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 15, 2003
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
Item 7. Financial Statements and Exhibits.
(c) Exhibits
99.1 Press release dated October 15, 2003.
Item 12. Results of Operations and Financial Condition.
On October 15, 2003, Jack Henry & Associates, Inc. issued a press
release announcing 2004 first quarter results, the text of which is
attached hereto as Exhibit 99.1.
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.
Date: October 15, 2003
JACK HENRY & ASSOCIATES, INC.
(Registrant)
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: Becky Pendleton Reid
The Cereghino Group
(206) 762-0993
FOR IMMEDIATE RELEASE
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JACK HENRY & ASSOCIATES FISCAL FIRST QUARTER NET INCOME INCREASES 23%
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Monett, MO, October 15, 2003 -- Jack Henry & Associates, Inc. (Nasdaq:
JKHY), a leading provider of integrated technology solutions that perform
data processing for financial institutions, today reported strong fiscal
first quarter results with revenues rising 16%, improving gross margins with
net income increasing 23% compared to the first quarter of fiscal 2003.
For the quarter ended September 30, 2003, the company generated total
revenues of $108.9 million, compared to $94.0 million in the same quarter a
year ago. Gross profit increased to $42.7 million compared to $35.1 million
in last year's first quarter. Net income totaled $13.9 million, or $0.15
per diluted share, compared to $11.3 million, or $0.13 per diluted share in
the year ago same quarter.
"Customer attendance at our recent national user group meeting was
significantly higher than at last year's event, and the participants
appeared to be noticeably more upbeat than in the prior year. The overall
attitudes of our existing customers appear that they are very happy and
fairly optimistic regarding the future which is evidenced by our strong
sales pipeline," said Michael E. Henry, Chairman and CEO. "We continue to
have good success in selling those products that assist our customers in
becoming more efficient such as teller and platform automation. Also, as
Congress moves closer to approving electronic methods for clearing checks,
sales of our check imaging solutions remain strong."
"The investments made last year to continue the development of our existing
products, acquisition and the opening of additional item processing centers
and an acquisition to service the smaller sized credit union market are all
beginning to have a positive impact on our overall performance," said Jack
Prim, President. "In addition to these product and service investments we
have recently signed contracts with a provider of customer relationship
management (CRM) software for an internal system which will allow us to
continue improving our level of customer support which will have a positive
impact on customer satisfaction levels. This system will be rolled out to
our customer support staff next spring and then immediately following that
to our sales and marketing departments."
Operating Results
License fees increased 7% to $13.0 million, or 12% of total revenues,
compared to $12.1 million, or 13% of first quarter revenues a year ago.
There was strong growth in all areas of installation services, in-house
support fees, outsourcing and ATM/Debit switch transaction fees, all which
contributed to the 21% increase in support and service revenue to $72.5
million, or 67% of total revenues, compared to $59.9 million, or 64% of last
year's first quarter revenues. First quarter hardware sales grew 6% to $23.5
million from $22.0 million in the prior year.
First quarter cost of sales increased 13% to $66.3 million from $58.9
million in the first quarter a year ago. First quarter gross margin was 39%
compared to 37% in the first quarter last year. Support and service margin
was 32% up slightly from 31% for the same quarter a year ago. Hardware
gross margin for the first quarter was 30% compared to 25% for the first
quarter last year which is primarily due to sales mix of hardware and an
increase in incentives and rebates received on the specific hardware sold
compared to last year.
For the first quarter there was an increase in total revenue and a
significant gross margin expansion in both of the Company's reporting
segments. The bank systems and services segment revenue increased 13% to
$91.6 million from $80.7 million and the related gross margins for this
segment increased to 40% from 38% compared to the prior year. The credit
union systems and services segment revenue increased 31% to $17.4 million
from $13.3 million and the related gross margins for this segment increased
to 35% from 31% in the same quarter last year. The gross margin expansion
is primarily due to additional leverage of resources and infrastructure,
overall cost control and a continued decrease in hardware as a percentage of
total revenue.
Operating expenses increased 21% during the quarter, reflecting a 50%
increase in research and development expenses, which was 5% of first quarter
revenues compared to 4% of revenues in the first quarter a year ago. The
increase in R & D expense is primarily due to ongoing development of
enhancements to existing products for financial institutions. In the prior
year, a large percentage of employee related expenses were capitalized as
part of major ongoing development projects, which have since been completed.
Sales and marketing expense increased 22% as a result of higher revenue and
remained fairly level as a percentage of revenue at approximately 8%.
General and administrative expense increased slightly for the first quarter
compared to last year.
Operating income increased 22% in the first quarter to $21.6 million
compared to $17.6 million in the first quarter of fiscal 2003. First
quarter pre-tax income rose 23% to $21.8 million compared to $17.8 million
in the first quarter a year ago. First quarter net income totaled $13.9
million, or $0.15 per share, compared to $11.3 million or $0.13 per share in
the same quarter of fiscal 2003.
Cash Flow, Balance Sheet and Backlog Review
Cash, cash equivalents and investments increased $61.4 million to $104.0
million compared to a year ago. Trade receivables decreased $6.4 million to
$65.6 million. Deferred revenue increased 26% to $110.7 million compared to
a year ago which reflects the shift in the annual billing cycles for in-
house support fees for acquired customers to our fiscal year end and
increases in prepaid annual support related to software installed in the
prior periods.
Cash flow from operations increased to $84.7 million this quarter from $59.9
million in the first quarter a year ago. The primary reason for the
increase of $24.8 million is collections related to the shift in the annual
billing cycle. Depreciation and amortization expenses were $8.0 million in
the first quarter compared to $7.3 million last year. Capital expenditures
were $17.7 million in the first quarter compared to $16.5 million last year.
The capital expenditure budget this year includes two large investments for
facilities in California and North Carolina totaling approximately $39
million to accommodate continued growth. Included in the expenditures for
this quarter is the payment of the initial purchase price of $12.3 million
for the California facility.
"We historically have consumed backlog in the first quarter of a fiscal year
due to it being the weakest contracting quarter for a variety of reasons,
and this year was no exception," said Kevin D. Williams, CFO. "Also, as of
June 30, 2003, we realigned our sales force into a more traditional
hunter/farmer approach to better match individual's skills with job
functions. These changes went smoothly, but undoubtedly had some
anticipated short-term impact as people established relationships with
customers and prospects and got up to speed with their new
responsibilities." Backlog was up 21% from year-ago levels, but down 4%
from June 30, 2003. Backlog at September 30, 2003, was $176.5 million
($60.2 million in-house and $116.3 million outsourcing) compared to $146.5
million ($53.2 million in-house and $93.3 million outsourcing) at September
30, 2002, and $183.1 million ($69.4 million in-house and $113.7 million
outsourcing) at June 30, 2003.
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 3,000 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 16th 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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2003 2002
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REVENUE
License $ 12,960 $ 12,069 7%
Support and service 72,524 59,884 21%
Hardware 23,456 22,025 6%
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Total 108,940 93,978 16%
COST OF SALES
Cost of license 913 791 15%
Cost of support and service 49,049 41,455 18%
Cost of hardware 16,321 16,619 -2%
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Total 66,283 58,865 13%
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GROSS PROFIT $ 42,657 $ 35,113 21%
OPERATING EXPENSES
Selling and marketing 8,772 7,199 22%
Research and development 5,319 3,551 50%
General and administrative 7,005 6,736 4%
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Total 21,096 17,486 21%
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OPERATING INCOME $ 21,561 $ 17,627 22%
INTEREST INCOME (EXPENSE)
Interest income 287 187 54%
Interest expense (26) (23) 13%
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Total 261 164 59%
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INCOME BEFORE INCOME TAXES $ 21,822 $ 17,791 23%
PROVISION FOR INCOME TAXES 7,965 6,493 23%
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Net Income $ 13,857 11,298 23%
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Diluted net income per share $ 0.15 $ 0.13 21%
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Diluted weighted average
shares outstanding 91,069 89,579
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Consolidated Balance Sheet Highlights
(In Thousands-unaudited) September 30, % Change
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2003 2002
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Cash, cash equivalents and investments $ 104,030 $ 42,665 144%
Trade receivables $ 65,594 $ 71,970 -9%
TOTAL ASSETS $ 543,352 $ 460,950 18%
Accounts payable and accrued expenses $ 21,180 $ 21,527 -2%
Deferred revenue $ 110,743 $ 87,838 26%
STOCKHOLDERS' EQUITY $ 385,479 $ 333,785 15%
(thirty)
Note: Transmitted on PR Newswire on October 15, 2003, at 10:00 p.m. CDT.