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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

Form 10-K

(Mark One)

|X|

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

For the fiscal year ended March 31, 2003

OR

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

For the transition period from __________ to __________

Commission file number 0-6355

Group 1 Software, Inc.

(Exact name of registrant as specified in its charter)

Registrant’s telephone number, including area code: (301) 918-0400

Securities registered pursuant to Section 12(b) of the Act: NONE

Securities registered pursuant to Section 12(g) of the Act: Common Stock $0.50 par value

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

YES |X|               NO |_|

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

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act).

YES |X|               NO |_|

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter: $87,222,954

The number of shares of the Registrant’s Common Stock outstanding on June 18, 2003 was 15,035,438

DOCUMENTS INCORPORATED BY REFERENCE:

Definitive proxy statement to be filed with the Securities and Exchange Commission relating to Company’s 2003 Annual Meeting of Shareholders (Part III of Form 10-K).

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Part I

Item 1.

Business

The Company

Group 1 Software, Inc., including its wholly owned subsidiaries (“Group 1” or the “Company”), is a leading provider of software solutions for data quality, customer communications management and direct marketing applications. Group 1 has offices throughout the United States and in Canada, the United Kingdom, continental Europe and Latin America and is also represented globally by distribution partners. Group 1 provides software solutions that enable more than 2,000 businesses to market smarter by helping them find, reach, and keep customers.

Many Group 1 products are used to help companies realize the benefits from or increase the return from their enterprise data applications including customer relationship management (CRM) systems. The Company’s data quality solutions help organizations ensure a proper foundation of information for CRM and other enterprise applications. These solutions enable businesses to ensure the integrity and usefulness of customer and prospect data through parsing, standardization, validation, matching, consolidation and enrichment.

The Company’s direct marketing applications help businesses ensure the accurate, on-time delivery of mailings, thereby increasing response rates and customer satisfaction. These solutions also help organizations to reduce mailing costs by standardizing addresses, validating postal codes and maximizing postal discounts.

Group 1’s DOC1 customer communications management suite provides integrated solutions for managing both printed and electronic customer communications. DOC1 technology enables businesses to control the entire document lifecycle, from content design, generation and presentment to archiving, retrieval and electronic payment.

The Company provides software solutions to leading organizations in the financial services, banking, retail, telecommunications, hospitality, publishing, utilities, high technology, e-business, insurance and other industries.

Group 1 markets all of its products in North America and a number of its products throughout the world. Group 1 is a leading worldwide vendor of customer communications management software and a leading vendor in North America of data quality and direct marketing software products.

Group 1 markets its data quality and direct marketing applications through a direct sales force in the United States and Canada. Customer communications management solutions are marketed directly to clients in the Americas and throughout Europe. The Company also uses distributors to supplement direct sales efforts.

The Company believes that continued growth within its core market segments can expand the market potential for its existing and future products. Contributing to the Company’s growth are the global adoption of customer-facing technologies, the increasing demand for end-to-end control over the customer communications management process, and operational requirements for enterprise-wide data quality.

Markets Served

Group 1 markets its products within a broad span of industries to meet the needs of organizations in the areas of data quality, direct marketing, and customer communications management. Group 1 addresses the direct marketing and data quality markets through its Enterprise Solutions Division, a single operating segment. Group 1 addresses the customer communications management market through a separate operating segment, its DOC1 Division.

Data Quality

The Company’s data quality solutions help businesses ensure a proper foundation for the success of CRM and other enterprise applications. These solutions enable businesses to ensure the integrity of customer and prospect data through parsing, standardization, validation, matching, and consolidation. Additionally, Group 1 applications can enrich customer data with valuable geographic, business-focused, and demographic intelligence. As a result, organizations can increase operational efficiency, make more informed business decisions, and maximize customer lifetime value. Available as software applications or via hosted services, these solutions encompass many of the Company’s direct marketing applications and can be utilized in both real-time and batch modes.

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DataSight, the Company’s flagship data quality solution, provides enterprise-wide correction, validation and enhancement of customer, prospect and supplier data. With DataSight, businesses can achieve greater returns from technology investments by consolidating disparate data to achieve an accurate single customer view. During the fiscal year, Group 1 introduced DataSight RT, enabling users to ensure the accuracy of data as it enters the enterprise from a variety of real-time operational sources. These include Web servers, call centers, and order entry systems. The Company also significantly enhanced DataSight’s non-name and address data quality functionality. This was accomplished by providing out-of-the-box support for phone numbers, part numbers, dates, social security numbers, credit card numbers, email addresses and any other customer-defined data elements.

The Group 1 Data Quality Connector for Siebel can be easily integrated into Siebel Systems’ leading CRM solution to provide accurate consolidated customer and prospect data in both batch and real-time modes. A Siebel-validated solution, the Data Quality Connector identifies and merges duplicate records and validates, corrects and/or formats address data for over 220 countries and dependencies worldwide. This solution helps users more efficiently utilize customer information, thereby improving target marketing effectiveness, enhancing customer relationships and strengthening the bottom line.

Group 1’s GeoTAX system provides businesses with the most accurate solution available for the assignment of local tax jurisdictions in the United States. GeoTAX is a comprehensive solution that standardizes addresses and appends accurate state, county, municipal place, and special tax jurisdiction information to customer address records. With tax jurisdictions constantly changing and new tax jurisdiction assignment requirements mandated by federal and state laws, the potential liability resulting from inaccurate tax assignment poses a significant problem. To provide businesses with accurate address information for tax jurisdiction assignment, GeoTAX provides exclusive access to the most current taxation boundary information. To meet this most important requirement, GeoTAX features a database that tracks and updates taxation boundary files nationwide on a monthly basis.

Group 1’s HotData hosted service is a one-stop-shop for an organization’s data quality and augmentation needs, letting users verify, standardize and append customer, prospect and business data. HotData offers premium data quality and enrichment for real-time environments including Web sites and call centers as well as databases and CRM applications. This technology incorporates global address verification, the ability to update the addresses of customers who have recently moved, business profiles, geographic intelligence, area code updating and tax jurisdiction assignment. HotData now also incorporates phone append and reverse phone append, which help organizations maintain current and actionable business and consumer phone numbers.

Geographic Coding Plus helps companies turn simple customer address data into practical and powerful information. By adding highly accurate census geography data, demographic data and lifestyle data to customer addresses, Geographic Coding Plus offers businesses a gateway to increased customer and prospect understanding.

Direct Marketing

Group 1’s direct marketing applications increase target marketing effectiveness and customer satisfaction by facilitating on-time, accurate delivery of mailings, goods and services. These technologies clean, code and standardize address data, validate postal codes, presort mailings, identify and eliminate duplicate records, and update addresses of individuals who have recently moved. By using these solutions, businesses can also take advantage of substantial discounts offered by the United States Postal Service (USPS) and Canada Post Corporation (CPC) by complying with standards governing mail preparation and sortation. Furthermore, Group 1 offers the industry’s most comprehensive international direct marketing solutions - validating, correcting and/or formatting address data for over 220 countries and dependencies worldwide.

Group 1’s direct marketing applications include CODE-1 Plus, CODE-1 Plus International, Canadian CODE-1 Plus, MailStream Plus, SortStream Canada, and MOVEforward, along with many additional products that provide significant operational benefits. Group 1’s CODE-1 Plus and MailStream Plus products are, respectively, Coding Accuracy Support System (CASS)-certified and Presort Accuracy Validation and Evaluation (PAVE)-certified by the USPS. Group 1’s Canadian CODE-1 Plus and SortStream Canada are recognized under the CPC’s Software Evaluation Recognition Program (SERP) for address validation and postal presortation. To ensure data quality, CODE-1 Plus and Canadian CODE-1 Plus validate, correct, and format each address element. Among the enhancements to CODE-1 Plus are Delivery Point Validation (DPV) and Residential Delivery Indicator (RDI). DPV enables mailers to virtually eliminate undeliverable-as-addressed mail by verifying that an actual address exists, down to the apartment or suite number. RDI lets parcel shippers determine if an address is a residence or a business, letting mailers save significantly on shipping costs.

MailStream Plus and SortStream Plus give mailers the most powerful software solutions available to presort mail for the highest postal discounts offered by the USPS and CPC, respectively, for nearly every class of mail. MOVEforward accesses business and residential address changes, ensuring that communications reach the intended recipients by updating addresses for the 20% of Americans that move each year.

US mailers currently can save nearly 25% of the cost of first-class postage and up to 31% of the cost of standard mail by using MailStream Plus and CODE-1 Plus. Significant savings can also be achieved with other classes of mail. Similar benefits are provided to Canadian mailers using Group 1’s Canadian products. Canadian clients can also avoid the $0.05 per piece surcharge by demonstrating an address accuracy level of at least 95%.

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CODE-1 Plus International uses postal address files obtained directly from postal administrations worldwide to validate and correct addresses for over 120 countries. For an additional 100 countries and dependencies, CODE-1 Plus International can format address data. Additionally, Group 1 is the only North American vendor partnered with the Universal Postal Union (UPU), a specialized agency of the United Nations, to incorporate the UPU’s Universal POST*CODE® DataBase. The UPU database contains locality and street-level data for all United Nations countries. Many U.S. businesses have been reluctant to conduct international direct marketing campaigns due to the historically poor quality of international address data and the complexity of dealing with such data. With CODE-1 Plus International providing highly accurate, complete address information in both batch and interactive modes, multinational direct marketing is much easier to implement.

Group 1’s data management applications, Merge/Purge Plus, Business Merge/Purge, Generalized Selection, and List Conversion Plus, provide substantial cost savings by enhancing the effectiveness of direct marketing initiatives. These technologies validate, parse, match and de-duplicate customer and prospect information for more efficient list processing and improved list hygiene. Using these products, businesses can focus marketing efforts on specific target groups based on geographic and demographic and other criteria and then can analyze response rates from specific segments of the target market.

Customer Communications Management

Group 1’s Customer Communications Management solutions provide an integrated, end-to-end solution for managing both printed and electronic customer communications. Through its core DOC1 suite, Group 1 offers businesses complete control of the document lifecycle, from content design, generation, and presentment to archiving, retrieval and electronic payment.

The Company believes that there is substantial demand for a single-source solution combining customer data with advanced document design, generation, multichannel delivery and archiving, retrieval and payment technology. Using Group 1 to develop and present millions of customer communications each month are over 500 businesses worldwide. This technology is utilized by telecommunications companies, insurance companies, brokerages, credit card processors, public utilities, health care providers, banks and others.

DOC1 is the industry’s leading enterprise-wide document generation suite and the leading single-source solution for generation of print and Web-based documents. Using DOC1, companies can market more intelligently and communicate more effectively with customers and prospects.

The DOC1 Design/Generate/Print solution enables businesses to create and deliver personalized customer communications anywhere using a single application. With this technology, businesses can combine fonts, full color images and variable data to create high-impact highly personalized communications. DOC1 Design/Generate/Print lets businesses generate output for on-line and e-commerce applications with PDF, HTML and XML. The solution also enables high-volume and on-demand printing with support for the industry’s leading print formats.

DOC1 Present permits companies to Web-enable customer documents quickly, enabling customers to view their documents online for cost-saving customer self-care. DOC1 Pay adds secure and flexible online payment capabilities that improve cash flow, reduce costs and ease customer payments. Using DOC1 Present and DOC1 Pay in tandem, businesses no longer need to deploy and maintain a separate system for electronic bill presentment and payment (EBPP).

DOC1 Interactive permits business users to create personalized, professional correspondence such as contracts, letters and policies, quickly and easily. Front-office employees can author one-to-one business correspondence through a managed Microsoft Word environment for delivery via print, e-mail, or Web browser.

DOC1 Archive provides high-speed search, retrieval and delivery of both Web and printed documents. This technology enables real-time indexing, compression, storage, and retrieval of high-resolution business documents. DOC1 Archive stores documents in their native print format, then renders them in real-time in the customer’s preferred format. The high rates of compression achieved with DOC1 Archive allow storage of multiple years of customer statements without large hardware investments. With DOC1 Archive, customer service representatives can find exact replicas of documents in less than a second, using a name or account number search, resulting in rapid and efficient call handling.

DOC1 Marketer facilitates intelligent marketing by combining data mining and powerful one-to-one messaging to enhance customer retention and improve response from marketing campaigns. This technology offers advanced, easy-to-use predictive modeling that gives marketers valuable insight into customer behavior and preferences to help pinpoint best targets for marketing campaigns.

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DOC1 supports all major printing architectures and can operate in centralized, distributed or desktop environments. When integrated with Group 1’s MailStream Plus and CODE-1 Plus, DOC1 produces documents in a mail-ready sequence that qualifies for significant United States Postal Service (USPS) presorting discounts.

Products, Services and Support

Products

As of March 31, 2003, Group 1 offered over 50 software products that run on more than 20 different operating systems and hardware platforms. Group 1’s products each can operate on a stand-alone basis or in conjunction with other Group 1 products to create an integrated solution that can be tailored to a client’s requirements.

Most products of the Enterprise Solutions Division and DOC1 Division are offered in a platform independent format, enabling operation on all major mainframe, Unix and Microsoft platforms. This approach provides consistent performance across the enterprise, regardless of computer platform, and allows users to migrate from one platform to another without lost productivity or added training.

Professional Services

Group 1’s broad range of professional services includes data profiling, data migration, integration with other systems, document analysis, consultation and design, installation and training, and file conversion. These services are designed to assist clients in obtaining maximum utilization from their Group 1 products and in improving other operational areas. Professional services, including operations support, business analysis, programming services, technical education and training, and operational reviews, are provided at the client’s location. These services are also offered at Group 1 training facilities throughout the U.S. and in the United Kingdom.

Support

Effective support of our customers and products has been a substantial factor in Group 1’s success to date and will continue to be in the foreseeable future. Customer support is primarily provided by telephone for assistance in product installation and problem resolution. Automated call tracking, client-specific call routing, regular electronic communications, and on-line discussion bulletin board services via the technical support Web site are also provided for customers utilizing Group 1’s maintenance and enhancement program. On-site visits by qualified company personnel are also available, if necessary. Other offerings include product and related data file downloads via the corporate Web site, e-mail support, integration support, and premium support plans.

Group 1 customers are afforded educational opportunities through our Annual User’s Conference and over 20 local User Groups. In addition, two National User Groups advise Group 1 on a variety of issues. The thirty-member National User Group for the Enterprise Solutions Division includes a cross-section of customers representing various platforms, products, and industries. The Customer Communications Management Division has its own User’s Group that meets twice a year. Group 1 Software Europe also has modem links with many of its customers to provide high levels of mission-critical support.

With its product licenses, Group 1 offers an annual service agreement that provides telephone support and continuing updates and enhancements, if and when available, to its products and documentation. The education department offers educational and training seminars specific to Group 1 products.

In the fiscal years ended March 31, 2003, 2002 and 2001, maintenance and enhancement fees represented approximately 44%, 49%, and 42%, respectively, of Group 1’s revenue.

Customers

Group 1’s customer base includes approximately 2,000 clients who have licensed one or more of its products. Group 1 provides software solutions to corporate leaders in a variety of industry segments, as indicated by the following brief list of customers:

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No customer accounts for more than 10% of the Company’s revenue.

Licensing

Most Group 1 products are licensed on a perpetual “right to use” basis pursuant to non-exclusive license agreements, except for certain products that incorporate third-party databases and are licensed on an annual basis. Group 1 does not sell or transfer title to its software products to clients. A client is generally entitled to use a product only for internal purposes on a single computer at a single location. Group 1 offers its customers a wide variety of license agreements, from single user to enterprise-wide. Certain postal products are required under USPS and CPC regulations (CASS and SERP, respectively) to have defined expiration dates (quarterly or monthly). These products must be under subscription or re-licensing arrangements with Group 1 to continue to qualify for postal discounts.

Group 1 generally warrants that its products will perform substantially in accordance with their standard documentation for the defined warranty period. The software is generally licensed in conjunction with a first year maintenance agreement to provide service and support for twelve months from the date of the license agreement. Hosted on-line services are offered under annual, renewable service agreements.

Sales and Marketing

Group 1 markets all of its software products in North America and Europe through a direct sales and sales support organization of over 100 Associates located in the Americas and Europe. To serve existing clients and to attract new customers, Group 1 has eleven regional sales and support offices in North America. Two of these are in the Washington, DC area and others are in the New York City, Chicago, Los Angeles, Atlanta, Dallas, Minneapolis, Miami, Austin, and Toronto, Canada areas. Group 1’s European headquarters is located in the London metropolitan area, with regional offices in Italy, Germany, Denmark and the Netherlands.

The Group 1 sales organization is supported by a comprehensive marketing program administered from Group 1’s Maryland headquarters. Marketing is conducted through direct mail, print advertising, an active Web site, trade show exhibitions, speaking engagements, product training seminars, telemarketing and a broad variety of public relations activities including media relations and industry analyst briefings.

Group 1’s domestic distributors and partners include PeopleSoft, Siebel Systems, BEA, Bearing Point, Pitney Bowes, SPL Worldgroup, Cap Gemini Ernst and Young, IBM, Amdocs, Xerox, Portal, CSC, Daleen, USHA, Software Spectrum, CommercialWare, CSG, Convergys, Systems Research and Development (SRD), Indus, ProQuest and others. Through its Group 1 Software Europe subsidiary, Group 1 has entered into software distribution and support agreements for the DOC 1 product suite with partner distribution companies throughout Europe. International distributors of Group 1’s products include Pitney Bowes, Xerox, IBM, Amdocs, OBIMD, Business Document, Accenture, Digital Planet, IMDEA, SIGIL, Unitel, Convergys, Intellia, MSI Business Solutions and Document Dialog. Group 1 has entered into agreements to distribute products from a number of leading software and hardware vendors. Group 1 distributes products manufactured by iWay, UNICA Technologies, Business Document, Sigaba, and licenses data maintained by USPS, CPC, UPU, Telematch, GDT and others.

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Product Development

The software and service industry is characterized by rapid changes in hardware and software technology and in user needs, requiring a continual expenditure for product development. Businesses are also placing emphasis on products and services that can be deployed across the enterprise and in real-time. Technology trends such as the increasing adoption of XML and Web services require constant evaluation. These operational requirements and technology trends in conjunction with input received from existing customers will continue to guide Group 1’s product and technology direction for the foreseeable future.

Group 1 must be able to provide new products and to modify and enhance existing products on a continuing basis to meet the requirements of its customers and of regulatory agencies, particularly the USPS and CPC. Group 1 may also have to adapt its products to accommodate future changes in hardware and operating systems. To date, Group 1 has been able to adapt its products to such changes and believes that it will be able to do so in the future. Most of the Company’s products are developed internally. The Company also purchases technology, licenses intellectual property rights and oversees third party development of certain products.

Quality assurance testing of Group 1’s new or enhanced products is conducted by teams of experienced individuals under the direction of testing specialists. Whether the product or technology is developed internally or acquired from another company, Group 1 considers it important to control the marketing, distribution, enhancement and future direction of each of its products and technologies.

Significant investment was made during the year in new software development, which in the Enterprise Solutions division focused on improving the core data quality technology to take advantage of the opportunities that Group 1 believes to exist. During the year, the Company released a new version of DataSight, its flagship data quality solution. Significant enhancements included strengthened non-name and address support and a reengineered user interface. Group 1 also updated the Data Quality Connector for Siebel, which provides robust data quality technology to users of the leading CRM solution. Additionally, the Company recently introduced the Universal Coder. This solution offers a single interface incorporating Group 1’s industry-leading United States, Canadian, and global address validation, correction and standardization technologies. The Universal Coder is the first offering built on Group 1’s new enterprise class architecture.

During fiscal 2003, Group 1 released product updates for its regulatory products that enabled the Company’s customers in the U.S. and Canada to meet all requirements of the USPS and CPC and continue to benefit from substantial postal discounts. The Company also introduced two new components of its CODE-1 Plus address data quality solution - Delivery Point Validation (DPV) and Residential Delivery Indicator (RDI). DPV provides even greater address accuracy while RDI enables parcel shippers to save significantly on mailing costs.

Substantial investments were also made in all DOC1 products, most notably the updating of the DOC1 suite. Enhancements to the suite include the introduction of a tightly integrated document repository that permits businesses to manage both printed and Web-enabled documents in a single system. Additionally, users of other document composition technologies can now utilize DOC1 Present, DOC1 Pay and DOC1 Archive, opening additional markets for these products.

Competition

The software and service industry is highly competitive, and little published data is available regarding Group 1’s relative position in the markets in which it operates. Although no major competitor currently competes against Group 1 across its entire product line, competitive products are available from a number of different vendors offering features similar to those of Group 1’s products. Group 1’s existing and potential competitors include companies having greater financial, marketing and technical resources than Group 1. There can be no assurance that one or more of these competitors will not develop products that are equal or superior to the products Group 1 markets. In addition, many potential clients for Group 1’s products have in-house capabilities to develop computer software programs that can provide some or all of the functionality of Group 1’s products.

Group 1 believes that the Company has principal, distinguishing competitive factors in the selection of its software products. These include price/performance characteristics, marketing and sales expertise, ease of use, product features and functions, reliability and quality of technical support, ease of integration of the product line and the Company’s financial strength. Group 1 believes that it competes favorably with regard to these factors. A major competitive asset is that Group 1 offers a comprehensive array of complementary products that ensure enterprise data quality, enhance the value of corporate data and provide end-to-end management of the customer communications process. Group 1’s primary strengths are the technical capabilities of its personnel and products, marketing and sales expertise, service and support, and industry product leadership.

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Intangible Asset Protection

Group 1 regards its software, in source and object code, related manuals and documentation as proprietary. The Company relies upon a combination of contract, trade secret, patents and copyright laws to protect its products. The license agreements under which clients use Group 1’s products often restrict the client’s use to its own operations and always prohibit unauthorized disclosure to third persons. Notwithstanding these, it may be possible for other persons to obtain copies of Group 1’s products. Furthermore, with the increasing number of patents issued for computer programming, notwithstanding Group 1’s efforts to assure to the contrary, Group 1 may in the future find that it has inadvertently infringed on a newly issued patent. Changes in the technology industry and changes in postal regulations that affect several core products occur frequently and rapidly. The Company believes that copyright, patent, and trade secret protection are less significant than factors such as the knowledge and experience of its personnel and their ability to develop, enhance, market and acquire new products.  

Group 1 has U.S. federal registrations on over 25 trademarks, including CODE-1 Plus, DOC1, Group 1 Software, GeoTAX, HotData and Model1. The Company also has registrations in Australia, Canada, Chile, the European Union, Japan and South Korea for selected trademarks. In addition, Group 1 maintains over 35 U.S. common law trademarks.

Employees

As of March 31, 2003, the Company employed 465 persons on a full-time basis, of whom 367 were based in the United States and 98 were based internationally. Of the total, 121 were engaged in sales and marketing, 203 in product development and support, 56 in professional services, 24 in information technology and 61 in finance and administration. None of the Company’s Associates is represented by a labor union. The Company has not experienced any work stoppages and believes its employee relations to be good.

Item 2.

Properties

The Company’s executive and administrative offices are located in Lanham, Maryland, a Washington, DC suburb, where the Company leases 68,598 square feet under a lease that expires in 2015. These facilities also include Group 1’s headquarters and principal operations base. Group 1 has options to lease additional space at specified periods during the term and to extend its lease. In North America, Group 1 leases additional offices in the Chicago, Dallas, Austin, Los Angeles, Las Vegas, Atlanta, New York City, Minneapolis, Miami, Toronto, and the Herndon, Virginia metropolitan areas. Outside North America, the Company leases an office in the London metropolitan area.

Item 3.

Legal Proceedings

The Company is not a party to any legal proceedings, which in its belief, after review by legal counsel, could have a material adverse effect on the consolidated financial position, cash flows or results of operations of the Company.

Item 4.

Submission of Matters to a Vote of Security Holders

None.

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PART II

Item 5.

Market for Registrant’s Common Stock and Related Stockholder Matters

The trading of the common stock of the Company is reported on the NASDAQ National Market System under the symbol GSOF. The table below sets forth the highest and lowest closing prices between dealers for the quarters indicated and reflects the 2 for 1 stock split effected by the Company in November 2002. These prices, as reported by NASDAQ, do not include retail markup, markdown or commissions and may not necessarily represent actual transactions.

Quarterly Closing Common Stock Prices

No cash dividends have been paid on the Company’s common stock. The Company paid dividends on the 6% Cumulative Convertible Preferred Stock through January 14, 2003, when each preferred share outstanding was exchanged for three common shares (see Note 8 in the notes to the consolidated financial statements included in Item 8). The Board of Directors intends to retain, for the foreseeable future, the Company’s earnings for use in the development of the business.

At June 15, 2003, there were approximately 3,500 holders of record of the Company’s common stock, including persons who wish to be identified as having an interest in shares held or recorded in “street name” with broker-dealers.

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The Company has three stock option programs currently in effect, and three predecessor plans for which option grants are still outstanding. Options granted under all plans were granted at 100% of the fair market value of the common stock at the date of grant. The options vest over a five year period, 20% each year on the anniversary of the grant date.

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As of March 31, 2003, equity compensation plans not approved by security holders consisted of outstanding warrants to purchase 169,000 shares of Common Stock. The following summarizes information about the outstanding warrants:

During fiscal 2001, the Company issued warrants to purchase 90,000 shares of Common Stock in exchange for advisory and acquisition related investment banking services. These warrants expire on June 26, 2005.

During fiscal 2002, the Company issued warrants to purchase 6,000 shares of Common stock in exchange for consulting services. These warrants expire on June 26, 2005.

From October 15, 1997 to March 31, 2003, the Company issued warrants to purchase 75,000 shares of Common Stock as compensation for Board of Director services.  As of March 31, 2003, warrants to purchase 75,000 were outstanding. These warrants vest over five years and have a fifteen-year expiration period.

All warrants described above were issued at the current market prices on the date of issue.

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Item 6.

Selected Consolidated Financial Data

The following selected consolidated financial data should be read in connection with Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations and the consolidated financial statements and notes thereto included in Item 8, Financial Statements and Supplementary Data.

Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Results of Operations

Forward-looking Statements

Any statements in this Annual Report on Form 10-K concerning the Company’s business outlook or future economic performance, anticipated profitability, revenues, expenses or other financial items; together with other statements that are not historical facts, are “forward-looking statements” as that term is defined under the Federal Securities Laws. Forward looking statements may include words such as “believes”, “is developing”, “will continue to be in the future”, “anticipates” and “expects”. Actual results may differ materially from the expectations expressed or implied in the forward-looking statements. Forward-looking statements are subject to risks, uncertainties and other factors which could cause actual results to differ materially from those stated in such statements. Such risks, uncertainties and factors include, but are not limited to, changes in currency exchange rates, changes and delays in new product introduction, customer acceptance of new products, changes in government regulations, changes in pricing or other actions by competitors and general economic conditions, as well as other risks detailed in the Company’s other filings with the Securities and Exchange Commission. The Company undertakes no obligation to update any forward-looking statement.

Fiscal 2003 as Compared with Fiscal 2002

For the year ended March 31, 2003, Group 1’s revenue was $104.3 million compared with $89.4 million for the prior year. Group 1’s net income available to common stockholders for the year increased 99% to $8.7 million from $4.4 million for fiscal 2002. The increase in profitability is attributed to increased revenue in both the Enterprise Solutions and DOC 1 segments, partially offset by higher costs of license in each segment and higher operating costs.

All of Group 1’s operations are in the two business segments defined as the Enterprise Solutions division and DOC1 division. Enterprise Solutions revenue accounted for 68% and 67% of Group 1’s total revenue in fiscal 2003 and fiscal 2002, respectively. DOC1 revenue was 32% and 33% of total revenue for fiscal 2003 and fiscal 2002, respectively. International revenues accounted for 16% and 15% of Group 1’s total revenue in fiscal 2003 and fiscal 2002, respectively.

Software license fees and related revenue of $48.5 million increased 47% from the prior year. As a percentage of total revenue, software license and related revenue was 46% and 37% for fiscal years 2003 and 2002, respectively. The increase was due to higher license fee revenue in both business segments as further described below.

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The Enterprise Solutions segment’s data quality/direct marketing software license fees increased 57% for fiscal year 2003 compared with fiscal year 2002. Sales of GeoTAX as well as the Company’s newest Data Quality offerings, DataSight and the Seibel Data Quality Connector contributed to the revenue increase from fiscal 2002.