|   | þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|--------|--------|------------------------------------------------------------------------------------------|

|   |  ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|--------|--------|-------------------------------------------------------------------------------------------|

| Delaware                                       |   | 65-0694077                           |
|------------------------------------------------|--------|--------------------------------------|
| (State or other jurisdiction of incorporation) |   | (I.R.S. Employer Identification No.) |
| or organization                                |   |                                 |

| 2000 Ultimate Way, Weston, FL            |   | 33326      |
|------------------------------------------|--------|------------|
| (Address of principal executive offices) |   | (Zip Code) |

| Large accelerated filer  þ |                                          | Accelerated filer   ̈ |
|-------------------------------------------|-----------------------------------------------|-------------------------------------|
|                                      |                                          |                                |
| Non-accelerated filer   ̈   | (Do not check if a smaller reporting company) | Smaller reporting company  ̈    |

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TABLE OF CONTENTS

|                                                                                                       |                                                                                                                                   |   | Page(s) |
|------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------|--------|---------|
|                                                                                                       |                                                                                                                                   |   |    |
| Part I – Financial Information:                                                                      |                                                                                                                                   |   |
|                                                                                                       |                                                                                                                                   |   |    |
| Item 1 – Financial Statements:                                                                       |                                                                                                                                   |   |
|                                                                                                       | Unaudited Condensed Consolidated Balance Sheets as of June 30, 2009 and December 31, 2008                                              |   | 1       |
|                                                                                                       | Unaudited Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2009 and June 30, 2008           |   | 2       |
|                                                                                                       | Unaudited Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2009 and June 30, 2008                     |   | 3       |
|                                                                                                       | Unaudited Condensed Consolidated Statement of Stockholders’ Equity and Comprehensive Loss for the Six Months Ended June 30, 2009 |   | 4       |
|                                                                                                       | Notes to Unaudited Condensed Consolidated Financial Statements                                                                         |   | 5-10    |
|                                                                                                       |                                                                                                                                   |   |    |
| Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations |                                                                                                                                   | 11-14  |
|                                                                                                       |                                                                                                                                   |   |    |
| Item 3 – Quantitative and Qualitative Disclosures About Market Risk                                  |                                                                                                                                   | 15     |
|                                                                                                       |                                                                                                                                   |   |    |
| Item 4 – Controls and Procedures                                                                     |                                                                                                                                   | 15     |
|                                                                                                       |                                                                                                                                   |   |
| Part II – Other Information:                                                                         |                                                                                                                                   |   |
|                                                                                                       |                                                                                                                                   |   |    |
| Item 1A – Risk Factors                                                                               |                                                                                                                                   | 16     |
|                                                                                                       |                                                                                                                                   |   |
| Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds                                 |                                                                                                                                   | 16     |
|                                                                                                       |                                                                                                                                   |   |
| Item 4 – Submission of Matters to a Vote of Security Holders                                         |                                                                                                                                   | 16     |
|                                                                                                       |                                                                                                                                   |   |
| Item 6 – Exhibits                                                                                    |                                                                                                                                   | 16     |
|                                                                                                       |                                                                                                                                   |   |
| Signatures                                                                                                 |                                                                                                                                   | 17     |
| Certifications                                                                                             |                                                                                                                                   | 18     |

----

| PART 1 – FINANCIAL INFORMATION                                                                                                                 |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| Item 1 – Financial Statements                                                                                                                  |   |
| THE ULTIMATE SOFTWARE GROUP, INC. AND SUBSIDIARIES                                                                                                   |   |
| UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS                                                                                                      |   |
| (Dollars in thousands, except share and per share data)                                                                                              |   |
|                                                                                                                                                 |   |   |   |   |   |   |
|                                                                                                                                                 |   | As of |   |   | As of |   |
|                                                                                                                                                 |   | June 30, |   |   | December 31, |   |
|                                                                                                                                                 |   | 2009 |   |   | 2008 |   |
| ASSETS                                                                                                                                               |   |   |   |   |   |   |
| Current assets:                                                                                                                                      |   |   |   |   |   |   |
|    Cash and cash equivalents                                                                                                          |   | $ | 29,723 |   |   | $ | 17,200 |   |
|    Short-term investments in marketable securities                                                                                    |   |   | 1,598 |   |   |   | 5,805 |   |
|    Accounts receivable, net of allowance for doubtful accounts of       $700 for 2009 and 2008     |   |   | 33,816 |   |   |   | 38,302 |   |
|    Prepaid expenses and other current assets                                                                                          |   |   | 15,435 |   |   |   | 16,011 |   |
|    Deferred tax assets, net                                                                                                           |   |   | 3,533 |   |   |   | 3,533 |   |
|       Total current assets before funds held for customers                                                             |   |   | 84,105 |   |   |   | 80,851 |   |
| Funds held for customers                                                                                                                             |   |   | 7,437 |   |   |   | 5,863 |   |
|       Total current assets                                                                                             |   |   | 91,542 |   |   |   | 86,714 |   |
| Property and equipment, net                                                                                                                          |   |   | 21,358 |   |   |   | 22,984 |   |
| Capitalized software, net                                                                                                                            |   |   | 5,139 |   |   |   | 5,642 |   |
| Goodwill                                                                                                                                             |   |   | 3,316 |   |   |   | 2,906 |   |
| Other assets, net                                                                                                                                    |   |   | 11,477 |   |   |   | 11,668 |   |
| Long-term deferred tax assets, net                                                                                                                   |   |   | 17,483 |   |   |   | 17,343 |   |
|       Total assets                                                                                                     |   | $ | 150,315 |   |   | $ | 147,257 |   |
| LIABILITIES AND STOCKHOLDERS’ EQUITY                                                                                                           |   |   |   |   |   |   |   |   |
| Current liabilities:                                                                                                                                 |   |   |   |   |   |   |   |   |
|    Accounts payable                                                                                                                   |   | $ | 3,422 |   |   | $ | 7,200 |   |
|    Accrued expenses                                                                                                                   |   |   | 10,832 |   |   |   | 12,701 |   |
|    Current portion of deferred revenue                                                                                                |   |   | 54,414 |   |   |   | 54,687 |   |
|    Current portion of capital lease obligations                                                                                       |   |   | 1,987 |   |   |   | 2,034 |   |
|    Current portion of long-term debt                                                                                                  |   |   | 320 |   |   |   | 320 |   |
|       Total current liabilities before customer funds obligations                                                      |   |   | 70,975 |   |   |   | 76,942 |   |
|    Customer funds obligations                                                                                                         |   |   | 7,437 |   |   |   | 5,863 |   |
|       Total current liabilities                                                                                        |   |   | 78,412 |   |   |   | 82,805 |   |
| Deferred revenue, net of current portion                                                                                                             |   |   | 8,075 |   |   |   | 8,807 |   |
| Deferred rent                                                                                                                                        |   |   | 3,280 |   |   |   | 3,054 |   |
| Capital lease obligations, net of current portion                                                                                                    |   |   | 1,516 |   |   |   | 1,519 |   |
|       Total liabilities                                                                                                |   |   | 91,283 |   |   |   | 96,185 |   |
| Stockholders’ equity:                                                                                                                          |   |   |   |   |   |   |   |   |
|    Preferred Stock, $.01 par value, 2,000,000 shares authorized, no shares issued or outstanding                                      |   |   | – |   |   |   | – |   |
|    Series A Junior Participating Preferred Stock, $.01 par value, 500,000 shares authorized, no shares issued or outstanding          |   |   | – |   |   |   | – |   |
|    Common Stock, $.01 par value, 50,000,000 shares authorized, 27,034,837 and 26,796,169 shares issued in 2009 and 2008, respectively |   |   | 270 |   |   |   | 268 |   |
|    Additional paid-in capital                                                                                                         |   |   | 172,881 |   |   |   | 164,574 |   |
|    Accumulated other comprehensive loss                                                                                               |   |   | (608 | ) |   |   | (1,002 | ) |
|    Accumulated deficit                                                                                                                |   |   | (54,011 | ) |   |   | (53,268 | ) |
|                                                                                                                                                 |   |   | 118,532 |   |   |   | 110,572 |   |
| Treasury stock, 2,533,575 shares, at cost, for 2009 and 2008                                                                                         |   |   | (59,500 | ) |   |   | (59,500 | ) |
|       Total stockholders’ equity                                                                                 |   |   | 59,032 |   |   |   | 51,072 |   |
|       Total liabilities and stockholders’ equity                                                                 |   | $ | 150,315 |   |   | $ | 147,257 |   |

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Table of Contents

| THE ULTIMATE SOFTWARE GROUP, INC. AND SUBSIDIARIES           |   |
|--------------------------------------------------------------|--------|
| UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS    |   |
| (In thousands, except per share amounts)                     |   |
|                                                         |   |   |   |   |   |   |
|                                                         |   | For the Three Months |   |   | For the Six Months |   |
|                                                         |   | Ended June 30, |   |   | Ended June 30, |   |
|                                                         |   | 2009 |   |   | 2008 |   |   | 2009 |   |   | 2008 |   |
| Revenues:                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
|    Recurring                                  |   | $ | 32,623 |   |   | $ | 25,377 |   |   | $ | 63,511 |   |   | $ | 51,073 |   |
|    Services                                   |   |   | 13,409 |   |   |   | 13,165 |   |   |   | 29,339 |   |   |   | 27,285 |   |
|    License                                    |   |   | 1,274 |   |   |   | 2,957 |   |   |   | 3,275 |   |   |   | 6,610 |   |
|       Total revenues           |   |   | 47,306 |   |   |   | 41,499 |   |   |   | 96,125 |   |   |   | 84,968 |   |
|                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cost of revenues:                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Recurring                                  |   |   | 9,567 |   |   |   | 7,002 |   |   |   | 18,473 |   |   |   | 13,527 |   |
|    Services                                   |   |   | 11,112 |   |   |   | 10,580 |   |   |   | 23,439 |   |   |   | 21,879 |   |
|    License                                    |   |   | 261 |   |   |   | 464 |   |   |   | 598 |   |   |   | 892 |   |
|       Total cost of revenues   |   |   | 20,940 |   |   |   | 18,046 |   |   |   | 42,510 |   |   |   | 36,298 |   |
| Gross profit                                                 |   |   | 26,366 |   |   |   | 23,453 |   |   |   | 53,615 |   |   |   | 48,670 |   |
| Operating expenses:                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Sales and marketing                        |   |   | 12,884 |   |   |   | 11,236 |   |   |   | 26,719 |   |   |   | 23,065 |   |
|    Research and development                   |   |   | 9,582 |   |   |   | 9,299 |   |   |   | 18,920 |   |   |   | 18,178 |   |
|    General and administrative                 |   |   | 4,331 |   |   |   | 4,405 |   |   |   | 8,888 |   |   |   | 8,701 |   |
|       Total operating expenses |   |   | 26,797 |   |   |   | 24,940 |   |   |   | 54,527 |   |   |   | 49,944 |   |
|       Operating loss           |   |   | (431 | ) |   |   | (1,487 | ) |   |   | (912 | ) |   |   | (1,274 | ) |
|                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other income (expense):                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Interest expense and other           |   |   | (38 | ) |   |   | (61 | ) |   |   | (82 | ) |   |   | (140 | ) |
|     Other income, net                    |   |   | 39 |   |   |   | 222 |   |   |   | 111 |   |   |   | 579 |   |
| Total other income, net                                      |   |   | 1 |   |   |   | 161 |   |   |   | 29 |   |   |   | 439 |   |
| Loss before benefit for income taxes                         |   |   | (430 | ) |   |   | (1,326 | ) |   |   | (883 | ) |   |   | (835 | ) |
|    Benefit for income taxes                   |   |   | 100 |   |   |   | 575 |   |   |   | 140 |   |   |   | 374 |   |
|       Net loss                 |   | $ | (330 | ) |   | $ | (751 | ) |   | $ | (743 | ) |   | $ | (461 | ) |
|                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss per share:                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Basic                                      |   | $ | (0.01 | ) |   | $ | (0.03 | ) |   | $ | (0.03 | ) |   | $ | (0.02 | ) |
|    Diluted                                    |   | $ | (0.01 | ) |   | $ | (0.03 | ) |   | $ | (0.03 | ) |   | $ | (0.02 | ) |
|                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted average shares outstanding:                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Basic                                      |   |   | 24,414 |   |   |   | 24,670 |   |   |   | 24,354 |   |   |   | 24,676 |   |
|    Diluted                                    |   |   | 24,414 |   |   |   | 24,670 |   |   |   | 24,354 |   |   |   | 24,676 |   |
|                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

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Table of Contents

| THE ULTIMATE SOFTWARE GROUP, INC. AND SUBSIDIARIES                                                                                    |   |
|---------------------------------------------------------------------------------------------------------------------------------------|--------|
| UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS                                                                             |   |
| (In thousands)                                                                                                                        |   |
|                                                                                                                                  |   | For the Six Months |   |
|                                                                                                                                  |   | Ended June 30, |   |
|                                                                                                                                  |   | 2009 |   |   | 2008 |   |
| Cash flows from operating activities:                                                                                                 |   |   |   |   |   |   |
|    Net loss                                                                                                            |   | $ | (743 | ) |   | $ | (461 | ) |
|    Adjustments to reconcile net loss to net cash provided by operating activities:                                     |   |   |   |   |   |   |   |   |
|       Depreciation and amortization                                                                     |   |   | 5,914 |   |   |   | 4,483 |   |
|       Provision for doubtful accounts                                                                   |   |   | 528 |   |   |   | 944 |   |
|       Non-cash stock-based compensation expense                                                         |   |   | 6,590 |   |   |   | 8,033 |   |
|       Deferred income taxes                                                                             |   |   | (140 | ) |   |   | (374 | ) |
|       Changes in operating assets and liabilities:                                                      |   |   |   |   |   |   |   |   |
|           Accounts receivable                                                       |   |   | 3,958 |   |   |   | 1,591 |   |
|           Prepaid expenses and other current assets                                 |   |   | 576 |   |   |   | (2,219 | ) |
|           Other assets                                                              |   |   | 98 |   |   |   | (1,512 | ) |
|           Accounts payable                                                          |   |   | (3,778 | ) |   |   | 3,179 |   |
|           Accrued expenses and deferred rent                                        |   |   | (1,418 | ) |   |   | (1,601 | ) |
|           Deferred revenue                                                          |   |   | (1,005 | ) |   |   | 1,455 |   |
|              Net cash provided by operating activities               |   |   | 10,580 |   |   |   | 13,518 |   |
|                                                                                                                                  |   |   |   |   |   |   |   |   |
| Cash flows from investing activities:                                                                                                 |   |   |   |   |   |   |   |   |
|    Purchases of property and equipment                                                                                 |   |   | (2,109 | ) |   |   | (8,111 | ) |
|    Purchases of marketable securities                                                                                  |   |   | (1,090 | ) |   |   | (642 | ) |
|    Maturities of marketable securities                                                                                 |   |   | 5,295 |   |   |   | 14,022 |   |
|    Net purchases of securities with customer funds                                                                     |   |   | (1,574 | ) |   |   | (1,876 | ) |
|    Capitalized software                                                                                                |   |   | (631 | ) |   |   | (889 | ) |
|              Net cash (used in) provided by investing activities     |   |   | (109 | ) |   |   | 2,504 |   |
|                                                                                                                                  |   |   |   |   |   |   |   |   |
| Cash flows from financing activities:                                                                                                 |   |   |   |   |   |   |   |   |
|    Repurchases of common stock                                                                                         |   |   | – |   |   |   | (17,674 | ) |
|    Principal payments on capital lease obligations                                                                     |   |   | (1,226 | ) |   |   | (1,098 | ) |
|    Net increase in customer fund obligations                                                                           |   |   | 1,574 |   |   |   | 1,876 |   |
|    Repayments of borrowings of long-term debt                                                                          |   |   | – |   |   |   | (168 | ) |
|    Net proceeds from issuances of common stock                                                                         |   |   | 1,719 |   |   |   | 4,460 |   |
|              Net cash provided by (used in) financing activities     |   |   | 2,067 |   |   |   | (12,604 | ) |
|                                                                                                                                  |   |   |   |   |   |   |   |   |
| Effect of exchange rate changes on cash                                                                                               |   |   | (15 | ) |   |   | (10 | ) |
| Net increase in cash and cash equivalents                                                                                             |   |   | 12,523 |   |   |   | 3,408 |   |
| Cash and cash equivalents, beginning of period                                                                                        |   |   | 17,200 |   |   |   | 17,462 |   |
| Cash and cash equivalents, end of period                                                                                              |   | $ | 29,723 |   |   | $ | 20,870 |   |
|                                                                                                                                  |   |   |   |   |   |   |   |   |
| Supplemental disclosure of cash flow information:                                                                                     |   |   |   |   |   |   |   |   |
|    Cash paid for interest                                                                                              |   | $ | 73 |   |   | $ | 39 |   |
|    Cash paid for income taxes                                                                                          |   | $ | 128 |   |   | $ | 227 |   |
|                                                                                                                                  |   |   |   |   |   |   |   |   |
| Supplemental disclosure of non-cash financing activities:                                                                             |   |   |   |   |   |   |   |   |
| - The Company entered into capital lease obligations to acquire new equipment totaling $1.2 million and $0.1 million for the six |   |
| months ended June 30, 2009 and June 30, 2008, respectively.                                                                           |   |
| - The Company entered into an agreement to purchase certain source code from a third-party vendor for $2.0 million, of which     |   |
| $0.5 million was paid during each of the six months ended June 30, 2009 and June 30, 2008.                                            |   |
|                                                                                                                                  |   |

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Table of Contents

|                                                                       |   | Common Stock |    |   | Additional Paid-in |   |    | Accumulated Other Comprehensive |   |   | Accumulated                           |   |   | Treasury Stock |    |   | Total Stockholders’ |   |
|----------------------------------------------------------------------------|--------|--------------|---------|--------|--------------------|--------|---------|---------------------------------|--------|--------|---------------------------------------|--------|--------|---------------------|---------|--------|---------------------------|--------|
|                                                                       |   | Shares       |    |   | Amount             |   |    | Capital                         |   |   | Loss                                  |   |   | Deficit             |    |   | Shares                    |   |   | Amount |   |   | Equity |   |
| Balance, December 31, 2008                                                 |   |         | 26,796  |   |               | $      | 268     |                            |   | $      | 164,574                               |   |   | $                   | (1,002  | )      |                      | $      | (53,268 | ) |   |   | 2,534 |   |   | $ | (59,500 | ) |   | $ | 51,072 |   |
| Net loss                                                                   |   |         | – |   |               |   | – |                            |   |   | –                               |   |   |                | – |   |                      |   | (743 | ) |   |   | – |   |   |   | – |   |   |   | (743 | ) |
| Unrealized loss on investments in marketable securities available for sale |   |         | – |   |               |   | – |                            |   |   | –                               |   |   |                | (1      | )      |                      |   | – |   |   |   | – |   |   |   | – |   |   |   | (1 | ) |
| Unrealized gain on foreign currency translation adjustments                |   |         | – |   |               |   | – |                            |   |   | –                               |   |   |                | 395     |   |                      |   | – |   |   |   | – |   |   |   | – |   |   |   | 395 |   |
| Comprehensive loss                                                         |   |         | – |   |               |   | – |                            |   |   | –                               |   |   |                | – |   |                      |   | – |   |   |   | – |   |   |   | – |   |   |   | (349 | ) |
| Issuances of Common Stock from exercises of stock options                  |   |         | 239     |   |               |   | 2       |                            |   |   | 1,717                                 |   |   |                | – |   |                      |   | – |   |   |   | – |   |   |   | – |   |   |   | 1,719 |   |
| Non-cash stock-based compensation                                          |   |         | – |   |               |   | – |                            |   |   | 6,590                                 |   |   |                | – |   |                      |   | – |   |   |   | – |   |   |   | – |   |   |   | 6,590 |   |
|                                                                       |   |         |    |   |               |   |    |                            |   |   |                                  |   |   |                |    |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance, June 30, 2009                                                     |   |         | 27,035  |   |               | $      | 270     |                            |   | $      |      172,881 |   |   | $                   | (608    | )      |                      | $      | (54,011 | ) |   |   | 2,534 |   |   | $ | (59,500 | ) |   | $ | 59,032 |   |

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Table of Contents

|   | NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS |
|--------|----------------------------------------------------------------|

Nature of Operations

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Table of Contents

|                               |   | As of June 30, 2009 |   |   | As of December 31, 2008 |   |
|------------------------------------|--------|---------------------|--------|--------|-------------------------|--------|
|                               |   |                |   |   | Net                     |   |   |   |   |   |   |   |   | Net |   |   |   |   |
|                               |   | Amortized           |   |   | Unrealized              |   |   | Fair |   |   | Amortized |   |   | Unrealized |   |   | Fair |   |
|                               |   | Cost                |   |   | Gain                    |   |   | Value |   |   | Cost |   |   | Gain |   |   | Value |   |
|                               |   |                |   |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Corporate debentures – bonds |   | $                   | 805    |   |                    | $      | 3 |   |   | $ | 808 |   |   | $ | 4,306 |   |   | $ | 2 |   |   | $ | 4,308 |   |
| Commercial paper                   |   |                | 300    |   |                    |   | – |   |   |   | 300 |   |   |   | 995 |   |   |   | 2 |   |   |   | 997 |   |
| Certificates of deposit            |   |                | 490    |   |                    |   | – |   |   |   | 490 |   |   |   | 500 |   |   |   | –– |   |   |   | 500 |   |
| Total investments                  |   | $                   | 1,595  |   |                    | $      | 3 |   |   | $ | 1,598 |   |   | $ | 5,801 |   |   | $ | 4 |   |   | $ | 5,805 |   |

|                    |   | As of June 30, 2009 |   |   | As of December 31, 2008 |   |
|-------------------------|--------|---------------------|--------|--------|-------------------------|--------|
|                    |   | Amortized           |   |   | Fair                    |   |   | Amortized |   |   | Fair |   |
|                    |   | Cost                |   |   | Value                   |   |   | Cost |   |   | Value |   |
|                    |   |                |   |   |                    |   |   |   |   |   |   |   |
| Due in one year or less |   | $                   | 1,595  |   |                    | $      | 1,598 |   |   | $ | 5,801 |   |   | $ | 5,805 |   |
| Total                   |   | $                   | 1,595  |   |                    | $      | 1,598 |   |   | $ | 5,801 |   |   | $ | 5,805 |   |

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Table of Contents

|   | Level 1: | Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets and liabilities. |
|--------|----------|--------------------------------------------------------------------------------------------------------------------------------------------|

|   | Level 2: | Quoted prices in markets that are not active or financial instruments for which all significant inputs are observable, either directly or indirectly. |
|--------|----------|-------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Level 3: | Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable. |
|--------|----------|--------------------------------------------------------------------------------------------------------------------|

|   | input that is significant to the fair value measurement. |
|--------|----------------------------------------------------------|

|                      |   | As of June 30, 2009 |   |   | As of December 31, 2008 |   |
|---------------------------|--------|---------------------|--------|--------|-------------------------|--------|
|                      |   |                |   |   | Quoted                  |   |   |   |   |   |   |   |   |   |   |   | Quoted |   |   |   |   |   |   |   |
|                      |   |                |   |   | Prices in               |   |   | Other |   |   | Un- |   |   |   |   |   | Prices in |   |   | Other |   |   | Un- |   |
|                      |   |                |   |   | Active                  |   |   | Observable |   |   | Observable |   |   |   |   |   | Active |   |   | Observable |   |   | Observable |   |
|                      |   |                |   |   | Markets                 |   |   | Inputs |   |   | Inputs |   |   |   |   |   | Markets |   |   | Inputs |   |   | Inputs |   |
|                      |   | Total               |   |   | (Level 1)               |   |   | (Level 2) |   |   | (Level 3) |   |   | Total |   |   | (Level 1) |   |   | (Level 2) |   |   | (Level 3) |   |
| Corporate debenture bonds |   | $                   | 808    |   |                    | $      | – |   |   | $ | 808 |   |   | $ | – |   |   | $ | 4,308 |   |   | $ | – |   |   | $ | 4,308 |   |   | $ | – |   |
| Commercial paper          |   |                | 300    |   |                    |   | – |   |   |   | 300 |   |   |   | – |   |   |   | 997 |   |   |   | – |   |   |   | 997 |   |   |   | – |   |
| Certificates of deposit   |   |                | 490    |   |                    |   | 490 |   |   |   | – |   |   |   | – |   |   |   | 500 |   |   |   | 500 |   |   |   | – |   |   |   | – |   |
| Total                     |   | $                   | 1,598  |   |                    | $      | 490 |   |   | $ | 1,108 |   |   | $ | – |   |   | $ | 5,805 |   |   | $ | 500 |   |   | $ | 5,305 |   |   | $ | – |   |

|                                                       |   | As of         |   |   | As of             |   |
|------------------------------------------------------------|--------|---------------|--------|--------|-------------------|--------|
|                                                       |   | June 30, 2009 |   |   | December 31, 2008 |   |
| Property and equipment                                     |   | $             | 69,477 |   |              | $      | 65,934 |   |
| Less:  accumulated depreciation and amortization |   |          | 48,119 |   |              |   | 42,950 |   |
|                                                       |   | $             | 21,358 |   |              | $      | 22,984 |   |

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|                                                                                                                                                                                                   |   | For the Three MonthsEnded June 30, |    |   | For the Six MonthsEnded June 30, |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------|---------|--------|----------------------------------|--------|
|                                                                                                                                                                                                   |   | 2009                               |    |   | 2008                             |   |   | 2009 |   |   | 2008 |   |
| Basic weighted average shares outstanding                                                                                                                                                              |   |                               | 24,414  |   |                             |   | 24,670 |   |   |   | 24,354 |   |   |   | 24,676 |   |
| Effect of dilutive equity instruments                                                                                                                                                                  |   |                               | – |   |                             |   | – |   |   |   | – |   |   |   | – |   |
| Dilutive weighted average shares outstanding                                                                                                                                                           |   |                               | 24,414  |   |                             |   | 24,670 |   |   |   | 24,354 |   |   |   | 24,676 |   |
|                                                                                                                                                                                                   |   |                               |    |   |                             |   |   |   |   |   |   |   |   |   |   |   |
| Options to purchase shares of Common Stock and other stock-based awards outstanding which are not included in the calculation of diluted income (loss) per share because their impact is anti-dilutive |   |                               |    |   |                             |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                   |   |                               |    |   |                             |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                   |   |                               |    |   |                             |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                   |   | 6,317                              |    |   |                             | 5,804  |   |   |   | 6,361 |   |   |   | 5,802 |   |

|                                                                                                                   |   | For the Three Monthsended June 30, |   |   | For the Six Monthsended June 30, |   |
|------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------|--------|--------|----------------------------------|--------|
|                                                                                                                   |   | 2009                               |   |   | 2008                             |   |   | 2009 |   |   | 2008 |   |
| Net loss                                                                                                               |   | $                                  | (330   | )      |                             | $      | (751 | ) |   |   | (743 | ) |   | $ | (461 | ) |
|     Other comprehensive income (loss)                                                              |   |                               |   |   |                             |   |   |   |   |   |   |   |   |   |   |   |
|         Unrealized gain (loss) on investments in                               |   |                               |   |   |                             |   |   |   |   |   |   |   |   |   |   |   |
|              marketable securities available-for-sale |   |                               | 2      |   |                             |   | (21 | ) |   |   | (1 | ) |   |   | 23 |   |
|         Unrealized gain (loss) on foreign currency                             |   |                               |   |   |                             |   |   |   |   |   |   |   |   |   |   |   |
|              translation adjustments                  |   |                               | 456    |   |                             |   | 3 |   |   |   | 395 |   |   |   | (10 | ) |
| Comprehensive income (loss)                                                                                            |   | $                                  | 128    |   |                             | $      | (769 | ) |   | $ | (349 | ) |   | $ | (448 | ) |

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|                                                        |   | For the Three MonthsEnded June 30, |    |   | For the Six MonthsEnded June 30, |   |
|-------------------------------------------------------------|--------|------------------------------------|---------|--------|----------------------------------|--------|
|                                                        |   | 2009                               |    |   | 2008                             |   |   | 2009 |   |   | 2008 |   |
| Non-cash stock-based compensation expense:                  |   |                               |    |   |                             |   |   |   |   |   |   |   |
|    Cost of recurring revenues                |   | $                                  | 171     |   |                             | $      | 169 |   |   | $ | 336 |   |   | $ | 498 |   |
|    Cost of services revenues                 |   |                               | 324     |   |                             |   | 406 |   |   |   | 668 |   |   |   | 1,086 |   |
|    Cost of license revenues                  |   |                               | – |   |                             |   | 3 |   |   |   | – |   |   |   | 7 |   |
|    Sales and marketing                       |   |                               | 1,747   |   |                             |   | 1,560 |   |   |   | 3,534 |   |   |   | 3,613 |   |
|    Research and development                  |   |                               | 308     |   |                             |   | 352 |   |   |   | 610 |   |   |   | 941 |   |
|    General and administrative                |   |                               | 724     |   |                             |   | 950 |   |   |   | 1,439 |   |   |   | 1,870 |   |
|   Total non-cash stock-based compensation expense |   | $                                  | 3,274   |   |                             | $      | 3,440 |   |   | $ | 6,587 |   |   | $ | 8,015 |   |

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|                             |   |   |    |   |           |   |    | Weighted        |   |   |      |   |
|----------------------------------|--------|--------|---------|--------|----------------|--------|---------|-----------------|--------|--------|-----------|--------|
|                             |   |   |    |   |           |   |    | Average         |   |   |      |   |
|                             |   |   |    |   | Weighted       |   |    | Remaining       |   |   | Aggregate |   |
|                             |   |   |    |   | Average        |   |    | Contractual     |   |   | Intrinsic |   |
| Stock Options                    |   | Shares |    |   | Exercise Price |   |    | Term (in Years) |   |   | Value     |   |
| Outstanding at December 31, 2008 |   |   | 4,965   |   |           | $      | 16.86   |            |   |   | 6.02      |   |   | $ | 16,140 |   |
|   Granted              |   |   | – |   |           |   | – |            |   |   |      |   |   |   |   |   |
|   Exercised            |   |   | (204    | )      |           |   | 8.44    |            |   |   |      |   |   |   |   |   |
|   Forfeited or expired |   |   | (100    | )      |           |   | 24.14   |            |   |   |      |   |   |   |   |   |
| Outstanding at June 30, 2009     |   |   | 4,661   |   |           | $      | 17.07   |            |   |   | 5.67      |   |   | $ | 40,211 |   |
|                             |   |   |    |   |           |   |    |            |   |   |      |   |   |   |   |   |
| Exercisable at June 30, 2009     |   |   | 3,893   |   |           | $      | 14.99   |            |   |   | 5.11      |   |   | $ | 39,481 |   |

|                             |   | Restricted Stock Awards |    |   | Restricted Stock Unit Awards |   |
|----------------------------------|--------|-------------------------|---------|--------|------------------------------|--------|
|                             |   |                    |    |   | Weighted                     |   |   |   |   |
|                             |   |                    |    |   | Average                      |   |   |   |   |
|                             |   |                    |    |   | Grant Date                   |   |   |   |   |
|                             |   | Shares                  |    |   | Fair Value                   |   |   | Shares |   |
| Outstanding at December 31, 2008 |   |                    | 1,361   |   |                         | $      | 23.09 |   |   |   | 45 |   |
|   Granted              |   |                    | 20      |   |                         |   | 16.48 |   |   |   | 169 |   |
|   Vested               |   |                    | – |   |                         |   | – |   |   |   | – |   |
|   Released             |   |                    | (35     | )      |                         |   | 15.90 |   |   |   |   |   |
|   Forfeited or expired |   |                    | – |   |                         |   | – |   |   |   | (4 | ) |
| Outstanding at June 30, 2009     |   |                    | 1,346   |   |                         | $      | 23.18 |   |   |   | 210 |   |

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Management’s Discussion 

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|                                                           |   | For the Three Months |   |   | For the Six Months |   |
|----------------------------------------------------------------|--------|----------------------|--------|--------|--------------------|--------|
|                                                           |   | Ended June 30,       |   |   | Ended June 30,     |   |
|                                                           |   | 2009                 |   |   | 2008               |   |   | 2009 |   |   | 2008 |   |
| Revenues:                                                      |   |                 |   |   |               |   |   |   |   |   |   |   |
| Recurring                                                      |   |                 | 69.0   | %      |               |   | 61.2 | % |   |   | 66.1 | % |   |   | 60.1 | % |
| Services                                                       |   |                 | 28.3   |   |               |   | 31.7 |   |   |   | 30.5 |   |   |   | 32.1 |   |
| License                                                        |   |                 | 2.7    |   |               |   | 7.1 |   |   |   | 3.4 |   |   |   | 7.8 |   |
| Total revenues                                                 |   |                 | 100.0  |   |               |   | 100.0 |   |   |   | 100.0 |   |   |   | 100.0 |   |
| Cost of revenues:                                              |   |                 |   |   |               |   |   |   |   |   |   |   |   |   |   |   |
| Recurring                                                      |   |                 | 20.2   |   |               |   | 16.9 |   |   |   | 19.2 |   |   |   | 15.9 |   |
| Services                                                       |   |                 | 23.5   |   |               |   | 25.5 |   |   |   | 24.4 |   |   |   | 25.7 |   |
| License                                                        |   |                 | 0.6    |   |               |   | 1.1 |   |   |   | 0.6 |   |   |   | 1.0 |   |
| Total cost of revenues                                         |   |                 | 44.3   |   |               |   | 43.5 |   |   |   | 44.2 |   |   |   | 42.6 |   |
| Operating expenses:                                            |   |                 |   |   |               |   |   |   |   |   |   |   |   |   |   |   |
| Sales and marketing                                            |   |                 | 27.2   |   |               |   | 27.1 |   |   |   | 27.8 |   |   |   | 27.2 |   |
| Research and development                                       |   |                 | 20.3   |   |               |   | 22.4 |   |   |   | 19.7 |   |   |   | 21.4 |   |
| General and administrative                                     |   |                 | 9.1    |   |               |   | 10.6 |   |   |   | 9.2 |   |   |   | 10.2 |   |
| Total operating expenses                                       |   |                 | 56.6   |   |               |   | 60.1 |   |   |   | 56.7 |   |   |   | 58.8 |   |
| Operating loss                                                 |   |                 | (0.9   | )      |               |   | (3.6 | ) |   |   | (0.9 | ) |   |   | (1.4 | ) |
| Other income (expense):                                        |   |                 |   |   |               |   |   |   |   |   |   |   |   |   |   |   |
|       Interest expense and other |   |                 | (0.1   | )      |               |   | (0.1 | ) |   |   | (0.1 | ) |   |   | (0.2 | ) |
|       Other income, net          |   |                 | 0.1    |   |               |   | 0.5 |   |   |   | 0.1 |   |   |   | 0.7 |   |
| Total other income, net                                        |   |                 | 0.0    |   |               |   | 0.4 |   |   |   | 0.0 |   |   |   | 0.5 |   |
| Loss before income taxes                                       |   |                 | (0.9   | )      |               |   | (3.2 | ) |   |   | (0.9 | ) |   |   | (0.9 | ) |
|       Benefit for income taxes   |   |                 | 0.2    |   |               |   | 1.4 |   |   |   | 0.1 |   |   |   | 0.4 |   |
| Net loss                                                       |   |                 | (0.7   | ) %    |               |   | (1.8 | ) % |   |   | (0.8 | ) % |   |   | (0.5 | ) % |

|                                                        |   | For the Three MonthsEnded June 30, |    |   | For the Six MonthsEnded June 30, |   |
|-------------------------------------------------------------|--------|------------------------------------|---------|--------|----------------------------------|--------|
|                                                        |   | 2009                               |    |   | 2008                             |   |   | 2009 |   |   | 2008 |   |
| Stock-based compensation:                                   |   |                               |    |   |                             |   |   |   |   |   |   |   |
|    Cost of recurring revenues                |   |                               | 171     |   |                             |   | 169 |   |   |   | 336 |   |   |   | 498 |   |
|    Cost of services revenues                 |   |                               | 324     |   |                             |   | 406 |   |   |   | 668 |   |   |   | 1,086 |   |
|    Cost of license revenues                  |   |                               | – |   |                             |   | 3 |   |   |   | – |   |   |   | 7 |   |
|    Sales and marketing                       |   |                               | 1,747   |   |                             |   | 1,560 |   |   |   | 3,534 |   |   |   | 3,613 |   |
|    Research and development                  |   |                               | 308     |   |                             |   | 352 |   |   |   | 610 |   |   |   | 941 |   |
|    General and administrative                |   |                               | 724     |   |                             |   | 950 |   |   |   | 1,439 |   |   |   | 1,870 |   |
|   Total non-cash stock-based compensation expense |   | $                                  | 3,274   |   |                             | $      | 3,440 |   |   | $ | 6,587 |   |   | $ | 8,015 |   |
|                                                        |   |                               |    |   |                             |   |   |   |   |   |   |   |   |   |   |   |
| Amortization of acquired intangibles:                       |   |                               |    |   |                             |   |   |   |   |   |   |   |   |   |   |   |
| General and administrative                             |   | $                                  | 46      |   |                             | $      | 46 |   |   | $ | 93 |   |   | $ | 93 |   |

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|   | a) | Intersourcing revenues increased 41.6% and 40.5% for the three and six months ended June 30, 2009, respectively, in comparison to the same periods in 2008. The increase in Intersourcing revenues is based on the revenue impact of incremental units sold that have gone Live since June 30, 2008, including the UltiPro core product and, to a lesser extent, Optional Features of UltiPro.  Intersourcing revenues fromthe Workplace solution in 2009 also contributed to the year-over-year growth, particularly since this solution was introduced late in 2007 and was ramping up in 2008.  Recognition of recurring revenues for Intersourcing sales commences upon Live date. |
|--------|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | b) | Maintenance revenues from past license sales increased 1.4% and 2.9% for the three and six months ended June 30, 2009, in comparison to the same periods of 2008, due to additional maintenance fees resulting from cumulative net increases in the customer base subsequent to June 30, 2008 due to incremental license sales since such date.  Maintenance revenues are recognized over the initial term of the relatedlicense contract, which is typically 12 months, and then on a monthly recurring basis thereafter as the maintenance contracts renew annually. |
|--------|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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Quantitative and Qualitative 

|   | · | Maximum safety of principal; |
|--------|--------|------------------------------|

|   | · | Maintenance of appropriate liquidity for regular cash needs; |
|--------|--------|--------------------------------------------------------------|

|   | · | Maximum yields in relationship to guidelines and market conditions; |
|--------|--------|---------------------------------------------------------------------|

|   | · | Diversification of risks; and |
|--------|--------|-------------------------------|

|   | · | Fiduciary control of all investments. |
|--------|--------|---------------------------------------|

Controls and Procedures

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Risk Factors

Unregistere

Submission of 

| Nominee                   |   | For        |   | Withheld Vote |
|---------------------------|--------|------------|--------|---------------|
| Marc D. Scherr            |   | 15,170,654 |   | 9,524,948     |
| James A. FitzPatrick, Jr. |   | 15,778,363 |   | 8,917,239     |
| Rick A. Wilber            |   | 15,653,808 |   | 9,041,794     |

| Term Expires in 2010: |
|-----------------------|
|                  | Scott Scherr |
|                  | Alois T. Leiter |
|                  |   |
| Term Expires in 2011: |
|                  | LeRoy A. Vander Putten |
|                  | Robert A. Yanover |

| For        |   | Against   |   | Abstain |   | Broker Non Votes |   |
|------------|--------|-----------|--------|---------|--------|------------------|--------|
| 12,337,836 |   | 9,635,593 |   | 4,540   |   | 2,717,633        |   |
|       |   |      |   |    |   |             |   |

| For        |   | Against |   | Abstain |   | Broker Non Votes |   |
|------------|--------|---------|--------|---------|--------|------------------|--------|
| 24,480,745 |   | 61,430  |   | 153,427 |   | 0                |   |
|       |   |    |   |    |   |             |   |

Exhibits

| Number | Description                                                                                                      |
|--------|------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                             |
| 31.1   | Certification Pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended * |
| 31.2   | Certification Pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended * |
| 32.1   | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted                                                     |
|   | Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, as amended *                                          |
| 32.2   | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted                                                     |
|   | Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, as amended *                                          |

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Signatures

|                                                                                   | The Ultimate Software Group, Inc. |
|----------------------------------------------------------------------------------------|-----------------------------------|
|                                                                                   |                              |   |
| Date:           August 10, 2009 | By:                               | /s/ Mitchell K. Dauerman |
|                                                                                   |                              | Mitchell K. Dauerman |
|                                                                                   |                              | Executive Vice President, Chief Financial Officer and Treasurer (Authorized Signatory and Principal Financial and Accounting Officer) |

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