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Second-Quarter Unaudited Results of Operations

Revenue declined 9.0% to $156.0 million, compared with $171.4 million in the second quarter of fiscal 2009. Hardware sales declined 3.5%, services declined 32.6% and software sales increased 14.0%. Consolidated revenues rebounded 19.8% from the $130.2 million reported in the first quarter, due to double-digit growth in hardware, software and services.

Cost-cutting initiatives and lower acquisition-related intangible amortization drove selling, general and administrative (SG&A) expense down $12.4 million, or 23.9%, to $39.6 million. The Company recently executed an additional $9 million in annual savings of which approximately $4 million will be realized in the second half of fiscal 2010.

The Company's operating income, excluding restructuring and asset impairment charges ("Charges"), improved $6.2 million to $4.3 million from the operating loss of $1.9 million last year. Lower sales and gross profit year-over-year were more than offset by lower SG&A expense. Adjusted EBITDA (operating income plus depreciation and amortization), excluding Charges, increased 44.9% to $7.4 million for the quarter, compared with $5.1 million a year ago.

Agilysys reported net income from continuing operations of $2.9 million, or $0.12 per diluted share, a significant increase from the loss of $105.3 million, or a loss of $4.66 per share, recorded in the previous year.

"We are pleased to report strong sequential growth in sales and positive net earnings for the quarter. The improvement in profitability reflects the tangible benefits realized from our cost-saving efforts," said Martin Ellis, President and Chief Executive Officer. "In addition to improved bottom-line performance, our order pipeline has started to show modest recovery from the depressed levels of the past several quarters."

Fiscal 2010 First-Half Unaudited Results of Operations

First-half 2010 revenue was $286.2 million compared with revenue of $351.2 million in the first six months of 2009. Revenue in the first half of fiscal 2010 decreased 18.5% reflecting lower sales in each of the company's three business segments. Hardware declined 13.6%, services declined 36.3% and software decreased 8.2%.

SG&A expense declined $23.7 million, or 22.0%, to $84.1 million, largely due to cost reductions. Approximately $44 million in annual costs have been eliminated since the first quarter of fiscal year 2009 when the company began aggressively reducing SG&A expenses to align cost structure with deteriorating market demand. Adjusted EBITDA, excluding Charges, was $1.1 million for the six-month period, versus $3.3 million in the comparable period of fiscal 2009.

For the first six months of fiscal 2010, the company reported a net loss from continuing operations of $9.5 million, or a loss of $0.42 per share, compared with a net loss from continuing operations of $165.4 million, or a loss of $7.33 per share, in the first six months of fiscal 2009.

Business Outlook

The year-over-year declines in revenue have moderated and while some economic indicators have improved, market conditions still reflect uncertainty regarding the overall business environment and demand for IT products. Ellis commented: "The business is stabilizing, our pipeline has improved, and we expect to see a seasonal increase in sales in our third quarter ending December. As we look to the balance of fiscal 2010, we plan to continue to focus on those items under our control that can help produce tangible improvements in results. Near-term, we are optimistic regarding our outlook for the third quarter of the fiscal year and expect financial performance in second half to improve versus the first half."

Conference Call Information

A conference call will be held at 11:00 a.m. ET on November 4, 2009 to review unaudited second-quarter and first-half fiscal 2010 results. A slide deck will be the basis for the review. Both the slide deck and the conference call can be accessed via the Investor Relations section of www.agilysys.com. In addition, a replay of the call will be archived on the Web site. If you are unable to participate during the live webcast, the call will be archived at the Investor Relations section of www.agilysys.com.

Forward-Looking Language

This release contains certain management expectations, which may constitute forward-looking information within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities and Exchange Act of 1934 and the Private Securities Reform Act of 1995. Forward-looking information speaks only as to the date of this presentation and may be identified by use of words such as "may," "will," "believes," "anticipates," "plans," "expects," "estimates," "projects," "targets," "forecasts," "continues," "seeks," or the negative of those terms or similar expressions. Many important factors could cause actual results to be materially different from those in forward-looking information including, without limitation, competitive factors, disruption of supplies, changes in market conditions, pending or future claims or litigation, or technology advances. No assurances can be provided as to the outcome of cost reductions, business strategies, future financial results, unanticipated downturns to our relationships with customers, unanticipated difficulties integrating acquisitions, new laws and government regulations, interest rate changes, and unanticipated deterioration in economic and financial conditions in the United States and around the world. We do not undertake to update or revise any forward-looking information even if events make it clear that any projected results, actions, or impact, express or implied, will not be realized.

Other potential risks and uncertainties that may cause actual results to be materially different from those in forward-looking information are described in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission (SEC), under Item 1A, "Risk Factors." Copies are available from the SEC or the Agilysys website.

Use of Non-GAAP Financial Information

To supplement the unaudited condensed consolidated financial statements presented in accordance with U.S. GAAP in this release, certain non-GAAP financial measures as defined by the SEC rules are used. Management believes that such information can enhance investors' understanding of the Company's ongoing operations and is a measure used in the Company's debt agreement. The non-GAAP measures included in this release have been reconciled to the comparable GAAP measures within an accompanying table, shown on the last page of this release.

About Agilysys, Inc.

Agilysys is a leading provider of innovative IT solutions to corporate and public-sector customers, with special expertise in select markets, including retail and hospitality. The Company uses technology--including hardware, software and services--to help customers resolve their most complicated IT needs. The Company possesses expertise in enterprise architecture and high availability, infrastructure optimization, storage and resource management, identity management and business continuity; and provides industry-specific software, services and expertise to the retail and hospitality markets. Headquartered in Cleveland, Agilysys operates extensively throughout North America, with additional sales offices in the United Kingdom and Asia.

News releases and other information on Agilysys are available on the Internet at: www.agilysys.com.

    Investor Contact:

    Curtis Stout
    Vice President and Treasurer
    Agilysys, Inc.
    440-519-8635
    curtis.stout@agilysys.com

    Media Contact:

    Maureen Morreale
    Senior Communications Manager
    Agilysys, Inc.
    440-519-8161
    maureen.morreale@agilysys.com

                                   AGILYSYS, INC.
            CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

                             Three Months Ended         Six Months Ended
    (In thousands, except          Sep 30,                  Sep 30,
     share and per-share   -----------------------   -----------------------
     data)                    2009         2008         2009         2008
                              ----         ----         ----         ----
    Net sales:
       Products             $126,925     $128,313     $231,818     $265,892
       Services               29,070       43,125       54,367       85,297
                              ------       ------       ------       ------
          Total net sales    155,995      171,438      286,185      351,189
    Cost of goods sold:
       Products               99,623       99,449      185,503      212,890
       Services               12,499       21,881       24,958       41,169
                              ------       ------       ------       ------
          Total cost of
           goods sold        112,122      121,330      210,461      254,059
                             -------      -------      -------      -------
       Gross margin           43,873       50,108       75,724       97,130
    Selling, general and
     administrative expenses  39,618       52,032       84,144      107,834
    Asset impairment
     charges                       -      112,020            -      145,643
    Restructuring charges         54          510           68       23,573
                                  --          ---           --       ------
    Operating income (loss)    4,201     (114,454)      (8,488)    (179,920)
    Other expense
     (income):
       Other expense (income),
        net                       81         (242)        (390)        (480)
       Interest income            (9)        (215)         (42)        (462)
       Interest expense          253          197          460          452
                                 ---          ---          ---          ---
    Income (loss) before
     income taxes              3,876     (114,194)      (8,516)    (179,430)
    Income tax expense
     (benefit)                   988       (8,917)       1,003      (14,080)
                                 ---       ------        -----      -------
    Income (loss) from
     continuing operations     2,888     (105,277)      (9,519)    (165,350)
    Loss from discontinued
     operations                  (52)      (1,312)         (41)      (1,274)
                                 ---       ------          ---       ------
    Net income (loss)         $2,836    $(106,589)     $(9,560)   $(166,624)
                              ======    =========      =======    =========

    Income (loss) per share
     - basic
       Income (loss) from
        continuing operations  $0.13       $(4.66)      $(0.42)      $(7.33)
       Loss from
        discontinued
        operations             (0.00)       (0.06)       (0.00)       (0.05)
                               -----        -----        -----        -----
       Net income (loss)       $0.13       $(4.72)      $(0.42)      $(7.38)
                               =====       ======       ======       ======

    Income (loss) per share
     - diluted
       Income (loss) from
        continuing
        operations             $0.12       $(4.66)      $(0.42)      $(7.33)
       Loss from
        discontinued
        operations             (0.00)       (0.06)       (0.00)       (0.05)
                               -----        -----        -----        -----
       Net income (loss)       $0.12       $(4.72)      $(0.42)      $(7.38)

    Weighted average
     shares outstanding
       Basic              22,625,654   22,601,549   22,626,491   22,569,206
       Diluted            22,879,030   22,601,549   22,626,491   22,569,206

    Cash dividends per
     share                     $0.03        $0.03        $0.06        $0.06

                                   AGILYSYS, INC.
                      BUSINESS SEGMENT INFORMATION (UNAUDITED)

                             Three Months Ended         Six Months Ended
                                   Sep 30,                  Sep 30,
                           -----------------------   -----------------------
    (In thousands)            2009         2008         2009         2008
                              ----         ----         ----         ----
    Hospitality (HSG)
       Total revenue         $23,836      $23,488      $40,386      $48,242
       Elimination of
        intersegment revenue    (514)         (43)      (1,057)         (82)
                                ----          ---       ------          ---
       Revenue from
        external customers   $23,322      $23,445      $39,329      $48,160
                             =======      =======      =======      =======
       Gross margin          $14,237      $14,435      $23,777      $28,844
                             =======      =======      =======      =======
                                61.0%        61.6%        60.5%        59.9%
       Depreciation and
        amortization          $1,104       $1,855       $2,227       $3,186
       Operating income
        (loss)                 3,997     (102,906)       2,095     (108,765)
                               -----     --------        -----     --------
       Adjusted EBITDA        $5,101    $(101,051)      $4,322    $(105,579)
                              ======   ==========       ======    =========
       Goodwill and
        intangible asset
        impairment                $-     $103,387           $-     $110,852

    Retail (RSG)
       Total revenue         $23,582      $29,437      $47,970      $67,704
       Elimination of
        intersegment revenue     (19)        (148)         (20)        (316)
                                 ---         ----          ---         ----
       Revenue from
        external customers   $23,563      $29,289      $47,950      $67,388
                             =======      =======      =======      =======
       Gross margin           $4,694       $6,094      $10,070      $14,493
                              ======       ======      =======      =======
                                19.9%        20.8%        21.0%        21.5%
       Depreciation and
        amortization             $44          $53          $94         $141
       Operating income
        (loss)                 1,133       (5,942)       2,763      (20,314)
                               -----       ------        -----      -------
       Adjusted EBITDA        $1,177      $(5,889)      $2,857     $(20,173)
                              ======      =======       ======     ========
       Goodwill impairment        $-       $6,549           $-      $24,910

    Technology (TSG)
       Total revenue        $109,126     $120,047     $198,950     $238,748
       Elimination of
        intersegment revenue     (16)      (1,343)         (44)      (3,107)
                                 ---       ------          ---       ------
       Revenue from
        external customers  $109,110     $118,704     $198,906     $235,641
                            ========     ========     ========     ========
       Gross margin          $24,909      $29,009      $42,638      $51,446
                             =======      =======      =======      =======
                                22.8%        24.4%        21.4%        21.8%
       Depreciation and
        amortization            $817       $4,061       $4,768       $8,534
       Operating income
        (loss)                 6,320        5,732        3,786      (26,313)
                               -----        -----        -----      -------
       Adjusted EBITDA        $7,137       $9,793       $8,554     $(17,779)
                              ======       ======       ======     ========
       Goodwill impairment        $-       $2,084           $-       $9,881
       Restructuring charge       $-         $510           $-      $23,573

                                   AGILYSYS, INC.
                           BUSINESS SEGMENT INFORMATION
                                    (Unaudited)

                              Three Months Ended         Six Months Ended
                                    Sep 30,                  Sep 30,
                            -----------------------   -----------------------
    (In thousands)             2009         2008         2009         2008
                               ----         ----         ----         ----
    Corporate / Other
       Gross margin              $33         $570        $(761)      $2,347
                                 ===         ====        =====       ======
       Depreciation and
        amortization (a)      $1,205       $1,079       $2,409       $2,098
       Operating loss         (7,249)     (11,338)     (17,132)     (24,528)
                              ------      -------      -------      -------
       Adjusted EBITDA       $(6,044)    $(10,259)    $(14,723)    $(22,430)
                             =======     ========     ========     ========
       Restructuring charge      $54           $-          $68           $-

    Consolidated
       Total revenue        $156,544     $172,972     $287,306     $354,694
       Elimination of
        intersegment
        revenue                 (549)      (1,534)      (1,121)      (3,505)
                                ----       ------       ------       ------
       Revenue from
        external customers  $155,995     $171,438     $286,185     $351,189
                            ========     ========     ========     ========
       Gross margin          $43,873      $50,108      $75,724      $97,130
                             =======      =======      =======      =======
                                28.1%        29.2%        26.5%        27.7%
       Depreciation and
        amortization (a)      $3,170       $7,048       $9,498      $13,959
       Operating income
       (loss)                  4,201     (114,454)      (8,488)    (179,920)
                               -----     --------       ------     --------
       Adjusted EBITDA        $7,371    $(107,406)      $1,010    $(165,961)
                              ======    =========       ======    =========
       Goodwill and
        intangible asset
        impairment                $-     $112,020           $-     $145,643
       Restructuring charge      $54         $510          $68      $23,573


    (a)  Does not include the amortization of deferred financing fees
         totaling $132 and $57 for the three months ended Sept. 30, 2009 and
         2008, respectively, and $220 and $113 for the six months ended
         Sept. 30, 2009 and 2008, respectively, all of which related to the
         Corporate/Other segment.

                                   AGILYSYS, INC.
                       CONDENSED CONSOLIDATED BALANCE SHEETS

                                              Sep 30,      Mar 31,
    (In thousands)                             2009         2009
                                               ----         ----
    ASSETS                                  (Unaudited)
    Current assets:
       Cash and cash equivalents              $48,197      $36,244
       Accounts receivable, net               125,166      151,944
       Inventories, net                        22,036       27,216
       Deferred income taxes - current,
        net                                     6,845        6,836
       Prepaid expenses and other
        current assets                          5,337        4,564
       Income taxes receivable                  3,874        3,871
       Assets of discontinued operations
        - current                                 285        1,075
                                                  ---        -----
          Total current assets                211,740      231,750
    Goodwill                                   50,563       50,382
    Intangible assets, net                     29,877       35,699
    Deferred income taxes - non-current,
     net                                          511          511
    Other non-current assets                   18,467       29,008
    Assets of discontinued operations -
     non-current                                    -           56
    Property and equipment, net                29,471       27,030
                                               ------       ------
          Total assets                       $340,629     $374,436
                                             ========     ========

    LIABILITIES AND SHAREHOLDERS' EQUITY
    Current liabilities:
       Accounts payable                       $92,832      $28,042
       Floor plan financing                         -       74,159
       Deferred revenue                        20,435       18,709
       Accrued liabilities                     20,665       37,807
       Long-term debt - current                   195          238
       Liabilities of discontinued
        operations - current                      575        1,176
                                                  ---        -----
          Total current liabilities           134,702      160,131
    Other non-current liabilities              21,827       21,588
    Shareholders' equity:
       Common shares, without par value,
        at $0.30 stated value; authorized
        80,000,000 shares; 31,606,831
        shares issued and 23,031,119
        shares outstanding at Sep 30, 2009      9,370        9,366
       Treasury stock (8,575,712 and
        8,896,778 shares at Sep 30, 2009,
        and Mar 31, 2009, respectively)        (2,670)      (2,670)
       Capital in excess of stated value       (9,934)     (11,036)
       Retained earnings                      189,027      199,947
       Accumulated other comprehensive
        loss                                   (1,693)      (2,890)
                                               ------       ------
          Total shareholders' equity          184,100      192,717
                                              -------      -------
          Total liabilities and
           shareholders' equity              $340,629     $374,436
                                             ========     ========

                                   AGILYSYS, INC.
             CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

                                               Six Months Ended
    (In thousands)                                  Sep 30,
                                           ------------------------
    Operating activities:                     2009          2008
                                              ----          ----
       Net loss                              $(9,560)    $(166,624)
          Add: Loss from discontinued
           operations                             41         1,274
                                                  --         -----
       Loss from continuing operations        (9,519)     (165,350)
       Adjustments to reconcile net loss
        from continuing operations to net
        cash provided by (used for)
        operating activities (net of
        effects from business acquisitions):
          Impairment of goodwill and
           intangible assets                       -       166,223
          Gain on redemption of cost basis
           investment                              -           (51)
          Gain on partial redemption of
           investment in The Reserve Fund's
           Primary Fund                          (70)            -
          Loss on the sale of securities          91             -
          Depreciation                         1,891         1,927
          Amortization                         7,827        12,145
          Deferred income taxes                   (9)      (18,372)
          Stock-based compensation             1,073         2,152
       Changes in working capital:
          Accounts receivable                 26,778        32,699
          Inventories                          5,180         2,001
          Accounts payable                    65,150       (76,327)
          Accrued and other liabilities      (15,309)      (40,816)
          Income taxes payable                  (798)          946
          Other changes, net                    (866)       (3,252)
       Other non-cash adjustments             (2,357)       (2,487)
                                              ------        ------
          Total adjustments                   88,581        76,788
                                              ------        ------
    Net cash provided by (used for)
     operating activities                     79,062       (88,562)

    Investing activities:
       Proceeds from (claim on) The Reserve
        Fund's Primary Fund                    2,337        (7,657)
       Proceeds from redemption of cost
        basis investment                           -         7,172
       Proceeds from the borrowings against
        company-owned life insurance
        policies                              12,500             -
       Change in cash surrender value of
        company-owned life insurance
        policies                                (107)         (103)
       Acquisition of businesses, net of
        cash acquired                              -        (2,381)
       Purchase of property and equipment     (5,923)       (2,603)
                                              ------        ------
    Net cash provided by (used for)
     investing activities                      8,807        (5,572)

    Financing activities:
       Floor plan financing agreement, net   (74,159)       75,551
       Proceeds from borrowings under
        credit facility                        5,000             -
       Principal payments under credit
        facility                              (5,000)            -
       Principal payment under long-term
        obligations                             (206)          (47)
       Issuance of common shares                  33             -
       Debt financing costs                   (1,520)            -
       Dividends paid                         (1,360)       (1,358)
                                              ------        ------
    Net cash used for (provided by)
     financing activities                    (77,212)       74,146

    Effect of exchange rate changes
     on cash                                   1,092          (101)
                                               -----          ----
    Cash flows provided by (used for)
     continuing operations                    11,749       (20,089)
    Cash flows of discontinued operations:
       Operating cash flows                      204           (29)
       Investing cash flows                        -            35
                                                  --            --
    Net increase (decrease) in cash           11,953       (20,083)
    Cash at beginning of period               36,244        69,935
                                              ------        ------
    Cash at end of period                    $48,197       $49,852
                                             =======       =======

                                   AGILYSYS, INC.
                RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED EBITDA
                                     (Unaudited)


                              Three Months Ended         Six Months Ended
                                    Sep 30,                  Sep 30,
                            -----------------------  -----------------------
    (In thousands)             2009        2008         2009         2008
                               ----        ----         ----         ----
    Net income (loss)         $2,836    $(106,589)     $(9,560)   $(166,624)
    Plus:
       Interest expense, net     244          (18)         418          (10)
       Other income, net          81         (242)        (390)        (480)
       Income tax expense
        (benefit)                988       (8,917)       1,003      (14,080)
       Depreciation and
        amortization
        expense (a)            3,170        7,048        9,498       13,959
       Loss from discontinued
        operations, net of
        tax                       52        1,312           41        1,274
                                  --          ---           --        -----
    Adjusted EBITDA            7,371     (107,406)       1,010     (165,961)
        Asset impairment
         charges                   -      112,020            -      145,643
        Restructuring charges     54          510           68       23,573
                                  --          ---           --       ------
    Adjusted EBITDA excluding
     asset impairment and
     restructuring charges    $7,425       $5,124       $1,078       $3,255
                              ======       ======       ======       ======

    (a)  Depreciation and amortization expense excludes amortization of
         deferred finance costs, totaling $132 and $57 for the three months
         ended Sept. 30, 2009 and 2008, respectively, and totaling $220 and
         $113 for the six months ended Sept. 30, 2009 and 2008,
         respectively, as such costs are already included in interest
         expense, net.

SOURCE Agilysys

http://www.agilysys.com

Expected next investor conference call information:
Conference Call Date: 11/4/2009
Conference Call Time (ET): 11:00 AM
Conference Call URL: http://www.agilysys.com/home/InvestorRelations/

Expected next investor conference call information:
Conference Call Date: 11/4/2009
Conference Call Time (ET): 11:00 AM
Conference Call URL: http://www.agilysys.com/home/InvestorRelations/

"We spent a great deal of time looking at software systems for point-of-sale and foodservice management, and our criteria were long and detailed," said William H. Sheaffer, director of information technology at Hershey Entertainment & Resorts. "We were impressed with the wide range of features and functionality found in Eatec Solutions and InfoGenesis POS and the fact that InfoGenesis POS is able to function in all of our venues, whether fine dining, quick-service or retail. We also appreciate the openness of the systems and their real-time reporting features. Agilysys has implemented similar technology in other large venues like ours and has an excellent reputation in the hotel and stadium markets."

InfoGenesis POS is an enterprise-ready point-of-sale solution that combines powerful reporting and configuration capabilities with an easy-to-use touch-screen terminal application. The system, which is designed for multi-unit operations common in hospitality environments, can manage any combination of dining, bar service and gift shop operations. Features of InfoGenesis POS include audit log and electronic journal, real-time reporting capabilities, multi-language capability and advanced sorting, filtering and grouping options. Hershey Entertainment & Resorts has implemented more than 400 InfoGenesis POS terminals in food and beverage and retail outlets throughout its venues.

Eatec Solutions is a full-featured inventory and procurement solution designed especially for the foodservice and hospitality industries. Along with its core purchasing, inventory, recipe, forecasting, production and sales analysis functions, the system also offers modules for catering, concessions and retail. The software solution offers more than 400 standard reports, which will enable Hershey Entertainment & Resorts to make more informed and intelligent business decisions.

"InfoGenesis POS and Eatec Solutions offer a complete and integrated system for managing food and beverage and retail operations," said Tina Stehle, senior vice president and general manager of Agilysys Hospitality Solutions Group. "This combination is ideal for large and multi-faceted companies like Hershey Entertainment & Resorts that want to maximize profitability, maintain accurate inventory counts and reduce potential losses. These solutions, which are among the most flexible, scalable and reliable on the market, will help ensure that Hershey operates at peak efficiency and delivers outstanding guest service."

Hershey Entertainment & Resorts is a privately held company founded in 1927, when Milton S. Hershey separated his chocolate manufacturing operations from his other businesses. Hershey Entertainment & Resorts operates Hersheypark, ZooAmerica North American Wildlife Park, Dutch Wonderland Family Amusement Park, Giant Center, Hersheypark Arena, Hersheypark Stadium, Hershey Bears AHL Hockey Club, The Hotel Hershey, The Spa at The Hotel Hershey, Hershey Lodge, Hershey Highmeadow Campground, Hershey Golf Collection, a variety of dining venues, Hershey Nursery and Hershey Laundry & Dry Cleaning.

About Agilysys, Inc.

Agilysys is a leading provider of innovative IT solutions to corporate and public-sector customers, with special expertise in select markets, including retail and hospitality. The company uses technology -- including hardware, software and services -- to help customers resolve their most complicated IT needs. The company possesses expertise in enterprise architecture and high availability, infrastructure optimization, storage and resource management, identity management and business continuity; and provides industry-specific software, services and expertise to the retail and hospitality markets. Headquartered in Cleveland, Agilysys operates extensively throughout North America, with additional sales and support offices in the United Kingdom and China. For more information, visit www.agilysys.com.

    PR Contact:
    Maureen Morreale, Agilysys, Inc., 440-519-8161,
    maureen.morreale@agilysys.com

SOURCE Agilysys

http://www.agilysys.com