UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 19, 2005
JACK HENRY & ASSOCIATES, INC.
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(Exact name of Registrant as specified in its Charter)
Delaware 0-14112 43-1128385
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(State or Other Jurisdiction (Commission File Number) (IRS Employer
of Incorporation) Identification No.)
663 Highway 60, P.O. Box 807, Monett, MO 65708
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(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code: (417) 235-6652
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of
the following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities
Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange
Act (17 CFR 240.14a.-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4 (c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 2.02 Results of Operations and Financial Condition.
On October 19, 2005, Jack Henry & Associates, Inc. issued a press
release announcing 2006 first quarter results, the text of which is attached
hereto as Exhibit 99.1.
Item 9.01 Financial Statements and Exhibits.
(c) Exhibits
99.1 Press release dated October 19, 2005.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
JACK HENRY & ASSOCIATES, INC.
(Registrant)
Date: October 19, 2005 By: /s/ Kevin D. Williams
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Kevin D. Williams
Chief Financial Officer
EXHIBIT 99.1
Company: Jack Henry & Associates, Inc. Analyst Contact: Kevin D. Williams
663 Highway 60, P.O. Box 807 Chief Financial Officer
Monett, MO 65708 (417) 235-6652
IR Contact: Jon Seegert
FOR IMMEDIATE RELEASE Director of Investor Relations
--------------------- (417) 235-6652
JACK HENRY & ASSOCIATES FISCAL 2006 FIRST QUARTER NET INCOME INCREASES 16%
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Monett, MO. October 19, 2005 - Jack Henry & Associates, Inc. (Nasdaq: JKHY),
a leading provider of integrated technology solutions that performs data
processing for financial institutions, today announced first quarter fiscal
2006 results with a 10% increase in revenue, an increase of 12% in gross
profit which resulted in a 16% rise in net income over the first quarter of
fiscal 2005.
For the quarter ended September 30, 2005, the company generated total
revenue of $137.0 million, compared to $124.1 million in the same quarter a
year ago. Gross profit increased to $56.6 million compared to $50.6 million
in the first quarter of fiscal 2005. Net income totaled $19.4 million, or
$0.21 per diluted share, compared to $16.7 million, or $0.18 per diluted
share in the same quarter a year ago.
According to Jack Prim, CEO, "We realized two important performance
milestones during the first fiscal quarter. Both our banking and credit
union sales organizations ended the quarter ahead of their respective sales
quotas, and our transaction-based services generated record revenue. Our
PassPort ATM and debit card solutions, our Select Payment enterprise payment
processing platform, and our PowerPay electronic bill pay system all
processed a record number of transactions on behalf of our clients during
the quarter. It is extremely rewarding that our banking and credit union
information processing platforms are generating such strong demand; and that
our transaction processing platforms, which are mission-critical to our
clients, can seamlessly process ever-increasing volumes."
Operating Results
"During the first fiscal quarter of 2006, we continued to experience the
growing demand for our outsourcing service offerings, which is reflected in
our increased outsourcing backlog," stated Tony Wormington, President. "In
fact, the wide-reaching impact of the recent hurricanes and the significant
business interruptions has motivated some of our existing in-house clients'
to reevaluate their ability to adequately respond to natural disasters,
resulting in increased interest in our outsourced core processing services,
disaster recovery services and business continuity consulting."
License revenue decreased 14% to $16.9 million, or 12% of first quarter
total revenue, compared to $19.6 million, or 16% of first quarter total
revenue a year ago. Growth of implementation services, in-house support
fees, outsourcing, and ATM/Debit card and switch fees contributed to the 19%
increase in support and service revenue which expanded to $99.4 million in
the first quarter of fiscal 2006 from $83.6 million for the same period a
year ago. Support and service revenue grew to 73% of fiscal 2006 first
quarter revenue from 67% of revenue last year. Hardware sales in the first
quarter of fiscal 2006 decreased 1% to $20.7 million, or 15% of total
revenue in the first quarter, from $20.9 million, or 17% of total revenue in
the prior year's quarter.
Cost of sales for the first quarter increased 9%, from $73.5 million for the
three months ended September 30, 2004 to $80.4 million for the same period
in the current fiscal year. Gross profit in the current year first quarter
increased 12% to $56.6 million compared to $50.6 million last year. Both
quarters produced a 41% gross margin. Cost of sales increased primarily due
to additional headcount and depreciation expense.
Gross margin on license revenue for the first quarter of fiscal 2006 was 95%
compared to 92% a year ago for the same period and is primarily due to a
decrease in the amount of third party software delivered during the quarter.
Support and service gross margins improved to 35% in the first quarter of
fiscal 2006 from 33% a year ago due to continued leveraging of resources.
Hardware gross margins were also higher for the first quarter at 26%
compared to 24% for the same quarter last year primarily due to the volume
and sales mix of hardware sold.
Operating expenses increased 7% to $25.9 million for the first quarter of
fiscal 2006 compared to $24.3 million for the same quarter a year ago
primarily due to increased employee-related expenses. Selling and marketing
expenses rose 7% in the first quarter to $11.4 million, or 8% of total
revenue, from $10.7 million, or 9% of total revenue a year ago. Research
and development expenses increased 10% to $6.7 million or 5% of total
revenue for the first quarter of fiscal 2006, from $6.1 million, also
5% of total revenue for the same quarter of fiscal 2005. General and
administrative costs increased 5% to $7.8 million, or 6% of revenue, in the
first quarter of fiscal year 2006, from $7.5 million, also 6% of revenue for
the same quarter a year ago. "We continue to focus on improving customer
satisfaction, process improvements and overall cost control, which is
evidenced by our strong contracting with new and existing customers, solid
and improving gross and operating margins and continued leverage to the
bottom line," stated Kevin Williams, CFO.
Operating income grew 17% to $30.6 million, or 22% of first quarter total
revenue, compared to $26.2 million, or 21% of total revenue in the first
quarter of fiscal 2005. Provision for income taxes in the first quarter of
fiscal 2006 was 37.0% compared to 37.5% in the same period a year ago due to
changes in the effective state tax provision. First quarter net income
totaled $19.4 million, or $0.21 per diluted share, compared to $16.7
million, or $0.18 per diluted share in the first quarter of fiscal 2005.
For the first quarter of 2006, the bank systems and services segment revenue
increased 12% to $111.4 million, with a gross margin of 42% from $99.8
million in revenue with a gross margin of 42% in the first quarter in fiscal
2005. The credit union systems and services segment revenue increased 5% to
$25.6 million with a gross margin of 37% for the first quarter of 2006 from
revenue of $24.3 million with the same gross margin of 37% in the same
quarter a year ago.
Balance Sheet, Cash Flow, and Backlog Review
Cash, cash equivalents, and investments decreased to $56.6 million from
$120.8 million compared to September 30, 2004. During the first quarter, the
revolving debt facility of $45.0 million was paid in full with cash from
operations. Trade receivables increased $13.6 million, or 18% to $88.9
million compared to September 30, 2004 at $75.3 million. The increase is
primarily due to the increase in annual maintenance billings for newly
installed core and complementary customers, increased customers and volume
of transactions processed.
Deferred revenue increased 19% to $137.3 million at September 30, 2005
compared to a year ago. Stockholders' equity grew 16% to $530.9 million at
September 30, 2005, from $459.2 million at September 30, 2004.
Cash flow from operations increased to $107.9 million for the first quarter
of fiscal 2006 from $87.7 million for the same quarter in fiscal 2005. The
$20.2 million increase consists of $2.7 million in net income, $1.7 million
increase in depreciation and amortization, plus a combined increase of $0.3
million in deferred income taxes, the loss on disposal of property and
equipment and stock-based compensation. Additionally, the increase in the
change in receivables of $26.4 million and the increase of $0.1 million in
accrued income taxes, less the $7.1 million change in prepaid, accrued
expenses and accounts payable and less the change in deferred revenues of
$3.9 million contributed to the increase in operating cash flows.
Net cash used in investing activities in the current quarter was $12.0
million and primarily included capital expenditures of $8.0 million and
capitalized software development of $4.0 million. In the first quarter in
fiscal 2005, net cash used in investing activities of $20.6 million
consisted mainly of $6.7 million for payment for acquisitions, $12.5
million in capital expenditures and $1.5 million for capitalized software
development.
Net cash from financing activities used cash of $51.9 million and included
repayment of a credit facility of $45.0 million, payment of dividends of
$4.1 million and the purchase of treasury stock of $6.3 million. Cash used
was offset by proceeds of $3.5 million from the exercise of stock options
and sale of common stock. In the first quarter of fiscal 2005, cash used in
financing activities was $0.9 million and consisted mainly of dividends paid
of $3.6 million, offset by the proceeds from the exercise of stock options
and sale of common stock of $2.7 million.
Backlog, which is a measure of future business and revenue, increased 11%
compared to year-ago levels and increased 3% from the June 2005 quarter to
$205.8 million ($63.4 million in-house and $142.4 million outsourcing) at
September 30, 2005. Backlog at September 30, 2004, was $185.1 million
($63.0 million in-house and $122.1 million outsourcing) and at June 30,
2005, it was $199.1 million ($64.0 million in-house and $135.1 million
outsourcing).
About Jack Henry & Associates
Jack Henry & Associates, Inc. provides integrated computer systems and
processes ATM and debit card transactions for banks and credit unions. Jack
Henry markets and supports its systems throughout the United States and has
over 7,000 customers nationwide. For additional information on Jack Henry,
visit the company's web site at www.jackhenry.com. The company will hold a
conference call on October 20th at 7:45 a.m. Central Time and investors are
invited to listen at www.jackhenry.com.
Statements made in this news release that are not historical facts are
forward-looking information. Actual results may differ materially from
those projected in any forward-looking information. Specifically, there are
a number of important factors that could cause actual results to differ
materially from those anticipated by any forward-looking information.
Additional information on these and other factors, which could affect the
Company's financial results, are included in its Securities and Exchange
Commission (SEC) filings on Form 10-K, and potential investors should review
these statements. Finally, there may be other factors not mentioned above
or included in the Company's SEC filings that may cause actual results to
differ materially from any forward-looking information.
Condensed Consolidated Statements of Income
(In Thousands, Except Per Share Data - unaudited)
Three Months Ended % Change
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September 30,
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2005 2004
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REVENUE
License $ 16,908 $ 19,551 -14%
Support and service 99,401 83,648 19%
Hardware 20,674 20,897 -1%
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Total 136,983 124,096 10%
COST OF SALES
Cost of license 851 1,609 -47%
Cost of support and service 64,237 56,030 15%
Cost of hardware 15,340 15,895 -3%
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Total 80,428 73,534 9%
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GROSS PROFIT 56,555 50,562 12%
Gross Profit Margin 41% 41%
OPERATING EXPENSES
Selling and marketing 11,440 10,732 7%
Research and development 6,749 6,142 10%
General and administrative 7,805 7,465 5%
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Total 25,994 24,339 7%
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OPERATING INCOME 30,561 26,223 17%
INTEREST INCOME (EXPENSE)
Interest income 443 459 -3%
Interest expense (175) (3) >100%
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Total 268 456 -41%
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INCOME BEFORE INCOME TAXES 30,829 26,679 16%
PROVISION FOR INCOME TAXES 11,407 10,005 14%
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NET INCOME $ 19,422 $ 16,674 16%
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Diluted net income per share $ 0.21 $ 0.18
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Diluted weighted avg shares outstanding 93,998 92,485
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Consolidated Balance Sheet Highlights
(In Thousands-unaudited) Sept 30, % Change
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2005 2004
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Cash, cash equivalents and investments $ 56,550 $ 120,843 -53%
Receivables 88,908 75,294 18%
TOTAL ASSETS 738,306 633,293 17%
Accounts payable and accrued expenses 31,418 28,775 9%
Deferred revenue 137,310 115,230 19%
STOCKHOLDERS' EQUITY 530,913 459,233 16%
(THIRTY)