline in costs.

    COST OF SOFTWARE LICENSES: Cost of software licenses increased $500,000 or
41% to $1.8 million for the quarter ended July 31, 2001 from $1.3 million for
the quarter ended July 31, 2000. Cost of software licenses as a percentage of
software license fees decreased to 15% for the quarter ended July 31, 2001 from
67% for the quarter ended July 31, 2000. Cost of software licenses increased
$600,000 or 23% to $3.0 million for the six months ended July 31, 2001 from $2.4
million for the six months ended July 31, 2000. Cost of software licenses as a
percentage of software license fees decreased to 17% for the six months ended
July 31, 2001 from 40% for the six months ended July 31, 2000. The primary
reason for the increase in costs is due to the addition of $900,000 of costs
from Check Solutions, offset by underlying decreases in software royalties.
However, we derived almost $8.0 million of software revenue from Check
Solutions, which sharply decreased our cost of software licenses as a percentage
of software license fees.

    WRITE-OFF OF CAPITALIZED SOFTWARE COSTS: During the second quarter of fiscal
2001, in connection with the Company's periodic impairment review of its
portfolio of software products, the Vault software acquired in the X-Port
business combination in May 2000 was deemed to be impaired. Based on the
Company's calculation of the expected cash flows of the product, a $2.8 million
non-cash charge was recorded. The charge resulted from the loss of two key
transactions and the projected changes in the approach to selling and delivering
the software and related services under a time or usage model.

    COST OF SOFTWARE MAINTENANCE: Cost of software maintenance increased $1.0
million or 124% to $1.8 million for the quarter ended July 31, 2001 from
$800,000 for the quarter ended July 31, 2000. Costs of software maintenance as a
percentage of software maintenance fees decreased to 28% for the quarter ended
July 31, 2001 from 29% for the quarter ended July 31, 2000. Cost of software
maintenance increased $1.8 million or 131% to $3.1 million for the six months
ended July 31, 2001 from $1.3 million for the six months ended July 31, 2000.
Cost of software maintenance as a percentage of software maintenance fees
increased to 32% for the six months ended July 31, 2001 from 27% for the six
months ended July 31, 2000. The acquisition of Check Solutions increased
maintenance costs by $600,000, and additionally the underlying cost of providing
customer support for software products sold has continued to increase as a
result of increases in personnel costs for the six months ended July 31, 2001.

    COST OF SOFTWARE IMPLEMENTATION: Cost of software implementation increased
$2.3 million or 183% to $3.5 million for the quarter ended July 31, 2001 from
$1.2 million for the quarter ended July 31, 2000. Cost of software
implementation as a percentage of related fees increased to 74% for the quarter
ended July 31, 2001 from 54% for the quarter ended July 31, 2000. Cost of
software implementation increased $2.7 million or 113% to $5.2 million for the
six months ended July 31, 2001 from $2.5 million for the six months ended July
31, 2000. Cost of software implementation as a percentage of related fees
increased to 77% for the six months ended July 31, 2001 from 51% during the six
months ended July 31, 2000. The acquisition of Check Solutions increased the
costs of software implementation by $1.2 million, although the underlying cost
of these implementations continues to increase primarily due to increased
personnel costs at a time when the related revenues have remained relatively
flat.



                                      23
<Page>


OPERATING COSTS AND EXPENSES

    SELLING GENERAL AND ADMINISTRATIVE: Selling general and administrative
expenses increased $5.3 million or 60% to $14.1 million for the quarter ended
July 31, 2001 from $8.8 million for the quarter ended July 31, 2000. Selling,
general and administrative expenses as a percent of revenue increased to 42% for
the quarter ended July 31, 2001 from 31% for the quarter ended July 31, 2000.
Selling, general and administrative expenses increased $6.6 million or 40% to
$23.0 million for the six months ended July 31, 2001 from $16.4 million for the
six months ended July 31, 2000. Selling, general and administrative expenses as
a percent of revenue increased to 39% for the six months ended July 31, 2001
from 32% for the six months ended July 31, 2000. Selling, general and
administrative expenses generally consist of personnel costs associated with
selling, marketing, general management, software management, provision for
doubtful accounts as well as fees for professional services and other related
costs. The acquisition of Check Solutions increased selling, general and
administrative expenses by $3.3 million reflecting the additional costs
associated with the Check Solutions' operations. Underlying selling, general and
administrative expenses increased by 23% for the quarter ended July 31, 2001 as
compared to the quarter ended July 31, 2000, and 20% for the six months ended
July 31, 2001,as compared to the six months ended July 31, 2000. The increase in
these expenses reflect increased personnel costs, travel and office costs.

    RESEARCH AND DEVELOPMENT: Research and development expenses increased
$600,000 or 39% to $2.0 million for the quarter ended July 31, 2001 from $1.4
million for the quarter ended July 31, 2000. Research and development expenses
increased $500,000 or 18% to $2.9 million for the six months ended July 31, 2001
from $2.4 million for the six months ended July 31, 2000. The acquisition of
Check Solutions increased research and development expense by $1.6 million
during the quarter ended July 31, 2001, however this was offset by an underlying
decrease of research and development expense, as more spending has taken place
on projects that have reached technological feasibility and therefore have been
capitalized.

    AMORTIZATION OF GOODWILL AND INTANGIBLE ASSETS: Amortization of
intangibles was $1.1 million for the quarter and six months ended July 31,
2001. This amortization is a direct result of the amortization of the
intangible assets from the acquisition of Check Solutions. The portion of the
amortization attributable to goodwill and intangibles with an indefinite life
will cease to be amortized effective February 2002, when the Company adopts
Statement of Financial Standards No. 141 and No. 142.

    MERGER-RELATED COSTS: In connection with the acquisition of Check
Solutions, we recorded $15.6 million in merger-related costs (consisting of
$11.3 million attributable to cost of revenues, $2.3 million attributable to
research and development, and $2.0 million attributable to selling, general
and administrative costs). These costs are summarized below (In thousands):

<Table>
<Caption>
                                              --------------------

                                                MERGER-RELATED
                                                    COSTS
                                              -------------------
     <S>                                      <C>
     Workforce reductions..................    $      1,925
     Charges relating to CheckFlow Suite...          10,833
     In-process research and development
       costs...............................           2,300
     Facility closures.....................             240
     Other.................................             298
                                              -------------------
     Total.................................    $     15,596
                                              ===================
</Table>

    Included in merger-related costs was $1.9 million of cash termination
benefits associated with the separation of approximately 50 employees. Most of
the affected employees will leave their positions by October 31, 2001.

    After an extensive review of the CheckFlow Suite product line, and
considering the difficulties reported to us by customers with achieving the
business functionality originally envisioned for the CheckFlow Suite, we
determined that the CheckFlow Suite was no longer viable in the market in the
form originally developed. We developed the CheckFlow Suite with PegaSystems,
Inc. ("Pega") under a Product Development, Distribution and Sublicensing
Agreement effective May 5, 1999 (the "Agreement"). Pega filed suit to
restrain us from developing, marketing, licensing, advertising, leasing or
selling any products, including certain Exceptions Management ("EM") products
acquired during the Check Solutions business combination, that allegedly
compete with products jointly developed under the Agreement. On August 27,
2001, we sent Pega notice of termination of the Agreement. That same day, we
initiated an arbitration proceeding seeking damages for Pega's prior and
material breaches of the Agreement.

    The charges related to CheckFlow Suite included a write-off of
capitalized software costs, accounts receivable net of deferred revenue,
settlements and estimated implementation costs for existing CheckFlow
customers, write-off of prepaid royalties previously paid to Pega, and
payments under existing work orders and other product wind-down costs.

    As described in footnote 2, a $2.3 million in-process research and
development charge was recorded reflecting the estimated fair value of
acquired research and development projects at Check Solutions, which have not
yet reached technological feasibility or that have no alternative future use.

    The facility closure charge includes $240,000 for office space, which will
no longer be utilized as a result of the acquisition.

    The activity related to the merger-related costs reserve balance is as
follows (In thousands):

<Table>
<Caption>
                                          -------------------------------------------------------------------------------------
                                                              Charges relating
                                             Workforce          to CheckFlow         Facility
                                            Reductions             Suite             Closures         Other          Total
                                          ----------------  --------------------   --------------  -------------  -------------
<S>                                       <C>               <C>                    <C>             <C>            <C>

May 1, 2001 reserve balance.............. $          --     $              --      $        --     $       --     $       --
Merger costs, excluding in-process
  research and development costs.........         1,925                10,833              240            298         13,296
Cash paid................................          (305)                 (317)              --             --           (622)
Non-cash charges against reserve.........            --                (5,181)              --           (298)        (5,479)
Other....................................            --                   150               --             --            150
                                          ----------------  --------------------   --------------  -------------  -------------
July 31, 2001 reserve balance............ $       1,620     $           5,485      $       240     $       --     $    7,345
                                          ================  ====================   ==============  =============  =============
</Table>

    INTEREST INCOME: Interest income increased $200,000 or 44% to $600,000 for
the three months ended July 31, 2001 from $400,000 for the three months ended
July 31, 2000. Interest income increased $500,000 or 71% to $1.3 million for the
six months July 31, 2001 from $800,000 for the six months ended July 31, 2000.
Interest income increased due to the addition of $32.0 million of net proceeds
related to our public offering of 2,000,000 shares of common stock, at a price
of $17.00 per share, in November 2000. As these proceeds were used to fund the
Check Solutions acquisition, we expect interest income to decrease in the
future.

    INTEREST EXPENSE: Interest expense is primarily the result of the
borrowings under the new three year revolving credit agreement with a group
of banks in an amount not to exceed $60.0 million. All borrowings are due on
June 5, 2004. Borrowings under the credit agreement bear interest equal to
either the greater of prime or federal funds rate plus a margin ranging from
0.00% to 0.75% depending on the Company's ratio of funded debt to EBITDA; or
LIBOR plus a margin equal to 1.50% to 2.25% depending on our ratio of funded
debt to EBITDA. Interest payments are due quarterly. We are required to pay a
commitment fee equal to 0.25% to 0.50% depending on our ratio of funded debt
to EBITDA on the unused amount of the revolving credit agreement. The
revolving credit agreement contains customary affirmative and negative
covenants including financial covenants requiring the maintenance of
specified interest coverage, ratio of EBITDA to funded debt, and ratio of
accounts receivable, cash and short-term investments to funded debt.
Additionally, the payment of dividends is precluded subject to the approval
of the banks. As of July 31, 2001, we believe it is in compliance with the
covenants of the revolving credit agreement. Substantially all of our assets
collateralize this Revolving Credit Agreement. At July 31, 2001, we have
borrowed $45.0 million to fund the acquisition of Check Solutions and has
available $15.0 million under the Revolving Credit Agreement.

    PROVISION (BENEFIT) FOR INCOME TAXES: The provision (benefit) for income
taxes is based on the estimated annual effective tax rate, and includes federal,
state and foreign income taxes. Our effective income tax rate was 37% for the
quarter and six months ended July 31, 2001 compared to 38% for the quarter and
six months ended July 31, 2000.









                                      24
<Page>


LIQUIDITY AND CAPITAL RESOURCES

    As of July 31, 2001, we had $46.4 million of working capital, including
$34.4 million in cash and cash equivalents, as compared to $111.8 million of
working capital as of January 31, 2001, including $63.1 million of cash and cash
equivalents. The decrease in both working capital and cash was the result of the
acquisition of Check Solutions.

    During the six months ended July 31, 2001, we used operating cash of $5.7
million. Operating cash of $9.0 million was used to fund the Strategic Alliance
with Xchange Applications, Inc. Another use of cash was the increase in our
income tax receivable due to our recent operating loss.

    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:

<Table>
<Caption>

       QUARTER ENDED                 DSO          DSO INCLUDING EXPENSE REIMBURSEMENTS*
       -------------                 ---          ------------------------------------
       <S>                           <C>          <C>
       July 31, 2001                 147                           137
       April 30, 2001                169                           151
       January 31, 2001              131                           119
       October 31, 2000              120                           108
       July 31, 2000                 123                           112

</Table>

    * Includes reimbursements for travel and out of pocket expenses which are
not considered revenue, but are included in outstanding receivables.

    Cash used in investing activities during the six months ended July 31, 2001
was $67.7 million and was used primarily to fund the purchase of Check
Solutions.

    Cash provided by financing activities for the six months ended July 31, 2001
was $44.7 million and primarily resulted from the proceeds from the issuance of
long-term debt.

    On June 6, 2001, the Company entered into a three-year revolving credit
agreement with a group of banks in an amount not to exceed $60.0 million. All
borrowings are due on June 5, 2004. Borrowings under the credit agreement bear
interest equal to either the greater of prime or federal funds rate plus a
margin ranging from 0.00% to 0.75% depending on the Company's ratio of funded
debt to EBITDA; or LIBOR plus a margin equal to 1.50% to 2.25% depending on the
Company's ratio of funded debt to EBITDA. Interest payments are due quarterly.
The Company is required to pay a commitment fee equal to 0.25% to 0.50%
depending on the Company's ratio of funded debt to EBITDA on the unused amount
of the revolving credit agreement. The revolving credit agreement contains
customary affirmative and negative covenants including financial covenants
requiring the maintenance of specified interest coverage, ratio of EBITDA to
funded debt, and ratio of accounts receivable, cash and short-term investments
to funded debt. Additionally, the payment of dividends is precluded subject to
the approval of the banks. As of July 31, 2001, the Company believes it is in
compliance with the covenants of the revolving credit agreement. Substantially
all of the Company's assets collateralize this Revolving Credit Agreement.

    At July 31, 2001, we have borrowed $45.0 million to fund the acquisition
of Check Solutions and have available $15.0 million under the Revolving
Credit Agreement.

    On November 3, 2000, the Securities and Exchange Commission declared
effective a Registration Statement on Form S-3 relating to our 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 $32,011,000 of net proceeds that we received was used
primarily to fund the cash portion of our acquisition of Check Solutions.

    Our future liquidity and capital requirements will depend upon numerous
factors. We believe our current cash and cash equivalents and short-term
investment balances and cash generated from operations will be sufficient to
meet our operating and capital requirements 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. Our failure to raise capital
when needed could have a material adverse effect on our business, financial
condition and results of operation.

                                      25
<Page>


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 operation or financial
position.

    In June 2001, the Financial Accounting Standards Board issued Statements of
Financial Accounting Standards No. 141, BUSINESS COMBINATIONS, and No. 142,
GOODWILL AND OTHER INTANGIBLE ASSETS, effective for fiscal years beginning after
December 15, 2001. Under the new rules, goodwill and intangible assets deemed to
have indefinite lives will no longer be amortized but will be subject to annual
impairment tests in accordance with the Statements. Other intangible assets will
continue to be amortized over their useful lives. The Company will apply the new
rules on accounting for goodwill and other intangible assets beginning in the
first quarter of 2002. Application of the nonamortization provisions of the
Statement is expected to result in an increase in net income of $6.8 million
($0.31 per share using the dilutive number of shares at July 31, 2001) per year.
During 2002, the Company will perform the first of the required impairment tests
of goodwill and indefinite lived intangible assets as of February 1, 2002 and
has not yet determined what the effect of these will be on the earnings and
financial position of the Company.


ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

    We invest our cash in a variety of financial instruments. These investments
are denominated in U.S. dollars and maintained with nationally recognized
financial institutions, and mutual fund companies.

    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"). We treat all of our cash equivalents
and short-term investments 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. At July 31, 2001, we did not hold any fixed rate
investments.





















                                      26
<Page>


                            PART II OTHER INFORMATION

ITEM 1.        LEGAL PROCEEDINGS

    Pegasystems, Inc. ("Pega") filed a Complaint on or about August 7, 2001 in
the Court of Chancery in the State of Delaware, New Castle County (the "Delaware
Court"), seeking to enjoin and restrain us until December 31, 2004 from
developing, marketing, licensing, advertising, leasing, or selling any products
(including certain products acquired during the Check Solutions business
combination) that allegedly compete with products jointly developed by us and
Pega under the Product Development, Distribution and Sublicensing Agreement (the
"Agreement") between Carreker and Pega effective May 5, 1999. We responded to
the Complaint and related motions filed by Pega, denying Pega's right to the
equitable relief sought. On August 27, 2001 we sent Pega notice of termination
of the Agreement. That same day, we initiated an arbitration proceeding in which
Carreker seeks damages for Pega's prior and material breaches of the Agreement.
On September 11, 2001 the Delaware Court held a hearing on Pega's motion for
preliminary injunction. The Court has taken the matter under advisement. We
intend to defend vigorously the action in the Delaware Court and to prosecute
fully the arbitration.

    We are subject from time to time to certain other 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
these other claims or legal proceedings against us will be material, there
can be no assurance in this regard.


ITEM 2.        CHANGES IN SECURITIES AND USE OF PROCEEDS

    None.


ITEM 3.        DEFAULTS UPON SENIOR SECURITIES

    None.


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

    At our Annual Meeting of Stockholders held on July 19, 2001, four
proposals were adopted by our stockholders: (1) the election of three
directors as Class II directors for terms expiring at the Annual Meeting of
Stockholders in 2004 as described in our Proxy Statement for the Annual
Meeting (Messrs. James D. Carreker, David K. Sias, and Ronald G. Steinhart
were re-elected as directors; Messrs. John D. Carreker, Jr., James R. Erwin,
James L. Fischer, Donald L. House and Richard R. Lee, Jr. continued as
directors); (2) the ratification of the appointment of Ernst & Young LLP as
independent certified public accountants of the Company for the fiscal year
ending January 31, 2002; (3) the approval to amend and restate the Company's
1994 Long Term Incentive Plan to make an additional 1,800,000 shares of
Common Stock available for issuance under the Plan; and (4) the approval to
amend and restate the Company's Director Stock Option Plan to make an
additional 100,000 shares of Common Stock available for issuance under the
Plan. The number of shares cast for and against as well as the number of
abstentions as to each of these matters (other than the election of
directors) are as follows:

<Table>
<Caption>

  PROPOSAL                                               SHARES FOR      SHARES AGAINST        ABSTENTIONS
  --------                                               ----------      --------------        -----------
  <S>                                                    <C>             <C>                   <C>
  Ratification of accountants.....................       18,978,793              65,209             17,199
  Amendment to 1994 Long Term Incentive Plan......        8,900,911           6,616,399             61,451
  Amendment to Director Stock Option Plan.........        8,370,521           7,143,994             64,246

<Caption>
  ELECTION OF DIRECTORS                                  SHARES FOR      SHARES WITHHELD
  ---------------------                                  ----------      ---------------
  <S>                                                    <C>             <C>
  James D. Carreker...............................       18,254,761           806,440
  David K. Sias...................................       18,254,701           806,500
  Ronald G. Steinhart.............................       18,305,544           755,657

</Table>







                                                 27
<Page>


ITEM 5.        OTHER INFORMATION

    On June 6, 2001 we acquired Check Solutions Company, a New York general
partnership ("Check Solutions") for $109.5 million in cash payable to Check
Solutions partners. The transaction was accounted for as a purchase.

    On June 5, 2001, in connection with the acquisition of Check Solutions, we
entered into a three year $60.0 million revolving credit agreement with a group
of banks. Under the agreement, we borrowed $45.0 million to fund the
acquisition. All borrowings are due on June 5, 2004 under the agreement.


ITEM 6.        EXHIBITS AND REPORTS ON FORM 8-K


               (a) Exhibits

<Table>
<Caption>
                   Number       Exhibit Description
                   ------       -------------------
                   <S>          <C>

                   10.1         Amendment No. 1 to Exchange Reseller Agreement dated
                                June 29, 2001.
</Table>

               (b) Reports on Form 8-K
                   We filed the following Current Reports on Form 8-K with the
                   Securities and Exchange Commission during the quarter ended
                   July 31, 2001:

                   (i)     A current report on Form 8-K dated May 25, 2001 was
                           filed with the Securities and Exchange Commission on
                           May 29, 2001.

                   (ii)    A current report on Form 8-K dated June 6, 2001 was
                           filed with Securities and Exchange Commission on
                           June 8, 2001.


















                                      28
<Page>


SIGNATURES

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


                              CARREKER CORPORATION




By:         /s/ John D. Carreker, Jr.                  Date: September 14, 2001
  --------------------------------------------             --------------------
  John D. Carreker, Jr.
  Chairman of the Board and
  Chief Executive Officer




By:         /s/ Terry L. Gage                          Date: September 14, 2001
  --------------------------------------------             --------------------
  Terry L. Gage
  Executive Vice President and
  Chief Financial Officer























                                      29