UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2005
OR
( ) 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 0-14112
JACK HENRY & ASSOCIATES, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 43-1128385
---------------------------- ---------------
(State or Other Jurisdiction I.R.S. Employer
of Incorporation) Identification No.)
663 Highway 60, P.O. Box 807, Monett, MO 65708
----------------------------------------------
Address of Principle Executive Offices
(Zip Code)
417-235-6652
----------------------------------------------------
(Registrant's Telephone number, including area code)
N/A
----------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter 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 whether the registrant is an accelerated filer (as
defined in Exchange Act Rule 12b-2 of the Exchange Act.) Yes X No
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
As of April 27, 2005, Registrant has 91,377,152 shares of common stock
outstanding ($.01 par value)
JACK HENRY & ASSOCIATES, INC.
CONTENTS
Page
PART I FINANCIAL INFORMATION Reference
ITEM 1 Financial Statements
Condensed Consolidated Balance Sheets
March 31, 2005 and June 30, 2004 (Unaudited) 3
Condensed Consolidated Statements of Income
for the Three and Nine Months Ended
March 31, 2005 and 2004 (Unaudited) 4
Condensed Consolidated Statements of Cash Flows
for the Nine Months Ended March 31, 2005
and 2004 (Unaudited) 5
Notes to Condensed Consolidated Financial
Statements (Unaudite 6
ITEM 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations 11
ITEM 3 Quantitative and Qualitative Disclosures about
Market Risk 18
ITEM 4 Controls and Procedures 18
PART II OTHER INFORMATION
ITEM 6 Exhibits 19
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
JACK HENRY & ASSOCIATES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Share and Per Share Data)
(Unaudited)
March 31, June 30,
2005 2004
----------- -----------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 15,952 $ 53,758
Investments, at amortized cost 993 998
Trade receivables 80,026 169,873
Prepaid expenses and other 14,322 14,023
Prepaid cost of product 16,002 19,086
Deferred income taxes 2,375 1,320
----------- -----------
Total 129,670 259,058
PROPERTY AND EQUIPMENT, net 226,537 215,100
OTHER ASSETS:
Prepaid cost of product 8,771 6,758
Computer software, net of amortization 27,148 18,382
Other non-current assets 6,597 5,791
Customer relationships, net of amortization 70,144 61,368
Trade names 4,011 4,029
Goodwill 187,222 83,128
----------- -----------
Total 303,893 179,456
----------- -----------
Total assets $ 660,100 $ 653,614
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 7,919 $ 9,171
Accrued expenses 16,187 21,509
Accrued income taxes 4,174 6,258
Note payable 14,000 -
Deferred revenues 71,191 136,302
----------- -----------
Total 113,471 173,240
DEFERRED REVENUES 11,180 8,694
DEFERRED INCOME TAXES 32,575 28,762
----------- -----------
Total liabilities 157,226 210,696
STOCKHOLDERS' EQUITY:
Preferred stock - $1 par value; 500,000
shares authorized, none issued - -
Common stock - $0.01 par value:
250,000,000 shares authorized;
Shares issued at 03/31/05 were 91,374,902
Shares issued at 06/30/04 were 90,519,856 914 905
Additional paid-in capital 189,248 175,706
Retained earnings 312,712 271,433
Less treasury stock at cost -
315,651 shares at 06/30/04 - (5,126)
----------- -----------
Total stockholders' equity 502,874 442,918
----------- -----------
Total liabilities and stockholders' equity $ 660,100 $ 653,614
=========== ===========
See notes to condensed consolidated financial statement
JACK HENRY & ASSOCIATES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In Thousands, Except Per Share Data)
(Unaudited)
Three Months Ended Nine Months Ended
March 31, March 31,
-------------------- --------------------
2005 2004 2005 2004
------- ------- ------- -------
REVENUE:
License $ 20,943 $ 15,343 $ 62,642 $ 40,703
Support and service 92,509 78,353 263,883 227,594
Hardware 20,930 26,012 67,913 73,081
------- ------- ------- -------
Total 134,382 119,708 394,438 341,378
COST OF SALES:
Cost of license 1,085 1,131 4,428 2,296
Cost of support and service 61,436 52,073 178,412 152,818
Cost of hardware 14,584 19,185 49,010 51,579
------- ------- ------- -------
Total 77,105 72,389 231,850 206,693
------- ------- ------- -------
GROSS PROFIT 57,277 47,319 162,588 134,685
OPERATING EXPENSES:
Selling and marketing 11,598 8,634 34,250 25,937
Research and development 7,738 6,344 20,621 17,575
General and administrative 6,915 6,842 22,507 21,520
------- ------- ------- -------
Total 26,251 21,820 77,378 65,032
------- ------- ------- -------
OPERATING INCOME 31,026 25,499 85,210 69,653
INTEREST INCOME (EXPENSE):
Interest income 171 248 989 816
Interest expense (110) (52) (127) (81)
------- ------- ------- -------
Total 61 196 862 735
------- ------- ------- -------
INCOME BEFORE INCOME TAXES 31,087 25,695 86,072 70,388
PROVISION FOR INCOME TAXES 11,658 9,379 32,277 25,692
------- ------- ------- -------
NET INCOME $ 19,429 $ 16,316 $ 53,795 $ 44,696
======= ======= ======= =======
Diluted net income per share $ 0.21 $ 0.18 $ 0.58 $ 0.49
======= ======= ======= =======
Diluted weighted average
shares outstanding 93,421 92,077 92,954 91,715
======= ======= ======= =======
Basic net income per share $ 0.21 $ 0.18 $ 0.59 $ 0.50
======= ======= ======= =======
Basic weighted average
shares outstanding 91,212 89,654 90,716 89,133
======= ======= ======= =======
See notes to condensed consolidated financial statements
JACK HENRY & ASSOCIATES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)
Nine Months Ended
March 31,
-----------------------
2005 2004
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 53,795 $ 44,696
Adjustments to reconcile net income from
operations to cash from operating activities:
Depreciation 21,900 19,908
Amortization 6,548 4,904
Deferred income taxes 5,045 5,850
Loss on disposal of property and equipment 1,016 258
Other, net - (68)
Changes in operating assets and liabilities,
net of acquisitions:
Trade receivables 94,879 84,473
Prepaid expenses, prepaid cost of product,
and other 382 4,089
Accounts payable (2,819) (3,308)
Accrued expenses (5,354) (5,975)
Income taxes (including tax benefit
of $3,463 and $4,917 from exercise
of stock options, respectively) 1,380 7,051
Deferred revenues (71,656) (58,209)
-------- --------
Net cash from operating activities 105,116 103,669
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (33,428) (33,069)
Purchase of investments (3,983) (2,994)
Proceeds from sale of property and equipment 150 971
Proceeds from investments 4,000 3,633
Computer software developed (4,607) (2,734)
Payment for acquisitions, net of cash acquired (119,616) (20,583)
Other, net 105 143
-------- --------
Net cash from investing activities (157,379) (54,633)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock upon
exercise of stock options 11,238 17,130
Proceeds from sale of common stock, net 565 540
Note payable 14,000 -
Dividends paid (11,346) (9,815)
-------- --------
Net cash from financing activities 14,457 7,855
-------- --------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS $ (37,806) $ 56,891
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD $ 53,758 $ 32,014
-------- --------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 15,952 $ 88,905
======== ========
Net cash paid for income taxes was $25,865 and $11,970 for the nine
months ended March 31, 2005 and 2004, respectively. The Company paid
interest of $127 and $81 for the nine months ended March 31, 2005 and 2004,
respectively.
See notes to condensed consolidated financial statements
JACK HENRY & ASSOCIATES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in Thousands, Except Per Share Amounts)
(Unaudited)
NOTE 1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
DESCRIPTION OF THE COMPANY
Jack Henry & Associates, Inc. and Subsidiaries ("JHA" or the "Company") is a
leading provider of integrated computer systems that has developed and
acquired a number of banking and credit union software systems. The
Company's revenues are predominately earned by marketing those systems
to financial institutions nationwide together with computer equipment
(hardware) and by providing the conversion and software implementation
services for a financial institution to utilize a JHA software system. JHA
also provides continuing support and services to customers using in-house or
outsourced systems.
CONSOLIDATION
The consolidated financial statements include the accounts of JHA and all of
its subsidiaries, which are wholly- owned, and all significant intercompany
accounts and transactions have been eliminated.
STOCK OPTIONS
As permitted under Statement of Financial Accounting Standards ("SFAS") No.
123, Accounting for Stock-Based Compensation, the Company has elected to
follow Accounting Principles Board Opinion ("APB") No. 25, Accounting
for Stock Issued to Employees, in accounting for stock-based awards
to employees. Under APB No. 25, the Company generally recognizes no
compensation expense with respect to such awards, since the exercise price
of the stock options awarded is equal to the fair market value of the
underlying security on the grant date.
The following table illustrates the effect on net income and net income per
share as if the Company had accounted for its stock-based awards to
employees under the fair value method of SFAS No. 123. The fair value of the
Company's stock-based awards to employees was estimated as of the date of
the grant using a Black-Scholes option pricing model. The Company's pro
forma information is as follows:
Three Months Ended Nine Months Ended
March 31, March 31,
------------------ ------------------
2005 2004 2005 2004
------- ------- ------- -------
Net income, as reported $ 19,429 $ 16,316 $ 53,795 $ 44,696
Deduct: Total stock-based employee
compensation expense determined
under fair value based method
for all awards, net of related
tax effects 295 249 900 7,058
------- ------- ------- -------
Pro forma net income $ 19,134 $ 16,067 $ 52,895 $ 37,638
======= ======= ======= =======
Diluted net income per share
As reported $ 0.21 $ 0.18 $ 0.58 $ 0.49
Pro forma $ 0.20 $ 0.17 $ 0.57 $ 0.41
Basic net income per share
As reported $ 0.21 $ 0.18 $ 0.59 $ 0.50
Pro forma $ 0.21 $ 0.18 $ 0.58 $ 0.42
COMPREHENSIVE INCOME
Comprehensive income for the three and nine-month periods ended March 31,
2005 and 2004 equals the Company's net income.
INTERIM FINANCIAL STATEMENTS
The accompanying condensed consolidated financial statements have been
prepared in accordance with the instructions to Form 10-Q of the Securities
and Exchange Commission and in accordance with accounting principles
generally accepted in the United States of America applicable to interim
condensed consolidated financial statements, and do not include all of the
information and footnotes required by accounting principles generally
accepted in the United States of America for complete consolidated financial
statements. The condensed consolidated financial statements should be read
in conjunction with the Company's audited consolidated financial statements
and accompanying notes, which are included in its Annual Report on Form 10-K
("Form 10-K") for the year ended June 30, 2004. The accounting policies
followed by the Company are set forth in Note 1 to the Company's
consolidated financial statements included in its Form 10-K for the fiscal
year ended June 30, 2004.
In the opinion of management of the Company, the accompanying condensed
consolidated financial statements reflect all adjustments necessary
(consisting solely of normal recurring adjustments) to present fairly the
financial position of the Company as of March 31, 2005, and the results of
its operations and its cash flows for the three and nine-month periods ended
March 31, 2005 and 2004.
The results of operations for the three and nine-month periods ended March
31, 2005 are not necessarily indicative of the results to be expected for
the entire year.
ADDITIONAL INTERIM FOOTNOTE INFORMATION
The following additional information is provided to update the notes to the
Company's annual consolidated financial statements for the developments
during the three and nine months ended March 31, 2005.
Acquisitions:
On March 2, 2005, the Company acquired all of the membership interests in
Tangent Analytics, LLC, ("Tangent"), a developer of business intelligence
software systems. The purchase price for Tangent, $4,000 paid in cash, was
allocated to the assets and liabilities acquired based on then estimated
fair values at the acquisition date, resulting in an allocation of
$241 to capitalized software and $4,045 to goodwill. Contingent purchase
consideration of up to $5,000 may be paid over the next three years
based upon Tangent's earnings before interest, depreciation, taxes and
amortization. The acquired goodwill has been allocated to the bank segment
and is non-deductible for federal income tax purposes.
Effective January 1, 2005, the Company acquired all of the membership
interests in RPM Intelligence, LLC, doing business as Stratika ("Stratika").
Stratika provides customer and product profitability solutions for financial
institutions. The purchase price for Stratika, $6,241 paid in cash, was
allocated to the assets and liabilities acquired based on then estimated
fair values at the acquisition date, resulting in an allocation of $422
to capitalized software and $5,807 to goodwill. Contingent purchase
consideration of up to $10,000 may be paid over the next three years based
upon the net operating income of Stratika. The acquired goodwill has been
allocated to the bank segment and is non-deductible for federal income tax.
On December 17, 2004, the Company acquired certain assets of SERSynergy[TM]
("Synergy"), a division of SER Solutions, Inc. Synergy is a market leader
for intelligent document management for financial institutions. The purchase
price for Synergy, $34,466 paid in cash, was allocated to the assets and
liabilities acquired based on then estimated fair values at the acquisition
date, resulting in an allocation of $2,541 to capitalized software, $6,145
to customer relationships, and $28,996 to goodwill. The acquired goodwill
has been allocated to the bank segment and is deductible for federal income
tax.
Effective December 1, 2004, the Company acquired the capital stock of TWS
Systems, Inc. and three affiliated corporations (collectively "TWS"). TWS
is a leading provider of image-based item processing solutions for credit
unions. The purchase price for TWS, $10,885 paid in cash, was allocated to
the assets and liabilities acquired, based on then estimated fair values at
the acquisition date, resulting in an allocation of $2,110 to capitalized
software, $2,645 to customer relationships, and $5,920 to goodwill. The
acquired goodwill has been allocated to the credit union segment and is non-
deductible for federal income tax.
On November 23, 2004, the Company acquired the capital stock of Optinfo,
Inc. ("Optinfo"). Optinfo is a leading provider of enterprise exception
management software and services. The purchase price for Optinfo, $12,927
paid in cash and $2,240 of vested options to acquire common stock, was
allocated to the assets and liabilities acquired based on then estimated
fair values at the acquisition date, resulting in an allocation of $421 to
capitalized software, and $12,650 to goodwill. The acquired goodwill has
been allocated to the bank segment and is non-deductible for federal income
tax.
Effective October 1, 2004, the Company acquired the capital stock of
Verinex Technologies, Inc. ("Verinex"). Verinex is a leading developer and
integrator of biometric security solutions. The purchase price for Verinex,
$35,000 paid in cash, was allocated to the assets and liabilities acquired
based on then estimated fair values at the acquisition date, resulting
in an allocation of $464 to capitalized software, $4,208 to customer
relationships, and $29,729 to goodwill. The acquired goodwill has been
allocated to the bank segment and is non-deductible for federal income tax.
On October 5, 2004, the Company announced it had completed the acquisition
by merger of Select Payment Processing, Inc. ("SPP") effective October 1,
2004. SPP is a provider of an innovative electronic payment processing
solution for financial institutions. The purchase price for SPP, $12,000
paid in cash, was allocated to the assets and liabilities acquired based on
then estimated fair values at the acquisition date, resulting in an
allocation of $467 to capitalized software and $10,397 to goodwill. The
acquired goodwill has been allocated to the bank segment and is non-
deductible for federal income tax.
On September 1, 2004, the Company acquired Banc Insurance Services, Inc.
("BIS") in Massachusetts. BIS is a leading provider of turnkey outsourced
insurance agency solutions for financial institutions. The purchase price
for BIS, $6,700 paid in cash, was allocated to the assets and liabilities
acquired based on then estimated fair values at the acquisition date, with
the remainder resulting in a net allocation of $6,549 to goodwill.
Contingent purchase consideration may be paid over the next five years based
upon BIS gross revenues which could result in additional allocations to
goodwill of up to $13,400. The acquired goodwill has been allocated to the
bank segment and is non-deductible for federal income tax.
The accompanying condensed statements of income for the three and nine-month
periods ended March 31, 2005 and 2004 do not include any revenues and
expenses related to these acquisitions prior to the respective closing
dates of each acquisition. The following unaudited pro forma consolidated
financial information is presented as if these acquisitions had occurred
at the beginning of the periods presented. In addition, this unaudited pro
forma financial information is provided for illustrative purposes only and
should not be relied upon as necessarily being indicative of the historical
results that would have been obtained if these acquisitions had actually
occurred during those periods, or the results that may be obtained in the
future as a result of these acquisitions.
Pro Forma Three Months Ended Nine Months Ended
March 31, March 31,
------------------ ------------------
2005 2004 2005 2004
------- ------- ------- -------
Revenue $134,573 $127,556 $411,964 $368,412
Gross profit 57,301 50,193 169,963 144,340
------- ------- ------- -------
Net Income $ 19,464 $ 16,937 $ 56,386 $ 47,612
======= ======= ======= =======
Earnings per share - diluted $ 0.21 $ 0.18 $ 0.61 $ 0.52
======= ======= ======= =======
Diluted Shares 93,421 92,077 92,954 91,715
======= ======= ======= =======
Earnings per share - basic $ 0.21 $ 0.19 $ 0.62 $ 0.53
======= ======= ======= =======
Basic Shares 91,212 89,654 90,716 89,133
======= ======= ======= =======
RECLASSIFICATION
Where appropriate, prior period financial information has been reclassified
to conform to the current period's presentation.
NOTE 2. RECENT ACCOUNTING PRONOUNCEMENTS
In December 2004, the Financial Accounting Standard Board ("FASB") issued
Statement No. 123 ("FAS 123R"), Share-Based Payment and on March 29, 2005,
the Securities and Exchange Commission ("SEC") issued Staff Accounting
Bulletin No. 107 ("SAB 107"), Share-Based Payment. FAS 123R requires all
entities to recognize compensation expense in an amount equal to the fair
value of stock options and restricted stock granted to employees, while SAB
No. 107 addresses issues regarding valuation methods and selection of
assumptions. The Company will apply these standards beginning July 1, 2005;
however the Company has not completed the process of evaluating the
methodology to be used to implement the requirements of these standards.
In December 2004, the FASB issued SFAS No. 153 ("SFAS 153"), Exchanges of
Nonmonetary Assets, an Amendment of APB Opinion No. 29, effective for
nonmonetary asset exchanges occurring in fiscal periods beginning after June
15, 2005, and therefore effective for the Company on July 1, 2005. SFAS No.
153 requires that exchanges of productive assets be accounted for at fair
value unless fair value cannot be reasonably determined or the transaction
lacks commercial substance. SFAS No. 153 is not expected to have a material
effect on the Company's consolidated financial statements.
NOTE 3. SHARES USED IN COMPUTING NET INCOME PER SHARE
Three Months Ended Nine Months Ended
March 31, March 31,
--------------- ---------------
2005 2004 2005 2004
------ ------ ------ ------
Weighted average number of common
shares outstanding - basic 91,212 89,654 90,716 89,133
Common stock equivalents 2,209 2,423 2,238 2,582
------ ------ ------ ------
Weighted average number of common
and common equivalent shares
outstanding - diluted 93,421 92,077 92,954 91,715
====== ====== ====== ======
Per share information is based on the weighted average number of common
shares outstanding for the periods ended March 31, 2005 and 2004. Stock
options have been included in the calculation of income per share to
the extent they are dilutive. Non-dilutive stock options to purchase
approximately 1,667 and 1,751 shares and 1,746 and 1,758 shares for the
three and nine-month periods ended March 31, 2005 and 2004, respectively,
were not included in the computation of diluted income per common share.
NOTE 4. BUSINESS SEGMENT INFORMATION
The Company is a leading provider of integrated computer systems that
perform data processing (both in-house and outsourced) for banks and credit
unions. The Company's operations are classified into two business segments:
bank systems and services and credit union systems and services. The
Company evaluates the performance of its segments and allocates resources to
them based on various factors, including prospects for growth, return on
investment, and return on revenue.
Three Months Ended Three Months Ended
March 31, 2005 March 31, 2004
---------------------------- ----------------------------
Bank Credit Union Total Bank Credit Union Total
------- ------------ ------- ------- ------------ -------
REVENUE:
License $ 11,614 $ 9,329 $ 20,943 $ 10,620 $ 4,723 $ 15,343
Support and service 77,076 15,433 92,509 66,848 11,505 78,353
Hardware 15,551 5,379 20,930 19,203 6,809 26,012
------- ------- ------- ------- ------- -------
Total 104,241 30,141 134,382 96,671 23,037 119,708
------- ------- ------- ------- ------- -------
COST OF SALES:
Cost of license 285 800 1,085 831 300 1,131
Cost of support and service 49,148 12,288 61,436 42,855 9,218 52,073
Cost of hardware 10,647 3,937 14,584 13,800 5,385 19,185
------- ------- ------- ------- ------- -------
Total 60,080 17,025 77,105 57,486 14,903 72,389
------- ------- ------- ------- ------- -------
GROSS PROFIT $ 44,161 $ 13,116 $ 57,277 $ 39,185 $ 8,134 $ 47,319
======= ======= ======= ======= ======= =======
Nine Months Ended Nine Months Ended
March 31, 2005 March 31, 2004
---------------------------- ----------------------------
Bank Credit Union Total Bank Credit Union Total
------- ------------ ------- ------- ------------ -------
REVENUE:
License $ 40,997 $ 21,645 $ 62,642 $ 28,108 $ 12,595 $ 40,703
Support and service 222,242 41,641 263,883 195,896 31,698 227,594
Hardware 52,123 15,790 67,913 58,457 14,624 73,081
------- ------- ------- ------- ------- -------
Total 315,362 79,076 394,438 282,461 58,917 341,378
------- ------- ------- ------- ------- -------
COST OF SALES:
Cost of license 1,820 2,608 4,428 1,471 825 2,296
Cost of support and service 143,300 35,112 178,412 126,332 26,486 152,818
Cost of hardware 36,928 12,082 49,010 40,884 10,695 51,579
------- ------- ------- ------- ------- -------
Total 182,048 49,802 231,850 168,687 38,006 206,693
------- ------- ------- ------- ------- -------
GROSS PROFIT $133,314 $ 29,274 $162,588 $113,774 $ 20,911 $134,685
======= ======= ======= ======= ======= =======
March 31, June 30,
----------- -----------
2005 2004
----------- -----------
Property and equipment, net:
Bank systems and services $ 192,382 $ 187,242
Credit Union systems and services 34,155 27,858
----------- -----------
Total $ 226,537 $ 215,100
=========== ===========
Identified intangible assets, net:
Bank systems and services $ 248,363 $ 125,650
Credit Union systems and services 40,162 41,257
----------- -----------
Total $ 288,525 $ 166,907
=========== ===========
NOTE 5. SUBSEQUENT EVENTS
Subsequent to March 31, 2005, the Company terminated its bank credit line
that it renewed in October 2004, which provided for funding up to $25,000
and bore interest at a variable LIBOR-based rate. At March 31, 2005, there
was a 30-day note outstanding for $14,000 under such credit line. The
credit line was terminated and the outstanding note of $14,000 was paid in
full on April 19, 2005, using the proceeds of a loan under a new unsecured
revolving bank credit agreement, entered into on the same date.
The new unsecured revolving bank credit facility allows borrowing of up to
$150,000, which may be increased by the Company at any time in the next
three years to $225,000. The unsecured revolving bank credit facility bears
interest at a rate equal to (a) LIBOR or (b) an alternate base rate (the
greater of (a) the Federal Funds Rate plus 1/2% or (b) the Prime Rate), plus
an applicable percentage in each case determined by the Company's leverage
ratio. The new unsecured revolving credit line terminates April 19, 2010.
Also subsequent to March 31, 2005, on April 29, 2005, the Board of Directors
increased its existing 3.0 million share stock repurchase authorization by
2.0 million, bringing the total authorization to 5.0 million shares. The
Company will finance its share repurchase with available cash reserves or
short-term borrowings on its existing credit facility. The share repurchase
program does not include specific price targets or timetables and may be
suspended at any time.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Background and Overview
We provide integrated computer systems for in-house and outsourced
data processing to commercial banks, credit unions and other financial
institutions. We have developed and acquired banking and credit union
application software systems that we market, together with compatible
computer hardware, to these financial institutions. We also perform data
conversion and software installation for the implementation of our systems
and provide continuing customer support services after the systems are
installed. For our customers who prefer not to make an up-front capital
investment in software and hardware, we provide our full range of products
and services on an outsourced basis through our six data centers and 22
item-processing centers located throughout the United States.
Fiscal year 2005 third quarter results reflect a 12% increase in revenue,
resulting in a 21% increase in gross profit and an increase of 19% in net
income over the third quarter of fiscal year 2004. For the nine months of
fiscal 2005, revenue increased 16%, with an increase of 21% in gross profit
and an increase of 20% in net income over the same nine months in fiscal
2004.
A detailed discussion of the major components of the results of operations
for the three and nine-month periods ended March 31, 2005 follows. All
amounts are in thousands and discussions compare the current three and nine-
month periods ended March 31 2005, to the prior three and nine-month periods
ended March 31, 2004.
REVENUE
License Revenue Three Months Ended Nine Months Ended
March 31, March 31,
------------------ ------------------
2005 2004 2005 2004
------- ------- ------- -------
License $ 20,943 $ 15,343 $ 62,642 $ 40,703
Percentage of total revenue 16% 13% 16% 12%
Change from prior year +36% +54%
License revenue represents the delivery and acceptance of application
software systems contracted with us by the customer. We license our
proprietary software products under standard license agreements that
typically provide the customer with a non-exclusive, non-transferable right
to use the software on a single computer and for a single financial
institution location.
License revenue increased mainly due to growth in delivery and acceptance
within both the bank and credit union segments. Year-to-date license revenue
in fiscal 2005 experienced growth in many software solutions. The leading
elements were Episys[R] (our flagship software solution for larger credit
unions), third party credit union ancillary software solutions, Silverlake
System[R] (our flagship software solution for larger banks), 4|sight[TM]
(our complementary image solution), and Fraud Detective[TM] (our anti-fraud
and anti-money laundering software solution).
Support and Service Revenue Three Months Ended Nine Months Ended
March 31, March 31,
------------------ ------------------
2005 2004 2005 2004
------- ------- ------- -------
Support and service $ 92,509 $ 78,353 $263,883 $227,594
Percentage of total revenue 69% 65% 67% 67%
Change from prior year +18% +16%
Support and service revenues are generated from implementation services
(including conversion, installation, configuration and training), annual
support to assist the customer in operating their systems and to enhance and
update the software, outsourced data processing services and ATM and debit
card processing services.
Q3 Fiscal 2005 Compared YTD Fiscal 2005 Compared
to Q3 Fiscal 2004 to YTD Fiscal 2004
------------------- -------------------
Support and Service Revenue $ Change % Change $ Change % Change
-------- -------- -------- --------
In-House Support &
Other Services $ 5,924 15% $ 15,350 14%
EFT Support 3,634 39% 11,544 44%
Outsourcing Services 3,247 16% 8,311 14%
Implementation Services 1,351 14% 1,084 4%
-------- --------
Total Increase $ 14,156 18% $ 36,289 16%
======== ========
There was strong growth in all of the support and service revenue components
for the third quarter and nine months of fiscal 2005. EFT support,
including ATM and debit card transaction processing services, experienced
the largest percentage of growth for the third quarter and the nine months
of fiscal 2005. Our daily transaction counts are rapidly growing as our
customers continue to experience consistent organic growth in ATM and debit
card transactions.
In-house support increased primarily from software implementations performed
during the previous twelve months. Outsourcing services for banks and
credit unions also continue to drive revenue growth at a strong pace as we
add new bank and credit union customers and open new data processing sites.
We expect growth in outsourcing to continue as we add services from recent
acquisitions to our existing and new customers.
Hardware Revenue Three Months Ended Nine Months Ended
March 31, March 31,
------------------ ------------------
2005 2004 2005 2004
------- ------- ------- -------
Hardware $ 20,930 $ 26,012 $ 67,913 $ 73,081
Percentage of total revenue 15% 22% 17% 21%
Change from prior year -20% -7%
The Company has entered into remarketing agreements with several hardware
manufacturers under which we sell computer hardware, hardware maintenance
and related services to our customers. Revenue related to hardware sales is
recognized when the hardware is shipped to our customers.
Hardware revenue decreased for the third quarter and year-to-date due to the
types of equipment sold and a decrease in the number of hardware systems
sold. Hardware revenue was 22% of total revenue in the third quarter and
21% for the nine months of fiscal 2004, while in the current third quarter
it is 15% of total revenue and 17% of total revenue for the nine months of
fiscal 2005. We expect this decrease as a percentage of total revenue to
continue as the entire industry is experiencing the impact of rising
equipment processing power and decreasing equipment prices.
BACKLOG
Backlog increased 5% from year-ago levels and increased 2% from December 31,
2004 quarter to $198,000 ($67,000 in-house and $131,000 outsourcing) at
March 31, 2005. Backlog at December 31, 2004, was $194,500 ($68,500 in-
house and $126,000 outsourcing). At March 31, 2004, backlog was $188,000
($66,500 in-house and $121,500 outsourcing).
COST OF SALES AND GROSS PROFIT
Cost of license represents the cost of software from third party vendors
through remarketing agreements. These costs are recognized when license
revenue is recognized. Cost of support and service represents costs
associated with conversion and implementation efforts, ongoing support for
our in-house customers, operation of our data and item centers providing
services for our outsourced customers, ATM and debit card processing
services and direct operation costs. These costs are recognized as they are
incurred. Cost of hardware consists of the direct and related costs of
purchasing the equipment from the manufacturers and delivery to our
customers, plus the ongoing operation costs to provide support to our
customers. These costs are recognized at the same time as the related
hardware revenue is recognized.
Cost of Sales and Gross Profit Three Months Ended Nine Months Ended
March 31, March 31,
------------------ ------------------
2005 2004 2005 2004
------- ------- ------- -------
Cost of License $ 1,085 $ 1,131 $ 4,428 $ 2,296
Percentage of total revenue <1% <1% 1% 1%
Change from prior year -4% +93%
License Gross Profit $ 19,858 $ 14,212 $ 58,214 $ 38,407
Gross Profit Margin 95% 93% 93% 94%
Change from prior year +40% +52%
------------------ ------------------
Cost of support and service $ 61,436 $ 52,073 $178,412 $152,818
Percentage of total revenue 46% 44% 45% 45%
Change from prior year +18% +17%
Support and Service Gross $ 31,073 $ 26,280 $ 85,471 $ 74,776
Gross Profit Margin 34% 34% 32% 33%
Change from prior year +18% +14%
------------------ ------------------
Cost of hardware $ 14,584 $ 19,185 $ 49,010 $ 51,579
Percentage of total revenue 11% 16% 12% 15%
Change from prior year -24% -5%
Hardware Gross Profit $ 6,346 $ 6,827 $ 18,903 $ 21,502
Gross Profit Margin 30% 26% 28% 29%
Change from prior year -7% -12%
------------------ ------------------
TOTAL COST OF SALES $ 77,105 $ 72,389 $231,850 $206,693
Percentage of total revenue 57% 60% 59% 61%
Change from prior year +7% +12%
TOTAL GROSS PROFIT $ 57,277 $ 47,319 $162,588 $134,685
Gross Profit Margin 43% 40% 41% 39%
Change from prior year +21% +21%
Cost of license decreased slightly for the third quarter due to less third
party reseller agreement software vendor costs. These costs increased for
the nine months of fiscal 2005 due to increased third party reseller
agreement software vendor costs in prior quarters of the current fiscal
year. Cost of support and service increased for the third quarter and the
nine months, in line with the support and service revenue increase,
primarily due to increased headcount and depreciation expense as compared to
the same periods last year. Cost of hardware decreased for the third
quarter and the nine months of fiscal 2005, in line with the decrease in
hardware sales, primarily due to the types of equipment delivered, with
varying vendor incentives in the current year. Incentives and rebates
received from vendors fluctuate quarterly and annually due to changing
thresholds established by the vendors.
GROSS PROFIT
Gross profit margin on license revenue increased in the third quarter and
decreased slightly for the nine months of fiscal 2005 due to the timing of
license revenue and the associated costs through reseller agreements. The
gross profit margin remained at 34% in support and service for the third
quarter in both fiscal years, but decreased slightly for the nine months of
fiscal 2005, primarily due to increased headcount relating to support and
service, facility costs related to new acquisitions, and depreciation
expense of new equipment. Hardware gross margin increased in the third
quarter of fiscal 2005 due to vendor rebates received. For the nine months
of fiscal 2005, hardware margins decreased minimally due to the number of
hardware shipments and sales mix.
OPERATING EXPENSES
Selling and Marketing Three Months Ended Nine Months Ended
March 31, March 31,
------------------ ------------------
2005 2004 2005 2004
------- ------- ------- -------
Selling and marketing $ 11,598 $ 8,634 $ 34,250 $ 25,937
Percentage of total revenue 9% 7% 9% 8%
Change from prior year +34% +32%
Dedicated sales forces, inside sales teams, and technical sales support
teams conduct our sales efforts for our two market segments, and are
overseen by regional sales managers. Our sales executives are responsible
for pursuing lead generation activities for new core customers. Our account
executives nurture long-term relationships with our client base and cross
sell our many complementary products and services. Our inside sales force
markets specific complementary products and services to our existing
customers.
For the three months and nine months ended March 31, 2005, selling and
marketing expenses increased due to higher commission and related expenses
due to increased revenue and to additional expenses incurred by entities
acquired during each period.
Research and Development Three Months Ended Nine Months Ended
March 31, March 31,
------------------ ------------------
2005 2004 2005 2004
------- ------- ------- -------
Research and development $ 7,738 $ 6,344 $ 20,621 $ 17,575
Percentage of total revenue 6% 5% 5% 5%
Change from prior year +22% +17%
We devote significant effort and expense to develop new software, service
products and continually upgrade and enhance our existing offerings.
Typically, we upgrade all of our core and complementary software
applications annually. We believe our research and development efforts are
highly efficient because of the extensive experience of our research and
development staff and because our product development is highly customer-
driven.
Research and development expenses increased primarily due to employee costs
in relation to increased headcount for ongoing development of new products
and enhancements to existing products, plus depreciation and equipment
maintenance expense. Research and development expenses increased to 6% of
total revenue for the third quarter ended March 31, 2005, but remained at
5% of total revenue for the nine months ended March 31, 2005.
General and Administrative Three Months Ended Nine Months Ended
March 31, March 31,
------------------ ------------------
2005 2004 2005 2004
------- ------- ------- -------
General and administrative $ 6,915 $ 6,842 $ 22,507 $ 21,520
Percentage of total revenue 5% 6% 6% 6%
Change from prior year +1% +5%
General and administrative expense increased for the third quarter and year-
to-date in fiscal 2005, primarily due to increased expenses related to
customer user group meetings, and insurance expense related to the
additional sites and increased coverage as compared to the same period last
year. Although general and administrative expenses increased in both the
third quarter and year-to-date, expenses remained at 5% of total revenue in
the current quarter and 6% of total revenue in the third quarter of last
fiscal year. For the nine months, expenses were 6% of total revenue for
both fiscal years.
INTEREST INCOME (EXPENSE)
Net interest income for the three and nine-months ended March 31, 2005
reflects a $135 decrease and a $127 increase, respectively. The decrease in
interest income of $77 for the third quarter is due to lower cash balances
as compared to the nine month increase of $173, which is due to higher cash
balances in prior quarters of fiscal 2005. The increase of interest expense
of $58 for the third quarter and $46 for the nine months is due to interest
expense on the bank credit line that was renewed in October 2004.
PROVISION FOR INCOME TAXES
The provision for income taxes was $11,658 and $32,277 for the three and
nine months ended March 31, 2005, compared with $9,379 and $25,692 for the
same three and nine-month periods in fiscal 2004. For the current fiscal
year, the rate of income taxes is estimated at 37.5% of income before income
taxes compared to 36.5% for the same periods in fiscal 2004. The change
reflects an overall increase in the effective state income tax rate.
NET INCOME
Net income increased 19% to $19,429, or $0.21 per diluted share, for the
three months ended March 31, 2005 compared to $16,316, or $0.18 per diluted
share, for the three months ended March 31, 2004. Net income increased 20%
to $53,795, or $0.58 per diluted share, for the nine months of fiscal 2005
compared to $44,696, or $0.49 per diluted share, for the nine-month period
ended March 31, 2004.
BUSINESS SEGMENT DISCUSSION
The Company is a leading provider of integrated computer systems that
perform data processing (available for in-house or outsourced installations)
for banks and credit unions. The Company's operations are classified into
two business segments: bank systems and services ("Bank") and credit
union systems and services ("Credit Union"). The Company evaluates the
performance of its segments and allocates resources to them based on various
factors, including prospects for growth, return on investment, and return on
revenue.
Bank Three Months Ended % Nine Months Ended %
March 31, Change March 31, Change
------------------------- ------------------------
2005 2004 2005 2004
------- ------- ------- -------
Revenue $104,241 $ 96,671 8% $315,362 $282,461 12%
Gross Profit $ 44,161 $ 39,185 13% $133,314 $113,774 17%
Gross Profit Margin 42% 41% 42% 40%
Revenue growth in the bank segment for the third quarter and nine months of
fiscal 2005 is attributable to the significant increase in license revenue
related to new core customers, migrations from legacy systems, and sales of
complementary products, together with the steady increase in support and
services relating to maintenance for in-house and outsourced customers. ATM
and debit card processing continue to experience strong organic growth,
along with expanding customer bases.
The bank segment increased gross profit for the third quarter and year-to-
date in fiscal 2005 due to revenue growth from bank customers and continued
leveraging of resources and infrastructure combined with company-wide cost
controls.
Credit Union Three Months Ended % Nine Months Ended %
March 31, Change March 31, Change
------------------------- ------------------------
2005 2004 2005 2004
------- ------- ------- -------
Revenue $ 30,141 $ 23,037 31% $ 79,076 $ 58,917 34%
Gross Profit $ 13,116 $ 8,134 61% $ 29,274 $ 20,911 40%
Gross Profit Margin 44% 35% 37% 35%
Revenue growth in the credit union segment for the third quarter and year to
date of fiscal 2005 is attributable to the rise in license revenue from our
credit union products together with a strong increase in support and service
revenue from maintenance for in-house customers, with the largest growth
being in credit union outsourcing. ATM and debit card processing activity
is also growing rapidly in our credit union segment from both organic growth
and expansion of our customer base.
The credit union gross profit increased for the third quarter and the nine
months of 2005 primarily due to revenue from delivery and acceptance of new
core systems. There was an increase in the hardware margin for the third
quarter, mainly due to vendor rebates compared to the same period in the
prior year. However, the increase in the third quarter did not raise the
year-to-date hardware margins, which had a small decrease for the nine
months of fiscal year 2005 due to the mix of products sold.
FINANCIAL CONDITION
Liquidity
The Company's cash and cash equivalents decreased to $15,952 at March 31,
2005, from $53,758 million at June 30, 2004 and $88,905 at March 31, 2004.
The decrease is primarily due to payment for acquisitions of $119,616. Cash
provided by operations increased $1,447 to $105,116 for the nine months
ended March 31, 2005 as compared to $103,669 for the same period last year.
The increase in net cash from operating activities consists of an increase
in net income of $9,099, and an increase in depreciation and amortization of
$3,636, plus changes in trade receivables of $10,406, prepaid expenses of
($3,707), accounts payable and accrued expenses of $1,110, offset by
decreasing income taxes of ($5,671) and deferred revenues of ($13,447).
Cash used in investing activities for the current period totaled $157,379.
The largest use of cash was for payment of acquisitions in the amount of
$119,616. Capital expenditures totaled $33,428, and internal computer
software developed used $4,607.
Financing activities netted cash of $14,457 during the nine months ended
March 31, 2005 and included proceeds from the issuance of stock for stock
options exercised and the sale of treasury and common stock to the employee
stock purchase plan of $11,238 and $565, respectively. Borrowing under a
line of credit note payable amounted to $14,000 and dividends were paid to
the stockholders of $11,346 during the nine-month period ended March 31,
2005.
The Company renewed a credit line on March 22, 2005 which provides for
funding of up to $8,000 and bears interest at the prime rate (5.75% at March
31, 2005). The credit line expires March 22, 2006 and is secured by $1,000
of investments. At March 31, 2005, no amount was outstanding.
In October 2004, the Company renewed a bank credit line that provided for
funding up to $25,000 and bore interest at a variable LIBOR-based rate. At
March 31, 2005, there was a 30-day note outstanding for $14,000 under such
credit line. The credit line was terminated and the outstanding note of
$14,000 was paid in full on April 19, 2005, using the proceeds of a loan
under a new unsecured revolving bank credit facility, entered into on the
same date.
The new unsecured revolving bank credit facility allows borrowing of up to
$150,000, which may be increased by the Company at any time in the next
three years to $225,000. The unsecured revolving bank credit facility bears
interest at a rate equal to (a) LIBOR or (b) an alternate base rate (the
greater of (a) the Federal Funds Rate plus 1/2% or (b) the Prime Rate), plus
an applicable percentage in each case determined by the Company's leverage
ratio. The new unsecured revolving credit line terminates April 19, 2010.
Also subsequent to March 31, 2005, on April 29, 2005, the Board of Directors
increased its existing 3.0 million share stock repurchase authorization by
2.0 million, bringing the total authorization to 5.0 million shares. The
Company will finance its share repurchase with available cash reserves or
short-term borrowings on its existing credit facility. The share repurchase
program does not include specific price targets or timetables and may be
suspended at any time.
Capital Requirements and Resources
The Company generally uses existing resources and funds generated from
operations to meet its capital requirements. Capital expenditures totaling
$33,428 and $33,069 for the nine-month periods ended March 31, 2005 and
2004, respectively, were made for expansion of facilities and additional
equipment. These additions were funded from cash generated by operations.
Total consolidated capital expenditures for the Company are not expected to
exceed $45,000 for fiscal year 2005.
On September 21, 2001, the Company's Board of Directors approved a stock
buyback of the Company's common stock of up to 3.0 million shares, and
approved an increase to 6.0 million shares on October 4, 2002. The buyback
was funded with cash from operations. At June 30, 2004, there were 315,651
shares remaining in treasury stock. During the nine months ended March 31,
2005, treasury shares of 306,027 were reissued for the shares exercised in
the employee stock option plan and 9,624 were reissued for the shares
exercised in the employee stock purchase plan. At March 31, 2005, there
were no shares remaining in treasury stock.
Subsequent to March 31, 2005, the Company's Board of Directors declared a
cash dividend of $.045 per share on its common stock payable on May 24,
2005, to stockholders of record on May 9, 2005. Current funds from
operations are adequate for this purpose. The Board has indicated that it
plans to continue paying dividends as long as the Company's financial
outlook continues to be favorable.
Critical Accounting Policies
The Company regularly reviews its selection and application of significant
accounting policies and related financial disclosures. The application of
these accounting policies requires that management make estimates and
judgments. The estimates that affect the application of our most critical
accounting policies and require our most significant judgments are outlined
in Management's Discussion and Analysis of Financial Condition and Results
of Operations - "Critical Accounting Policies" - contained in our annual
report on Form 10-K for the year ended June 30, 2004.
Accounting Pronouncements
In December 2004, the Financial Accounting Standard Board ("FASB") issued
Statement No. 123 ("FAS 123R"), Share-Based Payment and on March 29, 2005,
the Securities and Exchange Commission ("SEC") issued Staff Accounting
Bulletin No. 107 ("SAB 107"), Share-Based Payment. FAS 123R requires all
entities to recognize compensation expense in an amount equal to the fair
value of stock options and restricted stock granted to employees, while SAB
No. 107 addresses issues regarding valuation methods and selection of
assumptions. The Company will apply these standards beginning July 1, 2005;
however the Company has not completed the process of evaluating the
methodology to be used to implement the requirements of these standards.
In December 2004, the FASB issued SFAS No. 153 ("SFAS 153"), Exchanges of
Nonmonetary Assets, an Amendment of APB Opinion No. 29, effective for
nonmonetary asset exchanges occurring in fiscal periods beginning after June
15, 2005, and therefore effective for the Company on July 1, 2005. SFAS No.
153 requires that exchanges of productive assets be accounted for at fair
value unless fair value cannot be reasonably determined or the transaction
lacks commercial substance. SFAS No. 153 is not expected to have a material
effect on the Company's consolidated financial statements.
Forward Looking Statements
The Management's Discussion and Analysis of Results of Operations and
Financial Condition and other portions of this report contain forward-
looking statements within the meaning of federal securities laws. Actual
results are subject to risks and uncertainties, including both those
specific to the Company and those specific to the industry, which could
cause results to differ materially from those contemplated. The risks and
uncertainties include, but are not limited to, the matters detailed at Risk
Factors in its Annual Report on Form 10-K for the fiscal year ended June 30,
2004. Undue reliance should not be placed on the forward-looking statements.
The Company does not undertake any obligation to publicly update any
forward-looking statements.
CONCLUSION
The Company's results of operations and its financial position continue to
be strong with increased earnings, and continued gross margin growth for the
three and nine months ended March 31, 2005, and sustained growth in cash
flow from operations for the nine months ended March 31, 2005. This
reflects the continuing attitude of cooperation and commitment by each
employee, management's ongoing cost control efforts and our commitment to
deliver top quality products and services to the markets we serve.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market risk refers to the risk that a change in the level of one or more
market prices, interest rates, indices, volatilities, correlations or other
market factors such as liquidity, will result in losses for a certain
financial instrument or group of financial instruments. We are currently
exposed to credit risk on credit extended to customers and interest risk on
investments in U.S. government securities. We actively monitor these risks
through a variety of controlled procedures involving senior management. We
do not currently use any derivative financial instruments. Based on the
controls in place, credit worthiness of the customer base and the relative
size of these financial instruments, we believe the risk associated with
these exposures will not have a material adverse effect on our consolidated
financial position or results of operations.
ITEM 4. CONTROLS AND PROCEDURES
An evaluation was carried out under the supervision and with the
participation of our management, including our Company's Chief Executive
Officer (CEO) and Chief Financial Officer (CFO), of the effectiveness of the
design and operations of our disclosure controls and procedures pursuant to
Exchange Act Rules 13a-15 and 15d-15. Based upon that evaluation as of the
end of the period covered by this report, the CEO and CFO concluded that our
disclosure controls and procedures are effective in timely alerting them
to material information relating to us (including our consolidated
subsidiaries) required to be included in our periodic SEC filings. There
have not been any significant changes in our internal controls or in other
factors that could significantly affect these controls subsequent to the
date of evaluation.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS
31.1 Certification of the Chief Executive Officer dated May 6, 2005.
31.2 Certification of the Chief Financial Officer dated May 6, 2005.
32.1 Written Statement of the Chief Executive Officer dated May 6, 2005.
32.2 Written Statement of the Chief Financial Officer dated May 6, 2005.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this quarterly report on Form 10-Q to be signed
on its behalf by the undersigned thereunto duly authorized.
JACK HENRY & ASSOCIATES, INC.
Date: May 6, 2005 /s/ John F. Prim
---------------------
John F. Prim
Chief Executive Officer
Date: May 6, 2005 /s/ Kevin D. Williams
---------------------
Kevin D. Williams
Chief Financial Officer and Treasurer
EXHIBIT 31.1
CERTIFICATION
-------------
I, John F. Prim, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Jack Henry &
Associates, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects
the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being
prepared;
b) Evaluated the effectiveness of the registrant's disclosure controls and
procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of
the period covered by this report based on such evaluation; and
c) Disclosed in this report any change in the registrant's internal control
over financial reporting that occurred during the registrant's most recent
fiscal quarter (the registrant's fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial
reporting; and
5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation of internal control over financial reporting, to
the registrant's auditors and the audit committee of registrant's board of
directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or
operation of internal controls over financial reporting which are reasonably
likely to adversely affect the registrant's ability to record, process,
summarize and report financial information ; and
b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls
over financial reporting.
Date: May 6, 2005
/s/ John F. Prim
------------------------------
John F. Prim
Chief Executive Officer
EXHIBIT 31.2
CERTIFICATION
-------------
I, Kevin D. Williams, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Jack Henry &
Associates, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects
the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being
prepared;
b) Evaluated the effectiveness of the registrant's disclosure controls and
procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of
the period covered by this report based on such evaluation; and
c) Disclosed in this report any change in the registrant's internal control
over financial reporting that occurred during the registrant's most recent
fiscal quarter (the registrant's fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial
reporting; and
5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation of internal control over financial reporting, to
the registrant's auditors and the audit committee of registrant's board of
directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or
operation of internal controls over financial reporting which are reasonably
likely to adversely affect the registrant's ability to record, process,
summarize and report financial information ; and
b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls
over financial reporting.
Date: May 6, 2005 /s/ Kevin D. Williams
-------------------------------
Kevin D. Williams
Chief Financial Officer
EXHIBIT 32.1
Written Statement of the Chief Executive Officer
Pursuant to 18 U.S.C. Section 1350
Solely for the purposes of complying with 18 U.S.C. Section 1350, I, the
undersigned Chief Executive Officer of Jack Henry & Associates, Inc. (the
"Company"), hereby certify that the Quarterly Report on Form 10-Q of the
Company for the three and nine-months ended March 31, 2005 (the "Report")
fully complies with the requirements of Section 13(a) of the Securities
Exchange Act of 1934 and that information contained in the Report fairly
presents, in all material respects, the financial condition and results of
operations of the Company.
Dated: May 6, 2005
*/s/ John F. Prim
------------------------------------
John F. Prim
Chief Executive Officer
* A signed original of this written statement required by Section 906 has
been provided to Jack Henry & Associates, Inc. and will be retained by Jack
Henry & Associates, Inc. and furnished to the Securities and Exchange
Commission or its staff upon request.
EXHIBIT 32.2
Written Statement of the Chief Financial Officer
Pursuant to 18 U.S.C. Section 1350
Solely for the purposes of complying with 18 U.S.C. Section 1350, I, the
undersigned Chief Financial Officer of Jack Henry & Associates, Inc. (the
"Company"), hereby certify that the Quarterly Report on Form 10-Q of the
Company for the three and nine-months ended March 31, 2005 (the "Report")
fully complies with the requirements of Section 13(a) of the Securities
Exchange Act of 1934 and that information contained in the Report fairly
presents, in all material respects, the financial condition and results of
operations of the Company.
Dated: May 6, 2005
*/s/ Kevin D. Williams
------------------------------------
Kevin D. Williams
Chief Financial Officer
* A signed original of this written statement required by Section 906 has
been provided to Jack Henry & Associates, Inc. and will be retained by Jack
Henry & Associates, Inc. and furnished to the Securities and Exchange
Commission or its staff upon request.
