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): April 20, 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 April 20, 2005, Jack Henry & Associates, Inc. issued a press release
announcing 2005 third 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 April 20, 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: April 20, 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
Director Investor Relations
(417) 235-6652
FOR IMMEDIATE RELEASE
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JACK HENRY & ASSOCIATES FISCAL 2005 THIRD QUARTER NET INCOME INCREASES 19%
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Monett, MO. April 20, 2005 - Jack Henry & Associates, Inc. (Nasdaq: JKHY), a
leading provider of integrated technology solutions that perform data
processing for financial institutions, today reported fiscal 2005 third
quarter results with a 12% growth in revenue, a 21% increase in gross
profit, and a 19% increase in net income compared to the third quarter of
fiscal 2004. For the first nine months of fiscal 2005, revenue increased
16%, gross profit increased 21%, and net income grew 20% over the same nine
month period in fiscal 2004.
For the quarter ended March 31, 2005, the company generated total revenue of
$134.4 million compared to $119.7 million in the same quarter a year ago.
Gross profit increased to $57.3 million compared to $47.3 million in the
third quarter of last fiscal year. Net income totaled $19.4 million, or
$0.21 per diluted share, compared to $16.3 million, or $0.18 per diluted
share in the same quarter a year ago.
For the first nine months of fiscal 2005, total revenue of $394.4 million
was generated compared to $341.4 million for the same nine months of fiscal
2004. Gross profit grew $27.9 million to $162.6 million compared to $134.7
million during the same period last fiscal year. Net income for the first
nine months of fiscal 2005 was $53.8 million, or $0.58 per diluted share,
compared to $44.7 million, or $0.49 per diluted share, for the same nine-
month period in fiscal 2004.
"Revenue and gross profits have continued to improve during both the quarter
and the first nine months of our fiscal year. License and support and
service revenues continue to grow at a very nice level with the only
decreased revenue component being hardware. This shift in revenues has
had a positive impact on our margins," said Jack F. Prim, CEO. "The
acquisitions that we have completed during the fiscal year continue to show
significant promise, but as we have mentioned in earlier communications,
several of these will take additional time to increase their revenues to
generate margins equal to our traditional expectations. Therefore, some of
these recent acquisitions continue to put pressure on our margins in the
short-term, but in the longer-term present opportunities for both revenue
growth and margin expansion."
Operating Results
"We continue to have strong increases in our support and service revenue for
the third fiscal quarter with an 18% increase for the quarter and a 16%
increase for the nine months ended March 31, 2005, compared to the prior
year periods. This growth continues to be driven by increases in every
component of our recurring revenue. Our recurring revenue represented 60%
of total revenue for the quarter and 59% of total revenue for the nine
months of fiscal 2005, while last fiscal year, it was 57% for the third
quarter and 58% year-to-date" said Tony L. Wormington, President. "We
believe that the increase in our recurring revenue is directly attributable
to the quality of our products we provide and the commitment of our
employees to service our customers. As a result, our customers continue to
contract for additional products and services with us."
License revenue increased 36% to $20.9 million, or 16% of third quarter
total revenue, compared to $15.3 million, or 13% of the third quarter total
revenue a year ago. Support and services revenue increased 18% to $92.5
million, or 69% of total revenue in third quarter of fiscal 2005, from
$78.4 million, or 65% of total revenue for the same period a year ago.
Hardware sales in the third quarter of fiscal 2005 decreased 20% to $20.9
million, or 15% of total revenue, from $26.0 million, or 22% of total
revenue in the third quarter of last fiscal year.
For the nine months in fiscal 2005, license revenue improved by $21.9
million with an increase of 54% to $62.6 million, or 16% of total revenue,
compared to $40.7 million, or 12% of the total revenue a year ago. Support
and service revenue increased 16% and contributed 67% to total revenue, or
$263.9 million for the nine months of fiscal 2005 compared to $227.6
million, also 67% of total revenue for the nine months of fiscal 2004.
Hardware sales for the nine months of fiscal 2005 fell 7% to $67.9 million,
or 17% of total revenue, compared to $73.1 million, or 21% of total revenue
for the same nine month period in fiscal 2004.
Cost of sales for the third quarter increased 7% from $72.4 million for the
three months ended March 31, 2004 to $77.1 million for the three months
ended March 31, 2005. Third quarter gross profit expanded 21% to $57.3
million with a 43% gross margin compared to $47.3 million with a 40% gross
margin for the same quarter a year ago.
Cost of sales for the nine months ended March 31, 2005 increased 12%, to
$231.9 million from $206.7 million for the same period ended March 31, 2004.
Gross profit for the nine months in fiscal 2005 increased 21% to $162.6
million with a 41% gross margin, compared to $134.7 million with a 39% gross
margin for the same nine-month period in fiscal 2004.
Gross margin on license revenue for the third quarter of fiscal 2005 was 95%
compared to 93% a year ago for the same period due to the product mix of
license revenue. Support and service gross margin remained even at 34% for
the third quarter of fiscal 2005 and fiscal 2004. Hardware gross margins
increased to 30% in the current third quarter compared to 26% in the same
quarter last year, primarily due to volume and sales mix of hardware and
vendor rebates received in the current quarter.
Gross margin on license revenue for the nine months of fiscal 2005 was 93%
compared to 94% a year ago for the same period due to increased license
revenue delivered through reseller agreements in prior quarters of this
year. Support and service gross margin decreased slightly to 32% from 33%
primarily due to increased headcount for support and services. Hardware
gross margins were slightly lower for the nine months of fiscal 2005 at 28%
compared to 29% for the same nine months last year, primarily due to the
volume and sales mix of hardware for complimentary products which carry a
lower price and margin.
For the third quarter of 2005, the bank systems and services segment revenue
increased 8% to $104.2 million, with a gross margin of 42% from $96.7
million in revenue with a gross margin of 41% in the third quarter in fiscal
2004. The credit union systems and services segment revenue increased 31%
to $30.1 million with a gross margin of 44% for the third quarter of 2005
from $23.0 million and a gross margin of 35% in the same quarter a year ago.
"The credit union systems and services segment gross margin increased
predominantly due to both the amount of software delivered during the
quarter and the significant improvement in the support and services
margins," stated Kevin D. Williams, CFO. "The improvement in the support
and service margins was a dramatic improvement sequentially over last
quarter and returned the margins back in line year-to-date with those of
last year."
For the nine months ended March 31, 2005, the bank systems and services
segment revenue increased 12% to $315.4 million, with a gross margin of 42%
from $282.5 million with a gross margin of 40% a year ago. The credit union
systems and services segment revenue increased 34% to $79.1 million for the
nine months of fiscal 2005, with a gross margin of 37% from $58.9 million
and gross margin of 35% in the same period a year ago.
Operating expenses increased 20% to $26.3 million for the third quarter of
fiscal 2005 compared to $21.8 million for the same quarter a year ago
primarily due to employee-related expenses and depreciation expense.
Selling and marketing expenses rose 34% in the third quarter to $11.6
million, or 9% of total revenue, from $8.6 million, or 7% of total revenue.
Research and development expenses increased 22% to $7.7, million or 6% of
total revenue in fiscal 2005, from $6.3 million, or 5% of total revenue in
the third quarter of fiscal 2004. General and administrative costs
increased 1% to $6.9 million, or 5% of revenue, in the third quarter of
fiscal year 2005, from $6.8 million, or 6% of revenue for the same quarter a
year ago.
Operating expenses increased 19% to $77.4 million for fiscal 2005 year-to-
date compared to $65.0 million for the same nine-month period in fiscal 2004
mainly due to employee-related expenses and depreciation. Selling and
marketing expenses rose 32% in the same period to $34.3 million, or 9% of
total revenue, from $25.9 million, or 8% of total revenue. Research and
development expenses increased 17% to $20.6 million from $17.6 million,
while remaining at 5% of total revenue for nine-month periods in fiscal 2005
and 2004. General and administrative costs increased 5% to $22.5 million
compared to $21.5 million for the same nine months in fiscal 2004, and
remained at 6% of total revenue for both fiscal years.
Operating income grew 22% to $31.0 million, or 23% of third quarter
revenue, compared to $25.5 million, or 21% of revenue in the third quarter
of fiscal 2004. Provision for income taxes is 37.5% for the third quarter
in fiscal 2005 compared to 36.5% last year due to changes in the effective
state tax rates. Third quarter net income totaled $19.4 million, or $0.21
per diluted share, compared to $16.3 million, or $0.18 per diluted share in
the third quarter of fiscal 2004.
Operating income for the nine months of fiscal 2005 also increased 22% to
$85.2 million, or 22% of year-to-date revenue, compared to $69.7 million, or
20% of revenue year-to-date in fiscal 2004. Provision for income taxes is
37.5% year to date fiscal 2005 compared to 36.5% year-to-date in fiscal 2004
due to changes in the effective state tax rates. Year-to-date net income
totaled $53.8 million, or $0.58 per diluted share, compared to $44.7
million, or $0.49 per diluted share in the prior year.
Cash Flow, Balance Sheet and Backlog Review
Cash, cash equivalents, and investments decreased to $16.9 million from
$89.9 million compared to March 31, 2004 primarily due to amounts paid for
acquisitions. Trade receivables increased $13.0 million to $80.0 million
compared to a year ago.
Deferred revenue increased $8.0 million or 11% to $82.4 million at March 31,
2005 compared to a year ago. Stockholders' equity grew 19% to $502.9
million at March 31, 2005 from $422.7 million at March 31, 2004.
Cash flow from operations increased to $105.1 million for the first nine
months in fiscal year 2005 from $103.7 million for the same period in fiscal
2004. The increase of $1.4 million from net cash from operating activities
consists of an increase in net income of $9.1 million, an increase in
depreciation and amortization expense of $3.6 million, plus changes in trade
receivables of $10.4 million, prepaid expenses of ($3.7) million, accounts
payable and accrued expenses of $1.1 million, income taxes of ($5.7) million
and deferred revenues of ($13.4) million.
Net cash used in investing activities for the first nine months of fiscal
year 2005 was $157.4 million which includes $119.6 million for acquisitions,
capital expenditures of $33.4 million, and capitalized software development
of $4.6 million. For the first nine months in fiscal 2004, net cash used in
investing activities primarily consisted of $20.6 million for acquisitions,
$33.1 million in capital expenditures and $2.7 million for capitalized
software development.
For the first nine months in fiscal 2005, net cash from financing activities
totaled $14.5 million and includes proceeds of $11.8 million from the
exercise of stock options and sale of common stock, a short term note of
$14.0 million, offset by dividends paid of $11.3 million. For the first nine
months in fiscal 2004, net cash from financing activities was $7.9 million,
mainly from proceeds from the exercise of stock options and sale of common
stock of $17.7 million, offset by dividends paid of $9.8 million.
Backlog, which is a measure of future business and revenue, increased 5%
from year-ago levels and increased 2% from the prior quarter to $198.2
million ($67.1 million in-house and $131.1 million outsourcing). Backlog at
December 31, 2004, was $194.5 million ($68.4 million in-house and $126.1
million outsourcing) and at March 31, 2004, was $187.9 million ($66.4
million in-house and $121.5 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 7,400 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 April 21st 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 Nine Months Ended % Change
------------------ -------- ----------------- --------
March 31, March 31,
2005 2004 2005 2004
-------- -------- -------- --------
REVENUE
License $ 20,943 $ 15,343 36% $ 62,642 $ 40,703 54%
Support and service 92,509 78,353 18% 263,883 227,594 16%
Hardware 20,930 26,012 -20% 67,913 73,081 -7%
-------- -------- -------- --------
Total 134,382 119,708 12% 394,438 341,378 16%
COST OF SALES
Cost of license 1,085 1,131 -4% 4,428 2,296 93%
Cost of support and service 61,436 52,073 18% 178,412 152,818 17%
Cost of hardware 14,584 19,185 -24% 49,010 51,579 -5%
-------- -------- -------- --------
Total 77,105 72,389 7% 231,850 206,693 12%
-------- -------- -------- --------
GROSS PROFIT 57,277 47,319 21% 162,588 134,685 21%
Gross Profit Margin 43% 40% 41% 39%
OPERATING EXPENSES
Selling and marketing 11,598 8,634 34% 34,250 25,937 32%
Research and development 7,738 6,344 22% 20,621 17,575 17%
General and administrative 6,915 6,842 1% 22,507 21,520 5%
-------- -------- -------- --------
Total 26,251 21,820 20% 77,378 65,032 19%
-------- -------- -------- --------
OPERATING INCOME 31,026 25,499 22% 85,210 69,653 22%
INTEREST INCOME (EXPENSE)
Interest income 171 248 -31% 989 816 21%
Interest expense (110) (52) 112% (127) (81) 57%
-------- -------- -------- --------
Total 61 196 -69% 862 735 17%
-------- -------- -------- --------
INCOME BEFORE INCOME TAXES 31,087 25,695 21% 86,072 70,388 22%
PROVISION FOR INCOME TAXES 11,658 9,379 24% 32,277 25,692 26%
-------- -------- -------- --------
NET INCOME $ 19,429 $ 16,316 19% $ 53,795 $ 44,696 20%
======== ======== ======== ========
Diluted net income per share $ 0.21 $ 0.18 $ 0.58 $ 0.49
======== ======== ======== ========
Diluted weighted avg shares
outstanding 93,421 92,077 92,954 91,715
======== ======== ======== ========
Consolidated Balance Sheet Highlights
(In Thousands-unaudited) March 31, % Change
---------------------- --------
2005 2004
-------- --------
Cash, cash equivalents and investments $ 16,945 $ 89,904 -81%
Trade receivables $ 80,026 $ 66,980 19%
TOTAL ASSETS $ 660,100 $ 547,654 21%
Accounts payable and accrued expenses $ 28,280 $ 20,944 35%
Deferred revenue $ 82,371 $ 74,379 11%
Note payable $ 14,000 $ - >100%
STOCKHOLDERS' EQUITY $ 502,874 $ 422,691 19%
(THIRTY)